As filed with the Securities and Exchange Commission on
January 8, 2007
Registration Statement
No. 333-
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C.
20549
FORM S-3
REGISTRATION
STATEMENT
UNDER
THE SECURITIES ACT OF
1933
AVALONBAY COMMUNITIES,
INC.
(Exact Name of Registrant as
specified in its charter)
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Maryland
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77-0404318
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(State of
Incorporation)
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(I.R.S. Employer Identification
No.)
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2900 Eisenhower Avenue, Suite 300
Alexandria, Virginia 22314
(703) 329-6300
(Address, including zip code,
and telephone number, including area code, of Registrants
principal executive offices)
Bryce Blair
Chairman of the Board and Chief Executive Officer
AvalonBay Communities, Inc.
2900 Eisenhower Avenue, Suite 300
Alexandria, Virginia 22314
(703) 329-6300
(Name, address, including zip
code, and telephone number, including area code, of agent for
service)
With copies to:
Gilbert G. Menna
Goodwin Procter LLP
Exchange Place
Boston, Massachusetts
02109-2881
(617) 570-1000
Approximate date of commencement of proposed sale to the
public:
From time to time after this Registration
Statement becomes effective.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans,
please check the following box.
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If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to
Rule 415 under the Securities Act of 1933, other than
securities offered only in connection with dividend or interest
reinvestment plans, check the following
box.
þ
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act,
please check the following box and list the Securities Act
registration statement number of the earlier effective
registration statement for the same
offering.
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If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering.
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If this Form is a registration statement pursuant to General
Instruction I.D. or a post-effective amendment thereto that
shall become effective upon filing with the Commission pursuant
to Rule 462(e) under the Securities Act, check the
following box.
þ
If this Form is a post-effective amendment to a registration
statement filed pursuant to General Instruction I.D. filed
to register additional securities or additional classes of
securities pursuant to Rule 413(b) under the Securities
Act, check the following box.
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CALCULATION
OF REGISTRATION FEE
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Amount to be Registered/Proposed Maximum
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Title of Each Class of
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Offering Price per Unit/Proposed Maximum
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Securities to be Registered
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Aggregate Offering Price/Amount of Registration Fee
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Debt Securities
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Preferred Stock
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(1)
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Common Stock
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(1)
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An indeterminate aggregate initial
offering price and number or amount of Debt Securities,
Preferred Stock
and/or
Common Stock is being registered as may be offered and sold from
time to time by the Company at indeterminate prices. There is
also being registered hereunder such currently indeterminate
number of shares of Common Stock as may be issued upon
conversion of the Debt Securities or the Preferred Stock
registered hereby and shares of Preferred Stock as may be issued
upon conversion of the Debt Securities registered hereby. Any
securities registered under this Registration Statement may be
sold separately or as units with other securities under this
Registration Statement. The proposed maximum initial offering
prices per unit will be determined, from time to time, by the
Registrant in connection with the issuance by the Registrant of
the securities registered under this Registration Statement.
Separate consideration may or may not be received for securities
that are issuable on exercise, conversion or exchange of other
securities. Pursuant to Rule 429 under the Securities Act
of 1933, the prospectus contained in this registration statement
relates to the securities registered hereby and to the remaining
unsold $250,000,000 principal amount of securities previously
registered by the Company under its registration statement on
Form S-3
(No. 333-132435)
(the Prior Registration Statement) that were not
sold thereunder. The Prior Registration Statement has been
terminated effective upon the filing of this Registration
Statement pursuant to Rule 415(a)(6). No separate
consideration will be received for securities issued upon
conversion of Debt Securities or Preferred Stock. Payment of the
registration fee is deferred in reliance upon Rule 456(b)
and Rule 457(r).
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Prospectus
AVALONBAY COMMUNITIES,
INC.
Debt Securities
Preferred Stock
Common Stock
This prospectus provides you with a general description of debt
and equity securities that AvalonBay Communities, Inc. may offer
and sell from time to time. We may sell these securities
independently, or together in any combination that may include
other securities set forth in an accompanying prospectus
supplement, in one or more offerings, for sale directly to
purchasers or through underwriters, dealers or agents to be
designated at a future date. Each time we sell securities we
will provide a prospectus supplement that will contain specific
information about the terms of that sale and may add to or
update the information in this prospectus, including the names
of any underwriters, dealers or agents involved in the sale of
any securities. You should read this prospectus and any
applicable prospectus supplement carefully before you invest in
our securities.
Our common stock is listed on the New York Stock Exchange under
the symbol AVB.
Investing in our securities
involves various risks. Beginning on page 1, we have
discussed several Risk Factors that you should
consider before investing in our securities.
January 8, 2007
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal
offense.
Table of
Contents
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8
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9
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11
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12
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31
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48
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50
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Unless the context otherwise requires, all references to
we, us, our, our
company, AvalonBay, or similar expressions in
this prospectus refer collectively to AvalonBay Communities,
Inc., a Maryland corporation, and its subsidiaries, and their
respective predecessor entities for the applicable periods,
considered as a single enterprise.
Risk
Factors
Before you invest in our securities, you should be aware that
there are risks in making the investment, including those
described below. You should consider carefully these risk
factors together with all of the information included or
incorporated by reference in this prospectus before you decide
to purchase our securities. This section includes or refers to
forward-looking statements. You should refer to the explanation
of the qualifications and limitations on forward-looking
statements discussed on page 7.
Development,
redevelopment and construction risks could affect our
profitability.
We intend to continue to develop and redevelop apartment home
communities. These activities may be exposed to the following
risks:
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we may be unable to obtain, or experience delays in obtaining,
necessary zoning, occupancy, or other required governmental or
third party permits and authorizations, which could result in
increased costs or the delay or abandonment of opportunities;
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we may abandon opportunities that we have already begun to
explore for a number of reasons, including changes in local
market conditions or increases in construction or financing
costs, and, as a result, we may fail to recover costs already
incurred in exploring those opportunities;
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we may incur costs that exceed our original estimates due to
increased material, labor or other costs;
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occupancy rates and rents at a community may fail to meet our
expectations for a number of reasons, including changes in
market and economic conditions beyond our control and the
development by competitors of competing communities;
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we may be unable to complete construction and lease up of a
community on schedule, resulting in increased construction and
financing costs and a decrease in expected rental revenues;
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we may be unable to obtain financing with favorable terms, or at
all, for the proposed development of a community, which may
cause us to delay or abandon an opportunity;
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we may incur liabilities to third parties during the development
process, for example, in connection with managing existing
improvements on the site prior to tenant terminations and
demolition (such as commercial space) or in connection with
providing services to third parties, such as the construction of
shared infrastructure or other improvements; and
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we may incur liability if our communities are not constructed
and operated in compliance with the accessibility provisions of
the Americans with Disabilities Acts or the Fair Housing Act.
Noncompliance could result in imposition of fines, an award of
damages to private litigants, and a requirement that we
undertake structural modifications to remedy the noncompliance.
We are currently engaged in a lawsuit alleging noncompliance
with these statutes.
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We project construction costs based on market conditions at the
time we prepare our budgets, and our projections include changes
that we anticipate but cannot predict with certainty.
Construction costs have been increasing, particularly for
materials such as steel, concrete and lumber, and, for some of
our Development Communities and Development Rights, the total
construction costs may be higher than the original budget. Total
capitalized cost includes all capitalized costs projected to be
incurred to develop or redevelop a community, determined in
accordance with generally accepted accounting principals
(GAAP), including:
land
and/or
property acquisition costs;
construction or reconstruction costs;
costs of environmental remediation;
real estate taxes;
capitalized interest;
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loan fees;
permits;
professional fees;
allocated development or redevelopment
overhead; and
other regulatory fees.
Costs to redevelop communities that have been acquired have, in
some cases, exceeded our original estimates and similar
increases in costs may be experienced in the future. We cannot
assure you that market rents in effect at the time new
development or redevelopment communities complete
lease-up
will be sufficient to fully offset the effects of any increased
construction or reconstruction costs.
Unfavorable
changes in market and economic conditions could hurt occupancy
or rental rates.
Local conditions in our markets significantly affect occupancy
or rental rates at our communities. The risks that may adversely
affect conditions in those markets include the following:
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plant closings, industry slowdowns and other factors that
adversely affect the local economy;
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an oversupply of, or a reduced demand for, apartment homes;
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a decline in household formation or employment or lack of
employment growth;
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the inability or unwillingness of residents to pay rent
increases; and
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rent control or rent stabilization laws, or other laws
regulating housing, that could prevent us from raising rents to
offset increases in operating costs.
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Changes
in applicable laws, or noncompliance with applicable laws, could
adversely affect our operations or expose us to
liability.
We must operate our communities in compliance with numerous
federal, state and local laws and regulations, including
landlord tenant laws and other laws generally applicable to
business operations. Noncompliance with laws could expose us to
liability.
Compliance with changes in (i) laws increasing the
potential liability for environmental conditions existing on
properties or the restrictions on discharges or other
conditions, (ii) rent control or rent stabilization laws or
(iii) other governmental rules and regulations or
enforcement policies affecting the use and operation of our
communities, including changes to building codes and fire and
life-safety codes, may result in lower revenue growth or
significant unanticipated expenditures.
Short-term
leases expose us to the effects of declining market
rents.
Substantially all of our apartment leases are for a term of one
year or less. Because these leases generally permit the
residents to leave at the end of the lease term without penalty,
our rental revenues are impacted by declines in market rents
more quickly than if our leases were for longer terms.
Competition
could limit our ability to lease apartment homes or increase or
maintain rents.
Our apartment communities compete with other housing
alternatives to attract residents, including other rental
apartments, condominiums and single-family homes that are
available for rent, as well as new and existing condominiums and
single-family homes for sale. Competitive residential housing in
a particular area could adversely affect our ability to lease
apartment homes and to increase or maintain rental rates.
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Attractive
investment opportunities may not be available, which could
adversely affect our profitability.
We expect that other real estate investors, including insurance
companies, pension funds, other real estate investment trusts
(REITs) and other well-capitalized investors, will
compete with us to acquire existing properties and to develop
new properties. This competition could increase prices for
properties of the type we would likely pursue and adversely
affect our profitability.
Insufficient
cash flow could affect our debt financing and create refinancing
risk.
We are subject to the risks associated with debt financing,
including the risk that our cash flow will be insufficient to
meet required payments of principal and interest. In this
regard, we note that we are required to annually distribute
dividends generally equal to at least 90% of our REIT taxable
income, computed without regard to the dividends paid deduction
and our net capital gain, in order for us to continue to qualify
as a REIT, and this requirement limits the amount of our cash
flow available to meet required principal and interest payments.
The principal outstanding balance on a portion of our debt will
not be fully amortized prior to its maturity. Although we may be
able to repay our debt by using our cash flows, we cannot assure
you that we will have sufficient cash flows available to make
all required principal payments. Therefore, we may need to
refinance at least a portion of our outstanding debt as it
matures. There is a risk that we may not be able to refinance
existing debt or that a refinancing will not be done on as
favorable terms, either of which could have a material adverse
effect on our financial condition and results of operations.
Rising
interest rates could increase interest costs and could affect
the market price of our common stock.
We currently have, and may in the future incur, variable
interest rate debt. Accordingly, if interest rates increase, our
interest costs will also rise, unless we have made arrangements
that hedge the risk of rising interest rates. In addition, an
increase in market interest rates may lead purchasers of our
common stock to demand a greater annual dividend yield, which
could adversely affect the market price of our common stock.
Bond
financing and zoning compliance requirements could limit our
income, restrict the use of communities and cause favorable
financing to become unavailable.
We have financed some of our apartment communities with
obligations issued by local government agencies because the
interest paid to the holders of this debt is generally exempt
from federal income taxes and, therefore, the interest rate is
generally more favorable to us. These obligations are commonly
referred to as tax-exempt bonds and generally must
be secured by communities. As a condition to obtaining
tax-exempt financing, or on occasion as a condition to obtaining
favorable zoning in some jurisdictions, we will commit to make
some of the apartments in a community available to households
whose income does not exceed certain thresholds (e.g., 50% or
80% of area median income), or who meet other qualifying tests.
As of December 31, 2005, approximately 6.1% of our
apartment homes at current operating communities were under use
limitations such as these. These commitments, which may run
without expiration or may expire after a period of time (such as
15 or 20 years) may limit our ability to raise rents
aggressively and, in consequence, can also limit increases in
the value of the communities subject to these restrictions.
In addition, some of our tax-exempt bond financing documents
require us to obtain a guarantee from a financial institution of
payment of the principal of, and interest on, the bonds. The
guarantee may take the form of a letter of credit, surety bond,
guarantee agreement or other additional collateral. If the
financial institution defaults in its guarantee obligations, or
if we are unable to renew the applicable guarantee or otherwise
post satisfactory collateral, a default will occur under the
applicable tax-exempt bonds and the community could be
foreclosed upon.
Risks
Related to Indebtedness.
We have a $650,000,000 revolving variable rate unsecured credit
facility with JPMorgan Chase Bank, N.A., and Wachovia Bank,
National Association, serving together as syndication agent and
as banks, Bank of America, N.A., serving as administrative
agent, swing lender, issuing bank and a bank, Morgan Stanley
Bank, Wells Fargo Bank, National Association, and Deutsche Bank
Trust Company Americas, serving collectively as documentation
agent and as banks, and a syndicate of other financial
institutions, serving as banks. Our organizational documents
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do not limit the amount or percentage of indebtedness that may
be incurred. Accordingly, subject to compliance with outstanding
debt covenants, we could incur more debt, resulting in an
increased risk of default on our obligations and an increase in
debt service requirements that could adversely affect our
financial condition and results of operations.
The mortgages on those of our properties subject to secured
debt, our unsecured credit facility and the indentures under
which a substantial portion of our debt was issued contain
customary restrictions, requirements and other limitations, as
well as certain financial and operating covenants including
maintenance of certain financial ratios. Maintaining compliance
with these restrictions could limit our flexibility. A default
in these requirements, if uncured, could result in a requirement
that we repay indebtedness, which could severely affect our
liquidity and increase our financing costs.
Failure
to generate sufficient revenue could limit cash flow available
for distributions to stockholders.
A decrease in rental revenue could have an adverse effect on our
ability to pay distributions to our stockholders and our ability
to maintain our status as a REIT. Significant expenditures
associated with each community such as debt service payments, if
any, real estate taxes, insurance and maintenance costs are
generally not reduced when circumstances cause a reduction in
income from a community.
Debt
financing may not be available and equity issuances could be
dilutive to our stockholders.
Our ability to execute our business strategy depends on our
access to an appropriate blend of debt and equity financing.
Debt financing may not be available in sufficient amounts or on
favorable terms. If we issue additional equity securities, the
interests of existing stockholders could be diluted.
Difficulty
of selling apartment communities could limit
flexibility.
Federal tax laws may limit our ability to earn a gain on the
sale of a community (unless we own it through a subsidiary which
will incur a taxable gain upon sale) if we are found to have
held, acquired or developed the community primarily with the
intent to resell the community, and this limitation may affect
our ability to sell communities without adversely affecting
returns to our stockholders. In addition, real estate in our
markets can at times be hard to sell, especially if market
conditions are poor. These potential difficulties in selling
real estate in our markets may limit our ability to change or
reduce the apartment communities in our portfolio promptly in
response to changes in economic or other conditions.
Acquisitions
may not yield anticipated results.
Subject to the requirements related to AvalonBay Value Added
Fund, L.P., a private, discretionary investment vehicle (the
Fund) discussed below, we may in the future acquire
apartment communities on a select basis. Our acquisition
activities and their success may be exposed to the following
risks:
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an acquired property may fail to perform as we expected in
analyzing our investment; and
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our estimate of the costs of repositioning or redeveloping an
acquired property may prove inaccurate.
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Failure
to succeed in new markets or in activities other than the
development, ownership and operation of residential rental
communities may have adverse consequences.
We may from time to time commence development activity or make
acquisitions outside of our existing market areas if appropriate
opportunities arise. We also own and operate ancillary retail
space when a retail component represents the best use of the
space, as is often the case with large urban in-fill residential
developments. We expect to develop, through a taxable REIT
subsidiary, directly or through a joint venture partnership, one
or more parcels with the intent to sell, which we believe
represents the best use for those parcels. Our historical
experience in our existing markets in developing, owning and
operating rental communities does not ensure that we will be
able to operate successfully in new markets, should we choose to
enter them, or that we will be successful in these other
activities. We may be exposed to a variety of risks if we choose
to enter new markets, including an inability to evaluate
accurately local apartment market conditions; an inability to
obtain land for development or to identify
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appropriate acquisition opportunities; an inability to hire and
retain key personnel; and lack of familiarity with local
governmental and permitting procedures. We may be unsuccessful
in owning and operating retail space at our communities or in
developing real estate with the intent to sell.
Risks
involved in real estate activity through joint
ventures.
Instead of acquiring or developing apartment communities
directly, at times we invest as a partner or a co-venturer.
Partnership or joint venture investments involve risks,
including the possibility that our partner might become
insolvent or otherwise refuse to make capital contributions when
due; that we may be responsible to our partner for indemnifiable
losses; that our partner might at any time have business goals
which are inconsistent with ours; and that our partner may be in
a position to take action or withhold consent contrary to our
instructions or requests. Frequently, we and our partner may
each have the right to trigger a buy-sell arrangement, which
could cause us to sell our interest, or acquire our
partners interest, at a time when we otherwise would not
have initiated such a transaction.
Risks
associated with our discretionary investment fund.
We have formed the Fund, which, through a wholly-owned
subsidiary, we manage as the general partner and to which we
have committed $50,000,000, representing a 15% equity interest.
This presents risks, including the following:
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investors in the Fund may fail to make their capital
contributions when due and, as a result, the Fund may be unable
to execute its investment objectives;
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our subsidiary that is the general partner of the Fund is
generally liable, under partnership law, for the debts and
obligations of the Fund, subject to certain exculpation and
indemnification rights pursuant to the terms of the partnership
agreement of the Fund;
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investors in the Fund holding a majority of the partnership
interests may remove us as the general partner without cause,
subject to our right to receive an additional nine months of
management fees after such removal and our right to acquire one
of the properties then held by the Fund;
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while we have broad discretion to manage the Fund and make
investment decisions on behalf of the Fund, the investors or an
advisory committee comprised of representatives of the investors
must approve certain matters, and as a result we may be unable
to cause the Fund to make certain investments or implement
certain decisions that we consider beneficial;
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we are generally prohibited from making acquisitions of
apartment communities outside of the Fund until the earlier of
March 16, 2008 or until 80% of the Funds committed
capital is invested, subject to certain exceptions; and
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we may be liable if either the Fund, or the REIT through which a
number of investors have invested in the Fund and which we
manage, fails to comply with various tax or other regulatory
matters.
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Risk
of earthquake damage.
Many of our West Coast communities are located in the general
vicinity of active earthquake faults. We cannot assure you that
an earthquake would not cause damage or losses greater than
insured levels. In the event of a loss in excess of insured
limits, we could lose our capital invested in the affected
community, as well as anticipated future revenue from that
community. We would also continue to be obligated to repay any
mortgage indebtedness or other obligations related to the
community. Any such loss could materially and adversely affect
our business and our financial condition and results of
operations.
A
significant uninsured property or liability loss could have a
material adverse effect on our financial condition and results
of operations.
In addition to the earthquake insurance discussed above, we
carry commercial general liability insurance, property insurance
and terrorism insurance with respect to our communities on terms
we consider commercially
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reasonable. There are, however, certain types of losses (such as
losses arising from acts of war) that are not insured, in full
or in part, because they are either uninsurable or the cost of
insurance makes it, in managements view, economically
impractical. If an uninsured property loss or a property loss in
excess of insured limits were to occur, we could lose our
capital invested in a community, as well as the anticipated
future revenues from such community. We would also continue to
be obligated to repay any mortgage indebtedness or other
obligations related to the community. If an uninsured liability
to a third party were to occur, we would incur the cost of
defense and settlement with, or court ordered damages to, that
third party. A significant uninsured property or liability loss
could materially and adversely affect our business and our
financial condition and results of operations.
We may
incur costs and increased expenses to repair property damage
resulting from inclement weather.
Particularly in the Northeast and Midwest we are exposed to
risks associated with inclement winter weather, including
increased costs for the removal of snow and ice as well as from
delays in construction. In addition, inclement weather could
increase the need for maintenance and repair of our communities.
We may
incur costs due to environmental contamination.
Under various federal, state and local environmental laws,
regulations and ordinances, we may be required, regardless of
knowledge or responsibility, to investigate and remediate the
effects of hazardous or toxic substances or petroleum product
releases at our properties and may be held liable to a
governmental entity or to third parties for property or personal
injury damages and for investigation and remediation costs
incurred as a result of the contamination. These damages and
costs may be substantial. The presence of such substances, or
the failure to properly remediate the contamination, may
adversely affect our ability to borrow against, sell or rent the
affected property.
In addition, some environmental laws create a lien on the
contaminated site in favor of the government for damages and
costs it incurs as a result of the contamination.
Certain federal, state and local laws, regulations and
ordinances govern the removal, encapsulation or disturbance of
asbestos containing materials (ACMs) when such
materials are in poor condition or in the event of renovation or
demolition of a building. These laws may impose liability for
release of ACMs and may allow third parties to seek recovery
from owners or operators of real properties for personal injury
associated with exposure to ACMs. We are not aware that any ACMs
were used in the construction of the communities we developed.
ACMs were, however, used in the construction of several of the
communities that we acquired. We implement an operations and
maintenance program at each of the communities at which ACMs are
detected. We do not anticipate that we will incur any material
liabilities as a result of the presence of ACMs at our
communities.
We are aware that some of our communities have lead paint and
have implemented an operations and maintenance program at each
of those communities. We do not anticipate that we will incur
any material liabilities as a result of the presence of lead
paint at our communities.
All of our stabilized operating communities, and all of the
communities that we are currently developing or redeveloping,
have been subjected to at least a Phase I or similar
environmental assessment, which generally does not involve
invasive techniques such as soil or ground water sampling. These
assessments, together with subsurface assessments conducted on
some properties, have not revealed, and we are not otherwise
aware of, any environmental conditions that we believe would
have a material adverse effect on our business, assets,
financial condition or results of operation. In connection with
our ownership, operation and development of communities, from
time to time we undertake substantial remedial action in
response to the presence of subsurface or other contaminants. In
some cases, an indemnity exists upon which we may be able to
rely if environmental liability arises from the contamination or
remediation costs exceed estimates. There can be no assurance,
however, that all necessary remediation actions have been or
will be undertaken at our properties or that we will be
indemnified, in full or at all, in the event that environmental
liability arises.
Mold growth may occur when excessive moisture accumulates in
buildings or on building materials, particularly if the moisture
problem remains undiscovered or is not addressed over a period
of time. Although the occurrence of mold at multifamily and
other structures, and the need to remediate such mold, is not a
new
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phenomenon, there has been increased awareness in recent years
that certain molds may in some instances lead to adverse health
effects, including allergic or other reactions. To help limit
mold growth, we educate residents about the importance of
adequate ventilation and request or require that they notify us
when they see mold or excessive moisture. We have established
procedures for promptly addressing and remediating mold or
excessive moisture from apartment homes when we become aware of
its presence regardless of whether we or the resident believe a
health risk is presented. However, we cannot assure that mold or
excessive moisture will be detected and remediated in a timely
manner. If a significant mold problem arises at one of our
communities, we could be required to undertake a costly
remediation program to contain or remove the mold from the
affected community and could be exposed to other liabilities.
Additionally, we have occasionally been involved in developing,
managing, leasing and operating various properties for third
parties. Consequently, we may be considered to have been an
operator of such properties and, therefore, potentially liable
for removal or remediation costs or other potential costs which
could relate to hazardous or toxic substances. We are not aware
of any material environmental liabilities with respect to
properties managed or developed by us or our predecessors for
such third parties. We cannot assure you that:
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the environmental assessments described above have identified
all potential environmental liabilities;
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no prior owner created any material environmental condition not
known to us or the consultants who prepared the assessments;
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no environmental liabilities have developed since the
environmental assessments were prepared;
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the condition of land or operations in the vicinity of our
communities, such as the presence of underground storage tanks,
will not affect the environmental condition of our communities;
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future uses or conditions, including, without limitation,
changes in applicable environmental laws and regulations, will
not result in the imposition of environmental liability; or
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no environmental liabilities will arise at communities that we
have sold for which we may have liability.
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Failure
to qualify as a REIT would cause us to be taxed as a
corporation, which would significantly reduce funds available
for distribution to stockholders.
If we fail to qualify as a REIT for federal income tax purposes,
we will be subject to federal income tax on our taxable income
at regular corporate rates (subject to any applicable
alternative minimum tax). In addition, unless we are entitled to
relief under applicable statutory provisions, we would be
ineligible to make an election for treatment as a REIT for the
four taxable years following the year in which we lose our
qualification. The additional tax liability resulting from the
failure to qualify as a REIT would significantly reduce or
eliminate the amount of funds available for distribution to our
stockholders. Furthermore, we would no longer be required to
make distributions to our stockholders. Thus, our failure to
qualify as a REIT could also impair our ability to expand our
business and raise capital, and would adversely affect the value
of our common stock.
We believe that we are organized and qualified as a REIT, and we
intend to operate in a manner that will allow us to continue to
qualify as a REIT. However, we cannot assure you that we are
qualified as a REIT, or that we will remain qualified in the
future. This is because qualification as a REIT involves the
application of highly technical and complex provisions of the
Internal Revenue Code for which there are only limited judicial
and administrative interpretations and involves the
determination of a variety of factual matters and circumstances
not entirely within our control. In addition, future
legislation, new regulations, administrative interpretations or
court decisions may significantly change the tax laws or the
application of the tax laws with respect to qualification as a
REIT for federal income tax purposes or the federal income tax
consequences of this qualification.
Even if we qualify as a REIT, we will be subject to certain
federal, state and local taxes on our income and property and on
taxable income that we do not distribute to our shareholders. In
addition, we may engage in activities through taxable
subsidiaries and will be subject to federal income tax at
regular corporate rates on the income of those subsidiaries.
7
The
ability of our stockholders to control our policies and effect a
change of control of our company is limited by certain
provisions of our charter and bylaws and by Maryland
law.
There are provisions in our charter and bylaws that may
discourage a third party from making a proposal to acquire us,
even if some of our stockholders might consider the proposal to
be in their best interests. These provisions include the
following:
Our charter authorizes our board of directors to issue up to
50,000,000 shares of preferred stock without stockholder
approval and to establish the preferences and rights, including
voting rights, of any series of preferred stock issued. The
board of directors may issue preferred stock without stockholder
approval, which could allow the board to issue one or more
classes or series of preferred stock that could discourage or
delay a tender offer or a change in control.
To maintain our qualification as a REIT for federal income tax
purposes, not more than 50% in value of our outstanding stock
may be owned, directly or indirectly, by or for five or fewer
individuals at any time during the last half of any taxable
year. To maintain this qualification, and to otherwise address
concerns about concentrations of ownership of our stock, our
charter generally prohibits ownership (directly, indirectly by
virtue of the attribution provisions of the Internal Revenue
Code of 1986, as amended, or beneficially as defined in
Section 13 of the Securities Exchange Act) by any single
stockholder of more than 9.8% of the issued and outstanding
shares of any class or series of our stock. In general, under
our charter, pension plans and mutual funds may directly and
beneficially own up to 15% of the outstanding shares of any
class or series of stock. Under our charter, our board of
directors may in its sole discretion waive or modify the
ownership limit for one or more persons. These ownership limits
may prevent or delay a change in control and, as a result, could
adversely affect our stockholders ability to realize a
premium for their shares of common stock.
Our bylaws provide that the affirmative vote of holders of a
majority of all of the shares entitled to be cast in the
election of directors is required to elect a director. In a
contested election, if no nominee receives the vote of holders
of a majority of all of the shares entitled to be cast, the
incumbent directors would remain in office. This requirement may
prevent or delay a change in control and, as a result, could
adversely affect our stockholders ability to realize a
premium for their shares of common stock.
As a Maryland corporation, we are subject to the provisions of
the Maryland General Corporation Law. Maryland law imposes
restrictions on some business combinations and requires
compliance with statutory procedures before some mergers and
acquisitions may occur, which may delay or prevent offers to
acquire us or increase the difficulty of completing any offers,
even if they are in our stockholders best interests. In
addition, other provisions of the Maryland General Corporation
Law permit the Board of Directors to make elections and to take
actions without stockholder approval (such as classifying our
Board such that the entire Board is not up for reelection
annually) that, if made or taken, could have the effect of
discouraging or delaying a change in control.
Forward-looking
Statements
This prospectus, including the information incorporated by
reference into this prospectus, contains statements that are
forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. You can
identify forward-looking statements by the use of the words
believe, expect, anticipate,
intend, estimate, assume,
plan, project, may,
shall, will, outlook and
other similar expressions that predict or indicate future events
and trends and which do not relate to historical matters. These
statements include, among other things, statements regarding our
intent, belief or expectations with respect to:
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our potential development, redevelopment, acquisition or
disposition of communities;
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the timing and cost of completion of apartment communities under
construction, reconstruction, development or redevelopment;
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the timing of
lease-up,
occupancy and stabilization of apartment communities;
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the pursuit of land on which we are considering future
development;
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the anticipated operating performance of our communities;
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cost, yield and earnings estimates;
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our declaration or payment of distributions;
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our joint venture and discretionary fund activities;
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our policies regarding investments, indebtedness, acquisitions,
dispositions, financings and other matters;
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our qualification as a REIT under the Internal Revenue Code;
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the real estate markets in Northern and Southern California and
markets in selected states in the Mid-Atlantic, Northeast,
Midwest and Pacific Northwest regions of the United States and
in general;
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the availability of debt and equity financing;
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interest rates;
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general economic conditions; and
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trends affecting our financial condition or results of
operations.
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We cannot assure the future results or outcome of the matters
described in these statements; rather, these statements merely
reflect our current expectations of the approximate outcomes of
the matters discussed. You should not rely on forward-looking
statements because they involve known and unknown risks,
uncertainties and other factors, some of which are beyond our
control. These risks, uncertainties and other factors, which we
describe in Risk Factors elsewhere in this
prospectus, may cause our actual results, performance or
achievements to differ materially from the anticipated future
results, performance or achievements expressed or implied by
these forward-looking statements.
In addition, these forward-looking statements represent our
estimates and assumptions only as of the date of this
prospectus. We do not undertake to update these forward-looking
statements, and therefore they may not represent our estimates
and assumptions after the date of this prospectus.
About
this Prospectus
This prospectus is part of a registration statement that we
filed with the SEC utilizing a shelf registration process. Under
this shelf process, we may sell an indeterminate number or
amount of any combination of the securities described in this
prospectus in one or more offerings. This prospectus provides
you with a general description of the securities we may offer.
Each time we sell securities, we will provide a prospectus
supplement that will contain specific information about the
terms of that offering. The prospectus supplement may also add,
update or change information contained in this prospectus. You
should read both this prospectus and any applicable prospectus
supplement together with additional information described below
under the heading Where You Can Find More
Information.
Where You
Can Find More Information
We file annual, quarterly and current reports, proxy statements
and other information with the SEC. You may read and copy any
document we file at the SECs Public Reference Room at
450 Fifth Street, N.W., Washington, D.C. 20549. You
may call the SEC at
1-800-SEC-0330
for further information on the operation of the Public Reference
Room. Our SEC filings are also available to the public from the
SECs Web site at www.sec.gov or our Web site at
www.avalonbay.com. In addition, you may read our SEC filings at
the offices of the New York Stock Exchange (NYSE), which is
located at 20 Broad Street, New York, New York 10005. Our
SEC filings are available at the NYSE because our common stock
and an outstanding series of preferred stock are listed on the
NYSE.
In accordance with
Section 2-210
of the Maryland General Corporation Law, our board of directors
may authorize the issuance of some or all of the shares of any
or all of our classes or series of stock without certificates.
In
9
addition, we have the authority to designate and issue more than
one class or series of stock having various preferences,
conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and
conditions of redemption. See Description of Preferred
Stock and Description of Common Stock. Our
charter imposes limitations on the ownership and transfer of our
stock. See Limits on Ownership of Stock. We will
furnish a full statement of the relative rights and preferences
of each class or series of our stock which has been so
designated and any restrictions on the ownership or transfer of
our stock to any stockholder upon request and without charge.
Written requests for such copies should be directed to:
AvalonBay Communities, Inc., 2900 Eisenhower Avenue,
Suite 300, Alexandria, Virginia 22314, Attention: Chief
Financial Officer.
The SEC allows us to incorporate by reference the information we
file with it, which means that we can disclose important
information to you by referring you to these documents. The
information incorporated by reference is an important part of
this prospectus, and information that we file later with the SEC
will automatically update and supersede the information already
incorporated by reference. We are incorporating by reference the
documents listed below, which we have already filed with the
SEC, and any future filings we make with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934 until we sell all of the securities.
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AvalonBay SEC Filings (File No. 001-12672)
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Period or Date Filed
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Annual Report on
Form 10-K
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Year ended December 31, 2005
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Quarterly Report on
Form 10-Q
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Quarter ended March 31, 2006
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Quarterly Report on
Form 10-Q
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Quarter ended June 30, 2006
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Quarterly Report on
Form 10-Q
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Quarter ended September 30,
2006
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Current Report on
Form 8-K
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February 14, 2006
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Current Report on
Form 8-K
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March 13, 2006
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Current Report on
Form 8-K
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September 25, 2006
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Current Report on
Form 8-K
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November 17, 2006
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In addition, we are incorporating by reference the description
of our common stock from our Registration Statement on
Form 8-B
filed June 8, 1995.
You may request a copy of these filings, and any exhibits we
have specifically incorporated by reference as an exhibit in
this prospectus, at no cost by writing or telephoning us at the
following: AvalonBay Communities, Inc., 2900 Eisenhower Avenue,
Suite 300, Alexandria, Virginia 22314, Attention: Chief
Financial Officer. Our telephone number is
703-329-2300.
This prospectus is part of a registration statement we filed
with the SEC. We have incorporated exhibits into this
registration statement. You should read the exhibits carefully
for provisions that may be important to you.
You should rely only on the information incorporated by
reference or provided in this prospectus or any prospectus
supplement. We have not authorized anyone to provide you with
different information. We are not making an offer of these
securities in any state where the offer is not permitted. You
should not assume that the information in this prospectus or in
the documents incorporated by reference is accurate as of any
date other than the date on the front of this prospectus or
those documents.
About
AvalonBay Communities, Inc.
AvalonBay Communities, Inc. is a Maryland corporation that has
elected to be treated as a real estate investment trust, or
REIT, for federal income tax purposes. We engage in the
development, redevelopment, acquisition, ownership and operation
of multifamily communities in high
barrier-to-entry
markets of the United States. These
barriers-to-entry
generally include a difficult and lengthy entitlement process
with local jurisdictions and dense urban or suburban areas where
zoned and entitled land is in limited supply. Our markets are
located in the Northeast, Mid-Atlantic, Midwest, Pacific
Northwest, and Northern and Southern California regions of the
United States. We focus on these markets because we believe
that, long term, the limited new supply of apartment homes and
lower housing affordability in these markets will result in
larger increases in cash flows relative to other markets over an
entire business cycle. In addition to increasing the rental
revenues of our operating assets, we believe these
10
market attributes will increase the value of our operating
assets and enable us to create additional value through the
development and selective acquisition of multifamily housing.
At December 31, 2006, we owned or held a direct or indirect
ownership interest in 150 operating apartment communities
containing 43,141 apartment homes in ten states and the District
of Columbia, of which 6 communities containing
2,381 apartment homes were under reconstruction. In
addition, we owned or held a direct or indirect ownership
interest in 17 communities under construction that are
expected to contain an aggregate of 5,153 apartment homes
when completed. At November 30, 2006, we also owned a
direct or indirect ownership interest in rights to develop an
additional 52 communities that, if developed in the manner
expected, will contain an estimated 13,678 apartment homes.
AvalonBay is the surviving entity from the merger of Avalon
Properties, Inc. with and into Bay Apartment Communities, Inc.
on June 4, 1998. In October 1998, we changed our name to
AvalonBay Communities, Inc. Our common stock is listed on the
NYSE under the symbol AVB.
AvalonBay elected to qualify as a REIT for federal income tax
purposes for the taxable year ended December 31, 1994 and
has not terminated or revoked such election. As a REIT, with
limited exceptions, we will not be taxed under federal and
certain state income tax laws at the corporate level on our net
income to the extent net income is distributed to our
stockholders. We have historically made sufficient distributions
to avoid tax on retained income, and we intend to make
sufficient distributions to avoid income tax at the corporate
level. While we believe that we are organized and qualified as a
REIT and we intend to operate in a manner that will allow us to
continue to qualify as a REIT, there can be no assurance that we
will be successful in this regard. Qualification as a REIT
involves the application of highly technical and complex
provisions of the Internal Revenue Code for which there are
limited judicial and administrative interpretations and involves
the determination of a variety of factual matters and
circumstances not entirely within our control.
Ratios of
Earnings to Combined Fixed Charges and Preferred Stock
Dividends
Our ratio of earnings to combined fixed charges and preferred
stock dividends for each of the periods indicated is as follows:
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Nine Months Ended
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Year Ended
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Year Ended
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Year Ended
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Year Ended
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Year Ended
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September 30,
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December 31,
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December 31,
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December 31,
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December 31,
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December 31,
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2006
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2005
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2004
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2003
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2002
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2001
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Ratios
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1.8
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1.50
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x
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1.30
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x
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1.30
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x
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1.23
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x
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1.43x
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The ratios of earnings to combined fixed charges and preferred
stock dividends were computed by dividing earnings by combined
fixed charges and preferred stock dividends. For this purpose,
earnings consist of pre-tax income from continuing operations
before adjustment for minority interests in consolidated
subsidiaries plus fixed charges less capitalized interest. Fixed
charges consist of interest expense (including the amortization
of debt issuance costs) and capitalized interest.
During the five year period covered by the table above, the
following series of preferred stock of AvalonBay have been
outstanding:
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2,300,000 shares of 8.50% Series C Cumulative
Redeemable Preferred Stock were issued in June 1997, all of
which were redeemed in July 2002;
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3,267,700 shares of 8.00% Series D Cumulative
Redeemable Preferred Stock were issued in December 1997, all of
which were redeemed in March 2003;
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4,455,000 shares of 9.00% Series F Cumulative
Redeemable Preferred Stock were issued in June 1998, all of
which were redeemed in June 2001;
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4,300,000 shares of 8.96% Series G Cumulative
Redeemable Preferred Stock were issued in June 1998, all of
which were redeemed in October 2001;
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4,000,000 shares of 8.70% Series H Cumulative
Redeemable Preferred Stock were issued in October 1998, all of
which are currently outstanding;
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592,000 shares of Series I Cumulative Redeemable
Preferred Stock were issued in June 2002, all of which were
redeemed in August 2002; and
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3,336,611 shares of Series J Cumulative Redeemable
Preferred Stock were issued in March 2003, all of which were
redeemed in May 2003.
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In addition, AvalonBay designated 1,000,000 shares of
Series E Junior Participating Cumulative Preferred Stock in
March 1998 in connection with our shareholder rights agreement.
The shareholder rights agreement was subsequently terminated in
March 2003.
Ratios of
Earnings to Fixed Charges
Our ratio of earnings to fixed charges for each of the periods
indicated is as follows:
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Nine Months Ended
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Year Ended
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Year Ended
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Year Ended
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Year Ended
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Year Ended
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September 30,
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December 31,
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December 31,
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December 31,
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December 31,
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December 31,
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2006
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2005
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2004
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2003
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2002
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2001
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Ratios
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1.9
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x
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1.59
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x
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1.37
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x
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1.39
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x
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1.38
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x
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1.91x
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The ratios of earnings to fixed charges were computed by
dividing earnings by fixed charges. For this purpose, earnings
consist of pre-tax income from continuing operations before
adjustment for minority interests in consolidated subsidiaries
plus fixed charges less capitalized interest. Fixed charges
consist of interest expense (including the amortization of debt
issuance costs) and capitalized interest.
How We
Intend to Use the Proceeds
Unless we provide otherwise in a supplement to this prospectus,
we intend to use the net proceeds from the sale of the
securities for one or more of the following:
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working capital;
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capital expenditures, including for the development and
redevelopment of apartment communities;
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repayment and refinancing of debt or redemption of prior
issuances of preferred stock;
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potential acquisitions; and
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other general corporate purposes.
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Description
of the Debt Securities
This prospectus describes the general terms and provisions of
the debt securities. When we offer to sell a particular series
of debt securities, we will describe the specific terms of the
securities in a supplement to this prospectus. The prospectus
supplement will also indicate whether the general terms and
provisions described in this prospectus apply to a particular
series of debt securities. You should read the indentures
referenced below for a more complete understanding of the
general terms and provisions described in this prospectus.
The senior debt securities will be issued under an indenture,
dated as of a date prior to such issuance, between us and
U.S. Bank Trust National Association, as successor to
State Street Bank and Trust Company, as trustee, as amended or
supplemented from time to time. We will refer to any such
indenture throughout this prospectus as the senior
indenture. The subordinated debt securities will be issued
under a separate indenture, dated as of a date prior to such
issuance, between us and the trustee. We will refer to any such
indenture throughout this prospectus as the subordinated
indenture and to a trustee under any senior or
subordinated indenture as the trustee. The senior
indenture and the subordinated indenture are sometimes
collectively referred to in this prospectus as the
indentures. The indentures will be subject to and
governed by the Trust Indenture Act of 1939. We included copies
of the indentures as exhibits to our registration statement and
they are incorporated into this prospectus by reference. The
12
following summarizes the material provisions of the indentures
but may not contain all of the information that is important to
you. Except as otherwise indicated, the terms of the indentures
are identical. As used under this caption, the term debt
securities includes the debt securities being offered by
this prospectus and all other debt securities issued by us under
the indentures.
General
The indentures:
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do not limit the amount of debt securities that we may issue;
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allow us to issue debt securities in one or more series;
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do not require us to issue all of the debt securities of a
series at the same time;
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allow us to reopen a series to issue additional debt securities
without the consent of the debt securityholders of such
series; and
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provide that the debt securities will be unsecured.
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Unless we give you different information in the prospectus
supplement, the senior debt securities will be our
unsubordinated obligations and will rank equally with all of our
other unsecured and unsubordinated indebtedness. Payments on the
subordinated debt securities will be subordinated to the prior
payment in full of all of our senior indebtedness, as described
under Subordination and in the
applicable prospectus supplement.
Each indenture provides that we may, but need not, designate
more than one trustee under an indenture. Any trustee under an
indenture may resign or be removed and a successor trustee may
be appointed to act with respect to the series of debt
securities administered by the resigning or removed trustee. If
two or more persons are acting as trustee with respect to
different series of debt securities, each trustee shall be a
trustee of a trust under the applicable indenture separate and
apart from the trust administered by any other trustee. Except
as otherwise indicated in this prospectus, any action described
in this prospectus to be taken by each trustee may be taken by
each trustee with respect to, and only with respect to, the one
or more series of debt securities for which it is trustee under
the applicable indenture.
The prospectus supplement for each offering will provide the
following terms, where applicable:
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the title of the debt securities and whether they are senior or
subordinated;
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the aggregate principal amount of the debt securities being
offered, the aggregate principal amount of the debt securities
outstanding as of the most recent practicable date and any limit
on their aggregate principal amount, including the aggregate
principal amount of debt securities authorized;
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the price at which the debt securities will be issued, expressed
as a percentage of the principal;
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the portion of the principal payable upon declaration of
acceleration of the maturity, if other than the principal amount;
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the date or dates, or the method for determining the date or
dates, on which the principal of the debt securities will be
payable;
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the fixed or variable interest rate or rates of the debt
securities, or the method by which the interest rate or rates is
determined;
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the date or dates, or the method for determining the date or
dates, from which interest will accrue;
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the dates on which interest will be payable;
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the record dates for interest payment dates, or the method by
which we will determine those dates;
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the persons to whom interest will be payable;
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the basis upon which interest will be calculated if other than
that of a
360-day
year
of twelve
30-day
months;
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any make-whole amount, which is the amount in addition to
principal and interest that is required to be paid to the holder
of a debt security as a result of any optional redemption or
accelerated payment of such debt security, or the method for
determining the make-whole amount;
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the place or places where the principal of, and any premium (or
make-whole amount) and interest on, the debt securities will be
payable;
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where the debt securities may be surrendered for registration of
transfer or exchange;
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where notices or demands to or upon us in respect of the debt
securities and the applicable indenture may be served;
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the times, prices and other terms and conditions upon which we
may redeem the debt securities;
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any obligation we have to redeem, repay or purchase the debt
securities under any sinking fund or analogous provision or at
the option of holders of the debt securities, and the times and
prices at which we must redeem, repay or purchase the debt
securities as a result of such an obligation;
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the currency or currencies in which the debt securities are
denominated and payable if other than United States dollars,
which may be a foreign currency or units of two or more foreign
currencies or a composite currency or currencies and the terms
and conditions relating thereto, and the manner of determining
the equivalent of such foreign currency in United States dollars;
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whether the principal of, and any premium (or make-whole amount)
or interest on, the debt securities of the series are to be
payable, at our election or at the election of a holder, in a
currency or currencies other than that in which the debt
securities are denominated or stated to be payable, and other
related terms and conditions;
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whether the amount of payments of principal of, and any premium
(or make-whole amount) or interest on, the debt securities may
be determined according to an index, formula or other method and
how such amounts will be determined;
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whether the debt securities will be in registered form, bearer
form or both and (1) if in registered form, the person to
whom any interest shall be payable, if other than the person in
whose name the security is registered at the close of business
on the regular record date for such interest, or (2) if in
bearer form, the manner in which, or the person to whom, any
interest on the security shall be payable if otherwise than upon
presentation and surrender upon maturity;
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any restrictions applicable to the offer, sale or delivery of
securities in bearer form and the terms upon which securities in
bearer form of the series may be exchanged for securities in
registered form of the series and vice versa if permitted by
applicable laws and regulations;
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whether any debt securities of the series are to be issuable
initially in temporary global form and whether any debt
securities of the series are to be issuable in permanent global
form with or without coupons and, if so, whether beneficial
owners of interests in any such permanent global security may or
shall be required to exchange their interests for other debt
securities of the series, and the manner in which interest shall
be paid;
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the identity of the depository for securities in registered
form, if such series are to be issuable as a global security;
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the date as of which any debt securities in bearer form or in
temporary global form shall be dated if other than the original
issuance date of the first security of the series to be issued;
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the applicability, if any, of the defeasance and covenant
defeasance provisions described in this prospectus or in the
applicable indenture;
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whether and under what circumstances we will pay any additional
amounts on the debt securities in respect of any tax, assessment
or governmental charge and, if so, whether we will have the
option to redeem the debt securities in lieu of making such a
payment;
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the circumstances, if any, in the applicable prospectus
supplement, under which beneficial owners of interests in the
global security may obtain definitive debt securities and the
manner in which payments on a permanent global debt security
will be made if any debt securities are issuable in temporary or
permanent global form;
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any provisions granting special rights to holders of securities
upon the occurrence of such events as specified in the
applicable prospectus supplement;
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the name of the applicable trustee and the nature of any
material relationship with AvalonBay or with any of its
affiliates, and the percentage of debt securities of the class
necessary to require the trustee to take action;
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any deletions from, modifications of, or additions to the events
of default or covenants of AvalonBay, and any change in the
right of any trustee or any of the holders to declare the
principal amount of any of such debt securities due and
payable; and
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any other terms of such debt securities not inconsistent with
the provisions of the applicable indenture.
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We may issue debt securities at a discount below their principal
amount and provide for less than the entire principal amount
thereof to be payable upon declaration of acceleration of the
maturity thereof. We will refer to any such debt securities
throughout this prospectus as original issue discount
securities. The applicable prospectus supplement will
describe the federal income tax consequences and other relevant
considerations applicable to original issue discount securities.
Except as described under Merger,
consolidation or sale of assets or as may be set forth in
any prospectus supplement, the debt securities will not contain
any provisions that (1) would limit our ability to incur
indebtedness or (2) would afford holders of debt securities
protection in the event of (a) a highly leveraged or
similar transaction involving us or any of our respective
affiliates or (b) a change of control or reorganization,
restructuring, merger or similar transaction involving us that
may adversely affect the holders of the debt securities. In the
future, we may enter into transactions, such as the sale of all
or substantially all of our assets or a merger or consolidation,
that may have an adverse effect on our ability to service our
indebtedness, including the debt securities, by, among other
things, substantially reducing or eliminating our assets.
Neither the Maryland General Corporation Law nor the governing
instruments of AvalonBay define the term substantially
all as it relates to the sale of assets. Additionally,
Maryland cases interpreting the term substantially
all rely upon the facts and circumstances of each
particular case. Consequently, to determine whether a sale of
substantially all of our assets has occurred, a
holder of debt securities must review the financial and other
information that we disclosed to the public. AvalonBays
charter contains restrictions on ownership and transfers of its
stock that are designed to preserve its status as a REIT and to
otherwise address concerns about concentration of ownership of
our stock, and, therefore, it may prevent or hinder a change of
control. See Limits on Ownership of Stock beginning
on page 32.
We will provide you with more information in the applicable
prospectus supplement regarding any deletions, modifications, or
additions to the events of default or covenants that are
described below, including any addition of a covenant or other
provision providing event risk or similar protection.
Payment
Unless we give you different information in the applicable
prospectus supplement, the principal of, and any premium (or
make-whole amount) and interest on, any series of the debt
securities will be payable at the corporate trust office of the
trustee. We will provide you with the address of the trustee in
the applicable prospectus supplement. We may also pay interest
by mailing a check to the address of the person entitled to it
as it appears in the applicable register for the debt securities
or by wire transfer of funds to that person at an account
maintained within the United States.
All monies that we pay to a paying agent or a trustee for the
payment of the principal of, and any premium (or make-whole
amount) or interest on, any debt security will be repaid to us
if unclaimed at the end of two years after the obligation
underlying payment becomes due and payable. After funds have
been returned to us, the holder of the debt security may look
only to us for payment, without payment of interest for the
period which we hold the funds.
15
Denomination,
interest, registration and transfer
Unless otherwise described in the applicable prospectus
supplement, the debt securities of any series will be issuable
in denominations of $1,000 and integral multiples of $1,000.
Subject to the limitations imposed upon debt securities that are
evidenced by a computerized entry in the records of a depository
company rather than by physical delivery of a note, a holder of
debt securities of any series may:
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exchange them for any authorized denomination of other debt
securities of the same series and of a like aggregate principal
amount and kind upon surrender of such debt securities at the
corporate trust office of the applicable trustee or at the
office of any transfer agent that we designate for such
purpose; and
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surrender them for registration of transfer or exchange at the
corporate trust office of the applicable trustee or at the
office of any transfer agent that we designate for such purpose.
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Every debt security surrendered for registration of transfer or
exchange must be duly endorsed or accompanied by a written
instrument of transfer, and the person requesting such action
must provide evidence of title and identity satisfactory to the
applicable trustee or transfer agent. Payment of a service
charge will not be required for any registration of transfer or
exchange of any debt securities, but we or the trustee may
require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. If in
addition to the applicable trustee, the applicable prospectus
supplement refers to any transfer agent initially designated by
us for any series of debt securities, we may at any time rescind
the designation of any such transfer agent or approve a change
in the location through which any such transfer agent acts,
except that we will be required to maintain a transfer agent in
each place of payment for such series. We may at any time
designate additional transfer agents for any series of debt
securities.
Neither we nor any trustee shall be required to:
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issue, register the transfer of or exchange debt securities of
any series during a period beginning at the opening of business
15 days before the day that the notice of redemption of any
debt securities selected for redemption is mailed and ending at
the close of business on the day of such mailing;
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register the transfer of or exchange any debt security, or
portion thereof, so selected for redemption, in whole or in
part, except the unredeemed portion of any debt security being
redeemed in part; and
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issue, register the transfer of or exchange any debt security
that has been surrendered for repayment at the option of the
holder, except the portion, if any, of such debt security not to
be so repaid.
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Merger,
consolidation or sale of assets
The indentures provide that we may, without the consent of the
holders of any outstanding debt securities, (1) consolidate
with, (2) sell, lease or convey all or substantially all of
our assets to, or (3) merge with or into, any other entity
provided that:
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either we are the continuing entity, or the successor entity, if
other than us, assumes our obligations (A) to pay the
principal of, and any premium and interest on, all of the debt
securities and (B) to duly perform and observe all of our
covenants and conditions contained in each indenture;
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immediately after giving effect to the transaction and treating
any indebtedness that becomes our obligation or the obligation
of any of our subsidiaries as having been incurred by us or by
such subsidiary at the time of the transaction, no event of
default under the indentures, and no event which, after notice
or the lapse of time, or both, would become such an event of
default, occurs and continues; and
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an officers certificate and legal opinion covering such
conditions are delivered to each trustee.
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Covenants
Existence.
Except as permitted under
Merger, consolidation or sale of assets,
the indentures require us to do or cause to be done all things
necessary to preserve and keep in full force and effect our
existence, rights and
16
franchises. However, the indentures do not require us to
preserve any right or franchise if we determine that any right
or franchise is no longer desirable in the conduct of our
business.
Maintenance of properties.
If we determine
that it is necessary in order to properly and advantageously
carry on our business, the indentures require us to:
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cause all of our material properties used or useful in the
conduct of our business or the business of any of our
subsidiaries to be maintained and kept in good condition, repair
and working order and supplied with all necessary
equipment; and
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cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof.
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However, the indentures do not prohibit us or our subsidiaries
from selling or otherwise disposing of our respective properties
for value in the ordinary course of business.
Insurance.
The indentures require our
insurable properties to be insured against loss or damage in an
amount deemed reasonable by our board of directors with insurers
of recognized responsibility.
Payment of taxes and other claims.
The
indentures require us to pay, discharge or cause to be paid or
discharged, before they become delinquent:
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all taxes, assessments and governmental charges levied or
imposed on us, our subsidiaries or our subsidiaries
income, profits or property; and
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all lawful claims for labor, materials and supplies which, if
unpaid, might by law become a lien upon our or our
subsidiaries property.
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However, we will not be required to pay, discharge or cause to
be paid or discharged any such tax, assessment, charge or claim
whose amount, applicability or validity is being contested in
good faith by appropriate proceedings.
Provision of Financial Information.
The
indentures require us, within 15 days of each of the
respective dates by which we are required to file annual
reports, quarterly reports and other documents with the SEC to:
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mail to all holders of debt securities, as their names and
addresses appear in the applicable register for such debt
securities, without cost to such holders, copies of the annual
reports, quarterly reports and other documents that we file with
the SEC under Section 13 or Section 15(d) of the
Exchange Act; and
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supply, promptly upon written request and payment of the
reasonable cost of duplication and delivery, copies of such
documents to any prospective holder.
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Additional covenants.
The applicable
prospectus supplement will set forth any additional covenants of
AvalonBay relating to any series of debt securities.
Events
of default, notice and waiver
Unless the applicable prospectus supplement states otherwise,
when we refer to events of default as defined in the
indentures with respect to any series of debt securities, we
mean:
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default in the payment of any installment of interest on any
debt security of such series continuing for 30 days;
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default in the payment of principal of, or any premium (or
make-whole amount) on, any debt security of such series at its
maturity;
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default in making any sinking fund payment as required for any
debt security of such series;
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default in the performance or breach of any other covenant or
warranty of AvalonBay contained in the indenture continuing for
60 days after written notice to AvalonBay as provided in
the applicable indenture;
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(1) a default under any bond, debenture or note having an
aggregate principal amount of at least $25,000,000; or
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(2) a default under any indenture or instrument under which
there may be issued, secured or evidenced any existing or later
created indebtedness for money borrowed by us or our
subsidiaries in an aggregate principal amount of at least
$25,000,000, if the default results in the indebtedness becoming
or being declared due and payable prior to the date it otherwise
would have, without such indebtedness having been discharged, or
such acceleration having been rescinded or annulled, within
10 days after notice to the Company specifying such default;
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bankruptcy, insolvency or reorganization, or court appointment
of a receiver, liquidator or trustee of AvalonBay or any
significant subsidiary of AvalonBay; and
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any other event of default provided with respect to a particular
series of debt securities.
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When we use the term significant subsidiary, we
refer to the meaning ascribed to such term in
Rule 1-02
of
Regulation S-X
promulgated under the Securities Act.
If an event of default occurs and is continuing with respect to
debt securities of any series outstanding, then the applicable
trustee or the holders of 25% or more in principal amount of the
debt securities of that series will have the right to declare
the principal amount of all the debt securities of that series
to be due and payable. If the debt securities of that series are
original issue discount securities or indexed securities, then
the applicable trustee or the holders of 25% or more in
principal amount of the debt securities of that series will have
the right to declare the portion of the principal amount as may
be specified in the terms thereof to be due and payable.
However, at any time after such a declaration of acceleration
has been made, but before a judgment or decree for payment of
the money due has been obtained by the applicable trustee, the
holders of at least a majority in principal amount of
outstanding debt securities of such series or of all debt
securities then outstanding under the applicable indenture may
rescind and annul such declaration and its consequences if:
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we have deposited with the applicable trustee all required
payments of the principal, any premium (or make-whole amount),
and interest, plus applicable fees, expenses, disbursements and
advances of the applicable trustee; and
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all events of default, other than the non-payment of accelerated
principal, or a specified portion thereof, and any premium (or
make-whole amount), have been cured or waived.
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The indentures also provide that the holders of at least a
majority in principal amount of the outstanding debt securities
of any series or of all debt securities then outstanding under
the applicable indenture may on behalf of all holders waive any
past default with respect to such series and its consequences,
except a default:
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in the payment of the principal, any premium (or make-whole
amount) or interest;
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in respect of a covenant or provision contained in the
applicable indenture that cannot be modified or amended without
the consent of the holder of the outstanding debt security that
is affected by the default; or
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in respect of a covenant or provision for the benefit or
protection of the trustee, without its express written consent.
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The indentures require each trustee to give notice to the
holders of debt securities within 90 days of a default
unless such default has been cured or waived. However, the
trustee may withhold notice if specified responsible officers of
such trustee consider such withholding to be in the interest of
the holders of debt securities. The trustee may not withhold
notice of a default in the payment of principal, any premium or
interest on any debt security of such series or in the payment
of any sinking fund installment in respect of any debt security
of such series.
The indentures provide that holders of debt securities of any
series may not institute any proceedings, judicial or otherwise,
with respect to such indenture or for any remedy under the
indenture, unless the trustee fails to act for a period of
60 days after the trustee has received a written request to
institute proceedings in respect of an event of default from the
holders of 25% or more in principal amount of the outstanding
debt securities of such series, as well as an offer of indemnity
reasonably satisfactory to the trustee. However, this provision
will not prevent any holder of debt securities from instituting
suit for the enforcement of payment of the principal of, and any
premium (or make-whole amount) and interest on, such debt
securities at the respective due dates thereof.
18
The indentures provide that, subject to provisions in each
indenture relating to its duties in the case of a default, a
trustee has no obligation to exercise any of its rights or
powers at the request or direction of any holders of any series
of debt securities then outstanding under the indenture, unless
the holders have offered to the trustee reasonable security or
indemnity. The holders of at least a majority in principal
amount of the outstanding debt securities of any series or of
all debt securities then outstanding under an indenture shall
have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the
applicable trustee, or of exercising any trust or power
conferred upon such trustee. However, a trustee may refuse to
follow any direction which:
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is in conflict with any law or the applicable indenture;
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may involve the trustee in personal liability; or
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may be unduly prejudicial to the holders of debt securities of
the series not joining the proceeding.
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Within 120 days after the close of each fiscal year, we
will be required to deliver to each trustee a certificate,
signed by one of several specified officers of AvalonBay stating
whether or not that officer has knowledge of any default under
the applicable indenture. If the officer has knowledge of any
default, the notice must specify the nature and status of the
default.
Modification
of the indentures
The indentures provide that modifications and amendments may be
made only with the consent of the affected holders of at least a
majority in principal amount of all outstanding debt securities
issued under that indenture. However, no such modification or
amendment may, without the consent of the holders of the debt
securities affected by the modification or amendment:
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change the stated maturity of the principal of, or any premium
(or make-whole amount) on, or any installment of principal of or
interest on, any such debt security;
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reduce the principal amount of, the rate or amount of interest
on or any premium (or make-whole amount) payable on redemption
of any such debt security;
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reduce the amount of principal of an original issue discount
security that would be due and payable upon declaration of
acceleration of the maturity thereof or would be provable in
bankruptcy, or adversely affect any right of repayment of the
holder of any such debt security;
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change the place of payment or the coin or currency for payment
of principal of, or any premium (or make-whole amount) or
interest on, any such debt security;
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impair the right to institute suit for the enforcement of any
payment on or with respect to any such debt security;
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reduce the percentage in principal amount of any outstanding
debt securities necessary to modify or amend the applicable
indenture with respect to such debt securities, to waive
compliance with particular provisions thereof or defaults and
consequences thereunder or to reduce the quorum or voting
requirements set forth in the applicable indenture; and
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modify any of the foregoing provisions or any of the provisions
relating to the waiver of particular past defaults or covenants,
except to increase the required percentage to effect such action
or to provide that some of the other provisions may not be
modified or waived without the consent of the holder of such
debt security.
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The holders of a majority in aggregate principal amount of the
outstanding debt securities of each series may, on behalf of all
holders of debt securities of that series, waive, insofar as
that series is concerned, our compliance with material
restrictive covenants of the applicable indenture.
AvalonBay and the respective trustee may make modifications and
amendments of an indenture without the consent of any holder of
debt securities for any of the following purposes:
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to evidence the succession of another person to us as obligor
under such indenture;
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to add to the covenants of AvalonBay for the benefit of the
holders of all or any series of debt securities or to surrender
any right or power conferred upon us in such indenture;
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to add events of default for the benefit of the holders of all
or any series of debt securities;
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to add or change any provisions of an indenture (1) to
facilitate the issuance of, or to change or eliminate
restrictions on the payment of principal of, or premium (or
make-whole amount) or interest on, debt securities in bearer
form, or (2) to permit or facilitate the issuance of debt
securities in uncertificated form, provided that such action
shall not adversely affect the interests of the holders of the
debt securities of any series in any material respect;
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to change or eliminate any provisions of an indenture, provided
that any such change or elimination shall become effective only
when there are no debt securities outstanding of any series
created prior thereto which are entitled to the benefit of such
provision;
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to secure the debt securities;
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to establish the form or terms of debt securities of any series;
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to provide for the acceptance of appointment by a successor
trustee or facilitate the administration of the trusts under an
indenture by more than one trustee;
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to cure any ambiguity, defect or inconsistency in an indenture,
provided that such action shall not adversely affect the
interests of holders of debt securities of any series issued
under such indenture; or
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to supplement any of the provisions of an indenture to the
extent necessary to permit or facilitate defeasance and
discharge of any series of such debt securities, provided that
such action shall not adversely affect the interests of the
holders of the outstanding debt securities of any series.
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Voting
The indentures provide that in determining whether the holders
of the requisite principal amount of outstanding debt securities
of a series have given any request, demand, authorization,
direction, notice, consent or waiver under the indentures or
whether a quorum is present at a meeting of holders of debt
securities:
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the principal amount of an original issue discount security that
shall be deemed to be outstanding shall be the amount of the
principal thereof that would be due and payable as of the date
of such determination upon declaration of acceleration of the
maturity thereof;
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the principal amount of any debt security denominated in a
foreign currency that shall be deemed outstanding shall be the
United States dollar equivalent, determined on the issue date
for such debt security, of the principal amount or, in the case
of an original issue discount security, the United States dollar
equivalent on the issue date of such debt security of the amount
determined as provided in the preceding bullet point;
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the principal amount of an indexed security that shall be deemed
outstanding shall be the principal face amount of such indexed
security at original issuance, unless otherwise provided for
such indexed security under such indenture; and
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debt securities owned by us or any other obligor upon the debt
securities or by any affiliate of ours or of such other obligor
shall be disregarded.
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The indentures contain provisions for convening meetings of the
holders of debt securities of a series. A meeting will be
permitted to be called at any time by the applicable trustee,
and also, upon request, by us or the holders of at least 25% in
principal amount of the outstanding debt securities of such
series, in any such case upon notice given as provided in such
indenture. Except for any consent that must be given by the
holder of each debt security affected by the modifications and
amendments of an indenture described above, any resolution
presented at a meeting or adjourned meeting duly reconvened at
which a quorum is present may be adopted by the affirmative vote
of the holders of a majority of the aggregate principal amount
of the outstanding debt securities of that series represented at
such meeting.
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Notwithstanding the preceding paragraph, except as referred to
above, any resolution relating to a request, demand,
authorization, direction, notice, consent, waiver or other
action that may be made, given or taken by the holders of a
specified percentage, which is less than a majority, of the
aggregate principal amount of the outstanding debt securities of
a series may be adopted at a meeting or adjourned meeting duly
reconvened at which a quorum is present by the affirmative vote
of such specified percentage.
Any resolution passed or decision taken at any properly held
meeting of holders of debt securities of any series will be
binding on all holders of such series. The quorum at any meeting
called to adopt a resolution, and at any reconvened meeting,
will be persons holding or representing a majority in principal
amount of the outstanding debt securities of a series. However,
if any action is to be taken relating to a consent or waiver
which may be given by the holders of at least a specified
percentage in principal amount of the outstanding debt
securities of a series, the persons holding such percentage will
constitute a quorum.
Notwithstanding the foregoing provisions, the indentures provide
that if any action is to be taken at a meeting with respect to
any request, demand, authorization, direction, notice, consent,
waiver and other action that such indenture expressly provides
may be made, given or taken by the holders of a specified
percentage in principal amount of all outstanding debt
securities affected by such action, or of the holders of such
series and one or more additional series:
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there shall be no minimum quorum requirement for such
meeting; and
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the principal amount of the outstanding debt securities of such
series that vote in favor of such request, demand,
authorization, direction, notice, consent, waiver or other
action shall be taken into account in determining whether such
request, demand, authorization, direction, notice, consent,
waiver or other action has been made, given or taken under such
indenture.
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Subordination
Unless otherwise provided in the applicable prospectus
supplement, subordinated securities will be subject to the
following subordination provisions.
Upon any distribution to our creditors in a liquidation,
dissolution or reorganization, the payment of the principal of
and interest on any subordinated securities will be subordinated
to the extent provided in the applicable indenture in right of
payment to the prior payment in full of all senior debt.
However, our obligation to make payments of the principal of and
interest on such subordinated securities otherwise will not be
affected. No payment of principal or interest will be permitted
to be made on subordinated securities at any time if a default
on senior debt exists that permits the holders of such senior
debt to accelerate its maturity and the default is the subject
of judicial proceedings or we receive notice of the default.
After all senior debt is paid in full and until the subordinated
securities are paid in full, holders of subordinated securities
will be subrogated to the rights of holders of senior debt to
the extent that distributions otherwise payable to holders of
subordinated securities have been applied to the payment of
senior debt. The subordinated indenture will not restrict the
amount of senior debt or other indebtedness of AvalonBay and its
subsidiaries. As a result of these subordination provisions, in
the event of a distribution of assets upon insolvency, holders
of subordinated securities may recover less, ratably, than our
general creditors.
Senior Debt will be defined in the applicable
indenture as the principal of and interest on, or substantially
similar payments to be made by us in respect of, the following,
whether outstanding at the date of execution of the applicable
indenture or subsequently incurred, created or assumed:
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indebtedness incurred by us for money borrowed or represented by
purchase-money obligations;
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indebtedness incurred by us evidenced by notes, debentures,
bonds, or other securities issued under the provisions of an
indenture, fiscal agency agreement or other agreement;
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our obligations as lessee under leases of property either made
as part of any sale and leaseback transaction to which we are a
party or otherwise;
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indebtedness of partnerships and joint ventures which is
included in our consolidated financial statements;
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indebtedness, obligations and liabilities of others in respect
of which we are liable contingently or otherwise to pay or
advance money or property or as guarantor, endorser or otherwise
or which we have agreed to purchase or otherwise
acquire; and
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any binding commitment we have to fund any real estate
investment or to fund any investment in any entity making such
real estate investment.
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In each case, the following will not be Senior Debt:
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any such indebtedness, obligation or liability referred to in
the preceding clauses (1) that is outstanding and
(2) the instrument creating or evidencing such
indebtedness, obligation or liability provides that the same is
not superior to or ranks on an equal basis with the subordinated
securities with respect to right of payment;
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any such indebtedness, obligation or liability that is
subordinated to indebtedness incurred by us to substantially the
same extent as or to a greater extent than the subordinated
securities are subordinated; and
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the subordinated securities.
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No restrictions will be included in any indenture relating to
subordinated securities upon the creation of additional senior
debt.
If this prospectus is being delivered in connection with the
offering of a series of subordinated securities, the
accompanying prospectus supplement or the information
incorporated in this prospectus by reference will set forth the
approximate amount of senior debt outstanding as of the end of
our most recent fiscal quarter.
Discharge,
defeasance and covenant defeasance
Unless otherwise indicated in the applicable prospectus
supplement, the indentures allow us to discharge our obligations
to holders of any series of debt securities issued under any
indenture when:
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either (1) all securities of such series have already been
delivered to the applicable trustee for cancellation; or
(2) all securities of such series have not already been
delivered to the applicable trustee for cancellation but
(a) have become due and payable, (b) will become due
and payable within one year, or (c) if redeemable at our
option, are to be redeemed within one year, and we have
irrevocably deposited with the applicable trustee, in trust,
funds in such currency or currencies, currency unit or units or
composite currency or currencies in which such debt securities
are payable, an amount sufficient to pay the entire indebtedness
on such debt securities in respect of principal (and any premium
or make-whole amount) and interest to the date of such deposit
if such debt securities have become due and payable or, if they
have not, to the stated maturity or redemption date;
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we have paid or caused to be paid all other sums
payable; and
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we have delivered to the trustee an officers certificate
and an opinion of counsel stating the conditions to discharging
the debt securities have been satisfied.
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Unless otherwise indicated in the applicable prospectus
supplement, the indentures provide that, upon our irrevocable
deposit with the applicable trustee, in trust, of an amount, in
such currency or currencies, currency unit or units or composite
currency or currencies in which such debt securities are payable
at stated maturity, or government obligations, or both,
applicable to such debt securities, which through the scheduled
payment of principal and interest in accordance with their terms
will provide money in an amount sufficient to pay the principal
of, and any premium (or make-whole amount) and interest on, such
debt securities, and any mandatory sinking fund or analogous
payments thereon, on the scheduled due dates therefor, we may
elect either:
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to defease and be discharged from any and all obligations with
respect to such debt securities; or
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to be released from our obligations with respect to such debt
securities under the applicable indenture or, if provided in the
applicable prospectus supplement, our obligations with respect
to any other covenant, and any omission to comply with such
obligations shall not constitute an event of default with
respect to such debt securities.
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Notwithstanding the above, we may not elect to defease and be
discharged from the obligation to pay any additional amounts
upon the occurrence of particular events of tax, assessment or
governmental charge with respect to payments on such debt
securities and the obligations to register the transfer or
exchange of such debt securities, to replace temporary or
mutilated, destroyed, lost or stolen debt securities, to
maintain an office or agency in respect of such debt securities,
or to hold monies for payment in trust.
The indentures only permit us to establish the trust described
in the paragraph above if, among other things, we have delivered
to the applicable trustee an opinion of counsel to the effect
that the holders of such debt securities will not recognize
income, gain or loss for federal income tax purposes as a result
of such defeasance or covenant defeasance and will be subject to
federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such defeasance
or covenant defeasance had not occurred. Such opinion of
counsel, in the case of defeasance, will be required to refer to
and be based upon a ruling received from or published by the
Internal Revenue Service or a change in applicable federal
income tax law occurring after the date of the indenture. In the
event of such defeasance, the holders of such debt securities
would be able to look only to such trust fund for payment of
principal, any premium (or make-whole amount), and interest.
