Maryland | 77-0404318 | |
(State or other jurisdiction of | (I.R.S. Employer Identification No.) | |
incorporation or organization) |
Common Stock, par value $.01 per share | New York Stock Exchange | |
(Title of each class) | (Name of each exchange on which registered) |
Large accelerated filer þ | Accelerated filer o |
Non-accelerated filer
o
(Do not check if a smaller reporting company) |
Smaller reporting company o |
PAGE | ||||||
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PART I | |||||
ITEM 1.
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BUSINESS | 1 | ||||
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ITEM 1a.
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RISK FACTORS | 8 | ||||
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ITEM 1b.
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UNRESOLVED STAFF COMMENTS | 17 | ||||
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ITEM 2.
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COMMUNITIES | 17 | ||||
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ITEM 3.
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LEGAL PROCEEDINGS | 33 | ||||
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ITEM 4.
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SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS | 34 | ||||
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PART II | |||||
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ITEM 5.
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MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES | 35 | ||||
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ITEM 6.
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SELECTED FINANCIAL DATA | 37 | ||||
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ITEM 7.
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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 40 | ||||
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ITEM 7a.
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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK |
61 | ||||
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ITEM 8.
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FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA | 63 | ||||
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ITEM 9.
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CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE | 63 | ||||
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ITEM 9a.
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CONTROLS AND PROCEDURES | 63 | ||||
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ITEM 9b.
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OTHER INFORMATION | 63 | ||||
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PART III | |||||
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ITEM 10.
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DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE | 64 | ||||
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ITEM 11.
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EXECUTIVE COMPENSATION | 64 | ||||
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ITEM 12.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS | 64 | ||||
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ITEM 13.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE | 65 | ||||
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ITEM 14.
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PRINCIPAL ACCOUNTING FEES AND SERVICES | 65 | ||||
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PART IV | |||||
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ITEM 15.
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EXHIBITS, FINANCIAL STATEMENT SCHEDULE | 66 | ||||
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SIGNATURES
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72 |
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
164 operating apartment communities containing 45,728 apartment homes in ten states
and the District of Columbia, of which (i) seven wholly owned
communities containing 2,143 apartment
homes were under redevelopment, as discussed below and (ii) 19 communities containing
3,829 apartment homes, of which two communities containing 467
apartment homes were under
redevelopment, were held by the Fund (as defined below), which we manage and in
which we own a 15.2% equity interest;
14 communities under construction that are expected to contain an aggregate of 4,564
apartment homes when completed; and
rights to develop an additional 27 communities that, if developed in the manner
expected, will contain an estimated 7,304 apartment homes.
We generally obtain ownership in an apartment community by developing a new community on vacant
land or by acquiring an existing community. In selecting sites for development or acquisition, we
favor locations that are near expanding employment centers and convenient to transportation,
recreation areas, entertainment, shopping and dining.
Fund II will seek to create value through redevelopment, enhanced operations and/or improving
market fundamentals of communities that it will acquire, principally in our markets. A more
detailed description of the Fund and Fund II and the related investment activity can be found in
the discussion under Item I., Business General Financing Strategy and Note 6, Investments
in Real Estate Entities of the Consolidated Financial Statements in Item 8 of this report.
Boston, Massachusetts;
Chicago, Illinois;
Long Island, New York;
Los Angeles, California;
New York, New York;
Newport Beach, California;
San Francisco, California;
San Jose, California;
Seattle, Washington;
Shelton, Connecticut;
Virginia Beach, Virginia; and
Woodbridge, New Jersey.
Our principal strategies to maximize revenue include:
strong focus on resident satisfaction;
staggering lease terms such that lease expirations are better matched to traffic
patterns;
balancing high occupancy with premium pricing, and increasing rents as market
conditions permit; and
managing community occupancy for optimal rental revenue levels.
we use purchase order controls, acquiring goods and services from pre-approved
vendors;
we purchase supplies in bulk where possible;
we bid third-party contracts on a volume basis;
we strive to retain residents through high levels of service in order to eliminate
the cost of preparing an apartment home for a new resident and to reduce marketing and
vacant apartment utility costs;
we perform turnover work in-house or hire third parties, generally depending upon
the least costly alternative;
we undertake preventive maintenance regularly to maximize resident satisfaction and
property and equipment life; and
we aggressively pursue real estate tax appeals.
As of January 31, 2009, Fund II has made no investments.