When we use the term government obligations, we mean
securities that are:
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direct obligations of the United States or the government that
issued the foreign currency in which the debt securities of a
particular series are payable, for the payment of which its full
faith and credit is pledged; or
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obligations of a person controlled or supervised by and acting
as an agency or instrumentality of the United States or other
government that issued the foreign currency in which the debt
securities of such series are payable, the payment of which is
unconditionally guaranteed as a full faith and credit obligation
by the United States or such other government, which are not
callable or redeemable at the option of the issuer thereof and
shall also include a depository receipt issued by a bank or
trust company as custodian with respect to any such government
obligation or a specific payment of interest on or principal of
any such government obligation held by such custodian for the
account of the holder of a depository receipt. However, except
as required by law, such custodian is not authorized to make any
deduction from the amount payable to the holder of such
depository receipt from any amount received by the custodian in
respect of the government obligation or the specific payment of
interest on or principal of the government obligation evidenced
by such depository receipt.
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Unless otherwise provided in the applicable prospectus
supplement, if after we have deposited funds
and/or
government obligations to effect defeasance or covenant
defeasance with respect to debt securities of any series,
(a) the holder of a debt security of such series is
entitled to, and does, elect under the terms of the applicable
indenture or the terms of such debt security to receive payment
in a currency, currency unit or composite currency other than
that in which such deposit has been made in respect of such debt
security, or (b) a conversion event occurs in respect of
the currency, currency unit or composite currency in which such
deposit has been made, the indebtedness represented by such debt
security will be deemed to have been, and will be, fully
discharged and satisfied through the payment of the principal
of, and premium (or make-whole amount) and interest on, such
debt security as they become due out of the proceeds yielded by
converting the amount so deposited in respect of such debt
security into the currency, currency unit or composite currency
in which such debt security becomes payable as a result of such
election or such cessation of usage based on the applicable
market exchange rate.
When we use the term conversion event, we mean the
cessation of use of:
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a currency, currency unit or composite currency both by the
government of the country that issued such currency and for the
settlement of transactions by a central bank or other public
institutions of or within the international banking community;
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the European Currency Unit both within the European Monetary
System and for the settlement of transactions by public
institutions of or within the European Communities; or
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any currency unit or composite currency other than the European
Currency Unit for the purposes for which it was established.
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Unless otherwise provided in the applicable prospectus
supplement, all payments of principal of, and premium, if any,
and interest on, any debt security that is payable in a foreign
currency that ceases to be used by its government of issuance
shall be made in United States dollars.
In the event that (a) we effect covenant defeasance with
respect to any debt securities and (b) such debt securities
are declared due and payable because of the occurrence of any
event of default, the amount in such currency, currency unit or
composite currency in which such debt securities are payable,
and government obligations on deposit with the applicable
trustee, will be sufficient to pay amounts due on such debt
securities at the time of their stated maturity but may not be
sufficient to pay amounts due on such debt securities at the
time of the acceleration resulting from such event of default.
However, we would remain liable to make payments of such amounts
due at the time of acceleration. Notwithstanding the first
sentence of this paragraph, events of default in (b) above
shall not include the event of default described in (1) the
fourth bullet point under Events of default, notice
and waiver with respect to specified sections of an
indenture or (2) the seventh bullet point under
Events of default, notice and waiver
with respect to any other covenant as to which there has been
covenant defeasance.
The applicable prospectus supplement may further describe the
provisions, if any, permitting such defeasance or covenant
defeasance, including any modifications to the provisions
described above, with respect to the debt securities of or
within a particular series.
Conversion
rights
The terms and conditions, if any, upon which the debt securities
are convertible into common stock or preferred stock will be set
forth in the applicable prospectus supplement. The terms will
include whether the debt securities are convertible into shares
of common stock or preferred stock, the conversion price (or
manner of calculation thereof), the conversion period,
provisions as to whether conversion will be at our option or the
option of the holders, the events requiring an adjustment of the
conversion price and provisions affecting conversion in the
event of the redemption of the debt securities and any
restrictions on conversion, including restrictions directed at
maintaining our status as a REIT. If we issue debt securities
that are convertible into shares of common stock or convertible
into shares of preferred stock, in either case having rights,
preferences or privileges with respect to voting, dividends,
rights upon liquidation or otherwise that are on par with or
senior to any class or series of common stock or preferred
stock, then the rights of holders of such junior or parity
classes or series of common stock or preferred stock may be
materially adversely affected. In addition, the conversion of
any such debt securities into common stock or preferred stock
could result in the dilution of the holders of the then-existing
shares of common stock or preferred stock.
Global
securities
The debt securities of a series may be issued in whole or in
part in the form of one or more global securities that will be
deposited with, or on behalf of, a depository identified in the
applicable prospectus supplement relating to such series. Global
securities, if any, issued in the United States are expected to
be deposited with The Depository Trust Company (DTC), as
depository. We may issue global securities in either registered
or bearer form and in either temporary or permanent form. We
will describe the specific terms of the depository arrangement
with respect to a series of debt securities in the applicable
prospectus supplement relating to such series. We expect that
unless the applicable prospectus supplement provides otherwise,
the following provisions will apply to depository arrangements.
Once a global security is issued, the depository for such global
security or its nominee will credit on its book-entry
registration and transfer system the respective principal
amounts of the individual debt securities represented by such
global security to the accounts of participants that have
accounts with such depository. Such accounts shall be designated
by the underwriters, dealers or agents with respect to such debt
securities or by us if we offer such debt securities directly.
Ownership of beneficial interests in such global security will
be limited to participants with the depository or persons that
may hold interests through those participants.
We expect that, under procedures established by DTC, ownership
of beneficial interests in any global security for which DTC is
the depository will be shown on, and the transfer of that
ownership will be effected only through, records maintained by
DTC or its nominee (with respect to beneficial interests of
participants with the depository)
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and records of participants (with respect to beneficial
interests of persons who hold through participants with the
depository). Neither we nor the trustee will have any
responsibility or liability for any aspect of the records of DTC
or for maintaining, supervising or reviewing any records of DTC
or any of its participants relating to beneficial ownership
interests in the debt securities. The laws of some states
require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such limits and
laws may impair the ability to own, pledge or transfer
beneficial interest in a global security.
So long as the depository for a global security or its nominee
is the registered owner of such global security, such depository
or such nominee, as the case may be, will be considered the sole
owner or holder of the debt securities represented by the global
security for all purposes under the applicable indenture. Except
as described below or in the applicable prospectus supplement,
owners of beneficial interest in a global security will not be
entitled to have any of the individual debt securities
represented by such global security registered in their names,
will not receive or be entitled to receive physical delivery of
any such debt securities in definitive form and will not be
considered the owners or holders thereof under the applicable
indenture. Beneficial owners of debt securities evidenced by a
global security will not be considered the owners or holders
thereof under the applicable indenture for any purpose,
including with respect to the giving of any direction,
instructions or approvals to the trustee under the indenture.
Accordingly, each person owning a beneficial interest in a
global security with respect to which DTC is the depository must
rely on the procedures of DTC and, if such person is not a
participant with the depository, on the procedures of the
participant through which such person owns its interests, to
exercise any rights of a holder under the applicable indenture.
We understand that, under existing industry practice, if DTC
requests any action of holders or if an owner of a beneficial
interest in a global security desires to give or take any action
which a holder is entitled to give or take under the applicable
indenture, DTC would authorize the participants holding the
relevant beneficial interest to give or take such action, and
such participants would authorize beneficial owners through such
participants to give or take such actions or would otherwise act
upon the instructions of beneficial owners holding through them.
Payments of principal of, and any premium (or make-whole amount)
and interest on, individual debt securities represented by a
global security registered in the name of a depository or its
nominee will be made to or at the direction of the depository or
its nominee, as the case may be, as the registered owner of the
global security under the applicable indenture. Under the terms
of the applicable indenture, we and the trustee may treat the
persons in whose name debt securities, including a global
security, are registered as the owners thereof for the purpose
of receiving such payments. Consequently, neither we nor the
trustee have or will have any responsibility or liability for
the payment of such amounts to beneficial owners of debt
securities including principal, any premium (or make-whole
amount) or interest. We believe, however, that it is currently
the policy of DTC to immediately credit the accounts of relevant
participants with such payments, in amounts proportionate to
their respective holdings of beneficial interests in the
relevant global security as shown on the records of DTC or its
nominee. We also expect that payments by participants to owners
of beneficial interests in such global security held through
such participants will be governed by standing instructions and
customary practices, as is the case with securities held for the
account of customers in bearer form or registered in street
name, and will be the responsibility of such participants.
Redemption notices with respect to any debt securities
represented by a global security will be sent to the depository
or its nominee. If less than all of the debt securities of any
series are to be redeemed, we expect the depository to determine
the amount of the interest of each participant in such debt
securities to be redeemed to be determined by lot. Neither we,
the trustee, any paying agent nor the security registrar for
such debt securities will have any responsibility or liability
for any aspect of the records relating to or payments made on
account of beneficial ownership interests in the global security
for such debt securities or for maintaining any records with
respect thereto.
Neither we nor the trustee will be liable for any delay by the
holders of a global security or the depository in identifying
the beneficial owners of debt securities, and we and the trustee
may conclusively rely on, and will be protected in relying on,
instructions from the holder of a global security or the
depository for all purposes. The rules applicable to DTC and its
participants are on file with the SEC.
If a depository for any debt securities is at any time
unwilling, unable or ineligible to continue as depository and we
do not appoint a successor depository within 90 days, we
will issue individual debt securities in exchange for the global
security representing such debt securities. In addition, we may
at any time and in our sole discretion,
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subject to any limitations described in the prospectus
supplement relating to such debt securities, determine not to
have any of such debt securities represented by one or more
global securities and in such event will issue individual debt
securities in exchange for the global security or securities
representing such debt securities. Individual debt securities so
issued will be issued in denominations of $1,000 and integral
multiples of $1,000.
The debt securities of a series may also be issued in whole or
in part in the form of one or more bearer global securities that
will be deposited with a depository, or with a nominee for such
depository, identified in the applicable prospectus supplement.
Any such bearer global securities may be issued in temporary or
permanent form. The specific terms and procedures, including the
specific terms of the depository arrangement, with respect to
any portion of a series of debt securities to be represented by
one or more bearer global securities will be described in the
applicable prospectus supplement.
No
Recourse
There is no recourse under any obligation, covenant or agreement
in the applicable indenture or with respect to any security
against any of our or our successors past, present or
future stockholders, employees, officers or directors.
Description
of Preferred Stock
The following is a description of the material terms and
provisions of our preferred stock. It may not contain all of the
information that is important to you. Therefore, you should read
our charter and bylaws before you purchase any shares of our
preferred stock.
General
Under our charter, AvalonBay is authorized to issue
50,000,000 shares of preferred stock, of which
4,600,000 shares have been designated 8.70% Series H
Cumulative Redeemable Preferred Stock and 4,000,000 of which are
currently outstanding. The Series H Preferred Stock is
listed on the NYSE under the symbol AVB PrH.
Shares of preferred stock may be issued from time to time, in
one or more series, as authorized by our board of directors.
Prior to the issuance of shares of each series, the board of
directors is required by the Maryland General Corporation Law
and our charter to fix for each series, subject to the
provisions of the charter regarding excess stock, the terms,
preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends or other
distributions, qualifications and terms or conditions of
redemption, as are permitted by Maryland law. The preferred
stock will, when issued following the receipt of full
consideration therefor, be fully paid and nonassessable and will
have no preemptive rights. Our board of directors could
authorize the issuance of shares of preferred stock with terms
and conditions that could have the effect of discouraging a
takeover or other transactions that holders of common stock
might believe to be in their best interests or in which holders
of some, or a majority, of the shares of common stock might
receive a premium for their shares over the then market price of
such shares of common stock.
Terms
You should refer to the prospectus supplement relating to the
offering of a series of preferred stock for the specific terms
of that series, including:
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its title and stated value;
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the number of shares of preferred stock offered, the liquidation
preference per share, if applicable, and the offering price;
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the applicable dividend rate(s) or amount(s), period(s) and
payment date(s) or method(s) of calculation thereof;
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the date from which dividends on the preferred stock shall
accumulate, if applicable;
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any procedures for auction and remarketing;
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any provision for a sinking fund;
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any applicable provision for redemption;
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any securities exchange listing;
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the terms and conditions of conversion into common stock,
including the conversion price or rate or manner of calculation
thereof;
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any other specific terms, preferences, rights, limitations or
restrictions;
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a discussion of applicable federal income tax considerations;
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the relative ranking and preference as to dividend rights and
rights upon our liquidation, dissolution or the winding up of
our affairs;
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any limitations on issuance of any series of preferred stock
ranking senior to or on a parity with such series of preferred
stock as to dividend rights and rights upon our liquidation,
dissolution or the winding up of our affairs; and
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any limitations on direct or beneficial ownership and
restrictions on transfer, in each case as may be appropriate to
preserve our status as a REIT.
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Rank
Unless otherwise specified in the applicable prospectus
supplement, the preferred stock will, with respect to dividend
rights and rights upon a liquidation, dissolution or winding up
of our affairs, rank:
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senior to all classes and series of our common stock, and to all
equity securities ranking junior to such preferred stock with
respect to dividend rights or rights upon liquidation,
dissolution or winding up of our affairs;
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on a parity with all equity securities issued by us, the terms
of which specifically provide that such equity securities rank
on a parity with the preferred stock with respect to dividend
rights or rights upon liquidation, dissolution or winding up of
our affairs; and
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junior to all equity securities issued by us, the terms of which
specifically provide that such equity securities rank senior to
the preferred stock with respect to dividend rights or rights
upon liquidation, dissolution or winding up of our affairs.
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The term equity securities does not include
convertible debt securities.
Dividends
Holders of the preferred stock of each series will be entitled
to receive cash dividends when, as and if declared by our board
of directors. We will pay dividends out of assets that are
legally available for payment of dividends. We will specify the
rate(s) or amount(s) of dividends and the dates that we will pay
dividends in the applicable prospectus supplement. Dividends
will be payable to holders of record as they appear on our stock
transfer books on such record dates as fixed by our board of
directors.
Dividends on any series of the preferred stock may be cumulative
or non-cumulative, as provided in the applicable prospectus
supplement. Dividends, if cumulative, will be cumulative from
and after the date set forth in the applicable prospectus
supplement. If our board of directors fails to declare a
dividend payable on a dividend payment date on any series of the
preferred stock for which dividends are non-cumulative, then the
holders of that series of the preferred stock will have no right
to receive a dividend in respect of the dividend period ending
on that dividend payment date. Accordingly, we will have no
obligation to pay the dividend accrued for that period, whether
or not dividends on that series are declared payable on any
future dividend payment date.
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If preferred stock of any series is outstanding, we will not
declare, pay or set aside funds to pay dividends on any other
series of our stock ranking, as to dividends, on a parity with
or junior to the preferred stock of such series for any period
unless:
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if that series of preferred stock has a cumulative dividend, we
have declared and paid or contemporaneously declare and pay or
set aside funds to pay full cumulative dividends on the
preferred stock of such series for all past dividend periods and
the then current dividend period; or
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if that series of preferred stock does not have a cumulative
dividend, we have declared and paid or contemporaneously declare
and pay or set aside funds to pay full dividends on the
preferred stock of such series for the then current dividend
period.
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We must declare all dividends pro rata on all series of
preferred stock that rank on a parity with the series of
preferred stock upon which we paid dividends if we did not pay
or set aside funds to pay dividends on the series of preferred
stock in full. We must declare dividends pro rata to ensure that
the amount of dividends declared per share of preferred stock
bears in all cases the same ratio that accrued dividends per
share of preferred stock bears to each other. We will not
accumulate unpaid dividends for prior dividend periods with
respect to accrued dividends on preferred stock that does not
have cumulative dividends. No interest, or sum of money in lieu
of interest, will be payable in respect of any payments that may
be in arrears.
Except as provided in the immediately preceding paragraph,
unless:
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if such series of preferred stock has a cumulative dividend, we
have declared and paid or contemporaneously declare and pay or
set aside funds to pay full cumulative dividends for all past
dividend periods and the then current dividend period; or
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if such series of preferred stock does not have a cumulative
dividend, we have declared and paid or contemporaneously declare
and pay or set aside funds to pay full dividends for the then
current dividend period,
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we will not: (1) declare, pay or set aside funds to pay
dividends or declare or make any other distribution upon the
common stock or any other shares of our stock ranking junior to
or on a parity with the preferred stock of such series as to
dividends or upon liquidation; (2) redeem, purchase or
otherwise acquire for any consideration any common stock, or any
other shares of our stock ranking junior to or on a parity with
the preferred stock of such series as to dividends; nor
(3) pay any monies to or make any monies available for a
sinking fund to redeem any such shares, except by conversion
into or exchange for other shares of our capital stock ranking
junior to the preferred stock of such series as to dividends or
liquidation. Notwithstanding the preceding sentence, we may
declare or set aside dividends in common stock or other shares
of stock ranking junior to the preferred stock of such series as
to dividends and upon liquidation.
Any dividend payment we make on a series of preferred stock
shall first be credited against the earliest accrued but unpaid
dividend due with respect to shares of such series which remains
payable.
Redemption
If so provided in the applicable prospectus supplement, the
preferred stock will be subject to mandatory redemption or
redemption at our option, in whole or in part, upon the terms,
at the times and at the redemption prices set forth in the
prospectus supplement.
The prospectus supplement relating to a series of preferred
stock that is subject to mandatory redemption will specify the
number of shares that will be redeemed in each year commencing
after a specified date at a specified redemption price per
share, together with an amount equal to all accrued and unpaid
dividends thereon to the date of redemption. Unless the shares
have a cumulative dividend, such accrued dividends will not
include any accumulation in respect of unpaid dividends for
prior dividend periods. We may pay the redemption price in cash
or other property, as specified in the applicable prospectus
supplement. If the redemption price for preferred stock of any
series is payable only from the net proceeds of the issuance of
shares of our stock, the terms of such preferred stock may
provide that, if no such shares of our stock have been issued or
to the extent the net proceeds from any issuance are
insufficient to pay in full the aggregate redemption price then
due, such preferred stock will automatically and
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mandatorily convert into the applicable shares of our stock
under the conversion provisions specified in the applicable
prospectus supplement.
Notwithstanding the foregoing, we will not redeem any preferred
stock of a series unless:
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if that series of preferred stock has a cumulative dividend, we
have declared and paid or contemporaneously declare and pay or
set aside funds to pay full cumulative dividends on the
preferred stock for the past and current dividend
periods; or
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if that series of preferred stock does not have a cumulative
dividend, we have declared and paid or contemporaneously declare
and pay or set aside funds to pay full dividends on the
preferred stock for the current dividend period.
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However, in no case will we redeem any preferred stock of a
series unless we redeem all outstanding preferred stock of the
series simultaneously.
In addition, except as described below, we will not acquire any
preferred stock of a series unless:
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if that series of preferred stock has a cumulative dividend, we
have declared and paid or contemporaneously declare and pay or
set aside funds to pay full cumulative dividends on all
outstanding shares of such series of preferred stock for all
past dividend periods and the then current dividend
period; or
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if that series of preferred stock does not have a cumulative
dividend, we have declared and paid or contemporaneously declare
and pay or set aside funds to pay full dividends on the
preferred stock of such series for the then current dividend
period.
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However, at any time we may purchase or acquire preferred stock
of that series (1) to preserve our status as a REIT,
(2) in accordance with a purchase or exchange offer made on
the same terms to holders of all outstanding preferred stock of
such series or (3) by conversion into or exchange for
shares of our capital stock ranking junior to the preferred
stock of such series as to dividends and upon liquidation.
If fewer than all of the outstanding shares of preferred stock
of any series are to be redeemed, we will determine the number
of shares that may be redeemed pro rata from the holders of
record of such shares in proportion to the number of such shares
held or for which redemption is requested by such holder or by
any other equitable manner that we determine. Such determination
will reflect adjustments to avoid redemption of fractional
shares.
We will mail notice of redemption at least 30 days but not
more than 60 days before the redemption date to each holder
of record of preferred stock to be redeemed at the address shown
on our stock transfer books. Each notice shall state:
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the redemption date;
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the number of shares and series to be redeemed;
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the redemption price;
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the place or places where certificates are to be surrendered for
payment of the redemption price;
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that dividends on the shares to be redeemed will cease to accrue
from and after the redemption date;
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the date upon which the holders conversion rights, if any,
as to the shares shall terminate; and
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the specific number of shares to be redeemed from each the
holder if fewer than all the shares of any series are to be
redeemed.
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If notice of redemption has been given and we have set aside the
funds necessary for the redemption in trust for the benefit of
the holders of any shares so called for redemption, then from
and after the redemption date, dividends will cease to accrue on
those shares, and all rights of the holders of such shares will
terminate, except the right to receive the redemption price.
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Liquidation
preference
Upon any voluntary or involuntary liquidation, dissolution or
winding up of our affairs, then, before we make any distribution
or payment to the holders of any common stock or any other class
or series of our capital stock ranking junior to the preferred
stock in the distribution of assets upon any liquidation,
dissolution or winding up of our affairs, the holders of each
series of preferred stock will be entitled to receive, out of
assets legally available for distribution to stockholders,
liquidating distributions in the amount of the liquidation
preference per share set forth in the applicable prospectus
supplement, plus any accrued and unpaid dividends thereon. Such
dividends will not include any accumulation in respect of unpaid
noncumulative dividends for prior dividend periods. After full
payment of their liquidating distributions, holders will have no
right or claim to any of our remaining assets. Upon any such
voluntary or involuntary liquidation, dissolution or winding up,
if our available assets are insufficient to pay the amount of
the liquidating distributions on all outstanding preferred stock
and the corresponding amounts payable on all other classes or
series of our capital stock ranking on a parity with the
preferred stock in the distribution of assets, then the holders
of the preferred stock and all other such classes or series of
capital stock will share ratably in any such distribution of
assets in proportion to the full liquidating distributions to
which they would otherwise be entitled.
Upon liquidation, dissolution or winding up and if we have made
liquidating distributions in full to all holders of preferred
stock, we will distribute our remaining assets among the holders
of any other classes or series of capital stock ranking junior
to the preferred stock according to their respective rights and
preferences and, in each case, according to their respective
number of shares. For such purposes, our consolidation or merger
with or into any other corporation, trust or entity, or the
sale, lease or conveyance of all or substantially all of our
assets or business will not be deemed to constitute a
liquidation, dissolution or winding up of our affairs.
Voting
rights
Holders of preferred stock will have no voting rights, except as
described in the next paragraph, as otherwise from time to time
required by law or as indicated in the applicable prospectus
supplement.
Unless otherwise provided for any series of preferred stock, so
long as any preferred stock of a series remains outstanding, we
will not, without the affirmative vote or consent of the holders
of at least two-thirds of the preferred stock of such series
outstanding at the time, given in person or by proxy, either in
writing or at a meeting with each of such series voting
separately as a class:
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authorize or create, or increase the authorized or issued amount
of, any class or series of shares of capital stock ranking
senior to such series of preferred stock with respect to payment
of dividends or the distribution of assets upon liquidation,
dissolution or winding up, or reclassify any of our authorized
shares of capital stock into such shares, or create, authorize
or issue any obligation or security convertible into or
evidencing the right to purchase any such shares; or
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amend, alter or repeal the provisions of our charter or the
amendment to our charter designating the terms for such series
of preferred stock, whether by merger, consolidation or
otherwise, so as to materially and adversely affect any right,
preference, privilege or voting power of such series of
preferred stock or the holders thereof.
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The occurrence of any of the events described above in the
immediately preceding bullet shall not be deemed to materially
and adversely affect the rights, preferences, privileges or
voting power of holders of preferred stock, provided that, the
preferred stock remains outstanding with the terms thereof
materially unchanged, or, if we are not the surviving entity in
such transaction, the preferred stock is exchanged for a
security of a surviving entity with terms that are materially
the same as the preferred stock. In addition, any increase in
the amount of (1) authorized preferred stock or the
creation or issuance of any other series of preferred stock, or
(2) authorized shares of such series or any other series of
preferred stock, in each case ranking on a parity with or junior
to the preferred stock of such series with respect to payment of
dividends or the distribution of assets upon liquidation,
dissolution or winding up, shall not be deemed to materially and
adversely affect such rights, preferences, privileges or voting
powers.
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The foregoing voting provisions will not apply if, at or prior
to the time when the act with respect to which such vote would
otherwise be required will be effected, we have redeemed or
called for redemption all outstanding shares of such series of
preferred stock and, if called for redemption, have deposited
sufficient funds in trust to effect such redemption.
Conversion
rights
The terms and conditions upon which any series of preferred
stock may be convertible into common stock will be set forth in
the applicable prospectus supplement relating to the offering of
the series of preferred stock. Such terms will include the
number of shares of common stock into which the shares of
preferred stock are convertible, the conversion price, rate or
manner of calculation thereof, the conversion period, provisions
as to whether conversion will be at our option or at the
holders option, the events requiring an adjustment of the
conversion price and provisions affecting conversion in the
event of the redemption.
Restrictions
on ownership
For us to qualify as a REIT under the Internal Revenue Code, no
more than 50% in value of our outstanding capital stock may be
owned, directly or indirectly, by or for five or fewer
individuals at any time during the last half of a taxable year.
To assist us in meeting this requirement, we may take actions to
limit the beneficial ownership, directly or indirectly, by a
single person of our outstanding equity securities, including
any of our preferred stock. Therefore, the amendment to our
charter designating each series of preferred stock may contain
provisions restricting the ownership and transfer of the
preferred stock. The applicable prospectus supplement will
specify any additional ownership limitation relating to a series
of preferred stock. See Limits on Ownership of Stock
beginning on page 32.
Transfer
agent
The transfer agent and registrar for the preferred stock will be
set forth in the applicable prospectus supplement.
Description
of Common Stock
The following is a description of the material terms and
provisions of our common stock. You should read our charter and
bylaws in their entirety before you purchase any shares of our
common stock.
General
Under our charter, we have authority to issue
140,000,000 shares of common stock, par value $.01 per
share. Under Maryland law, stockholders generally are not
responsible for our debts or obligations. As of October 31,
2006, we had 74,602,809 shares of common stock issued and
outstanding. Our common stock is listed on the NYSE under the
symbol AVB.
Dividends
Subject to the preferential rights of any other class or series
of stock and to the provisions of our charter regarding excess
stock, which are described below, holders of shares of our
common stock will be entitled to receive dividends on shares of
common stock out of assets that we may legally use to pay
dividends, if and when they are authorized and declared by our
board of directors.
Voting
rights
Except as otherwise required by law and except as provided by
the terms of any other class or series of stock, holders of
common stock have the exclusive power to vote on all matters
presented to our stockholders, including the election of
directors. Holders of common stock are entitled to one vote per
share. There is no cumulative voting in the election of our
directors, and, subject to any rights to elect directors that
are granted to the holders of any class
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or series of preferred stock, the affirmative vote of the
holders of a majority of all outstanding shares of common stock
is required to elect a director.
Liquidation/dissolution
rights
Subject to the preferential rights of any other class or series
of stock and to the provisions of our charter regarding excess
stock, holders of shares of our common stock share in the same
proportion as our other stockholders in the assets that we may
legally use to pay distributions in the event we are liquidated,
dissolved or our affairs are wound up after we pay or make
adequate provision for all of our known debts and liabilities.
Other
rights
Subject to the preferential rights of any other class or series
of stock and to provisions of our charter regarding excess
stock, all shares of our common stock have equal dividend,
distribution, liquidation and other rights, and have no
preference, appraisal or exchange rights. Furthermore, holders
of shares of our common stock have no conversion, sinking fund
or redemption rights, or preemptive rights to subscribe for any
of our securities.
Under Maryland law, a corporation generally cannot dissolve,
amend its charter, merge, sell all or substantially all of its
assets, engage in a share exchange or engage in similar
transactions outside the ordinary course of business unless
approved by the affirmative vote of stockholders holding at
least two-thirds of the shares entitled to vote on the matter,
unless a different percentage is set forth in the
corporations charter, which percentage shall not in any
event be less than a majority of all of the shares entitled to
vote on such matter. Our charter provides that whenever any vote
of the holders of voting stock is required to amend or repeal
any provision of the charter, then in addition to any other vote
of the holders of voting stock that is required by the charter,
(1) the affirmative vote of the holders of a majority of
our outstanding shares of stock entitled to vote on such
amendment or repeal, voting together as a single class, and
(2) the affirmative vote of the holders of a majority of
the outstanding shares of each class entitled to vote thereon as
a class are required. However, with respect to the amendment or
repeal of any of the provisions of our charter relating to the
resignation or removal of directors, vacancies on the board of
directors, independent directors, the rights and powers of our
company, the board of directors and officers, and the limitation
of liability of directors and officers, the affirmative vote of
the holders of at least two-thirds of the outstanding shares
entitled to vote on such amendment or repeal, voting together as
a single class, and the affirmative vote of the holders of not
less than two-thirds of the outstanding shares of each class
entitled to vote thereon as a class, shall be required.
Restrictions
on ownership
For us to qualify as a REIT under the Internal Revenue Code, no
more than 50% in value of our outstanding capital stock may be
owned, directly or indirectly, by or for five or fewer
individuals at any time during the last half of a taxable year.
To assist us in meeting this requirement, we may take actions
such as the automatic conversion of shares in excess of this
ownership restriction into shares of excess stock to limit the
beneficial ownership of our outstanding equity securities,
directly or indirectly, by one individual. See Limits on
Ownership of Stock beginning on page 32.
Transfer
Agent
The transfer agent and registrar for the common stock is Bank of
New York, New York, New York.
Limits on
Ownership of Stock
Ownership
limits
For us to qualify as a REIT under the Internal Revenue Code,
among other things, no more than 50% in value of our outstanding
capital stock may be owned, directly or indirectly, by or for
five or fewer individuals at any time during the last half of a
taxable year. Additionally, the shares of our capital stock must
be beneficially owned by 100 or more persons during at least
335 days of a taxable year of twelve months or during a
proportionate part of a shorter taxable year. To protect us
against the risk of losing our status as a REIT due to a
concentration of ownership
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among our stockholders, and to otherwise address concerns
related to concentrated ownership of capital stock, our charter
provides that no person may own (directly, indirectly by virtue
of the attribution provisions of the Internal Revenue Code, or
beneficially under
Rule 13d-3
of the Securities Exchange Act) more than 9.8% of any class or
series of our stock (15% for some entities as described below).
Notwithstanding the preceding sentence, the board of directors
at its option and in its sole discretion may approve ownership
greater than the applicable ownership limitation by selected
persons or entities. Our board of directors does not expect that
it would waive the applicable ownership limit unless the board
of directors receives evidence to its satisfaction that the
waiver of the limit will not jeopardize our status as a REIT,
and the board of directors also decides that the waiver is in
our stockholders best interests. Any transfer of shares of
stock, including any security convertible into shares of stock,
shall be void and have no effect if it: (1) would create a
direct or indirect ownership of shares of stock in excess of the
applicable ownership limit, absent a valid waiver of this
ownership limit or (2) would result in our disqualification
as a REIT, including any transfer that would (a) result in
the shares of stock being owned by fewer than 100 persons,
(b) result in us being closely held within the
meaning of Section 856(h) of the Internal Revenue Code or
(c) result in us constructively owning 10% or more of the
ownership interests in a tenant within the meaning of
Section 856(d)(2)(B) of the Internal Revenue Code. In
addition, if any purported transfer of stock or any other event
would otherwise result in any person violating the applicable
ownership limit, then the purported transfer will be void and of
no force or effect with respect to the intended transferee as to
that number of shares in excess of the ownership limit. The
intended transferee will acquire no right or interest in the
excess shares; or, in the case of any event other than a
purported transfer, the person holding record title to any
shares in excess of the ownership limit shall cease to own any
right or interest in the excess shares. In both cases, neither
the intended transferee nor the person holding record title to
any shares in excess of the ownership limit shall have any right
to: (1) transfer or otherwise dispose of the excess stock,
(2) vote the excess stock or (3) receive any dividend
or distribution paid with respect to the excess stock, as
further explained below.
Under the Internal Revenue Code, some types of entities, which
includes pension plans described in Section 401(a) of the
Internal Revenue Code and mutual funds registered under the
Investment Company Act of 1940, will be looked through for
purposes of the five or fewer test described above. Our charter
limits these pension plans and mutual funds to owning no more
than 15% of any class or series of our stock.
Shares
owned in excess of the ownership limit
Stock owned, or deemed to be owned, or proposed to be
transferred to a stockholder in excess of the ownership limit
will be converted automatically into shares of excess stock and
will be transferred, by operation of law, to a trust, the
beneficiary of which shall be a qualified charitable
organization selected by us. As soon as practicable after the
transfer of shares to the trust, the trustee of the trust will
be required to sell the shares of excess stock to a person who
could own the shares without violating the ownership limit and
distribute to the proposed transferee an amount equal to the
lesser of (1) the price paid by the proposed transferee for
the shares of excess stock or (2) the sales proceeds
received by the trust for the shares of excess stock. In the
case of any excess stock resulting from any event other than a
transfer, or from a transfer for no consideration (such as a
gift), the trustee will be required to sell the excess stock to
a qualified person or entity and distribute to the person
holding record title to the shares in excess of the ownership
limit an amount equal to the lesser of (A) the fair market
value of the excess stock as of the date of the event or
(B) the sales proceeds received by the trust for the excess
stock. In either case, any proceeds in excess of the amount
distributable to the proposed transferee or person holding
record title to the shares in excess of the ownership limit, as
applicable, will be distributed to the beneficiary of the trust.
Upon the transfer of shares of excess stock by the trustee, the
shares shall be converted automatically into an equal number of
shares of the same class and series that were converted into the
excess stock, and the shares of excess stock will be
automatically retired and canceled and will thereupon be
restored to the status of authorized but unissued shares of
excess stock. Prior to a sale of any excess stock by the
trustee, the trustee will be entitled to receive in trust for
the beneficiary, all dividends and other distributions paid with
respect to the excess stock. In addition, while the shares of
excess stock are held in trust, the holder of shares will not be
entitled to vote such shares, except when Maryland law mandates
class voting rights. In the event voting rights are mandated by
Maryland law, the trustee shall be entitled to vote the shares
of excess stock.
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Neither the proposed transferee nor any person holding record
title to any excess stock shall have any right to receive any
dividend or distribution paid with respect to the excess stock.
Any dividend or distribution paid on excess stock prior to
discovery by us of the violation of the applicable ownership
limit shall be repaid to us. In addition, neither the proposed
transferee nor any person holding record title to any excess
stock shall have any voting rights with respect to the excess
stock. Any vote of any excess stock prior to discovery by us of
the violation of the applicable ownership limit shall, subject
to applicable law, be rescinded and deemed void and shall be
recast by the trustee acting for the benefit of the beneficiary;
provided, however, that such vote shall not be rescinded and
recast if we have already taken irreversible corporate action.
Shares of excess stock are not treasury stock, but rather
constitute a separate class of issued and outstanding stock.
Right
to purchase excess stock
In addition to the foregoing transfer restrictions, we have the
right for a period of 90 days to purchase all or any
portion of the excess stock from the proposed transferee or any
person holding record title to any excess stock for a price per
share equal to the lesser of:
(1) the price per share initially paid for the stock by the
proposed transferee or, in the case of excess stock resulting
from any event other than a transfer or from a transfer for no
consideration (such as a gift), the average of the closing price
per share for the class of shares from which the shares of
excess stock were converted for the five consecutive trading
days ending on the date of such event or transfer, as
applicable; or
(2) the average closing price per share for the class or
series of shares from which the shares of excess stock were
converted for the five consecutive trading days ending on the
date we elect to purchase the shares.
The
90-day
period begins on the date of the purported transfer or
non-transfer event that violated the applicable ownership limit
if the proposed transferee or person holding record title to any
excess stock gives notice to us of the transfer or non-transfer
event, as applicable, or if no notice is given, the date our
board of directors determines that such a transfer has been made
or such a non-transfer event has occurred.
General
The foregoing restrictions on transferability and ownership will
not apply if our board of directors determines that it is no
longer in our best interest to continue to qualify as a REIT.
The board may, in its sole discretion, waive the ownership
limits if evidence is presented that such ownership of shares in
excess of the ownership limit will not jeopardize our
qualification as a REIT and the board otherwise decides in its
sole discretion that such action is in our stockholders
best interest.
Our stockholders are required to disclose to us in writing any
information with respect to their ownership of our stock that we
may request in order to determine our status as a REIT and to
ensure compliance with the ownership limits.
The ownership limits may have the effect of delaying, deferring
or preventing a change of control of our company.
Federal
Income Tax Considerations and Consequences of Your
Investment
The following discussion describes the material
U.S. federal income tax consequences relating to our
qualification as a REIT and the ownership and disposition of
shares of our common stock and, to a lesser extent, our debt
securities.
The federal income tax consequences of the ownership and
disposition of shares of our preferred stock and of our debt
securities depend to a high degree on the specific rights and
terms of the preferred stock or debt securities issued. If we
offer one or more additional series of preferred stock or debt
securities, information about any income tax consequences to
holders of those particular shares of preferred stock or debt
securities will be included in the documents pursuant to which
they are offered to the extent required by applicable law.
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Because this is a summary that is intended to address only
material federal income tax consequences relating to the
ownership and disposition of our common stock and, to a lesser
extent, our debt securities that will apply to all holders, it
may not contain all the information that may be important to
you. As you review this discussion, you should keep in mind that:
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the tax consequences to you may vary depending on your
particular tax situation;
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special rules that are not discussed below may apply to you if,
for example, you are a tax-exempt organization, a broker-dealer,
a
non-U.S. person,
a trust, an estate, a regulated investment company, a financial
institution, an insurance company, or otherwise subject to
special tax treatment under the Internal Revenue Code;
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this summary does not address state, local or
non-U.S. tax
considerations;
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this summary deals only with common stockholders and holders of
debt securities that hold common stock or debt securities, as
applicable, as capital assets within the meaning of
Section 1221 of the Internal Revenue Code; and
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this discussion is not intended to be, and should not be
construed as, tax advice.
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You are urged both to review the following discussion and to
consult with your own tax advisor to determine the effect of
ownership and disposition of our securities on your individual
tax situation, including any state, local or
non-U.S. tax
consequences.
The information in this section is based on the current Internal
Revenue Code, current, temporary and proposed Treasury
regulations, the legislative history of the Internal Revenue
Code, current administrative interpretations and practices of
the Internal Revenue Service, including its practices and
policies as endorsed in private letter rulings, which are not
binding on the Internal Revenue Service except in the case of
the taxpayer to whom a private letter ruling is addressed, and
existing court decisions. Future legislation, regulations,
administrative interpretations and court decisions could change
current law or adversely affect existing interpretations of
current law. Any change could apply retroactively. We have not
obtained any rulings from the Internal Revenue Service
concerning the tax treatment of the matters discussed below.
Thus, it is possible that the Internal Revenue Service could
challenge the statements in this discussion, which do not bind
the Internal Revenue Service or the courts, and that a court
could agree with the Internal Revenue Service.
Taxation
of AvalonBay as a REIT
We have elected to be taxed as a REIT under the Internal Revenue
Code. A REIT generally is not subject to federal income tax on
the income that it distributes to stockholders if it meets the
applicable REIT distribution requirements and other requirements
for qualification.
We believe that we are organized and have operated, and we
intend to continue to operate, in a manner allowing us to
qualify as a REIT, but there can be no assurance that we have
qualified or will remain qualified as a REIT. Qualification and
taxation as a REIT depend upon our ability to meet, through
actual annual (or in some cases quarterly) operating results,
requirements relating to income, asset ownership, distribution
levels and diversity of share ownership, and the various other
REIT qualification requirements imposed under the Internal
Revenue Code. Given the complex nature of the REIT qualification
requirements, the ongoing importance of factual determinations
and the possibility of future changes in our circumstances, we
cannot provide any assurance that our actual operating results
will satisfy the requirements for taxation as a REIT under the
Internal Revenue Code for any particular taxable year.
So long as we qualify for taxation as a REIT, we generally will
not be subject to federal corporate income tax on our net income
that is distributed currently to our stockholders. This
treatment substantially eliminates double
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taxation (that is, taxation at both the corporate and
stockholder levels) that generally results from an investment in
a corporation. However, we will be subject to federal income tax
as follows:
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We will be taxed at regular corporate rates on any undistributed
REIT taxable income. REIT taxable income is the
taxable income of the REIT subject to specified adjustments,
including a deduction for dividends paid;
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Under some circumstances, we may be subject to the
alternative minimum tax on our items of tax
preference;
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If we have net income from the sale or other disposition of
foreclosure property that is held primarily for sale
to customers in the ordinary course of business, or other
nonqualifying income from foreclosure property, we will be
subject to tax at the highest corporate rate on this income;
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Our net income from prohibited transactions will be
subject to a 100% tax. In general, prohibited transactions are
sales or other dispositions of property held primarily for sale
to customers in the ordinary course of business other than
foreclosure property;
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If we fail to satisfy either the 75% gross income test or the
95% gross income test discussed below, but nonetheless maintain
our qualification as a REIT because other requirements are met,
we will be subject to a tax equal to the greater of (1) the
amount by which 75% of our gross income exceeds the amount of
our income qualifying under the 75% test for the taxable year or
(2) the amount by which 95% of our gross income exceeds the
amount of our income qualifying for the 95% income test for the
taxable year, multiplied by a fraction intended to reflect our
profitability;
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If we fail to satisfy any of the asset tests (other than a
failure by a de minimis amount of the 5% or 10% asset tests) and
we qualify for and satisfy certain cure provisions, then we will
have to pay an excise tax equal to the greater of
(1) $50,000 and (2) an amount determined by
multiplying (x) the net income generated during a specified
period by the assets that caused the failure by (y) the
highest federal income tax applicable to corporations;
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If we fail to satisfy any REIT requirements other than the
income test or asset test requirements and we qualify for a
reasonable cause exception, then we will have to pay a penalty
equal to $50,000 for each such failure;
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We will be subject to a 4% excise tax on the excess of the
required distribution over the sum of amounts actually
distributed and amounts retained for which federal income tax
was paid, if we fail to distribute during each calendar year at
least the sum of:
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(1)
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85% of our REIT ordinary income for the year;
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(2) 95% of our REIT capital gain net income for the year;
and
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(3)
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any undistributed taxable income from prior taxable years;
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We will be subject to a 100% penalty tax on some payments we
receive (or on certain expenses deducted by a taxable REIT
subsidiary) if arrangements among us, our tenants and our
taxable REIT subsidiaries are not comparable to similar
arrangements among unrelated parties;
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If we should acquire any asset from a C corporation
in a carry-over basis transaction and we subsequently recognize
gain on the disposition of such asset during the ten-year
recognition period beginning on the date on which we acquired
the asset, then, to the extent of any built-in gain, such gain
will be subject to tax at the highest regular corporate rate.
Built-in gain means the excess of (a) the fair market value
of the asset as of the beginning of the applicable recognition
period over (b) the adjusted basis in such asset as of the
beginning of such recognition period;
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Income earned by out taxable REIT subsidiaries will be subject
to tax at regular corporate rates; and
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We may be required to pay penalties to the IRS in certain
circumstances, including if we fail to meet record-keeping
requirements intended to monitor our compliance with rules
relating to the composition of our shareholders.
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Requirements
for qualification as a REIT
We elected to be taxable as a REIT for federal income tax
purposes for our taxable year ended December 31, 1994 and
for all subsequent taxable years. In order to have so qualified,
we must have met and continue to meet the requirements discussed
below, relating to our organization, sources of income, nature
of assets and distributions of income to stockholders.
The Internal Revenue Code defines a REIT as a corporation, trust
or association:
(1) that is managed by one or more trustees or directors;
(2) the beneficial ownership of which is evidenced by
transferable shares, or by transferable certificates of
beneficial interest;
(3) that would be taxable as a domestic corporation, but
for Sections 856 through 859 of the Internal Revenue Code;
(4) that is neither a financial institution nor an
insurance company subject to applicable provisions of the
Internal Revenue Code;
(5) the beneficial ownership of which is held by 100 or
more persons;
(6) during the last half of each taxable year not more than
50% in value of the outstanding shares of which is owned
directly or indirectly by five or fewer individuals, as defined
in the Internal Revenue Code to include specified entities;
(7) that makes an election to be taxable as a REIT, or has
made this election for a previous taxable year which has not
been revoked or terminated, and satisfies all relevant filing
and other administrative requirements established by the
Internal Revenue Service that must be met to elect and maintain
REIT status;
(8) that uses a calendar year for federal income tax
purposes and complies with the recordkeeping requirements of the
Internal Revenue Code and regulations promulgated
thereunder; and
(9) that meets other applicable tests, described below,
regarding the nature of its income and assets and the amount of
its distributions.
Conditions (1), (2), (3) and (4) above must be met
during the entire taxable year and condition (5) above must
be met during at least 335 days of a taxable year of
12 months, or during a proportionate part of a taxable year
of less than 12 months. For purposes of determining stock
ownership under condition (6) above, a supplemental
unemployment compensation benefits plan, a private foundation
and a portion of a trust permanently set aside or used
exclusively for charitable purposes generally are each
considered an individual. A trust that is a qualified trust
under Internal Revenue Code Section 401(a) generally is not
considered an individual, and beneficiaries of a qualified trust
are treated as holding shares of a REIT in proportion to their
actuarial interests in the trust for purposes of condition
(6) above.
We believe that we have issued sufficient shares of common stock
with sufficient diversity of ownership to allow us to satisfy
conditions (5) and (6) above. In addition, our charter
contains restrictions regarding the transfer of shares of common
stock and preferred stock that are intended to assist us in
continuing to satisfy the share ownership requirements described
in conditions (5) and (6) above. These restrictions,
however, may not ensure that we will be able to satisfy these
share ownership requirements.
To monitor its compliance with condition (6) above, a REIT
is required to send annual letters to its stockholders
requesting information regarding the actual ownership of its
shares. If we comply with the annual letters requirement and we
do not know or, exercising reasonable diligence, would not have
known of our failure to meet condition (6) above, then we
will be treated as having met condition (6) above.
37
To qualify as a REIT, we cannot have at the end of any taxable
year any undistributed earnings and profits that are
attributable to a non-REIT taxable year. We do not believe that
we have any non-REIT earnings and profits and believe that we
therefore satisfy this requirement.
Qualified REIT Subsidiaries.
If a REIT owns a
corporate subsidiary that is a qualified REIT
subsidiary, the separate existence of that subsidiary will
be disregarded for federal income tax purposes. Generally, a
qualified REIT subsidiary is a corporation, other than a taxable
REIT subsidiary (discussed below), all of the stock of which is
owned by the REIT. All assets, liabilities and items of income,
deduction and credit of the qualified REIT subsidiary will be
treated as assets, liabilities and items of income, deduction
and credit of the REIT itself. A qualified REIT subsidiary of
AvalonBay will not be subject to federal corporate income
taxation, although it may be subject to state and local taxation
in some states.
Taxable REIT Subsidiaries.
A taxable
REIT subsidiary of AvalonBay is a corporation in which we
directly or indirectly own stock and that elects, together with
us, to be treated as a taxable REIT subsidiary under
Section 856(l) of the Internal Revenue Code. In addition,
if one of our taxable REIT subsidiaries owns, directly or
indirectly, securities representing 35% or more of the vote or
value of a subsidiary corporation, that subsidiary will also be
treated as our taxable REIT subsidiary. A taxable REIT
subsidiary is a corporation subject to federal income tax, and
state and local income tax where applicable, as a regular
C corporation.
Generally, a taxable REIT subsidiary can perform some
impermissible tenant services without causing us to receive
impermissible tenant services income under the REIT income
tests. A taxable REIT subsidiary also can recognize income that
would be subject to the 100% prohibited transaction tax, or
income that would be nonqualifying income under the gross income
tests, if earned by a REIT. However, several provisions
regarding the arrangements between a REIT and its taxable REIT
subsidiaries ensure that a taxable REIT subsidiary will be
subject to an appropriate level of federal income taxation. For
example, a taxable REIT subsidiary is limited in its ability to
deduct interest payments in excess of a certain amount made to
us. In addition, we will be obligated to pay a 100% penalty tax
on some payments that we receive or on certain expenses deducted
by the taxable REIT subsidiary if the economic arrangements
between us, our tenants and the taxable REIT subsidiary are not
comparable to similar arrangements among unrelated parties.
Ownership of Partnership Interests by a
REIT.
A REIT that is a partner in a partnership
(or a member in a limited liability company or other entity that
is treated as a partnership for federal income tax purposes)
will be deemed to own its proportionate share of the assets of
the partnership and will be deemed to earn its proportionate
share of the partnerships income. The assets and gross
income of the partnership retain the same character in the hands
of the REIT for purposes of the gross income and asset tests
applicable to REITs as described below. Thus, our proportionate
share of the assets and items of income of any entity taxable as
a partnership for federal income tax purposes in which we hold
an interest will be treated as our assets and liabilities and
our items of income for purposes of applying the requirements
described in this prospectus. The assets, liabilities and items
of income of any partnership in which we own an interest include
such entitys share of the assets and liabilities and items
of income with respect to any partnership in which it holds an
interest.
Income Tests Applicable to REITs.
To qualify
as a REIT, we must satisfy two gross income tests. First, at
least 75% of our gross income, excluding gross income from
prohibited transactions, for each taxable year must be derived
directly or indirectly from investments relating to real
property or mortgages on real property, including rents
from real property, gains on the disposition of real
estate, dividends paid by another REIT and interest on
obligations secured by mortgages on real property or on
interests in real property, or from some types of temporary
investments. Second, at least 95% of our gross income, excluding
gross income from prohibited transactions, for each taxable year
must be derived from any combination of income qualifying under
the 75% test and dividends, interest, and gain from the sale or
disposition of stock or securities.
Rents received by us will qualify as rents from real property in
satisfying the gross income requirements for a REIT described
above only if several conditions are met. First, the amount of
rent must not be based in whole or in part on the income or
profits of any person. However, an amount received or accrued
generally will not be excluded from the term rents from
real property solely by reason of being based on a fixed
percentage or percentages of receipts or sales. Second, rents
received from a related party tenant will not
qualify as rents from real property in satisfying the gross
income tests unless the tenant is a taxable REIT subsidiary and
at least 90% of the property is
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leased to unrelated tenants and the rent paid by the taxable
REIT subsidiary is substantially comparable to the rent paid by
the unrelated tenants for comparable space, or the property
leased to the taxable REIT subsidiary is a hotel and certain
other requirements are satisfied. A tenant is a related party
tenant if the REIT, or an actual or constructive owner of 10% or
more of the REIT, actually or constructively owns 10% or more of
the tenant. Third, if rent attributable to personal property,
leased in connection with a lease of real property, is greater
than 15% of the total rent received under the lease, then the
portion of rent attributable to the personal property will not
qualify as rents from real property.
Generally, for rents to qualify as rents from real property for
the purpose of satisfying the gross income tests, we may provide
directly only an insignificant amount of services, unless those
services are usually or customarily rendered in
connection with the rental of real property and not otherwise
considered rendered to the occupant. Accordingly, we
may not provide impermissible services to tenants
(except through an independent contractor from whom we derive no
revenue and that meets other requirements or through a taxable
REIT subsidiary) without giving rise to impermissible
tenant service income. Impermissible tenant service income
is deemed to be at least 150% of our direct cost of providing
the service. If the impermissible tenant service income exceeds
1% of our total income from a property, then all of the income
from that property will fail to qualify as rents from real
property. If the total amount of impermissible tenant service
income from a property does not exceed 1% of our total income
from the property, the services will not taint the
other income from the property (that is, it will not cause the
rent paid by tenants of that property to fail to qualify as
rents from real property), but the impermissible tenant service
income will not qualify as rents from real property.
We have not charged, and do not anticipate charging, rent that
is based in whole or in part on the income or profits of any
person. We have not derived, and do not anticipate deriving,
rent attributable to personal property leased in connection with
real property that exceeds 15% of the total rents.
We have provided and will provide services with respect to the
multifamily apartment communities. We believe that the services
with respect to our communities that have been and will be
provided by us are usually or customarily rendered in connection
with the rental of space for occupancy only and are not
otherwise rendered to particular tenants, or, if considered
impermissible services, income from the provision of such
services with respect to a given property has not and will not
exceed 1% of all amounts received by us from such property.
Therefore, we believe that the provision of such services has
not and will not cause rents received with respect to our
communities to fail to qualify as rents from real property. We
believe that services with respect to our communities that may
not be provided by us directly without jeopardizing the
qualification of rent as rents from real property have been and
will be performed by independent contractors or taxable REIT
subsidiaries.
We may in the future acquire equity stakes in additional taxable
REIT subsidiaries, which do not constitute real estate assets.
Gain from a sale or other taxable disposition of these interests
will constitute income satisfying the 95% income test, but not
the 75% income test. The need to satisfy the 75% income test may
adversely affect the time at which we chose to sell or dispose
of one or more of these investments, depending on the
appreciation of these equity interests, if any.
We have earned and continue to earn amounts of nonqualifying
income. For example, we earn fees related to the development and
management of properties that are not wholly-owned by us. We
believe that the amount of nonqualifying income generated from
these activities has not affected and will not affect our
ability to meet the gross income tests.
Any gain realized by us on the sale of any property held as
inventory or other property held primarily for sale to customers
in the ordinary course of business will be treated as income
from a prohibited transaction that is subject to a 100% penalty
tax, unless such property has been held by us for four years and
certain other requirements are satisfied or the gain is realized
in a taxable REIT subsidiary. Under existing law, whether
property is held as inventory or primarily for sale to customers
in the ordinary course of a trade or business is a question of
fact that depends on all the facts and circumstances of a
particular transaction. We generally intend to hold our
properties for investment with a view to long-term appreciation,
to engage in the business of acquiring, developing, owning and
operating properties, and to make occasional sales of properties
as are consistent with our investment objectives. We cannot
provide any assurance, however, that the Internal Revenue
Service might not contend that one or more of these sales are
subject to the 100% penalty tax. We intend to hold assets
developed or held for sale in taxable REIT
39
subsidiaries. Although a taxable REIT subsidiary is not subject
to the 100% penalty tax, it does pay tax on its taxable income
and gains at regular corporate rates.
If we fail to satisfy one or both of the 75% or 95% gross income
tests for any taxable year, we may nevertheless qualify as a
REIT for that year if we are entitled to relief under the
Internal Revenue Code. These relief provisions generally will be
available if our failure to meet the tests is due to reasonable
cause and not due to willful neglect and, following our
identification of such failure for any taxable year, we file a
schedule describing each item of our gross income described in
the gross income tests in accordance with the applicable
Treasury Regulations. It is not possible, however, to state
whether in all circumstances we would be entitled to the benefit
of these relief provisions. For example, if we fail to satisfy
the gross income tests because nonqualifying income that we
intentionally incur exceeds the limits on nonqualifying income,
the Internal Revenue Service could conclude that the failure to
satisfy the tests was not due to reasonable cause. If these
relief provisions are inapplicable to a particular set of
circumstances involving us, we will fail to qualify as a REIT.
As discussed under Taxation of AvalonBay as a
REIT even if these relief provisions apply, a tax would be
imposed based on the amount of nonqualifying income.
Asset Tests Applicable to REITs.
At the close
of each quarter of our taxable year, we must satisfy four tests
relating to the nature of our assets:
(1) at least 75% of the value of our total assets must be
represented by real estate assets, cash, cash items and
government securities. Our real estate assets include, for this
purpose, stock or debt instruments held for less than one year
purchased with the proceeds of an offering of our shares or
long-term debt;
(2) not more than 25% of our total assets may be
represented by securities other than those in the 75% asset
class;
(3) except for investments in qualified REIT subsidiaries,
taxable REIT subsidiaries, equity interests in REITS or other
securities that qualify as real estate assets for
purposes of the test described in clause (1): the value of
any one issuers securities owned by us may not exceed 5%
of the value of our total assets; we may not own more than 10%
of any one issuers outstanding voting securities; and we
may not own more than 10% of the value of the outstanding
securities of any one issuer; and
(4) not more than 20% of our total assets may be
represented by securities of one or more taxable REIT
subsidiaries.
Securities for purposes of the asset tests may include debt
securities. However, certain debt of an issuer will not count as
a security for purposes of the 10% value test, including debt
securities that are straight debt as defined in
Section 1361 of the Internal Revenue Code, as modified by
Section 856(m), where (1) the issuer is an individual
or (2) the only securities of the issuer that the REIT
holds are straight debt or such securities have an aggregate
value of not more than the value of one percent of the
issuers outstanding securities.
We believe that the aggregate value of our taxable REIT
subsidiaries does not exceed 20% of the aggregate value of our
gross assets. With respect to each issuer in which we currently
own an interest that does not qualify as a REIT, a qualified
REIT subsidiary or a taxable REIT subsidiary, we believe that
our pro rata share of the value of the securities, including
debt, of any such issuer does not exceed 5% of the total value
of our assets and that we comply with the 10% voting securities
limitation and 10% value limitation with respect to each such
issuer. In this regard, however, we cannot provide any assurance
that the Internal Revenue Service might not disagree with our
determinations.
After initially meeting the asset tests at the close of any
quarter, we will not lose our status as a REIT if we fail to
satisfy the 25%, 20% and 5% asset tests and the 10% value
limitation at the end of a later quarter solely by reason of
changes in the relative values of our assets. If the failure to
satisfy the 25%, 20% or 5% asset tests or the 10% value
limitation results from an acquisition of securities or other
property during a quarter, the failure can be cured by
disposition of sufficient non-qualifying assets within
30 days after the close of that quarter. We intend to
maintain adequate records of the value of our assets to ensure
compliance with the asset tests and to take any available
actions within 30 days after the close of any quarter as
may be required to cure any noncompliance with the 25%, 20% or
5% asset tests or 10% value limitation.
40
Moreover, if we fail to satisfy any of the asset tests at the
end of a calendar quarter during a taxable year and such failure
is not cured within 30 days as described above, we will not
lose our REIT status if one of the following additional
exceptions applies: (A) the failure is due to a violation
of the 5% or 10% asset tests and is de minimis (for
this purpose, a de minimis failure is one that
arises from our ownership of assets the total value of which
does not exceed the lesser of 1% of the total value of our
assets at the end of the quarter in which the failure occurred
and $10 million) and we either dispose of the assets that
caused the failure or otherwise satisfy any of the asset tests
within 6 months after the last day of the quarter in which
our identification of the failure occurred; or (B) the
failure is due to a violation of any of the asset tests (other
than a de minimis violations of the 5% or 10% asset
tests) and all of the following requirements are satisfied:
(i) the failure is due to reasonable cause and not willful
neglect, (ii) we file a schedule in accordance with
Treasury Regulations providing a description of each asset that
caused the failure, (iii) we either dispose of the assets
that caused the failure or otherwise satisfy the asset tests
within 6 months after the last day of the quarter in which
our identification of the failure occurred, and (iv) we pay
an excise tax equal to the greater of (x) $50,000 and
(y) an amount determined by multiplying the net income
generated during a specified period by the assets that caused
the failure by the highest federal income tax applicable to
corporations.
Annual Distribution Requirements Applicable to
REITs.
To qualify as a REIT, we are required to
distribute dividends, other than capital gain dividends, to our
stockholders each year in an amount at least equal to
(1) the sum of (a) 90% of our REIT taxable income,
computed without regard to the dividends paid deduction and our
net capital gain, and (b) 90% of the net income, after tax,
from foreclosure property, minus (2) the sum of certain
specified items of noncash income. In addition, if we recognize
any built-in gain, we will be required, under Treasury
regulations, to distribute at least 90% of the built-in gain,
after tax, recognized on the disposition of the applicable
asset. See Taxation of AvalonBay as a
REIT for a discussion of the possible recognition of
built-in gain. These distributions must be paid either in the
taxable year to which they relate, or in the following taxable
year if declared before we timely file our tax return for the
prior year and if paid with or before the first regular dividend
payment date after the declaration is made.
We believe that we have made and intend to continue to make
timely distributions sufficient to satisfy the annual
distribution requirements.
We anticipate having sufficient cash or liquid assets to enable
us to satisfy the 90% distribution requirement. It is possible,
however, that we, from time to time, may not have sufficient
cash or other liquid assets to meet this distribution
requirement or to distribute such greater amount as may be
necessary to avoid income and excise taxation, due to timing
differences between (a) the actual receipt of income and
the actual payment of deductible expenses and (b) the
inclusion of such income and the deduction of such expenses in
arriving at our taxable income, or as a result of nondeductible
expenses such as principal amortization or capital expenditures
in excess of noncash deductions. In the event that such timing
differences occur, we may find it necessary to arrange for
borrowings or, if possible, pay taxable stock dividends in order
to meet the dividend requirement.
Under some circumstances, we may be able to rectify a failure to
meet the distribution requirement for a year by paying dividends
to stockholders in a later year, which may be included in our
deduction for dividends paid for the earlier year. We will refer
to such dividends as deficiency dividends. Thus, we
may be able to avoid being taxed on amounts distributed as
deficiency dividends. We will, however, be required to pay
interest based upon the amount of any deduction taken for
deficiency dividends.
To the extent that we do not distribute all of our net capital
gain or distribute at least 90%, but less than 100%, of our REIT
taxable income, as adjusted, we are subject to tax on these
amounts at regular corporate tax rates.
We will be subject to a 4% excise tax on the excess of the
required distribution over the sum of amounts actually
distributed and amounts retained for which federal income tax
was paid, if we fail to distribute during each calendar year at
least the sum of:
(1) 85% of our REIT ordinary income for the year;
(2) 95% of our REIT capital gain net income for the
year; and
(3) any undistributed taxable income from prior taxable
years.
41
A REIT may elect to retain rather than distribute all or a
portion of its net capital gains and pay the tax on the gains.
In that case, a REIT may elect to have its stockholders include
their proportionate share of the undistributed net capital gains
in income as long-term capital gains and receive a credit for
their share of the tax paid by the REIT. For purposes of the 4%
excise tax described above, any retained amounts would be
treated as having been distributed.
Record-Keeping Requirements.
We are required
to comply with applicable record-keeping requirements. Failure
to comply could result in monetary fines.
Failure of AvalonBay to Qualify as a REIT.
If
we fail to satisfy any REIT requirements (other than the income
test or asset test requirements, to which specific cure
provisions apply), we generally will be eligible for relief from
REIT disqualification if the failure is due to reasonable cause
and not willful neglect and we pay a penalty of $50,000 with
respect to such failure. It is not possible to state whether in
all circumstances we would be entitled to such statutory relief.
For example, if we fail to satisfy the gross income tests
because nonqualifying income that we intentionally incur exceeds
the limit on such income, the Internal Revenue Service could
conclude that our failure to satisfy the tests was not due to
reasonable cause.
If we fail to qualify for taxation as a REIT in any taxable year
and the relief provisions do not apply, we will be subject to
tax on our taxable income at regular corporate rates, including
any applicable alternative minimum tax. Distributions to
stockholders in any year in which we fail to qualify will not be
deductible by us nor will they be required to be made. In such
event, to the extent of current or accumulated earnings and
profits, all distributions to stockholders will be taxable as
dividend income. Subject to limitations of the Internal Revenue
Code, corporate stockholders may be eligible for the
dividends-received deduction and non-corporate stockholders may
be eligible to treat the dividends received from us as qualified
dividend income taxable as net capital gains under the
provisions of Section 1(h)(11) of the Internal Revenue
Code, for taxable years beginning before January 1, 2011.
Unless we are entitled to relief under specific statutory
provisions, we also will be disqualified from electing to be
taxed as a REIT for the four taxable years following the year
during which qualification was lost.
Taxation
of U.S. stockholders
When we refer to a United States stockholder, we mean a
beneficial owner of a share of our common stock that is, for
United States federal income tax purposes:
(1) a citizen or resident, as defined in
Section 7701(b) of the Internal Revenue Code, of the United
States;
(2) a corporation or partnership, or other entity treated
as a corporation or partnership for federal income tax purposes,
created or organized under the laws of the United States, any
state or the District of Columbia;
(3) an estate the income of which is subject to federal
income taxation regardless of its source; or
(4) in general, a trust subject to the primary supervision
of a United States court and the control of one or more United
States persons.
Generally, in the case of a partnership that holds our common
stock, any partner that would be a U.S. stockholder if it
held the common stock directly is also a U.S. stockholder.
A
non-U.S. stockholder
is a holder, including any partner in a partnership that holds
our common stock, that is not a U.S. stockholder.
Distributions by AvalonBay.
So long as we
qualify as a REIT, distributions to U.S. stockholders out
of our current or accumulated earnings and profits that are not
designated as capital gain dividends will be taxable as dividend
income and will not be eligible for the dividends received
deduction generally available for corporations and generally
will not be eligible for treatment as qualified dividend income
by non-corporate stockholders. Distributions in excess of our
current and accumulated earnings and profits will not be taxable
to a U.S. stockholder to the extent that the distributions
do not exceed the adjusted tax basis of the stockholders
shares. Rather, such distributions will reduce the adjusted
basis of such shares. Distributions in excess of current and
accumulated earnings and profits that exceed the
U.S. stockholders adjusted basis in its shares will
be treated as gain from the sale or exchange of such shares
taxable as capital gains in the amount of such excess if the
shares are held as a capital asset. If we declare a dividend in
October, November or December of any year with a record date in
one of these months and pay the dividend on or before January 31
of the following year, we will be treated as having paid the
42
dividend, and the stockholder will be treated as having received
the dividend, on December 31 of the year in which the
dividend was declared. The above applies regardless of whether
the distributions by us are reinvested pursuant to the Dividend
Reinvestment and Stock Purchase Plan.
We may elect to designate distributions of our net capital gain
as capital gain dividends. Capital gain dividends
are taxed to stockholders as gain from the sale or exchange of a
capital asset held for more than one year, without regard to how
long the U.S. stockholder has held its shares. Designations
made by us only will be effective to the extent that they comply
with the principles of Revenue Ruling
89-81,
which
require that distributions made to different classes of shares
be composed proportionately of dividends of a particular type.
If we designate any portion of a dividend as a capital gain
dividend, a U.S. stockholder will receive an Internal
Revenue Service
Form 1099-DIV
indicating the amount that will be taxable to the stockholder as
capital gain. Corporate stockholders, however, may be required
to treat up to 20% of capital gain dividends as ordinary income.
Instead of paying capital gain dividends, we may choose to
retain all or part of our net capital gain and designate such
amount as undistributed capital gain. We will be
subject to tax at regular corporate rates on any undistributed
capital gain.
A U.S. stockholder:
(1) will include in its income as long-term capital gains
its proportionate share of such undistributed capital
gains; and
(2) will be deemed to have paid its proportionate share of
the tax paid by us on such undistributed capital gains and
receive a credit or a refund to the extent that the tax paid by
us exceeds the U.S. stockholders tax liability on the
undistributed capital gain.
A U.S. stockholder will increase the basis in its common
stock by the difference between the amount of capital gain
included in its income and the amount of tax it is deemed to
have paid. Our earnings and profits will be adjusted
appropriately.
We will classify portions of any designated capital gain
dividend or undistributed capital gain as either:
(1) a 15% rate gain distribution, which would be taxable to
non-corporate U.S. stockholders at a maximum rate of
15%; or
(2) an unrecaptured Section 1250 gain
distribution, which would be taxable to non-corporate
U.S. stockholders at a maximum rate of 25%.
We must determine the maximum amounts that we may designate as
15% and 25% rate capital gain dividends by performing the
computation required by the Internal Revenue Code as if the REIT
were an individual whose ordinary income were subject to a
marginal tax rate in excess of 25%.
Distributions made by our company and gain arising from the sale
or exchange by a U.S. stockholder of shares will not be
treated as passive activity income, and as a result,
U.S. stockholders generally will not be able to apply any
passive losses against this income or gain. In
addition, taxable distributions from our company generally will
be treated as investment income for purposes of the investment
interest limitations. A U.S. stockholder may elect to treat
capital gain dividends and capital gains from the disposition of
shares as investment income for purposes of the investment
interest limitation, in which case the applicable capital gains
will be taxed at ordinary income rates. We will notify
stockholders regarding the portions of distributions for each
year that constitute ordinary income, return of capital and
capital gain. U.S. stockholders may not include in their
individual income tax returns any net operating losses or
capital losses of our company. Our operating or capital losses
would be carried over for potential offset against our future
income, subject to applicable limitations.
Sales of Shares.
Upon any taxable sale or
other disposition of shares, a U.S. stockholder will
recognize gain or loss for federal income tax purposes in an
amount equal to the difference between:
(1) the amount of cash and the fair market value of any
property received on the sale or other disposition; and
(2) the holders adjusted basis in the shares for tax
purposes.
43
This gain or loss will be a capital gain or loss if the shares
have been held by the U.S. stockholder as a capital asset.
The applicable tax rate will depend on the stockholders
holding period in the asset (generally, if an asset has been
held for more than one year it will produce long-term capital
gain) and the stockholders tax bracket. The Internal
Revenue Service has the authority to prescribe, but has not yet
prescribed, regulations that would apply a capital gain tax rate
of 25% (which is generally higher than the long-term capital
gain tax rates for noncorporate stockholders) to a portion of
capital gain realized by a noncorporate stockholder on the sale
of REIT shares that would correspond to the REITs
unrecaptured Section 1250 gain. Stockholders
are urged to consult with their own tax advisors with respect to
their capital gain tax liability. A corporate
U.S. stockholder will be subject to tax at a maximum rate
of 35% on capital gain from the sale of our companys
shares. In general, any loss recognized by a
U.S. stockholder upon the sale or other disposition of
shares that have been held for six months or less, after
applying the holding period rules, will be treated as a
long-term capital loss, to the extent of distributions received
by the U.S. stockholder from us that were required to be
treated as long-term capital gains. All or a portion of any loss
realized upon a taxable disposition of shares may be disallowed
if other shares are purchased within 30 days before or
after the date of disposition.
Taxation
of tax-exempt stockholders
Provided that a tax-exempt stockholder has not held its common
stock as debt financed property within the meaning
of the Internal Revenue Code, the dividend income from our
company will not be unrelated business taxable income, referred
to as UBTI, to a tax-exempt stockholder. Similarly, gain from
the sale of shares will not constitute UBTI unless the
tax-exempt stockholder has held its shares as debt financed
property within the meaning of the Internal Revenue Code or is a
dealer in the shares.
However, for tax-exempt stockholders that are social clubs,
voluntary employee benefit associations, supplemental
unemployment benefit trusts and qualified group legal services
plans exempt from federal income taxation under
Sections 501(c)(7), (c)(9), (c)(17) and (c)(20) of the
Internal Revenue Code, respectively, income from an investment
in our company will constitute UBTI unless the organization
properly sets aside or reserves such amounts for purposes
specified in the Internal Revenue Code. These tax-exempt
stockholders should consult their own tax advisors concerning
these set aside and reserve requirements.
Notwithstanding the above, however, a portion of the dividends
paid by a pension held REIT are treated as UBTI if
received by any trust which is described in Section 401(a)
of the Internal Revenue Code, is tax-exempt under
Section 501(a) of the Internal Revenue Code and holds more
than 10%, by value, of the interests in the REIT.
Tax-exempt pension funds that are described in
Section 401(a) of the Internal Revenue Code are referred to
below as pension trusts.
A REIT is a pension held REIT if it meets the following two
tests:
(1) it qualified as a REIT only by reason of
Section 856(h)(3) of the Internal Revenue Code, which
provides that stock owned by pension trusts will be treated, for
purposes of determining if the REIT is closely held, as owned by
the beneficiaries of the trust rather than by the trust
itself; and
(2) either (a) at least one pension trust holds more
than 25% of the value of the REITs stock, or (b) a
group of pension trusts each individually holding more than 10%
of the value of the REITs shares, collectively owns more
than 50% of the value of the REITs shares.
The percentage of any REIT dividend treated as UBTI is equal to
the ratio of the UBTI earned by the REIT, treating the REIT as
if it were a pension trust and therefore subject to tax on UBTI,
to the total gross income of the REIT. An exception applies
where the percentage is less than 5% for any taxable year.
Taxation
of holders of debt securities and potential tax consequences of
their investment in the debt securities
Stated interest and market discount.
Holders
of debt securities will be required to include stated interest
on the debt securities in gross income for federal income tax
purposes in accordance with their methods of accounting for tax
purposes. This discussion assumes that the debt securities were
not issued with original issue discount.
44
Purchasers of debt securities should be aware that the holding
and disposition of debt securities may be affected by the market
discount provisions of the Internal Revenue Code. These rules
generally provide that if a holder of a debt instrument
purchases it at a market discount and subsequently recognizes
gain on a disposition of the debt instrument, including a gift
or payment on maturity, the lesser of such gain or appreciation,
in the case of a gift, and the portion of the market discount
that accrued while the debt instrument was held by such holder
will be treated as ordinary interest income at the time of the
disposition. For this purpose, a purchase at a market discount
includes a purchase after original issuance at a price below the
debt instruments stated principal amount. The market
discount rules also provide that a holder who acquires a debt
instrument at a market discount and who does not elect to
include such market discount in income on a current basis may be
required to defer a portion of any interest expense that may
otherwise be deductible on any indebtedness incurred or
maintained to purchase or carry such debt instrument until the
holder disposes of the debt instrument in a taxable transaction.
A holder of a debt instrument acquired at a market discount may
elect to include the market discount in income as the discount
thereon accrues, either on a straight line basis or, if elected,
on a constant interest rate basis. The current inclusion
election, once made, applies to all market discount obligations
acquired by such holder on or after the first day of the first
taxable year to which the election applies and may not be
revoked without the consent of the Internal Revenue Service. If
a holder of a debt security elects to include market discount in
income in accordance with the preceding sentence, the foregoing
rules with respect to the recognition of ordinary income on a
sale or particular other dispositions of such debt security and
the deferral of interest deductions on indebtedness related to
such debt security would not apply.
Amortizable bond premium.
Generally, if the
tax basis of an obligation held as a capital asset exceeds the
amount payable at maturity of the obligation, such excess may
constitute amortizable bond premium that the holder may elect to
amortize under the constant interest rate method and deduct the
amortized premium over the period from the holders
acquisition date to the obligations maturity date. A
holder who elects to amortize bond premium must reduce the tax
basis in the related obligation by the amount of the aggregate
deductions allowable for amortizable bond premium.
The amortizable bond premium deduction is treated as an offset
to interest income on the related security for federal income
tax purposes. Each prospective purchaser is urged to consult his
tax advisor as to the consequences of the treatment of such
premium as an offset to interest income for federal income tax
purposes.
Disposition.
In general, a holder of a debt
security will recognize gain or loss upon the sale, exchange,
redemption, payment upon maturity or other taxable disposition
of the debt security. The gain or loss is measured by the
difference between (a) the amount of cash and the fair
market value of property received and (b) the holders
tax basis in the debt security as increased by any market
discount previously included in income by the holder and
decreased by any amortizable bond premium deducted over the term
of the debt security. However, the amount of cash and the fair
market value received excludes cash or other property
attributable to the payment of accrued interest not previously
included in income, which amount will be taxable as ordinary
income. Subject to the market discount and amortizable bond
premium rules above, any such gain or loss will generally be
long-term capital gain or loss, provided the debt security was a
capital asset in the hands of the holder and had been held for
more than one year.
U.S. taxation
of
non-U.S. stockholders
Distributions by AvalonBay.
Distributions by
us to a
non-U.S. stockholder
that are neither attributable to gain from sales or exchanges by
us of U.S. real property interests nor
designated by us as capital gains dividends will be treated as
dividends of ordinary income to the extent that they are made
out of our current or accumulated earnings and profits. These
distributions ordinarily will be subject to withholding of
U.S. federal income tax on a gross basis at a rate of 30%,
or a lower rate as permitted under an applicable income tax
treaty, unless the dividends are treated as effectively
connected with the conduct by the
non-U.S. stockholder
of a U.S. trade or business. Under some treaties, however,
lower withholding rates generally applicable to dividends do not
apply to dividends from REITs. Dividends that are effectively
connected with a trade or business will be subject to tax on a
net basis, that is, after allowance for deductions, at graduated
rates, in the same manner as U.S. stockholders are taxed
with respect to these dividends, and are generally not subject
to withholding. Applicable certification and disclosure
requirements
45
must be satisfied to be exempt from withholding under the
effectively connected income exemption. Any dividends received
by a corporate
non-U.S. stockholder
that is engaged in a U.S. trade or business also may be
subject to an additional branch profits tax at a 30% rate, or
lower applicable treaty rate.
Distributions in excess of our current and accumulated earnings
and profits that exceed the
non-U.S. stockholders
basis in its common stock will be taxable to a
non-U.S. stockholder
as gain from the sale of common stock, which is discussed below.
Distributions in excess of our current or accumulated earnings
and profits that do not exceed the adjusted basis of the
non-U.S. stockholder
in its common stock will reduce the
non-U.S. stockholders
adjusted basis in its common stock and will not be subject to
U.S. federal income tax, but will be subject to
U.S. withholding tax as described below.
We expect to withhold U.S. income tax at the rate of 30% on
any dividend distributions (including distributions that later
may be determined to have been in excess of current and
accumulated earnings and profits) made to a
non-U.S. stockholder
unless:
(1) a lower treaty rate applies and the
non-U.S. stockholder
files an Internal Revenue Service
Form W-8BEN
evidencing eligibility for that reduced treaty rate with
us; or
(2) the
non-U.S. stockholder
files an Internal Revenue Service Form
W-8ECI
with
us claiming that the distribution is income effectively
connected with
non-U.S. stockholders
trade or business within the U.S.
We may be required to withhold at least 10% of any distribution
in excess of our current and accumulated earnings and profits,
even if a lower treaty rate applies and the
non-U.S. stockholder
is not liable for tax on the receipt of that distribution.
However, a
non-U.S. stockholder
may seek a refund of these amounts from the Internal Revenue
Service if the
non-U.S. stockholders
U.S. tax liability with respect to the distribution is less
than the amount withheld.
Distributions to a
non-U.S. stockholder
that are designated by us at the time of the distribution as
capital gain dividends, other than those arising from the
disposition of a U.S. real property interest, generally
should not be subject to U.S. federal income taxation
unless:
(1) the investment in the common stock is effectively
connected with the
non-U.S. stockholders
U.S. trade or business, in which case the
non-U.S. stockholder
will be subject to the same treatment as U.S. stockholders
with respect to any gain, except that a stockholder that is a
foreign corporation also may be subject to the 30% branch
profits tax, as discussed above, or
(2) the
non-U.S. stockholder
is a nonresident alien individual who is present in the
U.S. for 183 days or more during the taxable year and
has a tax home in the U.S., in which case the
nonresident alien individual will be subject to a 30% tax on the
individuals capital gains.
Under the Foreign Investment in Real Property Tax Act, which is
referred to as FIRPTA, subject to the exception
discussed below for 5% or smaller holders of regularly traded
classes of stock, distributions to a
non-U.S. stockholder
that are attributable to gain from sales or exchanges by us of
U.S. real property interests, whether or not designated as
a capital gain dividend, will cause the
non-U.S. stockholder
to be treated as recognizing gain that is income effectively
connected with a U.S. trade or business.
Non-U.S. stockholders
will be taxed on this gain at the same rates applicable to
U.S. stockholders, subject to a special alternative minimum
tax in the case of nonresident alien individuals. Also, this
gain may be subject to a 30% branch profits tax in the hands of
a
non-U.S. stockholder
that is a corporation.
We will be required to withhold and remit to the Internal
Revenue Service 35% of any distributions to
non-U.S. stockholders
that are designated as capital gain dividends, or, if greater,
35% of a distribution that could have been designated as a
capital gain dividend. Distributions can be designated as
capital gains to the extent of our net capital gain for the
taxable year of the distribution. The amount withheld is
creditable against the
non-U.S. stockholders
United States federal income tax liability. A
non-U.S. stockholder
whose U.S. federal income tax liability under FIRPTA
exceeds amounts withheld by us will be required to file a
U.S. federal income tax return for the taxable year.
46
A
non-U.S. stockholder
that owns no more than 5% of our common stock at all times
during the one-year period ending on the date of the
distribution will not be subject to 35% FIRPTA withholding with
respect to distributions that are attributable to gain from our
sale or exchange of U.S. real property interests, provided
that our common stock is regularly traded on an established
securities market. Instead, any distributions made to such
non-U.S. stockholder
will be subject to the general withholding rules discussed above
which generally impose a withholding tax equal to 30% of the
gross amount of each distribution (unless reduced by treaty).
Although the law is not clear on the matter, it appears that
amounts designated by us as undistributed capital gains in
respect of the common stock held by U.S. stockholders
generally should be treated with respect to
non-U.S. stockholders
in the same manner as actual distributions by us of capital gain
dividends. Under that approach, the
non-U.S. stockholders
would be able to offset as a credit against their United States
federal income tax liability resulting therefrom an amount equal
to their proportionate share of the tax paid by us on the
undistributed capital gains, and to receive from the Internal
Revenue Service a refund to the extent their proportionate share
of this tax paid by our company exceeds their actual United
States federal income tax liability.
Sale of Common Stock.
Gain recognized by a
non-U.S. stockholder
upon the sale or exchange of our common stock generally would
not be subject to United States taxation unless:
(1) the investment in our companys common stock is
effectively connected with the
non-U.S.
stockholders U.S. trade or business, in which case
the
non-U.S. stockholder
will be subject to the same treatment as domestic stockholders
with respect to any gain;
(2) the
non-U.S. stockholder
is a nonresident alien individual who is present in the United
States for 183 days or more during the taxable year and has
a tax home in the United States, in which case the nonresident
alien individual will be subject to a 30% tax on the
individuals net capital gains for the taxable year; or
(3) our common stock constitutes a U.S. real property
interest within the meaning of FIRPTA, as described below.
Our common stock will not constitute a U.S. real property
interest if we are a domestically controlled qualified
investment entity. We will be a domestically controlled
qualified investment entity if, at all times during a specified
testing period, less than 50% in value of our stock is held
directly or indirectly by
non-U.S. stockholders.
Because our companys common stock is publicly traded, we
cannot guarantee that we are or will continue to be a
domestically controlled qualified investment entity.
Even if we are a domestically controlled qualified investment
entity, upon disposition of the our stock, a
non-U.S. stockholder
may be treated as having gain from the sale or exchange of a
U.S. real property interest if the
non-U.S. stockholder
(1) disposes of an interest in our stock during the
30-day
period preceding the ex-dividend date of a distribution, any
portion of which, but for the disposition, would have been
treated as gain from sale or exchange of a U.S. real
property interest and (2) acquires, enters into a contract
or option to acquire, or is deemed to acquire, other shares of
the Companys stock within 30 days after such
ex-dividend date. This rule does not apply if the exception for
distributions to 5% or smaller holders of regularly traded
classes of stock is satisfied.
Even if we do not qualify as a domestically controlled qualified
investment entity at the time a
non-U.S. stockholder
sells its common stock, our stock sold by such stockholder would
not be considered a U.S. real property interest if:
(1) the class or series of stock sold is considered
regularly traded under applicable Treasury regulations on an
established securities market, such as the NYSE; and
(2) the selling
non-U.S. stockholder
owned, actually or constructively, 5% or less in value of the
outstanding class or series of stock being sold throughout the
five-year period ending on the date of the sale or exchange.
If gain on the sale or exchange of our common stock were subject
to taxation under FIRPTA, the
non-U.S. stockholder
would be subject to regular U.S. income tax with respect to
any gain in the same manner as a taxable U.S. stockholder,
subject to any applicable alternative minimum tax and special
alternative minimum tax in the case of nonresident alien
individuals.
47
Information
reporting and backup withholding tax applicable to
stockholders
U.S. Stockholders.
In general,
information reporting requirements will apply to payments of
distributions on our common stock and payments of the proceeds
of the sale of our common stock to some stockholders, unless an
exception applies. Further, the payer will be required to
withhold backup withholding tax at the rate of 28% if:
(1) the payee fails to furnish a taxpayer identification
number, or TIN, to the payer or to establish an exemption from
backup withholding;
(2) the Internal Revenue Service notifies the payer that
the TIN furnished by the payee is incorrect;
(3) the payee fails to certify under the penalty of perjury
that the payee is not subject to backup withholding under the
Internal Revenue Code.
Some stockholders, including corporations, will be exempt from
backup withholding. Any amounts withheld under the backup
withholding rules from a payment to a stockholder will be
allowed as a credit against the stockholders United States
federal income tax and may entitle the stockholder to a refund,
provided that the required information is furnished to the
Internal Revenue Service.
Non-U.S. Stockholders.
Generally,
information reporting will apply to payments of distributions on
our common stock, and backup withholding at a rate of 28% may
apply, unless the payee certifies that it is not a
U.S. person or otherwise establishes an exemption.
The payment of the proceeds from the disposition of AvalonBay
common stock to or through the U.S. office of a
U.S. or foreign broker will be subject to information
reporting and, possibly, backup withholding unless the
non-U.S. stockholder
certifies as to its
non-U.S. status
or otherwise establishes an exemption, provided that the broker
does not have actual knowledge that the stockholder is a
U.S. person or that the conditions of any other exemption
are not, in fact, satisfied. The proceeds of the disposition by
a
non-U.S. stockholder
of our common stock to or through a foreign office of a broker
generally will not be subject to information reporting or backup
withholding. However, if the broker is a U.S. person, a
controlled foreign corporation for U.S. tax purposes or a
foreign person 50% or more of whose gross income from all
sources for specified periods is from activities that are
effectively connected with a U.S. trade or business,
information reporting generally will apply unless the broker has
documentary evidence as to the
non-U.S. stockholders
foreign status and has no actual knowledge to the contrary.
Applicable Treasury regulations provide presumptions regarding
the status of stockholders when payments to the stockholders
cannot be reliably associated with appropriate documentation
provided to the payer. Because the application of the these
Treasury regulations varies depending on the stockholders
particular circumstances, you are urged to consult your tax
advisor regarding the information reporting requirements
applicable to you.
Other
tax consequences for AvalonBay and its
stockholders
Our company and its stockholders may be subject to state and
local taxation in various state or local jurisdictions,
including those in which it or they transact business or reside.
The state and local tax treatment of our company and its
stockholders may not conform to the federal income tax
consequences discussed above. Consequently, prospective
investors should consult their own tax advisors regarding the
effect of state and local tax laws on an investment in our
securities.
To the extent that we and the taxable REIT subsidiaries are
required to pay federal, state or local taxes, we will have less
cash available for distribution to stockholders.
How We
Plan to Sell the Securities
We may sell the securities in any one or more of the following
ways:
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directly to investors;
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to investors through agents;
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to dealers;
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48
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through underwriting syndicates led by one or more managing
underwriters; and
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through one or more underwriters acting alone.
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Any underwritten offering may be on a best efforts or a firm
commitment basis. We may also make direct sales through
subscription rights distributed to our stockholders on a pro
rata basis, which may or may not be transferable. In any
distribution of subscription rights to stockholders, if all of
the underlying securities are not subscribed for, we may then
sell the unsubscribed securities directly to third parties or
may engage the services of one or more underwriters, dealers or
agents, including standby underwriters, to sell the unsubscribed
securities to third parties.
The distribution of the securities may be effected from time to
time in one or more transactions:
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at a fixed price or prices, which may be changed;
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at market prices prevailing at the time of sale;
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at prices related to such prevailing market prices; or
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at negotiated prices.
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Any of the prices may represent a discount from the then
prevailing market prices.
In the sale of the securities, underwriters or agents may
receive compensation from us or from purchasers of the
securities, for whom they may act as agents, in the form of
discounts, concessions or commissions. Underwriters may sell the
securities to or through dealers, and such dealers may receive
compensation in the form of discounts, concessions or
commissions from the underwriters
and/or
commissions from the purchasers for whom they may act as agents.
Underwriters, dealers and agents that participate in the
distribution of the securities may be deemed to be underwriters
under the Securities Act of 1933, and any discounts or
commissions they receive from us and any profit on the resale of
securities they realize may be deemed to be underwriting
discounts and commissions under the Securities Act. The
applicable prospectus supplement will, where applicable:
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identify any such underwriter or agent;
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describe any compensation in the form of discounts, concessions,
commissions or otherwise received from us by each such
underwriter or agent and in the aggregate to all underwriters
and agents;
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identify the amounts underwritten; and
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identify the nature of the underwriters obligation to take
the securities.
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Unless otherwise specified in the related prospectus supplement,
each series of securities will be a new issue with no
established trading market, other than the common stock and the
Series H Preferred Stock, which are listed on the NYSE. Any
common stock sold pursuant to a prospectus supplement will be
listed on the NYSE, subject to official notice of issuance. We
may elect to list any series of debt securities or preferred
stock, respectively, on an exchange, but we are not obligated to
do so. It is possible that one or more underwriters may make a
market in a series of securities, but such underwriters will not
be obligated to do so and may discontinue any market making at
any time without notice. Therefore, no assurance can be given as
to the liquidity of, or the trading market for, any series of
debt securities or preferred stock.
Until the distribution of the securities is completed, rules of
the SEC may limit the ability of any underwriters and selling
group members to bid for and purchase the securities. As an
exception to these rules, underwriters are permitted to engage
in some transactions that stabilize the price of the securities.
Such transactions consist of bids or purchases for the purpose
of pegging, fixing or maintaining the price of the securities.
If any underwriters create a short position in the securities in
an offering in which they sell more securities than are set
forth on the cover page of the applicable prospectus supplement,
the underwriters may reduce that short position by purchasing
the securities in the open market.
The lead underwriters may also impose a penalty bid on other
underwriters and selling group members participating in an
offering. This means that if the lead underwriters purchase
securities in the open market to reduce
49
the underwriters short position or to stabilize the price
of the securities, they may reclaim the amount of any selling
concession from the underwriters and selling group members who
sold those securities as part of the offering.
In general, purchases of a security for the purpose of
stabilization or to reduce a short position could cause the
price of the security to be higher than it might be in the
absence of such purchases. The imposition of a penalty bid might
also have an effect on the price of a security to the extent
that it were to discourage resales of the security before the
distribution is completed.
We do not make any representation or prediction as to the
direction or magnitude of any effect that the transactions
described above might have on the price of the securities. In
addition, we do not make any representation that underwriters
will engage in such transactions or that such transactions, once
commenced, will not be discontinued without notice.
Under agreements into which we may enter, underwriters, dealers
and agents who participate in the distribution of the securities
may be entitled to indemnification by us against some
liabilities, including liabilities under the Securities Act.
Underwriters, dealers and agents may engage in transactions with
us, perform services for us or be our tenants in the ordinary
course of business.
If indicated in the applicable prospectus supplement, we will
authorize underwriters or other persons acting as our agents to
solicit offers by particular institutions to purchase securities
from us at the public offering price set forth in such
prospectus supplement pursuant to delayed delivery contracts
providing for payment and delivery on the date or dates stated
in such prospectus supplement. Each delayed delivery contract
will be for an amount no less than, and the aggregate principal
amounts of securities sold under delayed delivery contracts
shall be not less nor more than, the respective amounts stated
in the applicable prospectus supplement. Institutions with which
such contracts, when authorized, may be made include commercial
and savings banks, insurance companies, pension funds,
investment companies, educational and charitable institutions
and others, but will in all cases be subject to our approval.
The obligations of any purchaser under any such contract will be
subject to the conditions that (a) the purchase of the
securities shall not at the time of delivery be prohibited under
the laws of any jurisdiction in the United States to which the
purchaser is subject, and (b) if the securities are being
sold to underwriters, we shall have sold to the underwriters the
total principal amount of the securities less the principal
amount thereof covered by the contracts. The underwriters and
such other agents will not have any responsibility in respect of
the validity or performance of such contracts.
To comply with applicable state securities laws, the securities
offered by this prospectus will be sold, if necessary, in such
jurisdictions only through registered or licensed brokers or
dealers. In addition, securities may not be sold in some states
unless they have been registered or qualified for sale in the
applicable state or an exemption from the registration or
qualification requirement is available and is complied with.
Experts
The consolidated financial statements of AvalonBay Communities,
Inc. appearing in AvalonBay Communities, Inc.s Annual
Report
(Form 10-K)
for the year ended December 31, 2005 including the schedule
appearing therein, and AvalonBay Communities, Inc.s
managements assessment of the effectiveness of internal
control over financial reporting as of December 31, 2005
included therein, have been audited by Ernst & Young
LLP, independent registered public accounting firm, as set forth
in their reports thereon, included therein, and incorporated
herein by reference. Such consolidated financial statements and
managements assessment are incorporated herein by
reference in reliance upon such reports given on the authority
of such firm as experts in accounting and auditing.
Legal
Matters
The validity of the securities we are offering will be passed
upon for us by Goodwin Procter LLP, Boston, Massachusetts.
50
You should only rely on the information contained in this
prospectus, any prospectus supplement or any document
incorporated by reference. We have not authorized anyone else to
provide you with different or additional information. You should
not assume that the information in this prospectus or any
prospectus supplement is accurate as of any date other than the
date on the front of those documents. We are not making an offer
of these securities in any state where the offer is not
permitted.
TABLE OF
CONTENTS
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Risk Factors
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1
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Forward-Looking Statements
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8
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About This Prospectus
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9
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Where You Can Find More Information
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9
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About AvalonBay Communities,
Inc.
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10
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Ratios of Earnings to Combined
Fixed Charges and Preferred Stock Dividends
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11
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Ratios of Earnings to Fixed Charges
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12
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How We Intend to Use the Proceeds
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12
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Description of Debt Securities
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12
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Description of Preferred Stock
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26
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Description of Common Stock
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31
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Limits on Ownership of Stock
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32
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Federal Income Tax Considerations
and Consequences of Your Investment
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34
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How We Plan to Sell the Securities
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48
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Experts
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50
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Legal Matters
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50
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AvalonBay Communities,
Inc.
Debt Securities
Preferred Stock
Common Stock
PROSPECTUS
January 8, 2007
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
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Item 14.
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Other
Expenses of Issuance and Distribution.
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The expenses in connection with the issuance and distribution of
the securities being registered will be borne by AvalonBay
Communities, Inc. and are set forth in the following table (all
amounts except the registration fee are estimates):
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Registration fee
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$
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*
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Legal fees and expenses
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450,000
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Trustee and transfer agent expenses
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50,000
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Accounting fees and expenses
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200,000
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Rating agency fees
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75,000
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Printing fees and expenses
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200,000
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Miscellaneous
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100,000
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Total
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$
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1,075,000
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*
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To be deferred pursuant to Rule 456(b) and calculated in
connection with the offering of securities under this
Registration Statement pursuant to Rule 457(r) under the
Securities Act.
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Item 15.
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Indemnification
of Directors and Officers.
|
Subject to certain limited exceptions, AvalonBays charter
and bylaws, each as amended, limit the liability of
AvalonBays directors and officers to AvalonBay and its
stockholders for money damages for any breach of any duty owed
by such director or officer of AvalonBay to the fullest extent
permitted by Maryland law. The Maryland General Corporation Law
(MGCL) generally permits the liability of directors
and officers to a corporation or its stockholders for money
damages to be limited, unless it is established that
(A) the director or officer actually received an improper
personal benefit in money, property or services; (B) in the
case of a criminal proceeding, the director or officer had
reasonable cause to believe that the act or omission was
unlawful; or (C) the directors or officers act
or omission was material to the matter giving rise to the
proceeding and either was committed in bad faith or was the
result of active and deliberate dishonesty. However, if the
proceeding was one by or in the right of AvalonBay,
indemnification may not be made in respect of any proceeding in
which the director or officer shall have been adjudged to be
liable to AvalonBay. These provisions do not limit the ability
of AvalonBay or its stockholders to obtain other relief, such as
an injunction or rescission.
Pursuant to the authority granted in AvalonBays charter
and bylaws, AvalonBay has also entered into indemnification
agreements with certain of its executive officers and members of
the board of directors who are not officers of AvalonBay,
pursuant to which AvalonBay has agreed to indemnify them against
certain liabilities incurred in connection with their service as
executive officers
and/or
directors and has agreed to advance expenses incurred by them in
certain circumstances. These provisions and contracts could
reduce the legal remedies available to AvalonBay and its
stockholders against these individuals. In addition, AvalonBay
maintains a directors and officers liability
insurance policy.
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Exhibit No.
|
|
Description
|
|
|
1
|
.1
|
|
Form of Underwriting Agreement (to
be filed by amendment).
|
|
*4
|
.1
|
|
Indenture for Senior Debt
Securities, dated as of January 16, 1998, between the
Company and State Street Bank and Trust Company, as Trustee.
|
|
*4
|
.2
|
|
First Supplemental Indenture,
dated as of January 20, 1998, between the Company and State
Street Bank and Trust Company, as Trustee.
|
|
*4
|
.3
|
|
Second Supplemental Indenture,
dated as of July 7, 1998, between the Company and State
Street Bank and Trust Company, as Trustee.
|
II-1
|
|
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|
|
Exhibit No.
|
|
Description
|
|
|
*4
|
.4
|
|
Amended and Restated Third
Supplemental Indenture, dated as of July 10, 2000, between
the Company and State Street Bank and Trust Company, as Trustee.
|
|
*4
|
.5
|
|
Fourth Supplemental Indenture,
dated as of September 18, 2006, between the Company and
U.S. Bank National Association, as Trustee.
|
|
4
|
.6
|
|
Form of Senior Debt Security
(Incorporated by reference to Exhibit 4.2 to the
Companys Registration Statement on
Form S-3
(File
No. 333-41511)).
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|
4
|
.7
|
|
Form of Indenture for Subordinated
Debt Securities (Incorporated by reference to Exhibit 4.3
to the Companys Registration Statement on
Form S-3
(File
No. 333-41511)).
|
|
4
|
.8
|
|
Form of Subordinated Debt Security
(Incorporated by reference to Exhibit 4.4 to the
Companys Registration Statement on
Form S-3
(File
No. 333-41511)).
|
|
*5
|
.1
|
|
Opinion of Goodwin Procter LLP as
to the legality of the securities being registered.
|
|
*8
|
.1
|
|
Opinion of Goodwin Procter LLP as
to certain tax matters.
|
|
12
|
.1
|
|
Calculation of Ratios of Earnings
to Combined Fixed Charges and Preferred Stock Dividends and
Ratios of Earnings to Fixed Charges (Incorporated by reference
to Exhibit 12.1 to the Companys
Form 10-K
for the year ended December 31, 2005).
|
|
*23
|
.1
|
|
Consent of Ernst & Young
LLP, Independent Registered Public Accounting Firm.
|
|
23
|
.2
|
|
Consent of Goodwin Procter LLP
(included in Exhibit 5.1 hereto).
|
|
24
|
.1
|
|
Powers of Attorney (included in
Part II of this Registration Statement).
|
|
25
|
.1
|
|
Statement of Eligibility of
Trustee (Incorporated by reference to Exhibit 4.4 to the
Companys Registration Statement on Form S 3 (File
No. 333-103755)).
|
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more
than a 20% change in the maximum aggregate offering price set
forth in the Calculation of Registration Fee table
in the effective registration statement; and
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
provided, however
, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the information required to be
included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 that
are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered
II-2
therein, and the offering of such securities at that time shall
be deemed to be the initial
bona fide
offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
(5) That, for the purpose of determining liability under
the Securities Act of 1933 to any purchaser:
(A) Each prospectus filed by a Registrant pursuant to
Rule 424(b)(3) shall be deemed to be part of the
registration statement as of the date the filed prospectus was
deemed part of and included in the registration
statement; and
(B) Each prospectus required to be filed pursuant to
Rule 424(b)(2), (b)(5) or (b)(7) as part of a registration
statement in reliance on Rule 430B relating to an offering
made pursuant to Rule 415(a)(1)(i), (vii) or
(x) for the purpose of providing the information required
by Section 10(a) of the Securities Act of 1933 shall be
deemed to be part of and included in the registration statement
as of the earlier of the date such form of prospectus is first
used after effectiveness or the date of the first contract of
sale of securities in the offering described in the prospectus.
As provided in Rule 430B, for liability purposes of the
issuer and any person that is at that date an underwriter, such
date shall be deemed to be a new effective date of the
registration statement relating to the securities in the
registration statement to which the prospectus relates, and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof. Provided, however, that
no statement made in a registration statement or prospectus that
is part of the registration statement or made in a document
incorporated or deemed incorporated by reference into the
registration statement or prospectus that is part of the
registration statement will, as to a purchaser with a time of
contract of sale prior to such effective date, supersede or
modify any statement that was made in the registration statement
or prospectus that was part of the registration statement or
made in any such document immediately prior to such effective
date.
(6) That, for the purpose of determining liability of the
Registrant under the Securities Act of 1933 to any purchaser in
the initial distribution of the securities, the undersigned
Registrant undertakes that in a primary offering of securities
of the undersigned Registrant pursuant to this registration
statement, regardless of the underwriting method used to sell
the securities to the purchaser, if the securities are offered
or sold to such purchaser by means of any of the following
communications, the undersigned Registrant will be a seller to
the purchaser and will be considered to offer or sell such
securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the
undersigned Registrant relating to the offering required to be
filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering
prepared by or on behalf of the undersigned Registrant or used
or referred to by an undersigned Registrant;
(iii) The portion of any other free writing prospectus
relating to the offering containing material information about
an undersigned Registrant or its securities provided by or on
behalf of the undersigned Registrant; and
(iv) Any other communication that is an offer in the
offering made by the undersigned Registrant to the purchaser.
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act
of 1933, each filing of the registrants annual report
pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plans annual report pursuant to
Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide
offering thereof.
II-3
(c) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the registrant pursuant to
the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
(d) The undersigned registrant hereby undertakes to file an
application for the purpose of determining the eligibility of
the trustee to act under subsection (a) of
Section 310 of the Trust Indenture Act in accordance with
the rules and regulations prescribed by the Commission under
Section 305(b)(2) of the Trust Indenture Act.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
AvalonBay Communities, Inc. certifies that it has reasonable
grounds to believe that it meets all of the requirements for
filing on
Form S-3
and has duly caused this registration statement (the
Registration Statement) to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of
Alexandria, Virginia, on this 7th day of January, 2007.
AVALONBAY COMMUNITIES, INC.
Bryce Blair
Chairman and Chief Executive Officer
KNOW ALL PERSONS BY THESE PRESENTS, that we, the undersigned
officers and directors of AvalonBay Communities, Inc. hereby
severally constitute Bryce Blair, Timothy J. Naughton and Thomas
J. Sargeant, and each of them singly, our true and lawful
attorneys with full power to them, and each of them singly, to
sign for us and in our names in the capacities indicated below,
the Registration Statement filed herewith, a registration
statement on
Form S-3,
which may be subsequently filed pursuant to Rule 462 of the
Securities Act of 1933, and which would incorporate by reference
this Registration Statement, and any and all pre-effective and
post-effective amendments to any of said registration
statements, and generally to do all such things in our names and
in our capacities as officers and directors to enable AvalonBay
Communities, Inc. to comply with the provisions of the
Securities Act of 1933 and all requirements of the Commission,
hereby ratifying and confirming our signatures as they may be
signed by our said attorneys, or any of them, to either of said
registration statements and any and all amendments thereto.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
|
|
|
|
|
|
|
Signature
|
|
Capacity
|
|
Date
|
|
/s/ Bryce
Blair
Bryce
Blair
|
|
Chairman and Chief Executive
Officer (Principal Executive Officer), Director
|
|
January 7, 2007
|
|
|
|
|
|
/s/ Bruce
A. Choate
Bruce
A. Choate
|
|
Director
|
|
January 7, 2007
|
|
|
|
|
|
/s/ John
J. Healy, Jr.
John
J. Healy, Jr.
|
|
Director
|
|
January 7, 2007
|
|
|
|
|
|
/s/ Timothy
J. Naughton
Timothy
J. Naughton
|
|
President, Director
|
|
January 7, 2007
|
|
|
|
|
|
/s/ Gilbert
M. Meyer
Gilbert
M. Meyer
|
|
Director
|
|
January 7, 2007
|
|
|
|
|
|
/s/ Lance
R. Primis
Lance
R. Primis
|
|
Director
|
|
January 7, 2007
|
|
|
|
|
|
/s/ H.
Jay Sarles
H.
Jay Sarles
|
|
Director
|
|
January 7, 2007
|
II-5
|
|
|
|
|
|
|
Signature
|
|
Capacity
|
|
Date
|
|
/s/ Allan
D. Schuster
Allan
D. Schuster
|
|
Director
|
|
January 7, 2007
|
|
|
|
|
|
/s/ Amy
P. Williams
Amy
P. Williams
|
|
Director
|
|
January 7, 2007
|
|
|
|
|
|
/s/ Thomas
J. Sargeant
Thomas
J. Sargeant
|
|
Chief Financial Officer (Principal
Financial and Accounting Officer)
|
|
January 7, 2007
|
II-6
EXHIBIT INDEX
|
|
|
|
|
Exhibit No.
|
|
Description
|
|
|
1
|
.1
|
|
Form of Underwriting Agreement (to
be filed by amendment).
|
|
*4
|
.1
|
|
Indenture for Senior Debt
Securities, dated as of January 16, 1998, between the
Company and State Street Bank and Trust Company, as Trustee.
|
|
*4
|
.2
|
|
First Supplemental Indenture,
dated as of January 20, 1998, between the Company and State
Street Bank and Trust Company, as Trustee.
|
|
*4
|
.3
|
|
Second Supplemental Indenture,
dated as of July 7, 1998, between the Company and State
Street Bank and Trust Company, as Trustee.
|
|
*4
|
.4
|
|
Amended and Restated Third
Supplemental Indenture, dated as of July 10, 2000, between
the Company and State Street Bank and Trust Company, as Trustee.
|
|
*4
|
.5
|
|
Fourth Supplemental Indenture,
dated as of September 18, 2006, between the Company and
U.S. Bank National Association, as Trustee.
|
|
4
|
.6
|
|
Form of Senior Debt Security
(Incorporated by reference to Exhibit 4.2 to the
Companys Registration Statement on
Form S-3
(File
No. 333-41511)).
|
|
4
|
.7
|
|
Form of Indenture for Subordinated
Debt Securities (Incorporated by reference to Exhibit 4.3
to the Companys Registration Statement on
Form S-3
(File
No. 333-41511)).
|
|
4
|
.8
|
|
Form of Subordinated Debt Security
(Incorporated by reference to Exhibit 4.4 to the
Companys Registration Statement on
Form S-3
(File
No. 333-41511)).
|
|
*5
|
.1
|
|
Opinion of Goodwin Procter LLP as
to the legality of the securities being registered.
|
|
*8
|
.1
|
|
Opinion of Goodwin Procter LLP as
to certain tax matters.
|
|
12
|
.1
|
|
Calculation of Ratios of Earnings
to Combined Fixed Charges and Preferred Stock Dividends and
Ratios of Earnings to Fixed Charges (Incorporated by reference
to Exhibit 12.1 to the Companys
Form 10-Q
for the quarter ended June 30, 2006).
|
|
*23
|
.1
|
|
Consent of Ernst & Young
LLP, Independent Registered Public Accounting Firm.
|
|
23
|
.2
|
|
Consent of Goodwin Procter LLP
(included in Exhibit 5.1 hereto).
|
|
24
|
.1
|
|
Powers of Attorney (included in
Part II of this Registration Statement).
|
|
25
|
.1
|
|
Statement of Eligibility of
Trustee (Incorporated by reference to Exhibit 4.4 to the
Companys Registration Statement on
Form S-3
(File
No. 333-103755)).
|
Exhibit
4.1
BAY APARTMENT COMMUNITIES, INC.
TO
STATE STREET BANK AND TRUST COMPANY
Trustee
Indenture
Dated as of January 16, 1998
Senior Debt Securities
TABLE OF CONTENTS
|
|
|
|
|
|
|
Page
|
|
RECITALS OF THE COMPANY
|
|
|
1
|
|
ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
|
|
|
1
|
|
SECTION 101. Definitions
|
|
|
1
|
|
SECTION 102. Compliance Certificates and Opinions
|
|
|
11
|
|
SECTION 103. Form of Documents Delivered to Trustee
|
|
|
11
|
|
SECTION 104. Acts of Holders
|
|
|
12
|
|
SECTION 105. Notices, etc., to Trustee and Company
|
|
|
14
|
|
SECTION 106. Notice to Holders: Waiver
|
|
|
14
|
|
SECTION 107. Counterparts; Effect of Headings and Table of Contents
|
|
|
15
|
|
SECTION 108. Successors and Assigns
|
|
|
15
|
|
SECTION 109. Severability Clause
|
|
|
15
|
|
SECTION 110. Benefits of Indenture
|
|
|
15
|
|
SECTION 111. Governing Law
|
|
|
16
|
|
SECTION 112. Legal Holidays
|
|
|
16
|
|
SECTION 113. Immunity of Stockholders, Directors, Officers and Agents of the Company
|
|
|
16
|
|
SECTION 114. Conflict with Trust Indenture Act
|
|
|
16
|
|
ARTICLE TWO SECURITIES FORMS
|
|
|
17
|
|
SECTION 201. Forms of Securities
|
|
|
17
|
|
SECTION 202. Form of Trustees Certificate of Authentication
|
|
|
17
|
|
SECTION 203. Securities Issuable in Global Form
|
|
|
17
|
|
ARTICLE THREE THE SECURITIES
|
|
|
19
|
|
SECTION 301. Amount Unlimited; Issuable in Series
|
|
|
19
|
|
SECTION 302. Denominations
|
|
|
22
|
|
SECTION 303. Execution, Authentication, Delivery and Dating
|
|
|
22
|
|
SECTION 304. Temporary Securities
|
|
|
25
|
|
SECTION 305. Registration, Registration of Transfer and Exchange
|
|
|
27
|
|
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities
|
|
|
30
|
|
SECTION 307. Payment of Interest; Interest Rights Preserved
|
|
|
32
|
|
SECTION 308. Persons Deemed Owners
|
|
|
34
|
|
SECTION 309. Cancellation
|
|
|
35
|
|
SECTION 310. Computation of Interest
|
|
|
35
|
|
ARTICLE FOUR SATISFACTION AND DISCHARGE
|
|
|
35
|
|
SECTION 401. Satisfaction and Discharge of Indenture
|
|
|
35
|
|
SECTION 402. Application of Trust Funds
|
|
|
37
|
|
ARTICLE FIVE REMEDIES
|
|
|
37
|
|
SECTION 501. Events of Default
|
|
|
37
|
|
SECTION 502. Acceleration of Maturity; Rescission and Annulment
|
|
|
39
|
|
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee
|
|
|
40
|
|
SECTION 504. Trustee May File Proofs of Claim
|
|
|
40
|
|
(i)
|
|
|
|
|
|
|
Page
|
|
SECTION 505. Trustee May Enforce Claims Without Possession of Securities or
Coupons
|
|
|
41
|
|
SECTION 506. Application of Money Collected
|
|
|
42
|
|
SECTION 507. Limitation on Suits
|
|
|
42
|
|
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium or Make-Whole
Amount, if any, and Interest
|
|
|
43
|
|
SECTION 509. Restoration of Rights and Remedies
|
|
|
43
|
|
SECTION 510. Rights and Remedies Cumulative
|
|
|
43
|
|
SECTION 511. Delay or Omission Not Waiver
|
|
|
43
|
|
SECTION 512. Control by Holders of Securities
|
|
|
43
|
|
SECTION 513. Waiver of Past Defaults
|
|
|
44
|
|
SECTION 514. Waiver of Usury, Stay or Extension Laws
|
|
|
44
|
|
SECTION 515. Undertaking for Costs
|
|
|
45
|
|
ARTICLE SIX THE TRUSTEE
|
|
|
45
|
|
SECTION 601. Notice of Defaults
|
|
|
45
|
|
SECTION 602. Certain Rights of Trustee
|
|
|
45
|
|
SECTION 603. Not Responsible for Recitals or Issuance of Securities
|
|
|
47
|
|
SECTION 604. May Hold Securities
|
|
|
47
|
|
SECTION 605. Money Held in Trust
|
|
|
48
|
|
SECTION 606. Compensation and Reimbursement
|
|
|
48
|
|
SECTION 607. Corporate Trustee Required; Eligibility; Conflicting Interests
|
|
|
48
|
|
SECTION 608. Resignation and Removal; Appointment of Successor
|
|
|
49
|
|
SECTION 609. Acceptance of Appointment by Successor
|
|
|
50
|
|
SECTION 610. Merger, Conversion, Consolidation or Succession to Business
|
|
|
51
|
|
SECTION 611. Appointment of Authenticating Agent
|
|
|
52
|
|
SECTION 612. Certain Duties and Responsibilities of the Trustee.
|
|
|
53
|
|
ARTICLE SEVEN HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY
|
|
|
55
|
|
SECTION 701. Disclosure of Names and Addresses of Holders
|
|
|
55
|
|
SECTION 702. Reports by Trustee
|
|
|
55
|
|
SECTION 703. Reports by Company
|
|
|
55
|
|
SECTION 704. Company to Furnish Trustee Names and Addresses of Holders
|
|
|
56
|
|
ARTICLE EIGHT CONSOLIDATION, MERGER, SALE, LEASE OR CONVEYANCE
|
|
|
56
|
|
SECTION 801. Consolidations and Mergers of Company and Sales, Leases and Conveyances
Permitted Subject to Certain Conditions
|
|
|
56
|
|
SECTION 802. Rights and Duties of Successor Corporation
|
|
|
56
|
|
SECTION 803. Officers Certificate and Opinion of Counsel
|
|
|
57
|
|
ARTICLE NINE SUPPLEMENTAL INDENTURES
|
|
|
57
|
|
SECTION 901. Supplemental Indentures Without Consent of Holders
|
|
|
57
|
|
SECTION 902. Supplemental Indentures with Consent of Holders
|
|
|
59
|
|
SECTION 903. Execution of Supplemental Indentures
|
|
|
60
|
|
SECTION 904. Effect of Supplemental Indentures
|
|
|
60
|
|
SECTION 905. Conformity with Trust Indenture Act
|
|
|
60
|
|
SECTION 906. Reference in Securities to Supplemental Indentures
|
|
|
60
|
|
(ii)
|
|
|
|
|
|
|
Page
|
|
ARTICLE TEN COVENANTS
|
|
|
61
|
|
SECTION 1001. Payment of Principal, Premium or Make-Whole Amount, if any; and
Interest
|
|
|
61
|
|
SECTION 1002. Maintenance of Office or Agency
|
|
|
61
|
|
SECTION 1003. Money for Securities Payments to Be Held in Trust
|
|
|
62
|
|
SECTION 1004. Existence
|
|
|
64
|
|
SECTION 1005. Maintenance of Properties
|
|
|
64
|
|
SECTION 1006. Insurance
|
|
|
64
|
|
SECTION 1007. Payment of Taxes and Other Claims
|
|
|
64
|
|
SECTION 1008. Statement as to Compliance
|
|
|
65
|
|
SECTION 1009. Waiver of Certain Covenants
|
|
|
65
|
|
ARTICLE ELEVEN REDEMPTION OF SECURITIES
|
|
|
65
|
|
SECTION 1101. Applicability of Article
|
|
|
65
|
|
SECTION 1102. Election to Redeem; Notice to Trustee
|
|
|
65
|
|
SECTION 1103. Selection by Trustee of Securities to Be Redeemed
|
|
|
65
|
|
SECTION 1104. Notice of Redemption
|
|
|
66
|
|
SECTION 1105. Deposit of Redemption Price
|
|
|
67
|
|
SECTION 1106. Securities Payable on Redemption Date
|
|
|
67
|
|
SECTION 1107. Securities Redeemed in Part
|
|
|
68
|
|
ARTICLE TWELVE SINKING FUNDS
|
|
|
69
|
|
SECTION 1201. Applicability of Article
|
|
|
69
|
|
SECTION 1202. Satisfaction of Sinking Fund Payments with Securities
|
|
|
69
|
|
SECTION 1203. Redemption of Securities for Sinking Fund
|
|
|
69
|
|
ARTICLE THIRTEEN REPAYMENT AT THE OPTION OF HOLDERS
|
|
|
70
|
|
SECTION 1301. Applicability of Article
|
|
|
70
|
|
SECTION 1302. Repayment of Securities
|
|
|
70
|
|
SECTION 1303. Exercise of Option
|
|
|
70
|
|
SECTION 1304. When Securities Presented for Repayment Become Due and Payable
|
|
|
71
|
|
SECTION 1305. Securities Repaid in Part
|
|
|
72
|
|
ARTICLE FOURTEEN DEFEASANCE AND COVENANT DEFEASANCE
|
|
|
72
|
|
SECTION 1401. Applicability of Article: Companys Option to Effect Defeasance or Covenant
Defeasance
|
|
|
72
|
|
SECTION 1402. Defeasance and Discharge
|
|
|
72
|
|
SECTION 1403. Covenant Defeasance
|
|
|
73
|
|
SECTION 1404. Conditions to Defeasance or Covenant Defeasance
|
|
|
73
|
|
SECTION 1405. Deposited Money and Government Obligations to Be Held in Trust; Other
Miscellaneous Provisions
|
|
|
75
|
|
ARTICLE FIFTEEN MEETINGS OF HOLDERS OF SECURITIES
|
|
|
76
|
|
SECTION 1501. Purposes for Which Meetings May Be Called
|
|
|
76
|
|
SECTION 1502. Call, Notice and Place of Meetings
|
|
|
76
|
|
SECTION 1503. Persons Entitled to Vote at Meetings
|
|
|
77
|
|
SECTION 1504. Quorum; Action
|
|
|
77
|
|
SECTION 1505. Determination of Voting Rights; Conduct and Adjournment of Meetings
|
|
|
78
|
|
(iii)
|
|
|
|
|
|
|
Page
|
|
SECTION 1506. Counting Votes and Recording Action of Meetings
|
|
|
79
|
|
SIGNATURES AND SEALS
|
|
|
80
|
|
ACKNOWLEDGMENT
|
|
|
81
|
|
EXHIBIT
A FORM OF REDEEMABLE OR NON-REDEEMABLE SENIOR SECURITY
|
|
|
1
|
|
EXHIBIT B FORMS OF CERTIFICATION
|
|
|
1
|
|
(iv)
BAY APARTMENT COMMUNITIES, INC.
Reconciliation and tie between Trust Indenture Act of 1939 (the Trust Indenture Act or
TIA) and Indenture, dated as of January 16, 1998.
|
|
|
|
|
|
Trust Indenture
|
|
|
|
|
|
Act Section
|
|
|
|
Indenture Section
|
§310(a)(1)
|
|
|
|
607
|
|
(a)(2)
|
|
|
|
607
|
|
(b)
|
|
|
|
607, 608
|
|
§312(c)
|
|
|
|
701
|
|
§313(a)
|
|
|
|
702
|
|
(c)
|
|
|
|
702
|
|
§314(a)
|
|
|
|
703
|
|
(a)(4)
|
|
|
|
1008
|
|
(c)(1)
|
|
|
|
102
|
|
(c)(2)
|
|
|
|
102
|
|
(e)
|
|
|
|
102
|
|
§315(b)
|
|
|
|
601
|
|
§316(a)
|
|
(last sentence)
|
|
101
|
(Outstanding)
|
(a)(1)(A)
|
|
|
|
502, 512
|
|
(a)(1)(B)
|
|
|
|
513
|
|
(b)
|
|
|
|
508
|
|
§317(a)(1)
|
|
|
|
503
|
|
(a)(2)
|
|
|
|
504
|
|
§318(a)
|
|
|
|
111
|
|
(c)
|
|
|
|
111
|
|
|
|
|
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be a part of the
Indenture.
|
Attention should also be directed to TIA Section 318(c), which provides that the provisions of
TIA Sections 310 to and including 317 of the Trust Indenture Act are a part of and govern every
qualified indenture, whether or not physically contained therein.
(v)
INDENTURE, dated as of January 16, 1998, between BAY APARTMENT COMMUNITIES, INC., a
corporation organized under the laws of the State of Maryland (hereinafter called the Company),
having its principal office at 4340 Stevens Creek Boulevard, Suite 275, San Jose, California 95129,
and STATE STREET BANK AND TRUST COMPANY, a trust company organized under the laws of The
Commonwealth of Massachusetts, as Trustee hereunder (hereinafter called the Trustee), having a
Corporate Trust Office at Two International Place, Boston, Massachusetts 02110.
RECITALS OF THE COMPANY
The Company deems it necessary to issue from time to time for its lawful purposes senior debt
securities (hereinafter called the Securities) evidencing its unsecured and senior indebtedness,
and has duly authorized the execution and delivery of this Indenture to provide for the issuance
from time to time of the Securities, to be issued in one or more Series as provided in this
Indenture.
This Indenture is subject to the provisions of the Trust Indenture Act of 1939, as amended
(the Trust Indenture Act or TIA), that are deemed to be incorporated into this Indenture and
shall, to the extent applicable, be governed by such provisions.
All things necessary to make this Indenture a valid agreement of the Company, in accordance
with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Securities by the Holders
thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all
Holders of the Securities, as follows:
ARTICLE
ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101.
Definitions
. For all purposes of this
Indenture, except as otherwise expressly provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to them in this
Article, and include the plural as well as the singular;
(2) all other terms used herein which are defined in the TIA, either directly or by
reference therein, have the meanings assigned to them therein, and the terms cash
transactions and self-liquidating paper, as used in TIA Section 311, shall have the
meanings assigned to them in the rules of the Commission adopted under the TIA;
(3) all accounting terms not otherwise defined herein have the meanings assigned
to them in accordance with GAAP; and
(4) the words herein, hereof and hereunder and other words of similar import
refer to this Indenture as a whole and not to any particular Article, Section or other
subdivision.
Act
, when used with respect to any Holder, has the meaning specified in Section 104.
Affiliate
of any specified Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with such specified Person.
For the purposes of this definition, control when used with respect to any specified Person
means the power to direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise; and the terms
controlling and controlled have meanings correlative to the foregoing.
Authenticating Agent
means any Person authorized by the Trustee pursuant to Section
611 hereof to act on behalf of the Trustee to authenticate Securities.
Authorized Newspaper
means a newspaper, printed in the English language or in an
official language of the country of publication, customarily published on each Business Day,
whether or not published on Saturdays, Sundays or holidays, and of general circulation in each
place in connection with which the term is used or in the financial community of each such place.
Whenever successive publications are required to be made in Authorized Newspapers, the successive
publications may be made in the same or in different Authorized Newspapers in the same city meeting
the foregoing requirements and in each case on any Business Day.
Bankruptcy Law
has the meaning specified in Section 501.
Bearer Security
means any Security established pursuant to Section 201 which is
payable to bearer.
Board of Directors
means the board of directors of the Company or any committee of
that board duly authorized to act hereunder.
Board Resolution
means a copy of a resolution certified by the Secretary or an
Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in
full force and effect on the date of such certification, and delivered to the Trustee.
Business Day
, when used with respect to any Place of Payment or any other
particular location referred to in this Indenture or in the Securities, means, unless otherwise
specified with
respect to any Securities issued pursuant to Section 301, any day, other than a Saturday or
Sunday, that is not a day on which banking institutions in that Place of Payment or particular
location are authorized or required by law, regulation or executive order to close.
Capital Stock
means, with respect to any Person, any capital stock (including
preferred stock), shares, interests, participations or other ownership interests (however
designated) of such Person and any rights (other than debt securities convertible into or
exchangeable for corporate stock), warrants or options to purchase any thereof.
CEDEL
means Centrale de Livraison de Valeurs Mobiliéres, S.A., or its successor.
Commission
means the Securities and Exchange Commission, as from time to time
constituted, created under the Securities Exchange Act of 1934, or, if at any time after execution
of this instrument such Commission is not existing and performing the duties now assigned to it
under the Trust Indenture Act, then the body performing such duties on such date.
Common Stock
means, with respect to any Person, all shares of capital stock issued
by such Person other than Preferred Stock.
Company
means the Person named as the Company in the first paragraph of this
Indenture until a successor corporation shall have become such pursuant to the applicable
provisions of this Indenture, and thereafter Company shall mean such successor corporation.
Company Request
and
Company Order
mean, respectively, a written request or
order signed in the name of the Company by its Chairman of the Board, the President or a Vice
President, and by its Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary,
of the Company, and delivered to the Trustee.
Consolidated Net Assets
means as of any particular time the aggregate amount of
assets (less applicable reserves and other properly deductible items) after deducting therefrom all
current liabilities except for (a) notes and loans payable, (b) current maturities of long-term
debt and (c) current maturities of obligations under capital leases, all as set forth on the most
recent consolidated balance sheet of the Company and its consolidated Subsidiaries and computed in
accordance with generally accepted accounting principles and practices as in effect on January 16,
1998.
Conversion Event
means the cessation of use of (i) a Foreign Currency both by the
government of the country which issued such currency and for the settlement of transactions by a
central bank or other public institutions of or within the international banking community, (ii)
the ECU both within the European Monetary System and for the settlement of transactions by public
institutions of or within the European Communities or (iii) any currency unit (or composite
currency) other than the ECU for the purposes for which it was established.
Corporate Trust Office
means the office of the Trustee at which, at any particular
time, its corporate trust business shall be principally administered, which office at the date
hereof is located at Two International Place, Boston, Massachusetts 02110, Attention: Corporate
Trust Department.
corporation
includes corporations, associations, companies and business trusts.
coupon
means any interest coupon appertaining to a Bearer Security.
Custodian
has the meaning specified in Section 501.
Defaulted Interest
has the meaning specified in Section 307.
Dollar
or
$
means a dollar or other equivalent unit in such coin or
currency of the United States of America as at the time shall be legal tender for the payment of
public and private debts.
ECU
means the European Currency Unit as defined and revised from time to time by the
Council of the European Communities.
Euroclear
means Morgan Guaranty Trust Company of New York, Brussels office, or its
successor, as operator of the Euroclear System.
European Communities
means the European Economic Community, the European Coal and
Steel Community and the European Atomic Energy Community.
European Monetary System
means the European Monetary System established by the
Resolution of December 5, 1978 of the Council of the European Communities.
Event of Default
has the meaning specified in Article Five.
Foreign Currency
means any currency, currency unit or composite currency, including,
without limitation, the ECU issued by the government of one or more countries other than the United
States of America or by any recognized confederation or association of such governments.
GAAP
means, except as otherwise provided herein, generally accepted accounting
principles, as in effect from time to time, as used in the United States applied on a consistent
basis.
Global Security
means a Security evidencing all or a part of a series of Securities
issued to and registered in the name of the depository for such series, or its nominee, in
accordance with Section 305, and bearing the legend prescribed in Section 203.
Government Obligations
means securities which are (i) direct obligations of the
United States of America or the government which issued the Foreign Currency in which the
Securities of a particular series are payable, for the payment of which its full faith and credit
is pledged or (ii) obligations of a Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America or such government which issued the Foreign
Currency in which
the Securities of such series are payable, the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United States of America or
such other government, which, in either case, are not callable or redeemable at the option of the
issuer thereof, and (iii) shall also include a depository receipt issued by a bank or trust company
as custodian with respect to any such Government Obligation or a specific payment of interest on or
principal of any such Government Obligation held by such custodian for the account of the holder of
a depository receipt,
provided
that (except as required by law) such custodian is not
authorized to make any deduction from the amount payable to the holder of such depository receipt
from any amount received by the custodian in respect of the Government Obligation or the specific
payment of interest on or principal of the Government Obligation evidenced by such depository
receipt.
Guaranty
by any Person means any Obligation, contingent or otherwise, of such Person
guaranteeing any Indebtedness of any other Person (the primary obligor) in any manner, whether
directly or indirectly, and including, without limitation, every Obligation of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or to
purchase (or to advance or supply funds for the purchase of) any security for the payment of such
Indebtedness, (ii) to purchase property, securities or services for the purpose of assuring the
holder of such Indebtedness of the payment of such Indebtedness or (iii) to maintain working
capital, equity capital or other financial statement condition or liquidity of the primary obligor
so as to enable the primary obligor to pay such Indebtedness;
provided
,
however
,
that a Guaranty by any Person shall not include endorsements by such Person for collection or
deposit, in either case in the ordinary course of business. The terms Guaranteed, Guaranteeing
and Guarantor shall have meanings correlative to the foregoing.
Holder
means, in the case of a Registered Security, the Person in whose name a
Security is registered in the Security Register and, in the case of a Bearer Security, the bearer
thereof and, when used with respect to any coupon, shall mean the bearer thereof.
Indebtedness
means, with respect to any Person, without duplication, (i) any
Obligation of such Person relating to any indebtedness of such Person (A) for borrowed money
(whether or not the recourse of the lender is to the whole of the assets, of such person or only to
a portion thereof), (B) evidenced by notes, debentures or similar instruments (including purchase
money obligations) given in connection with the acquisition of any property or assets (other than
trade accounts payable for inventory or similar property acquired in the ordinary course of
business), including securities, for the payment of which such Person is liable, directly or
indirectly, or the payment of which is secured by a lien, charge or encumbrance on property or
assets of such Person, (C) for goods, materials or services purchased in the ordinary course of
business (other than trade accounts payable arising in the ordinary course of business), (D) with
respect to letters of credit or bankers acceptances issued for the account of such Person or
performance, surety or
similar bonds, (E) for the payment of money relating to a Capitalized Lease Obligation or (F)
under interest rate swaps, caps or similar agreements and foreign exchange contracts, currency
swaps or similar agreements; (ii) any liability of others of the kind described in the preceding
clause (i), which such Person has Guaranteed or which is otherwise its legal liability; and
(iii)
any and all deferrals, renewals, extensions and refunding of, or amendments, modifications or
supplements to, any liability of the kind described in any of the preceding clauses (i) or (ii).
Indenture
means this instrument as originally executed or as it may be supplemented
or amended from time to time by one or more indentures supplemental hereto entered into pursuant to
the applicable provisions hereof, and shall include the terms of particular series of Securities
established as contemplated by Section 301;
provided
,
however
, that, if at any time
more than one Person is acting as Trustee under this instrument, Indenture shall mean, with
respect to any one or more series of Securities for which such Person is Trustee, this instrument
as originally executed or as it may be supplemented or amended from time to time by one or more
indentures supplemental hereto entered into pursuant to the applicable provisions hereof and shall
include the terms of the or those particular series of Securities for which such Person is Trustee
established as contemplated by Section 301, exclusive, however, of any provisions or terms which
relate solely to other series of Securities for which such Person is Trustee, regardless of when
such terms or provisions were adopted, and exclusive of any provisions or terms adopted by means of
one or more indentures supplemental hereto executed and delivered after such Person had become such
Trustee but to which such Person, as such Trustee, was not a party.
Indexed Security
means a Security the terms of which provide that the principal
amount thereof payable at Stated Maturity may be more or less than the principal face amount
thereof at original issuance.
Interest
, when used with respect to an Original Issue Discount Security which by its
terms bears interest only after Maturity, shall mean interest payable after Maturity.
Interest Payment Date
, when used with respect to any Security, means the Stated
Maturity of an installment of interest on such Security.
Make-Whole Amount
, when used with respect to any Security, means the amount, if any,
in addition to principal (and accrued interest thereon, if any) which is required by a Security,
under the terms and conditions specified therein or as otherwise specified as contemplated by
Section 301, to be paid by the Company to the Holder thereof in connection with any optional
redemption or accelerated payment of such Security.
Maturity
, when used with respect to any Security, means the date on which the
principal of such Security or an installment of principal becomes due and payable as therein or
herein provided, whether at the Stated Maturity or by declaration of acceleration, notice of
redemption, notice of option to elect repayment or otherwise.
Obligation
of any Person with respect to any specified Indebtedness means any
obligation of such Person to pay principal, premium, interest (including interest accruing on or
after the filing of any petition in bankruptcy or for reorganization relating to such Person,
whether or not a claim for such post-petition interest is allowed in such Proceeding), penalties,
reimbursement or indemnification amounts, fees, expenses or other amounts relating to such
Indebtedness.
Officers Certificate
means a certificate signed by the Chairman of the Board of
Directors, the President or a Vice President and by the Treasurer, an Assistant Treasurer, the
Secretary or an Assistant Secretary of the Company, and delivered to the Trustee.
Opinion of Counsel
means a written opinion of counsel, who may be counsel for the
Company or who may be an employee of or other counsel for the Company and who shall be satisfactory
to the Trustee.
Original Issue Discount Security
means any Security which provides for an amount
less than the principal amount thereof to be due and payable upon a declaration of acceleration of
the Maturity thereof pursuant to Section 502.
Outstanding
, when used with respect to Securities, means, as of the date of
determination, all Securities theretofore authenticated and delivered under this Indenture,
except
:
(i) Securities theretofore canceled by the Trustee or delivered to the Trustee for
cancellation;
(ii) Securities, or portions thereof, for whose payment or redemption (including
repayment at the option of the Holder) money in the necessary amount has been theretofore
deposited with the Trustee or any Paying Agent (other than the Company) in trust or set
aside and segregated in trust by the Company (if the Company shall act as its own Paying
Agent) for the Holders of such Securities and any coupons appertaining thereto;
provided
,
however
, that, if such Securities are to be redeemed, notice of
such redemption has been duly given pursuant to this Indenture or provision therefor
satisfactory to the Trustee has been made;
(iii) Securities, except to the extent provided in Sections 1402 and 1403, with respect
to which the Company has effected defeasance and/or covenant defeasance as provided in
Article Fourteen; and
(iv) Securities which have been paid pursuant to Section 306 or in exchange for
or in lieu of which other Securities have been authenticated and delivered pursuant to this
Indenture, other than any such Securities in respect of which there shall have been
presented to the Trustee proof satisfactory to it that such Securities are held by a bona
fide purchaser in whose hands such Securities are valid obligations of the Company.
provided
,
however
, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand, authorization,
direction, notice, consent or waiver hereunder or are present at a meeting of Holders for quorum
purposes, and for the purpose of making the calculations required by TIA Section 313, (i) the
principal amount of an Original Issue Discount Security that may be counted in making such
determination or
calculation and that shall be deemed to be Outstanding for such purpose shall be
equal to the amount of principal thereof that would be (or shall have been declared to be) due and
payable, at the time of such determination, upon a declaration of acceleration of the maturity
thereof pursuant to Section 502, (ii) the principal amount of any Security denominated in a Foreign
Currency that may be counted in making such determination or calculation and that shall be deemed
Outstanding for such purpose shall be equal to the Dollar equivalent, determined pursuant to
Section 301 as of the date such Security is originally issued by the Company, of the principal
amount (or, in the case of an Original Issue Discount Security, the Dollar equivalent as of such
date of original issuance of the amount determined as provided in clause (i) above) of such
Security, (iii) the principal amount of any Indexed Security that may be counted in making such
determination or calculation and that shall be deemed outstanding for such purpose shall be equal
to the principal face amount of such Indexed Security at original issuance, unless otherwise
provided with respect to such Security pursuant to Section 301, and (iv) Securities owned by the
Company or any other obligor upon the Securities or any Affiliate of the Company or of such other
obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether
the Trustee shall be protected in making such calculation or in relying upon any such request,
demand, authorization, direction, notice, consent or waiver, only Securities which the Trustee
knows to be so owned shall be so disregarded. Securities owned as provided in clause (iv) above
which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to
the satisfaction of the Trustee the pledgees right so to act with respect to such Securities and
that the pledgee is not the Company or any other obligor upon the Securities or any Affiliate of
the Company or of such other obligor. In case of a dispute as to such right, the advice of counsel
shall be full protection in respect of any decision made by the Trustee in accordance with such
advice.
Paying Agent
means any Person authorized by the Company to pay the principal of (and
premium or Make-Whole Amount, if any) or interest on any Securities or coupons on behalf of the
Company.
Person
means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
Place of Payment
, when used with respect to the Securities of or within any series,
means the place or places where the principal of (and premium or Make-Whole Amount, if any) and
interest on such Securities are payable as specified as contemplated by Sections 301 and 1002.
Predecessor Security
of any particular Security means every previous Security
evidencing all or a portion of the same debt as that evidenced by such particular Security; and,
for the purposes of this definition, any Security authenticated and delivered under Section 306 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Security or a Security to which a
mutilated, destroyed, lost or stolen coupon appertains shall be deemed to evidence the same debt
as
the mutilated, destroyed, lost or stolen Security or the Security to which the mutilated,
destroyed, lost or stolen coupon appertains.
Preferred Stock
means, with respect to any Person, all capital stock issued by such
Person that are entitled to a preference or priority over any other capital stock issued by such
Person with respect to any distribution of such Persons assets, whether by dividend or upon any
voluntary or involuntary liquidation, dissolution or winding up.
Redemption Date
, when used with respect to any Security to be redeemed, in whole or
in part, means the date fixed for such redemption by or pursuant to this Indenture.
Redemption Price
, when used with respect to any Security to be redeemed, means the
price specified in the related Officers Certificate or supplemental indenture contemplated by and
pursuant to Section 301, at which it is to be redeemed pursuant to this Indenture.
Registered Security
shall mean any Security which is registered in the Security
Register.
Regular Record Date
for the interest payable on any Interest Payment Date on the
Registered Securities of or within any series means the date specified for that purpose as
contemplated by Section 301, whether or not a Business Day.
Repayment Date
means, when used with respect to any Security to be repaid at the
option of the Holder, the date fixed for such repayment by or pursuant to this Indenture.
Repayment Price
means, when used with respect to any Security to be repaid at the
option of the Holder, the price at which it is to be repaid by or pursuant to this Indenture.
Responsible Officer
, when used with respect to the Trustee, means any senior
vice president, vice president (whether or not designated by a number or a word or words added
before or after the title vice president), assistant vice president, assistant secretary, trust
officer or assistant trust officer working in its Corporate Trust Department, or any other officer
of the Trustee customarily performing functions similar to those performed by any of the above
designated officers and working in its Corporate Trust Department, and also means, with respect to
a particular corporate trust matter, any other officer to whom such matter is referred because of
such officers knowledge and familiarity with the particular subject.
Security
has the meaning stated in the first recital of this Indenture and, more
particularly, means any Security or Securities authenticated and delivered under this Indenture;
provided
,
however
, that, if at any time there is more than one Person acting
as Trustee under this Indenture, Securities with respect to the Indenture as to which such Person
is Trustee shall have the meaning stated in the first recital of this Indenture and shall more
particularly mean Securities authenticated and delivered under this Indenture, exclusive, however,
of Securities of any series as to which such Person is not Trustee.
Security Register
and
Security Registrar
have the respective meanings
specified in Section 305.
Significant Subsidiary
means any Subsidiary which is a significant subsidiary (as
defined in Article I, Rule 1-02 of Regulation S-X, promulgated under the Securities Act of 1933) of
the Company.
Special Record Date
for the payment of any Defaulted Interest on the Registered
Securities of or within any series means a date fixed by the Company pursuant to Section 307.
Stated Maturity
, when used with respect to any Security or any installment of
principal thereof or interest thereon, means the date specified in such Security or a coupon
representing such installment of interest as the fixed date on which the principal of such Security
or such installment of principal or interest is due and payable.
Subsidiary
means, with respect to any Person, any corporation, limited liability
company, partnership or other entity of which a majority of (i) the voting power of the voting
equity securities or (ii) the outstanding equity interests are owned, directly or indirectly, by
such Person. For the purposes of this definition, voting equity securities means equity
securities having voting power for the election of directors, whether at all times or only so long
as no senior class of security has such voting power by reason of any contingency.
Trust Indenture Act
or
TIA
means the Trust Indenture Act of 1939, as
amended and as in force at the date as of which this Indenture was executed, except as provided in
Section 905.
Trustee
means the Person named as the Trustee in the first paragraph of
this Indenture until a successor Trustee shall have become such pursuant to the applicable
provisions of this Indenture, and thereafter Trustee shall mean or include each Person who is
then a Trustee hereunder;
provided
,
however
, that if at any time there is more than
one such Person, Trustee as used with respect to the Securities of any series shall mean only the
Trustee with respect to Securities of that series.
United States
means, unless otherwise specified with respect to any Securities
pursuant to Section 301, the United States of America (including the states and the District of
Columbia), its territories, its possessions and other areas subject to its jurisdiction.
United States Person
means, unless otherwise specified with respect to any
Securities pursuant to Section 301, an individual who is a citizen or resident of the United
States, a
corporation, partnership or other entity created or organized in or under the laws of the
United States or an estate or trust the income of which is subject to United States Federal income
taxation regardless of its source.
Yield to Maturity
means the yield to maturity, computed at the time of issuance of a
Security (or, if applicable, at the most recent redetermination of interest on such Security) and
as set forth in such Security in accordance with generally accepted United States bond yield
computation principles.
SECTION 102.
Compliance Certificates and Opinions
. Upon any application or request by the Company to the Trustee to take any action
under any provision of this Indenture, the Company shall furnish to the Trustee an Officers
Certificate stating that all conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with and an Opinion of Counsel stating that in the
opinion of such counsel all such conditions precedent, if any, have been complied with, except that
in the case of any such application or request as to which the furnishing of such documents is
specifically required by any provision of this Indenture relating to such particular application or
request, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition or covenant provided
for in this Indenture (including certificates delivered pursuant to Section 1008) shall include:
(1) a statement that each individual signing such certificate or opinion has read such
condition or covenant and the definitions herein relating thereto;
(2) a brief statement as to the nature and scope of the examination or investigation
upon which the statements or opinions contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has made such
examination or investigation as is necessary to enable him to express an informed opinion as
to whether or not such condition or covenant has been complied with; and
(4) a statement as to whether, in the opinion of each such individual, such condition
or covenant has been complied with.
SECTION 103.
Form of Documents Delivered to Trustee
. In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they be so certified or
covered by only one document, but one such Person may certify or give an opinion with respect to
some matters
and one or more other such Persons as to other matters, and any such Person may certify or
give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based, insofar as it relates to
legal matters, upon an Opinion of Counsel, or a certificate or representations by counsel, unless
such officer knows, or in the exercise of reasonable care should know, that the opinion,
certificate or representations with respect to the matters upon which his certificate or opinion is
based are erroneous. Any such Opinion of Counsel or certificate or representations may be based,
insofar as it relates to factual matters, upon a certificate or opinion of, or representations by,
an officer or officers of the Company stating that the information as to such factual matters is in
the possession of the Company, unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to such matters are
erroneous.
Where any Person is required to make, give or execute two or more applications, requests,
consents, certificates, statements, opinions or other instruments under this Indenture, they may,
but need not, be consolidated and form one instrument.
SECTION 104.
Acts of Holders
. (a) Any request,
demand, authorization, direction, notice, consent, waiver or other action provided by this
Indenture to be given or taken by Holders of the Outstanding Securities of all series or one or
more series, as the case may be, may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agents duly appointed in
writing. If Securities of a series are issuable as Bearer Securities, any request, demand,
authorization, direction, notice, consent, waiver or other action provided by this Indenture to be
given or taken by Holders of Securities of such series may, alternatively, be embodied in and
evidenced by the record of Holders of Securities of such series voting in favor thereof, either in
person or by proxies duly appointed in writing, at any meeting of Holders of Securities of such
series duly called and held in accordance with the provisions of Article Fifteen, or a combination
of such instruments and any such record. Except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments or record or both are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such instrument or
instruments and any such record (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the Act of the Holders signing such instrument or instruments or so
voting at any such meeting. Proof of execution of any such instrument or of a writing appointing
any such agent, or of the holding by any Person of a Security, shall be sufficient for any purpose
of this Indenture and conclusive in favor of the Trustee and the Company and any agent of the
Trustee or the Company, if made in the manner provided in this Section. The record of any meeting
of Holders of Securities shall be proved in the manner provided in Section 1506.
(b) The fact and date of the execution by any Person of any such instrument or writing may be
proved by the affidavit of a witness of such execution or by a certificate of a notary public or
other officer authorized by law to take acknowledgments of deeds, certifying
that the individual signing such instrument or writing acknowledged to him the execution
thereof. Where such execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof of his authority.
The fact and date of the execution of any such instrument or writing, or the authority of the
Person executing the same, may also be proved in any other reasonable manner which the Trustee
deems sufficient.
(c) The ownership of Registered Securities shall be proved by the Security Register. As to
any matter relating to beneficial ownership interests in any Global Security, the appropriate
depositorys records shall be dispositive for purposes of this Indenture.
(d) The ownership of Bearer Securities may be proved by the production of such Bearer
Securities or by a certificate executed, as depository, by any trust company, bank, banker or other
depository, wherever situated, if such certificate shall be deemed by the Trustee to be
satisfactory, showing that at the date therein mentioned such Person had on deposit with such
depository, or exhibited to it, the Bearer Securities therein described; or such facts may be
proved by the certificate or affidavit of the Person holding such Bearer Securities, if such
certificate or affidavit is deemed by the Trustee to be satisfactory. The Trustee and the Company
may assume that such ownership of any Bearer Security continues until (1) another certificate or
affidavit bearing a later date issued in respect of the same Bearer Security is produced, or (2)
such Bearer Security is produced to the Trustee by some other Person, or (3) such Bearer Security
is surrendered in exchange for a Registered Security, or (4) such Bearer Security is no longer
Outstanding. The ownership of Bearer Securities may also be proved in any other manner which the
Trustee deems sufficient.