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;
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 expenses already incurred in
exploring those opportunities;
we may incur costs that exceed our original estimates due to increased material, labor
or other costs;
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;
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;
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;
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
we may incur liability if our communities are not constructed and operated in
compliance with the accessibility provisions of the Americans with Disabilities Acts, the
Fair Housing Act or other federal, state or local requirements. 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 lawsuits alleging noncompliance with these statutes. See Item 3., Legal
Proceedings.
land and/or property acquisition costs;
fees paid to secure air rights and/or tax abatements;
construction or reconstruction costs;
costs of environmental remediation;
real estate taxes;
capitalized interest;
loan fees;
permits;
professional fees;
allocated development or redevelopment overhead; and
other regulatory fees.
plant closings, industry slowdowns and other factors that adversely affect the local
economy;
an oversupply of, or a reduced demand for, apartment homes;
a decline in household formation or employment or lack of employment growth;
the inability or unwillingness of residents to pay rent increases;
rent control or rent stabilization laws, or other laws regulating housing, that could
prevent us from raising rents to offset increases in operating costs; and
economic conditions that could cause an increase in our operating expenses, such as
increases in property taxes, utilities, compensation of on-site associates and routine
maintenance.
an acquired property may fail to perform as we expected in analyzing our investment;
and
our estimate of the costs of repositioning or redeveloping an acquired property may
prove inaccurate.
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;
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;
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;
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; and
we may be liable and/or our status as a REIT may be
jeopardized 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.
investors in Fund II may fail to make their capital contributions when due and, as a
result, Fund II may be unable to execute its investment objectives;
our subsidiary that is the general partner of Fund II is generally liable, under
partnership law, for the debts and obligations of Fund II, subject to certain exculpation
and indemnification rights pursuant to the terms of the partnership agreement of Fund II;
investors in Fund II 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 Fund II;
while we have broad discretion to manage Fund II and make investment decisions on
behalf of Fund II, 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 Fund
II to make certain investments or implement certain decisions that we consider beneficial;
we can develop communities but have been generally prohibited from making acquisitions
of apartment communities outside of Fund II, which is our exclusive investment vehicle
until September 2011 or when 90% of Fund IIs capital is invested, subject to certain
exceptions; and
we may be liable and/or our status as a REIT may be
jeopardized if either Fund II , or the Fund II REIT through which a number of
investors have invested in Fund II and which we manage, fails to comply with various tax
or other regulatory matters.
the environmental assessments described above have identified all potential
environmental liabilities;
no prior owner created any material environmental condition not known to us or the
consultants who prepared the assessments;
no environmental liabilities have developed since the environmental assessments were
prepared;
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;
future uses or conditions, including, without limitation, changes in applicable
environmental laws and regulations, will not result in the imposition of environmental
liability; and
no environmental liabilities will arise at communities that we have sold for which we
may have liability.
Established Communities (also known as Same Store Communities)
are
consolidated communities where a comparison of operating results from
the prior year to the current year is meaningful, as these communities
were owned and had stabilized occupancy and operating expenses as of the
beginning of the prior year. For the year ended December 31, 2008, the
Established Communities are communities that are consolidated for
financial reporting purposes, had stabilized occupancy and operating
expenses as of January 1, 2007, are not conducting or planning to
conduct substantial redevelopment activities and are not held for sale
or planned for disposition within the current year. A community is
considered to have stabilized occupancy at the earlier of (i) attainment
of 95% physical occupancy or (ii) the one-year anniversary of completion
of development or redevelopment.
Other Stabilized Communities
includes all other completed communities
that we own or have a direct or indirect ownership interest in, and that
have stabilized occupancy, as defined above. Other Stabilized
Communities do not include communities that are conducting or planning
to conduct substantial redevelopment activities within the current year.
Lease-Up Communities
are communities where construction has been
complete for less than one year and where physical occupancy has not
reached 95%.
Redevelopment Communities
are communities where substantial
redevelopment is in progress or is planned to begin during the current
year. For communities that we
wholly own, redevelopment is considered substantial when capital
invested during the reconstruction effort is expected to exceed the
lesser of $5,000,000 or 10% of the communitys acquisition cost. The
definition of substantial redevelopment may differ for communities owned
through a joint venture arrangement.
Number of
Number of
communities
apartment homes
23
5,351
17
5,309
18
6,122
6
1,320
20
5,657
11
3,430
95
27,189
10
3,130
14
4,044
9
2,443
4
1,058
10
2,820
9
1,675
56
15,170
4
759
9
2,610
164
45,728
14
4,564
27
7,304
vaulted ceilings;
lofts;
fireplaces;
patios/decks; and
modern appliances.
swimming pools;
fitness centers;
tennis courts; and
business centers.