(e) If the Company shall solicit from the Holders of Registered Securities any request,
demand, authorization, direction, notice, consent, waiver or other Act, the Company may, at its
option, in or pursuant to a Board Resolution, fix in advance a record date for the determination of
Holders entitled to give such request, demand, authorization, direction, notice, consent, waiver or
other Act, but the Company shall have no obligation to do so. Notwithstanding TIA Section 316(c),
such record date shall be the record date specified in or pursuant to such Board Resolution, which
shall be a date not earlier than the date 30 days prior to the first solicitation of Holders
generally in connection therewith and not later than the date such solicitation is completed. If
such a record date is fixed, such request, demand, authorization, direction, notice, consent,
waiver or other Act may be given before or after such record date, but only the Holders of record
at the close of business on such record date shall be deemed to be Holders for the purposes of
determining whether Holders of the requisite proportion of Outstanding Securities have authorized
or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver
or other Act, and for that purpose the Outstanding Securities shall be computed as of such record
date;
provided
that no such authorization, agreement or consent by the Holders on such
record date shall be deemed effective unless it shall become effective pursuant to the provisions
of this Indenture not later than eleven months after the record date.
(f) Any request, demand, authorization, direction, notice, consent, waiver or other Act of the
Holder of any Security shall bind every future Holder of the same Security and the Holder of every
Security issued upon the registration of transfer thereof or in exchange therefor or in lieu
thereof in respect of anything done, omitted or suffered to be done by the Trustee, any Security
Registrar, any Paying Agent, any Authenticating Agent or the Company in reliance thereon, whether
or not notation of such action is made upon such Security.
SECTION 105.
Notices, etc., to Trustee and Company
. Any request, demand, authorization, direction, notice, consent, waiver or Act of
Holders or other document provided or permitted by this Indenture to be made upon, given or
furnished to, or filed with,
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(1) the
Trustee by any Holder or by the Company shall be sufficient for every purpose
hereunder if made, given, furnished or filed in writing to or with the Trustee at State
Street Bank and Trust Company, Two International Place, Boston MA 02110, Attention:
Corporate Trust Department; or
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(2)
the Company by the Trustee or by any Holder shall be sufficient for every purpose
hereunder (unless otherwise herein expressly provided) if in writing and mailed, first class
postage prepaid, to the Company addressed to it at the address of its principal office
specified in the first paragraph of this Indenture or at any other address previously
furnished in writing to the Trustee by the Company, Attention: Chief Financial Officer, or
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(3)
either the Trustee or the Company, by the other party, shall be sufficient for
every purpose hereunder if given by facsimile transmission, receipt confirmed by telephone
followed by an original copy delivered by guaranteed overnight courier; if to the Trustee at
facsimile number (617) 664-5371; and if to the Company at facsimile number (408) 554-9780.
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SECTION 106.
Notice to Holders: Waiver
.
Where this Indenture provides for notice of any event to Holders of Registered Securities by the
Company or the Trustee, such notice shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to each such Holder affected by
such event, at his address as it appears in the Security Register, not later than the latest date,
if any, and not earlier than the earliest date, if any, prescribed for the giving of such notice.
In any case where notice to Holders of Registered Securities is given by mail, neither the failure
to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect
the sufficiency of such notice with respect to other Holders of Registered Securities or the
sufficiency of any notice to Holders of Bearer Securities given as provided herein. Any notice
mailed to a Holder in the manner herein prescribed shall be conclusively deemed to have been
received by such Holder, whether or not such Holder actually receives such notice.
If by reason of the suspension of or irregularities in regular mail service or by reason of
any other cause it shall be impracticable to give such notice by mail, then such notification to
Holders of Registered Securities as shall be made with the approval of the Trustee shall constitute
a sufficient notification to such Holders for every purpose hereunder.
Except as otherwise expressly provided herein or otherwise specified with respect to any
Securities pursuant to Section 301, where this Indenture provides for notice to Holders of Bearer
Securities of any event, such notice shall be sufficiently given if published in an Authorized
Newspaper in The City of New York and in such other city or cities as may be specified in such
Securities on a Business Day, such publication to be not later than the latest date, if any, and
not earlier than the earliest date, if any, prescribed for the giving of such notice. Any such
notice shall be deemed to have been given on the date of such publication or, if published more
than once, on the date of the first such publication.
If by reason of the suspension of publication of any Authorized Newspaper or Authorized
Newspapers or by reason of any other cause it shall be impracticable to publish any notice to
Holders of Bearer Securities as provided above, then such notification to Holders of Bearer
Securities as shall be given with the approval of the Trustee shall constitute sufficient notice to
such Holders for every purpose hereunder. Neither the failure to give notice by publication to any
particular Holder of Bearer Securities as provided above, nor any defect in any notice so
published, shall affect the sufficiency of such notice with respect to other Holders of Bearer
Securities or the sufficiency of any notice to Holders of Registered Securities given as provided
herein.
Any request, demand, authorization, direction, notice, consent or waiver required or permitted
under this Indenture shall be in the English language, except that any published notice may be in
an official language of the country of publication.
Where this Indenture provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or after the event, and such
waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with
the Trustee, but such filing shall not be a condition precedent to the validity of any action taken
in reliance upon such waiver.
SECTION
107.
Counterparts; Effect of Headings and Table of Contents
. This Indenture may be executed in any
number of counterparts, each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same Indenture. The Article and Section
headings herein and the Table of Contents are for convenience only and shall not affect the
construction hereof.
SECTION 108.
Successors and Assigns
. All
covenants and agreements in this Indenture by the Company shall bind its successors and assigns,
whether so expressed or not.
SECTION 109.
Severability Clause
. In case any
provision in this Indenture or in any Security or coupon shall be held invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
SECTION 110.
Benefits of Indenture
. Nothing in
this Indenture or in the Securities or coupons, express or implied, shall give to any Person, other
than the parties hereto, any Security Registrar, any Paying Agent, any Authenticating Agent and
their successors hereunder and the Holders any benefit or any legal or equitable right, remedy or
claim under this Indenture.
SECTION 111.
Governing Law
. This Indenture and the
Securities and coupons shall be governed by and construed in accordance with the law of the State
of New York. This Indenture is subject to the provisions of the TIA that are required to be part
of this Indenture and shall, to the extent applicable, be governed by such provisions.
SECTION 112.
Legal Holidays
. In any case where any
Interest Payment Date, Redemption Date, Repayment Date, sinking fund payment date, Stated Maturity
or Maturity of any Security or the last date on which a Holder has the right to exchange a Security
shall not be a Business Day at any Place of Payment, then (notwithstanding any other provision of
this Indenture or any Security or coupon other than a provision in the Securities of any series
which specifically states that such provision shall apply in lieu hereof), payment of interest or
principal (and premium or Make-Whole Amount, if any) or exchange of such security need not be made
at such Place of Payment on such date, but (except as otherwise provided in the supplemental
indenture with respect to such Security) may be made on the next succeeding Business Day at such
Place of Payment with the same force and effect as if made on the Interest Payment Date, Redemption
Date, Repayment Date or sinking fund payment date, or at the Stated Maturity or Maturity, or on
such last day for exchange, provided that no interest shall accrue on the amount so payable for the
period from and after such Interest Payment Date, Redemption Date, Repayment Date, sinking fund
payment date, Stated Maturity or Maturity, as the case may be.
SECTION 113.
Immunity of Stockholders, Directors, Officers and Agents of the
Company
.
No recourse under or upon any obligation, covenant or agreement contained in this Indenture, or in
any Security, or because of any indebtedness evidenced thereby, shall be had against any past,
present or future stockholder, employee, 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 the Securities by the Holders and as part of the consideration for
the issue of the Securities.
SECTION 114.
Conflict with Trust Indenture Act
. If any provision hereof limits, qualifies or conflicts with another provision hereof
which is required or deemed to be included in this Indenture by any of the provisions of the Trust
Indenture Act, such required provision shall control. If any provision of this Indenture modifies
or excludes any provision of the Trust Indenture Act that may be so modified or excluded, the
latter provision shall be deemed to apply to this Indenture as so modified or to be excluded, as
the case may be.
ARTICLE TWO SECURITIES FORMS
SECTION 201.
Forms of Securities
. The Registered
Securities, if any, of each series and the Bearer Securities, if any, of each series and related
coupons shall be substantially in the form of
Exhibit A
hereto or in such other form as
shall be established in one or more indentures supplemental hereto or approved from time to time by
or pursuant to a Board Resolution in accordance with Section 301, shall have such appropriate
insertions, omissions, substitutions and other variations as are required or permitted by this
Indenture or any indenture supplemental hereto, and may have such letters, numbers or other marks
of identification or designation and such legends or endorsements placed thereon as the Company may
deem appropriate and as are not inconsistent with the provisions of this Indenture, or as may be
required to comply with any law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange on which the Securities may be listed, or to conform to
usage.
Unless otherwise specified as contemplated by Section 301, Bearer Securities shall have
interest coupons attached.
The definitive Securities and coupons shall be printed, lithographed or engraved or produced
by any combination of these methods on a steel engraved border or steel engraved borders or
mechanically reproduced on safety paper or may be produced in any other manner, all as determined
by the officers executing such Securities or coupons, as evidenced by their execution of such
Securities or coupons.
SECTION 202.
Form of Trustees Certificate of Authentication
. Subject to Section 611, the Trustees certificate of
authentication shall be in substantially the following form:
This is one of the Securities of the series designated therein referred to in the within-
mentioned Indenture.
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[
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as Trustee
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Dated:
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By:
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Authorized Signatory
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SECTION 203.
Securities Issuable in Global Form
. If Securities of or within a series are issuable in the form of one or more
Global Securities, then, notwithstanding clause (8) of Section 301 and the provisions of Section
302, any such Global Security or Securities may provide that it or they shall represent the
aggregate amount of all Outstanding Securities of such series (or such lesser amount as is
permitted by the terms thereof) from time to time endorsed thereon and may also provide that the
aggregate amount of Outstanding Securities of such series represented thereby may from time to time
be increased or decreased to reflect exchanges. Any endorsement of any Global Security to reflect
the amount, or any increase or decrease in the
amount, or changes in the rights of Holders thereof,
of Outstanding Securities represented thereby shall be made (or caused to be made) by the Trustee
in such manner or by such Person or Persons as shall be specified therein or in the Company Order
to be delivered to the Trustee pursuant to Section 303 or 304. Subject to the provisions of
Section 303 and, if applicable, Section 304, the Trustee shall deliver and redeliver any Global
Security in permanent global form in the manner and upon instructions given by the Person or
Persons specified therein or in the applicable Company Order. If a Company Order pursuant to
Section 303 or 304 has been, or simultaneously is, delivered, any instructions by the Company with
respect to endorsement or delivery or redelivery of a Global Security shall be in writing but need
not comply with Section 102 and need not be accompanied by an Opinion of Counsel.
The provisions of the last sentence of Section 303 shall apply to any Security represented by
a Global Security if such Security was never issued and sold by the Company and the Company
delivers to the Trustee the Global Security together with written instructions (which need not
comply with Section 102 and need not be accompanied by an Opinion of Counsel) with regard to the
reduction in the principal amount of Securities represented thereby, together with the written
statement contemplated by the last sentence of Section 303.
Notwithstanding the provisions of Section 307, unless otherwise specified as
contemplated by Section 301, payment of principal of and any premium or Make-Whole Amount, if any,
and interest on any Global Security in permanent global form shall be made to the registered Holder
thereof.
Notwithstanding the provisions of Section 308 and except as provided in the preceding
paragraph, the Company, the Trustee and any agent of the Company and the Trustee shall treat as
the Holder of such principal amount of Outstanding Securities represented by a permanent
Global Security (i) in the case of a permanent Global Security in registered form, the Holder of
such permanent Global Security in registered form, or (ii) in the case of a permanent Global
Security in bearer form, Euroclear or CEDEL.
Any Global Security authenticated and delivered hereunder shall bear a legend in substantially
the following form:
This
Security is a Global Security within the meaning set forth in
the Indenture hereinafter referred to and is registered in the name
of a Depository or a nominee of a Depository. This Security is
exchangeable for Securities registered in the name of a person other
than the Depository or its nominee only in the limited circumstances
described in the Indenture, and may not be transferred except as a
whole by the Depository to a nominee of the Depository or by a
nominee of the Depository to the Depository or another nominee of
the Depository or by the Depository or its nominee to a successor
Depository or its nominee.
ARTICLE THREE -THE SECURITIES
SECTION 301.
Amount Unlimited; Issuable in Series
. The aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be established in one or more
Board Resolutions or pursuant to authority granted by one or more Board Resolutions and, subject to
Section 303, set forth in an Officers Certificate, or established in one or more indentures
supplemental hereto, prior to the issuance of Securities of any series:
(1) The title of the Securities of the series (which shall distinguish the Securities
of such series from all other series of Securities);
(2) Any limit upon the aggregate principal amount of the Securities of the
series that may be authenticated and delivered under this Indenture (except for Securities
authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu
of, other Securities of the series pursuant to Section 304, 305, 306, 906, 1107 or 1305) and
the minimum authorized denominations with respect to the Securities of such series;
(3) The price (expressed as a percentage of the principal amount thereof) at which such
Securities will be issued and, if other than the principal amount thereof, the portion of
the principal amount thereof payable upon declaration of acceleration of the maturity
thereof;
(4) The date or dates, or the method for determining such date or dates, on which the
principal of such Securities will be payable;
(5) The rate or rates (which may be fixed or variable), or the method by which such
rate or rates shall be determined, at which such Securities will bear interest, if any;
(6) The date or dates, or the method for determining such date or dates, from which any
such interest will accrue, the dates on which any such interest will be payable, the record
dates for such interest payment dates, or the method by which such dates shall be
determined, the persons to whom such interest shall be payable, and the basis upon which
interest shall be calculated if other than that of a 360-day year of twelve 30-day months;
(7) The Make-Whole Amount, if any, or method for determining the Make-Whole Amount, if
any, payable with respect to such Securities, and the terms upon which such amount, if any,
will be payable;
(8) The place or places where the principal of (and premium or Make-Whole Amount, if
any) and interest, if any, on such Securities will be payable,
where such Securities may be
surrendered for registration of transfer or exchange and where notices or demands to or upon
the Company in respect of such Securities and this Indenture may be served;
(9) The period or periods, if any, within which, the price or prices at which and the
other terms and conditions upon which such Securities may, pursuant to any optional or
mandatory redemption provisions, be redeemed, as a whole or in part, at the option of the
Company;
(10) The obligation, if any, of the Company to redeem, repay or purchase such
Securities pursuant to any sinking fund or analogous provision or at the option of a holder
thereof, and the period or periods within which, the price or prices at which and the other
terms and conditions upon which such Securities will be redeemed, repaid or purchased, as a
whole or in part, pursuant to such obligation;
(11) If other than Dollars, the currency or currencies in which such Securities
are denominated and payable, which may be a foreign currency or units of two or more foreign
currencies or a composite currency or currencies, the manner of determining the equivalent
thereof in Dollars for purposes of the definition of Outstanding in Section 101, and the
terms and conditions relating thereto;
(12) Whether the amount of payments of principal of (and premium or Make-Whole Amount,
if any, including any amount due upon redemption, if any) or interest, if any, on such
Securities may be determined with reference to an index, formula or other method (which
index, formula or method may, but need not be, based on the yield on or trading price of
other securities, including United States Treasury securities or on a currency, currencies,
currency unit or units, or composite currency or currencies) and the manner in which such
amounts shall be determined;
(13) Whether the principal of (and premium or Make-Whole Amount, if any) or interest on
the Securities of the series are to be payable, at the election of the Company or a Holder
thereof, in a currency or currencies, currency unit or units or composite currency or
currencies other than that in which such Securities are denominated or stated to be payable,
the period or periods within which, and the terms and conditions upon which, such election
may be made, and the time and manner of, and identity of the exchange rate agent with
responsibility for, determining the exchange rate between the currency or currencies,
currency unit or units or composite currency or currencies in which such Securities are
denominated or stated to be payable and the currency or currencies, currency unit or units
or composite currency or currencies in which such Securities are to be so payable;
(14) Provisions, if any, granting special rights to the Holders of Securities of the
series upon the occurrence of such events as may be specified;
(15) Any deletions from, modifications of or additions to the Events of Default or
covenants of the Company with respect to Securities of the series, whether or not such
Events of Default or covenants are consistent with the Events of Default or covenants set
forth herein;
(16) Whether and under what circumstances the Company will pay any additional amounts
on such Securities in respect of any tax, assessment or governmental charge and, if so,
whether the Company will have the option to redeem such Securities in lieu of making such
payment;
(17) Whether Securities of the series are to be issuable as Registered
Securities, Bearer Securities (with or without coupons) or both, any restrictions applicable
to the offer, sale or delivery of Bearer Securities and the terms upon which Bearer
Securities of the series may be exchanged for Registered Securities of the series and vice
versa (if permitted by applicable laws and regulations), whether any Securities of the
series are to be issuable initially in temporary global form and whether any Securities of
the series are to be issuable in permanent global form with or without coupons and, if so,
whether beneficial owners of interests in any such permanent global Security may, or shall
be required to, exchange such interests for Securities of such series and of like tenor of
any authorized form and denomination and the circumstances under which any such exchanges
may, or shall be required to, occur, if other than in the manner provided in the
Indenture, and, if Registered Securities of the series are to be issuable as a Global
Security, the identity of the depository for such series;
(18) The date as of which any Bearer Securities of the series and any temporary Global
Security representing outstanding Securities of the series shall be dated if other than the
date of original issuance of the first Security of the series to be issued;
(19) The Person to whom any interest on any Registered Security of the series shall be
payable, if other than the Person in whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date for such
interest, the manner in which, or the Person to whom, any interest on any Bearer Security of
the series shall be payable, if otherwise than upon presentation and surrender of the
coupons appertaining thereto as they severally mature, and the extent to which, or the
manner in which, any interest payable on a temporary Global Security on an Interest Payment
Date will be paid if other than in the manner provided herein; provided, however, in each
case, that the manner of determining such Person or making such payment shall be acceptable
to the Trustee (as not imposing on it any undue administrative burden or risk of liability);
(20) The applicability, if any, of the defeasance and covenant defeasance provisions of
Article Fourteen hereof to the Securities of the series;
(21) If the Securities of such series are to be issuable in definitive form (whether
upon original issue or upon exchange of a temporary Security of such series) only upon
receipt of certain certificates or other documents or satisfaction of other conditions, then
the form and/or terms of such certificates, documents or conditions;
(22) Designation of the Trustee, if different from the Trustee under the Indenture,
with respect to such series and the terms applicable to such Trustee (which shall be
accepted by such Trustee by its execution and delivery of a supplemental indenture as
provided therein); and
(23) Any other terms of the series (which terms shall not be inconsistent with the
provisions of this Indenture).
All Securities of any one series and the coupons appertaining to any Bearer Securities
of such series shall be substantially identical except, in the case of Registered Securities, as to
denomination and except as may otherwise be provided in or pursuant to such Board Resolution
(subject to Section 303) and set forth in such Officers Certificate or in any such indenture
supplemental hereto. All Securities of any one series need not be issued at the same time and,
unless otherwise provided, a series may be reopened, without the consent of the Holders, for
issuances of additional Securities of such series.
If any of the terms of the Securities of any series are established by action taken pursuant
to one or more Board Resolutions, a copy of an appropriate record of such action(s) shall be
certified by the Secretary or an Assistant Secretary of the Company and delivered to the
Trustee at or prior to the delivery of the Officers Certificate setting forth the terms of the
Securities of such series.
SECTION 302.
Denominations
. The Securities of each series
shall be issuable in such denominations as shall be specified as contemplated by Section 301. With
respect to Securities of any series denominated in Dollars, in the absence of any such provisions
with respect to the Securities of any series, the Securities of such series, other than Global
Securities (which may be of any denomination), shall be issuable in denominations of $1,000 and any
integral multiple thereof.
SECTION 303.
Execution, Authentication, Delivery and Dating
. The Securities and any coupons appertaining thereto shall
be executed on behalf of the Company by its Chairman of the Board, its President or one of its Vice
Presidents, under its corporate seal reproduced thereon, and attested by its Secretary or one of
its Assistant Secretaries. The signature of any of these officers on the Securities and coupons
may be manual or facsimile signatures of the present or any future such authorized officer and may
be imprinted or otherwise reproduced on the Securities.
Securities or coupons bearing the manual or facsimile signatures of individuals who were at
any time the proper officers of the Company shall bind the Company, notwithstanding that
such individuals or any of them have ceased to hold such offices prior to the
authentication and delivery of such Securities or did not hold such offices at the date of such
Securities or coupons.
At any time and from time to time after the execution and delivery of this Indenture, the
Company may deliver Securities of any series, together with any coupon appertaining thereto,
executed by the Company to the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities (accompanied by a copy of the Board Resolution and
the Officers Certificate or supplemental indenture contemplated by Section 301), and the Trustee
in accordance with the Company Order shall authenticate and deliver such Securities;
provided
,
however
, that, in connection with its original issuance, no Bearer
Security shall be mailed or otherwise delivered to any location in the United States; and
provided
further
that, unless otherwise specified with respect to any series of
Securities pursuant to Section 301, a Bearer Security may be delivered in connection with its
original issuance only if the Person entitled to receive such Bearer Security shall have furnished
a certificate to Euroclear or CEDEL, as the case may be, in the form set forth in
Exhibit
B-1
to this Indenture or such other certificate as may be specified by the Company with respect
to any series of Securities pursuant to Section 301, dated no earlier than 15 days prior to the
earlier of the date on which such Bearer Security is delivered and the date on which any temporary
Security first becomes exchangeable for such Bearer Security in accordance with the terms of such
temporary Security and this Indenture. If any Security shall be represented by a permanent global
Bearer Security, then, for purposes of this Section and Section 304, the notation of a beneficial
owners interest therein upon original issuance of such Security or upon exchange of a portion of a
temporary Global Security shall be deemed to be delivery in connection with its original issuance
of such beneficial owners interest in such permanent Global Security. Except as permitted by
Section 306, the Trustee shall not authenticate and deliver any Bearer Security unless all
appurtenant coupons for interest then matured have been detached and canceled.
If all the Securities of any series are not to be issued at one time and if the Board
Resolution or supplemental indenture establishing such series shall so permit, such Company Order
may set forth procedures acceptable to the Trustee for the issuance of such Securities and
determining the terms of particular Securities of such series, such as interest rate or formula,
maturity date, date of issuance and date from which interest shall accrue. In authenticating such
Securities, and accepting the additional responsibilities under this Indenture in relation to such
Securities, the Trustee shall be entitled to receive, and (subject to TIA Section 315(a) through
315(d)) shall be fully protected in relying upon,
(i) an Opinion of Counsel stating that
(a) the form or forms of such Securities and any coupons have been established
in conformity with the provisions of this Indenture;
(b) the terms of such Securities and any coupons have been established in
conformity with the provisions of this Indenture; and
(c) such Securities, together with any coupons appertaining thereto,
when completed by appropriate insertions and executed and delivered by the Company
to the Trustee for authentication in accordance with this Indenture, authenticated
and delivered by the Trustee in accordance with this Indenture and issued by the
Company in the manner and subject to any conditions specified in such Opinion of
Counsel, will constitute legal, valid and legally binding obligations of the
Company, enforceable in accordance with their terms, subject to applicable
bankruptcy, insolvency, fraudulent transfer, reorganization and other similar laws
of general applicability relating to or affecting the enforcement of creditors
rights generally and to general equitable principles; and
(ii) an Officers Certificate stating that all conditions precedent provided for in
this Indenture relating to the issuance of the Securities have been complied with and that,
to the best of the knowledge of the signers of such certificate, that no Event of Default
with respect to any of the Securities shall have occurred and be continuing.
If such form or terms have been so established, the Trustee shall not be required to authenticate
such Securities (or to enter into the related supplemental indenture, if applicable) if the issue
of such Securities pursuant to this Indenture will affect the Trustees own rights, duties,
obligations or immunities under the Securities and this Indenture or otherwise in a manner which is
not reasonably acceptable to the Trustee.
Notwithstanding the provisions of Section 301 and of the preceding paragraph, if all the
Securities of any series are not to be issued at one time, it shall not be necessary to deliver an
Officers Certificate otherwise required pursuant to Section 301 or a Company Order, or an Opinion
of Counsel or an Officers Certificate otherwise required pursuant to the preceding paragraph at
the time of issuance of each Security of such series, but such order, opinion and certificates,
with appropriate modifications to cover such future issuances, shall be delivered at or before the
time of issuance of the first Security of such series.
Each Registered Security shall be dated the date of its authentication and each Bearer
Security shall be dated as of the date specified as contemplated by Section 301.
No Security or coupon shall be entitled to any benefit under this Indenture or be valid or
obligatory for any purpose unless there appears on such Security or Security to which such coupon
appertains a certificate of authentication substantially in the form provided for herein duly
executed by the Trustee (subject to Section 611) by manual signature of an authorized signatory,
and such certificate upon any Security shall be conclusive evidence, and the only evidence, that
such Security has been duly authenticated and delivered hereunder and is entitled to the benefits
of this Indenture. Notwithstanding the foregoing, if any Security (including a Global Security)
shall have been authenticated and delivered hereunder but never issued and sold by the Company, and
the Company shall deliver such Security to the Trustee for cancellation as provided in Section 309
together with a written statement (which need not comply with Section 102 and need not be
accompanied by an Opinion of Counsel) stating that such Security
has never been issued and sold by
the Company, for all purposes of this Indenture such Security shall be deemed never to have been
authenticated and delivered hereunder and shall never be entitled to the benefits of this
Indenture.
SECTION 304.
Temporary Securities
.
(a) Pending the preparation of definitive Securities of any series, the Company may execute,
and upon Company Order the Trustee shall authenticate and deliver, temporary Securities which are
printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized
denomination, substantially of the tenor of the definitive Securities in lieu of which they are
issued, in registered form, or, if authorized, in bearer form with one or more coupons or without
coupons, and with such appropriate insertions, omissions, substitutions and other variations as the
officers executing such Securities may determine, as conclusively evidenced by their execution of
such Securities. In the case of Securities of any series, such temporary Securities may be in
global form.
Except in the case of temporary Global Securities (which shall be exchanged as otherwise
provided herein or as otherwise provided in or pursuant to a Board Resolution or supplemental
indenture pursuant to Section 301), if temporary Securities of any series are issued, the Company
will cause definitive Securities of that series to be prepared without unreasonable delay. After
the preparation of definitive Securities of such series, the temporary Securities of such series
shall be exchangeable for definitive Securities of such series upon surrender of the temporary
Securities of such series at the office or agency of the Company in a Place of Payment for that
series, without charge to the Holder. Upon surrender for cancellation of any one or more temporary
Securities of any series (accompanied by any non-matured coupons appertaining thereto), the Company
shall execute and the Trustee shall authenticate and deliver in exchange therefor a like principal
amount of definitive Securities of the same series of authorized denominations;
provided
,
however
, that no definitive Bearer Security shall be delivered in exchange for a temporary
Registered Security; and
provided
further
that a definitive Bearer Security shall
be delivered in exchange for a temporary Bearer Security only in compliance with the conditions set
forth in Section 303. Until so exchanged, the temporary Securities of any series shall in all
respects be entitled to the same benefits under this Indenture as definitive Securities of such
series.
(b) Unless otherwise provided in or pursuant to a Board Resolution or supplemental indenture
pursuant to Section 301, the following provisions of this Section 304(b) shall govern the exchange
of temporary Securities other than through the facilities of The Depository Trust Company. If any
such temporary Security is issued in global form, then such temporary Global Security shall, unless
otherwise provided therein, be delivered to the London office of a depository or common depository
upon and pursuant to written direction of the Company (the Common Depository), for the benefit of
Euroclear and CEDEL, for credit to the respective accounts of the beneficial owners of such
Securities (or to such other accounts as they may direct).
Without unnecessary delay but in any event not later than the date specified in, or
determined pursuant to the terms of, any such temporary Global Security (the Exchange Date), the
Company shall deliver to the Trustee definitive Securities, in aggregate principal amount equal to
the principal amount of such temporary Global Security, executed by the Company. On or after the
Exchange Date, such temporary Global Security shall be surrendered by the Common Depository to the
Trustee, as the Companys agent for such purpose, to be exchanged, in whole or from time to time in
part, for definitive Securities without charge, and the Trustee shall authenticate and deliver, in
exchange for each portion of such temporary Global Security, an equal aggregate principal amount of
definitive Securities of the same series of authorized denominations and of like tenor as the
portion of such temporary Global Security to be exchanged. The definitive Securities to be
delivered in exchange for any such temporary Global Security shall be in bearer form, registered
form, permanent global bearer form or permanent global registered form, or any combination thereof,
as specified as contemplated by Section 301, and, if any combination thereof is so specified, as
requested by the beneficial owner thereof (as directed by or pursuant to information provided by
the Common Depository);
provided
,
however
, that, unless otherwise specified in such
temporary Global Security, upon such presentation by the Common Depository, such temporary Global
Security shall be accompanied by a certificate dated the Exchange Date or a subsequent date and
signed by Euroclear as to the portion of such temporary Global Security held for its account then
to be exchanged and a certificate dated the Exchange Date or a subsequent date and signed by CEDEL
as to the portion of such temporary Global Security held for its account then to be exchanged, each
in the form set forth in
Exhibit A-2
to this Indenture or in such other form as may be
established pursuant to Section 301; and
provided
further
that definitive Bearer
Securities shall be delivered in exchange for a portion of a temporary Global Security only in
compliance with the requirements of Section 303.
Unless otherwise specified in such temporary Global Security, the interest of a beneficial
owner of Securities of a series in a temporary Global Security shall be exchanged for definitive
Securities of the same series and of like tenor following the Exchange Date when the account holder
instructs Euroclear or CEDEL, as the case may be, to request such exchange on his behalf and
delivers to Euroclear or CEDEL, as the case may be, a certificate in the form set forth in
Exhibit B-1
to this Indenture (or in such other form as may be established pursuant to
Section 301), dated no earlier than 15 days prior to the Exchange Date, copies of which certificate
shall be available from the offices of Euroclear and CEDEL, the Trustee, any Authenticating Agent
appointed for such series of Securities and each Paying Agent. Unless otherwise specified in such
temporary Global Security, any such exchange shall be made free of charge to the beneficial owners
of such temporary Global Security, except that a Person receiving definitive Securities must bear
the cost of insurance, postage, transportation and the like unless such Person takes delivery of
such definitive Securities in person at the offices of Euroclear or CEDEL. Definitive Securities
in bearer form to be delivered in exchange for any portion of a temporary Global Security shall be
delivered only to an address located outside the United States.
Until exchanged in full as hereinabove provided, the temporary Securities of any series
shall in all respects be entitled to the same benefits under this Indenture as definitive
Securities of the same series and of like tenor authenticated and delivered hereunder, except that,
unless
otherwise specified as contemplated by Section 301, interest payable on a temporary Global
Security on an Interest Payment Date for Securities of such series occurring prior to the
applicable Exchange Date shall be payable to Euroclear and CEDEL on such Interest Payment Date upon
delivery by Euroclear and CEDEL to the Trustee of a certificate or certificates in the form set
forth in
Exhibit B-2
to this Indenture (or in such other forms as may be established
pursuant to Section 301), for credit without further interest on or after such Interest Payment
Date to the respective accounts of Persons who are the beneficial owners of such temporary Global
Security on such Interest Payment Date and who have each delivered to Euroclear or CEDEL, as the
case may be, a certificate dated no earlier than 15 days prior to the Interest Payment Date
occurring prior to such Exchange Date in the form set forth as
Exhibit B-1
to this
Indenture (or in such other forms as may be established pursuant to Section 301). Notwithstanding
anything to the contrary herein contained, the certifications made pursuant to this paragraph shall
satisfy the certification requirements of the preceding two paragraphs of this Section 304(b) and
of the third paragraph of Section 303 of this Indenture and the interests of the Persons who are
the beneficial owners of the temporary Global Security with respect to which such certification was
made will be exchanged for definitive Securities of the same series and of like tenor on the
Exchange Date or the date of certification if such date occurs after the Exchange Date, without
further act or deed by such beneficial owners. Except as otherwise provided in this paragraph, no
payments of principal or interest owing with respect to a beneficial interest in a temporary Global
Security will be made unless and until such interest in such temporary Global Security shall have
been exchanged for an interest in a definitive Security. Any interest so received by Euroclear and
CEDEL and not paid as herein provided shall be returned to the Trustee prior to the expiration of
two years after such Interest Payment Date in order to be repaid to the Company.
SECTION 305.
Registration, Registration of Transfer and Exchange
. The Company shall
cause to be kept at the Corporate Trust Office of the Trustee or in any office or agency of the
Company in a Place of Payment a register for each series of Securities (the registers maintained in
such office or in any such office or agency of the Company in a Place of Payment being herein
sometimes referred to collectively as the Security Register) in which, subject to such reasonable
regulations as it may prescribe, the Company shall provide for the registration of Registered
Securities and of transfers of Registered Securities. The Security Register shall be in written
form or any other form capable of being converted into written form within a reasonable time. The
Trustee, at its Corporate Trust Office, is hereby initially appointed Security Registrar for the
purpose of registering Registered Securities and transfers of Registered Securities on such
Security Register as herein provided. In the event that the Trustee shall cease to be Security
Registrar, it shall have the right to examine, and be provided a copy of, the Security Register at
all reasonable times.
Subject to the provisions of this Section 305, upon surrender for registration of
transfer of any Registered Security of any series at any office or agency of the Company in a Place
of Payment for that series, the Company shall execute, and the Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more new Registered
Securities of the same series, of any authorized denominations and of a like aggregate principal
amount, bearing a number not contemporaneously outstanding, and containing identical terms and
provisions.
Subject to the provisions of this Section 305, at the option of the Holder, Registered
Securities of any series may be exchanged for other Registered Securities of the same series, of
any authorized denomination or denominations and of a like aggregate principal amount, containing
identical terms and provisions, upon surrender of the Registered Securities to be exchanged at any
such office or agency. Whenever any such Registered Securities are so surrendered for exchange,
the Company shall execute, and the Trustee shall authenticate and deliver, the Registered
Securities which the Holder making the exchange is entitled to receive. Unless otherwise specified
with respect to any series of Securities as contemplated by Section 301, Bearer Securities may not
be issued in exchange for Registered Securities.
If (but only if) permitted by the applicable Board Resolution and (subject to Section
303) set forth in the applicable Officers Certificate, or in any indenture supplemental hereto,
delivered as contemplated by Section 301, at the option of the Holder, Bearer Securities of any
series may be exchanged for Registered Securities of the same series of any authorized
denominations and of a like aggregate principal amount and tenor, upon surrender of the Bearer
Securities to be exchanged at any such office or agency, with all unmatured coupons and all matured
coupons in default thereto appertaining. If the Holder of a Bearer Security is unable to produce
any such unmatured coupon or coupons or matured coupon or coupons in default, any such permitted
exchange may be effected if the Bearer Securities are accompanied by payment in funds acceptable to
the Company in an amount equal to the face amount of such missing coupon or coupons, or the
surrender of such missing coupon or coupons may be waived by the Company and the Trustee if there
is furnished to them such security or indemnity as they may require to save each of them and any
Paying Agent harmless. If thereafter the Holder of such Security shall surrender to any Paying
Agent any such missing coupon in respect of which such a payment shall have been made, such Holder
shall be entitled to receive the amount of such payment;
provided
,
however
, that,
except as otherwise provided in Section 1002, interest represented by coupons shall be payable only
upon presentation and surrender of those coupons at an office or agency located outside the United
States. Notwithstanding the foregoing, in case a Bearer Security of any series is surrendered at
any such office or agency in a permitted exchange for a Registered Security of the same series and
like tenor after the close of business at such office or agency on (i) any Regular Record Date and
before the opening of business at such office or agency on the relevant Interest Payment Date, or
(ii) any Special Record Date and before the opening of business at such office or agency on the
related proposed date for payment of Defaulted Interest, such Bearer Security shall be surrendered
without the coupon relating to such Interest Payment Date or proposed date for payment, as the case
may be, and interest or Defaulted Interest, as the case may be, will not be payable on such
Interest Payment Date or proposed date for payment, as the case may be, in respect of the
Registered Security issued in exchange for such Bearer Security, but will be payable only to the
Holder of such coupon when due in accordance with the provisions of this Indenture. Whenever any
Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall
authenticate and deliver, the Securities which the Holder making the exchange is entitled to
receive.
Notwithstanding the foregoing, except as otherwise specified as contemplated by Section
301, any permanent Global Security shall be exchangeable only as provided in this paragraph. If
the depository for any permanent Global Security is The Depository Trust Company (DTC), then,
unless the terms of such Global Security expressly permit such Global Security to be exchanged in
whole or in part for definitive Securities, a Global Security may be transferred, in whole but not
in part, only to a nominee of DTC, or by a nominee of DTC to DTC, or to a successor to DTC for such
Global Security selected or approved by the Company or to a nominee of such successor to DTC. If
at any time DTC notifies the Company that it is unwilling or unable to continue as depository for
the applicable Global Security or Securities or if at any time DTC ceases to be a clearing agency
registered under the Securities Exchange Act of 1934 if so required by applicable law or
regulation, the Company shall appoint a successor depository with respect to such Global Security
or Securities. If (x) a successor depository for such Global Security or Securities is not
appointed by the Company within 90 days after the Company receives such notice or becomes aware of
such unwillingness, inability or ineligibility, (y) an Event of Default has occurred and is
continuing and the beneficial owners representing a majority in principal amount of the applicable
series of Securities represented by such Global Security or Securities advise DTC to cease acting
as depository for such Global Security or Securities or (z) the Company, in its sole discretion,
determines at any time that all Outstanding Securities (but not less than all) of any series issued
or issuable in the form of one or more Global Securities shall no longer be represented by such
Global Security or Securities, then the Company shall execute, and the Trustee shall authenticate
and deliver definitive Securities of like series, rank, tenor and terms in definitive form in an
aggregate principal amount equal to the principal amount of such Global Security or Securities. If
any beneficial owner of an interest in a permanent global Security is otherwise entitled to
exchange such interest for Securities of such series and of like tenor and principal amount of
another authorized form and denomination, as specified as contemplated by Section 301 and provided
that any applicable notice provided in the permanent Global Security shall have been given, then
without unnecessary delay but in any event not later than the earliest date on which such interest
may be so exchanged, the Company shall execute, and the Trustee shall authenticate and deliver
definitive Securities in aggregate principal amount equal to the principal amount of such
beneficial owners interest in such permanent Global Security. On or after the earliest date on
which such interests may be so exchanged, such permanent Global Security shall be surrendered for
exchange by DTC or such other depository as shall be specified in the Company Order with respect
thereto to the Trustee, as the Companys agent for such purpose;
provided
,
however
,
that no such exchanges may occur during a period beginning at the opening of business 15 days
before any selection of Securities to be redeemed and ending on the relevant Redemption Date if the
Security for which exchange is requested may be among those selected for redemption; and
provided
further
that no Bearer Security delivered in exchange for a portion of a
permanent Global Security shall be mailed or otherwise delivered to any location in the United
States. If a Registered Security is issued in exchange for any portion of a permanent Global
Security after the close of business at the office or agency where such exchange occurs on (i) any
Regular Record Date and before the opening of business at such office or agency on the relevant
Interest Payment Date, or (ii) any Special Record Date and the opening of business at such office
or agency on the related proposed date for
payment of Defaulted Interest, interest or Defaulted
Interest, as the case may be, will not be payable on such Interest Payment Date or proposed date
for payment, as the case may be, in respect of such Registered Security, but will be payable on
such Interest Payment Date or proposed date for payment, as the case may be, only to the Person to
whom interest in respect of such portion of such permanent Global Security is payable in accordance
with the provisions of this Indenture.
All Securities issued upon any registration of transfer or exchange of Securities shall be the
valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under
this Indenture, as the Securities surrendered upon such registration of transfer or exchange.
Every Registered Security presented or surrendered for registration of transfer or for
exchange or redemption shall (if so required by the Company or the Security Registrar) be duly
endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company
and the Security Registrar, duly executed by the Holder thereof or his attorney duly authorized in
writing.
No service charge shall be made for any registration of transfer or exchange of Securities,
but the Company may require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or exchange of
Securities, other than exchanges pursuant to Section 304, 906, 1107 or 1305 not involving any
transfer.
The Company or the Trustee, as applicable, shall not be required (i) to issue, register
the transfer of or exchange any Security if such Security may be among those selected for
redemption during a period beginning at the opening of business 15 days before selection of the
Securities to be redeemed under Section 1103 and ending at the close of business on (A) if such
Securities are issuable only as Registered Securities, the day of the mailing of the relevant
notice of redemption and (B) if such Securities are issuable as Bearer Securities, the day of the
first publication of the relevant notice of redemption or, if such Securities are also issuable as
Registered Securities and there is no publication, the mailing of the relevant notice of
redemption, or (ii) to register the transfer of or exchange any Registered Security so selected for
redemption in whole or in part, except, in the case of any Registered Security to be redeemed in
part, the portion thereof not to be redeemed, or (iii) to exchange any Bearer Security so selected
for redemption except that such a Bearer Security may be exchanged for a Registered Security of
that series and like tenor,
provided
that such Registered Security shall be simultaneously
surrendered for redemption, or (iv) to issue, register the transfer of or exchange any Security
which has been surrendered for repayment at the option of the Holder, except the portion, if any,
of such Security not to be so repaid.
SECTION 306.
Mutilated, Destroyed, Lost and Stolen Securities
. If any mutilated
Security or a Security with a mutilated coupon appertaining to it is surrendered to the Trustee or
the Company, together with, in proper cases, such security or indemnity as may be required by the
Company or the Trustee to save each of them or any agent of either of them harmless, the
Company
shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Security of
the same series and principal amount, containing identical terms and provisions and bearing a
number not contemporaneously outstanding, with coupons corresponding to the coupons, if any,
appertaining to the surrendered Security.
If there shall be delivered to the Company and to the Trustee (i) evidence to their
satisfaction of the destruction, loss or theft of any Security or coupon, and (ii) such security or
indemnity as may be required by them to save each of them and any agent of either of them harmless,
then, in the absence of notice to the Company or the Trustee that such Security or coupon has been
acquired by a bona fide purchaser, the Company shall execute and upon its request the Trustee shall
authenticate and deliver, in lieu of any such destroyed, lost or stolen Security or in exchange for
the Security to which a destroyed, lost or stolen coupon appertains (with all appurtenant coupons
not destroyed, lost or stolen), a new Security of the same series and principal amount, containing
identical terms and provisions and bearing a number not contemporaneously outstanding, with coupons
corresponding to the coupons, if any, appertaining to such destroyed, lost or stolen Security or to
the Security to which such destroyed, lost or stolen coupon appertains.
Notwithstanding the provisions of the previous two paragraphs, in case any such mutilated,
destroyed, lost or stolen Security or coupon has become or is about to become due and payable, the
Company in its discretion may, instead of issuing a new Security, with coupons corresponding to the
coupons, if any, appertaining to such destroyed, lost or stolen Security or to the Security to
which such destroyed, lost or stolen coupon appertains, pay such Security or coupon;
provided
,
however
, that payment of principal of (and premium or Make-Whole Amount,
if any), and any interest on, Bearer Securities shall, except as otherwise provided in Section
1002, be payable only at an office or agency located outside the United States and, unless
otherwise specified as contemplated by Section 301, any interest on Bearer Securities shall be
payable only upon presentation and surrender of the coupons appertaining thereto.
Upon the issuance of any new Security under this Section, the Company may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Trustee) connected
therewith.
Every new Security of any series with its coupons, if any, issued pursuant to this
Section in lieu of any destroyed, lost or stolen Security, or in exchange for a Security to which a
destroyed, lost or stolen coupon appertains, shall constitute an original additional contractual
obligation of the Company, whether or not the destroyed, lost or stolen Security and its coupons,
if any, or the destroyed, lost or stolen coupon shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Indenture equally and proportionately with any and
all other Securities of that series and their coupons, if any, duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the extent lawful) all
other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost
or stolen Securities or coupons.
SECTION 307.
Payment of Interest; Interest Rights Preserved
. Except as otherwise
specified with respect to a series of Securities in accordance with the provisions of Section 301,
interest on any Registered Security that is payable, and is punctually paid or duly provided for,
on any Interest Payment Date shall be paid to the Person in whose name that Security (or one or
more Predecessor Securities) is registered at the close of business on the Regular Record Date for
such interest at the office or agency of the Company maintained for such purpose pursuant to
Section 1002;
provided
,
however
, that each installment of interest on any
Registered Security may at the Companys option be paid by (i) mailing a check for such interest,
payable to or upon the written order of the Person entitled thereto pursuant to Section 308, to the
address of such Person as it appears on the Security Register or (ii) transfer to an account
maintained by the payee located inside the United States.
Unless otherwise provided as contemplated by Section 301 with respect to the Securities of any
series, payment of interest may be made, in the case of a Bearer Security, by transfer to an
account maintained by the payee with a bank located outside the United States.
Unless otherwise provided as contemplated by Section 301, every permanent global Security will
provide that interest, if any, payable on any Interest Payment Date will be paid to DTC, Euroclear
and/or CEDEL, as the case may be, with respect to that portion of such permanent global Security
held for its account by Cede & Co. or the Common Depository, as the case may be, for the purpose of
permitting such party to credit the interest received by it in respect of such permanent global
Security to the accounts of the beneficial owners thereof.
In case a Bearer Security of any series is surrendered in exchange for a Registered Security
of such series after the close of business (at an office or agency in a Place of Payment for such
series) on any Regular Record Date and before the opening of business (at such office or agency) on
the next succeeding Interest Payment Date, such Bearer Security shall be surrendered without the
coupon relating to such Interest Payment Date and interest will not be payable on such Interest
Payment Date in respect of the Registered Security issued in exchange for such Bearer Security, but
will be payable only to the Holder of such coupon when due in accordance with the provisions of
this Indenture.
Except as otherwise specified with respect to a series of Securities in accordance with
the provisions of Section 301, any interest on any Registered Security of any series that is
payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein
called Defaulted Interest) shall forthwith cease to be payable to the registered Holder thereof
on the relevant Regular Record Date by virtue of having been such Holder, and such Defaulted
Interest may be paid by the Company, at its election in each case, as provided in clause (1) or (2)
below:
(1) The Company may elect to make payment of any Defaulted Interest to the
Persons in whose names the Registered Securities of such series (or their respective
Predecessor Securities) are registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest, which shall be fixed in the following manner. The
Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to
be paid on each Registered Security of such series and the date of the proposed payment
(which shall not be less than 20 days after such notice is received by the Trustee), and at
the same time the Company shall deposit with the Trustee an amount of money in the currency
or currencies, currency unit or units or composite currency or currencies in which the
Securities of such series are payable (except as otherwise specified pursuant to Section 301
for the Securities of such series) equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee
for such deposit on or prior to the date of the proposed payment, such money when deposited
to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in
this clause provided. Thereupon the Trustee shall fix a Special Record Date for the payment
of such Defaulted Interest which shall be not more than 15 days and not less than 10 days
prior to the date of the proposed payment and not less than 10 days after the receipt by the
Trustee of the notice of the proposed payment. The Trustee shall promptly notify the
Company of such Special Record Date and, in the name and at the expense of the Company,
shall cause notice of the proposed payment of such Defaulted Interest and the Special Record
Date therefor to be mailed, first-class postage prepaid, to each Holder of Registered
Securities of such series at his address as it appears in the Security Register not less
than 10 days prior to such Special Record Date. The Trustee may, in its discretion, in the
name and at the expense of the Company, cause a similar notice to be published at least once
in an Authorized Newspaper in each Place of Payment, but such publications shall not be a
condition precedent to the establishment of such Special Record Date. Notice of the
proposed payment of such Defaulted Interest and the Special Record Date therefor having been
mailed as aforesaid, such Defaulted Interest shall be paid to the Persons in whose names the
Registered Securities of such series (or their respective Predecessor Securities) are
registered at the close of business on such Special Record Date and shall no longer be
payable pursuant to the following clause (2). In case a Bearer Security of any series is
surrendered at the office or agency in a Place of Payment for such series in exchange for a
Registered Security of such series after the close of business at such office or agency on
any Special Record Date and before the opening of business at such office or agency on the
related proposed date for payment of Defaulted Interest, such Bearer Security shall be
surrendered without the coupon relating to such proposed date of payment and Defaulted
Interest will not be payable on such proposed date of payment in respect of the Registered
Security issued in exchange for such Bearer Security, but will be payable only to the Holder
of such coupon when due in accordance with the provisions of this Indenture.
(2) The Company may make payment of any Defaulted Interest on the Registered Securities
of any series in any other lawful manner not inconsistent with the requirements of any
securities exchange on which such Securities may be listed, and upon such notice as may be
required by such exchange, if, after notice given by the Company
to the Trustee of the
proposed payment pursuant to this clause, such manner of payment shall be deemed practicable
by the Trustee.
Subject to the foregoing provisions of this Section and Section 305, each Security delivered
under this Indenture upon registration of transfer of or in exchange for or in lieu of any other
Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried
by such other Security.
SECTION 308.
Persons Deemed Owners
. Prior to due presentment of a Registered
Security for registration of transfer, the Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name such Registered Security is registered as the owner of
such Security for the purpose of receiving payment of principal of (and premium or Make-Whole
Amount, if any), and (subject to Sections 305 and 307) interest on, such Registered Security and
for all other purposes whatsoever, whether or not such Registered Security be overdue, and neither
the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to
the contrary. All such payments so made to any such Person, or upon such Persons order, shall be
valid, and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the
liability for money payable upon any such Security.
Title to any Bearer Security and any coupons appertaining thereto shall pass by delivery. The
Company, the Trustee and any agent of the Company or the Trustee may treat the Holder of any Bearer
Security and the Holder of any coupon as the absolute owner of such Security or coupon for the
purpose of receiving payment thereof or on account thereof and for all other purposes whatsoever,
whether or not such Security or coupon be overdue, and neither the Company, the Trustee nor any
agent of the Company or the Trustee shall be affected by notice to the contrary.
No holder of any beneficial interest in any Global Security held on its behalf by a
depository shall have any rights under this Indenture with respect to such Global Security and such
depository (which is the Holder of such security) shall be treated by the Company, the Trustee, and
any agent of the Company or the Trustee as the owner of such Global Security for all purposes
whatsoever. None of the Company, the Trustee, any Paying Agent or the Security Registrar will
have any responsibility or liability for any aspect of the records relating to or payments made on
account of beneficial ownership interests of a Global Security or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
Notwithstanding the foregoing, with respect to any Global Security, nothing herein shall
prevent the Company, the Trustee, or any agent of the Company or the Trustee, from giving effect to
any written certification, proxy or other authorization furnished by any depository, as a Holder,
with respect to such Global Security or impair, as between such depository and owners of beneficial
interests in such Global Security, the operation of customary practices governing the exercise of
the rights of such depository (or its nominee) as Holder of such Global Security.
SECTION 309.
Cancellation
. All Securities and coupons surrendered for payment,
redemption, repayment at the option of the Holder, registration of transfer or exchange or for
credit against any sinking fund payment shall, if surrendered to any Person other than the Trustee,
be delivered to the Trustee, and any such Securities and coupons and Securities and coupons
surrendered directly to the Trustee for any such purpose shall be promptly cancelled by it. The
Company may at any time deliver to the Trustee for cancellation any Securities previously
authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever,
and may deliver to the Trustee (or to any other Person for delivery to the Trustee) for
cancellation any Securities previously authenticated hereunder which the Company has not issued and
sold, and all Securities so delivered shall be promptly cancelled by the Trustee. If the Company
shall so acquire any of the Securities, however, such acquisition shall not operate as a redemption
or satisfaction of the indebtedness represented by such Securities unless and until the same are
surrendered to the Trustee for cancellation. No Securities shall be authenticated in lieu of or in
exchange for any Securities cancelled as provided in this Section, except as expressly permitted by
this Indenture. Cancelled Securities and coupons held by the Trustee shall be destroyed by the
Trustee and the Trustee shall deliver a certificate of such destruction to the Company, unless the
Trustee is otherwise directed by a Company Order.
SECTION 310.
Computation of Interest
. Except as otherwise specified as contemplated
by Section 301 with respect to Securities of any series, interest on the Securities of each series
shall be computed on the basis of a 360-day year consisting of twelve 30-day months.
ARTICLE FOUR SATISFACTION AND DISCHARGE
SECTION 401.
Satisfaction and Discharge of Indenture
. This Indenture shall
upon Company Request cease to be of further effect with respect to any series of Securities
specified in such Company Request (except as to any surviving rights of registration of transfer or
exchange of Securities of such series herein expressly provided for), and the Trustee, upon receipt
of a Company Order, and at the expense of the Company, shall execute instruments in form and
substance satisfactory to the Trustee and the Company acknowledging satisfaction and discharge of
this Indenture as to such series when
(1) either
(A) all Securities of such series theretofore authenticated and delivered and
all coupons, if any, appertaining thereto (other than (i) coupons appertaining to
Bearer Securities surrendered for exchange for Registered Securities and maturing
after such exchange, whose surrender is not required or has been waived as provided
in Section 305, (ii) Securities and coupons of such series which have been
destroyed, lost or stolen and which have been replaced or paid as provided in
Section 306, (iii) coupons appertaining to Securities called for redemption and
maturing after the relevant Redemption Date, whose surrender has been waived as
provided in Section 1106, and (iv) Securities and coupons of such series for
whose
payment money has theretofore been deposited in trust or segregated and held in
trust by the Company and thereafter repaid to the Company or discharged from such
trust, as provided in Section 1003) have been delivered to the Trustee for
cancellation; or
(B) all Securities of such series and, in the case of (i) or (ii) below, any
coupons appertaining thereto not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity within one
year, or
(iii) if redeemable at the option of the Company, are to be called for
redemption within one year under arrangements satisfactory to the Trustee
for the giving of notice of redemption by the Trustee in the name, and at
the expense, of the Company,
and the Company, in the case of (i), (ii) or (iii) above, has irrevocably
deposited or caused to be deposited with the Trustee as trust funds in trust for the
purpose an amount in the currency or currencies, currency unit or units or composite
currency or currencies in which the Securities of such series are payable,
sufficient to pay and discharge the entire indebtedness on such Securities and such
coupons not theretofore delivered to the Trustee for cancellation, for principal
(and premium or Make-Whole Amount, if any) and interest to the date of such deposit
(in the case of Securities which have become due and payable) or to the Stated
Maturity or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums payable hereunder by the
Company; and
(3) the Company has delivered to the Trustee an Officers Certificate and an Opinion of
Counsel, each stating that all conditions precedent herein provided for relating to the
satisfaction and discharge of this Indenture as to such series have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to
the Trustee and any predecessor Trustee under Section 606, the obligations of the Company to any
Authenticating Agent under Section 611 and, if money shall have been deposited with and held by the
Trustee pursuant to subclause (B) of clause (1) of this Section, the obligations of the Trustee
under Section 402 and the last paragraph of Section 1003 shall survive.
SECTION 402.
Application of Trust Funds
. Subject to the provisions of the last
paragraph of Section 1003, all money deposited with the Trustee pursuant to Section 401 shall be
held in trust and applied by it, in accordance with the provisions of the Securities, the coupons
and this Indenture, to the payment, either directly or through any Paying Agent (including the
Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled
thereto, of the principal (and premium or Make-Whole Amount, if any), and any interest for whose
payment such money has been deposited with or received by the Trustee, but such money need not be
segregated from other funds except to the extent required by law.
ARTICLE FIVE REMEDIES
SECTION 501.
Events of Default
. Event of Default, wherever used herein with
respect to any particular series of Securities, means any one of the following events (whatever the
reason for such Event of Default and whether or not it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of any court or any
order, rule or regulation of any administrative or governmental body):
(1) default in the payment of any interest on any Security of that series or of any
coupon appertaining thereto, when such interest or coupon becomes due and payable, and
continuance of such default for a period of 30 days; or
(2) default in the payment of the principal of (or premium or Make-Whole Amount,
if any, on) any Security of that series when it becomes due and payable at its Maturity; or
(3) default in the deposit of any sinking fund payment, when and as due by the terms of
any Security of that series; or
(4) default in the performance, or breach, of any covenant or warranty of the Company
in this Indenture with respect to any Security of that series (other than a covenant or
warranty a default in whose performance or whose breach is elsewhere in this Section
specifically dealt with), and continuance of such default or breach for a period of 60 days
after there has been given, by registered or certified mail, to the Company by the Trustee
or to the Company and the Trustee by the Holders of at least 25% in principal amount of the
Outstanding Securities of that series a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a Notice of Default hereunder;
or
(5) default under any bond, debenture, note, mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any indebtedness for
money borrowed by the Company (or by any Subsidiary, the repayment of which the Company has
guaranteed or for which the Company is directly responsible or liable as obligor or
guarantor), having an aggregate principal
amount outstanding of at least $25,000,000,
whether such indebtedness now exists or shall hereafter be created, which default shall have
resulted in such indebtedness becoming or being declared due and payable prior to the date
on which it would otherwise have become due and payable, without such indebtedness having
been discharged, or such acceleration having been rescinded or annulled, within a period of
10 days after there shall have been given, by registered or certified mail, to the Company
by the Trustee or to the Company and the Trustee by the Holders of at least 10% in principal
amount of the Outstanding Securities of that series a written notice specifying such default
and requiring the Company to cause such indebtedness to be discharged or cause such
acceleration to be rescinded or annulled and stating that such notice is a Notice of
Default hereunder; or
(6) the Company or any Significant Subsidiary pursuant to or within the meaning of any
Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief
against it in an involuntary case,
(C) consents to the appointment of a Custodian of it or for all or
substantially all of its property, or
(D) makes a general assignment for the benefit of its creditors; or
(7) a court of competent jurisdiction enters an order or decree under any Bankruptcy
Law that:
(A) is for relief against the Company or any Significant Subsidiary in an
involuntary case,
(B) appoints a Custodian of the Company or any Significant Subsidiary or for
all or substantially all of either of its property, or
(C) orders the liquidation of the Company or any Significant Subsidiary, and
the order or decree remains unstayed and in effect for 90 days; or
(8) any other Event of Default provided with respect to Securities of that series.
As used in this Section 501, the term Bankruptcy Law means title 11, U.S. Code or any similar
Federal or state law for the relief of debtors and the term Custodian means any receiver,
trustee, assignee, liquidator or other similar official under any Bankruptcy Law.
SECTION 502.
Acceleration of Maturity; Rescission and Annulment
. If an Event of
Default with respect to Securities of any series at the time Outstanding occurs and is continuing,
then and in every such case the Trustee or the Holders of not less than 25% in principal amount of
the Outstanding Securities of that series may declare the principal amount (or, if Securities of
that Series are Original Issue Discount Securities or Indexed Securities, such portion of the
principal as may be specified in the terms thereof) of all the Securities of that series to be due
and payable immediately, by a notice in writing to the Company (and to the Trustee if given by the
Holders), and upon any such declaration such principal or specified portion thereof shall become
immediately due and payable.
At any time after such a declaration of acceleration with respect to Securities of any series
has been made and before a judgment or decree for payment of the money due has been obtained by the
Trustee as hereinafter in this Article provided, the Holders of a majority in principal amount of
the Outstanding Securities of that series, by written notice to the Company and the Trustee, may
rescind and annul such declaration of acceleration and its consequences if:
(1) the Company has paid or deposited with the Trustee a sum sufficient to pay
in the currency, currency unit or composite currency in which the Securities of such series
are payable (except as otherwise specified pursuant to Section 301 for the Securities of
such series):
(A) all overdue installments of interest on all Outstanding Securities of that
series and any related coupons,
(B) the principal of (and premium or Make-Whole Amount, if any, on) any
Outstanding Securities of that series which have become due otherwise than by such
declaration of acceleration and interest thereon at the rate or rates borne by or
provided for in such Securities,
(C) to the extent that payment of such interest is lawful, interest upon
overdue installments of interest at the rate or rates borne by or provided for in
such Securities, and
(D) all sums paid or advanced by the Trustee hereunder and the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents and
counsel; and
(2) all Events of Default with respect to Securities of that series, other than the
nonpayment of the principal of (or premium or Make-Whole Amount, if any) or interest on
Securities of that series which have become due solely by such declaration of acceleration,
have been cured or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right consequent thereon.
SECTION 503.
Collection of Indebtedness and Suits for Enforcement by Trustee
. The
Company covenants that if:
(1) default is made in the payment of any installment of interest on any Security of
any series and any related coupon when such interest becomes due and payable and such
default continues for a period of 30 days, or
(2) default is made in the payment of the principal of (or premium or Make-Whole
Amount, if any, on) any Security of any series at its Maturity,
then the Company will, upon demand of the Trustee, pay to the Trustee, for the benefit of
the Holders of such Securities of such series and coupons, the whole amount then due and payable on
such Securities and coupons for principal (and premium or Make-Whole Amount, if any) and interest,
with interest upon any overdue principal (and premium or Make-Whole Amount, if any) and, to the
extent that payment of such interest shall be legally enforceable, upon any overdue installments of
interest at the rate or rates borne by or provided for in such Securities, and, in addition
thereto, such further amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own
name and as trustee of an express trust, may institute a judicial proceeding for the collection of
the sums so due and unpaid, and may prosecute such proceeding to judgment or final decree, and may
enforce the same against the Company or any other obligor upon such Securities of such series and
collect the moneys adjudged or decreed to be payable in the manner provided by law out of the
property of the Company or any other obligor upon such Securities of such series, wherever
situated.
If an Event of Default with respect to Securities of any series occurs and is continuing, the
Trustee may in its discretion proceed to protect and enforce its rights and the rights of the
Holders of Securities of such series and any related coupons by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce any such rights,
whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of
the exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 504.
Trustee May File Proofs of Claim
. In case of the pendency of any
receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment,
composition or other judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their creditors, the Trustee
(irrespective of whether the principal of the Securities of any series shall then be due and
payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee
shall have made any demand on the Company for the payment of overdue principal, premium or
Make-Whole Amount, if any, or interest) shall be entitled and empowered, by intervention in such
proceeding or otherwise:
(i) to file and prove a claim for the whole amount, or such lesser amount as may be
provided for in the Securities of such series, of principal (and premium or Make-Whole
Amount, if any) and interest owing and unpaid in respect of the Securities and to file such
other papers or documents as may be necessary or advisable in order to have the claims of
the Trustee (including any claim for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel) and of the Holders allowed in such
judicial proceeding, and
(ii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator (or other similar
official) in any such judicial proceeding is hereby authorized by each Holder of Securities of such
series and coupons to make such payments to the Trustee, and in the event that the Trustee shall
consent to the making of such payments directly to the Holders, to pay to the Trustee any amount
due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee and
any predecessor Trustee, their agents and counsel, and any other amounts due the Trustee or any
predecessor Trustee under Section 606.
Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to
or accept or adopt on behalf of any Holder of a Security or coupon any plan of reorganization,
arrangement, adjustment or composition affecting the Securities or coupons or the rights of any
Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder of a
Security or coupon in any such proceeding.
In any proceedings brought by the Trustee (and also any proceedings involving the
interpretation of any provision of this Indenture to which the Trustee shall be a party) the
Trustee shall be held to represent all the Holders of the Securities, and it shall not be necessary
to make any Holders of the Securities parties to any such proceedings.
SECTION 505.
Trustee May Enforce Claims Without Possession of Securities or Coupons
.
All rights of action and claims under this Indenture or any of the Securities or coupons may be
prosecuted and enforced by the Trustee without the possession of any of the Securities or coupons
or the production thereof in any proceeding relating thereto, and any such proceeding instituted by
the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of
judgment shall, after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of
the Holders of the Securities and coupons in respect of which such judgment has been recovered.
SECTION 506.
Application of Money Collected
. Any money collected by the Trustee
pursuant to this Article shall be applied in the following order, at the date or dates fixed by the
Trustee and, in case of the distribution of such money on account of principal (or premium or
Make-Whole Amount, if any) or interest, upon presentation of the Securities or coupons, or both, as
the case may be, and the notation thereon of the payment if only partially paid and upon surrender
thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee and any predecessor Trustee under
Section 606;
SECOND: To the payment of the amounts then due and unpaid upon the Securities and
coupons for principal (and premium or Make-Whole Amount, if any) and interest, in respect of
which or for the benefit of which such money has been collected, ratably, without preference
or priority of any kind, according to the aggregate amounts due and payable on such
Securities and coupons for principal (and premium or Make-Whole Amount, if any) and
interest, respectively; and
THIRD: To the payment of the remainder, if any, to the Company.
SECTION 507.
Limitation on Suits
. No Holder of any Security of any series or any
related coupon shall have any right to institute any proceeding, judicial or otherwise, with
respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy
hereunder, unless:
(1) such Holder has previously given written notice to the Trustee of a continuing
Event of Default with respect to the Securities of that series;
(2) the Holders of not less than 25% in principal amount of the Outstanding Securities
of that series shall have made written request to the Trustee to institute proceedings in
respect of such Event of Default in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee indemnity reasonably
satisfactory to the Trustee against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request and offer of
indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been given to the Trustee
during such 60-day period by the Holders of a majority in principal amount of the
Outstanding Securities of that series;
it being understood and intended that no one or more of such Holders shall have any right in any
manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb
or prejudice the rights of any other of such Holders, or to obtain or to seek to obtain priority or
preference over any other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all such Holders.
SECTION 508.
Unconditional Right of Holders to Receive Principal, Premium or Make-Whole
Amount, if any, and Interest
. Notwithstanding any other provision in this Indenture, the
Holder of any Security or coupon shall have the right which is absolute and unconditional to
receive payment of the principal of (and premium or Make-Whole Amount, if any) and (subject to
Sections 305 and 307) interest on such Security or payment of such coupon on the respective due
dates expressed in such Security or coupon (or, in the case of redemption, on the Redemption Date)
and to institute suit for the enforcement of any such payment, and such rights shall not be
impaired without the consent of such Holder.
SECTION 509.
Restoration of Rights and Remedies
. If the Trustee or any Holder
of a Security or coupon has instituted any proceeding to enforce any right or remedy under this
Indenture and such proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Trustee or to such Holder, then and in every such case, the Company,
the Trustee and the Holders of Securities and coupons shall, subject to any determination in such
proceeding, be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such
proceeding had been instituted.
SECTION 510.
Rights and Remedies Cumulative
. Except as otherwise provided with
respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities or coupons
in the last paragraph of Section 306, no right or remedy herein conferred upon or reserved to the
Trustee or to the Holders of Securities or coupons is intended to be exclusive of any other right
or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter existing at law or in
equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise,
shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.
SECTION 511.
Delay or Omission Not Waiver
. No delay or omission of the Trustee or of
any Holder of any Security or coupon to exercise any right or remedy accruing upon any Event of
Default shall impair any such right or remedy or constitute a waiver of any such Event of Default
or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee
or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by
the Trustee or by the Holders of Securities or coupons, as the case may be.
SECTION 512.
Control by Holders of Securities
. The Holders of not less than a
majority in principal amount of the Outstanding Securities of any series shall have the right to
direct the time, method and place of conducting any proceeding for any remedy available to the
Trustee or exercising any trust or power conferred on the Trustee with respect to the Securities of
such series,
provided
that
(1) such direction shall not be in conflict with any rule of law or with this
Indenture,
(2) the Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction, and
(3) the Trustee need not take any action which might involve it in personal liability
or be unduly prejudicial to the Holders of Securities of such series not joining therein.
Nothing in this Indenture shall impair the right of the Trustee in its discretion to
take any action deemed proper by the Trustee and which is not inconsistent with such direction by
Holders.
SECTION 513.
Waiver of Past Defaults
. The Holders of not less than a majority in
principal amount of the Outstanding Securities of any series may on behalf of the Holders of all
the Securities of such series and any related coupons waive any past default hereunder with respect
to such series and its consequences, except a default
(1) in the payment of the principal of (or premium or Make-Whole Amount, if any) or
interest on any Security of such series or any related coupons, or
(2) in respect of a covenant or provision hereof which under Article Nine cannot be
modified or amended without the consent of the Holder of each Outstanding Security of such
series affected; or
(3) in respect of a covenant or provision hereof for the benefit
or protection of the Trustee, without its express written consent.
Upon any such waiver, such default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such
waiver shall extend to any subsequent or other default or Event of Default or impair any right
consequent thereon.
SECTION 514.
Waiver of Usury, Stay or Extension Laws
. The Company covenants (to the
extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any
manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law
wherever enacted, now or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Trustee, but will suffer and
permit the execution of every such power as though no such law had been enacted.
SECTION 515.
Undertaking for Costs
. All parties to this Indenture agree, and
each Holder of any Security by his acceptance thereof shall be deemed to have agreed, that any
court may in its discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken or omitted by it as
Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such
suit, and that such court may in its discretion assess reasonable costs, including reasonable
attorneys fees, against any party litigant in such suit having due regard to the merits and good
faith of the claims or defenses made by such party litigant; but the provisions of this Section
shall not apply to any suit instituted by the Trustee, to any suit instituted by any Holder, or
group of Holders, holding in the aggregate more than 10% in principal amount of the Outstanding
Securities of any series, or to any suit instituted by any Holder for the enforcement of the
payment of the principal of (or premium or Make-Whole Amount, if any) or interest on any Security
on or after the respective Stated Maturities expressed in such Security (or, in the case of
redemption, on or after the Redemption Date).
ARTICLE SIX THE TRUSTEE
SECTION 601.
Notice of Defaults
. Within 90 days after the occurrence of any default
hereunder with respect to the Securities of any series, the Trustee shall transmit in the manner
and to the extent provided in TIA Section 313(c), notice of such default hereunder known to the
Trustee, unless such default shall have been cured or waived;
provided
,
however
,
that, except in the case of a default in the payment of the principal of (or premium or Make-Whole
Amount, if any) or interest on any Security of such series, or in the payment of any sinking or
purchase fund installment with respect to the Securities of such series, the Trustee shall be
protected in withholding such notice if and so long as the board of directors, the executive
committee, or a trust committee of directors and/or Responsible Officers of the Trustee in good
faith determine that the withholding of such notice is in the interests of the Holders of the
Securities and coupons of such series; and
provided
further
that in the case of any
default or breach of the character specified in Section 501(4) with respect to the Securities and
coupons of such series, no such notice to Holders shall be given until at least 60 days after the
occurrence thereof. For the purpose of this Section, the term default means any event which is,
or after notice or lapse of time or both would become, an Event of Default with respect to the
Securities of such series.
SECTION 602.
Certain Rights of Trustee
. Subject to the provisions of TIA Section
315(a) through 315(d):
(1) the Trustee may rely and shall be protected in acting or refraining from acting
upon any resolution, certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, coupon or other paper or document believed
by it to be genuine and to have been signed or presented by the proper party or parties;
(2) any request or direction of the Company mentioned herein shall be sufficiently
evidenced by a Company Request or Company Order (other than delivery of any Security,
together with any coupons appertaining thereto, to the Trustee for authentication and
delivery pursuant to Section 303 which shall be sufficiently evidenced as provided therein)
and any resolution of the Board of Directors may be sufficiently evidenced by a Board
Resolution;
(3) whenever in the administration of this Indenture the Trustee shall deem it
desirable that a matter be proved or established prior to taking, suffering or omitting any
action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may,
in the absence of bad faith on its part, rely upon an Officers Certificate;
(4) the Trustee may consult with counsel and the written advice of such counsel or any
Opinion of Counsel shall be full and complete authorization and protection in respect of any
action taken, suffered or omitted by it hereunder in good faith and in reliance thereon;
(5) the Trustee shall be under no obligation to exercise any of the rights or powers
vested in it by this Indenture at the request or direction of any of the Holders of
Securities of any series or any related coupons pursuant to this Indenture, unless such
Holders shall have offered to the Trustee security or indemnity reasonably satisfactory to
the Trustee against the costs, expenses and liabilities which might be incurred by it in
compliance with such request or direction;
(6) the Trustee shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, coupon or other paper or
document, unless requested in writing so to do by the Holders of not less than a majority in
aggregate principal amount of the Outstanding Securities of any series;
provided
that, if the payment within a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such investigation is, in the
opinion of the Trustee, not reasonably assured to the Trustee by the security afforded to it
by the terms of this Indenture, the Trustee may require reasonable indemnity against such
expenses or liabilities as a condition to proceeding; the reasonable expenses of every such
examination shall be paid by the Holders or, if paid by the Trustee, shall be repaid by the
Holders upon demand. The Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit, and, if the Trustee shall
determine to make such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, relevant to the facts or matters that are the
subject of its inquiry, personally or by agent or attorney;
(7) the Trustee may execute any of the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents or attorneys and the
Trustee shall not be
responsible for any misconduct or negligence on the part of any agent or attorney appointed
with due care by it hereunder;
(8) the Trustee shall not be liable for any action taken, suffered or omitted by it in
good faith and reasonably believed by it to be authorized or within the discretion or rights
or powers conferred upon it by this Indenture;
(9) any permissive right or power available to the Trustee under this Indenture
or any supplement hereto shall not be construed to be a mandatory duty or obligation;
(10) the Trustee shall not be charged with knowledge of any matter (including any
default, other than as described in Section 501(1), (2) or (3)) unless and except to the
extent actually known to a Responsible Officer of the Trustee or to the extent written
notice thereof is received by the Trustee at the Corporate Trust Office; and
(11) the Trustee shall have no liability for the selection of any Independent
Investment Banker; and shall have no liability for any inaccuracy in the books and records
of, or for any actions or omissions of, DTC, Euroclear or CEDEL or any depository acting on
behalf of any of them.
The Trustee shall not be required to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder, or in the exercise of any of
its rights or powers, if it shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably assured to it.
Except during the continuance of an Event of Default, the Trustee undertakes to perform only
such duties as are specifically set forth in this Indenture, and no implied covenants or
obligations shall be read into this Indenture against the Trustee.
SECTION 603.
Not Responsible for Recitals or Issuance of Securities
. The recitals
contained herein and in the Securities, except the Trustees certificate of authentication, and in
any coupons shall be taken as the statements of the Company, and neither the Trustee nor any
Authenticating Agent assumes any responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the Securities or
coupons, except that the Trustee represents that it is duly authorized to execute and deliver this
Indenture, authenticate the Securities and perform its obligations hereunder. Neither the Trustee
nor any Authenticating Agent shall be accountable for the use or application by the Company of
Securities or the proceeds thereof.
SECTION 604.
May Hold Securities
. The Trustee, any Paying Agent, Security Registrar,
Authenticating Agent or any other agent of the Company, in its individual or any other capacity,
may become the owner or pledgee of Securities and coupons and, subject to TIA Sections 310(b) and
311, may otherwise deal with the Company with the same rights it would
have if it were not Trustee, Paying Agent, Security Registrar, Authenticating Agent or such
other agent.
SECTION 605.
Money Held in Trust
. Money held by the Trustee in trust
hereunder need not be segregated from other funds except to the extent required by law. The
Trustee shall be under no liability for interest on any money received by it hereunder except as
otherwise agreed with the Company.
SECTION 606.
Compensation and Reimbursement
. The Company agrees:
(1) to pay to the Trustee from time to time reasonable compensation for all services
rendered by it hereunder (which compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to reimburse each of the Trustee and
any predecessor Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision of this Indenture
(including the reasonable compensation and the reasonable expenses and disbursements of its
agents and counsel), except any such expense, disbursement or advance as may be attributable
to its negligence or bad faith; and
(3) to indemnify each of the Trustee and any predecessor Trustee for, and to hold it
harmless against, any loss, liability or expense incurred without negligence or bad faith on
its part, arising out of or in connection with the acceptance or administration of the trust
or trusts hereunder, including the costs and expenses of defending itself against any claim
or liability in connection with the exercise or performance of any of its powers or duties
hereunder.
When the Trustee incurs expenses or renders services in connection with an Event of Default
specified in Section 501(7) or Section 501(8), the expenses (including the reasonable charges and
expenses of its counsel) and the compensation for the services are intended to constitute expenses
of administration under any applicable Federal or state bankruptcy, insolvency or other similar
law.
As security for the performance of the obligations of the Company under this Section, the
Trustee shall have a lien prior to the Securities upon all property and funds held or collected by
the Trustee as such, except funds held in trust for the payment of principal of (or premium or
Make-Whole Amount, if any) or interest on particular Securities or any coupons.
The provisions of this Section shall survive the termination of this Indenture.
SECTION 607.
Corporate Trustee Required; Eligibility; Conflicting Interests
.
There shall at all times be a Trustee hereunder which shall be eligible to act as Trustee under TIA
Section 310(a)(1) and shall have at all times a combined capital and surplus of at least
$50,000,000. If the
Trustee publishes reports of condition at least annually, pursuant to law or the requirements
of Federal, state, territorial or District of Columbia supervising or examining authority, then for
the purposes of this Section, the combined capital and surplus of the Trustee shall be deemed to be
its combined capital and surplus as set forth in its most recent report of condition so published.
If at any time the Trustee shall cease to be eligible in accordance with the provisions of this
Section, it shall resign immediately in the manner and with the effect hereinafter specified in
this Article. Neither the Company nor any Person directly or indirectly controlling, controlled
by, or under common control with the Company shall serve as Trustee.
SECTION 608.
Resignation and Removal; Appointment of Successor
.
(a) No resignation or removal of the Trustee and no appointment of a successor Trustee
pursuant to this Article shall become effective until the acceptance of appointment by the
successor Trustee in accordance with the applicable requirements of Section 609.
(b) The Trustee may resign at any time with respect to the Securities of one or more series by
giving written notice thereof to the Company. If an instrument of acceptance by a successor
Trustee shall not have been delivered to the Trustee within 30 days after the giving of such notice
of resignation, the resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(c) The Trustee may be removed at any time with respect to the Securities of any series by Act
of the Holders of a majority in principal amount of the Outstanding Securities of such series
delivered to the Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with the provisions of TIA Section 310(b) after
written request therefor by the Company or by any Holder of a Security who has been a bona
fide Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 607 and shall fail to resign
after written request therefor by the Company or by any Holder of a Security who has been a
bona fide Holder of a Security for at least six months, or
(3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or
insolvent or a receiver of the Trustee or of its property shall be appointed or any public
officer shall take charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company by or pursuant to a Board Resolution may remove the Trustee
and appoint a successor Trustee with respect to all Securities, or (ii) subject to TIA Section
315(e), any Holder of a Security who has been a bona fide Holder of a Security for at
least six
months may, on behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the removal of the Trustee with respect to all Securities and the
appointment of a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become incapable of acting, or if a
vacancy shall occur in the office of Trustee for any cause with respect to the Securities of one or
more series, the Company, by or pursuant to a Board Resolution, shall promptly appoint a successor
Trustee or Trustees with respect to the Securities of that or those series (it being understood
that any such successor Trustee may be appointed with respect to the Securities of one or more or
all of such series and that at any time there shall be only one Trustee with respect to the
Securities of any particular series). If, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor Trustee with respect to the Securities
of any series shall be appointed by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series delivered to the Company and the retiring Trustee, the
successor Trustee so appointed shall, forthwith upon its acceptance of such appointment, become the
successor Trustee with respect to the Securities of such series and to that extent supersede the
successor Trustee appointed by the Company. If no successor Trustee with respect to the Securities
of any series shall have been so appointed by the Company or the Holders of Securities and accepted
appointment in the manner hereinafter provided, any Holder of a Security who has been a bona fide
Holder of a Security of such series for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the appointment of a
successor Trustee with respect to Securities of such series.
(f) The Company shall give notice of each resignation and each removal of the Trustee with
respect to the Securities of any series and each appointment of a successor Trustee with respect to
the Securities of any series in the manner provided for notices to the Holders of Securities in
Section 106. Each notice shall include the name of the successor Trustee with respect to the
Securities of such series and the address of its Corporate Trust Office.
SECTION 609.
Acceptance of Appointment by Successor
. (a) In case of the appointment
hereunder of a successor Trustee with respect to all Securities, every such successor Trustee so
appointed shall execute, acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring
Trustee; but, on request of the Company or the successor Trustee, such retiring Trustee shall, upon
payment of its charges, execute and deliver an instrument transferring to such successor Trustee
all the rights, powers and trusts of the retiring Trustee, and shall duly assign, transfer and
deliver to such successor Trustee all property and money held by such retiring Trustee hereunder,
subject nevertheless to its claim, if any, provided for in Section 606.
(b) In case of the appointment hereunder of a successor Trustee with respect to the
Securities of one or more (but not all) series, the Company, the retiring Trustee and each
successor Trustee with respect to the Securities of one or more series shall execute and deliver an
indenture supplemental hereto, pursuant to Article Nine hereof, wherein each successor Trustee
shall accept such appointment and which (1) shall contain such provisions as shall be necessary or
desirable to transfer and confirm to, and to vest in, each successor Trustee all the rights,
powers,
trusts and duties of the retiring Trustee with respect to the Securities of that or those
series to which the appointment of such successor Trustee relates, (2) if the retiring Trustee is
not retiring with respect to all Securities, shall contain such provisions as shall be deemed
necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring
Trustee with respect to the Securities of that or those series as to which the retiring Trustee is
not retiring shall continue to be vested in the retiring Trustee, and (3) shall add to or change
any of the provisions of this Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee, it being understood that nothing
herein or in such supplemental indenture shall constitute such Trustees co-trustees of the same
trust and that each such Trustee shall be trustee of a trust or trusts hereunder separate and apart
from any trust or trusts hereunder administered by any other such Trustee; and upon the execution
and delivery of such supplemental indenture the resignation or removal of the retiring Trustee
shall become effective to the extent provided therein and each such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Trustee with respect to the Securities of that or those series to which the
appointment of such successor Trustee relates; but, on request of the Company or any successor
Trustee, such retiring Trustee shall duly assign, transfer and deliver to such successor Trustee
all property and money held by such retiring Trustee hereunder with respect to the Securities of
that or those series to which the appointment of such successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company shall execute any and all
instruments for more fully and certainly vesting in and confirming to such successor Trustee all
such rights, powers and trusts referred to in paragraph (a) or (b) of this Section 609, as the case
may be.
(d) No successor Trustee shall accept its appointment unless at the time of such acceptance
such successor Trustee shall be qualified and eligible under this Article.
SECTION 610.
Merger, Conversion, Consolidation or Succession to Business
. Any
corporation into which the Trustee may be merged or converted or with which it may be consolidated,
or any corporation resulting from any merger, conversion or consolidation to which the Trustee
shall be a party, or any corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided
such
corporation shall be otherwise qualified and eligible under this Article, without the execution or
filing of any paper or any further act on the part of any of the parties hereto. In case any
Securities or coupons shall have been authenticated, but not delivered, by the Trustee then in
office, any successor by merger, conversion or consolidation to such authenticating Trustee may
adopt such authentication and deliver the Securities or coupons so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities or coupons. In case
any Securities or coupons shall not have been authenticated by such predecessor Trustee, any such
successor Trustee may authenticate and deliver such Securities or coupons, in either its own
name
or that of its predecessor Trustee, with the full force and effect which this Indenture provides
for the certificate of authentication of the Trustee.
SECTION 611.
Appointment of Authenticating Agent
. At any time when any of the
Securities remain Outstanding, the Trustee may appoint an Authenticating Agent or Agents with
respect to one or more series of Securities which shall be authorized to act on behalf of the
Trustee to authenticate Securities of such series issued upon exchange, registration of transfer or
partial redemption or repayment thereof, and Securities so authenticated shall be entitled to the
benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated
by the Trustee hereunder. Any such appointment shall be evidenced by an instrument in writing
signed by a Responsible Officer of the Trustee, a copy of which instrument shall be promptly
furnished to the Company. Wherever reference is made in this Indenture to the authentication and
delivery of Securities by the Trustee or the Trustees certificate of authentication, such
reference shall be deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the Company and shall at
all times be a bank or trust company or corporation organized and doing business and in good
standing under the laws of the United States of America or of any state or the District of
Columbia, authorized under such laws to act as Authenticating Agent, having a combined capital and
surplus of not less than $50,000,000 and subject to supervision or examination by Federal or state
authorities. If such Authenticating Agent publishes reports of condition at least annually,
pursuant to law or the requirements of the aforesaid supervising or examining authority, then for
the purposes of this Section, the combined capital and surplus of such Authenticating Agent shall
be deemed to be its combined capital and surplus as set forth in its most recent report of
condition so published. In case at any time an Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section, such Authenticating Agent shall resign immediately
in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or converted or with which it
may be consolidated, or any corporation resulting from any merger, conversion or consolidation to
which such Authenticating Agent shall be a party, or any corporation succeeding to the corporate
agency or corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible under this Section,
without the execution or filing of any paper or further act on the part of the Trustee or the
Authenticating Agent.
An Authenticating Agent for any series of Securities may at any time resign by giving
written notice of resignation to the Trustee for such series and to the Company. The Trustee for
any series of Securities may at any time terminate the agency of an Authenticating Agent by giving
written notice of termination to such Authenticating Agent and to the Company. Upon receiving such
a notice of resignation or upon such a termination, or in case at any time such Authenticating
Agent shall cease to be eligible in accordance with the provisions of this Section, the Trustee for
such series may appoint a successor Authenticating Agent which shall be acceptable to the Company
and shall give notice of such appointment to all Holders of Securities
of the series with respect
to which such Authenticating Agent will serve in the manner set forth in Section 106. Any
successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested
with all the rights, powers and duties of its predecessor hereunder, with like
effect as if originally named as an Authenticating Agent herein. No successor Authenticating
Agent shall be appointed unless eligible under the provisions of this Section.
The Company agrees to pay to each Authenticating Agent from time to time reasonable
compensation including reimbursement of its reasonable expenses for its services under this
Section.
If an appointment with respect to one or more series is made pursuant to this Section, the
Securities of such series may have endorsed thereon, in addition to or in lieu of the Trustees
certificate of authentication, an alternate certificate of authentication substantially in the
following form:
This is one of the Securities of the series designated therein referred to in the within-
mentioned Indenture.
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[__________________]
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as Trustee
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Dated:
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By:
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as Authenticating Agent
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Dated:
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By:
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Authorized Signatory
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SECTION 612.
Certain Duties and Responsibilities of the Trustee
.
(a) With respect to the Securities of any series, except during the continuance of an Event of
Default with respect to the Securities of such series:
(1) the Trustee undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture, and no implied covenants or obligations shall be
read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may conclusively rely,
as to the truth of the statements and the correctness of the opinions expressed therein,
upon certificates or opinions furnished to the Trustee and conforming to the requirements of
this Indenture; but in the case of any such certificates or opinions which by any provision
hereof are specifically required to be furnished to the Trustee, the Trustee shall be under
a duty to examine the same to determine whether or not they conform to the
requirements of
this Indenture, but shall not be under any duty to verify the contents or accuracy thereof.
(b) In case an Event of Default with respect to the Securities of any series has occurred and
is continuing, the Trustee shall, with respect to Securities of such series, exercise
such of the rights and powers vested in it by this Indenture, and use the same degree of care
and skill in their exercise, as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs.
(c) No provision of this Indenture shall be construed to relieve the Trustee from liability
for its own negligent action, its own negligent failure to act, or its own willful misconduct,
except that:
(1) this Subsection shall not be construed to limit the effect of Subsection (a) of
this Section;
(2) the Trustee shall not be liable for any error of judgment made in good faith by a
Responsible Officer, unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action taken or omitted to be
taken by it in good faith in accordance with the direction of the Holders of a majority in
principal amount of the Outstanding Securities of any series relating to the time, method
and place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this Indenture with respect
to the Securities of such series; and
(4) no provision of this Indenture shall require the Trustee to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it.
(d) Whether or not therein expressly so provided, every provision of this Indenture relating
to the conduct or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section 612.
(e) The Trustee shall not be liable for interest on any money or assets held by it
except to the extent the Trustee may agree in writing with the Company. Assets held in trust by
the Trustee need not be segregated from other assets except to the extent required by law.
ARTICLE SEVEN HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701.
Disclosure of Names and Addresses of Holders
. Every Holder of
Securities or coupons, by receiving and holding the same, agrees with the Company and the Trustee
that neither the Company nor the Trustee nor any Authenticating Agent nor any Paying Agent nor any
Security Registrar shall be held accountable by reason of the disclosure of any information as to
the names and addresses of the Holders of Securities in accordance with TIA Section 312, regardless
of the source from which such information was derived, and that the Trustee shall not be held
accountable by reason of mailing any material pursuant to a request made under TIA Section 312(b).
SECTION 702.
Reports by Trustee
. The Trustee shall transmit to Holders such reports
concerning the Trustee and its actions under this Indenture as may be required by TIA Section 313
at the times and in the manner provided by the TIA, which shall initially be not less than every
twelve months commencing on January ___, 1998. A copy of each such report shall, at the time of
such transmission to Holders, be filed by the Trustee with each stock exchange, if any, upon which
any Securities are listed, with the Commission and with the Company. The Company will notify the
Trustee when any Securities are listed on any stock exchange.
SECTION 703.
Reports by Company
. The Company will:
(1) file with the Trustee, within 15 days after the Company is required to file the
same with the Commission, copies of the annual reports and of the information, documents and
other reports (or copies of such portions of any of the foregoing as the Commission may from
time to time by rules and regulations prescribe) which the Company may be required to file
with the Commission pursuant to Section 13 or Section 15(d) of the Securities Exchange Act
of 1934; or, if the Company is not required to file information, documents or reports
pursuant to either of such Sections, then it will file with the Trustee and the Commission,
in accordance with rules and regulations prescribed from time to time by the Commission,
such of the supplementary and periodic information, documents and reports which may be
required pursuant to Section 13 of the Securities Exchange Act of 1934 in respect of a
security listed and registered on a national securities exchange as may be prescribed from
time to time in such rules and regulations;
(2) file with the Trustee and the Commission, in accordance with rules and
regulations prescribed from time to time by the Commission, such additional information,
documents and reports with respect to compliance by the Company with the conditions and
covenants of this Indenture as may be required from time to time by such rules and
regulations; and
(3) transmit by mail to the Holders of Securities, within 30 days after the filing
thereof with the Trustee, in the manner and to the extent provided in TIA Section 313(c),
such summaries of any information, documents and reports required to be filed by the Company
pursuant to paragraphs (1) and (2) of this Section as may be required by rules and
regulations prescribed from time to time by the Commission.
SECTION 704.
Company to Furnish Trustee Names and Addresses of Holders
. The Company
will furnish or cause to be furnished to the Trustee:
(a) semiannually, not later than 15 days after the Regular Record Date for interest for each
series of Securities, a list, in such form as the Trustee may reasonably require, of the names and
addresses of the Holders of Registered Securities of such series as of such Regular Record Date, or
if there is no Regular Record Date for interest for such series of Securities, semiannually, upon
such dates as are set forth in the Board Resolution or indenture supplemental hereto authorizing
such series, and
(b) at such other times as the Trustee may request in writing, within 30 days after the
receipt by the Company of any such request, a list of similar form and content as of a date not
more than 15 days prior to the time such list is furnished,
provided
,
however
, that, so long as the Trustee is the Security Registrar, no such
list shall be required to be furnished.
ARTICLE EIGHT CONSOLIDATION, MERGER, SALE, LEASE OR CONVEYANCE
SECTION 801.
Consolidations and Mergers of Company and Sales, Leases and
Conveyances Permitted Subject to Certain Conditions
. The Company may consolidate with, or
sell, lease or convey all or substantially all of its assets to, or merge with or into any other
corporation, provided that in any such case, (1) either the Company shall be the continuing
corporation, or the successor corporation shall be a corporation organized and existing under the
laws of the United States or a State thereof and such successor corporation shall expressly assume
the due and punctual payment of the principal of (and premium or Make-Whole Amount, if any) and any
interest on all of the Securities, according to their tenor, and the due and punctual performance
and observance of all of the covenants and conditions of this Indenture to be performed by the
Company by supplemental indenture, complying with Article Nine hereof, satisfactory to the Trustee,
executed and delivered to the Trustee by such corporation and (2) immediately after giving effect
to such transaction and treating any indebtedness which becomes an obligation of the Company or any
Subsidiary as a result thereof as having been incurred by the Company or such Subsidiary at the
time of such transaction, no Event of Default, and no event which, after notice or the lapse of
time, or both, would become an Event of Default, shall have occurred and be continuing.
SECTION 802.
Rights and Duties of Successor Corporation
. In case of any such
consolidation, merger, sale, lease or conveyance and upon any such assumption by the successor
corporation, such successor corporation shall succeed to and be substituted for the Company, with
the same effect as if it had been named herein as the party of the first part, and the
predecessor
corporation, except in the event of a lease, shall be relieved of any further obligation under this
Indenture and the Securities. Such successor corporation thereupon may cause to be signed, and may
issue either in its own name or in the name of the Company, any or all of the Securities issuable
hereunder which theretofore shall not have been signed by the Company and delivered to the Trustee;
and, upon the order of such successor corporation, instead of the Company, and subject to all the
terms, conditions and limitations in this Indenture prescribed, the Trustee shall authenticate and
shall deliver any Securities which previously shall have been signed and delivered by the officers
of the Company to the Trustee for authentication, and any Securities which such successor
corporation thereafter shall cause to be signed and delivered to the Trustee for that purpose. All
the Securities so issued shall in all respects have the same legal rank and benefit under this
Indenture as the Securities theretofore or thereafter issued in accordance with the terms of this
Indenture as though all of such Securities had been issued at the date of the execution hereof.
In case of any such consolidation, merger, sale, lease or conveyance, such changes in
phraseology and form (but not in substance) may be made in the Securities thereafter to be issued
as may be appropriate.
SECTION 803.
Officers Certificate and Opinion of Counsel
. Any consolidation,
merger, sale, lease or conveyance permitted under Section 801 is also subject to the condition that
the Trustee receive an Officers Certificate and an Opinion of Counsel to the effect that any such
consolidation, merger, sale, lease or conveyance, and the assumption by any successor corporation,
complies with the provisions of this Article and that all conditions precedent herein provided for
relating to such transaction have been complied with.
ARTICLE NINE SUPPLEMENTAL INDENTURES
SECTION 901.
Supplemental Indentures Without Consent of Holders
. Without the consent
of any Holders of Securities or coupons, the Company, when authorized by or pursuant to a Board
Resolution, and the Trustee, at any time and from time to time, may enter into one or more
indentures supplemental hereto, in form satisfactory to the Trustee, for any of the following
purposes:
(1) to evidence the succession of another Person to the Company and the
assumption by any such successor of the covenants of the Company contained herein and in the
Securities; or
(2) to add to the covenants of the Company for the benefit of the Holders of all or any
series of Securities (and if such covenants are to be for the benefit of
less than all series of Securities, stating that such covenants are expressly being
included solely for the benefit of such series) or to surrender any right or power herein
conferred upon the Company; or
(3) to add any additional Events of Default for the benefit of the Holders of all or
any series of Securities (and if such Events of Default are to be for the benefit of less
than all series of Securities, stating that such Events of Default are expressly being
included solely for the benefit of such series);
provided
,
however
, that in
respect of any such additional Events of Default such supplemental indenture may provide for
a particular period of grace after default (which period may be shorter or longer than that
allowed in the case of other defaults) or may provide for an immediate enforcement upon such
default or may limit the remedies available to the Trustee upon such default or may limit
the right of the Holders of a majority in aggregate principal amount of that or those series
of Securities to which such additional Events of Default apply to waive such default; or
(4) to add to or change any of the provisions of this Indenture to provide that Bearer
Securities may be registrable as to principal, to change or eliminate any restrictions on
the payment of principal of or premium or Make-Whole Amount, if any, or interest on Bearer
Securities, to permit Bearer Securities to be issued in exchange for Registered Securities,
to permit Bearer Securities to be issued in exchange for Bearer Securities of other
authorized denominations or to permit or facilitate the issuance of Securities in
uncertificated form,
provided
that any such action shall not adversely affect the
interests of the Holders of Securities of any series or any related coupons in any material
respect; or
(5) to change or eliminate any of the provisions of this Indenture,
provided
that any such change or elimination shall become effective only when there is no Security
Outstanding of any series created prior to the execution of such supplemental indenture
which is entitled to the benefit of such provision; or
(6) to secure the Securities; or
(7) to establish the form or terms of Securities of any series and any related
coupons as permitted or contemplated by Sections 201 and 301; or
(8) to evidence and provide for the acceptance of appointment hereunder by a
successor Trustee with respect to the Securities of one or more series and to add to or
change any of the provisions of this Indenture as shall be necessary to provide for or
facilitate the administration of the trusts hereunder by more than one Trustee; or
(9) to cure any ambiguity, to correct or supplement any provision herein which may be
defective or inconsistent with any other provision herein, or to make any other provisions
with respect to matters or questions arising under this Indenture which shall not be
inconsistent with the provisions of this Indenture,
provided
such
provisions shall not adversely affect the interests of the Holders of Securities of any
series or any related coupons in any material respect; or
(10) to supplement any of the provisions of this Indenture to such extent as shall be
necessary to permit or facilitate the defeasance and discharge of any series of Securities
pursuant to Sections 401, 1402 and 1403;
provided
that any such action shall not
adversely affect the interests of the Holders of Securities of such series and any related
coupons or any other series of Securities in any material respect.
SECTION 902.
Supplemental Indentures with Consent of Holders
. With the consent of
the Holders of not less than a majority in principal amount of all Outstanding Securities affected
by such supplemental indenture, by Act of said Holders delivered to the Company and the Trustee,
the Company, when authorized by or pursuant to a Board Resolution, and the Trustee may enter into
an indenture or indentures supplemental hereto for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Indenture or of modifying in
any manner the rights of the Holders of Securities and any related coupons under this Indenture;
provided
,
however
, that no such supplemental indenture shall, without the consent
of the Holder of each Outstanding Security affected thereby:
(1) change the Stated Maturity of the principal of (or premium or Make-Whole Amount, if
any, on) or any installment of principal of or interest on, any Security; or reduce the
principal amount thereof or the rate or amount of interest thereon, or any premium or
Make-Whole Amount payable upon the redemption thereof, or reduce the amount of the principal
of an Original Issue Discount Security that would be due and payable upon a declaration of
acceleration of the Maturity thereof pursuant to Section 502 or the amount thereof provable
in bankruptcy pursuant to Section 504, or adversely affect any right of repayment at the
option of the Holder of any Security, or change any Place of Payment where, or the currency
or currencies, currency unit or units or composite currency or currencies in which, any
Security or any premium or Make-Whole Amount or the interest thereon is payable, or impair
the right to institute suit for the enforcement of any such payment on or after the Stated
Maturity thereof (or, in the case of redemption or repayment at the option of the Holder, on
or after the Redemption Date or the Repayment Date, as the case may be), or
(2) reduce the percentage in principal amount of the Outstanding Securities of
any series, the consent of whose Holders is required for any such supplemental indenture, or
the consent of whose Holders is required for any waiver with respect to such series (or
compliance with certain provisions of this Indenture or certain defaults hereunder and their
consequences) provided for in this Indenture, or reduce the requirements of Section 1504 for
quorum or voting, or
(3) modify any of the provisions of this Section, Section 513 or Section 1009, except
to increase the required percentage to effect such action or to provide that certain other
provisions of this Indenture cannot be modified or waived without the consent of the Holder
of each Outstanding Security affected thereby,
provided
,
however
, that this
clause shall not be deemed to require the consent of any Holder with respect to
changes in the references to the Trustee and concomitant
changes in this Section 902
and Section 1009, or the deletion of this proviso, in accordance with the requirements of
Sections 609(b) and 901(11).
It shall not be necessary for any Act of Holders under this Section 902 to approve the
particular form of any proposed supplemental indenture, but it shall be sufficient if such Act
shall approve the substance thereof.
A supplemental indenture which changes or eliminates any covenant or other provision of this
Indenture which has expressly been included solely for the benefit of one or more particular series
of Securities, or which modifies the rights of the Holders of Securities of such series with
respect to such covenant or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.
SECTION 903.
Execution of Supplemental Indentures
. In executing, or accepting the
additional trusts created by, any supplemental indenture permitted by this Article or the
modification thereby of the trusts created by this Indenture, the Trustee shall be entitled to
receive, and shall be fully protected in relying upon, an Opinion of Counsel stating that the
execution of such supplemental indenture is authorized or permitted by this Indenture. The Trustee
may, but shall not be obligated to, enter into any such supplemental indenture which affects the
Trustees own rights, duties or immunities under this Indenture or otherwise.
SECTION 904.
Effect of Supplemental Indentures
. Upon the execution of any
supplemental indenture under this Article, this Indenture shall be modified in accordance
therewith, and such supplemental indenture shall form a part of this Indenture for all purposes;
and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder and
of any coupon appertaining thereto shall be bound thereby.
SECTION 905.
Conformity with Trust Indenture Act
. Every supplemental indenture
executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act as
then in effect.
SECTION 906.
Reference in Securities to Supplemental Indentures
. Securities
of any series authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article may, and shall, if required by the Trustee, bear a notation in form
approved by the Trustee as to any matter provided for in such supplemental indenture. If the
Company shall so determine, new Securities of any series so modified as to conform, in the opinion
of the Trustee and the Company, to any such supplemental indenture may be prepared and executed by
the Company and authenticated and delivered by the Trustee in exchange for Outstanding Securities
of such series.
ARTICLE TEN COVENANTS
SECTION 1001.
Payment of Principal, Premium or Make-Whole Amount, if any; and
Interest
. The Company covenants and agrees for the benefit of the Holders of each series of
Securities that it will duly and punctually pay the principal of (and premium or Make-Whole Amount,
if any) and interest on the Securities of that series in accordance with the terms of such series
of Securities, any coupons appertaining thereto and this Indenture. Unless otherwise specified as
contemplated by Section 301 with respect to any series of Securities, any interest due on Bearer
Securities on or before Maturity shall be payable only upon presentation and surrender of the
several coupons for such interest installments as are evidenced thereby as they severally mature.
Unless otherwise specified with respect to Securities of any series pursuant to Section 301, at the
option of the Company (upon written notice to the Trustee), all payments of principal may be paid
by check to the registered Holder of the Registered Security or other person entitled thereto
against surrender of such Security.
SECTION 1002.
Maintenance of Office or Agency
. If Securities of a series are
issuable only as Registered Securities, the Company shall maintain in each Place of Payment for any
series of Securities an office or agency where Securities of that series may be presented or
surrendered for payment, where Securities of that series may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Company in respect of the
Securities of that series and this Indenture may be served. If Securities of a series are issuable
as Bearer Securities, the Company will maintain: (A) in the Borough of Manhattan, The City of New
York, an office or agency where any Registered Securities of that series may be presented or
surrendered for payment, where any Registered Securities of that series may be surrendered for
registration of transfer, where Securities of that series may be surrendered for exchange, where
notices and demands to or upon the Company in respect of the Securities of that series and this
Indenture may be served and where Bearer Securities of that series and related coupons may be
presented or surrendered for payment in the circumstances described in the following paragraph (and
not otherwise); (B) subject to any laws or regulations applicable thereto, in a Place of Payment
for that series which is located outside the United States, an office or agency where Securities of
that series and related coupons may be presented and surrendered for payment;
provided
,
however
, that if the Securities of that series are listed on any stock exchange located
outside the United States and such stock exchange shall so require, the Company will maintain a
Paying Agent for the Securities of that series in any required city located outside the United
States, as the case may be, so long as the Securities of that series are listed on such exchange;
and (C) subject to any laws or regulations applicable thereto, in a Place of Payment for that
series located outside the United States an office or agency where any Registered Securities of
that series may be surrendered for registration of transfer, where Securities of that series may be
surrendered for exchange and where notices and demands to or upon the Company in respect of the
Securities of that series and this Indenture may be served. The Company will give prompt written
notice to the Trustee of the location, and any change in the location, of each such office or
agency. If at any time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices
and demands may be made or served at the Corporate Trust Office of the Trustee, except
that Bearer
Securities of that series and the related
coupons may be presented and surrendered for payment at the offices specified in the Security,
in London, England, and the Company hereby appoints the same as its agent to receive such
respective presentations, surrenders, notices and demands, and the Company hereby appoints the
Trustee its agent to receive all such presentations, surrenders, notices and demands.
Unless otherwise specified with respect to any Securities pursuant to Section 301, no payment
of principal, premium or Make-Whole Amount or interest on Bearer Securities shall be made at any
office or agency of the Company in the United States or by check mailed to any address in the
United States or by transfer to an account maintained with a bank located in the United States;
provided
,
however
, that, if the Securities of a series are payable in Dollars,
payment of principal of and any premium or Make-Whole Amount and interest on any Bearer Security
shall be made at the office of the Companys Paying Agent in the Borough of Manhattan, The City of
New York, if (but only if) payment in Dollars of the full amount of such principal, premium or
Make-Whole Amount, or interest, as the case may be, at all offices or agencies outside the United
States maintained for the purpose by the Company in accordance with this Indenture, is illegal or
effectively precluded by exchange controls or other similar restrictions.
The Company may from time to time designate one or more other offices or agencies where
the Securities of one or more series may be presented or surrendered for any or all of such
purposes, and may from time to time rescind such designations;
provided
,
however
,
that no such designation or rescission shall in any manner relieve the Company of its obligation to
maintain an office or agency in accordance with the requirements set forth above for Securities of
any series for such purposes. The Company will give prompt written notice to the Trustee of any
such designation or rescission and of any change in the location of any such other office or
agency. Unless otherwise specified with respect to any Securities pursuant to Section 301 with
respect to a series of Securities, the Company hereby designates as a Place of Payment for each
series of Securities, each of (i) the office or agency of the Company in the Borough of Manhattan,
The City of New York, and (ii) the Corporate Trust Office of the Trustee (as Paying Agent); and the
Company hereby initially appoints the Trustee at its Corporate Trust Office as Paying Agent in such
city; and the Company hereby initially appoints as its agent to receive all such presentations,
surrenders, notices and demands each of the Trustee, at its Corporate Trust Office, and State
Street Bank and Trust Company, N.A. at its offices at 61 Broadway, New York, NY 10005.
Unless otherwise specified with respect to any Securities pursuant to Section 301, if and so
long as the Securities of any series (i) are denominated in a Foreign Currency or (ii) may be
payable in a Foreign Currency, or so long as it is required under any other provision of the
Indenture, then the Company will maintain with respect to each such series of Securities, or as so
required, at least one exchange rate agent (of which it shall give written notice to the Trustee).
SECTION 1003.
Money for Securities Payments to Be Held in Trust
. If the Company
shall at any time act as its own Paying Agent with respect to any series of any Securities and any
related coupons, it will, on or before each due date of the principal of (and premium or Make-Whole
Amount, if any), or interest on any of the Securities of that series, segregate and hold in trust
for the benefit of the Persons entitled thereto a sum in the currency or currencies, currency unit
or units or composite currency or currencies in which the Securities of such series are payable
(except as
otherwise specified pursuant to Section 301 for the Securities of such series) sufficient to
pay the principal (and premium or Make-Whole Amount, if any) or interest so becoming due until such
sums shall be paid to such Persons or otherwise disposed of as herein provided, and will promptly
notify the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents for any series of Securities and any
related coupons, it will, on or before each due date of the principal of (and premium or Make-Whole
Amount, if any), or interest on any Securities of that series, deposit with a Paying Agent a sum
(in the currency or currencies, currency unit or units or composite currency or currencies
described in the preceding paragraph) sufficient to pay the principal (and premium or Make-Whole
Amount, if any) or interest so becoming due, such sum to be held in trust for the benefit of the
Persons entitled to such principal, premium or Make-Whole Amount, if any, or interest and (unless
such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its action or
failure so to act.
The Company will cause each Paying Agent for any series of Securities other than the Trustee
to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the
Trustee, subject to the provisions of this Section, that such Paying Agent will
(1) hold all sums held by it for the payment of principal of (and premium or Make-Whole
Amount, if any) or interest on Securities in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise disposed of as herein
provided;
(2) give the Trustee notice of any default by the Company (or any other obligor
upon the Securities) in the making of any such payment of principal (and premium or
Make-Whole Amount, if any) or interest on the Securities of that series; and
(3) at any time during the continuance of any such default upon the written request of
the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the satisfaction and discharge of
this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay,
to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by
the Trustee upon the same trusts as those upon which such sums were held by the Company or such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be
released from all further liability with respect to such sums.
Except as otherwise provided in the Securities of any series, and subject to applicable laws,
any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for
the payment of the principal of (and premium or Make-Whole Amount, if any) or interest on any
Security of any series and remaining unclaimed for two years after such principal (and premium or
Make-Whole Amount, if any) or interest has become due and payable shall be paid to the Company upon
Company Request or (if then held by the Company) shall be discharged from such trust; and the
Holder of such Security shall thereafter, as an unsecured
general creditor, look only to the Company for payment of such principal of (and premium or
Make-Whole Amount, if any) or interest on any Security, without interest thereon, and all liability
of the Trustee or such Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease;
provided
,
however
, that the
Trustee or such Paying Agent, before being required to make any such repayment, may at the expense
of the Company cause to be published once, in an Authorized Newspaper, notice that such money
remains unclaimed and that, after a date specified therein, which shall not be less than 30 days
from the date of such publication, any unclaimed balance of such money then remaining will be
repaid to the Company.
SECTION 1004.
Existence
. Subject to Article Eight, the Company will do or cause to
be done all things necessary to preserve and keep in full force and effect its corporate existence,
all material rights (by articles of incorporation, by-laws and statute) and material franchises;
provided
,
however
, that the Company shall not be required to preserve any such
right or franchise if the Board of Directors shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company.
SECTION 1005.
Maintenance of Properties
. The Company will cause all of its
material properties used or useful in the conduct of its business or the business of any Subsidiary
to be maintained and kept in good condition, repair and working order and supplied with all
necessary equipment and will cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of the Company may be necessary so
that the business carried on in connection therewith may be properly and advantageously conducted
at all times;
provided
,
however
, that the Company and its Subsidiaries shall not be
prevented from selling or otherwise disposing of their properties for value in the ordinary course
of business.
SECTION 1006.
Insurance
. The Company will cause each of its and its Subsidiaries
insurable properties to be insured against loss or damage in an amount deemed reasonable by the
Board of Directors with insurers of recognized responsibility.
SECTION 1007.
Payment of Taxes and Other Claims
. The Company will pay or discharge
or cause to be paid or discharged, before the same shall become delinquent, (1) all taxes,
assessments and governmental charges levied or imposed upon it or any Subsidiary or upon the
income, profits or property of the Company or any Subsidiary, and (2) all lawful claims for labor,
materials and supplies which, if unpaid, might by law become a lien upon the property of the
Company or any Subsidiary;
provided
,
however
, that the Company shall not be
required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or
claim
whose amount, applicability or validity is being contested in good faith by appropriate
proceedings.
SECTION 1008.
Statement as to Compliance
. The Company will deliver to the Trustee,
within 120 days after the end of each fiscal year, a brief certificate from the principal executive
officer, principal financial officer or principal accounting officer as to his or her knowledge of
the Companys compliance with all
conditions and covenants under this Indenture and, in the event of any noncompliance,
specifying such noncompliance and the nature and status thereof. For purposes of this Section
1008, such compliance shall be determined without regard to any period of grace or requirement of
notice under this Indenture.
SECTION 1009.
Waiver of Certain Covenants
. The Company may omit in any particular
instance to comply with any term, provision or condition set forth in Sections 1004 to 1008,
inclusive, if before or after the time for such compliance the Holders of at least a majority in
principal amount of all outstanding Securities of such series, by Act of such Holders, either waive
such compliance in such instance or generally waive compliance with such covenant or condition, but
no such waiver shall extend to or affect such covenant or condition except to the extent so
expressly waived, and, until such waiver shall become effective, the obligations of the Company and
the duties of the Trustee in respect of any such term, provision or condition shall remain in full
force and effect.
ARTICLE ELEVEN REDEMPTION OF SECURITIES
SECTION 1101.
Applicability of Article
. Securities of any series which are
redeemable before their Stated Maturity shall be redeemable in accordance with their terms and
(except as otherwise specified as contemplated by Section 301 for Securities of any series) in
accordance with this Article.
SECTION 1102.
Election to Redeem; Notice to Trustee
. The election of the Company to
redeem any Securities shall be evidenced by or pursuant to a Board Resolution. In case of any
redemption at the election of the Company of less than all of the Securities of any series, the
Company shall, at least 45 days prior to the giving of the notice of redemption in Section 1104
(unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of such
Redemption Date and of the principal amount of Securities of such series to be redeemed. In the
case of any redemption of Securities prior to the expiration of any restriction on such redemption
provided in the terms of such Securities or elsewhere in this Indenture, the Company shall furnish
the Trustee with an Officers Certificate evidencing compliance with such restriction.
SECTION 1103.
Selection by Trustee of Securities to Be Redeemed
. If less than all
the Securities of any series issued on the same day with the same terms are to be redeemed, the
particular Securities to be redeemed shall be selected not more than 60 days prior to the
Redemption Date by the Trustee, from the Outstanding Securities of such series issued on such date
with the same terms not previously called for redemption, by such method as the Trustee shall deem
fair and appropriate and which may provide for the selection for redemption of
portions (equal to
the minimum authorized denomination for Securities of that series or any integral multiple thereof)
of the principal amount of Securities of such series of a denomination larger than the minimum
authorized denomination for Securities of that series.
The Trustee shall promptly notify the Company and the Security Registrar (if other than
itself) in writing of the Securities selected for redemption and, in the case of any Securities
selected for partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires, all provisions
relating to the redemption of Securities shall relate, in the case of any Security redeemed or to
be redeemed only in part, to the portion of the principal amount of such Security which has been or
is to be redeemed.
SECTION 1104.
Notice of Redemption
. Notice of redemption shall be given in the
manner provided in Section 106, not less than 30 days nor more than 60 days prior to the Redemption
Date, unless a shorter period is specified by the terms of such series established pursuant to
Section 301, to each Holder of Securities to be redeemed, but failure to give such notice in the
manner herein provided to the Holder of any Security designated for redemption as a whole or in
part, or any defect in the notice to any such Holder, shall not affect the validity of the
proceedings for the redemption of any other such Security or portion thereof.
Any notice that is mailed to the Holders of Registered Securities in the manner herein
provided shall be conclusively presumed to have been duly given, whether or not the Holder receives
the notice.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price, accrued interest to the Redemption Date payable as provided
in Section 1106, if any,
(3) if less than all Outstanding Securities of any series are to be redeemed, the
identification (and, in the case of partial redemption, the principal amount) of the
particular Security or Securities to be redeemed,
(4) in case any Security is to be redeemed in part only, the notice which relates to
such Security shall state that on and after the Redemption Date, upon surrender of such
Security, the holder will receive, without a charge, a new Security or Securities of
authorized denominations for the principal amount thereof remaining unredeemed,
(5) that on the Redemption Date the Redemption Price and accrued interest to the
Redemption Date payable as provided in Section 1106, if any, will become
due and payable
upon each such Security, or the portion thereof, to be redeemed and, if applicable, that
interest thereon shall cease to accrue on and after said date,
(6) the Place or Places of Payment where such Securities, together in the case of
Bearer Securities with all coupons appertaining thereto, if any, maturing after
the Redemption Date, are to be surrendered for payment of the Redemption Price and
accrued interest, if any,
(7) that the redemption is for a sinking fund, if such is the case,
(8) that, unless otherwise specified in such notice, Bearer Securities of any series,
if any, surrendered for redemption must be accompanied by all coupons maturing subsequent to
the date fixed for redemption or the amount of any such missing coupon or coupons will be
deducted from the Redemption Price, unless security or indemnity satisfactory to the
Company, the Trustee for such series and any Paying Agent is furnished,
(9) if Bearer Securities of any series are to be redeemed and any Registered
Securities of such series are not to be redeemed, and if such Bearer Securities may be
exchanged for Registered Securities not subject to redemption on this Redemption Date
pursuant to Section 305 or otherwise, the last date, as determined by the Company, on which
such exchanges may be made, and
(10) the CUSIP number of such Security, if any.
Notice of redemption of Securities to be redeemed at the election of the Company shall be
given by the Company or, at the Companys request, by the Trustee in the name and at the expense of
the Company.
SECTION 1105.
Deposit of Redemption Price
. On or prior to any Redemption Date, the
Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its
own Paying Agent, which it may not do in the case of a sinking fund payment under Article Twelve,
segregate and hold in trust as provided in Section 1003) an amount of money in the currency or
currencies, currency unit or units or composite currency or currencies in which the Securities of
such series are payable (except as otherwise specified pursuant to Section 301 for the Securities
of such series) sufficient to pay on the Redemption Date the Redemption Price of, and (except if
the Redemption Date shall be an Interest Payment Date) accrued interest on, all the Securities or
portions thereof which are to be redeemed on that date.
SECTION 1106.
Securities Payable on Redemption Date
. Notice of redemption having
been given as aforesaid, the Securities so to be redeemed shall, on the Redemption Date, become due
and payable at the Redemption Price therein specified in the currency or currencies, currency unit
or units or composite currency or currencies in which the Securities of such series are payable
(except as otherwise specified pursuant to Section 301 for the Securities of such series)
(together
with accrued interest, if any, to the Redemption Date), and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued interest) such Securities
shall, if the same were interest-bearing, cease to bear interest and the coupons for such interest
appertaining to any Bearer Securities so to be redeemed, except to the extent provided below, shall
be void. Upon surrender of any such Security for redemption in accordance with said
notice, together with all coupons, if any, appertaining thereto maturing after the Redemption
Date, such Security shall be paid by the Company at the Redemption Price, together with accrued
interest, if any, to the Redemption Date;
provided
,
however
, that installments of
interest on Bearer Securities whose Stated Maturity is on or prior to the Redemption Date shall be
payable only at an office or agency located outside the United States (except as otherwise provided
in Section 1002) and, unless otherwise specified as contemplated by Section 301, only upon
presentation and surrender of coupons for such interest; and
provided
further that
installments of interest on Registered Securities whose Stated Maturity is on or prior to the
Redemption Date shall be payable to the Holders of such Securities, or one or more Predecessor
Securities, registered as such at the close of business on the relevant Record Dates according to
their terms and the provisions of Section 307.
If any Bearer Security surrendered for redemption shall not be accompanied by all
appurtenant coupons maturing after the Redemption Date, such Security may be paid after deducting
from the Redemption Price an amount equal to the face amount of all such missing coupons, or the
surrender of such missing coupon or coupons may be waived by the Company and the Trustee if there
be furnished to them such security or indemnity as they may require to save each of them and any
Paying Agent harmless. If thereafter the Holder of such Security shall surrender to the Trustee or
any Paying Agent any such missing coupon in respect of which a deduction shall have been made from
the Redemption Price, such Holder shall be entitled to receive the amount so deducted;
provided
,
however
, that interest represented by coupons shall be payable only at an
office or agency located outside the United States (except as otherwise provided in Section 1002)
and, unless otherwise specified as contemplated by Section 301, only upon presentation and
surrender of those coupons.
If any Security called for redemption shall not be so paid upon surrender thereof for
redemption, the principal (and premium or Make-Whole Amount, if any) shall, until paid, bear
interest from the Redemption Date at the rate borne by the Security.
SECTION 1107.
Securities Redeemed in Part
. Any Registered Security which is to be
redeemed only in part (pursuant to the provisions of this Article or of Article Twelve) shall be
surrendered at a Place of Payment therefor (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the Company and the
Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing) and the
Company shall execute and the Trustee shall authenticate and deliver to the Holder of such Security
without service charge a new Security or Securities of the same series, of any authorized
denomination as requested by such Holder in aggregate principal amount equal to and in exchange for
the unredeemed portion of the principal of the Security so surrendered. If a Global Security is so
surrendered, the Company shall execute and the Trustee shall authenticate and deliver to the
depository, without service charge, a new Global Security in a denomination equal
to and in
exchange for the unredeemed portion of the principal of the Global Security so surrendered.
ARTICLE TWELVE SINKING FUNDS
SECTION 1201.
Applicability of Article
. The provisions of this Article shall be
applicable to any sinking fund for the retirement of Securities of a series except as otherwise
specified as contemplated by Section 301 for Securities of such series.
The minimum amount of any sinking fund payment provided for by the terms of Securities
of any series is herein referred to as a mandatory sinking fund payment, and any payment in
excess of such minimum amount provided for by the terms of such Securities of any series is herein
referred to as an optional sinking fund payment. If provided for by the terms of any Securities
of any series, the cash amount of any mandatory sinking fund payment may be subject to reduction as
provided in Section 1202. Each sinking fund payment shall be applied to the redemption of
Securities of any series as provided for by the terms of Securities of such series.
SECTION 1202.
Satisfaction of Sinking Fund Payments with Securities
. The Company
may, in satisfaction of all or any part of any mandatory sinking fund payment with respect to the
Securities of a series, (1) deliver Outstanding Securities of such series (other than any
previously called for redemption) together in the case of any Bearer Securities of such series with
all unmatured coupons appertaining thereto and (2) apply as a credit Securities of such series
which have been redeemed either at the election of the Company pursuant to the terms of such
Securities or through the application of permitted optional sinking fund payments pursuant to the
terms of such Securities, as provided for by the terms of such Securities, or which have otherwise
been acquired by the Company;
provided
that such Securities so delivered or applied as a
credit have not been previously so credited. Such Securities shall be received and credited for
such purpose by the Trustee at the applicable Redemption Price specified in such Securities for
redemption through operation of the sinking fund and the amount of such mandatory sinking fund
payment shall be reduced accordingly.
SECTION 1203.
Redemption of Securities for Sinking Fund
. Not less than 60 days prior
to each sinking fund payment date for Securities of any series, the Company will deliver to the
Trustee an Officers Certificate specifying the amount of the next ensuing mandatory sinking fund
payment for that series pursuant to the terms of that series, the portion thereof, if any, which is
to be satisfied by payment of cash in the currency or currencies, currency unit or units or
composite currency or currencies in which the Securities of such series are payable (except as
otherwise specified pursuant to Section 301 for the Securities of such series) and the portion
thereof, if any, which is to be satisfied by delivering and crediting Securities of that series
pursuant to Section 1202, and the optional amount, if any, to be added in cash to the next ensuing
mandatory sinking fund payment, and will also deliver to the Trustee any Securities to be so
delivered and credited. If such Officers Certificate shall specify an optional amount to be added
in cash to the next ensuing mandatory sinking fund payment, the Company shall thereupon be
obligated to pay the amount therein specified. Not less than 30 days before each such sinking fund
payment date the Trustee shall select the Securities to be redeemed upon such sinking fund payment
date in the manner specified in Section 1103 and cause notice of the redemption thereof to be given
in the name of
and at the expense of the Company in the manner provided in Section 1104. Such notice having
been duly given, the redemption of such Securities shall be made upon the terms and in the manner
stated in Sections 1106 and 1107.
ARTICLE THIRTEEN REPAYMENT AT THE OPTION OF HOLDERS
SECTION 1301.
Applicability of Article
. Repayment of Securities of any series
before their Stated Maturity at the option of Holders thereof shall be made in accordance with the
terms of such Securities, if any, and (except as otherwise specified by the terms of such series
established pursuant to Section 301) in accordance with this Article.
SECTION 1302.
Repayment of Securities
. Securities of any series subject to repayment
in whole or in part at the option of the Holders thereof will, unless otherwise provided in the
terms of such Securities, be repaid at a price equal to the principal amount thereof, together with
interest, if any, thereon accrued to the Repayment Date specified in or pursuant to the terms of
such Securities. The Company covenants that on or prior to the Repayment Date it will deposit with
the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate
and hold in trust as provided in Section 1003) an amount of money in the currency or currencies,
currency unit or units or composite currency or currencies in which the Securities of such series
are payable (except as otherwise specified pursuant to Section 301 for the Securities of such
series) sufficient to pay the principal (or, if so provided by the terms of the Securities of any
series, a percentage of the principal) of, and (except if the Repayment Date shall be an Interest
Payment Date) accrued interest on, all the Securities or portions thereof, as the case may be, to
be repaid on such date.
SECTION 1303.
Exercise of Option
. Securities of any series subject to
repayment at the option of the Holders thereof will contain an Option to Elect Repayment form on
the reverse of such Securities. In order for any Security to be repaid at the option of the
Holder, the Trustee must receive at the Place of Payment therefor specified in the terms of such
Security (or at such other place or places of which the Company shall from time to time notify the
Holders of such Securities) not earlier than 60 days nor later than 30 days prior to the Repayment
Date (1) the Security so providing for such repayment together with the Option to Elect Repayment
form on the reverse thereof duly completed by the Holder (or by the Holders attorney duly
authorized in writing) or (2) a telegram, telex, facsimile transmission or a letter from a member
of a national securities exchange, or the National Association of Securities Dealers, Inc.
(NASD), or a commercial bank or trust company in the United States setting forth the name of the
Holder of the Security, the principal amount of the Security, the principal amount of the Security
to be repaid, the CUSIP number, if any, or a description of the tenor and terms of the Security, a
statement that the
option to elect repayment is being exercised thereby and a guarantee that the
Security to be repaid, together with the duly completed form entitled Option to Elect Repayment
on the reverse of the Security, will be received by the Trustee not later than the fifth Business
Day after the date of such telegram, telex, facsimile transmission or letter;
provided
,
however
, that such telegram, telex, facsimile
transmission or letter shall only be effective if such Security and form duly completed are
received by the Trustee by such fifth Business Day. If less than the entire principal amount of
such Security is to be repaid in accordance with the terms of such Security, the principal amount
of such Security to be repaid, in increments of the minimum denomination for Securities of such
series, and the denomination or denominations of the Security or Securities to be issued to the
Holder for the portion of the principal amount of such Security surrendered that is not to be
repaid, must be specified. The principal amount of any Security providing for repayment at the
option of the Holder thereof may not be repaid in part if, following such repayment, the unpaid
principal amount of such Security would be less than the minimum authorized denomination of
Securities of the series of which such Security to be repaid is a part. Except as otherwise may be
provided by the terms of any Security providing for repayment at the option of the Holder thereof,
exercise of the repayment option by the Holder shall be irrevocable unless waived by the Company.
SECTION 1304.
When Securities Presented for Repayment Become Due and Payable
. If
Securities of any series providing for repayment at the option of the Holders thereof shall have
been surrendered as provided in this Article and as provided by or pursuant to the terms of such
Securities, such Securities or the portions thereof, as the case may be, to be repaid shall become
due and payable and shall be paid by the Company on the Repayment Date therein specified, and on
and after such Repayment Date (unless the Company shall default in the payment of such Securities
on such Repayment Date) such Securities shall, if the same were interest-bearing, cease to bear
interest and the coupons for such interest appertaining to any Bearer Securities so to be repaid,
except to the extent provided below, shall be void. Upon surrender of any such Security for
repayment in accordance with such provisions, together with all coupons, if any, appertaining
thereto maturing after the Repayment Date, the principal amount of such Security so to be repaid
shall be paid by the Company, together with accrued interest, if any, to the Repayment Date;
provided
,
however
, that coupons whose Stated Maturity is on or prior to the
Repayment Date shall be payable only at an office or agency located outside the United States
(except as otherwise provided in Section 1002) and, unless otherwise specified pursuant to Section
301, only upon presentation and surrender of such coupons; and
provided further
that, in
the case of Registered Securities, installments of interest, if any, whose Stated Maturity is on or
prior to the Repayment Date shall be payable (but without interest thereon, unless the Company
shall default in the payment thereof) to the Holders of such Securities, or one or more Predecessor
Securities, registered as such at the close of business on the relevant Record Dates according to
their terms and the provisions of Section 307.
If any Bearer Security surrendered for repayment shall not be accompanied by all appurtenant
coupons maturing after the Repayment Date, such Security may be paid after deducting from the
amount payable therefor as provided in Section 1302 an amount equal to the face amount of all such
missing coupons, or the surrender of such missing coupon or coupons may be waived by the Company
and the Trustee if there be furnished to them such security or
indemnity as they may require to
save each of them and any Paying Agent harmless. If thereafter the Holder of such Security shall
surrender to the Trustee or any Paying Agent any such missing coupon in respect of which a
deduction shall have been made as provided in the preceding sentence, such Holder shall be entitled
to receive the amount so deducted;
provided
,
however
,
that interest represented by coupons shall be payable only at an office or agency located
outside the United States (except as otherwise provided in Section 1002) and, unless otherwise
specified as contemplated by Section 301, only upon presentation and surrender of those coupons.
If the principal amount of any Security surrendered for repayment shall not be so
repaid upon surrender thereof, such principal amount (together with interest, if any, thereon
accrued to such Repayment Date) shall, until paid, bear interest from the Repayment Date at the
rate of interest or Yield to Maturity (in the case of Original Issue Discount Securities) set forth
in such Security.
SECTION 1305.
Securities Repaid in Part
. Upon surrender of any Registered Security
which is to be repaid in part only, the Company shall execute and the Trustee shall authenticate
and deliver to the Holder of such Security, without service charge and at the expense of the
\Company, a new Registered Security or Securities of the same series, of any authorized
denomination specified by the Holder, in an aggregate principal amount equal to and in exchange for
the portion of the principal of such Security so surrendered which is not to be repaid.
ARTICLE FOURTEEN DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1401.
Applicability of Article: Companys Option to Effect Defeasance or Covenant
Defeasance
. If, pursuant to Section 301, provision is made for either or both of (a)
defeasance of the Securities of or within a series under Section 1402 or (b) covenant defeasance of
the Securities of or within a series under Section 1403, then the provisions of such Section or
Sections, as the case may be, together with the other provisions of this Article (with such
modifications thereto as may be specified pursuant to Section 301 with respect to any Securities),
shall be applicable to such Securities and any coupons appertaining thereto, and the Company may at
its option by Board Resolution, at any time, with respect to such Securities and any coupons
appertaining thereto, elect to have Section 1402 (if applicable) or Section 1403 (if applicable) be
applied to such Outstanding Securities and any coupons appertaining thereto upon compliance with
the conditions set forth below in this Article.
SECTION 1402.
Defeasance and Discharge
. Upon the Companys exercise of the
above option applicable to this Section with respect to any Securities of or within a series, the
Company shall be deemed to have been discharged from its obligations with respect to such
Outstanding Securities and any coupons appertaining thereto on the date the conditions set forth in
Section 1404 are satisfied (hereinafter, defeasance). For this purpose, such defeasance means
that the Company shall be deemed to have paid and discharged the entire indebtedness represented by
such Outstanding Securities and any coupons appertaining thereto, which shall thereafter be deemed
to be Outstanding only for the purposes of Section 1405 and the other Sections of this
Indenture
referred to in clauses (A) and (B) below, and to have satisfied all of its other obligations under
such Securities and any coupons appertaining thereto and this Indenture insofar as such Securities
and any coupons
appertaining thereto are concerned (and the Trustee, at the expense of the Company, shall
execute proper instruments acknowledging the same), except for the following which shall survive
until otherwise terminated or discharged hereunder: (A) the rights of Holders of such Outstanding
Securities and any coupons appertaining thereto to receive, solely from the trust fund described in
Section 1404 and as more fully set forth in such Section, payments in respect of the principal of
(and premium or Make-Whole Amount, if any) and interest, if any, on such Securities and any coupons
appertaining thereto when such payments are due, (B) the Companys obligations with respect to such
Securities under Sections 305, 306, 1002 and 1003, and the Companys obligations under Section 606
hereof (C) the rights, powers, trusts, duties and immunities of the Trustee hereunder and (D) this
Article. Subject to compliance with this Article Fourteen, the Company may exercise its option
under this Section notwithstanding the prior exercise of its option under Section 1403 with respect
to such Securities and any coupons appertaining thereto.
SECTION 1403.
Covenant Defeasance
. Upon the Companys exercise of the above option
applicable to this Section with respect to any Securities of or within a series, the Company shall
be released from its obligations under Sections 1004 to 1009, inclusive, and, if specified pursuant
to Section 301, its obligations under any other covenant contained herein or in any indenture
supplemental hereto, with respect to such Outstanding Securities and any coupons appertaining
thereto on and after the date the conditions set forth in Section 1404 are satisfied (hereinafter,
covenant defeasance), and such Securities and any coupons appertaining thereto shall thereafter
be deemed to be not Outstanding for the purposes of any direction, waiver, consent or declaration
or Act of Holders (and the consequences of any thereof) in connection with Sections 1004 to 1009,
inclusive, or such other covenant, but shall continue to be deemed Outstanding for all other
purposes hereunder. For this purpose, such covenant defeasance means that, with respect to such
Outstanding Securities and any coupons appertaining thereto, the Company may omit to comply with
and shall have no liability in respect of any term, condition or limitation set forth in any such
Section or such other covenant, whether directly or indirectly, by reason of any reference
elsewhere herein to any such Section or such other covenant or by reason of reference in any such
Section or such other covenant to any other provision herein or in any other document and such
omission to comply shall not constitute a default or an Event of Default under Section 501(4) or
501(8) or otherwise, as the case may be, but, except as specified above, the remainder of this
Indenture and such Securities and any coupons appertaining thereto shall be unaffected thereby.
SECTION 1404.
Conditions to Defeasance or Covenant Defeasance
. The following shall
be the conditions to application of Section 1402 or Section 1403 to any Outstanding Securities of
or within a series and any coupons appertaining thereto:
(a) The Company shall irrevocably have deposited or caused to be deposited with the
Trustee (or another trustee satisfying the requirements of Section 607 who shall agree to comply
with the provisions of this Article Fourteen applicable to it) as trust funds in trust for the
purpose of making the following payments, specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of such Securities and any coupons appertaining thereto, (1)
an amount in such currency, currencies or currency unit in which such Securities and any coupons
appertaining thereto are then specified as payable at Stated Maturity, or (2) Government
Obligations applicable to such Securities and coupons appertaining thereto (determined on the
basis of the currency, currencies or currency unit in which such Securities and coupons
appertaining thereto are then specified as payable at Stated Maturity) which through the scheduled
payment of principal and interest in respect thereof in accordance with their terms will provide,
not later than the due date of any payment of principal of (and premium or Make-Whole Amount, if
any) and interest, if any, on such Securities and any coupons appertaining thereto, money in an
amount, or (3) a combination thereof, in any case, in an amount, sufficient, without consideration
of any reinvestment of such principal and interest, in the opinion of a nationally recognized firm
of independent public accountants expressed in a written certification thereof delivered to the
Trustee, to pay and discharge, and which shall be applied by the Trustee (or other qualifying
trustee) to pay and discharge, (i) the principal of (and premium or Make-Whole Amount, if any) and
interest, if any, on such Outstanding Securities and any coupons appertaining thereto on the Stated
Maturity of such principal or installment of principal or interest and (ii) any mandatory sinking
fund payments or analogous payments applicable to such Outstanding Securities and any coupons
appertaining thereto on the day on which such payments are due and payable in accordance with the
terms of this Indenture and of such Securities and any coupons appertaining thereto.
(b) Such defeasance or covenant defeasance shall not result in a breach or violation of, or
constitute a default under, this Indenture or any other material agreement or instrument to which
the Company is a party or by which it is bound.
(c) No Event of Default or event which with notice or lapse of time or both would become an
Event of Default with respect to such Securities and any coupons appertaining thereto shall have
occurred and be continuing on the date of such deposit or, insofar as Sections 501(6) and 501(7)
are concerned, at any time during the period ending on the 91st day after the date of such deposit
(it being understood that this condition shall not be deemed satisfied until the expiration of such
period).
(d) In the case of an election under Section 1402, the Company shall have delivered to the
Trustee an Opinion of Counsel stating that (i) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling, or (ii) since the date of execution of this
Indenture, there has been a change in the applicable Federal income tax law, in either case to the
effect that, and based thereon such opinion shall confirm that, the Holders of such Outstanding
Securities and any coupons appertaining thereto will not recognize income, gain or loss for Federal
income tax purposes as a result of such defeasance and will be subject to Federal income tax on the
same amounts, in the same manner and at the same times as would have been the case if such
defeasance had not occurred.
(e) In the case of an election under Section 1403, the Company shall have
delivered to the Trustee an Opinion of Counsel to the effect that the Holders of such Outstanding
Securities and any coupons appertaining thereto will not recognize income, gain or loss for Federal
income tax purposes as a result of such covenant defeasance and will be subject to Federal income
tax on the same amounts, in the same manner and at the same times as would have been the case if
such covenant defeasance had not occurred.
(f) The Company shall have delivered to the Trustee an Officers Certificate and an Opinion of
Counsel, each stating that all conditions precedent to the defeasance under Section 1402 or the
covenant defeasance under Section 1403 (as the case may be) have been complied with and an Opinion
of Counsel to the effect that either (i) as a result of a deposit pursuant to subsection (a) above
and the related exercise of the Companys option under Section 1402 or Section 1403 (as the case
may be), registration is not required under the Investment Company Act of 1940, as amended, by the
Company, with respect to the trust funds representing such deposit or by the Trustee for such trust
funds or (ii) all necessary registrations under said Act have been effected.
(g) Notwithstanding any other provisions of this Section, such defeasance or covenant
defeasance shall be effected in compliance with any additional or substitute terms, conditions or
limitations which may be imposed on the Company in connection therewith pursuant to Section 301.
(h) The payment of amounts payable to the Trustee pursuant to this Indenture shall be paid or
provided for to the reasonable satisfaction of the Trustee.
SECTION 1405.
Deposited Money and Government Obligations to Be Held in Trust; Other
Miscellaneous Provisions
. Subject to the provisions of the last paragraph of Section 1003, all
money and Government Obligations (or other property as may be provided pursuant to Section 301)
(including the proceeds thereof) deposited with the Trustee (or other qualifying trustee,
collectively for purposes of this Section 1405, the Trustee) pursuant to Section 1404 in respect
of any Outstanding Securities of any series and any coupons appertaining thereto shall be held in
trust and applied by the Trustee, in accordance with the provisions of such Securities and any
coupons appertaining thereto and this Indenture, to the payment, either directly or through any
Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine,
to the Holders of such Securities and any coupons appertaining thereto of all sums due and to
become due thereon in respect of principal (and premium or Make-Whole Amount, if any) and interest,
but such money need not be segregated from other funds except to the extent required by law.
Unless otherwise specified with respect to any Security pursuant to Section 301, if,
after a deposit referred to in Section 1404(a) has been made, (a) the Holder of a Security in
respect of which such deposit was made is entitled to, and does, elect pursuant to Section 301 or
the terms of such Security to receive payment in a currency or currency unit other than that in
which the deposit pursuant to Section 1404(a) has been made in respect of such Security, or (b) a
Conversion Event occurs in respect of the currency or currency unit in which the deposit
pursuant to Section 1404(a) has been made, the indebtedness represented by such Security and any
coupons appertaining thereto shall be deemed to have been, and will be, fully discharged and
satisfied through the payment of the principal of (and premium or Make-Whole Amount, if any), and
interest, if any, on such Security as the same becomes due out of the proceeds yielded by
converting (from time to time as specified below in the case of any such election) the amount or
other property deposited in respect of such Security into the currency or currency unit in which
such Security becomes payable as a result of such election or Conversion Event based on the
applicable market exchange rate for such currency or currency unit in effect on the second Business
Day prior to each payment date, except, with respect to a Conversion Event, for such currency or
currency unit in effect (as nearly as feasible) at the time of the Conversion Event.
The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed
on or assessed against the Government Obligations deposited pursuant to Section 1404 or the
principal and interest received in respect thereof other than any such tax, fee or other charge
which by law is for the account of the Holders of such Outstanding Securities and any coupons
appertaining thereto.
Anything in this Article to the contrary notwithstanding, subject to Section 606, the Trustee
shall deliver or pay to the Company from time to time upon Company Request any money or Government
Obligations (or other property and any proceeds therefrom) held by it as provided in Section 1404
which, in the opinion of a nationally recognized firm of independent public accountants expressed
in a written certification thereof delivered to the Trustee, are in excess of the amount thereof
which would then be required to be deposited to effect a defeasance or covenant defeasance, as
applicable, in accordance with this Article.
ARTICLE FIFTEEN MEETINGS OF HOLDERS OF SECURITIES
SECTION 1501.
Purposes for Which Meetings May Be Called
. A meeting of Holders of
Securities of any series may be called at any time and from time to time pursuant to this Article
to make, give or take any request, demand, authorization, direction, notice, consent, waiver or
other action provided by this Indenture to be made, given or taken by Holders of Securities of such
series.
SECTION 1502.
Call, Notice and Place of Meetings
. (a) The Trustee may at any time
call a meeting of Holders of Securities of any series for any purpose specified in Section 1501, to
be held at such time and at such place as the Trustee shall determine. Notice of every meeting of
Holders of Securities of any series, setting forth the time and the place of such meeting and in
general terms the action proposed to be taken at such meeting, shall be given, in the manner
provided in Section 106, not less than 20 nor more than 180 days prior to the date fixed for the
meeting.
(b) In case at any time the Company, pursuant to a Board Resolution, or the Holders of
at least 25% in principal amount of the Outstanding Securities of any series shall have
requested the Trustee to call a meeting of the Holders of Securities of such series for any
purpose specified in Section 1501, by written request setting forth in reasonable detail the action
proposed to be taken at the meeting, and the Trustee shall not have made the first publication of
the notice of such meeting within 20 days after receipt of such request or shall not thereafter
proceed to cause the meeting to be held as provided herein, then the Company or the Holders of
Securities of such series in the amount above specified, as the case may be, may determine the time
and the place for such meeting and may call such meeting for such purposes by giving notice thereof
as provided in subsection (a) of this Section.
SECTION 1503.
Persons Entitled to Vote at Meetings
. To be entitled to vote at any
meeting of Holders of Securities of any series, a Person shall be (1) a Holder of one or more
Outstanding Securities of such series, or (2) a Person appointed by an instrument in writing as
proxy for a Holder or Holders of one or more Outstanding Securities of such series by such Holder
or Holders. The only Persons who shall be entitled to be present or to speak at any meeting of
Holders of Securities of any series shall be the Persons entitled to vote at such meeting and their
counsel, any representatives of the Trustee and its counsel and any representatives of the Company
and its counsel.
SECTION 1504.
Quorum; Action
. The Persons entitled to vote a majority in principal
amount of the Outstanding Securities of a series shall constitute a quorum for a meeting of Holders
of Securities of such series;
provided
,
however
, that if any action is to be taken
at such meeting with respect to a consent or waiver which this Indenture expressly provides may be
given by the Holders of not less than a specified percentage in principal amount of the Outstanding
Securities of a series, the Persons entitled to vote such specified percentage in principal amount
of the Outstanding Securities of such series shall constitute a quorum. In the absence of a quorum
within 30 minutes after the time appointed for any such meeting, the meeting shall, if convened at
the request of Holders of Securities of such series, be dissolved. In any other case the meeting
may be adjourned for a period of not less than 10 days as determined by the chairman of the meeting
prior to the adjournment of such meeting. In the absence of a quorum at the reconvening of any
such adjourned meeting, such adjourned meeting may be further adjourned for a period of not less
than 10 days; at the reconvening of any meeting adjourned or further adjourned for lack of a
quorum, the persons entitled to vote 25% in aggregate principal amount of the then Outstanding
Securities shall constitute a quorum for the taking of any action set forth in the notice of the
original meeting. Notice of the reconvening of any adjourned meeting shall be given as provided in
Section 1502(a), except that such notice need be given only once not less than five days prior to
the date on which the meeting is scheduled to be reconvened.
Except as limited by the proviso to Section 902, any resolution presented to a meeting
or adjourned meeting duly reconvened at which a quorum is present as aforesaid may be adopted by
the affirmative vote of the persons entitled to vote a majority in aggregate principal amount of
the Outstanding Securities represented at such meeting;
provided
,
however
, that,
except as limited by
the proviso to Section 902, any resolution with respect to any request,
demand, authorization, direction, notice, consent, waiver or other action which this Indenture
expressly provides may be made, given or taken by the Holders of a specified percentage, which is
less than a majority, in principal amount of the Outstanding Securities of a series may be adopted
at a meeting or an
adjourned meeting duly reconvened and at which a quorum is present as aforesaid by the
affirmative vote of the Holders of such specified percentage in principal amount of the Outstanding
Securities of that series.
Any resolution passed or decision taken at any meeting of Holders of Securities of any series
duly held in accordance with this Section shall be binding on all the Holders of Securities of such
series and the related coupons, whether or not present or represented at the meeting.