Number of
Number of
Percentage of total
communities at
apartment homes at
apartment homes at
1-31-08
1-31-09
1-31-08
1-31-09
1-31-08
1-31-09
36
36
9,600
9,077
20.2
%
19.9
%
22
24
5,788
6,460
12.7
%
14.2
%
14
12
3,812
2,617
7.5
%
5.7
%
28
31
7,947
9,353
17.5
%
20.4
%
7
7
1,732
1,732
3.8
%
3.8
%
5
5
1,618
1,618
3.6
%
3.5
%
6
7
2,042
2,258
4.5
%
4.9
%
10
12
2,555
3,745
5.6
%
8.2
%
32
30
9,770
9,213
21.5
%
20.2
%
9
8
1,987
1,830
4.4
%
4.0
%
16
16
5,831
5,831
12.8
%
12.8
%
7
6
1,952
1,552
4.3
%
3.4
%
12
11
3,111
2,746
6.8
%
6.0
%
12
11
3,111
2,746
6.8
%
6.0
%
34
32
9,546
8,879
20.9
%
19.4
%
7
8
2,089
2,394
4.6
%
5.2
%
11
11
2,489
2,489
5.5
%
5.4
%
16
13
4,968
3,996
10.8
%
8.8
%
21
24
5,958
6,460
13.1
%
14.1
%
11
12
3,214
3,345
7.1
%
7.3
%
7
8
1,686
1,896
3.7
%
4.1
%
3
4
1,058
1,219
2.3
%
2.7
%
163
164
45,932
45,728
100.0
%
100.0
%
a full fee simple, or absolute, ownership interest in 125
operating communities, eight of
which are on land subject to land leases expiring in
October 2026, November 2028, July 2029, December 2034, January 2062,
April 2095, April 2095, and March 2142;
a general partnership interest in three partnerships that each own a fee simple interest
in an operating community;
a general partnership interest and an indirect limited partnership interest in the Fund,
which owns a fee simple interest in 19 operating communities;
a general partnership interest in two partnerships structured as DownREITs, as
described more fully below, that own an aggregate of 10 communities;
a membership interest in 6 limited liability companies that each hold a fee simple
interest in an operating community, two of which are on land subject to land leases
expiring in September 2044 and November 2089; and
a residual profits interest (with no ownership interest) in a limited liability company
to which an operating community was transferred upon completion of construction in the
second quarter of 2006.
(Dollars in thousands, except per apartment home data)
Average
Approx.
Year of
Average
Physical
Average economic
rental rate
Financial
Number of
rentable area
completion /
size
occupancy at
occupancy
$ per
$ per
reporting cost
City and state
homes
(Sq. Ft.)
Acres
acquisition
(Sq. Ft.)
12/31/08
2008
2007
Apt (4)
Sq. Ft.
(5)
Lexington, MA
198
237,855
16.1
1994
1,201
97.5%
97.6%
96.5%
1,826
1.48
16,461
Wilmington, MA
204
237,167
22.5
1999
1,163
96.6%
95.6%
95.4%
1,481
1.22
21,275
Quincy, MA
245
224,974
8.0
1986/1996
918
95.5%
97.1%
96.0%
1,346
1.42
17,694
Peabody, MA
154
201,063
11.1
2000
1,306
95.5%
96.3%
96.5%
1,574
1.16
21,956
Quincy, MA
171
183,954
8.3
1998
1,076
94.2%
95.7%
95.9%
1,667
1.48
15,884
Boston, MA
780
759,130
1.0
1968/1998
973
96.2%
97.5%
97.0%
2,932
2.94
157,295
Wilmington, MA
120
133,376
27.0
2002
1,111
93.3%
93.9%
95.0%
1,400
1.18
16,874
Marlborough, MA
156
179,227
23.0
2002
1,149
96.2%
97.0%
96.0%
1,572
1.33
21,351
Westborough, MA
280
301,675
62.0
2003
1,077
94.6%
95.8%
96.0%
1,511
1.34
37,564
Newton, MA
294
339,537
7.0
2003
1,155
94.2%
96.2%
95.5%
2,300
1.92
56,815
Plymouth, MA
101
151,629
6.0
2004
1,501
95.0%
95.9%
95.8%
1,856
1.19
19,984
Peabody, MA
387
433,778
20.0
2004
1,121
96.4%
96.4%
95.7%
1,360
1.17
54,824
Peabody, MA
286
250,473
18.0
2004
876
91.6%
88.8%
(2)
96.3%
(2)
1,155
1.17
(2)
34,565
Bedford, MA
139
159,704
38.0
2005
1,149
93.5%
95.3%
95.6%
1,739
1.44
24,804
Chestnut Hill, MA
204
271,899
4.7
2007
1,333
92.6%
93.1%
78.8%
2,337
1.63
60,353
Shrewsbury, MA
251
274,780
25.5
2007
1,095
92.8%
95.0%
84.3%
1,377
1.20
35,761
Danvers, MA
433
512,991
75.0
2006
1,185
97.0%
86.4%
24.1%
(3)
1,407
1.03
85,550
Woburn, MA
446
486,091
56.0
2007
1,090
98.4%
96.7%
61.4%
(3)
1,581
1.40
82,986
Lexington, MA
387
511,454
23.0
2007
1,322
94.8%
71.1%
(3)
15.5%
(3)
1,811
2.91
(3)
86,351
Acton, MA
380
373,690
50.3
2007
983
95.3%
59.2%
(3)
7.5%
(3)
1,258
3.00
(3)
63,686
Sharon, MA
156
178,628
27.2
2007
1,145
98.7%
62.3%
(3)
N/A
1,508
1.96
(3)
30,011
Providence, RI
225
233,910
1.2
1991/1997
1,040
90.7%
94.5%
92.8%
2,174
1.98
29,254
Trumbull, CT
340
389,047
37.0
1997
1,144
96.5%
96.5%
94.9%
1,645
1.39
37,584
Stamford, CT
238
265,940
4.1
1991
1,117
95.8%
97.1%
97.2%
2,014
1.75
32,551
Wilton, CT
102
160,159
12.0
1996
1,570
90.2%
94.2%
96.5%
3,072
1.84
17,276
Danbury, CT
268
303,193
17.1
1999
1,131
90.7%
95.7%
96.8%
1,668
1.41
26,397
Orange, CT
168
161,795
9.6
2005
963
95.2%
95.3%
95.1%
1,554
1.54
22,097
Stamford, CT
323
337,572
12.1
2003
1,045
96.6%
96.5%
97.5%
2,544
2.35
62,931
New Canaan, CT
104
145,118
9.1
2002
1,395
94.2%
96.1%
94.3%
2,910
2.00
24,379
Stamford, CT
306
334,381
3.0
2002
1,093
93.8%
96.3%
97.5%
2,301
2.03
70,844
Danbury, CT
234
238,952
36.0
2005
1,021
92.7%
96.0%
95.5%
1,651
1.55
35,534
Darien, CT
189
242,533
32.0
2004
1,283
91.0%
94.7%
96.2%
2,640
1.95
41,598
Milford, CT
246
230,246
22.0
2004
936
97.2%
96.2%
96.1%
1,466
1.51
31,502
Shelton, CT
99
145,573
7.1
2008
1,470
34.3%
17.0%
(3)
N/A
2,421
0.28
(3)
23,956
Smithtown, NY
312
385,290
20.6
1997
1,235
92.9%
95.0%
95.4%
2,145
1.65
34,068
Long Beach, NY
109
135,036
1.3
1990/1995
1,239
95.4%
97.4%
96.8%
3,596
2.83
21,482
Melville, NY
494
601,342
35.4
1997/2000
1,217
93.5%
94.2%
95.3%
2,474
1.91
60,189
Glen Cove, NY
256
262,285
4.0
2004
1,025
93.0%
95.8%
94.5%
2,362
2.21
67,965
Coram, NY
298
364,124
32.0
2005
1,222
93.6%
95.8%
95.7%
1,985
1.56
46,876
Glen Cove, NY
111
100,851
1.3
2007
909
93.7%
96.8%
50.2%
(3)
2,080
2.22
39,913
Coram, NY
152
183,857
42.0
2006
1,210
92.1%
95.2%
96.3%
1,974
1.55
24,755
(Dollars in thousands, except per apartment home data)
Average
Approx.
Year of
Average
Physical
Average economic
rental rate
Financial
Number of
rentable area
completion /
size
occupancy at
occupancy
$ per
$ per
reporting cost
City and state
homes
(Sq. Ft.)
Acres
acquisition
(Sq. Ft.)
12/31/08
2008
2007
Apt (4)
Sq. Ft.