Notwithstanding the foregoing provisions of this Section 1504, if any action is to be taken at
a meeting of Holders of Securities of any series with respect to any request, demand,
authorization, direction, notice, consent, waiver or other action that this Indenture expressly
provides may be made, given or taken by the Holders of a specified percentage in principal amount
of all Outstanding Securities affected thereby, or of the Holders of such series and one or more
additional series:
(i) there shall be no minimum quorum requirement for such meeting; and
(ii) the principal amount of the Outstanding Securities of such series that vote in
favor of such request, demand, authorization, direction, notice, consent, waiver or other
action shall be taken into account in determining whether such request, demand,
authorization, direction, notice, consent, waiver or other action has been made, given or
taken under this Indenture.
SECTION 1505.
Determination of Voting Rights; Conduct and Adjournment of Meetings
.
(a) Notwithstanding any provisions of this Indenture, the Trustee may make such reasonable
regulations as it may deem advisable for any meeting of Holders of Securities of a series in regard
to proof of the holding of Securities of such series and of the appointment of proxies and in
regard to the appointment and duties of inspectors of votes, the submission and examination of
proxies, certificates and other evidence of the right to vote, and such other matters concerning
the conduct of the meeting as it shall deem appropriate. Except as otherwise permitted or required
by any such regulations, the holding of Securities shall be proved in the manner specified in
Section 104 and the appointment of any proxy shall be proved in the manner specified in Section 104
or by having the signature of the Person executing the proxy witnessed or guaranteed by any trust
company, bank or banker authorized by Section 104 to certify to the holding of Bearer Securities.
Such regulations may provide that written instruments appointing proxies, regular on their face,
may be presumed valid and genuine without the proof specified in Section 104 or other proof.
(b) The Trustee shall, by an instrument in writing appoint a temporary chairman of the
meeting, unless the meeting shall have been called by the Company or by Holders of Securities as
provided in Section 1502(b), in which case the Company or the Holders of Securities of the series
calling the meeting, as the case may be, shall in like manner appoint a temporary chairman. A
permanent chairman and a permanent secretary of the meeting shall be
elected by vote of the Persons entitled to vote a majority in principal amount of the
Outstanding Securities of such series represented at the meeting.
(c) At any meeting each Holder of a Security of such series or proxy shall be entitled to one
vote for each $1,000 principal amount of the Outstanding Securities of such series held or
represented by him;
provided
,
however
, that no vote shall be cast or counted at any
meeting in respect of any Security challenged as not Outstanding and ruled by the chairman of the
meeting to be not Outstanding. The chairman of the meeting shall have no right to vote, except as
a Holder of a Security of such series or proxy.
(d) Any meeting of Holders of Securities of any series duly called pursuant to Section 1502 at
which a quorum is present may be adjourned from time to time by Persons entitled to vote a majority
in principal amount of the Outstanding Securities of such series represented at the meeting, and
the meeting may be held as so adjourned without further notice.
SECTION 1506.
Counting Votes and Recording Action of Meetings
. The vote upon any
resolution submitted to any meeting of Holders of Securities of any series shall be by written
ballots on which shall be subscribed the signatures of the Holders of Securities of such series or
of their representatives by proxy and the principal amounts and serial numbers of the Outstanding
Securities of such series held or represented by them. The permanent chairman of the meeting shall
appoint two inspectors of votes who shall count all votes cast at the meeting for or against any
resolution and who shall make and file with the secretary of the meeting their verified written
reports in duplicate of all votes cast at the meeting. A record, at least in duplicate, of the
proceedings of each meeting of Holders of Securities of any Series shall be prepared by the
secretary of the meeting and there shall be attached to said record the original reports of the
inspectors of votes on any vote by ballot taken thereat and affidavits by one or more persons
having knowledge of the fact, setting forth a copy of the notice of the meeting and showing that
said notice was given as provided in Section 1502 and, if applicable, Section 1504. Each copy
shall be signed and verified by the affidavits of the permanent chairman and secretary of the
meeting and one such copy shall be delivered to the Company and another to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the ballots voted at the meeting.
Any record so signed and verified shall be conclusive evidence of the matters therein stated.
SIGNATURES AND SEALS
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed all as
of the day and year first above written.
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BAY APARTMENT COMMUNITIES, INC.
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[Corporate Seal]
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By:
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/s/ Gilbert M. Meyer
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Name: Gilbert M. Meyer
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Title: President
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Attest:
Jeffrey B. VanHorn
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Title: Chief Financial Officer
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STATE STREET BANK AND TRUST COMPANY,
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as Trustee
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By:
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/s/ Robert J. Dunn
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Name: Robert J. Dun
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Title: Vice President
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Attest:
/s/ [illegible]
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Title: Vice President
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ACKNOWLEDGMENT
STATE OF CALIFORNIA
) ss:
COUNTY OF SANTA CLARA
On the 15TH day of January, 1998, before me personally came Gilbert M. Meyer, to me known, who,
being by me duly sworn, did depose and say that he is the President of BAY APARTMENT COMMUNITIES,
INC., one of the parties described in and which executed the foregoing instrument, and that he
signed his name thereto by authority of the Board of Directors.
[Notarial Seal]
/s/ Anna Maria Kintzer
Notary Public
Commission Expires
STATE OF MASSACHUSETTS
) ss:
COUNTY OF SUFFOLK
On the 15TH day of January, 1998, before me personally came Robert J. Dunn, to me known, who, being
by me duly sworn, did depose and say that he is a Vice President of STATE STREET BANK AND TRUST
COMPANY, one of the parties described in and which executed the foregoing instrument, and that he
signed his name thereto by authority of the Board of Directors.
[Notarial Seal]
/s/ [illegible]
Notary Public
Commission Expires
EXHIBIT A
FORM OF REDEEMABLE OR NON-REDEEMABLE SENIOR SECURITY
[Face of Security]
[If the Holder of this Security (as indicated below) is The Depository Trust Company (DTC) or a
nominee of DTC, this Security is a Global Security and the following two legends apply:
Unless this Security is presented by an authorized representative of The Depository Trust Company
(DTC), 55 Water Street, New York, New York to the issuer or its agent for registration of
transfer, exchange or payment, and such Security issued is registered in the name of CEDE & CO., or
such other name as 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, since the registered owner
hereof, CEDE & CO., has an interest herein.
Unless and until this Security is exchanged in whole or in part for Securities in certificated
form, this Security may not be transferred except as a whole by DTC to a nominee thereof or by a
nominee thereof to DTC or another nominee of DTC or by DTC or any such nominee to a successor of
DTC or a nominee of such successor.
]
[
If this Security is an Original Issue Discount Security, insert
FOR PURPOSES OF SECTION
1273 and 1275 OF THE UNITED STATES INTERNAL REVENUE CODE, THE AMOUNT OF ORIGINAL ISSUE DISCOUNT ON
THIS SECURITY IS
% OF ITS PRINCIPAL AMOUNT, THE ISSUE DATE
IS
,19___ [AND] THE YIELD TO MATURITY IS
%. [THE METHOD USED TO DETERMINE THE
AMOUNT OF ORIGINAL ISSUE DISCOUNT APPLICABLE TO THE SHORT ACCRUAL PERIOD OF
,
19___TO
, 19___, IS
% OF THE PRINCIPAL AMOUNT OF THIS
SECURITY.]
BAY APARTMENT COMMUNITIES, INC.
[Designation of Series]
BAY APARTMENT COMMUNITIES, INC., a Maryland corporation (herein referred to as the
Company, which term includes any successor corporation under the Indenture referred to on the
reverse hereof), for value received, hereby promises to pay to
or
registered assigns the principal sum of
Dollars on
(the Stated
Maturity Date) [or
insert date fixed for earlier redemption
(the Redemption Date, and
together with the Stated Maturity Date with respect to principal repayable on such date, the
Maturity Date.)]
[
If the Security is to bear interest prior to Maturity, insert
and to pay interest
thereon from
or from the most recent Interest Payment Date to which interest has
been paid or duly provided for, semi-annually on
and
in each year (each, an
Interest Payment Date), commencing
, at the rate of ___% per annum, until the principal
hereof is paid or duly provided for. The interest so payable, and punctually paid or duly provided
for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Holder in
whose name this Security (or one or more Predecessor Securities) is registered at the close of
business on the Regular Record Date for such interest, which shall be the
or
(whether or not a Business Day), as the case may be, next preceding such Interest Payment Date [at
the office or agency of the Company maintained for such purpose;
provided
,
however
,
that such interest may be paid, at the Companys option, by mailing a check to such Holder at its
registered address or by transfer of funds to an account maintained by such Holder within the
United States]. 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 be paid to the Holder in
whose name this Security (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of Securities of this series not less than 10
days prior to such Special Record Date, or may be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the Securities of this
series may be listed, and upon such notice as may be required by such exchange, all as more fully
provided in the Indenture. Interest will be computed on the basis of a 360-day year of twelve
30-day months.]
[
If the Security is not to bear interest prior to Maturity, insert
The principal of this
Security shall not bear interest except in the case of a default in payment of principal upon
acceleration, upon redemption or at the [Stated] Maturity Date and in such case the overdue
principal of this Security shall bear interest at the rate of
% per annum (to the extent
that the payment of such interest shall be legally enforceable), which shall accrue from the date
of such default in payment to the date payment of such principal has been made or duly provided
for. Interest on any overdue principal shall be payable on demand. Any such interest on any
overdue principal that is not so paid on demand shall bear interest at the rate of
% per
annum (to the extent that the payment of such interest shall be legally enforceable), which shall
accrue from the date of such demand for payment to the date payment of such interest has been made
or duly provided for, and such interest shall also be payable on demand.]
The principal of this Security payable on the Stated Maturity Date [or the principal of,
premium or Make-Whole Amount, if any, and, if the Redemption Date is not an Interest Payment Date,
interest on this Security payable on the Redemption Date] will be paid against presentation of this
Security at the office or agency of the Company maintained for that purpose in
,
in such coin or currency of the United States of America as at the time of payment is legal tender
for the payment of public and private debts.
Interest payable on this Security on any Interest Payment Date and on the [Stated] Maturity Date
[or Redemption Date, as the case may be,] will include interest accrued from and including the
next preceding Interest Payment Date in respect of which interest has been paid or duly provided
for (or from and including
, if no interest has been paid on this Security) to but
excluding such Interest Payment Date or the [Stated] Maturity Date [or Redemption Date, as the case
may be.] If any Interest Payment Date or the [Stated] Maturity Date or [Redemption Date] falls on
a day that is not a Business Day, as defined below, principal, premium or Make-Whole Amount, if
any, and/or interest payable with respect to such Interest Payment Date or [Stated] Maturity Date
[or Redemption Date, as the case may be,] will be paid on the next succeeding Business Day with the
same force and effect as if it were paid on the date such payment was due, and no interest shall
accrue on the amount so payable for the period from and after such Interest Payment Date or
[Stated] Maturity Date [or Redemption Date, as the case may be.] Business Day means any day,
other than a Saturday or Sunday, on which banks in
are not required or
authorized by law or executive order to close.
[
If this Security is a Global Security, insert
All payments of principal, premium or
Make-Whole Amount, if any, and interest in respect of this Security will be made by the Company in
immediately available funds.]
Reference is hereby made to the further provisions of this Security set forth on the reverse
hereof, which further provisions shall for all purposes have the same effect as if set forth at
this place.
Unless the Certificate of Authentication hereon has been executed by the Trustee by manual
signature of one of its authorized signatories, this Security 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 facsimile
corporate seal.
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Dated:
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BAY APARTMENT COMMUNITIES, INC.
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By:
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Attest:
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Secretary
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[Reverse of Security]
BAY APARTMENT COMMUNITIES, INC.
This Security is one of a duly authorized issue of securities of the Company (herein called the
Securities), issued and to be issued in one or more
series under an Indenture, dated as of ______, 199______(herein
called the Indenture) between the Company and
______, as Trustee (herein called the Trustee, which term includes any successor
trustee under the Indenture with respect to the series of which this Security is a part), to which
Indenture and all indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of the Company, the
Trustee and the Holders of the Securities, and of the terms upon which the Securities are, and are
to be, authenticated and delivered. This Security is one of the duly authorized series of
Securities designated on the face hereof (collectively, the Securities), [
if applicable,
insert
and the aggregate principal amount of the Securities to be issued under such series
is limited to $______(except for Securities authenticated and delivered upon transfer of, or in
exchange for, or in lieu of other Securities).] All terms used in this Security which are defined
in the Indenture shall have the meanings assigned to them in the Indenture.
If an Event of Default, as defined in the Indenture, shall occur and be continuing, the principal
of the Securities of this series may be declared due and payable in the manner and with the effect
provided in the Indenture.
[
If applicable, insert
The Securities may not be redeemed prior to the Stated Maturity
Date.]
[
If applicable, insert
The Securities are subject to redemption [ (l)
(If
applicable, insert
on ___in any year commencing with the year _________and ending with
the year ______through operation of the sinking fund for this series at a Redemption Price equal to
100% of the principal amount, and (2) ] [
If applicable, insert
at any time [on or after
___], as a whole or in part, at the election of the Company, at the following Redemption
Prices (expressed as percentages of the principal amount):
If redeemed on or before ______, ______% and if redeemed during the 12-month period
beginning
______of the years indicated at the Redemption Prices indicated below.
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Year
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Redemption Price
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Year
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Redemption Price
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and thereafter at a Redemption Price equal to ___% of the principal amount, together in the
case of any such redemption [
If applicable, insert
(whether through operation of the
sinking fund or otherwise)] with accrued interest to the Redemption Date;
provided,
however
, that installments
of interest on this Security whose Stated Maturity is on or prior to
such Redemption Date will be
payable to the Holder of this Security, or one or more Predecessor Securities, of record at the
close of business on the relevant Record Dates referred to on the face hereof, all as provided in
the Indenture.]
[
If applicable, insert
The Securities are subject to redemption (1) on ___ in
any year commencing with the year ___ and ending with the year ___ through operation of the
sinking fund for this series at the Redemption Prices for redemption through operation of the
sinking fund (expressed as percentages of the principal amount) set forth in the table below, and
(2) at any time [on or after ______], as a whole or in part, at the election of the Company, at
the Redemption Prices for redemption otherwise than through operation of the sinking fund
(expressed as percentages of the principal amount) set forth in the table below: If redeemed during
the 12-month period beginning ______ of the years indicated,
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Redemption Price for
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Redemption Price for
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Redemption Through
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Redemption Otherwise
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Operation of the
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Than Through Operation
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Year
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Sinking Fund
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of the Sinking Fund
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and thereafter at a Redemption Price equal to ___% of the principal amount, together in the case
of any such redemption (whether through operation of the sinking fund or otherwise) with accrued
interest to the Redemption Date;
provided
,
however
, that installments of interest
on this Security whose Stated Maturity is on or prior to such Redemption Date will be payable to
the Holder of this Security, or one or more Predecessor Securities, of record at the close of
business on the relevant Record Dates referred to on the face hereof, all as provided in the
Indenture.]
[
If applicable, insert
Notwithstanding the foregoing, the Company may not, prior to
______, redeem any Securities as contemplated by [Clause (2) of] the preceding paragraph as a part
of, or in anticipation of, any refunding operation by the application, directly or indirectly, of
moneys borrowed having an interest cost to the Company (calculated in accordance with generally
accepted financial practice) of less than ______% per annum.]
[
If applicable, insert
The sinking fund for the Securities provides for the
redemption on ______in each year, beginning with the year ______and ending with the year ___, of
[not less than] $______] [(mandatory sinking fund) and not more than $___] aggregate
principal amount of the Securities. [The Securities acquired or redeemed by the Company otherwise
than through [mandatory] sinking fund payments may be credited against subsequent [mandatory]
sinking fund payments otherwise required to be made in the [
describe order
] order in which
they become due.]]
Notice of redemption will be given by mail to Holders of Securities, not less than 30 nor more
than 60 days prior to the Redemption Date, all as provided in the Indenture.
In the event of redemption of this Security in part only, a new Security or Securities for the
unredeemed portion hereof shall be issued in the name of the Holder hereof upon the cancellation
hereof.
The Indenture permits, with certain exceptions as therein provided, the amendment thereof and
the modification of the rights and obligations of the Company and the rights of the Holders of the
Securities under the Indenture at any time by the Company and the Trustee with the consent of the
Holders of not less than a majority of the aggregate principal amount of all Securities issued
under the Indenture at the time Outstanding and affected thereby. The Indenture also contains
provisions permitting the Holders of not less than a majority of the aggregate principal amount of
the Outstanding Securities, on behalf of the Holders of all such Securities, to waive compliance by
the Company with certain provisions of the Indenture. Furthermore, provisions in the Indenture
permit the Holders of not less than a majority of the aggregate principal amount, in certain
instances, of the Outstanding Securities of any series to waive, on behalf of all of the Holders of
Securities of such series, certain past defaults under the Indenture and their consequences. Any
such consent or waiver by the Holder of this Security shall be conclusive and binding upon such
Holder and upon all future Holders of this Security and other Securities issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation
of such consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this Security or of the Indenture
shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay
the principal of (and premium or Make-Whole Amount, if any) and interest on this Security 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 [and herein] set
forth, the transfer of this Security is registrable in the Security Register of the Company upon
surrender of this Security for registration of transfer at the office or agency of the Company in
any place where the principal of (and premium or Make-Whole Amount, if any) and interest on this
Security are payable, duly endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or by
his attorney duly authorized in writing, and thereupon one or more new Securities, of authorized
denominations and for the same aggregate principal amount, will be issued to the designated
transferee or transferees.
As provided in the Indenture and subject to certain limitations therein [and herein]
set forth, this Security is exchangeable for a like aggregate principal amount of Securities of
different authorized denominations but otherwise having the same terms and conditions, as requested
by the Holder hereof surrendering the same.
The Securities of this series are issuable only in registered form [without coupons] in
denominations of $______ and any integral multiple thereof.
No service charge shall be made for any such registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith,
Prior to due presentment of this Security for registration of transfer, the Company, the
Trustee and any agent of the Company or the Trustee may treat the Person in whose name this
Security is registered as the owner hereof for all purposes, whether or not this Security be
overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
No recourse shall be had for the payment of the principal of or premium or Make-Whole Amount,
if any, or the interest on this Security, or for any claim based hereon, or otherwise in respect
hereof, or based on or in respect of the Indenture or any indenture supplemental thereto, against
any past, present or future stockholder, employee, officer or director, as such, of the Company or
of any successor, either directly or through the Company or any successor, whether by virtue of any
constitution, statute or rule of law or by the enforcement of any assessment or penalty or
otherwise, all such liability being, by the acceptance hereof and as part of the consideration for
the issue hereof, expressly waived and released.
The Indenture and the Securities shall be governed by and construed in accordance with the
laws of [the State of New York] applicable to agreements made and to be performed entirely in such
State.
EXHIBIT B
FORMS OF CERTIFICATION
EXHIBIT B-1
FORM OF CERTIFICATE TO BE GIVEN BY PERSON ENTITLED
TO RECEIVE BEARER SECURITY OR TO OBTAIN INTEREST
PAYABLE PRIOR TO THE EXCHANGE DATE
CERTIFICATE
[Insert title or sufficient description of Securities to be delivered]
This is to certify that, as of the date hereof, and except as set forth below, the
above-captioned Securities held by you for our account (i) are owned by person(s) that are not
citizens or residents of the United States, domestic partnerships, domestic corporations or any
estate or trust the income of which is subject to United States Federal income taxation regardless
of its source (United States person(s)), (ii) are owned by United States person(s) that are (a)
foreign branches of United States financial institutions (financial institutions, as defined in
United States Treasury Regulations Section 2.165-12(c)(1)(v) are herein referred to as financial
institutions) purchasing for their own account or for resale, or (b) United States person(s) who
acquired the Securities through foreign branches of United States financial institutions and who
hold the Securities through such United States financial institutions on the date hereof (and in
either case (a) or (b), each such United States financial institution hereby agrees, on its own
behalf or through its agent, that you may advise Bay Apartment Communities, Inc. or its agent that
such financial institution will comply with the requirements of Section 165(j)(3)(A), (B) or (C) of
the United States Internal Revenue Code of 1986, as amended, and the regulations thereunder), or
(iii) are owned by United States or foreign financial institution(s) for purposes of resale during
the restricted period (as defined in United States Treasury Regulations Section
1.163-5(c)(2)(i)(D)(7)), and, in addition, if the owner is a United States or foreign financial
institution described in clause (iii) above (whether or not also described in clause (i) or (ii)),
this is to further certify that such financial institution has not acquired the Securities for
purposes of resale directly or indirectly to a United States person or to a person within the
United States or its possessions.
As used herein, United States means the United States of America (including the States and
the District of Columbia); and its possessions include Puerto Rico, the U.S. Virgin Islands,
Guam, American Samoa, Wake Island and the Northern Mariana Islands.
We undertake to advise you promptly by tested telex on or prior to the date on which
you intend to submit your certification relating to the above-captioned Securities held by you for
our
account in accordance with your Operating Procedures if any applicable statement herein is not
correct on such date, and in the absence of any such notification it may be assumed that this
certification applies as of such date.
This certificate excepts and does not relate to [U.S.$] of such interest in the
above-captioned Securities in respect of which we are not able to certify and as to which we
understand an exchange for an interest in a permanent Global Security or an exchange for and
delivery of definitive Securities (or, if relevant, collection of any interest) cannot be made
until we do so certify.
We understand that this certificate may be required in connection with certain tax legislation
in the United States. If administrative or legal proceedings are commenced or threatened in
connection with which this certificate is or would be relevant, we irrevocably authorize you to
produce this certificate or a copy thereof to any interested party in such proceedings.
Dated:
___, ___
[To be dated no earlier than the 15th day prior to (i) the Exchange Date or (ii) the relevant
Interest Payment Date occurring prior to the Exchange Date, as applicable]
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[Name of Person Making Certification]
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(Authorized Signature)
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Name:
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Title:
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EXHIBIT B-2
FORM OF CERTIFICATE TO BE GIVEN BY EUROCLEAR
AND CEDEL S.A. IN CONNECTION WITH THE EXCHANGE OF
A PORTION OF A TEMPORARY GLOBAL SECURITY OR TO
OBTAIN INTEREST PAYABLE PRIOR TO THE EXCHANGE DATE
CERTIFICATE
[Insert title or sufficient description of Securities to be delivered]
This is to certify that, based solely on written certifications that we have received in
writing, by tested telex or by electronic transmission from each of the persons appearing in our
records as persons entitled to a portion of the principal amount set forth below (our Member
Organizations) substantially in the form attached hereto, as of the date hereof, [U.S.$] principal
amount of the above-captioned Securities (i) is owned by person(s) that are not citizens or
residents of the United States, domestic partnerships, domestic corporations or any estate or trust
the income of which is subject to United States Federal income taxation regardless of its source
(United States person(s)), (ii) is owned by United States person(s) that are (a) foreign branches
of United States financial institutions (financial institutions, as defined in U.S. Treasury
Regulations Section 1.165-12(c)(1)(v) are herein referred to as financial institutions)
purchasing for their own account or for resale, or (b) United States person(s) who acquired the
Securities through foreign branches of United States financial institutions and who hold the
Securities through such United States financial institutions on the date hereof (and in either case
(a) or (b), each such financial institution has agreed, on its own behalf or through its agent,
that we may advise Bay Apartment Communities, Inc. or its agent that such financial institution
will comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code
of 1986, as amended, and the regulations thereunder), or (iii) is owned by United States or foreign
financial institution(s) for purposes of resale during the restricted period (as defined in United
States Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)), and, to the further effect, that
financial institutions described in clause (iii) above (whether or not also described in clause (i)
or (ii)) have certified that they have not acquired the Securities for purposes of resale directly
or indirectly to a United States person or to a person within the United States or its possessions.
As used herein, United States means the United States of America (including the States and
the District of Columbia); and its Possessions include Puerto Rico, the U.S. Virgin Islands,
Guam, American Samoa, Wake Island and the Northern Mariana Islands.
We further certify that (i) we are not making available herewith for exchange (or, if
relevant, collection of any interest) any portion of the temporary Global Security representing the
above-captioned Securities excepted in the above-referenced certificates of Member Organizations
and (ii) as of the date hereof we have not received any notification from any of our Member
Organizations to the effect that the statements made by such Member Organizations
with respect to any portion of the part submitted herewith for exchange (or, if relevant,
collection of any interest) are no longer true and cannot be relied upon as of the date hereof.
We understand that this certification is required in connection with certain tax legislation
in the United States. If administrative or legal proceedings are commenced or threatened in
connection with which this certificate is or would be relevant, we irrevocably authorize you to
produce this certificate or a copy thereof to any interested party in such proceedings.
Dated: ______ ___
[To be dated no earlier than the Exchange Date or the relevant Interest Payment Date occurring
prior to the Exchange Date, as applicable]
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[Morgan Guaranty Trust Company of New York,
Brussels
Office,] as Operator of the Euroclear
System [CEDEL
S.A.]
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By:
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Exhibit 4.2
BAY APARTMENT COMMUNITIES, INC.
Issuer
to
STATE STREET BANK AND TRUST COMPANY
Trustee
First Supplemental Indenture
Dated as of January 20, 1998
$50,000,000
of
6.250% Senior Notes due 2003
$50,000,000
of
6.500% Senior Notes due 2005
$50,000,000
of
6.625% Senior Notes due 2008
FIRST SUPPLEMENTAL INDENTURE, dated as of January 20, 1998 (the Supplemental Indenture),
between BAY APARTMENT COMMUNITIES, INC., a corporation duly organized and existing under the laws
of the State of Maryland (herein called the Company), and STATE STREET BANK AND TRUST COMPANY, a
trust company organized and existing under the laws of The Commonwealth of Massachusetts, as
Trustee (herein called the Trustee).
RECITALS OF THE COMPANY
The Company has heretofore delivered to the Trustee an Indenture dated as of January 16, 1998
(the Senior Indenture), a form of which has been filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, as an exhibit to the Companys
Registration Statement on Form S-3, as amended (File No. 333-41511), providing for the issuance
from time to time of Senior Debt Securities of the Company (the Securities).
Section 301 of the Senior Indenture provides for various matters with respect to any series of
Securities issued under the Senior Indenture to be established in an indenture supplemental to the
Senior Indenture.
Section 901(7) of the Senior Indenture provides for the Company and the Trustee to enter into
an indenture supplemental to the Senior Indenture to establish the form or terms of Securities of
any series as provided by Sections 201 and 301 of the Senior Indenture.
The Board of Directors of the Company has duly adopted resolutions authorizing the Company to
execute and deliver this Supplemental Indenture.
All the conditions and requirements necessary to make this Supplemental Indenture, when duly
executed and delivered, a valid and binding agreement in accordance with its terms and for the
purposes herein expressed, have been performed and fulfilled.
NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of each of the series of Securities
provided for herein by the Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Notes or for either thereof, as follows:
ARTICLE ONE RELATION TO SENIOR INDENTURE; DEFINITIONS.
SECTION 1.1.
Relation to Senior Indenture
. This Supplemental Indenture constitutes an
integral part of the Senior Indenture.
2
SECTION 1.2.
Definitions
. For all purposes of this Supplemental Indenture, except as
otherwise expressly provided for or unless the context otherwise requires:
(1) Capitalized terms used but not defined herein shall have the respective meanings assigned
to them in the Senior Indenture;
(2) All references herein to Articles and Sections, unless otherwise specified, refer to the
corresponding Articles and Sections of this Supplemental Indenture; and
(3) In the event that any of the following definitions differs from its respective definition
set forth in the Senior Indenture, the definition set forth herein shall control.
Acquired Indebtedness means Indebtedness of a Person (i) existing at the time such Person
becomes a Subsidiary or (ii) assumed in connection with the acquisition of assets from such Person,
in each case, other than Indebtedness incurred in connection with, or in contemplation of, such
Person becoming a Subsidiary or such acquisition. Acquired Indebtedness shall be deemed to be
incurred on the date of the related acquisition of assets from any Person or the date the acquired
Person becomes a Subsidiary.
Annual Service Charge for any period means the maximum amount which is payable during such
period for interest on, and original issue discount of, Indebtedness of the Company and its
Subsidiaries and the amount of dividends which are payable during such period in respect of any
Disqualified Stock.
Business Day means any day, other than a Saturday or Sunday, that is neither a legal holiday
nor a day on which banking institutions in the City of New York or in the City of Chicago are
authorized or required by law, regulation or executive order to close.
Capital Stock means, with respect to any Person, any capital stock (including preferred
stock), shares, interests, participations or other ownership interests (however designated) of such
Person and any rights (other than debt securities convertible into or exchangeable for corporate
stock), warrants or options to purchase any thereof.
Consolidated Income Available for Debt Service for any period means Earnings from Operations
of the Company and its Subsidiaries, plus amounts which have been deducted, and minus amounts which
have been added, for the following (without duplication): (i) interest on Indebtedness of the
Company and its Subsidiaries, (ii) provision for taxes of the Company and its Subsidiaries based on
income, (iii) amortization of debt discount and other deferred financing costs, (iv) provisions for
gains and losses on properties and property depreciation and amortization, (v) the effect of any
noncash charge resulting from a change in accounting principles in determining Earnings from
Operations for such period and (vi) amortization of deferred charges.
3
Corporate Trust Office means the office of the Trustee at which, at any particular time, its
corporate trust business shall be principally administered, which office at the date hereof is
located at Two International Place, Boston, Massachusetts 02110 and, for purposes of the Place of
Payment provisions of Sections 305 and 1002 of the Senior Indenture, is located at the office of
State Street Bank and Trust Company, N.A., 61 Broadway, New York, New York 10005.
Disqualified Stock means, with respect to any Person, any Capital Stock of such Person which
by the terms of such Capital Stock (or by the terms of any security into which it is convertible or
for which it is exchangeable or exercisable), upon the happening of any event or otherwise (i)
matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise (other
than Capital Stock which is redeemable solely in exchange for common stock), (ii) is convertible
into or exchangeable or exercisable for Indebtedness or Disqualified Stock or (iii) is redeemable
at the option of the holder thereof, in whole or in part (other than Capital Stock which is
redeemable solely in exchange for Capital Stock which is not Disqualified Stock), in each case on
or prior to the Stated Maturity of the Notes.
Earnings from Operations for any period means net earnings excluding gains and losses on
sales of investments, extraordinary items, and property valuation losses, net as reflected in the
financial statements of the Company and its Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP.
Encumbrance means any mortgage, lien, charge, pledge or security interest of any kind.
Exchange Act means the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder by the Commission.
GAAP means generally accepted accounting principles as used in the United States applied on
a consistent basis as in effect from time to time; provided that solely for purposes of any
calculation required by the financial covenants contained herein, GAAP shall mean generally
accepted accounting principles as used in the United States on the date hereof, applied on a
consistent basis.
Indebtedness of the Company or any Subsidiary means, without duplication, any indebtedness
of the Company or any Subsidiary, whether or not contingent, in respect of (i) borrowed money or
evidenced by bonds, notes, debentures or similar instruments, (ii) indebtedness for borrowed money
secured by any Encumbrance existing on property owned by the Company or any Subsidiary, (iii) the
reimbursement obligations, contingent or otherwise, in connection with any letters of credit
actually issued (other than letters of credit issued to provide credit enhancement or support with
respect to other indebtedness of the Company or any
4
Subsidiary otherwise reflected as Indebtedness
hereunder) or amounts representing the balance deferred and unpaid of the purchase price of any
property or services, except any such balance
that constitutes an accrued expense or trade payable, or all conditional sale obligations or
obligations under any title retention agreement, (iv) the principal amount of all obligations of
the Company or any Subsidiary with respect to redemption, repayment or other repurchase of any
Disqualified Stock, (v) any lease of property by the Company or any Subsidiary as lessee which is
reflected on the Companys consolidated balance sheet as a capitalized lease in accordance with
GAAP, or (vi) interest rate swaps, caps or similar agreements and foreign exchange contracts,
currency swaps or similar agreements, to the extent, in the case of items of indebtedness under (i)
through (iii) above, that any such items (other than letters of credit) would appear as a liability
on the Companys consolidated balance sheet in accordance with GAAP, and also includes, to the
extent not otherwise included, any obligation by the Company or any Subsidiary to be liable for, or
to pay, as obligor, guarantor or otherwise (other than for purposes of collection in the ordinary
course of business), Indebtedness of another Person (other than the Company or any Subsidiary) (it
being understood that Indebtedness shall be deemed to be incurred by the Company or any Subsidiary
whenever the Company or such Subsidiary shall create, assume, guarantee or otherwise become liable
in respect thereof).
Make-Whole Amount means, in connection with any optional redemption or accelerated payment
of any 2003 Note, 2005 Note or 2008 Note, as the case may be, the excess, if any, of (i) the
aggregate present value as of the date of such redemption or accelerated payment of each dollar of
principal being redeemed or paid and the amount of interest (exclusive of interest accrued to the
date of redemption or accelerated payment) that would have been payable in respect of such dollar
if such redemption or accelerated payment had not been made, determined by discounting, on a
semi-annual basis, such principal and interest at the Reinvestment Rate (determined on the third
Business Day preceding the date such notice of Redemption is given or declaration of acceleration
is made) from the respective dates on which such principal and interest would have been payable if
such redemption or accelerated payment had not been made, over (ii) the aggregate principal amount
of the Notes being redeemed or paid.
Notes has the meaning specified in Section 2.1 hereof.
Reinvestment Rate means .25% (twenty-five one hundredths of one percent) plus the arithmetic
mean of the yields under the respective headings This Week and Last Week published in the
Statistical Release under the caption Treasury Constant Maturities for the maturity (rounded to
the nearest month) corresponding to the remaining life to maturity, as of the payment date of the
principal being redeemed or paid. If no maturity exactly corresponds to such maturity, yields for
the two published maturities most closely corresponding to such maturity shall be calculated
pursuant to the immediately preceding sentence and the Reinvestment Rate shall be interpolated or
extrapolated from such yields on a straight-line basis, rounding in each of such relevant periods
to the nearest month. For such purposes of calculating
5
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 of the Make-Whole Amount,
then such other reasonably comparable index which shall be designated by the Company.
"
Subsidiary
means, with respect to any Person, any corporation, limited liability company,
partnership or other entity of which a majority of (i) the voting power of the voting equity
securities or (ii) the outstanding equity interests are owned, directly or indirectly, by such
Person. For the purposes of this definition, voting equity securities means equity securities
having voting power for the election of directors, whether at all times or only so long as no
senior class of security has such voting power by reason of any contingency.
Total Assets as of any date means the sum of (i) the Undepreciated Real Estate Assets and
(ii) all other assets of the Company and its Subsidiaries determined in accordance with GAAP (but
excluding accounts receivable and intangibles).
Total Unencumbered Assets means the sum of (i) those Undepreciated Real Estate Assets not
subject to an Encumbrance for borrowed money and (ii) all other assets of the Company and its
Subsidiaries not subject to an Encumbrance for borrowed money, determined in accordance with GAAP
(but excluding accounts receivable and intangibles).
2003 Notes has the meaning specified in Section 2.1 hereof.
2005 Notes has the meaning specified in Section 2.1 hereof.
2008 Notes has the meaning specified in Section 2.1 hereof.
Undepreciated Real Estate Assets as of any date means the cost (original cost plus capital
improvements) of real estate assets of the Company and its Subsidiaries on such date, before
depreciation and amortization, determined on a consolidated basis in accordance with GAAP.
Unsecured Indebtedness means Indebtedness which is not secured by any Encumbrance upon any
of the properties of the Company or any Subsidiary.
<@CWEOP:15>
6
ARTICLE TWO THE SERIES OF NOTES.
The following provisions of this Article Two are made pursuant to Section 301 of the Senior
Indenture in order to establish and set forth the terms of the series of Securities described in
Section 2.1.
SECTION 2.1.
Title of the Securities
. There shall be a series of Securities
designated the 6.250% Senior Notes due 2003 (the 2003 Notes), a series of Securities designated
the 6.500% Senior Notes due 2005 (the 2005 Notes) and a series of Securities designated the
6.625% Senior Notes due 2008 (the 2008 Notes and, together with the 2003 Notes and the 2005
Notes, the Notes).
SECTION 2.2.
Limitation on Aggregate Principal Amount
.
(1) The aggregate principal amount of the 2003 Notes shall be limited to $50,000,000, and,
except as provided in this Section and in Section 306 of the Senior Indenture, the Company shall
not execute and the Trustee shall not authenticate or deliver 2003 Notes in excess of such
aggregate principal amount.
(2) The aggregate principal amount of the 2005 Notes shall be limited to $50,000,000, and,
except as provided in this Section and in Section 306 of the Senior Indenture, the Company shall
not execute and the Trustee shall not authenticate or deliver 2005 Notes in excess of such
aggregate principal amount.
(3) The aggregate principal amount of the 2008 Notes shall be limited to $50,000,000, and,
except as provided in this Section and in Section 306 of the Senior Indenture, the Company shall
not execute and the Trustee shall not authenticate or deliver 2008 Notes in excess of such
aggregate principal amount.
Nothing contained in this Section 2.2 or elsewhere in this Supplemental Indenture, or in the
Notes, is intended to or shall limit execution by the Company or authentication or delivery by the
Trustee of Notes under the circumstances contemplated by Sections 303, 304, 305, 306, 906, 1107 and
1305 of the Senior Indenture.
SECTION 2.3.
Interest and Interest Rates; Maturity Date of Notes
. The 2003 Notes will
bear interest at a rate of 6.250% per annum, the 2005 Notes will bear interest at a rate of 6.500%
per annum and the 2008 Notes will bear interest at a rate of 6.625% per annum, in each case, from
January 15, 1998 or from the immediately preceding Interest Payment Date to which interest has been
paid or duly provided for, payable semi-annually in arrears on January 15 and July 15 of each year,
commencing July 15, 1998 (each, an Interest Payment Date), to the Person in whose name such Note
is registered at the close of business on December 31 or June 30 (whether or not a Business Day),
as the case may be, next preceding such Interest Payment Date (each, a Regular Record Date).
Interest will be computed on the basis of a 360-day year
7
comprised of twelve 30-day months. The
interest so payable on any Note which is not punctually paid or duly provided for on any Interest
Payment Date shall forthwith cease to be payable to the Person in whose name such Note is
registered on the relevant Regular Record Date, and such defaulted interest shall instead be
payable to the Person in whose name such Note is registered on
the Special Record Date or other specified date determined in accordance with the Senior
Indenture.
If any Interest Payment Date or Maturity falls on a day that is not a Business Day, the
required payment shall be made on the next Business Day as if it were made on the date such payment
was due and no interest shall accrue on the amount so payable for the period from and after such
Interest Payment Date or Maturity, as the case may be.
The 2003 Notes will mature on January 15, 2003, the 2005 Notes will mature on January 15, 2005
and the 2008 Notes will mature on January 15, 2008.
SECTION 2.4.
Limitations on Incurrence of Indebtedness
.
(1) The Company will not, and will not permit any Subsidiary to, incur any Indebtedness if,
immediately after giving effect to the incurrence of such additional Indebtedness and the
application of the proceeds thereof, the aggregate principal amount of all outstanding Indebtedness
of the Company and its Subsidiaries on a consolidated basis determined in accordance with GAAP is
greater than 60% of the sum of (without duplication) (i) the Total Assets of the Company and its
Subsidiaries as of the end of the calendar quarter covered in the Companys Annual Report on Form
10-K or Quarterly Report on Form 10-Q, as the case may be, most recently filed with the Commission
(or, if such filing is not permitted under the Exchange Act, with the Trustee) prior to the
incurrence of such additional Indebtedness and (ii) the purchase price of any real estate assets or
mortgages receivable acquired, and the amount of any securities offering proceeds received (to the
extent that such proceeds were not used to acquire real estate assets or mortgages receivable or
used to reduce Indebtedness), by the Company or any Subsidiary since the end of such calendar
quarter, including those proceeds obtained in connection with the incurrence of such additional
Indebtedness.
(2) In addition to the limitation set forth in subsection (1) of this Section 2.4, the Company
will not, and will not permit any Subsidiary to, incur any Indebtedness if the ratio of
Consolidated Income Available for Debt Service to the Annual Service Charge for the four
consecutive fiscal quarters most recently ended prior to the date on which such additional
Indebtedness is to be incurred shall have been less than 1.5:1, on a
pro forma
basis after giving
effect thereto and to the application of the proceeds therefrom, and calculated on the assumption
that (i) such Indebtedness and any other Indebtedness incurred by the Company and its Subsidiaries
since the first day of such four-quarter period and the application of the proceeds therefrom,
including to refinance other Indebtedness, had occurred at the beginning of such period; (ii) the
repayment or retirement of any other Indebtedness by the Company and its
8
Subsidiaries since the
first day of such four-quarter period had been repaid or retired at the beginning of such period
(except that, in making such computation, the amount of Indebtedness under any revolving credit
facility shall be computed based upon the average daily balance of such Indebtedness during such
period); (iii) in the case of Acquired Indebtedness or Indebtedness incurred in connection with any
acquisition since the first day of such four-quarter period, the
related acquisition had occurred as of the first day of such period with the appropriate
adjustments with respect to such acquisition being included in such
pro forma
calculation; and (iv)
in the case of any acquisition or disposition by the Company or its Subsidiaries of any asset or
group of assets since the first day of such four-quarter period, whether by merger, stock purchase
or sale, or asset purchase or sale, such acquisition or disposition or any related repayment of
Indebtedness had occurred as of the first day of such period with the appropriate adjustments with
respect to such acquisition or disposition being included in such
pro forma
calculation.
(3) In addition to the limitations set forth in subsections (1) and (2) of this Section 2.4,
the Company will not, and will not permit any Subsidiary to, incur any Indebtedness secured by any
Encumbrance upon any of the property of the Company or any Subsidiary if, immediately after giving
effect to the incurrence of such additional Indebtedness and the application of the proceeds
thereof, the aggregate principal amount of all outstanding Indebtedness of the Company and its
Subsidiaries on a consolidated basis which is secured by any Encumbrance on property of the Company
or any Subsidiary is greater than 40% of the sum of (without duplication) (i) the Total Assets of
the Company and its Subsidiaries as of the end of the calendar quarter covered in the Companys
Annual Report on Form 10-K or Quarterly Report on Form 10-Q, as the case may be, most recently
filed with the Commission (or, if such filing is not permitted under the Exchange Act, with the
Trustee) prior to the incurrence of such additional Indebtedness and (ii) the purchase price of any
real estate assets or mortgages receivable acquired, and the amount of any securities offering
proceeds received (to the extent that such proceeds were not used to acquire real estate assets or
mortgages receivable or used to reduce Indebtedness), by the Company or any Subsidiary since the
end of such calendar quarter, including those proceeds obtained in connection with the incurrence
of such additional Indebtedness.
(4) The Company and its Subsidiaries may not at any time own Total Unencumbered Assets equal
to less than 150% of the aggregate outstanding principal amount of the Unsecured Indebtedness of
the Company and its Subsidiaries on a consolidated basis.
(5) For purposes of this Section 2.4, Indebtedness shall be deemed to be incurred by the
Company or a Subsidiary whenever the Company or such Subsidiary shall create, assume, guarantee or
otherwise become liable in respect thereof.
SECTION 2.5.
Redemption
. The Notes may be redeemed at any time at the option of the
Company, in whole or in part, at a redemption price equal to the sum of (i) the principal amount
9
of
the Notes being redeemed plus accrued interest thereon to the Redemption Date and (ii) the
Make-Whole Amount, if any, with respect to such Notes (the Redemption Price).
SECTION 2.6.
Places of Payment
. The Places of Payment where the Notes may be
presented or surrendered for payment, where the Notes may be surrendered for registration of
transfer or exchange and where notices and demands to and upon the Company in respect of the
Notes and the Senior Indenture may be served shall be in (i) the Borough of Manhattan, The
City of New York, New York, and the office or agency for such purpose shall initially be located
at the office of State Street Bank and Trust Company, 61 Broadway, New York, New York 10005, and
(ii) the City of Boston, Massachusetts and the office or agency for such purpose shall initially be
located at the Corporate Trust Office.
SECTION 2.7.
Method of Payment
. Payment of the principal of and interest on the Notes
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 (which shall initially be an office or agency of the Trustee), 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, payments of principal and interest on the Notes (other than payments of principal and
interest due at Maturity) may be made (i) by check mailed to the address of the Person entitled
thereto as such address shall appear in the Security Register or (ii) by wire transfer to an
account maintained by the Person entitled thereto located within the United States.
SECTION 2.8.
Currency
. Principal and interest on the Notes shall be payable in U.S.
dollars.
SECTION 2.9.
Registered Securities; Global Form
. The Notes shall be issuable and
transferable in fully registered form as Registered Securities, without coupons. The 2003 Notes,
the 2005 Notes and the 2008 Notes each shall be issued in the form of one or more permanent Global
Securities. The depository for the Notes shall be The Depository Trust Company (DTC). The Notes
shall not be issuable in definitive form except as provided in Section 305 of the Senior Indenture.
SECTION 2.10.
Form of Notes
. The 2003 Notes shall be substantially in the form
attached hereto as
Exhibit A
. The 2005 Notes shall be substantially in the form attached
hereto as
Exhibit B
. The 2008 Notes shall be substantially in the form attached hereto as
Exhibit C
.
SECTION 2.11.
Registrar and Paying Agent
. The Trustee shall initially serve as
Registrar and Paying Agent for the Notes.
SECTION 2.12.
Defeasance
. The provisions of Sections 1402 and 1403 of the
Senior Indenture, together with the other provisions of Article Fourteen of the Senior Indenture,
10
shall be applicable to the Notes. The provisions of Section 1403 of the Senior Indenture shall
<@CWEOP:4>apply to the covenants set forth in Sections 2.4 and 2.15 of this Supplemental
Indenture and to those covenants specified in Section 1403 of the Senior Indenture.
SECTION 2.13.
Events of Default
. The provisions of clause (5) of Section 501 of the
Senior Indenture as applicable with respect to the Notes shall be deemed to be amended and restated
in their entirety to read as follows:
(5) default under any bond, debenture, note, mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any indebtedness for money
borrowed by the Company (or by any Subsidiary, the repayment of which the Company has guaranteed or
for which the Company is directly responsible or liable as obligor or guarantor), having an
aggregate principal amount outstanding of at least $10,000,000, whether such indebtedness now
exists or shall hereafter be created, which default shall have resulted in such indebtedness
becoming or being declared due and payable prior to the date on which it would otherwise have
become due and payable, without such indebtedness having been discharged, or such acceleration
having been rescinded or annulled, within a period of 10 days after there shall have been given
written notice, by registered or certified mail, to the Company by the Trustee or to the Company
and the Trustee by the Holders of at least 10% in principal amount of the Outstanding Securities of
that series a written notice specifying such default and requiring the Company to cause such
indebtedness to be discharged or cause such acceleration to be rescinded or annulled and stating
that such notice is a Notice of Default hereunder; provided, however, that such a default on
indebtedness which constitutes tax-exempt financing having an aggregate principal amount
outstanding not exceeding $25,000,000 that results solely from a failure of an entity providing
credit support for such indebtedness to honor a demand for payment on a letter of credit shall not
constitute an Event of Default.
SECTION 2.14.
Acceleration of Maturity; Rescission and Annulment
. The provisions of
the first paragraph of Section 502 of the Senior Indenture as applicable with respect to the Notes
shall be deemed to be amended and restated in their entirety to read as follows:
If an Event of Default with respect to Securities of any series at the time Outstanding occurs
and is continuing, then in every such case the Trustee or the Holders of not less than 25% in
principal amount of the Outstanding Securities of that series may declare the principal amount (or,
if Securities of that series are Original Issue Discount Securities or Indexed Securities, such
portion of the principal as may be specified in the terms thereof) of, and the Make-Whole Amount,
if any, on, all the Securities of that series to be due and payable immediately, by a notice in
writing to the Company (and to the Trustee if given by the Holders), and upon any such declaration
such principal or specified portion thereof shall become immediately due and payable. If an Event
of Default with respect to the Securities of any series set forth in Section 501(6) of the Senior
Indenture occurs and is continuing, then in every such case all the Securities of that series shall
become immediately due and payable, without notice to
11
the Company, at the principal amount thereof
(or, if any Securities are Original Issue Discount Securities or Indexed Securities, such portion
of the principal as may be specified in the terms thereof) plus accrued interest to the date the
Securities of that series are paid, plus the Make-Whole Amount, if any, on the Securities of that
series.
SECTION 2.15.
Provision of Financial Information
. Whether or not the Company is
subject to Section 13 or 15(d) of the Exchange Act, the Company will, to the extent permitted under
the Exchange Act, file with the Commission the annual reports, quarterly reports and other
documents which the Company would have been required to file with the Commission pursuant to
such Section 13 or 15(d) if the Company were so subject, such documents to be filed with the
Commission on or prior to the respective dates (the Required Filing Dates) by which the Company
would have been required so to file such documents if the Company were so subject.
The Company will also in any event (x) within 15 days of each Required Filing Date (i) if the
Company is not then subject to Section 13 or 15(d) of the Exchange Act, transmit by mail to all
Holders, as their names and addresses appear in the Security Register, without cost to such
Holders, copies of the annual reports, quarterly reports and other documents which the Company
would have been required to file with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act if the Company were subject to such Sections and (ii) file with the Trustee copies of
annual reports, quarterly reports and other documents which the Company is required to file with
the Commission or would have been required to file with the Commission pursuant to Section 13 or
15(d) of the Exchange Act if the Company were subject to such Sections and (y) supply, promptly
upon written request and payment of the reasonable cost of duplication and delivery, copies of such
documents to any prospective Holder.
The Trustee shall not be required to examine any of the reports and other documents filed
therewith pursuant to the provisions of this Section 2.15 or Section 7.03 of the Senior Indenture
in order to determine whether the Company is in compliance with the provisions of Section 2.4 of
this Supplemental Indenture.
SECTION 2.16.
Waiver of Certain Covenants
. Notwithstanding the provisions of Section
1009 of the Senior Indenture, the Company may omit in any particular instance to comply with any
term, provision or condition set forth in Sections 1004 to 1008, inclusive, of the Senior
Indenture, with Sections 2.4 and 2.15 of this Supplemental Indenture and with any other term,
provision or condition with respect to the Notes (except any such term, provision or condition
which could not be amended without the consent of all Holders of the Notes or such series thereof,
as applicable), if before or after the time for such compliance the Holders of at least a majority
in principal amount of all outstanding Notes, by Act of such Holders, either waive such compliance
in such instance or generally waive compliance with such covenant or condition. Except to the
extent so expressly waived, and until such waiver shall become effective, the obligations of the
Company and the duties of the Trustee in respect of any such term, provision or condition shall
remain in full force and effect.
12
ARTICLE THREE MISCELLANEOUS PROVISIONS.
SECTION 3.1.
Ratification of Senior Indenture
. Except as expressly modified or
amended hereby, the Senior Indenture continues in full force and effect and is in all respects
confirmed and preserved.
SECTION 3.2.
Governing Law
. This Supplemental Indenture and the Notes shall be
governed by and construed in accordance with the laws of the State of New York. This Supplemental
Indenture is subject to the provisions of the Trust Indenture Act of 1939, as amended, and shall,
to the extent applicable, be governed by such provisions.
SECTION 3.3.
Counterparts
. This Supplemental Indenture may be executed in any number
of counterparts, each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
[Remainder of Page Intentionally Left Blank.]
13
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly
executed by their respective officers hereunto duly authorized, all as of the day and year first
written above.
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BAY APARTMENT COMMUNITIES, INC.
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By:
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/s/ Gilbert M. Meyer
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Name:
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Gilbert M. Meyer
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Title:
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Chairman of the Board, President and
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Chief Executive Officer
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STATE STREET BANK AND TRUST COMPANY,
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as Trustee
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By:
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/s/ Robert J. Dunn
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Name:
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Robert J. Dunn
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Title:
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Vice President
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14
Exhibit A to Supplemental Indenture
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY,
A NEW YORK CORPORATION (DTC), 55 WATER STREET, NEW YORK, NEW YORK, 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.
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING SET FORTH IN THE INDENTURE HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF DTC OR A NOMINEE OF DTC. THIS SECURITY IS
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN DTC OR ITS NOMINEE ONLY
IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND MAY NOT BE TRANSFERRED EXCEPT AS A
WHOLE BY DTC TO A NOMINEE OF DTC OR ANOTHER NOMINEE OF DTC OR BY DTC OR ITS NOMINEE TO A SUCCESSOR
DEPOSITORY OR ITS NOMINEE.
BAY APARTMENT COMMUNITIES, INC.
6.250% SENIOR NOTE DUE 2003
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Registered No. 1
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PRINCIPAL AMOUNT
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CUSIP No.: 072012 AA 5
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$
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50,000,000
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BAY APARTMENT COMMUNITIES, INC., a corporation duly organized and existing under the laws of
the State of Maryland (herein referred to as the Company which term shall include any successor
corporation under the Indenture hereinafter referred to), for value received, hereby promises to
pay to CEDE & CO., or registered assigns, upon presentation, the principal sum of $50,000,000 on
January 15, 2003 and to pay interest on the outstanding principal amount thereon from January 15,
1998, or from the immediately preceding Interest Payment Date to which interest has been paid or
duly provided for, semi-annually in arrears on January 15 and July 15 in each year, commencing July
15, 1998, at the rate of 6.250% per annum, until the entire
A-1
principal hereof is paid or made
available for payment. The interest so payable and punctually
paid or duly provided for on any Interest Payment Date will, as provided in the Indenture, be
paid to the Holder in whose name this Security is registered at the close of business on the
Regular Record Date for such interest which shall be December 31 or June 30 (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date. Any such interest
not so punctually paid or duly provided for shall forthwith cease to be payable to the Holder on
such Regular Record Date, and may either be paid to the Holder in whose name this Security 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 the Holder of this Security
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 this Security 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 Security will be made at the office or agency maintained for that purpose in the City of New
York, New York, or elsewhere as provided in the Indenture, 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 payments of principal
and interest on the Notes (other than payments of principal and interest due at Maturity) may be
made (i) by check mailed to the address of the Holder entitled thereto as such address shall appear
in the Security Register or (ii) by wire transfer to an account of the Holder entitled thereto
located within the United States.
Securities of this series are one of a duly authorized issue of securities of the Company
(herein called the Securities), issued and to be issued in one or more series under an Indenture,
dated as of January 16, 1998, as supplemented by the First Supplemental Indenture, dated as of
January 20, 1998 (as so supplemented, herein called the Indenture), between the Company and State
Street Bank and Trust Company (herein called the Trustee, which term includes any successor
trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference
is hereby made for a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Trustee and the Holders of the Securities and of the
terms upon which the Securities are authenticated and delivered. This Security is one of the
series designated in the first page hereof, limited in aggregate principal amount to $50,000,000.
Securities of this series may be redeemed at any time at the option of the Company, in whole
or in part, upon notice of not more than 60 nor less than 30 days prior to the Redemption Date, at
a redemption price equal to the sum of (i) the principal amount of the Securities being redeemed
plus accrued interest thereon to the Redemption Date and (ii) the Make-Whole Amount, if any, with
respect to such Securities.
A-2
The Indenture contains provisions for defeasance at any time of (a) the entire indebtedness of
the Company on this Security and (b) certain restrictive covenants and the related defaults and
Events of Default applicable to the Company, in each case, upon compliance by the Company with
certain conditions set forth in the Indenture, which provisions apply to this Security.
If an Event of Default with respect to the Securities shall occur and be continuing, the
principal of the Securities may be declared due and payable in the manner and with the effect
provided in the Indenture.
As provided in and subject to the provisions of the Indenture, the Holder of this Security
shall not have the right to institute any proceeding with respect to the Indenture or for the
appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall
have previously given written notice to the Trustee of a continuing Event of Default with respect
to the Securities, the Holders of not less than 25% in principal amount of the Securities of this
series at the time outstanding shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default as Trustee and offered the Trustee reasonable
indemnity and the Trustee shall not have received from the Holders of a majority in principal
amount of the Securities of this series 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 Security for the enforcement of any payment of principal hereof or any interest
on or after the respective due dates expressed herein.
The Indenture permits, with certain exceptions as therein provided, the amendment thereof and
the modification of the rights and obligations of the Company and the rights of the Holders of the
Securities of each series to be affected under the Indenture at any time by the Company and the
Trustee with the consent of the Holders of not less than a majority in principal amount of all
outstanding Securities. The Indenture also contains provisions permitting the Holders of specified
percentages in principal amount of the Securities of each series at the time outstanding, on behalf
of the Holders of all Securities of such series, to waive compliance by the Company with certain
provisions of the Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such
Holder and upon all future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation
of such consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this Security or of the Indenture
shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay
the principal of (and Make-Whole Amount, if any) and interest on this Security at the times, place
and rate, and in the coin or currency, herein prescribed.
A-3
As provided in the Indenture and subject to certain limitations therein set forth, the
transfer of this Security is registrable in the Security Register, upon surrender of this Security
for registration of transfer at the office or agency of the Company in any Place of Payment where
the principal of (and Make-Whole Amount, if any) and interest on this Security are payable, duly
endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company
and the Security Registrar duly executed by the Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Securities of this series, of authorized denominations and
for the same aggregate principal amount, will be issued to the designated transferee or
transferees.
The Securities of this series are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the Indenture and
subject to certain limitations therein set forth, Securities of this series are exchangeable for a
like aggregate principal amount of Securities of this series of a different authorized
denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the Company, the
Trustee and any agent of the Company or the Trustee may treat the Person in whose name this
Security is registered as the owner hereof for all purposes, whether or not this Security be
overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
No recourse under or upon any obligation, covenant or agreement contained in the Indenture or
in this Security, or because of any indebtedness evidenced hereby or 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 Security by the Holder thereof and as part of the consideration
for the issue of the Securities of this series.
All capitalized terms used in this Security which are defined in the Indenture shall have the
meanings assigned to them in the Indenture.
THE INDENTURE AND THE SECURITIES, INCLUDING THIS SECURITY, SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
A-4
Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification
Procedures, the Company has caused CUSIP numbers to be printed on the Securities of this series
as a convenience to the Holders of such Securities. No representation is made as to the
correctness or accuracy of such CUSIP numbers as printed on the Securities, and reliance may be
placed only on the other identification numbers printed hereon.
Unless the certificate of authentication hereon has been executed by or on behalf of the
Trustee by manual signature, this Security shall not be entitled to any benefit under the Indenture
or be valid or obligatory for any purpose.
A-5
IN WITNESS WHEREOF, BAY APARTMENT COMMUNITIES, INC. has caused this instrument to be duly
executed under its corporate seal.
Dated:
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BAY APARTMENT COMMUNITIES, INC.
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By:
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/s/ Gilbert M. Meyer
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Name:
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Gilbert M. Meyer
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Title:
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Chairman of the Board, President and
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Chief Executive Officer
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[Corporate Seal]
Attest:
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/s/ Jeffrey B. VanHorn
Secretary
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TRUSTEES CERTIFICATE OF AUTHENTICATION:
This is one of the Securities of the series designated therein referred to in the
within-mentioned Indenture.
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STATE STREET BANK AND TRUST COMPANY, as Trustee
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By:
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/s/ Robert J. Dunn
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Name:
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Robert J. Dunn
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Title:
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Vice President
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A-6
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 Security of Bay Apartment Communities, Inc. and hereby does irrevocably constitute and
appoint
Attorney to transfer said Security 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 Security in every particular, without alteration or enlargement or any change
whatever.
A-7
Exhibit B to Supplemental Indenture
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY,
A NEW YORK CORPORATION (DTC), 55 WATER STREET, NEW YORK, NEW YORK, 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.
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING SET FORTH IN THE INDENTURE HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF DTC OR A NOMINEE OF DTC. THIS SECURITY IS
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN DTC OR ITS NOMINEE ONLY
IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND MAY NOT BE TRANSFERRED EXCEPT AS A
WHOLE BY DTC TO A NOMINEE OF DTC OR ANOTHER NOMINEE OF DTC OR BY DTC OR ITS NOMINEE TO A SUCCESSOR
DEPOSITORY OR ITS NOMINEE.
BAY APARTMENT COMMUNITIES, INC.
6.500% SENIOR NOTE DUE 2005
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Registered No. 1
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PRINCIPAL AMOUNT
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CUSIP No.: 072012 AB 3
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$
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50,000,000
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BAY APARTMENT COMMUNITIES, INC., a corporation duly organized and existing under the laws of
the State of Maryland (herein referred to as the Company which term shall include any successor
corporation under the Indenture hereinafter referred to), for value received, hereby promises to
pay to CEDE & CO., or registered assigns, upon presentation, the principal sum of $50,000,000 on
January 15, 2005 and to pay interest on the outstanding principal amount thereon from January 15,
1998, or from the immediately preceding Interest Payment Date to which interest has been paid or
duly provided for, semi-annually in arrears on January 15 and July 15 in each year, commencing July
15, 1998, at the rate of 6.500% per annum, until the entire
B-1
principal hereof is paid or made
available for payment. The interest so payable and punctually
paid or duly provided for on any Interest Payment Date will, as provided in the Indenture, be
paid to the Holder in whose name this Security is registered at the close of business on the
Regular Record Date for such interest which shall be December 31 or June 30 (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date. Any such interest
not so punctually paid or duly provided for shall forthwith cease to be payable to the Holder on
such Regular Record Date, and may either be paid to the Holder in whose name this Security 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 the Holder of this Security
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 this Security 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 Security will be made at the office or agency maintained for that purpose in the City of New
York, New York, or elsewhere as provided in the Indenture, 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 payments of principal
and interest on the Notes (other than payments of principal and interest due at Maturity) may be
made (i) by check mailed to the address of the Holder entitled thereto as such address shall appear
in the Security Register or (ii) by wire transfer to an account of the Holder entitled thereto
located within the United States.
Securities of this series are one of a duly authorized issue of securities of the Company
(herein called the Securities), issued and to be issued in one or more series under an Indenture,
dated as of January 16, 1998, as supplemented by the First Supplemental Indenture, dated as of
January 20, 1998 (as so supplemented, herein called the Indenture), between the Company and State
Street Bank and Trust Company (herein called the Trustee, which term includes any successor
trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference
is hereby made for a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Trustee and the Holders of the Securities and of the
terms upon which the Securities are authenticated and delivered. This Security is one of the
series designated in the first page hereof, limited in aggregate principal amount to $50,000,000.
Securities of this series may be redeemed at any time at the option of the Company, in whole
or in part, upon notice of not more than 60 nor less than 30 days prior to the Redemption Date, at
a redemption price equal to the sum of (i) the principal amount of the Securities being redeemed
plus accrued interest thereon to the Redemption Date and (ii) the Make-Whole Amount, if any, with
respect to such Securities.
B-2
The Indenture contains provisions for defeasance at any time of (a) the entire indebtedness of
the Company on this Security and (b) certain restrictive covenants and the related defaults and
Events of Default applicable to the Company, in each case, upon compliance by the Company with
certain conditions set forth in the Indenture, which provisions apply to this Security.
If an Event of Default with respect to the Securities shall occur and be continuing, the
principal of the Securities may be declared due and payable in the manner and with the effect
provided in the Indenture.
As provided in and subject to the provisions of the Indenture, the Holder of this Security
shall not have the right to institute any proceeding with respect to the Indenture or for the
appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall
have previously given written notice to the Trustee of a continuing Event of Default with respect
to the Securities, the Holders of not less than 25% in principal amount of the Securities of this
series at the time outstanding shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default as Trustee and offered the Trustee reasonable
indemnity and the Trustee shall not have received from the Holders of a majority in principal
amount of the Securities of this series 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 Security for the enforcement of any payment of principal hereof or any interest
on or after the respective due dates expressed herein.
The Indenture permits, with certain exceptions as therein provided, the amendment thereof and
the modification of the rights and obligations of the Company and the rights of the Holders of the
Securities of each series to be affected under the Indenture at any time by the Company and the
Trustee with the consent of the Holders of not less than a majority in principal amount of all
outstanding Securities affected thereby. The Indenture also contains provisions permitting the
Holders of specified percentages in principal amount of the Securities of each series at the time
outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the
Company with certain provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive
and binding upon such Holder and upon all future Holders of this Security and of any Security
issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether
or not notation of such consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this Security or of the Indenture
shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay
the principal of (and Make-Whole Amount, if any) and interest on this Security at the times, place
and rate, and in the coin or currency, herein prescribed.
B-3
As provided in the Indenture and subject to certain limitations therein set forth, the
transfer of this Security is registrable in the Security Register, upon surrender of this Security
for registration of transfer at the office or agency of the Company in any Place of Payment where
the principal of (and Make-Whole Amount, if any) and interest on this Security are payable, duly
endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company
and the Security Registrar duly executed by the Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Securities of this series, of authorized denominations and
for the same aggregate principal amount, will be issued to the designated transferee or
transferees.
The Securities of this series are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the Indenture and
subject to certain limitations therein set forth, Securities of this series are exchangeable for a
like aggregate principal amount of Securities of this series of a different authorized
denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the Company, the
Trustee and any agent of the Company or the Trustee may treat the Person in whose name this
Security is registered as the owner hereof for all purposes, whether or not this Security be
overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
No recourse under or upon any obligation, covenant or agreement contained in the Indenture or
in this Security, or because of any indebtedness evidenced hereby or 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 Security by the Holder thereof and as part of the consideration
for the issue of the Securities of this series.
All capitalized terms used in this Security which are defined in the Indenture shall have the
meanings assigned to them in the Indenture.
THE INDENTURE AND THE SECURITIES, INCLUDING THIS SECURITY, SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
B-4
Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification
Procedures, the Company has caused CUSIP numbers to be printed on the Securities of this series
as a convenience to the Holders of such Securities. No representation is made as to the
correctness or accuracy of such CUSIP numbers as printed on the Securities, and reliance may be
placed only on the other identification numbers printed hereon.
Unless the certificate of authentication hereon has been executed by or on behalf of the
Trustee by manual signature, this Security shall not be entitled to any benefit under the Indenture
or be valid or obligatory for any purpose.
B-5
IN WITNESS WHEREOF, BAY APARTMENT COMMUNITIES, INC. has caused this instrument to be duly
executed under its corporate seal.
Dated:
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BAY APARTMENT COMMUNITIES, INC.
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By:
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/s/ Gilbert M. Meryer
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Name:
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Gilbert M. Meyer
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Title:
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Chairman of the Board, President and Chief Executive Officer
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[Corporate Seal]
Attest:
/s/ Jeffrey B. VanHorn
Secretary
TRUSTEES CERTIFICATE OF AUTHENTICATION:
This is one of the Securities of the series designated therein referred to in the
within-mentioned Indenture.
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STATE STREET BANK AND TRUST COMPANY, as Trustee
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By:
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/s/ Robert J. Dunn
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Name:
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Robert J. Dunn
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Title:
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Vice President
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B-6
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 Security of Bay Apartment Communities, Inc. and hereby does irrevocably constitute and
appoint
Attorney to transfer said Security 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 Security in every particular, without alteration or enlargement or any change
whatever.
B-7
Exhibit C to Supplemental Indenture
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY,
A NEW YORK CORPORATION (DTC), 55 WATER STREET, NEW YORK, NEW YORK, 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.
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING SET FORTH IN THE INDENTURE HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF DTC OR A NOMINEE OF DTC. THIS SECURITY IS
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN DTC OR ITS NOMINEE ONLY
IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND MAY NOT BE TRANSFERRED EXCEPT AS A
WHOLE BY DTC TO A NOMINEE OF DTC OR ANOTHER NOMINEE OF DTC OR BY DTC OR ITS NOMINEE TO A SUCCESSOR
DEPOSITORY OR ITS NOMINEE.
BAY APARTMENT COMMUNITIES, INC.
6.625% SENIOR NOTE DUE 2008
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Registered No. 1
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PRINCIPAL AMOUNT
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CUSIP No.: 072012 AC 1
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$
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50,000,000
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BAY APARTMENT COMMUNITIES, INC., a corporation duly organized and existing under the laws of
the State of Maryland (herein referred to as the Company which term shall include any successor
corporation under the Indenture hereinafter referred to), for value received, hereby promises to
pay to CEDE & CO., or registered assigns, upon presentation, the principal sum of $50,000,000 on
January 15, 2008 and to pay interest on the outstanding principal amount thereon from January 15,
1998, or from the immediately preceding Interest Payment Date to which interest has been paid or
duly provided for, semi-annually in arrears on January 15 and July 15 in each year, commencing July
15, 1998, at the rate of 6.625% per annum, until the entire
C-1
principal hereof is paid or made
available for payment. The interest so payable and punctually
paid or duly provided for on any Interest Payment Date will, as provided in the Indenture, be
paid to the Holder in whose name this Security is registered at the close of business on the
Regular Record Date for such interest which shall be December 31 or June 30 (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date. Any such interest
not so punctually paid or duly provided for shall forthwith cease to be payable to the Holder on
such Regular Record Date, and may either be paid to the Holder in whose name this Security 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 the Holder of this Security
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 this Security 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 Security will be made at the office or agency maintained for that purpose in the City of New
York, New York, or elsewhere as provided in the Indenture, 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 payments of principal
and interest on the Notes (other than payments of principal and interest due at Maturity) may be
made (i) by check mailed to the address of the Holder entitled thereto as such address shall appear
in the Security Register or (ii) by wire transfer to an account of the Holder entitled thereto
located within the United States.
Securities of this series are one of a duly authorized issue of securities of the Company
(herein called the Securities), issued and to be issued in one or more series under an Indenture,
dated as of January 16, 1998, as supplemented by the First Supplemental Indenture, dated as of
January 20, 1998 (as so supplemented, herein called the Indenture), between the Company and State
Street Bank and Trust Company (herein called the Trustee, which term includes any successor
trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference
is hereby made for a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Trustee and the Holders of the Securities and of the
terms upon which the Securities are authenticated and delivered. This Security is one of the
series designated in the first page hereof, limited in aggregate principal amount to $50,000,000.
Securities of this series may be redeemed at any time at the option of the Company, in whole
or in part, upon notice of not more than 60 nor less than 30 days prior to the Redemption Date, at
a redemption price equal to the sum of (i) the principal amount of the Securities being redeemed
plus accrued interest thereon to the Redemption Date and (ii) the Make-Whole Amount, if any, with
respect to such Securities.
C-2
The Indenture contains provisions for defeasance at any time of (a) the entire indebtedness of
the Company on this Security and (b) certain restrictive covenants and the related defaults and
Events of Default applicable to the Company, in each case, upon compliance by the Company with
certain conditions set forth in the Indenture, which provisions apply to this Security.
If an Event of Default with respect to the Securities shall occur and be continuing, the
principal of the Securities may be declared due and payable in the manner and with the effect
provided in the Indenture.
As provided in and subject to the provisions of the Indenture, the Holder of this Security
shall not have the right to institute any proceeding with respect to the Indenture or for the
appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall
have previously given written notice to the Trustee of a continuing Event of Default with respect
to the Securities, the Holders of not less than 25% in principal amount of the Securities of this
series at the time outstanding shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default as Trustee and offered the Trustee reasonable
indemnity and the Trustee shall not have received from the Holders of a majority in principal
amount of the Securities of this series 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 Security for the enforcement of any payment of principal hereof or any interest
on or after the respective due dates expressed herein.
The Indenture permits, with certain exceptions as therein provided, the amendment thereof and
the modification of the rights and obligations of the Company and the rights of the Holders of the
Securities of each series to be affected under the Indenture at any time by the Company and the
Trustee with the consent of the Holders of not less than a majority in principal amount of all
outstanding Securities affected thereby. The Indenture also contains provisions permitting the
Holders of specified percentages in principal amount of the Securities of each series at the time
outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the
Company with certain provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive
and binding upon such Holder and upon all future Holders of this Security and of any Security
issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether
or not notation of such consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this Security or of the Indenture
shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay
the principal of (and Make-Whole Amount, if any) and interest on this Security at the times, place
and rate, and in the coin or currency, herein prescribed.
C-3
As provided in the Indenture and subject to certain limitations therein set forth, the
transfer of this Security is registrable in the Security Register, upon surrender of this Security
for registration of transfer at the office or agency of the Company in any Place of Payment where
the principal of (and Make-Whole Amount, if any) and interest on this Security are payable, duly
endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company
and the Security Registrar duly executed by the Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Securities of this series, of authorized denominations and
for the same aggregate principal amount, will be issued to the designated transferee or
transferees.