(5)
Jersey City, NJ
504
640,467
11.0
1997
1,271
97.6%
96.1%
97.5%
3,014
2.28
93,461
Edgewater, NJ
408
438,670
7.6
2002
1,075
96.8%
96.3%
95.2%
2,399
2.15
75,355
Florham Park, NJ
270
330,410
41.9
2001
1,224
97.0%
95.8%
96.1%
2,696
2.11
42,114
Lyndhurst, NJ
328
352,462
5.8
2006
1,075
94.5%
94.9%
57.0%
(3)
2,205
1.95
80,978
Lawrenceville, NJ
206
274,933
27.1
1996
1,335
97.1%
95.1%
96.2%
1,638
1.17
16,462
West Windsor, NJ
512
496,141
64.4
1988
969
95.1%
96.0%
95.6%
1,438
1.42
30,196
Freehold, NJ
296
317,416
40.3
2002
1,072
97.0%
96.2%
97.5%
1,780
1.60
34,810
Lawrenceville, NJ
312
341,292
70.5
2003
1,094
95.5%
96.0%
96.2%
1,820
1.60
52,201
Lawrenceville, NJ
426
443,168
9.0
1994
1,040
97.2%
96.0%
96.2%
1,477
1.36
60,263
Tinton Falls, NJ
216
240,747
35.0
2007
1,115
95.8%
56.3%
(3)
N/A
1,412
2.83
(3)
40,518
Nanuet, NY
504
617,992
62.5
1998
1,226
96.6%
97.0%
96.9%
2,148
1.70
55,580
Elmsford, NY
105
115,038
16.9
1995
1,096
97.1%
97.4%
97.3%
2,415
2.15
13,951
Mamaroneck, NY
227
240,459
4.0
2000
1,059
94.7%
98.0%
96.5%
2,299
2.13
47,570
Bronxville, NY
110
148,335
1.5
1999
1,349
96.4%
97.7%
97.4%
3,700
2.68
31,544
New Rochelle, NY
412
415,369
2.4
2001
1,008
97.3%
96.2%
95.2%
2,269
2.17
117,260
Long Island City, NY
372
352,988
1.0
2002
949
95.2%
96.8%
97.6%
3,229
3.30
94,698
New York, NY
206
162,000
1.1
2006
786
94.7%
96.2%
89.8%
3,982
4.87
92,216
Long Island City, NY
602
519,092
1.8
2007
862
96.3%
92.2%
(3)
30.6%
(3)
3,575
3.82
(3)
173,788
New Rochelle, NY
588
622,999
1.7
2007
1,060
96.1%
79.6%
(3)
27.8%
(3)
3,463
2.60
(3)
179,477
New York, NY
90
73,624
1.1
2007
818
84.4%
97.1%
42.4%
(3)
3,754
4.46
55,623
Columbia, MD
192
193,784
15.0
1987/1996
1,009
97.4%
94.6%
95.8%
1,275
1.19
10,436
Columbia, MD
192
192,560
29.0
1987/1996
1,003
95.8%
93.9%
95.9%
1,297
1.21
12,656
Columbia, MD
176
179,880
10.0
1986
1,022
86.4%
88.8%
(2)
93.2%
1,354
1.18
(2)
11,706
Columbia, MD
336
337,683
15.0
1987/1996
1,005
94.3%
94.8%
95.5%
1,416
1.34
29,596
Columbia, MD
215
214,670
12.7
1986/2006
998
86.1%
90.3%
(2)
93.5%
1,233
1.12
(2)
38,782
Washington, DC
308
297,876
2.7
1982
967
93.5%
96.3%
96.2%
2,291
2.28
44,994
Washington, DC
203
184,157
0.5
2003
907
97.0%
96.7%
95.4%
2,511
2.68
49,045
Rockville, MD
368
368,732
24.0
1991/1995
1,002
96.5%
96.2%
96.2%
1,462
1.40
32,842
Gaithersburg, MD
192
197,280
5.0
1996
1,028
97.9%
96.7%
97.3%
1,391
1.31
14,468
Gaithersburg, MD
96
100,268
5.0
1998
1,044
97.9%
97.0%
95.9%
1,580
1.47
8,333
Germantown, MD
300
290,544
26.7
1985
968
96.3%
96.5%
96.0%
1,215
1.21
9,000
North Bethesda, MD
386
387,884
10.2
2003
1,005
98.4%
96.8%
95.0%
1,774
1.71
82,340
North Bethesda, MD
497
472,001
10.0
2004
950
95.6%
97.0%
95.8%
1,825
1.86
82,181
North Potomac, MD
520
575,529
47.9
2004
1,107
96.5%
97.0%
96.2%
1,761
1.54
70,014
Rockville, MD
196
182,560
10.8
2007
931
93.4%
95.2%
85.3%
(3)
1,540
1.57
30,594
Fairfax, VA
420
354,945
24.3
1989/1996
845
92.4%
93.3%
(2)
90.0%
(2)
1,380
1.52
(2)
37,872
Arlington, VA
344
294,954
4.1
1990
857
96.8%
96.2%
96.2%
1,811
2.03
39,215
Alexandria, VA
460
478,068
16.0
1998
1,039
94.6%
96.2%
95.6%
1,874
1.73
44,124
Fairfax, VA
141
148,282
9.3
1988/1997
1,052
96.5%
96.7%
97.0%
1,558
1.43
11,874
McLean, VA
558
613,426
19.1
1996
1,099
93.9%
96.5%
95.6%
1,944
1.71
57,915
Arlington, VA
842
628,433
20.1
2001
746
94.8%
96.8%
96.6%
1,879
2.44
113,201
(Dollars in thousands, except per apartment home data)
Average economic
Average
Approx.