The Securities of this series are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the Indenture and
subject to certain limitations therein set forth, Securities of this series are exchangeable for a
like aggregate principal amount of Securities of this series of a different authorized
denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the Company, the
Trustee and any agent of the Company or the Trustee may treat the Person in whose name this
Security is registered as the owner hereof for all purposes, whether or not this Security be
overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
No recourse under or upon any obligation, covenant or agreement contained in the Indenture or
in this Security, or because of any indebtedness evidenced hereby or 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 Security by the Holder thereof and as part of the consideration
for the issue of the Securities of this series.
All capitalized terms used in this Security which are defined in the Indenture shall have the
meanings assigned to them in the Indenture.
THE INDENTURE AND THE SECURITIES, INCLUDING THIS SECURITY, SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
C-4
Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification
Procedures, the Company has caused CUSIP numbers to be printed on the Securities of this series
as a convenience to the Holders of such Securities. No representation is made as to the
correctness or accuracy of such CUSIP numbers as printed on the Securities, and reliance may be
placed only on the other identification numbers printed hereon.
Unless the certificate of authentication hereon has been executed by or on behalf of the
Trustee by manual signature, this Security shall not be entitled to any benefit under the Indenture
or be valid or obligatory for any purpose.
C-5
IN WITNESS WHEREOF, BAY APARTMENT COMMUNITIES, INC. has caused this instrument to be duly
executed under its corporate seal.
Dated:
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BAY APARTMENT COMMUNITIES, INC.
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By:
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/s/ Gilbert M. Meyer
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Name:
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Gilbert M. Meyer
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Title:
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Chairman of the Board, President and Chief Executive Officer
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[Corporate Seal]
Attest:
Secretary
TRUSTEES CERTIFICATE OF AUTHENTICATION:
This is one of the Securities of the series designated therein referred to in the
within-mentioned Indenture.
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STATE STREET BANK AND TRUST COMPANY,
as Trustee
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By:
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/s/ Robert J. Dunn
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Name:
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Robert J. Dunn
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Title:
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Vice President
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C-6
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 Security of Bay Apartment Communities, Inc. and hereby does irrevocably constitute and
appoint
Attorney to transfer said Security 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 Security in every particular, without alteration or enlargement or any change
whatever.
C-7
Exhibit 4.3
AVALON BAY COMMUNITIES, INC.
Issuer
to
STATE STREET BANK AND TRUST COMPANY
Trustee
Second Supplemental Indenture
Dated as of July 7, 1998
$100,000,000
of
6.50% Senior Notes due 2003
$150,000,000
of
6.80% Senior Notes due 2006
SECOND SUPPLEMENTAL INDENTURE, dated as of July 7, 1998 (the Supplemental Indenture),
between AVALON BAY COMMUNITIES, INC., a corporation duly organized and existing under the laws of
the State of Maryland (formerly known as Bay Apartment Communities, Inc. and hereinafter called the
Company), and STATE STREET BANK AND TRUST COMPANY, a trust company organized and existing under
the laws of The Commonwealth of Massachusetts, as Trustee (herein called the Trustee).
RECITALS OF THE COMPANY
The Company has heretofore delivered to the Trustee an Indenture dated as of January 16, 1998
(the Senior Indenture), and a First Supplemental Indenture dated as of January 20, 1998, copies
of which have been filed with the Securities and Exchange Commission under the Securities Act of
1933, as amended, as exhibits to the Companys Registration Statement on Form S-3, as amended (File
No. 333-41511), providing for the issuance from time to time of Senior Debt Securities of the
Company (the Securities).
Section 301 of the Senior Indenture provides for various matters with respect to any series of
Securities issued under the Senior Indenture to be established in an indenture supplemental to the
Senior Indenture.
Section 901(7) of the Senior Indenture provides for the Company and the Trustee to enter into
an indenture supplemental to the Senior Indenture to establish the form or terms of Securities of
any series as provided by Sections 201 and 301 of the Senior Indenture.
The Board of Directors of the Company has duly adopted resolutions authorizing the Company to
execute and deliver this Supplemental Indenture.
All the conditions and requirements necessary to make this Supplemental Indenture, when duly
executed and delivered, a valid and binding agreement in accordance with its terms and for the
purposes herein expressed, have been performed and fulfilled.
NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of each of the series of Securities
provided for herein by the Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Notes (as herein defined) or for either thereof, as
follows:
2
ARTICLE ONE RELATION TO SENIOR INDENTURE; DEFINITIONS.
SECTION 1.1.
Relation to Senior Indenture
. This Supplemental Indenture constitutes an
integral part of the Senior Indenture.
SECTION 1.2.
Definitions
. For all purposes of this Supplemental Indenture, except as
otherwise expressly provided for or unless the context otherwise requires:
(1) Capitalized terms used but not defined herein shall have the respective meanings assigned
to them in the Senior Indenture;
(2) All references herein to Articles and Sections, unless otherwise specified, refer to the
corresponding Articles and Sections of this Supplemental Indenture; and
(3) In the event that any of the following definitions differs from its respective definition
set forth in the Senior Indenture, the definition set forth herein shall control.
Acquired Indebtedness means Indebtedness of a Person (i) existing at the time such Person
becomes a Subsidiary or (ii) assumed in connection with the acquisition of assets from such Person,
in each case, other than Indebtedness incurred in connection with, or in contemplation of, such
Person becoming a Subsidiary or such acquisition. Acquired Indebtedness shall be deemed to be
incurred on the date of the related acquisition of assets from any Person or the date the acquired
Person becomes a Subsidiary.
Annual Service Charge for any period means the maximum amount which is payable during such
period for interest on, and original issue discount of, Indebtedness of the Company and its
Subsidiaries and the amount of dividends which are payable during such period in respect of any
Disqualified Stock.
Business Day means any day, other than a Saturday or Sunday, that is neither a legal holiday
nor a day on which banking institutions in the City of New York or in the City of Chicago are
authorized or required by law, regulation or executive order to close.
Capital Stock means, with respect to any Person, any capital stock (including preferred
stock), shares, interests, participations or other ownership interests (however designated) of such
Person and any rights (other than debt securities convertible into or exchangeable for corporate
stock), warrants or options to purchase any thereof.
Consolidated Income Available for Debt Service for any period means Earnings from Operations
of the Company and its Subsidiaries, plus amounts which have been deducted, and minus amounts which
have been added, for the following (without duplication): (i) interest on Indebtedness of the
Company and its Subsidiaries, (ii) provision for taxes of the Company and its Subsidiaries based on
income, (iii) amortization of debt discount and other deferred financing costs, (iv) provisions for
gains and losses on properties and property depreciation and
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amortization, (v) the effect of any
noncash charge resulting from a change in accounting principles in determining Earnings from
Operations for such period and (vi) amortization of deferred charges.
Corporate Trust Office means the office of the Trustee at which, at any particular time, its
corporate trust business shall be principally administered, which office at the date hereof is
located at Two International Place, Boston, Massachusetts 02110 and, for purposes of the Place of
Payment provisions of Sections 305 and 1002 of the Senior Indenture, is located at the office of
State Street Bank and Trust Company, N.A., 61 Broadway, New York, New York 10005.
Disqualified Stock means, with respect to any Person, any Capital Stock of such Person which
by the terms of such Capital Stock (or by the terms of any security into which it is convertible or
for which it is exchangeable or exercisable), upon the happening of any event or otherwise (i)
matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise (other
than Capital Stock which is redeemable solely in exchange for common stock), (ii) is convertible
into or exchangeable or exercisable for Indebtedness or Disqualified Stock or (iii) is redeemable
at the option of the holder thereof, in whole or in part (other than Capital Stock which is
redeemable solely in exchange for Capital Stock which is not Disqualified Stock), in each case on
or prior to the Stated Maturity of the Notes.
Earnings from Operations for any period means net earnings excluding gains and losses on
sales of investments, extraordinary items, and property valuation losses, net as reflected in the
financial statements of the Company and its Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP.
Encumbrance means any mortgage, lien, charge, pledge or security interest of any kind.
Exchange Act means the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder by the Commission.
GAAP means generally accepted accounting principles as used in the United States applied on
a consistent basis as in effect from time to time; provided that solely for purposes of any
calculation required by the financial covenants contained herein, GAAP shall mean generally
accepted accounting principles as used in the United States on the date hereof, applied on a
consistent basis.
Indebtedness of the Company or any Subsidiary means, without duplication, any indebtedness
of the Company or any Subsidiary, whether or not contingent, in respect of (i) borrowed money or
evidenced by bonds, notes, debentures or similar instruments, (ii) indebtedness for borrowed money
secured by any Encumbrance existing on property owned by
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the Company or any Subsidiary, (iii) the
reimbursement obligations, contingent or otherwise, in connection with any letters of credit
actually issued (other than letters of credit issued to provide credit enhancement or support with
respect to other indebtedness of the Company or any Subsidiary otherwise reflected as Indebtedness
hereunder) or amounts representing the balance
deferred and unpaid of the purchase price of any property or services, except any such balance
that constitutes an accrued expense or trade payable, or all conditional sale obligations or
obligations under any title retention agreement, (iv) the principal amount of all obligations of
the Company or any Subsidiary with respect to redemption, repayment or other repurchase of any
Disqualified Stock, (v) any lease of property by the Company or any Subsidiary as lessee which is
reflected on the Companys consolidated balance sheet as a capitalized lease in accordance with
GAAP, or (vi) interest rate swaps, caps or similar agreements and foreign exchange contracts,
currency swaps or similar agreements, to the extent, in the case of items of indebtedness under (i)
through (iii) above, that any such items (other than letters of credit) would appear as a liability
on the Companys consolidated balance sheet in accordance with GAAP, and also includes, to the
extent not otherwise included, any obligation by the Company or any Subsidiary to be liable for, or
to pay, as obligor, guarantor or otherwise (other than for purposes of collection in the ordinary
course of business), Indebtedness of another Person (other than the Company or any Subsidiary) (it
being understood that Indebtedness shall be deemed to be incurred by the Company or any Subsidiary
whenever the Company or such Subsidiary shall create, assume, guarantee or otherwise become liable
in respect thereof).
Make-Whole Amount means, in connection with any optional redemption or accelerated payment
of any 2003 Note or 2006 Note, the excess, if any, of (i) the aggregate present value as of the
date of such redemption or accelerated payment of each dollar of principal being redeemed or paid
and the amount of interest (exclusive of interest accrued to the date of redemption or accelerated
payment) that would have been payable in respect of such dollar if such redemption or accelerated
payment had not been made, determined by discounting, on a semi-annual basis, such principal and
interest at the Reinvestment Rate (determined on the third Business Day preceding the date such
notice of Redemption is given or declaration of acceleration is made) from the respective dates on
which such principal and interest would have been payable if such redemption or accelerated payment
had not been made, over (ii) the aggregate principal amount of the Notes being redeemed or paid.
Notes has the meaning specified in Section 2.1 hereof.
Reinvestment Rate means .25% (twenty-five one hundredths of one percent) plus the arithmetic
mean of the yields under the respective headings This Week and Last Week published in the
Statistical Release under the caption Treasury Constant Maturities for the maturity (rounded to
the nearest month) corresponding to the remaining life to maturity, as of the payment date of the
principal being redeemed or paid. If no maturity exactly corresponds to such maturity, yields for
the two published maturities most closely corresponding to such maturity shall be calculated
pursuant to the immediately preceding sentence and the
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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 such 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 of the Make-Whole Amount,
then such other reasonably comparable index which shall be designated by the Company.
"
Subsidiary
means, with respect to any Person, any corporation, limited liability company,
partnership or other entity of which a majority of (i) the voting power of the voting equity
securities or (ii) the outstanding equity interests are owned, directly or indirectly, by such
Person. For the purposes of this definition, voting equity securities means equity securities
having voting power for the election of directors, whether at all times or only so long as no
senior class of security has such voting power by reason of any contingency.
Total Assets as of any date means the sum of (i) the Undepreciated Real Estate Assets and
(ii) all other assets of the Company and its Subsidiaries determined in accordance with GAAP (but
excluding accounts receivable and intangibles).
Total Unencumbered Assets means the sum of (i) those Undepreciated Real Estate Assets not
subject to an Encumbrance for borrowed money and (ii) all other assets of the Company and its
Subsidiaries not subject to an Encumbrance for borrowed money, determined in accordance with GAAP
(but excluding accounts receivable and intangibles).
2003 Notes has the meaning specified in Section 2.1 hereof.
2006 Notes has the meaning specified in Section 2.1 hereof.
Undepreciated Real Estate Assets as of any date means the cost (original cost plus capital
improvements) of real estate assets of the Company and its Subsidiaries on such date, before
depreciation and amortization, determined on a consolidated basis in accordance with GAAP.
Unsecured Indebtedness means Indebtedness which is not secured by any Encumbrance upon any
of the properties of the Company or any Subsidiary.
<@CWEOP:15>
6
ARTICLE TWO THE SERIES OF NOTES.
The following provisions of this Article Two are made pursuant to Section 301 of the Senior
Indenture in order to establish and set forth the terms of the series of Securities described in
Section 2.1.
SECTION 2.1.
Title of the Securities
. There shall be a series of Securities
designated the 6.50% Senior Notes due 2003 (the 2003 Notes) and a series of Securities
designated the 6.80% Senior Notes due 2006 (the 2006 Notes and, together with the 2003 Notes,
the Notes).
SECTION 2.2.
Limitation on Aggregate Principal Amount
.
(1) The aggregate principal amount of the 2003 Notes shall be limited to $100,000,000, and,
except as provided in this Section and in Section 306 of the Senior Indenture, the Company shall
not execute and the Trustee shall not authenticate or deliver 2003 Notes in excess of such
aggregate principal amount.
(2) The aggregate principal amount of the 2006 Notes shall be limited to $150,000,000, and,
except as provided in this Section and in Section 306 of the Senior Indenture, the Company shall
not execute and the Trustee shall not authenticate or deliver 2006 Notes in excess of such
aggregate principal amount.
Nothing contained in this Section 2.2 or elsewhere in this Supplemental Indenture, or in the
Notes, is intended to or shall limit execution by the Company or authentication or delivery by the
Trustee of Notes under the circumstances contemplated by Sections 303, 304, 305, 306, 906, 1107 and
1305 of the Senior Indenture.
SECTION 2.3.
Interest and Interest Rates; Maturity Date of Notes
. The 2003 Notes will
bear interest at a rate of 6.50% per annum and the 2006 Notes will bear interest at a rate of 6.80%
per annum, in each case from July 7, 1998 or from the immediately preceding Interest Payment Date
to which interest has been paid or duly provided for, payable semi-annually in arrears on January
15 and July 15 of each year, commencing January 15, 1999 (each, an Interest Payment Date), to the
Person in whose name such Note is registered at the close of business on December 31 or June 30
(whether or not a Business Day), as the case may be, next preceding such Interest Payment Date
(each, a Regular Record Date). Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months. The interest so payable on any Note which is not punctually
paid or duly provided for on any Interest Payment Date shall forthwith cease to be payable to the
Person in whose name such Note is registered on the relevant Regular Record Date, and such
defaulted interest shall instead be payable to the Person in whose name such Note is registered on
the Special Record Date or other specified date determined in accordance with the Senior Indenture.
7
If any Interest Payment Date or Maturity falls on a day that is not a Business Day, the
required payment shall be made on the next Business Day as if it were made on the date such payment
was due and no interest shall accrue on the amount so payable for the period from and after such
Interest Payment Date or Maturity, as the case may be.
The 2003 Notes will mature on July 15, 2003 and the 2006 Notes will mature on July 15, 2006.
SECTION 2.4.
Limitations on Incurrence of Indebtedness
.
(1) The Company will not, and will not permit any Subsidiary to, incur any Indebtedness if,
immediately after giving effect to the incurrence of such additional Indebtedness and the
application of the proceeds thereof, the aggregate principal amount of all outstanding Indebtedness
of the Company and its Subsidiaries on a consolidated basis determined in accordance with GAAP is
greater than 60% of the sum of (without duplication) (i) the Total Assets of the Company and its
Subsidiaries as of the end of the calendar quarter covered in the Companys Annual Report on Form
10-K or Quarterly Report on Form 10-Q, as the case may be, most recently filed with the Commission
(or, if such filing is not permitted under the Exchange Act, with the Trustee) prior to the
incurrence of such additional Indebtedness and (ii) the purchase price of any real estate assets or
mortgages receivable acquired, and the amount of any securities offering proceeds received (to the
extent that such proceeds were not used to acquire real estate assets or mortgages receivable or
used to reduce Indebtedness), by the Company or any Subsidiary since the end of such calendar
quarter, including those proceeds obtained in connection with the incurrence of such additional
Indebtedness.
(2) In addition to the limitation set forth in subsection (1) of this Section 2.4, the Company
will not, and will not permit any Subsidiary to, incur any Indebtedness if the ratio of
Consolidated Income Available for Debt Service to the Annual Service Charge for the four
consecutive fiscal quarters most recently ended prior to the date on which such additional
Indebtedness is to be incurred shall have been less than 1.5:1, on a
pro forma
basis after giving
effect thereto and to the application of the proceeds therefrom, and calculated on the assumption
that (i) such Indebtedness and any other Indebtedness incurred by the Company and its Subsidiaries
since the first day of such four-quarter period and the application of the proceeds therefrom,
including to refinance other Indebtedness, had occurred at the beginning of such period; (ii) the
repayment or retirement of any other Indebtedness by the Company and its Subsidiaries since the
first day of such four-quarter period had been repaid or retired at the beginning of such period
(except that, in making such computation, the amount of Indebtedness under any revolving credit
facility shall be computed based upon the average daily balance of such Indebtedness during such
period); (iii) in the case of Acquired Indebtedness or Indebtedness incurred in connection with any
acquisition since the first day of such four-quarter period, the related acquisition had occurred
as of the first day of such period with the appropriate adjustments with respect to such
acquisition being included in such
pro forma
calculation; and
8
(iv) in the case of any acquisition
or disposition by the Company or its Subsidiaries of any asset or group of assets since the first
day of such four-quarter period, whether by merger, stock purchase or sale, or asset purchase or
sale, such acquisition or disposition or any related repayment of Indebtedness had occurred as of
the first day of such period with the appropriate adjustments with respect to such acquisition or
disposition being included in such
pro forma
calculation.
(3) In addition to the limitations set forth in subsections (1) and (2) of this Section 2.4,
the Company will not, and will not permit any Subsidiary to, incur any Indebtedness secured by any
Encumbrance upon any of the property of the Company or any Subsidiary if, immediately after giving
effect to the incurrence of such additional Indebtedness and the application of the proceeds
thereof, the aggregate principal amount of all outstanding Indebtedness of the Company and its
Subsidiaries on a consolidated basis which is secured by any Encumbrance on property of the Company
or any Subsidiary is greater than 40% of the sum of (without duplication) (i) the Total Assets of
the Company and its Subsidiaries as of the end of the calendar quarter covered in the Companys
Annual Report on Form 10-K or Quarterly Report on Form 10-Q, as the case may be, most recently
filed with the Commission (or, if such filing is not permitted under the Exchange Act, with the
Trustee) prior to the incurrence of such additional Indebtedness and (ii) the purchase price of any
real estate assets or mortgages receivable acquired, and the amount of any securities offering
proceeds received (to the extent that such proceeds were not used to acquire real estate assets or
mortgages receivable or used to reduce Indebtedness), by the Company or any Subsidiary since the
end of such calendar quarter, including those proceeds obtained in connection with the incurrence
of such additional Indebtedness.
(4) The Company and its Subsidiaries may not at any time own Total Unencumbered Assets equal
to less than 150% of the aggregate outstanding principal amount of the Unsecured Indebtedness of
the Company and its Subsidiaries on a consolidated basis.
(5) For purposes of this Section 2.4, Indebtedness shall be deemed to be incurred by the
Company or a Subsidiary whenever the Company or such Subsidiary shall create, assume, guarantee or
otherwise become liable in respect thereof.
SECTION 2.5.
Redemption
. The Notes may be redeemed at any time at the option of the
Company, in whole or in part, at a redemption price equal to the sum of (i) the principal amount of
the Notes being redeemed plus accrued interest thereon to the Redemption Date and (ii) the
Make-Whole Amount, if any, with respect to such Notes (the Redemption Price).
SECTION 2.6.
Places of Payment
. The Places of Payment where the Notes may be
presented or surrendered for payment, where the Notes may be surrendered for registration of
transfer or exchange and where notices and demands to and upon the Company in respect of the Notes
and the Senior Indenture may be served shall be in (i) the Borough of Manhattan, The City
9
of New
York, New York, and the office or agency for such purpose shall initially be located at the office
of State Street Bank and Trust Company, 61 Broadway, New York, New York 10005, and (ii) the City of
Boston, Massachusetts and the office or agency for such purpose shall initially be located at the
Corporate Trust Office.
SECTION 2.7.
Method of Payment
. Payment of the principal of and interest on the Notes
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 (which shall initially be an office or agency of the
Trustee), 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, payments of principal and interest on the Notes (other than payments of
principal and interest due at Maturity) may be made (i) by check mailed to the address of the
Person entitled thereto as such address shall appear in the Security Register or (ii) by wire
transfer to an account maintained by the Person entitled thereto located within the United States.
SECTION 2.8.
Currency
. Principal and interest on the Notes shall be payable in U.S.
dollars.
SECTION 2.9.
Registered Securities; Global Form
. The Notes shall be issuable and
transferable in fully registered form as Registered Securities, without coupons. The 2003 Notes
and the 2006 Notes shall be issued in the form of one or more permanent Global Securities. The
depository for the Notes shall be The Depository Trust Company (DTC). The Notes shall not be
issuable in definitive form except as provided in Section 305 of the Senior Indenture.
SECTION 2.10.
Form of Notes
. The 2003 Notes shall be substantially in the form
attached hereto as
Exhibit A
. The 2006 Notes shall be substantially in the form attached
hereto as
Exhibit B
.
SECTION 2.11.
Registrar and Paying Agent
. The Trustee shall initially serve as
Registrar and Paying Agent for the Notes.
SECTION 2.12.
Defeasance
. The provisions of Sections 1402 and 1403 of the Senior
Indenture, together with the other provisions of Article Fourteen of the Senior Indenture, shall be
applicable to the Notes. The provisions of Section 1403 of the Senior Indenture shall
<@CWEOP:4>apply to the covenants set forth in Sections 2.4 and 2.15 of this Supplemental
Indenture and to those covenants specified in Section 1403 of the Senior Indenture.
SECTION 2.13.
Events of Default
. The provisions of clause (5) of Section 501 of the
Senior Indenture as applicable with respect to the Notes shall be deemed to be amended and restated
in their entirety to read as follows:
10
(5) default under any bond, debenture, note, mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any indebtedness for money
borrowed by the Company (or by any Subsidiary, the repayment of which the Company has guaranteed or
for which the Company is directly responsible or liable as obligor or guarantor), having an
aggregate principal amount outstanding of at least $10,000,000, whether such indebtedness now
exists or shall hereafter be created, which default shall have resulted in such indebtedness
becoming or being declared due and payable prior to the date on which it would otherwise have
become due and payable, without such indebtedness having been discharged, or such acceleration
having been rescinded or annulled, within a period of 10 days
after there shall have been given written notice, by registered or certified mail, to the
Company by the Trustee or to the Company and the Trustee by the Holders of at least 10% in
principal amount of the Outstanding Securities of that series a written notice specifying such
default and requiring the Company to cause such indebtedness to be discharged or cause such
acceleration to be rescinded or annulled and stating that such notice is a Notice of Default
hereunder; provided, however, that such a default on indebtedness which constitutes tax-exempt
financing having an aggregate principal amount outstanding not exceeding $25,000,000 that results
solely from a failure of an entity providing credit support for such indebtedness to honor a demand
for payment on a letter of credit shall not constitute an Event of Default.
SECTION 2.14.
Acceleration of Maturity; Rescission and Annulment
. The provisions of
the first paragraph of Section 502 of the Senior Indenture as applicable with respect to the notes
shall be deemed to be amended and restated in their entirety to read as follows:
If an Event of Default with respect to Securities of any series at the time Outstanding occurs
and is continuing, then in every such case the Trustee or the Holders of not less than 25% in
principal amount of the Outstanding Securities of that series may declare the principal amount (or,
if Securities of that series are Original Issue Discount Securities or Indexed Securities, such
portion of the principal as may be specified in the terms thereof) of, and the Make-Whole Amount,
if any, on, all the Securities of that series to be due and payable immediately, by a notice in
writing to the Company (and to the Trustee if given by the Holders), and upon any such declaration
such principal or specified portion thereof shall become immediately due and payable. If an Event
of Default with respect to the Securities of any series set forth in Section 501(6) of the Senior
Indenture occurs and is continuing, then in every such case all the Securities of that series shall
become immediately due and payable, without notice to the Company, at the principal amount thereof
(or, if any Securities are Original Issue Discount Securities or Indexed Securities, such portion
of the principal as may be specified in the terms thereof) plus accrued interest to the date the
Securities of that series are paid, plus the Make-Whole Amount, if any, on the Securities of that
series.
SECTION 2.15.
Provision of Financial Information
. Whether or not the Company is
subject to Section 13 or 15(d) of the Exchange Act, the Company will, to the extent permitted under
the Exchange Act, file with the Commission the annual reports, quarterly reports and other
11
documents which the Company would have been required to file with the Commission pursuant to such
Section 13 or 15(d) if the Company were so subject, such documents to be filed with the Commission
on or prior to the respective dates (the Required Filing Dates) by which the Company would have
been required so to file such documents if the Company were so subject.
The Company will also in any event (x) within 15 days of each Required Filing Date (i) if the
Company is not then subject to Section 13 or 15(d) of the Exchange Act, transmit by mail to all
Holders, as their names and addresses appear in the Security Register, without cost to such
Holders, copies of the annual reports, quarterly reports and other documents which the Company
would have been required to file with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act if the Company were subject to such Sections and (ii) file with the Trustee
copies of annual reports, quarterly reports and other documents which the Company is required to
file with the Commission or would have been required to file with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act if the Company were subject to such Sections and (y)
supply, promptly upon written request and payment of the reasonable cost of duplication and
delivery, copies of such documents to any prospective Holder.
The Trustee shall not be required to examine any of the reports and other documents filed
therewith pursuant to the provisions of this Section 2.15 or Section 7.03 of the Senior Indenture
in order to determine whether the Company is in compliance with the provisions of Section 2.4 of
this Supplemental Indenture.
SECTION 2.16.
Waiver of Certain Covenants
. Notwithstanding the provisions of Section
1009 of the Senior Indenture, the Company may omit in any particular instance to comply with any
term, provision or condition set forth in Sections 1004 to 1008, inclusive, of the Senior
Indenture, with Sections 2.4 and 2.15 of this Supplemental Indenture and with any other term,
provision or condition with respect to the Notes (except any such term, provision or condition
which could not be amended without the consent of all Holders of the Notes or such series thereof,
as applicable), if before or after the time for such compliance the Holders of at least a majority
in principal amount of all outstanding Notes, by Act of such Holders, either waive such compliance
in such instance or generally waive compliance with such covenant or condition. Except to the
extent so expressly waived, and until such waiver shall become effective, the obligations of the
Company and the duties of the Trustee in respect of any such term, provision or condition shall
remain in full force and effect.
ARTICLE THREE MISCELLANEOUS PROVISIONS.
SECTION 3.1.
Ratification of Senior Indenture
. Except as expressly modified or
amended hereby, the Senior Indenture continues in full force and effect and is in all respects
confirmed and preserved.
12
SECTION 3.2.
Governing Law
. This Supplemental Indenture and the Notes shall be
governed by and construed in accordance with the laws of the State of New York. This Supplemental
Indenture is subject to the provisions of the Trust Indenture Act of 1939, as amended, and shall,
to the extent applicable, be governed by such provisions.
SECTION 3.3.
Counterparts
. This Supplemental Indenture may be executed in any number
of counterparts, each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
[Remainder of Page Intentionally Left Blank.]
13
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly
executed by their respective officers hereunto duly authorized, all as of the day and year first
written above.
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AVALON BAY COMMUNITIES, INC.
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By:
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/s/ Richard L. Michaux
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Name: Richard L. Michaux
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Title: Chief Executive Officer
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STATE STREET BANK AND TRUST COMPANY,
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as Trustee
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By:
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/s/ Robert J. Dunn
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Name: Robert J. Dunn
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Title: Vice President
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14
Exhibit A to Supplemental Indenture
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY,
A NEW YORK CORPORATION (DTC), 55 WATER STREET, NEW YORK, NEW YORK, 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.
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING SET FORTH IN THE INDENTURE HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF DTC OR A NOMINEE OF DTC. THIS SECURITY IS
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN DTC OR ITS NOMINEE ONLY
IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND MAY NOT BE TRANSFERRED EXCEPT AS A
WHOLE BY DTC TO A NOMINEE OF DTC OR ANOTHER NOMINEE OF DTC OR BY DTC OR ITS NOMINEE TO A SUCCESSOR
DEPOSITORY OR ITS NOMINEE.
AVALON BAY COMMUNITIES, INC.
6.50% SENIOR NOTE DUE 2003
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Registered No. 1
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PRINCIPAL AMOUNT
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CUSIP No.: 053373 AA 4
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$100,000,000
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AVALON BAY COMMUNITIES, INC., a corporation duly organized and existing under the laws of the
State of Maryland (herein referred to as the Company which term shall include any successor
corporation under the Indenture hereinafter referred to), for value received, hereby promises to
pay to CEDE & CO., or registered assigns, upon presentation, the principal sum of $100,000,000 on
July 15, 2003 and to pay interest on the outstanding principal amount thereon from July 7, 1998, or
from the immediately preceding Interest Payment Date to which interest has been paid or duly
provided for, semi-annually in arrears on January 15 and July 15 in each year, commencing January
15, 1999, at the rate of 6.50% per annum, until the entire principal hereof is paid or
made available for payment. The interest so payable and punctually paid or
A-1
duly provided for on any
Interest Payment Date will, as provided in the Indenture, be paid to the
Holder in whose name this Security is registered at the close of business on the Regular
Record Date for such interest which shall be December 31 or June 30 (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date. Any such interest not so
punctually paid or duly provided for shall forthwith cease to be payable to the Holder on such
Regular Record Date, and may either be paid to the Holder in whose name this Security 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 the Holder of this Security 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 this
Security 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 Security will be made
at the office or agency maintained for that purpose in the City of New York, New York, or elsewhere
as provided in the Indenture, 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 payments of principal and interest on the Notes
(other than payments of principal and interest due at Maturity) may be made (i) by check mailed to
the address of the Holder entitled thereto as such address shall appear in the Security Register or
(ii) by wire transfer to an account of the Holder entitled thereto located within the United
States.
Securities of this series are one of a duly authorized issue of securities of the Company
(herein called the Securities), issued and to be issued in one or more series under an Indenture,
dated as of January 16, 1998, as supplemented by the First Supplemental Indenture, dated as of
January 20, 1998, and the Second Supplemental Indenture, dated as of July 7, 1998 (as so
supplemented, herein called the Indenture), between the Company and State Street Bank and Trust
Company (herein called the Trustee, which term includes any successor trustee under the
Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for
a statement of the respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee and the Holders of the Securities and of the terms upon which the
Securities are authenticated and delivered. This Security is one of the series designated in the
first page hereof, limited in aggregate principal amount to $100,000,000.
Securities of this series may be redeemed at any time at the option of the Company, in whole
or in part, upon notice of not more than 60 nor less than 30 days prior to the Redemption Date, at
a redemption price equal to the sum of (i) the principal amount of the Securities being redeemed
plus accrued interest thereon to the Redemption Date and (ii) the Make-Whole Amount, if any, with
respect to such Securities.
A-2
The Indenture contains provisions for defeasance at any time of (a) the entire indebtedness of
the Company on this Security and (b) certain restrictive covenants and the related defaults and
Events of Default applicable to the Company, in each case, upon compliance by the Company with
certain conditions set forth in the Indenture, which provisions apply to this Security.
If an Event of Default with respect to the Securities shall occur and be continuing, the
principal of the Securities may be declared due and payable in the manner and with the effect
provided in the Indenture.
As provided in and subject to the provisions of the Indenture, the Holder of this Security
shall not have the right to institute any proceeding with respect to the Indenture or for the
appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall
have previously given written notice to the Trustee of a continuing Event of Default with respect
to the Securities, the Holders of not less than 25% in principal amount of the Securities of this
series at the time outstanding shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default as Trustee and offered the Trustee reasonable
indemnity and the Trustee shall not have received from the Holders of a majority in principal
amount of the Securities of this series 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 Security for the enforcement of any payment of principal hereof or any interest
on or after the respective due dates expressed herein.
The Indenture permits, with certain exceptions as therein provided, the amendment thereof and
the modification of the rights and obligations of the Company and the rights of the Holders of the
Securities of each series to be affected under the Indenture at any time by the Company and the
Trustee with the consent of the Holders of not less than a majority in principal amount of all
outstanding Securities. The Indenture also contains provisions permitting the Holders of specified
percentages in principal amount of the Securities of each series at the time outstanding, on behalf
of the Holders of all Securities of such series, to waive compliance by the Company with certain
provisions of the Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such
Holder and upon all future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation
of such consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this Security or of the Indenture
shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay
the principal of (and Make-Whole Amount, if any) and interest on this Security at the times, place
and rate, and in the coin or currency, herein prescribed.
A-3
As provided in the Indenture and subject to certain limitations therein set forth, the
transfer of this Security is registrable in the Security Register, upon surrender of this Security
for registration of transfer at the office or agency of the Company in any Place of Payment where
the principal of (and Make-Whole Amount, if any) and interest on this Security are payable, duly
endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company
and the Security Registrar duly executed by the Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Securities of this series, of authorized denominations and
for the same aggregate principal amount, will be issued to the designated transferee or
transferees.
The Securities of this series are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the Indenture and
subject to certain limitations therein set forth, Securities of this series are exchangeable for a
like aggregate principal amount of Securities of this series of a different authorized
denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the Company, the
Trustee and any agent of the Company or the Trustee may treat the Person in whose name this
Security is registered as the owner hereof for all purposes, whether or not this Security be
overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
No recourse under or upon any obligation, covenant or agreement contained in the Indenture or
in this Security, or because of any indebtedness evidenced hereby or 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 Security by the Holder thereof and as part of the consideration
for the issue of the Securities of this series.
All capitalized terms used in this Security which are defined in the Indenture shall have the
meanings assigned to them in the Indenture.
THE INDENTURE AND THE SECURITIES, INCLUDING THIS SECURITY, SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
A-4
Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification
Procedures, the Company has caused CUSIP numbers to be printed on the Securities of this series
as a convenience to the Holders of such Securities. No representation is made as to the
correctness or accuracy of such CUSIP numbers as printed on the Securities, and reliance may be
placed only on the other identification numbers printed hereon.
Unless the certificate of authentication hereon has been executed by or on behalf of the
Trustee by manual signature, this Security shall not be entitled to any benefit under the Indenture
or be valid or obligatory for any purpose.
A-5
IN WITNESS WHEREOF, AVALON BAY COMMUNITIES, INC. has caused this instrument to be duly
executed under its corporate seal.
Dated:
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AVALON BAY COMMUNITIES, INC.
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By:
/s/ Richard L. Michaux
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Name: Richard L. Michaux
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Title: Chief Executive Officer
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[Corporate Seal]
Attest:
Secretary
TRUSTEES CERTIFICATE OF AUTHENTICATION:
This is one of the Securities of the series designated therein referred to in the
within-mentioned Indenture.
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STATE STREET BANK AND TRUST COMPANY, as Trustee
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By:
/s/ Robert J. Dunn
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Name: Robert J. Dunn
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Title: Vice President
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A-6
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 Security of Avalon Bay Communities, Inc. and hereby does irrevocably constitute and
appoint
Attorney to transfer said Security on the books of the within-named Company with full power of substitution
in the premises.
NOTICE: The signature to this assignment must correspond with the name as it appears on the first
page of the within Security in every particular, without alteration or enlargement or any change
whatever.
B-1
Exhibit B to Supplemental Indenture
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY,
A NEW YORK CORPORATION (DTC), 55 WATER STREET, NEW YORK, NEW YORK, 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.
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING SET FORTH IN THE INDENTURE HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF DTC OR A NOMINEE OF DTC. THIS SECURITY IS
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN DTC OR ITS NOMINEE ONLY
IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND MAY NOT BE TRANSFERRED EXCEPT AS A
WHOLE BY DTC TO A NOMINEE OF DTC OR ANOTHER NOMINEE OF DTC OR BY DTC OR ITS NOMINEE TO A SUCCESSOR
DEPOSITORY OR ITS NOMINEE.
AVALON BAY COMMUNITIES, INC.
6.80% SENIOR NOTE DUE 2006
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Registered No. 1
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PRINCIPAL AMOUNT
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CUSIP No.: 053373 AB 2
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$150,000,000
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AVALON BAY COMMUNITIES, INC., a corporation duly organized and existing under the laws of the
State of Maryland (herein referred to as the Company which term shall include any successor
corporation under the Indenture hereinafter referred to), for value received, hereby promises to
pay to CEDE & CO., or registered assigns, upon presentation, the principal sum of $150,000,000 on
July 15, 2006 and to pay interest on the outstanding principal amount thereon from July 7, 1998, or
from the immediately preceding Interest Payment Date to which interest has been paid or duly
provided for, semi-annually in arrears on January 15 and July 15 in each year, commencing January
15, 1999, at the rate of 6.80% per annum, until the entire principal
B-2
hereof is paid or made
available for payment. The interest so payable and punctually paid or
duly provided for on any Interest Payment Date will, as provided in the Indenture, be paid to
the Holder in whose name this Security is registered at the close of business on the Regular Record
Date for such interest which shall be December 31 or June 30 (whether or not a Business Day), as
the case may be, next preceding such Interest Payment Date. Any such interest not so punctually
paid or duly provided for shall forthwith cease to be payable to the Holder on such Regular Record
Date, and may either be paid to the Holder in whose name this Security 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 the Holder of this Security 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 this Security 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 Security will be made at the
office or agency maintained for that purpose in the City of New York, New York, or elsewhere as
provided in the Indenture, 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 payments of principal and interest on the Notes
(other than payments of principal and interest due at Maturity) may be made (i) by check mailed to
the address of the Holder entitled thereto as such address shall appear in the Security Register or
(ii) by wire transfer to an account of the Holder entitled thereto located within the United
States.
Securities of this series are one of a duly authorized issue of securities of the Company
(herein called the Securities), issued and to be issued in one or more series under an Indenture,
dated as of January 16, 1998, as supplemented by the First Supplemental Indenture, dated as of
January 20, 1998, and the Second Supplemental Indenture, dated as of July 7, 1998 (as so
supplemented, herein called the Indenture), between the Company and State Street Bank and Trust
Company (herein called the Trustee, which term includes any successor trustee under the
Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for
a statement of the respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee and the Holders of the Securities and of the terms upon which the
Securities are authenticated and delivered. This Security is one of the series designated in the
first page hereof, limited in aggregate principal amount to $150,000,000.
Securities of this series may be redeemed at any time at the option of the Company, in whole
or in part, upon notice of not more than 60 nor less than 30 days prior to the Redemption Date, at
a redemption price equal to the sum of (i) the principal amount of the Securities being redeemed
plus accrued interest thereon to the Redemption Date and (ii) the Make-Whole Amount, if any, with
respect to such Securities.
The Indenture contains provisions for defeasance at any time of (a) the entire indebtedness of
the Company on this Security and (b) certain restrictive covenants and the
B-3
related defaults and
Events of Default applicable to the Company, in each case, upon compliance
by the Company with certain conditions set forth in the Indenture, which provisions apply to
this Security.
If an Event of Default with respect to the Securities shall occur and be continuing, the
principal of the Securities may be declared due and payable in the manner and with the effect
provided in the Indenture.
As provided in and subject to the provisions of the Indenture, the Holder of this Security
shall not have the right to institute any proceeding with respect to the Indenture or for the
appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall
have previously given written notice to the Trustee of a continuing Event of Default with respect
to the Securities, the Holders of not less than 25% in principal amount of the Securities of this
series at the time outstanding shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default as Trustee and offered the Trustee reasonable
indemnity and the Trustee shall not have received from the Holders of a majority in principal
amount of the Securities of this series 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 Security for the enforcement of any payment of principal hereof or any interest
on or after the respective due dates expressed herein.
The Indenture permits, with certain exceptions as therein provided, the amendment thereof and
the modification of the rights and obligations of the Company and the rights of the Holders of the
Securities of each series to be affected under the Indenture at any time by the Company and the
Trustee with the consent of the Holders of not less than a majority in principal amount of all
outstanding Securities. The Indenture also contains provisions permitting the Holders of specified
percentages in principal amount of the Securities of each series at the time outstanding, on behalf
of the Holders of all Securities of such series, to waive compliance by the Company with certain
provisions of the Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such
Holder and upon all future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation
of such consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this Security or of the Indenture
shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay
the principal of (and Make-Whole Amount, if any) and interest on this Security at the times, place
and rate, and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein set forth, the
transfer of this Security is registrable in the Security Register, upon surrender of this Security
for
B-4
registration of transfer at the office or agency of the Company in any Place of Payment where
the principal of (and Make-Whole Amount, if any) and interest on this Security are payable, duly
endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Securities of this series, of authorized
denominations and for the same aggregate principal amount, will be issued to the designated
transferee or transferees.
The Securities of this series are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the Indenture and
subject to certain limitations therein set forth, Securities of this series are exchangeable for a
like aggregate principal amount of Securities of this series of a different authorized
denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the Company, the
Trustee and any agent of the Company or the Trustee may treat the Person in whose name this
Security is registered as the owner hereof for all purposes, whether or not this Security be
overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
No recourse under or upon any obligation, covenant or agreement contained in the Indenture or
in this Security, or because of any indebtedness evidenced hereby or 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 Security by the Holder thereof and as part of the consideration
for the issue of the Securities of this series.
All capitalized terms used in this Security which are defined in the Indenture shall have the
meanings assigned to them in the Indenture.
THE INDENTURE AND THE SECURITIES, INCLUDING THIS SECURITY, SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification
Procedures, the Company has caused CUSIP numbers to be printed on the
B-5
Securities of this series
as a convenience to the Holders of such Securities. No representation is made as to the
correctness or accuracy of such CUSIP numbers as printed on the Securities, and reliance may be
placed only on the other identification numbers printed hereon.
Unless the certificate of authentication hereon has been executed by or on behalf of the
Trustee by manual signature, this Security shall not be entitled to any benefit under the Indenture
or be valid or obligatory for any purpose.
B-6
IN WITNESS WHEREOF, AVALON BAY COMMUNITIES, INC. has caused this instrument to be duly
executed under its corporate seal.
Dated:
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AVALON BAY COMMUNITIES, INC.
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By:
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/s/ Richard L. Michaux
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Name: Richard L. Michaux
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Title: Chief Executive Officer
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[Corporate Seal]
Attest:
TRUSTEES CERTIFICATE OF AUTHENTICATION:
This is one of the Securities of the series designated therein referred to in the
within-mentioned Indenture.
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STATE STREET BANK AND TRUST COMPANY, as Trustee
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By:
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/s/ Robert J. Dunn
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Name: Robert J. Dunn
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Title: Vice President
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B-7
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 Security of Avalon Bay Communities, Inc. and hereby does irrevocably constitute and
appoint
Attorney to transfer said Security on the books of the within-named Company with full power of substitution
in the premises.
NOTICE: The signature to this assignment must correspond with the name as it appears on the first
page of the within Security in every particular, without alteration or enlargement or any change
whatever.
B-8
Exhibit 4.4
AvalonBay Communities, Inc.
Issuer
to
State Street Bank and Trust Company
Trustee
Amended and Restated Third Supplemental Indenture
Dated as of July 10, 2000
Medium-Term Notes Due Nine Months or More
from Date of Issue
AMENDED AND RESTATED THIRD SUPPLEMENTAL INDENTURE, dated as of July 10, 2000 (the
Supplemental Indenture), between AVALONBAY COMMUNITIES, INC., a corporation organized under the
laws of the State of Maryland (herein called the Company), and STATE STREET BANK AND TRUST
COMPANY, a trust company organized and existing under the laws of the Commonwealth of
Massachusetts, as Trustee (herein called the Trustee).
RECITALS OF THE COMPANY
The Company has heretofore delivered to the Trustee an Indenture dated as of January 16, 1998
(the Senior Indenture), a First Supplemental Indenture dated as of January 20, 1998, a Second
Supplemental Indenture dated as of July 7, 1998, and a Third Supplemental Indenture dated as of
December 21, 1998, the forms of which have been filed with the Securities and Exchange Commission
(the Commission) under the Securities Act of 1933, as amended, and incorporated by reference as
exhibits to the Companys Registration Statement on Form S-3 (Registration No. 333-60875),
providing for the issuance from time to time of Senior Debt Securities of the Company (the
Securities) in an unlimited aggregate principal amount, including a series of debt securities
entitled Medium-Term Notes Due Nine Months or More from Date of Issue limited to $400,000,000 in
aggregate initial principal amount.
The Company wishes to amend and restate the Third Supplemental Indenture to provide for the
issuance of Medium-Term Notes without limit as to aggregate principal amount, and in all other
respects to continue the Third Supplemental Indenture in full force and effect except as amended
and restated by this Amended and Restated Third Supplemental Indenture.
Section 301 of the Senior Indenture provides that the aggregate principal amount of Securities
that may be authenticated and delivered under the Senior Indenture shall be unlimited, and further
provides for various matters with respect to any series of Securities issued under the Senior
Indenture to be established in an indenture supplemental to the Senior Indenture.
Section 901(5) of the Senior Indenture provides that the Company and the Trustee may enter
into an indenture supplemental to the Senior Indenture to change or eliminate any of the provisions
of the Senior Indenture, subject to certain limitations with respect to outstanding Securities.
The Trustee is willing to enter into this Amended and Restated Third Supplemental Indenture at
the Companys request, subject to compliance with Section 901 of the Senior Indenture, as
applicable.
Section 901(7) of the Senior Indenture provides for the Company and the Trustee to enter into
an indenture supplemental to the Senior Indenture to
1
establish the form or terms of Securities of
any series as provided by Sections 201 and 301 of the Senior Indenture.
The Board of Directors of the Company has previously duly adopted resolutions authorizing the
Company to execute and deliver this Supplemental Indenture.
All the conditions and requirements necessary to make this Amended and Restated Third
Supplemental Indenture, when duly executed and delivered, a valid and binding agreement in
accordance with its terms and for the purposes herein expressed, have been performed and fulfilled.
NOW, THEREFORE, THIS AMENDED AND RESTATED SUPPLEMENTAL INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of each of the series of Securities
provided for herein by the Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Notes (as herein defined) or of any series thereof, as
follows:
ARTICLE ONE
RELATION TO SENIOR INDENTURE; DEFINITIONS
SECTION 1.1.
Relation to Senior Indenture
.
This Supplemental Indenture constitutes an integral part of the Senior Indenture.
SECTION 1.2.
Definitions
.
For all purposes of this Supplemental Indenture, except as otherwise expressly provided for or
unless the context otherwise requires:
(1) Capitalized terms used but not defined herein shall have the respective meanings
assigned to them in the Senior Indenture;
(2) All references herein to Articles and Sections, unless otherwise specified, refer
to the corresponding Articles and Sections of this Supplemental Indenture; and
(3) In the event that any of the following definitions differs from its respective
definition set forth in the Senior Indenture, the definition set forth herein shall
control.
2
Acquired Indebtedness means Indebtedness of a Person (i) existing at the time such Person
becomes a Subsidiary or (ii) assumed in connection with the acquisition of assets from such Person,
in each case, other than Indebtedness incurred in connection with, or in contemplation of, such
Person becoming a Subsidiary or such acquisition. Acquired Indebtedness shall be deemed to be
incurred on the date of the related acquisition of assets from any Person or the date the acquired
Person becomes a Subsidiary.
Annual Service Charge for any period means the maximum amount which is payable during such
period for interest on, and original issue discount of, Indebtedness of the Company and its
Subsidiaries and the amount of dividends which are payable during such period in respect of any
Disqualified Stock.
Capital Stock means, with respect to any Person, any capital stock (including preferred
stock), shares, interests, participations or other ownership interests (however designated) of such
Person and any rights (other than debt securities convertible into or exchangeable for corporate
stock), warrants or options to purchase any thereof.
Consolidated Income Available for Debt Service for any period means Earnings from Operations
of the Company and its Subsidiaries plus amounts which have been deducted, and minus amounts which
have been added, for the following (without duplication): (i) interest on Indebtedness of the
Company and its Subsidiaries, (ii) provision for taxes of the Company and its Subsidiaries based on
income, (iii) amortization of debt discount and other deferred financing costs, (iv) provisions for
gains and losses on properties and property depreciation and amortization, (v) the effect of any
noncash charge resulting from a change in accounting principles in determining Earnings from
Operations for such period and (vi) amortization of deferred charges.
Corporate Trust Office means the office of the Trustee at which, at any particular time, its
corporate trust business shall be principally administered, which office at the date hereof is
located at Two Avenue de Lafayette, Boston, Massachusetts 02111 and, for purposes of the Place of
Payment provisions of Sections 305 and 1002 of the Senior Indenture and other provisions requiring
a New York City office, is located at the office of State Street Bank and Trust Company, N.A., 61
Broadway, New York, New York 10005.
Disqualified Stock means, with respect to any Person, any Capital Stock of such Person which
by the terms of such Capital Stock (or by the terms of any security into which it is convertible or
for which it is exchangeable or exercisable), upon the happening of any event or otherwise (i)
matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise (other
than Capital Stock which is redeemable solely in exchange for common stock), (ii) is convertible
into or exchangeable or exercisable for Indebtedness or Disqualified
3
Stock or (iii) is redeemable
at the option of the holder thereof, in whole or in part (other than Capital Stock which is
redeemable solely in exchange for Capital Stock
which is not Disqualified Stock), in each case on or prior to the Stated Maturity of the
Notes.
Earnings from Operations for any period means net earnings excluding gains and losses on
sales of investments, extraordinary items, and property valuation losses, net as reflected in the
financial statements of the Company and its Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP.
Encumbrance means any mortgage, lien, charge, pledge or security interest of any kind.
Exchange Act means the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder by the Commission.
Fixed Rate Notes means the Companys Fixed Rate Notes due nine months or more from the date
of issue, a form of which is attached hereto as
Exhibit B
.
Floating Rate Notes means the Companys Floating Rate Notes due nine months or more from the
date of issue, a form of which is attached hereto as
Exhibit A
.
GAAP means generally accepted accounting principles as used in the United States applied on
a consistent basis as in effect from time to time; provided that solely for purposes of any
calculation required by the financial covenants contained herein, GAAP shall mean generally
accepted accounting principles as used in the United States on the date hereof, applied on a
consistent basis.
Holder means, in the case of a Registered Security, the Person in whose name a Security is
registered in the Security Register and, in the case of a Bearer Security, the bearer thereof and,
when used with respect to any coupon, shall mean the bearer thereof.
Indebtedness of the Company or any Subsidiary means, without duplication, any indebtedness
of the Company or any Subsidiary, whether or not contingent, in respect of (i) borrowed money or
evidenced by bonds, notes, debentures or similar instruments, (ii) indebtedness for borrowed money
secured by any Encumbrance existing on property owned by the Company or any Subsidiary, (iii) the
reimbursement obligations, contingent or otherwise, in connection with any letters of credit
actually issued (other than letters of credit issued to provide credit enhancement or support with
respect to other indebtedness of the Company or any Subsidiary otherwise reflected as Indebtedness
hereunder) or amounts representing
4
the balance deferred and unpaid of the purchase price of any
property or services, except any such balance that constitutes an accrued expense or trade payable,
or all conditional sale obligations or obligations under any title retention agreement, (iv)
the principal amount of all obligations of the Company or any Subsidiary with respect to
redemption, repayment or other repurchase of any Disqualified Stock, (v) any lease of property by
the Company or any Subsidiary as lessee which is reflected on the Companys consolidated balance
sheet as a capitalized lease in accordance with GAAP, or (vi) interest rate swaps, caps or similar
agreements and foreign exchange contracts, currency swaps or similar agreements, to the extent, in
the case of items of indebtedness under (i) through (iii) above, that any such items (other than
letters of credit) would appear as a liability on the Companys consolidated balance sheet in
accordance with GAAP, and also includes, to the extent not otherwise included, any obligation by
the Company or any Subsidiary to be liable for, or to pay, as obligor, guarantor or otherwise
(other than for purposes of collection in the ordinary course of business), Indebtedness of another
Person (other than the Company or any Subsidiary) (it being understood that Indebtedness shall be
deemed to be incurred by the Company or any Subsidiary whenever the Company or such Subsidiary
shall create, assume, guarantee or otherwise become liable in respect thereof).
Notes has the meaning specified in Section 2.1 hereof.
Pricing Supplement means a pricing supplement to the Prospectus, dated August 18, 1998, as
supplemented by the Prospectus Supplement dated September 30, 1998, setting forth the terms of the
applicable Notes.
Subsidiary means, with respect to any Person, any corporation, limited liability company,
partnership or other entity of which a majority of (i) the voting power of the voting equity
securities or (ii) the outstanding equity interests of which are owned, directly or indirectly, by
such Person. For the purposes of this definition, voting equity securities means equity
securities having voting power for the election of directors, whether at all times or only so long
as no senior class of security has such voting power by reason of any contingency.
Total Assets as of any date means the sum of (i) the Undepreciated Real Estate Assets and
(ii) all other assets of the Company and its Subsidiaries determined in accordance with GAAP (but
excluding accounts receivable and intangibles).
Total Unencumbered Assets means the sum of (i) those Undepreciated Real Estate Assets not
subject to an Encumbrance for borrowed money and (ii) all other assets of the Company and its
Subsidiaries not subject to an Encumbrance for borrowed money, determined in accordance with GAAP
(but excluding accounts receivable and intangibles).
5
Undepreciated Real Estate Assets as of any date means the cost (original cost plus capital
improvements) of real estate assets of the Company and its Subsidiaries on such date, before
depreciation and amortization, determined on a consolidated basis in accordance with GAAP.
Unsecured Indebtedness means Indebtedness which is not secured by any Encumbrance upon any
of the properties of the Company or any Subsidiary.
ARTICLE TWO
THE SERIES OF NOTES
The following provisions of this Article Two are made pursuant to Section 301 of the Senior
Indenture in order to establish and set forth the terms of the series of Securities described in
Section 2.1.
SECTION 2.1
Title of the Securities
.
There shall be a series of Securities designated the Medium-Term Notes Due Nine Months or More
from Date of Issue (the Notes).
SECTION 2.2
No limitation on Aggregate Principal Amount
.
The aggregate principal amount of the Notes shall be unlimited.
Nothing contained in this Section 2.2 or elsewhere in this Supplemental Indenture, or in the
Notes, is intended to or shall limit execution by the Company or authentication or delivery by the
Trustee of Notes under the circumstances contemplated by Sections 303, 304, 305, 306, 906, 1107 and
1305 of the Senior Indenture.
SECTION 2.3
Terms and Conditions of the Notes
.
The Notes shall be governed by all the terms and conditions of the Indenture, including,
without limitation, the terms and conditions set forth in the forms of Note referred to in Section
2.9 below, as the same may be supplemented or, to the extent allowed by the Indenture, modified by
the additional or different terms and conditions established from time to time with respect to the
Notes either in resolutions of the Board of Directors of the Company or by action of authorized
officers of the Company and, in either such case, such additional or different terms and conditions
shall be set forth in the Notes and the related Pricing Supplement. All such terms and conditions
set forth in such Notes and in such Pricing Supplement are incorporated by reference into this
Supplemental Indenture.
6
SECTION 2.4
Limitations on Incurrence of Indebtedness
(1) The Company will not, and will not permit any Subsidiary to, incur any Indebtedness if,
immediately after giving effect to the incurrence of such additional Indebtedness and the
application of the proceeds thereof, the aggregate principal amount of all outstanding Indebtedness
of the Company and its Subsidiaries on a consolidated basis determined in accordance with GAAP is
greater than 60% of the sum of (without duplication) (i) the Total Assets of the Company and its
Subsidiaries as of the end of the calendar quarter covered in the Companys Annual Report on Form
10-K or Quarterly Report on Form 10-Q, as the case may be, most recently filed with the Commission
(or, if such filing is not permitted under the Exchange Act, with the Trustee) prior to the
incurrence of such additional Indebtedness and (ii) the purchase price of any real estate assets or
mortgages receivable acquired, and the amount of any securities offering proceeds received (to the
extent that such proceeds were not used to acquire real estate assets or mortgages receivable or
used to reduce Indebtedness), by the Company or any Subsidiary since the end of such calendar
quarter, including those proceeds obtained in connection with the incurrence of such additional
Indebtedness.
(2) In addition to the limitation set forth in subsection (1) of this Section 2.4, the Company
will not, and will not permit any Subsidiary to, incur any Indebtedness if the ratio of
Consolidated Income Available for Debt Service to the Annual Service Charge for the four
consecutive fiscal quarters most recently ended prior to the date on which such additional
Indebtedness is to be incurred shall have been less than 1.5:1, on a
pro forma
basis after giving
effect thereto and to the application of the proceeds therefrom, and calculated on the assumption
that (i) such Indebtedness and any other Indebtedness incurred by the Company and its Subsidiaries
since the first day of such four-quarter period and the application of the proceeds therefrom,
including to refinance other Indebtedness, had occurred at the beginning of such period; (ii) the
repayment or retirement of any other Indebtedness by the Company and its Subsidiaries since the
first day of such four-quarter period had been repaid or retired at the beginning of such period
(except that, in making such computation, the amount of Indebtedness under any revolving credit
facility shall be computed based upon the average daily balance of such Indebtedness during such
period); (iii) in the case of Acquired Indebtedness or Indebtedness incurred in connection with any
acquisition since the first day of such four-quarter period, the related acquisition had occurred
as of the first day of such period with the appropriate adjustments with respect to such
acquisition being included in such
pro forma
calculation; and (iv) in the case of any acquisition
or disposition by the Company or its Subsidiaries of any asset or group of assets since the first
day of such four-quarter period, whether by merger, stock purchase or sale, or asset purchase or
sale, such acquisition or disposition or any related repayment of Indebtedness had occurred as of
the first day of such period with the appropriate adjustments with respect to such acquisition or
disposition being included in such
pro forma
calculation.
7
(3) In addition to the limitations set forth in subsections (1) and (2) of this Section 2.4,
the Company will not, and will not permit any Subsidiary to, incur any Indebtedness secured by any
Encumbrance upon any of the property of the Company or any Subsidiary if, immediately after giving
effect to the incurrence of such additional Indebtedness and the application of the proceeds
thereof, the aggregate principal amount of all outstanding Indebtedness of the Company and its
Subsidiaries on a consolidated basis which is secured by any Encumbrance on property of the Company
or any Subsidiary is greater than 40% of the sum of (without duplication) (i) the Total Assets of
the Company and its Subsidiaries as of the end of the calendar quarter covered in the Companys
Annual Report on Form 10-K or Quarterly Report on Form 10-Q, as the case may be, most recently
filed with the Commission (or, if such filing is not permitted under the Exchange Act, with the
Trustee) prior to the incurrence of such additional Indebtedness and (ii) the purchase price of any
real estate assets or mortgages receivable acquired, and the amount of any securities offering
proceeds received (to the extent that such proceeds were not used to acquire real estate assets or
mortgages receivable or used to reduce Indebtedness), by the Company or any Subsidiary since the
end of such calendar quarter, including those proceeds obtained in connection with the incurrence
of such additional Indebtedness.
(4) The Company and its Subsidiaries may not at any time own Total Unencumbered Assets equal
to less than 150% of the aggregate outstanding principal amount of the Unsecured Indebtedness of
the Company and its Subsidiaries on a consolidated basis.
(5) For purposes of this Section 2.4, Indebtedness shall be deemed to be incurred by the
Company or a Subsidiary whenever the Company or such Subsidiary shall create, assume, guarantee or
otherwise become liable in respect thereof.
SECTION 2.5
Defeasance
.
The provisions of Sections 1402 and 1403 of the Senior Indenture, together with the other
provisions of Article Fourteen of the Senior Indenture, shall be applicable to the Notes. The
provisions of Section 1403 of the Senior Indenture shall apply to the covenants set forth in
Sections 2.4 and 2.10 of this Supplemental Indenture and to those covenants specified in Section
1403 of the Senior Indenture.
SECTION 2.6
Events of Default
The provisions of clause (5) of Section 501 of the Senior Indenture as applicable with respect
to the Notes shall be deemed to be amended and restated in their entirety to read as follows:
(5) default under any bond, debenture, note, mortgage, indenture or instrument under
which there may be issued or by which there
8
may be secured or evidenced any indebtedness
for money borrowed by the Company (or by any Subsidiary, the repayment of which the Company
has guaranteed or for which the Company is directly responsible or liable as obligor or
guarantor), having an aggregate principal amount outstanding of at least $10,000,000,
whether such indebtedness now exists or shall hereafter be created, which default shall
have resulted in such indebtedness becoming or being declared due and payable prior to the
date on which it would otherwise have become due and payable, without such indebtedness
having been discharged, or such acceleration having been rescinded or annulled, within a
period of 10 days after there shall have been given written notice, by registered or
certified mail, to the Company by the Trustee or to the Company and the Trustee by the
Holders of at least 10% in principal amount of the Outstanding Securities of that series a
written notice specifying such default and requiring the Company to cause such indebtedness
to be discharged or cause such acceleration to be rescinded or annulled and stating that
such notice is a Notice of Default hereunder;
provided, however
, that such a default on
indebtedness which constitutes tax-exempt financing having an aggregate principal amount
outstanding not exceeding $25,000,000 that results solely from a failure of an entity
providing credit support for such indebtedness to honor a demand for payment on a letter of
credit shall not constitute an Event of Default; or
SECTION 2.7
Acceleration of Maturity; Rescission and Annulment
.
The provisions of the first paragraph of Section 502 of the Senior Indenture as applicable
with respect to the Notes shall be deemed to be amended and restated in their entirety to read as
follows:
If an Event of Default with respect to Securities of any series at the time Outstanding occurs
and is continuing, then in every such case the Trustee or the Holders of not less than 25% in
principal amount of the Outstanding Securities of that series may declare the principal amount (or,
if Securities of that series are Original Issue Discount Securities or Indexed Securities, such
portion of the principal as may be specified in the terms thereof) of all the Securities of that
series to be due and payable immediately, by a notice in writing to the Company (and to the Trustee
if given by the Holders), and upon any such declaration such principal, or specified portion
thereof, plus accrued interest to the date the Securities of that series are paid, shall become
immediately due and payable. With respect to the Securities of any series, if an Event of Default
set forth in Section 501(6) of the Senior Indenture occurs and is continuing, then in every such
case all the Securities of that series shall become immediately due and payable, without notice to
the Company, at the principal amount thereof (or, if any Securities are Original Issue Discount
Securi
ties or Indexed Securities, such portion of the principal as may be specified in the terms
thereof) plus accrued interest to the date the Securities of that series are paid.
9
SECTION 2.8
Registered Securities
.
Each Note shall be issuable and transferable in fully registered book-entry form or
certificated form as specified in the applicable Pricing Supplement.
SECTION 2.9
Form of Notes
.
The Floating Rate Notes shall be substantially in the form attached as
Exhibit A
hereto. The Fixed Rate Notes shall be substantially in the form attached as
Exhibit B
hereto.
SECTION 2.10
Provision of Financial Information
.
Whether or not the Company is subject to Section 13 or 15(d) of the Exchange Act, the Company
will, to the extent permitted under the Exchange Act, file with the Commission the annual reports,
quarterly reports and other documents which the Company would have been required to file with the
Commission pursuant to such Section 13 or 15(d) if the Company were so subject, such documents to
be filed with the Commission on or prior to the respective dates (the Required Filing Dates) by
which the Company would have been required so to file such documents if the Company were so
subject.
The Company will also in any event (x) within 15 days of each Required Filing Date (i) if the
Company is not then subject to Section 13 or 15(d) of the Exchange Act, transmit by mail to all
Holders, as their names and addresses appear in the Security Register, without cost to such
Holders, copies of the annual reports, quarterly reports and other documents which the Company
would have been required to file with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act if the Company were subject to such Sections and (ii) file with the Trustee copies of
annual reports, quarterly reports and other documents which the Company would have been required to
file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act if the Company were
subject to such Sections and (y) supply, promptly upon written request and payment of the
reasonable cost of duplication and delivery, copies of such documents to any prospective Holder.
The Trustee shall not be required to examine any of the reports and other documents filed
therewith pursuant to the provisions of this Section 2.10 or Section 7.03 of the Senior Indenture
in order to determine whether the Company is in compliance with the provisions of Section 2.4 of
this Supplemental Indenture.
SECTION 2.11
Waiver of Certain Covenants.
Notwithstanding the provisions of Section 1009 of the Senior Indenture, the Company may omit
in any particular instance to comply with any term, provision or condition set forth in Sections
1004 to 1008, inclusive, of the Senior Indenture, with Sections 2.4 and 2.10 of this Supplemental
Indenture and with any
10
other term, provision or condition with respect to the Notes or any series
thereof (except any such term, provision or condition which could not be amended without the
consent of all Holders of the Notes or such series thereof, as applicable), if before or after the
time for such compliance the Holders of at least a majority in principal amount of all outstanding
Notes or such series thereof, as applicable, by Act of such Holders, either waive such compliance
in such instance or generally waive compliance with such covenant or condition. Except to the
extent so expressly waived, and until such waiver shall become effective, the obligations of the
Company and the duties of the Trustee in respect of any such term, provision or condition shall
remain in full force and effect.
ARTICLE THREE
MISCELLANEOUS PROVISIONS
SECTION 3.1.
Ratification of Senior
Indenture
.
Except as expressly modified or amended hereby, the Senior Indenture continues in full force
and effect and is in all respects confirmed and preserved.
SECTION 3.2.
Governing Law
.
This Supplemental Indenture and each Note shall be governed by and construed in accordance
with the laws of the State of New York. This Supplemental Indenture is subject to the provisions
of the Trust Indenture Act of 1939, as amended, and shall, to the extent applicable, be governed by
such provisions.
SECTION 3.3.
Counterparts
.
This Supplemental Indenture may be executed in any number of counterparts, each of which so
executed shall be deemed to be an original, but all such counterparts shall together constitute but
one and the same instrument.
[Signature page follows.]
11
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly
executed by their respective officers hereunto duly authorized, all as of the day and year first
written above.
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AVALONBAY COMMUNITIES, INC.
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By:
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/s/ Richard L. Michaux
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Richard L. Michaux
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Chief Executive Officer
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Attest:
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/s/ Edward M. Schulman
Edward
M. Schulman
Secretary
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STATE STREET BANK AND TRUST COMPANY
,
as Trustee
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By:
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/s/ Susan Calise
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Susan Calise
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Vice President
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Attest:
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/s/ Robert J. Dunn
Name:
Robert J. Dunn
Vice President
|
S-1
EXHIBIT A
Form of Floating Rate Note
[Face of Note]
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (THE
DEPOSITARY) (55 WATER STREET, NEW YORK, NEW YORK) TO THE ISSUER HEREOF OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY AND
ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
1
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING SET FORTH IN THE INDENTURE HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF CEDE & CO., AS NOMINEE OF THE DEPOSITARY. THIS
SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE. UNLESS AND
UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED FORM, THIS NOTE MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF
THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
2
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Registered No. FLR-
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[PRINCIPAL AMOUNT]
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CUSIP No:
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AVALONBAY COMMUNITIES, INC.
MEDIUM-TERM NOTE
(Floating Rate)
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INTEREST RATE BASIS OR
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ORIGINAL ISSUE DATE:
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STATED MATURITY
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BASES:
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DATE:
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1
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This paragraph applies to global Notes only.
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2
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This paragraph applies to global Notes only.
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A-1
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IF LIBOR:
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IF CMT RATE:
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o
LIBOR Reuters
|
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Designated CMT Telerate Page:
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Page: ___
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If Telerate Page 7052:
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o
LIBOR Telerate
|
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o
Weekly Average
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Page: ___
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o
Monthly Average
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Designated CMT Maturity Index:
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INDEX CURRENCY:
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INDEX MATURITY:
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INITIAL INTEREST RATE: ___%
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INTEREST PAYMENT
DATE(S):
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SPREAD (PLUS OR
MINUS):
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SPREAD MULTIPLIER:
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INITIAL INTEREST
RESET DATE:
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MINIMUM INTEREST
RATE: ___%
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MAXIMUM INTEREST RATE ___%
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INTEREST RESET
DATE(S):
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INITIAL REDEMPTION
DATE:
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INITIAL REDEMPTION PERCENTAGE: ___%
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ANNUAL REDEMPTION
PERCENTAGE
REDUCTION:
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OPTIONAL PAYMENT
DATE(S):
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CALCULATION AGENT:
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INTEREST CATEGORY:
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o
Regular Floating Rate Note
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DAY COUNT CONVENTION:
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o
Floating Rate/Fixed Rate Note
|
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o
30/360 for the period
|
Fixed Rate Commencement Date:
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from
to
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Fixed Interest Rate: %
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o
Actual/360 for the period
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o
Inverse Floating Rate Note
|
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from
to
|
Fixed Interest Rate: %
|
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o
Actual/Actual for the period
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o
Original Issue Discount Note
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from
to
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Issue Price: %
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Applicable Interest Rate Basis:
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SPECIFIED CURRENCY:
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AUTHORIZED DENOMINATION:
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o
US Dollars
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o
$1,000 and integral multiples thereof
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o
Other:
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o
Other:
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EXCHANGE RATE:
U.S. $1.00 =
EXCHANGE RATE AGENT:
AMORTIZING SECURITY:
A-2
o
Yes
o
No
AMORTIZATION FORMULA:
AMORTIZATION PAYMENT DATE(S):
DEFAULT RATE: %
ADDENDUM ATTACHED:
o
Yes
o
No
OTHER/ADDITIONAL PROVISIONS:
AVALONBAY COMMUNITIES, INC., a corporation duly organized and existing under the laws of
Maryland (hereinafter referred to as the Company, which term includes any successor entity under
the Indenture hereinafter referred to), for value received, hereby promises to pay to
___, or registered assigns, the principal sum of ___, on the
Stated Maturity Date specified above (or any Redemption Date or Repayment Date, each as defined
below) (each such Stated Maturity Date, Redemption Date or Repayment Date being hereinafter
referred to as the Maturity Date with respect to the principal repayable on such date) and to pay
interest thereon, at a rate per annum equal to the initial Interest Rate specified above until the
Initial Interest Reset Date specified above and thereafter at a rate determined in accordance with
the provisions specified above and on the reverse hereof or in an Addendum hereto with respect to
one or more Interest Rate Bases specified above until the principal hereof is paid or duly made
available for payment, and (to the extent that the payment of such interest shall be legally
enforceable) at the Default Rate per annum specified above on any overdue principal, premium and/or
interest, including any overdue sinking fund or redemption payment. The Company will pay interest
in arrears on each Interest Payment Date, if any, specified above (each, an Interest Payment
Date), commencing with the first Interest Payment Date next succeeding the Original Issue Date
specified above, and on the Maturity Date; provided, however, that if the Original Issue Date
occurs between a Record Date (as defined below) and the next succeeding Interest Payment Date,
interest payments will commence on the second Interest Payment Date next succeeding the Original
Issue Date to the holder of this Note on the Record Date with respect to such second Interest
Payment Date.
Interest on this Note will accrue from, and including, the immediately preceding Interest
Payment Date to which interest has been paid or duly provided for (or from, and including, the
Original Issue Date if no interest has been paid or duly provided for) to, but excluding, the
applicable Interest Payment Date or the Maturity Date, as the case may be (each, an Interest
Period). The interest so payable, and punctually paid or duly provided for, on any Interest
Payment Date will, subject to certain exceptions described herein, be paid to the person in whose
name this Note (or one or more predecessor Notes) is registered at the close of business on the
fifteenth calendar day (whether or not a Business Day, as defined on the reverse hereof)
A-3
immediately preceding such Interest Payment Date (the Record Date); provided, however, that
interest payable on the Maturity Date will be payable to the person to whom the principal hereof
and premium, if any, hereon shall be payable. Any such interest not so punctually paid or duly
provided for (Defaulted Interest) will forthwith cease to be payable to the holder on any Record
Date, and shall be paid to the person in whose name this Note is registered at the close of
business on a special record date (the Special Record Date) for the payment of such Defaulted
Interest to be fixed by the Trustee hereinafter referred to, notice whereof shall be given to the
holder of this Note by the Trustee 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 this Note may be listed, and upon such notice as
may be required by such exchange, all as more fully provided for in the Indenture.
Payment of principal, premium, if any, and interest in respect of this Note due on the
Maturity Date, or any prior date on which the principal or an installment of principal of this Note
becomes due and payable, whether by the declaration of acceleration or otherwise, will be made in
immediately available funds upon presentation and surrender of this Note (and, with respect to any
applicable repayment of this Note, upon presentation and surrender of this Note and a duly
completed election form as contemplated on the reverse hereof) at the office or agency maintained
by the Company for that purpose in the Borough of Manhattan, The City of New York; provided,
however, that if the Specified Currency specified above is other than United States dollars and
such payment is to be made in the Specified Currency in accordance with the provisions set forth
below, such payment may be made by wire transfer of immediately available funds to an account with
a bank designated by the holder hereof at least 15 calendar days prior to the Maturity Date,
provided that such bank has appropriate facilities therefor and that this Note (and, if applicable,
a duly completed repayment election form) is presented and surrendered at the aforementioned office
or agency maintained by the Company in time for the Trustee to make such payment in such funds in
accordance with its normal procedures. Payment of interest due on any Interest Payment Date other
than the Maturity Date will be made at the aforementioned office or agency maintained by the
Company or, at the option of the Company, by check mailed to the address of the person entitled
thereto as such address shall appear in the Security Register maintained by the Trustee; provided,
however, that a holder of U.S. $10,000,000 (or, if the Specified Currency is other than United
States dollars, the equivalent thereof in the Specified Currency) or more in aggregate principal
amount of Notes (whether having identical or different terms and provisions) will be entitled to
receive interest payments on any Interest Payment Date other than the Maturity Date by wire
transfer of immediately available funds if appropriate wire transfer instructions have been
received in writing by the Trustee not less than 15 calendar days prior to such Interest Payment
Date. Any such wire transfer instructions received by the Trustee shall remain in effect until
revoked by such holder.
If any Interest Payment Date other than the Maturity Date would otherwise be a day that is not
a Business Day, such Interest Payment Date shall be postponed to the next succeeding Business Day,
except that if LIBOR is an applicable Interest Rate Basis and such Business Day falls in the next
succeeding calendar month, such Interest Payment Date shall be the immediately preceding Business
Day. If the Maturity Date falls on a day that is not a Business Day, the required payment of
principal, premium, if any, and interest shall be made on the next succeeding Business Day with the
same force and effect as if made on the date such
A-4
payment was due, and no interest shall accrue
with respect to such payment for the period from and after the Maturity Date to the date of such
payment on the next succeeding Business Day.
As used herein, Business Day means any day, other than a Saturday or Sunday, that is neither
a legal holiday nor a day on which banking institutions are authorized or required by law,
regulation or executive order to close in The City of New York or Chicago; provided, however, that
if the Specified Currency is other than United States dollars, such day is also not a day on which
banking institutions are authorized or required by law, regulation or executive order to close in
the Principal Financial Center (as defined below) of the country issuing the Specified Currency
(or, if the Specified Currency is European Currency Units (ECU), such day is not a day that
appears as an ECU non-settlement day on the display designated as ISDE on the Reuter Monitor
Money Rates Service (or a day so designated by the ECU Banking Association), or, if ECU
non-settlement days do not appear on that page (and are not so designated), is not a day on which
payments in ECU cannot be settled in the international interbank market); provided, further, that
if LIBOR is an applicable Interest Rate Basis, such day is also a London Business Day (as defined
below). London Business Day means (i) if the Index Currency (as defined below) is other than ECU,
any day on which dealings in such Index Currency are transacted in the London interbank market or
(ii) if the Index Currency is ECU, any day that does not appear as an ECU non-settlement day on the
display designated as ISDE on the Reuter Monitor Money Rates Service (or a day so designated by
the ECU Banking Association) or, if ECU non-settlement days do not appear on that page (and are not
so designated), is not a day on which payments in ECU cannot be settled in the international
interbank market. Principal Financial Center means the capital city of the country issuing the
Specified Currency or, solely with respect to the calculation of LIBOR, the Index Currency, except
that with respect to United States dollars, Australian dollars, Deutsche marks, Dutch guilders,
Italian lire, Swiss francs and ECU, the Principal Financial Center shall be The City of New York,
Sydney, Frankfurt, Amsterdam, Milan, Zurich and Luxembourg, respectively.
The Company is obligated to make payments of principal, premium, if any, and interest in
respect of this Note in the Specified Currency (or, if the Specified Currency is not at the time of
such payment legal tender for the payment of public and private debts, in such other coin or
currency of the country which issued the Specified Currency as at the time of such payment is legal
tender for the payment of such debts). If the Specified Currency is other than United States
dollars, except as provided below, any such amounts so payable by the Company will be converted by
the Exchange Rate Agent specified above into United States dollars for payment to the holder of
this Note.
If the Specified Currency is other than United States dollars, the holder of this Note may
elect to receive such amounts in such Specified Currency. If the holder of this Note shall not have
duly made an election to receive all or a specified portion of any payment of principal, premium,
if any, and/or interest in respect of this Note in the Specified Currency, any United States dollar
amount to be received by the holder of this Note will be based on the highest bid quotation in The
City of New York received by the Exchange Rate Agent at approximately 11:00 A.M., New York City
time, on the second Business Day preceding the applicable payment date from three recognized
foreign exchange dealers (one of whom may be the Exchange Rate Agent) selected by the Exchange Rate
Agent and approved by the Company for the purchase by
A-5
the quoting dealer of the Specified Currency
for United States dollars for settlement on such payment date in the aggregate amount of such
Specified Currency payable to all holders of Foreign Currency Notes scheduled to receive United
States dollar payments and at which the applicable dealer commits to execute a contract. All
currency exchange costs will be borne by
the holder of this Note by deductions from such payments. If three such bid quotations are not
available, payments on this Note will be made in the Specified Currency.
If the Specified Currency is other than United States dollars, the holder of this Note may
elect to receive all or a specified portion of any payment of principal, premium, if any, and/or
interest in respect of this Note in the Specified Currency by submitting a written request for such
payment to the Trustee at its Corporate Trust Office in The City of New York on or prior to the
applicable Record Date or at least 15 calendar days prior to the Maturity Date, as the case may be.
Such written request may be mailed or hand delivered or sent by cable, telex or other form of
facsimile transmission. The holder of this Note may elect to receive all or a specified portion of
all future payments in the Specified Currency in respect of such principal, premium, if any, and/or
interest and need not file a separate election for each payment. Such election will remain in
effect until revoked by written notice to the Trustee, but written notice of any such revocation
must be received by the Trustee on or prior to the applicable Record Date or at least 15 calendar
days prior to the Maturity Date, as the case may be. If the Specified Currency is other than
United States dollars or a composite currency and the holder of this Note shall have duly made an
election to receive all or a specified portion of any payment of principal, premium, if any, and/or
interest in respect of this Note in the Specified Currency and if the Specified Currency is not
available due to the imposition of exchange controls or other circumstances beyond the reasonable
control of the Company, the Company will be entitled to satisfy its obligations to the holder of
this Note by making such payment in United States dollars on the basis of the Market Exchange Rate
(as defined below) on the second Business Day prior to such payment date or, if such Market
Exchange Rate is not then available, on the basis of the most recently available Market Exchange
Rate or as otherwise specified on the face hereof. The Market Exchange Rate for the Specified
Currency means the noon dollar buying rate in The City of New York for cable transfers for such
Specified Currency as certified for customs purposes by (or if not so certified, as otherwise
determined by) the Federal Reserve Bank of New York. Any payment made under such circumstances in
United States dollars will not constitute an Event of Default (as defined in the Indenture) with
respect to this Note.
If the Specified Currency is a composite currency and the holder of this Note shall have duly
made an election to receive all or a specified portion of any payment of principal, premium, if
any, and/or interest in respect of this Note in the Specified Currency and if such composite
currency is unavailable due to the imposition of exchange controls or other circumstances beyond
the reasonable control of the Company, then the Company will be entitled to satisfy its obligations
to the holder of this Note by making such payment in United States dollars. The amount of each
payment in United States dollars shall be computed by the Exchange Rate Agent on the basis of the
equivalent of the composite currency in United States dollars. The component currencies of the
composite currency for this purpose (collectively, the Component Currencies and each, a
Component Currency) shall be the currency amounts that were components of the composite currency
as of the last day on which the composite currency was used. The equivalent of the composite
currency in United States dollars shall be calculated by
A-6
aggregating the United States dollar
equivalents of the Component Currencies. The United States dollar equivalent of each of the
Component Currencies shall be determined by the Exchange Rate Agent on the basis of the most
recently available Market Exchange Rate for each such Component Currency, or as otherwise specified
on the face hereof.
If the official unit of any Component Currency is altered by way of combination or
subdivision, the number of units of the currency as a Component Currency shall be divided or
multiplied in the same proportion. If two or more Component Currencies are consolidated into a
single currency, the amounts of those currencies as Component Currencies shall be replaced by an
amount in such single currency equal to the sum of the amounts of the consolidated Component
Currencies expressed in such single currency. If any Component Currency is divided into two or more
currencies, the amount of the original Component Currency shall be replaced by the amounts of such
two or more currencies, the sum of which shall be equal to the amount of the original Component
Currency.
All determinations referred to above made by the Exchange Rate Agent shall be at its sole
discretion and shall, in the absence of manifest error, be conclusive for all purposes and binding
on the holder of this Note.
Reference is hereby made to the further provisions of this Note set forth on the reverse
hereof and, if so specified above on the face hereof, in the Addendum hereto, which further
provisions shall have the same force and effect as if set forth on the face hereof.
Notwithstanding any provisions to the contrary contained herein, if the face of this Note
specifies that an Addendum is attached hereto or that Other/Additional Provisions apply to this
Note, this Note shall be subject to the terms set forth in such Addendum or such Other/Additional
Provisions.
Unless the Certificate of Authentication hereon has been executed by the Trustee or its
Authenticating Agent by manual signature, this Note shall not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose.
A-7
IN WITNESS WHEREOF, AvalonBay Communities, Inc. has caused this Note to be duly executed under
its corporate seal.
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Dated:
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AVALONBAY COMMUNITIES, INC.
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By:
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Richard L. Michaux
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President and Chief Executive Officer
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[Corporate Seal]
Attest:
TRUSTEES CERTIFICATE OF AUTHENTICATION:
This is one of the Securities of the series designated therein referred to in the
within-mentioned Indenture.
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STATE STREET BANK AND TRUST COMPANY,
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as Trustee
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Dated:
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By
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Robert J. Dunn
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Vice President
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A-8
[Reverse Of Note]
AVALONBAY COMMUNITIES, INC.
MEDIUM-TERM NOTE
(Floating Rate)
This Note is one of a duly authorized series of Securities (the Securities) of the Company
issued and to be issued under an Indenture, dated as of January 16, 1998, as amended and
supplemented by the First Supplemental Indenture dated as of January 20, 1998, the Second
Supplemental Indenture dated July 7, 1998 and the Amended and Restated Third Supplemental Indenture
dated July 7, 2000, as further amended, modified or supplemented from time to time (the
Indenture), between the Company and State Street Bank and Trust Company, as Trustee (the
Trustee, which term includes any successor trustee under the Indenture), to which Indenture and
all indentures supplemental thereto reference is hereby made for a statement of the respective
rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the
holders of the Securities, and of the terms upon which the Securities are, and are to be,
authenticated and delivered. This Note is one of the series of Securities designated as
Medium-Term Notes Due Nine Months or More from Date of Issue (the Notes). All terms used but
not defined in this Note or in an Addendum hereto shall have the meanings assigned to such terms in
the Indenture or on the face hereof, as the case may be.
This Note is issuable only in registered form without coupons in minimum denominations of U.S.
$1,000 and integral multiples thereof or the minimum Authorized Denomination specified on the face
hereof.
This Note will not be subject to any sinking fund and, unless otherwise specified on the face
hereof in accordance with the provisions of the following two paragraphs, will not be redeemable or
repayable prior to the Stated Maturity Date.
This Note will be subject to redemption at the option of the Company on any date on and after
the Initial Redemption Date, if any, specified on the face hereof, in whole or from time to time in
part in increments of U.S. $1,000 or the minimum Authorized Denomination (provided that any
remaining principal amount hereof shall be at least U.S. $1,000 or such minimum Authorized
Denomination), at the Redemption Price (as defined below), together with unpaid interest accrued
thereon to the date fixed for redemption (each, a Redemption Date), on notice given not more than
60 nor less than 30 calendar days prior to the Redemption Date and in accordance with the
provisions of the Indenture. The Redemption Price shall initially be the Initial Redemption
Percentage specified on the face hereof multiplied by the unpaid principal amount of this Note to
be redeemed. The Initial Redemption Percentage shall decline at each anniversary of the Initial
Redemption Date by the Annual Redemption Percentage Reduction, if any, specified on the face hereof
until the Redemption Price is 100% of the unpaid principal amount to be redeemed. In the event of
redemption of this Note in part only, a new Note of like tenor for the unredeemed portion hereof
and otherwise having the same terms as this Note shall be issued in the name of the holder hereof
upon the presentation and surrender hereof.
A-9
This Note will be subject to repayment by the Company at the option of the holder hereof on
the Optional Repayment Date(s), if any, specified on the face hereof, in whole or in part in
increments of U.S. $1,000 or the minimum Authorized Denomination (provided that any remaining
principal amount hereof shall be at least U.S. $1,000 or such minimum Authorized Denomination), at
a repayment price equal to 100% of the unpaid principal amount to be repaid, together with unpaid
interest accrued thereon to the date fixed for repayment (each, a Repayment Date). For this Note
to be repaid, the Trustee must receive at its office in the Borough of Manhattan, The City of New
York, referred to on the face hereof, at least 30 days but not more than 60 days prior to the
Repayment Date (i) this Note and the form hereon entitled Option to Elect Repayment duly
completed or (ii) a telegram, telex, facsimile transmission, or a letter from a member of a
national securities exchange or the National Association of Securities Dealers, Inc. or a
commercial bank or trust company in the United States setting forth the name of the holder hereof,
the principal amount of this Note, the principal amount of this Note to be repaid, the certificate
number or a description of the tenor and terms of this Note, a statement that the option to elect
repayment is being exercised thereby, and a guarantee that this Note, together with the form hereon
entitled Option to Elect Repayment duly completed, will be received by the Trustee not later than
the fifth Business Day after the date of such telegram, telex, facsimile transmission or letter,
provided that such telegram, telex, facsimile transmission or letter shall only be effective if
this Note and duly completed form are received by the Trustee by such fifth Business Day. Exercise
of such repayment option by the holder hereof will be irrevocable. In the event of repayment of
this Note in part only, a new Note of like tenor for the unrepaid portion hereof and otherwise
having the same terms as this Note shall be issued in the name of the holder hereof upon the
presentation and surrender hereof.
If this Note is an Original Issue Discount Note as specified on the face hereof, the amount
payable to the holder of this Note in the event of redemption, repayment or acceleration of
maturity of this Note will be equal to the sum of (i) the Issue Price specified on the face hereof
(increased by any accruals of the Discount, as defined below) and, in the event of any redemption
of this Note (if applicable), multiplied by the Initial Redemption Percentage (as adjusted by the
Annual Redemption Percentage Reduction, if applicable) and (ii) any unpaid interest on this Note
accrued from the Original Issue Date to the Redemption Date, Repayment Date or date of acceleration
of maturity, as the case may be. The difference between the Issue Price and 100% of the principal
amount of this Note is referred to herein as the Discount.
For purposes of determining the amount of Discount that has accrued as of any Redemption Date,
Repayment Date or date of acceleration of maturity of this Note, such Discount will be accrued
using a constant yield method. The constant yield will be calculated using a 30-day month, 360-day
year convention, a compounding period that, except for the Initial Period (as defined below),
corresponds to the shortest period between Interest Payment Dates (with ratable accruals within a
compounding period), a coupon rate equal to the initial coupon rate applicable to this Note and an
assumption that the maturity of this Note will not be accelerated. If the period from the Original
Issue Date to the initial Interest Payment Date (the Initial Period) is shorter than the
compounding period for this Note, a proportionate amount of the yield for an entire compounding
period will be accrued. If the Initial Period is longer than the
A-10
compounding period, then such
period will be divided into a regular compounding period and a short period, with the short period
being treated as provided in the preceding sentence.
The interest rate borne by this Note will be determined as follows:
(i) Unless the Interest Category of this Note is specified on the face hereof as a Floating
Rate/Fixed Rate Note or an Inverse Floating Rate Note or as otherwise specified as
Other/Additional Provisions on the face hereof or in an Addendum hereto, this Note shall be
designated as a Regular Floating Rate Note and, except as set forth below or specified on the
face hereof or in an Addendum hereto, shall bear interest at the rate determined by reference to
the applicable Interest Rate Basis or Bases (a) plus or minus the Spread, if any, and/or (b)
multiplied by the Spread Multiplier, if any, in each case as specified on the face hereof.
Commencing on the Initial Interest Reset Date, the rate at which interest on this Note shall
be payable shall be reset as of each Interest Reset Date specified on the face hereof; provided,
however, that the interest rate in effect for the period, if any, from the Original Issue Date to
the Initial Interest Reset Date shall be the Initial Interest Rate.
(ii) If the Interest Category of this Note is specified on the face hereof as a Floating
Rate/Fixed Rate Note, then, except as set forth below or specified on the face hereof or in an
Addendum hereto, this Note shall bear interest at the rate determined by reference to the
applicable Interest Rate Basis or Bases (a) plus or minus the Spread, if any, and/or (b) multiplied
by the Spread Multiplier, if any. Commencing on the Initial Interest Reset Date, the rate at which
interest on this Note shall be payable shall be reset as of each Interest Reset Date; provided,
however, that (y) the interest rate in effect for the period, if any, from the Original Issue Date
to the Initial Interest Reset Date shall be the Initial Interest Rate and (z) the interest rate in
effect for the period commencing on the Fixed Rate Commencement Date specified on the face hereof
to the Maturity Date shall be the Fixed Interest Rate specified on the face hereof or, if no such
Fixed Interest Rate is specified, the interest rate in effect hereon on the day immediately
preceding the Fixed Rate Commencement Date.
(iii) If the Interest Category of this Note is specified on the face hereof as an Inverse
Floating Rate Note, then, except as set forth below or specified on the face hereof or in an
Addendum hereto, this Note shall bear interest at the Fixed Interest Rate minus the rate determined
by reference to the applicable Interest Rate Basis or Bases (a) plus or minus the Spread, if any,
and/or (b) multiplied by the Spread Multiplier, if any; provided, however, that, unless otherwise
specified on the face hereof or in an Addendum hereto, the interest rate hereon shall not be less
than zero. Commencing on the Initial Interest Reset Date, the rate at which interest on this Note
shall be payable shall be reset as of each Interest Reset Date; provided, however, that the
interest rate in effect for the period, if any, from the Original Issue Date to the Initial
Interest Reset Date shall be the Initial Interest Rate.
Except as set forth above or specified on the face hereof or in an Addendum hereto, the
interest rate in effect on each day shall be (i) if such day is an Interest Reset Date, the
interest rate determined as of the Interest Determination Date (as defined below) immediately
preceding such Interest Reset Date or (ii) if such day is not an Interest Reset Date, the interest
A-11
rate determined as of the Interest Determination Date immediately preceding the most recent
Interest Reset Date. If any Interest Reset Date would otherwise be a day that is not a Business
Day, such Interest Reset Date shall be postponed to the next succeeding Business Day, except that
if LIBOR is an applicable Interest Rate Basis and such Business Day falls in the next
succeeding calendar month, such Interest Reset Date shall be the immediately preceding
Business Day. In addition, if the Treasury Rate is an applicable Interest Rate Basis and the
Interest Determination Date would otherwise fall on an Interest Reset Date, then such Interest
Reset Date will be postponed to the next succeeding Business Day.
The interest rate applicable to each Interest Reset Period commencing on the related Interest
Reset Date will be determined by the Calculation Agent as of the applicable Interest Determination
Date and will be calculated by the Calculation Agent on or prior to the Calculation Date (as
defined below), except with respect to LIBOR and the Eleventh District Cost of Funds Rate, which
will be calculated on such Interest Determination Date. The Interest Determination Date with
respect to the CD Rate, the CMT Rate, the Commercial Paper Rate, the Federal Funds Rate and the
Prime Rate will be the second Business Day immediately preceding the applicable Interest Reset
Date; the Interest Determination Date with respect to the Eleventh District Cost of Funds Rate
shall be the last business day of the month immediately preceding the applicable Interest Reset
Date on which the Federal Home Loan Bank of San Francisco (the FHLB of San Francisco) publishes
the Index (as defined below); and the Interest Determination Date with respect to LIBOR shall be
the second London Business Day immediately preceding the applicable Interest Reset Date, unless the
Index Currency is British pounds sterling, in which case the Interest Determination Date will be
the applicable Interest Reset Date. The Interest Determination Date, with respect to the Treasury
Rate shall be the day in the week in which the applicable Interest Reset Date falls on which day
Treasury Bills (as defined below) are normally auctioned (Treasury Bills are normally sold at an
auction held on Monday of each week, unless that day is a legal holiday, in which case the auction
is normally held on the following Tuesday, except that such auction may be held on the preceding
Friday); provided, however, that if an auction is held on the Friday of the week preceding the
applicable Interest Reset Date, the Interest Determination Date shall be such preceding Friday.
If the interest rate of this Note is determined with reference to two or more Interest Rate Bases
specified on the face hereof, the Interest Determination Date pertaining to this Note shall be
the most recent Business Day which is at least two Business Days prior to the applicable Interest
Reset Date on which each Interest Rate Basis is determinable. Each Interest Rate Basis shall be
determined as of such date, and the applicable interest rate shall take effect on the applicable
Interest Reset Date.
Unless otherwise specified on the face hereof or in an Addendum hereto, the rate with respect
to each Interest Rate Basis will be determined in accordance with the following provisions:
CD Rate
. If an Interest Rate Basis for this Note is specified on the face hereof as the CD
Rate, the CD Rate shall be determined as of the applicable Interest Determination Date (a CD Rate
Interest Determination Date) as the rate on such date for negotiable United States dollar
certificates of deposit having the Index Maturity specified on the face hereof as published by the
Board of Governors of the Federal Reserve System in Statistical Release H.15(519),
A-12
Selected
Interest Rates or any successor publication (H.15(519)) under the heading CDS (Secondary
Market), or, if not published by 3:00 P.M., New York City time, on the related Calculation Date,
the rate on such CD Rate Interest Determination Date for negotiable United States dollar
certificates of deposit of the Index Maturity as published by the Federal Reserve Bank of New York
in its daily statistical release Composite 3:30 P.M. Quotations for United
States Government Securities or any successor publication (Composite Quotations) under the
heading Certificates of Deposit. If such rate is not yet published in either H.15(519) or
Composite Quotations by 3:00 P.M., New York City time, on the related Calculation Date, then the CD
Rate on such CD Rate Interest Determination Date will be calculated by the Calculation Agent
specified on the face hereof and will be the arithmetic mean of the secondary market offered rates
as of 10:00 A.M., New York City time, on such CD Rate Interest Determination Date, of three leading
nonbank dealers in negotiable United States dollar certificates of deposit in The City of New York
selected by the Calculation Agent for negotiable United States dollar certificates of deposit of
major United States money center banks in the market for negotiable United States dollar
certificates of deposit with a remaining maturity closest to the Index Maturity in an amount that
is representative for a single transaction in that market at that time; provided, however, that if
the dealers so selected by the Calculation Agent are not quoting as mentioned in this sentence, the
CD Rate determined as of such CD Rate Interest Determination Date will be the CD Rate in effect on
such CD Rate Interest Determination Date.
CMT Rate
. If an Interest Rate Basis for this Note is specified on the face hereof as the CMT
Rate, the CMT Rate shall be determined as of the applicable Interest Determination Date (a CMT
Rate Interest Determination Date) as the rate displayed on the Designated CMT Telerate Page (as
defined below) under the caption . . . Treasury Constant Maturities . . . Federal Reserve Board
Release H.15 . . . Mondays Approximately 3:45 P.M., under the column for the Designated CMT
Maturity Index (as defined below) for (i) if the Designated CMT Telerate Page is 7055, the rate on
such CMT Rate Interest Determination Date and (ii) if the Designated CMT Telerate Page is 7052, the
weekly or monthly average, as specified on the face hereof, for the week or month, as applicable,
ended immediately preceding the week or month, as applicable, in which the related CMT Rate
Interest Determination Date occurs. If such rate is no longer displayed on the relevant page or is
not displayed by 3:00 P.M., New York City time, on the related Calculation Date, then the CMT Rate
for such CMT Rate Interest Determination Date will be such treasury constant maturity rate for the
Designated CMT Maturity Index as published in H.15(519). If such rate is no longer published or is
not published by 3:00 P.M., New York City time, on the related Calculation Date, then the CMT Rate
on such CMT Rate Interest Determination Date will be such treasury constant maturity rate for the
Designated CMT Maturity Index (or other United States Treasury rate for the Designated CMT Maturity
Index) for the CMT Rate Interest Determination Date with respect to such Interest Reset Date as may
then be published by either the Board of Governors of the Federal Reserve System or the United
States Department of the Treasury that the Calculation Agent determines to be comparable to the
rate formerly displayed on the Designated CMT Telerate Page and published in H.15(519). If such
information is not provided by 3:00 P.M., New York City time, on the related Calculation Date, then
the CMT Rate on the CMT Rate Interest Determination Date will be calculated by the Calculation
Agent and will be a yield to maturity, based on the arithmetic mean of the secondary market closing
offer side prices as of approximately 3:30 P.M., New York City time, on such CMT Rate Interest
Determination Date reported, according to their written records, by three
A-13
leading primary United
States government securities dealers (each, a Reference Dealer) in The City of New York selected
by the Calculation Agent (from five such Reference Dealers selected by the Calculation Agent and
eliminating the highest quotation (or, in the event of equality, one of the highest) and the lowest
quotation (or, in the event of equality, one of the lowest)), for the most recently issued direct
noncallable fixed rate obligations of the United States (Treasury Notes) with an original
maturity of approximately the Designated CMT Maturity Index and a
remaining term to maturity of not less than such Designated CMT Maturity Index minus one year.
If the Calculation Agent is unable to obtain three such Treasury Note quotations, the CMT Rate on
such CMT Rate Interest Determination Date will be calculated by the Calculation Agent and will be a
yield to maturity based on the arithmetic mean of the secondary market offer side prices as of
approximately 3:30 P.M., New York City time, on such CMT Rate Interest Determination Date of three
Reference Dealers in The City of New York (from five such Reference Dealers selected by the
Calculation Agent and eliminating the highest quotation (or, in the event of equality, one of the
highest) and the lowest quotation (or, in the event of equality, one of the lowest)), for Treasury
Notes with an original maturity of the number of years that is the next highest to the Designated
CMT Maturity Index and a remaining term to maturity closest to the Designated CMT Maturity Index
and in an amount of at least U.S.$100 million. If three or four (and not five) of such Reference
Dealers are quoting as described above, then the CMT Rate will be based on the arithmetic mean of
the offer prices obtained and neither the highest nor the lowest of such quotes will be eliminated;
provided, however, that if fewer than three Reference Dealers selected by the Calculation Agent are
quoting as mentioned herein, the CMT Rate determined as of such CMT Rate Interest Determination
Date will be the CMT Rate in effect on such CMT Rate Interest Determination Date. If two Treasury
Notes with an original maturity as described in the second preceding sentence have remaining terms
to maturity equally close to the Designated CMT Maturity Index, the Calculation Agent will obtain
quotations for the Treasury Note with the shorter remaining term to maturity and will use such
quotations to calculate the CMT Rate as set forth above.
Designated CMT Telerate Page means the display on the Dow Jones Telerate Service (or any
successor service) on the page specified on the face hereof (or any other page as may replace such
page on that service (or any successor service) for the purpose of displaying Treasury Constant
Maturities as reported in H.15(519)). If no such page is specified on the face hereof, the
Designated CMT Telerate Page shall be 7052, for the most recent week.
Designated CMT Maturity Index means the original period to maturity of the United States
Treasury securities (either one, two, three, five, seven, 10, 20 or 30 years) specified on the face
hereof with respect to which the CMT Rate will be calculated. If no such maturity is specified on
the face hereof, the Designated CMT Maturity Index shall be two years.
Commercial Paper Rate
. If an Interest Rate Basis for this Note is specified on the face hereof
as the Commercial Paper Rate, the Commercial Paper Rate shall be determined as of the applicable
Interest Determination Date (a Commercial Paper Rate Interest Determination Date) as the Money
Market Yield (as defined below) on such date of the rate for commercial paper having the Index
Maturity as published in H.15(519) under the heading Commercial
Paper Non Financial.
A-14
In the event that such rate is not published by 3:00 P.M., New York City time, on the related
Calculation Date, then the Commercial Paper Rate on such Commercial Paper Rate Interest
Determination Date will be the Money Market Yield of the rate or commercial paper having the Index
Maturity as published in Composite Quotations under the heading Commercial Paper (with an Index
Maturity of one month or three months being deemed to be equivalent to an Index Maturity of 30 days
or 90 days, respectively). If such rate is not yet published in either H.l5(519) or Composite
Quotations by 3:00 P.M., New York City time, on the related
Calculation Date, then the Commercial Paper Rate on such Commercial Paper Rate Interest
Determination Date will be calculated by the Calculation Agent and shall be the Money Market Yield
of the arithmetic mean of the offered rates at approximately 11:00 A.M., New York City time, on
such Commercial Paper Rate Interest Determination Date of three leading dealers of commercial paper
in The City of New York selected by the Calculation Agent for commercial paper having the Index
Maturity placed for an industrial issuer whose bond rating is AAA, or the equivalent, from a
nationally recognized statistical rating organization; provided, however, that if the dealers so
selected by the Calculation Agent are not quoting as mentioned in this sentence, the Commercial
Paper Rate determined as of such Commercial Paper Rate Interest Determination Date will be the
Commercial Paper Rate in effect on such Commercial Paper Rate Interest Determination Date.
Money Market Yield means a yield (expressed as a percentage) calculated in accordance with
the following formula:
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Money Market Yield =
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D x 360
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x 100
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360 (D x M)
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where D refers to the applicable per annum rate for commercial paper quoted on a bank discount
basis and expressed as a decimal, and M refers to the actual number of days in the Interest
Period for which interest is being calculated.
Eleventh District Cost of Funds Rate
. If an Interest Rate Basis for this Note is specified on
the face hereof as the Eleventh District Cost of Funds Rate, the Eleventh District Cost of Funds
Rate shall be determined as of the applicable Interest Determination Date (an Eleventh District
Cost of Funds Rate Interest Determination Date) as the rate equal to the monthly weighted average
cost of funds for the calendar month immediately preceding the month in which such Eleventh
District Cost of Funds Rate Interest Determination Date falls, as set forth under the caption llth
District on Telerate Page 7058 as of 11:00 A.M., San Francisco time, on such Eleventh District
Cost of Funds Rate Interest Determination Date. If such rate does not appear on Telerate Page 7058
on such Eleventh District Cost of Funds Rate Interest Determination Date, then the Eleventh
District Cost of Funds Rate on such Eleventh District Cost of Funds Rate Interest Determination
Date shall be the monthly weighted average cost of funds paid by member institutions of the
Eleventh Federal Home Loan Bank District that was most recently announced (the Index) by the FHLB
of San Francisco as such cost of funds for the calendar month immediately preceding such Eleventh
District Cost of Funds Rate Interest Determination Date. If the FHLB of San Francisco fails to
announce the Index on or prior to such Eleventh District Cost of Funds Rate Interest Determination
Date for the calendar month immediately preceding such Eleventh District Cost of Funds Rate
Interest Determination Date,
A-15
the Eleventh District Cost of Funds Rate determined as of such
Eleventh District Cost of Funds Rate Interest Determination Date will be the Eleventh District Cost
of Funds Rate in effect on such Eleventh District Cost of Funds Rate Interest Determination Date.
Federal Funds Rate
. If an Interest Rate Basis for this Note is specified on the face hereof as
the Federal Funds Rate, the Federal Funds Rate shall be determined as of the applicable Interest
Determination Date (a Federal Funds Rate Interest Determination Date) as the rate on such date
for United States dollar federal funds as published in H.15(519) under the heading
Federal Funds (Effective) or, if not published by 3:00 P.M., New York City time, on the
Calculation Date, the rate on such Federal Funds Rate Interest Determination Date as published in
Composite Quotations under the heading Federal Funds/Effective Rate. If such rate is not
published in either H.15(519) or Composite Quotations by 3:00 P.M., New York City time, on the
related Calculation Date, then the Federal Funds Rate on such Federal Funds Interest Determination
Date shall be calculated by the Calculation Agent and will be the arithmetic mean of the rates for
the last transaction in overnight United States dollar federal funds arranged by three leading
brokers of federal funds transactions in The City of New York selected by the Calculation Agent,
prior to 9:00 A.M., New York City time, on such Federal Funds Rate Interest Determination Date;
provided, however, that if the brokers so selected by the Calculation Agent are not quoting as
mentioned in this sentence, the Federal Funds Rate determined as of such Federal Funds Rate
Interest Determination Date will be the Federal Funds Rate in effect on such Federal Funds Rate
Interest Determination Date.
LIBOR
. If an Interest Rate Basis for this Note is specified on the face hereof as LIBOR, LIBOR
shall be determined by the Calculation Agent as of the applicable Interest Determination Date (a
LIBOR Interest Determination Date) in accordance with the following provisions:
(i) if (a) LIBOR Reuters is specified on the face hereof, the arithmetic mean of the
offered rates (unless the Designated LIBOR Page (as defined below) by its terms provides
only for a single rate, in which case such single rate will be used) for deposits in the
Index Currency having the Index Maturity, commencing on the applicable Interest Reset Date,
that appear (or, if only a single rate is required as aforesaid, appears) on the Designated
LIBOR Page (as defined below) as of 11:00 A.M., London time, on such LIBOR Interest
Determination Date, or (b) LIBOR Telerate is specified on the face hereof, or if neither
LIBOR Reuters nor LIBOR Telerate is specified on the face hereof as the method for
calculating LIBOR, the rate for deposits in the Index Currency having the Index Maturity,
commencing on such Interest Reset Date, that appears on the Designated LIBOR Page as of
11:00 A.M., London time, on such LIBOR Interest Determination Date. If fewer than two such
offered rates appear, or if no such rate appears, as applicable, LIBOR on such LIBOR
Interest Determination Date shall be determined in accordance with the provisions described
in clause (ii) below.
(ii) With respect to a LIBOR Interest Determination Date on which fewer than two
offered rates appear, or no rate appears, as the case may be, on the Designated LIBOR Page
as specified in clause (i) above, the Calculation Agent shall request the principal London
offices of each of four major reference banks in the London
A-16
interbank market, as selected by
the Calculation Agent, to provide the Calculation Agent with its offered quotation for
deposits in the Index Currency for the period of the Index Maturity, commencing on the
applicable Interest Reset Date, to prime banks in the London interbank market at
approximately 11:00 A.M., London time, on such LIBOR Interest Determination Date and in a
principal amount that is representative for a single transaction in such Index Currency in
such market at such time. If at least two such quotations are so provided, then LIBOR on
such LIBOR Interest Determination Date will be the arithmetic mean of such quotations. If
fewer than two such quotations are so provided, then LIBOR on such LIBOR Interest
Determination Date will be the arithmetic
mean of the rates quoted at approximately 11:00 A.M., in the applicable Principal
Financial Center, on such LIBOR Interest Determination Date by three major banks in such
Principal Financial Center selected by the Calculation Agent for loans in the Index Currency
to leading European banks, having the Index Maturity and in a principal amount that is
representative for a single transaction in such Index Currency in such market at such time;
provided, however, that if the banks so selected by the Calculation Agent are not quoting as
mentioned in this sentence, LIBOR determined as of such LIBOR Interest Determination Date
shall be LIBOR in effect on such LIBOR Interest Determination Date.
Index Currency means the currency or composite currency specified on the face hereof as to
which LIBOR shall be calculated. If no such currency or composite currency is specified on the face
hereof, the Index Currency shall be United States dollars.
Designated LIBOR Page means (a) if LIBOR Reuters is specified on the face hereof, the
display on the Reuter Monitor Money Rates Service (or any successor service) on the page specified
on the face hereof (or any other page as may replace such page on such service (or any successor
service)), for the purpose of displaying the London interbank rates of major banks for the Index
Currency, or (b) if LIBOR Telerate is specified on the face hereof or neither LIBOR Reuters nor
LIBOR Telerate is specified on the face hereof as the method for calculating LIBOR, the display
on the Dow Jones Telerate Service (or any successor service) on the page specified on the face
hereof (or any other page as may replace such page on such service (or any successor service)), for
the purpose of displaying the London interbank rates of major banks for the applicable Index
Currency.
Prime Rate
. If an Interest Rate Basis for this Note is specified on the face hereto as the
Prime Rate, the Prime Rate shall be determined as of the applicable Interest Determination Date (a
Prime Rate Interest Determination Date) as the rate on such date as such rate is published in
H.15(519) under the heading Bank Prime Loan. If such rate is not published prior to 3:00 P.M.,
New York City time, on the related Calculation Date, then the Prime Rate shall be the arithmetic
mean of the rates of interest publicly announced by each bank that appears on the Reuters Screen
USPRIME1 Page (as defined below) as such banks prime rate or base lending rate as in effect for
such Prime Rate Interest Determination Date. If fewer than four such rates appear on the Reuters
Screen USPRIME1 Page for such Prime Rate Interest Determination Date, then the Prime Rate shall be
the arithmetic mean of the prime rates quoted on the basis of the actual number of days in the year
divided by a 360-day year as of the close of business on such Prime Rate Interest Determination
Date by four major money center banks in The City of New
A-17
York selected by the Calculation Agent. If
fewer than four such quotations are so provided, the Prime Rate shall be the arithmetic mean of
four prime rates quoted on the basis of the actual number of days in the year divided by a 360-day
year as of the close of business on such Prime Rate Interest Determination Date as furnished in The
City of New York by the major money center banks, if any, that have provided such quotations and by
a reasonable number of substitute banks or trust companies to obtain four such prime rate
quotations, provided such substitute banks or trust companies are organized and doing business
under the laws of the United States, or any State thereof, each having total equity capital of at
least U.S.$500 million and being subject to supervision or examination by Federal or State
authority, selected by the Calculation Agent to provide such rate or rates; provided, however, that
if the banks or trust companies so
selected by the Calculation Agent are not quoting as mentioned in this sentence, the Prime
Rate determined as of such Prime Rate Interest Determination Date will be the Prime Rate in effect
on such Prime Rate Interest Determination Date.
Reuters Screen USPRIME1 Page means the display designated as page USPRIME1 on the Reuter
Monitor Money Rates Service (or any successor service) (or such other page as may replace the
USPRIME1 page on such service (or any successor service) for the purpose of displaying prime rates
or base lending rates of major United States banks).
Treasury Rate
. If an Interest Rate Basis for this Note is specified on the face hereof as the
Treasury Rate, the Treasury Rate shall be determined as of the applicable Interest Determination
Date (a Treasury Rate Interest Determination Date) as the rate from the auction held on such
Treasury Rate Interest Determination Date (the Auction) of direct obligations of the United
States (Treasury Bills) having the Index Maturity, as such rate is published in H.15(519) under
the heading Treasury bills-auction average (investment) or, if not published by 3:00 P.M., New
York City time, on the related Calculation Date, the auction average rate of such Treasury Bills
(expressed as a bond equivalent on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) as otherwise announced by the United States Department of the Treasury.
In the event that the results of the Auction of Treasury Bills having the Index Maturity are not
reported as provided above by 3:00 P.M., New York City time, on such Calculation Date, or if no
such Auction is held, then the Treasury Rate shall be calculated by the Calculation Agent and shall
be a yield to maturity (expressed as a bond equivalent on the basis of a year of 365 or 366 days,
as applicable, and applied on a daily basis) of the arithmetic mean of the secondary market bid
rates, as of approximately 3:30 P.M., New York City time, on such Treasury Rate Interest
Determination Date, of three leading primary United States government securities dealers selected
by the Calculation Agent, for the issue of Treasury Bills with a remaining maturity closest to the
Index Maturity; provided, however, that if the dealers so selected by the Calculation Agent are not
quoting as mentioned in this sentence, the Treasury Rate determined as of such Treasury Rate
Interest Determination Date will be the Treasury Rate in effect on such Treasury Rate Interest
Determination Date.
Notwithstanding the foregoing, the interest rate hereon shall not be greater than the Maximum
Interest Rate, if any, or less than the Minimum Interest Rate, if any, in each case as specified on
the face hereof. The interest rate on this Note will in no event be higher than the maximum rate
permitted by New York law, as the same may be modified by United States law of general application.
A-18
The Calculation Date, if applicable, pertaining to any Interest Determination Date shall be
the earlier of (i) the tenth calendar day after such Interest Determination Date or, if such day is
not a Business Day, the next succeeding Business Day or (ii) the Business Day immediately preceding
the applicable Interest Payment Date or the Maturity Date, as the case may be. At the request of
the Holder hereof, the Calculation Agent will provide to the Holder hereof the interest rate hereon
then in effect and, if determined, the interest rate that will become effective as a result of a
determination made for the next succeeding Interest Reset Date.
Accrued interest hereon shall be an amount calculated by multiplying the principal amount
hereof by an accrued interest factor. Such accrued interest factor shall be
computed by adding the interest factor calculated for each day in the applicable Interest
Period. Unless otherwise specified as the Day Count Convention on the face hereof, the interest
factor for each such date shall be computed by dividing the interest rate applicable to such day by
360 if the CD Rate, the Commercial Paper Rate, the Eleventh District Cost of Funds Rate, the
Federal Funds Rate, LIBOR or the Prime Rate is an applicable Interest Rate Basis or by the actual
number of days in the year if the CMT Rate or the Treasury Rate is an applicable Interest Rate
Basis. Unless otherwise specified as the Day Count Convention on the face hereof, the interest
factor for this Note, if the interest rate is calculated with reference to two or more Interest
Rate Bases, shall be calculated in each period in the same manner as if only the Applicable
Interest Rate Basis specified on the face hereof applied. All percentages resulting from any
calculation on this Note shall be rounded to the nearest one hundred-thousandth of a percentage
point, with five one-millionths of a percentage point rounded upwards (e.g., 5.876545% (or
.05876545) would be rounded to 5.87655% (or .0587655)), and all amounts used in or resulting from
such calculation on this Note shall be rounded, in the case of United States dollars, to the
nearest cent or, in the case of a Specified Currency other than United States dollars or a
composite currency, to the nearest unit (with one-half cent or unit being rounded upwards).
If an Event of Default, as defined in the Indenture, shall occur and be continuing, the
principal of the Notes may be declared due and payable in the manner and with the effect provided
in the Indenture.
The Indenture contains provisions for defeasance of (i) the entire indebtedness of the Notes
or (ii) certain covenants and Events of Default with respect to the Notes, in each case upon
compliance with certain conditions set forth therein, which provisions apply to the Notes.
The Indenture permits, with certain exceptions as therein provided, the amendment thereof and
the modification of the rights and obligations of the Company and the rights of the holders of the
Securities at any time by the Company and the Trustee with the consent of the holders of not less
than a majority of the aggregate principal amount of all Securities at the time outstanding and
affected thereby. The Indenture also contains provisions permitting the holders of not less than a
majority of the aggregate principal amount of the outstanding Securities of any series, on behalf
of the holders of all such Securities, to waive compliance by the Company with certain provisions
of the Indenture. Furthermore, provisions in the Indenture permit the holders of not less than a
majority of the aggregate principal amount of the outstanding Securities of any series, in certain
instances, to waive, on behalf of all of the
A-19
holders of Securities of such series, 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 other Notes issued upon the registration of transfer hereof or in exchange hereof or in lieu
hereof, whether or not notation of such consent or waiver is made upon this Note.
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
principal, premium, if any, and interest in respect of this Note at the times, places and rate or
formula, and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein and herein set forth,
the transfer of this Note is registrable in the Security Register of the Company upon surrender of
this Note for registration of transfer at the office or agency of the Company in any place where
the principal hereof and any premium or interest hereon are payable, duly endorsed by, or
accompanied by a written instrument of transfer, in form satisfactory to the Company and the
Security Registrar, duly executed by the holder hereof or by his attorney duly authorized in
writing, and thereupon one or more new Notes, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or transferees.
As provided in the Indenture and subject to certain limitations therein and herein set forth,
this Note is exchangeable for a like aggregate principal amount of Notes of different authorized
denominations but otherwise having the same terms and conditions, as requested by the holder hereof
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 holder in whose name this Note is
registered as the owner thereof 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.
This Note and all documents, agreements, understandings and arrangements relating to any
transaction contemplated hereby or thereby have been executed or entered into by the undersigned in
his/her capacity as an officer of the Company which has been formed as a Maryland corporation, and
not individually. No recourse under or upon any obligation, covenant or agreement contained in the
Indenture or in this Note, or because of any indebtedness evidenced hereby or 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 this Note.
A-20
THE INDENTURE AND THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification
Procedures, the Company has caused CUSIP numbers to be printed on the Securities of this series
as a convenience to the holders of such Securities. No representation is made as to the
correctness or accuracy of such CUSIP numbers as printed on the Securities, and reliance may be
placed only on the other identification numbers printed hereon.
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this Note, shall be
construed as though they were written out in full according to applicable laws or regulations:
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TEN COM
as tenants in common
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TEN ENT as
tenants by the entireties
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JT TEN as joint tenants with right of survivorship and not as
tenants in common
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UNIF GIFT MIN ACT
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Custodian
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(Cust)
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(Minor)
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Under Uniform Gifts to Minors Act
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(State)
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Additional abbreviations may also be used though not in the above list.
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A-21
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned hereby
sell(s), assign(s) and transfer(s) unto
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PLEASE INSERT SOCIAL
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SECURITY OR OTHER IDENTIFYING
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NUMBER OF ASSIGNEE
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(Please Print or Typewrite Name and Address including
Postal Zip Code of Assignee)
this Note and all rights thereunder and hereby does irrevocably
constitute and appoint _______________________ Attorney
to transfer this Note on the books of the within-named Company with full power of substitution in
the premises.
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Dated:
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(signature)
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(signature)
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NOTICE: The signature(s) on this Assignment must correspond with the name(s) as written on the
first page of this Note in every particular, without alteration or enlargement or any change
whatsoever.
A-22
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably request(s) and instruct(s) the Company to repay this Note
(or portion hereof specified below) pursuant to its terms at a price equal to 100% of the principal
amount to be repaid, together with unpaid interest accrued hereon to the Repayment Date, to the
undersigned, at
(Please print or typewrite name and address, including postal Zip Code, of the undersigned)
For this Note to be repaid, the Trustee must receive at its Corporate Trust Office in the
Borough of Manhattan, The City of New York, this Note with this Option to Elect Repayment form
duly completed.
If less than the entire principal amount of this Note is to be repaid, specify the portion
hereof (which shall be increments of U.S. $1,000 (or, if the Specified Currency is other than
United States dollars, the minimum Authorized Denomination specified on the face hereof)) which the
holder elects to have repaid and specify the denomination or denominations (which shall be an
Authorized Denomination) of the Notes to be issued to the holder for the portion of this Note not
being repaid (in the absence of any such specification, one such Note will be issued for the
portion not being repaid).
Principal Amount to be Repaid: $
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Dated:
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NOTICE: The signature(s) on this Option to Elect Repayment must correspond with the name(s) as
written upon the face of this Note in every particular, without alteration or enlargement or any
change whatsoever.
A-23
EXHIBIT B
Form of Fixed Rate Note
[Face of Note]
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (THE
DEPOSITARY) (55 WATER STREET, NEW YORK, NEW YORK) TO THE ISSUER HEREOF OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY AND
ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
3
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING SET FORTH IN THE INDENTURE HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF CEDE & CO., AS NOMINEE OF THE DEPOSITARY. THIS
SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE. UNLESS AND
UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED FORM, THIS NOTE MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF
THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY.
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Registered No. FXR-
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[PRINCIPAL AMOUNT]
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CUSIP No:
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AVALONBAY COMMUNITIES, INC.
MEDIUM-TERM NOTE
(Fixed Rate)
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ORIGINAL ISSUE DATE:
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INTEREST RATE: ___%
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STATED MATURITY
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INTEREST PAYMENT DATE(S)
___and ___
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DEFAULT RATE: ___%
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DATE:
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Other:
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This paragraph applies to global Notes only.
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This paragraph applies to global Notes only.
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INITIAL REDEMPTION
DATE:
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INITIAL REDEMPTION
PERCENTAGE:
%
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ANNUAL REDEMPTION
PERCENTAGE
REDUCTION:
%
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OPTIONAL REPAYMENT DATE(S):
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CHECK IF AN ORIGINAL
ISSUE DISCOUNT NOTE
Issue Price: %
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REPAYMENT PRICE: %
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AUTHORIZED DENOMINATION:
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SPECIFIED CURRENCY:
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United States dollars
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Other:
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$1,000 and integral
multiples thereof
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Other:
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EXCHANGE RATE
AGENT:
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ADDENDUM ATTACHED:
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EXCHANGE RATE:
U.S. $1.00 =
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Yes
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No
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OTHER/ADDITIONAL
PROVISIONS:
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AVALONBAY COMMUNITIES, INC., a corporation duly organized and existing under the laws of
Maryland (hereinafter referred to as the Company, which term includes any successor entity under
the Indenture hereinafter referred to), for value received, hereby promises to pay to
, or registered assigns, the principal sum of
, on the
Stated Maturity Date specified above (or any Redemption Date or Repayment Date, each as defined on
the reverse hereof) (each such Stated Maturity Date, Redemption Date or Repayment Date being
hereinafter referred to as the Maturity Date with respect to the principal repayable on such
date) and to pay interest thereon, at the Interest Rate per annum specific above, until the
principal hereof is paid or duly made available for payment, and (to the extent that the payment of
such interest shall be legally enforceable) at the Default Rate per annum specified above on any
overdue principal, premium and/or interest, including any overdue sinking fund or redemption
payment. The Company will pay interest in arrears on each Interest Payment Date, if any, specified
above (each, an Interest Payment Date), commencing with the first Interest Payment Date next
succeeding the Original Issue Date specified above, and on the Maturity Date; provided, however,
that if the Original Issue Date occurs between a Record Date (as defined below) and the next
succeeding Interest Payment Date, interest payments will commence on the second Interest Payment
Date next succeeding the Original Issue Date to the holder of this Note on the Record Date with
respect to such second Interest Payment Date. Interest on this Note will be computed on the basis
of a 360-day year of twelve 30-day months.
Interest on this Note will accrue from, and including, the immediately preceding Interest
Payment Date to which interest has been paid or duly provided for (or from, and including, the
Original Issue Date if no interest has been paid or duly provided for) to, but excluding, the
applicable Interest Payment Date or the Maturity Date, as the case may be (each,
B-2
an Interest
Period). The interest so payable, and punctually paid or duly provided for, on any Interest
Payment Date will, subject to certain exceptions described herein, be paid to the person in whose
name this Note (or one or more predecessor Notes) is registered at the close of business on the
fifteenth calendar day (whether or not a Business Day, as defined
blow)
immediately preceding such Interest Payment Date (the Record Date); provided, however, that
interest payable on the Maturity Date will be payable to the person
to whom the principal hereto
and premium, if any, hereon shall be payable. Any such interest not so punctually paid or duly
provided for (Defaulted Interest) will forthwith cease to be payable to the holder on any Record
Date, and shall be paid to the person in whose name this Note is registered at the close of
business on a special record date (the Special Record Date) for the payment of such Defaulted
Interest to be fixed by the Trustee hereinafter referred to, notice whereof shall be given to the
holder of this Note by the Trustee 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 this Note may be listed, and upon such notice as
may be required by such exchange, all as more fully provided for in the Indenture.
Payment of principal, premium, if any, and interest in respect of this Note due on the
Maturity Date or any prior date on which the principal or an installment of principal of this Note
becomes due and payable, whether by the declaration of acceleration or otherwise, will be made in
immediately available funds upon presentation and surrender of this Note (and, with respect to any
applicable repayment of this Note, upon presentation and surrender of this Note and a duly
completed election form as contemplated on the reverse hereof) at the office or agency maintained
by the Company for that purpose in the Borough of Manhattan, The City
of New York, currently the office of the Trustee; provided,
however, that if the Specified Currency specified above is other than United States dollars and
such payment is to be made in the Specified Currency in accordance with the provisions set forth
below, such payment may be made by wire transfer of immediately available funds to an account with
a bank designated by the holder hereof at least 15 calendar days prior to the Maturity Date,
provided that such bank has appropriate facilities therefor and that this Note (and, if applicable,
a duly completed repayment election form) is presented and surrendered at the aforementioned office
or agency maintained by the Company in time for the Trustee to make such payment in such funds in
accordance with its normal procedures. Payment of interest due on any Interest Payment Date other
than the Maturity Date will be made at the aforementioned office or agency maintained by the
Company or, at the option of the Company, by check mailed to the address of the person entitled
thereto as such address shall appear in the Security Register maintained by the Trustee; provided,
however, that a holder of U.S. $10,000,000 (or, if the Specified Currency is other than United
States dollars, the equivalent thereof in the Specified Currency) or more in aggregate principal
amount of Notes (whether having identical or different terms and provisions) will be entitled to
receive interest payments on any Interest Payment Date other than the Maturity Date by wire
transfer of immediately available funds if appropriate wire transfer instructions have been
received in writing by the Trustee not less than 15 calendar days prior to such Interest Payment
Date. Any such wire transfer instructions received by the Trustee shall remain in effect until
revoked by such holder.
B-3
If
any Interest Payment date or the Maturity Date falls on a day that is
not a Business Day, the required payment of principal, premium, if
any, and/or interest shall be made on the next succeeding Business
Day with the same force and effect as if made on the date such
payment was due, and no interest shall accrue with respect to such
payment for the period from and after such Interest Payment Date or
the Maturity Date, as the case may be, to the date of such payment on
the next succeeding Business day.
As used herein, Business Day means any day, other than a Saturday or Sunday, that is neither
a legal holiday nor a day on which banking institutions are authorized or required by law,
regulation or executive order to close in The City of New York or Chicago; provided, however, that
if the Specified Currency is other than United States dollars, such day is also not a day on which
banking institutions are authorized or required by law, regulation or executive order to close in
the Principal Financial Center (as defined below) of the country issuing the Specified Currency
(or, if the Specified Currency is European Currency Units (ECU), such day is not a day that
appears as an ECU non-settlement day on the display designated as ISDE on the Reuter Monitor
Money Rates Service (or a day so designated by the ECU Banking Association), or, if ECU
non-settlement days do not appear on that page (and are not so designated), is not a day on which
payments in ECU cannot be settled in the international interbank
market) Principal Financial Center means the capital city of the country issuing the
Specified Currency, except
that with respect to United States dollars, Australian dollars, Deutsche marks, Dutch guilders,
Italian lire, Swiss francs and ECU, the Principal Financial Center shall be The City of New York,
Sydney, Frankfurt, Amsterdam, Milan, Zurich and Luxembourg, respectively.
The Company is obligated to make payments of principal, premium, if any, and interest in
respect of this Note in the Specified Currency (or, if the Specified Currency is not at the time of
such payment legal tender for the payment of public and private debts, in such other coin or
currency of the country which issued the Specified Currency as at the time of such payment is legal
tender for the payment of such debts). If the Specified Currency is other than United States
dollars, except as provided below, any such amounts so payable by the Company will be converted by
the Exchange Rate Agent specified above into United States dollars for payment to the holder of
this Note.
If the Specified Currency is other than United States dollars, the holder of this Note may
elect to receive such amounts in such Specified Currency. If the holder of this Note shall not have
duly made an election to receive all or a specified portion of any payment of principal, premium,
if any, and/or interest in respect of this Note in the Specified Currency, any United States dollar
amount to be received by the holder of this Note will be based on the highest bid quotation in The
City of New York received by the Exchange Rate Agent at approximately 11:00 A.M., New York City
time, on the second Business Day preceding the applicable payment date from three recognized
foreign exchange dealers (one of whom may be the Exchange Rate Agent) selected by the Exchange Rate
Agent and approved by the Company for the purchase by the quoting dealer of the Specified Currency
for United States dollars for settlement on such payment date in the aggregate amount of such
Specified Currency payable to all holders of Foreign Currency Notes scheduled to receive United
States dollar payments and at which the
B-4
applicable dealer commits to execute a contract. All
currency exchange costs will be borne by
the holder of this Note by deductions from such payments. If three such bid quotations are not
available, payments on this Note will be made in the Specified Currency.
If the Specified Currency is other than United States dollars, the holder of this Note may
elect to receive all or a specified portion of any payment of principal, premium, if any, and/or
interest in respect of this Note in the Specified Currency by submitting a written request for such
payment to the Trustee at its Corporate Trust Office in The City of New York on or prior to the
applicable Record Date or at least 15 calendar days prior to the Maturity Date, as the case may be.
Such written request may be mailed or hand delivered or sent by cable, telex or other form of
facsimile transmission. The holder of this Note may elect to receive all or a specified portion of
all future payments in the Specified Currency in respect of such principal, premium, if any, and/or
interest and need not file a separate election for each payment. Such election will remain in
effect until revoked by written notice to the Trustee, but written notice of any such revocation
must be received by the Trustee on or prior to the applicable Record Date or at least 15 calendar
days prior to the Maturity Date, as the case may be.
If the Specified Currency is other than
United States dollars or a composite currency and the holder of this Note shall have duly made an
election to receive all or a specified portion of any payment of principal, premium, if any, and/or
interest in respect of this Note in the Specified Currency and if the Specified Currency is not
available due to the imposition of exchange controls or other circumstances beyond the reasonable
control of the Company, the Company will be entitled to satisfy its obligations to the holder of
this Note by making such payment in United States dollars on the basis of the Market Exchange Rate
(as defined below) on the second Business Day prior to such payment date or, if such Market
Exchange Rate is not then available, on the basis of the most recently available Market Exchange
Rate or as otherwise specified on the face hereof. The Market Exchange Rate for the Specified
Currency means the noon dollar buying rate in The City of New York for cable transfers for such
Specified Currency as certified for customs purposes by (or if not so certified, as otherwise
determined by) the Federal Reserve Bank of New York. Any payment made under such circumstances in
United States dollars will not constitute an Event of Default (as defined in the Indenture) with
respect to this Note.
If the Specified Currency is a composite currency and the holder of this Note shall have duly
made an election to receive all or a specified portion of any payment of principal, premium, if
any, and/or interest in respect of this Note in the Specified Currency and if such composite
currency is unavailable due to the imposition of exchange controls or other circumstances beyond
the reasonable control of the Company, then the Company will be entitled to satisfy its obligations
to the holder of this Note by making such payment in United States dollars. The amount of each
payment in United States dollars shall be computed by the Exchange Rate Agent on the basis of the
equivalent of the composite currency in United States dollars. The component currencies of the
composite currency for this purpose (collectively, the Component Currencies and each, a
Component Currency) shall be the currency amounts that were components of the composite currency
as of the last day on which the composite currency was used. The equivalent of the composite
currency in United States dollars shall be calculated by
B-5
aggregating the United States dollar
equivalents of the Component Currencies. The United States dollar equivalent of each of the
Component Currencies shall be determined by the Exchange Rate Agent on the basis of the most
recently available Market Exchange Rate for each such Component Currency, or as otherwise specified
on the face hereof.
If the official unit of any Component Currency is altered by way of combination or
subdivision, the number of units of the currency as a Component Currency shall be divided or
multiplied in the same proportion. If two or more Component Currencies are consolidated into a
single currency, the amounts of those currencies as Component Currencies shall be replaced by an
amount in such single currency equal to the sum of the amounts of the consolidated Component
Currencies expressed in such single currency. If any Component Currency is divided into two or more
currencies, the amount of the original Component Currency shall be replaced by the amounts of such
two or more currencies, the sum of which shall be equal to the amount of the original Component
Currency.
All determinations referred to above made by the Exchange Rate Agent shall be at its sole
discretion and shall, in the absence of manifest error, be conclusive for all purposes and binding
on the holder of this Note.
Reference is hereby made to the further provisions of this Note set forth on the reverse
hereof and, if so specified above on the face hereof, in the Addendum hereto, which further
provisions shall have the same force and effect as if set forth on the face hereof.
Notwithstanding any provisions to the contrary contained herein, if the face of this Note
specifies that an Addendum is attached hereto or that Other/Additional Provisions apply to this
Note, this Note shall be subject to the terms set forth in such Addendum or such Other/Additional
Provisions.
Unless the Certificate of Authentication hereon has been executed by the Trustee or its
Authenticating Agent by manual signature, this Note shall not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose.
B-6
IN WITNESS WHEREOF, AvalonBay Communities, Inc. has caused this Note to be duly executed under
its corporate seal.
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Dated:
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AVALONBAY COMMUNITIES, INC.
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By:
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Richard L. Michaux
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President and Chief Executive Officer
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[Corporate Seal]
Attest:
TRUSTEES CERTIFICATE OF AUTHENTICATION:
This is one of the Securities of the series designated therein referred to in the
within-mentioned Indenture.
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STATE STREET BANK AND TRUST COMPANY,
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as Trustee
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Dated:
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By
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Robert J. Dunn
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Vice President
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B-7
[Reverse of Note]
AVALONBAY COMMUNITIES, INC.
MEDIUM-TERM NOTE
(Fixed Rate)
This Note is one of a duly authorized series of Securities (the Securities) of the Company
issued and to be issued under an Indenture, dated as of January 16, 1998, as amended and
supplemented by the First Supplemental Indenture dated as of January 20, 1998, the Second
Supplemental Indenture dated July 7, 1998 and the Amended and Restated Third Supplemental Indenture
dated July 7, 2000, as further amended, modified or supplemented from time to time (the
Indenture), between the Company and State Street Bank and Trust Company, as Trustee (the
Trustee, which term includes any successor trustee under the Indenture), to which Indenture and
all indentures supplemental thereto reference is hereby made for a statement of the respective
rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the
holders of the Securities, and of the terms upon which the Securities are, and are to be,
authenticated and delivered. This Note is one of the series of Securities designated as
Medium-Term Notes Due Nine Months or More from Date of Issue (the Notes). All terms used but
not defined in this Note or in an Addendum hereto shall have the meanings assigned to such terms in
the Indenture or on the face hereof, as the case may be.
This Note is issuable only in registered form without coupons in minimum denominations of U.S.
$1,000 and integral multiples thereof or the minimum Authorized Denomination specified on the face
hereof.
This Note will not be subject to any sinking fund and, unless otherwise specified on the face
hereof in accordance with the provisions of the following two paragraphs, will not be redeemable or
repayable prior to the Stated Maturity Date.
This Note will be subject to redemption at the option of the Company on any date on and after
the Initial Redemption Date, if any, specified on the face hereof, in whole or from time to time in
part in increments of U.S. $1,000 or the minimum Authorized Denomination (provided that any
remaining principal amount hereof shall be at least U.S. $1,000 or such minimum Authorized
Denomination), at the Redemption Price (as defined below), together with unpaid interest accrued
thereon to the date fixed for redemption (each, a Redemption Date), on notice given not more than
60 nor less than 30 calendar days prior to the Redemption Date and in accordance with the
provisions of the Indenture. The Redemption Price shall initially be the Initial Redemption
Percentage specified on the face hereof multiplied by the unpaid principal amount of this Note to
be redeemed. The Initial Redemption Percentage shall decline at each anniversary of the Initial
Redemption Date by the Annual Redemption Percentage Reduction, if any, specified on the face hereof
until the Redemption Price is 100% of the unpaid principal amount to be redeemed. In the event of
redemption of this Note in part only, a new Note of like tenor for the unredeemed portion hereof
and otherwise having the same terms as this Note shall be issued in the name of the holder hereof
upon the presentation and surrender hereof.
B-8
This Note will be subject to repayment by the Company at the option of the holder hereof on
the Optional Repayment Date(s), if any, specified on the face hereof, in whole or in part in
increments of U.S.$1,000 or the minimum Authorized Denomination (provided that any remaining
principal amount hereof shall be at least U.S.$1,000 or such minimum Authorized Denomination), at a
repayment price equal to 100% of the unpaid principal amount to be repaid, together with unpaid
interest accrued thereon to the date fixed for repayment (each, a Repayment Date). For this Note
to be repaid, the Trustee must receive at its office in the Borough of Manhattan, The City of New
York, referred to on the face hereof, at least 30 days but not more than 60 days prior to the
Repayment Date (i) this Note and the form hereon entitled Option to Elect Repayment duly
completed or (ii) a telegram, telex, facsimile transmission, or a letter from a member of a
national securities exchange or the National Association of Securities Dealers, Inc. or a
commercial bank or trust company in the United States setting forth the name of the holder hereof,
the principal amount of this Note, the principal amount of this Note to be repaid, the certificate
number or a description of the tenor and terms of this Note, a statement that the option to elect
repayment is being exercised thereby, and a guarantee that this Note, together with the form hereon
entitled Option to Elect Repayment duly completed, will be received by the Trustee not later than
the fifth Business Day after the date of such telegram, telex, facsimile transmission or letter,
provided that such telegram, telex, facsimile transmission or letter shall only be effective if
this Note and duly completed form are received by the Trustee by such fifth Business Day. Exercise
of such repayment option by the holder hereof will be irrevocable. In the event of repayment of
this Note in part only, a new Note of like tenor for the unrepaid portion hereof and otherwise
having the same terms as this Note shall be issued in the name of the holder hereof upon the
presentation and surrender hereof.
If this Note is an Original Issue Discount Note as specified on the face hereof, the amount
payable to the holder of this Note in the event of redemption, repayment or acceleration of
maturity of this Note will be equal to the sum of (i) the Issue Price specified on the face hereof
(increased by any accruals of the Discount, as defined below) and, in the event of any redemption
of this Note (if applicable), multiplied by the Initial Redemption Percentage (as adjusted by the
Annual Redemption Percentage Reduction, if applicable) and (ii) any unpaid interest on this Note
accrued from the Original Issue Date to the Redemption Date, Repayment Date or date of acceleration
of maturity, as the case may be. The difference between the Issue Price and 100% of the principal
amount of this Note is referred to herein as the Discount.
For purposes of determining the amount of Discount that has accrued as of any Redemption Date,
Repayment Date or date of acceleration of maturity of this Note, such Discount will be accrued
using a constant yield method. The constant yield will be calculated using a 30-day month, 360-day
year convention, a compounding period that, except for the Initial Period (as defined below),
corresponds to the shortest period between Interest Payment Dates (with ratable accruals within a
compounding period), a coupon rate equal to the initial coupon rate applicable to this Note and an
assumption that the maturity of this Note will not be accelerated. If the period from the Original
Issue Date to the initial Interest Payment Date (the Initial Period) is shorter than the
compounding period for this Note, a proportionate amount of the yield for an entire
compounding-period will be accrued. If the Initial Period is longer than the
B-9
compounding period, then such period will be divided into a regular compounding period and a
short period, with the short period being treated as provided in the preceding sentence.
If an Event of Default, as defined in the Indenture, shall occur and be continuing, the
principal of the Notes may be declared due and payable in the manner and with the effect provided
in the Indenture.
The Indenture contains provisions for defeasance of (i) the entire indebtedness of the Notes
or (ii) certain covenants and Events of Default with respect to the Notes, in each case upon
compliance with certain conditions set forth therein, which provisions apply to the Notes.
The Indenture permits, with certain exceptions as therein provided, the amendment thereof and
the modification of the rights and obligations of the Company and the rights of the holders of the
Securities at any time by the Company and the Trustee with the consent of the holders of not less
than a majority of the aggregate principal amount of all Securities at the time outstanding and
affected thereby. The Indenture also contains provisions permitting the holders of not less than a
majority of the aggregate principal amount of the outstanding Securities of any series, on behalf
of the holders of all such Securities, to waive compliance by the Company with certain provisions
of the Indenture. Furthermore, provisions in the Indenture permit the holders of not less than a
majority of the aggregate principal amount of the outstanding Securities of any series, in certain
instances, to waive, on behalf of all of the holders of Securities of such series, 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 other Notes issued upon the registration of transfer hereof or in exchange heretofore or in
lieu hereof, whether or not notation of such consent or waiver is made upon this Note.
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
principal, premium, if any, and interest in respect of this Note at the times, places and rate or
formula, and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein and herein set forth,
the transfer of this Note is registrable in the Security Register of the Company upon surrender of
this Note for registration of transfer at the office or agency of the Company in any place where
the principal hereof and any premium or interest hereon are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the Company and the
Security Registrar, duly executed by, the holder hereof or by his attorney duly authorized in
writing, and thereupon one or more new Notes, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or transferees.
As provided in the Indenture and subject to certain limitations therein and herein set forth,
this Note is exchangeable for a like aggregate principal amount of Notes of different authorized
denominations but otherwise having the same terms and conditions, as requested by the holder hereof
surrendering the same.
B-10
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 holder in whose name this Note is
registered as the owner thereof 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.
This Note and all documents, agreements, understandings and arrangements relating to any
transaction contemplated hereby or thereby have been executed or entered into by the undersigned in
his/her capacity as an officer of the Company which has been formed as a Maryland corporation, and
not individually. No recourse under or upon any obligation, covenant or agreement contained in the
Indenture or in this Note, or because of any indebtedness evidenced hereby or 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 this Note.
THE INDENTURE AND THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification
Procedures, the Company has caused CUSIP numbers to be printed on the Securities of this series
as a convenience to the holders of such Securities. No representation is made as to the
correctness or accuracy of such CUSIP numbers as printed on the Securities, and reliance may be
placed only on the other identification numbers printed hereon.
B-11
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this Note, shall be
construed as though they were written out in full according to applicable laws or regulations:
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TEN COM as tenants in common
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TEN ENT as tenants by the entireties
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JT TEN as joint tenants with right of survivorship and not as tenants in common
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UNIF GIFT MIN ACT -
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Custodian
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(Cust)
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(Minor)
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Under Uniform Gifts to Minors Act
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(State)
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Additional abbreviations may also be used though not in the above list.
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B-12
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned hereby
sell(s), assign(s) and transfer(s) unto
PLEASE INSERT SOCIAL
SECURITY OR OTHER IDENTIFYING
NUMBER OF ASSIGNEE
(Please Print or Typewrite Name and Address including
Postal Zip Code of Assignee)
this Note and all rights thereunder and hereby does irrevocably constitute and appoint
Attorney
to transfer this Note on the books of the within-named Company with full power of substitution in
the premises.
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Dated:
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(signature)
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(signature)
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(signature)
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NOTICE: The signature(s) on this Assignment must correspond with the name(s) as written on the
first page of this Note in every particular, without alteration or enlargement or any change
whatsoever.
B-13
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably request(s) and instruct(s) the Company to repay this Note
(or portion hereof specified below) pursuant to its terms at a price equal to 100% of the principal
amount to be repaid, together with unpaid interest accrued hereon to the Repayment Date, to the
undersigned, at
(Please print or typewrite name and address, including postal Zip Code, of the undersigned)
For this Note to be repaid, the Trustee must receive at its Corporate Trust Office in the
Borough of Manhattan, The City of New York, this Note with this Option to Elect Repayment form
duly completed.
If less than the entire principal amount of this Note is to be repaid, specify the portion
hereof (which shall be increments of U.S. $1,000 (or, if the Specified Currency is other than
United States dollars, the minimum Authorized Denomination specified on the face hereof)) which the
holder elects to have repaid and specify the denomination or denominations (which shall be an
Authorized Denomination) of the Notes to be issued to the holder for the portion of this Note not
being repaid (in the absence of any such specification, one such Note will be issued for the
portion not being repaid).
Principal Amount to be Repaid: $
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Dated:
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(signature)
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(signature)
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(signature)
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NOTICE: The signature(s) on this Option to Elect Repayment must correspond with the name(s) as
written upon the face of this Note in every particular, without alteration or enlargement or any
change whatsoever.
B-14