Year of
Average
Physical
occupancy
rental rate
Financial
Number of
rentable area
completion /
size
occupancy at
$ per
$ per
reporting cost
City and state
homes
(Sq. Ft.)
Acres
acquisition
(Sq. Ft.)
12/31/08
2008
2007
Apt (4)
Sq. Ft.
(5)
Wheaton, IL
295
351,206
19.2
1997
1,191
95.6
%
96.2
%
95.5
%
1,432
1.16
40,030
Bloomingdale, IL
192
237,124
12.7
1997
1,235
94.8
%
96.7
%
96.1
%
1,460
1.14
22,238
Arlington Heights, IL
409
352,236
2.8
1987/2000
861
96.6
%
96.2
%
94.3
% (2)
1,543
1.72
56,947
Redmond, WA
222
219,075
8.4
1991/1997
987
91.4
%
86.4
% (2)
90.1
% (2)
1,374
1.20
(2)
31,882
Redmond, WA
264
296,530
22.2
1998
1,123
93.9
%
96.6
%
95.5
%
1,437
1.24
35,858
Bellevue, WA
202
170,965
1.7
2001
846
95.0
%
94.8
%
96.6
%
1,609
1.80
30,966
Bothell, WA
206
246,683
11.2
2000
1,197
95.6
%
95.2
%
96.6
%
1,332
1.06
24,993
Everett, WA
234
266,580
23.0
2000
1,139
95.3
%
95.8
%
96.7
%
1,153
0.97
23,096
Everett, WA
391
428,962
19.0
2000
1,097
93.4
%
94.8
%
96.6
%
1,131
0.98
39,879
Redmond, WA
124
131,706
2.0
2000
1,062
95.2
%
96.9
%
96.5
%
1,628
1.49
19,516
Lynwood, WA
424
465,257
27.0
2001
1,097
94.6
%
95.1
%
96.1
%
1,214
1.05
45,671
Seattle, WA
100
95,201
0.7
2001
952
97.0
%
95.3
%
97.2
%
1,813
1.82
18,499
Bellevue, WA
368
333,502
3.6
2008
906
93.5
%
48.1
% (3)
N/A
1,783
1.89
(3)
89,119
Fremont, CA
308
386,277
14.3
1994
1,254
97.1
%
96.3
%
97.4
%
1,769
1.36
56,939
Dublin, CA
204
179,004
13.0
1989/1997
877
95.6
%
96.7
%
97.3
%
1,578
1.74
28,366
Pleasanton, CA
456
366,062
14.7
1988/1994
803
97.8
%
96.8
%
95.8
%
1,443
1.74
63,005
Union City, CA
208
150,320
8.5
1973/1996
723
94.2
%
96.7
%
97.6
%
1,293
1.73
22,738
Hayward, CA
544
452,043
11.1
1985/1986
831
93.8
%
93.9
%
96.5
%
1,279
1.45
62,190
Fremont, CA
235
191,935
13.5
1985/1994
817
98.3
%
97.0
%
98.1
%
1,558
1.85
36,493
Dublin, CA
305
300,760
4.7
2006
986
95.4
%
67.6
% (3)
2.0
% (3)
1,723
2.02
(3)
84,269
Daly City, CA
195
141,411
7.0
1972/1997
725
95.4
%
97.0
%
98.1
%
1,593
2.13
27,534
San Francisco, CA
185
108,712
1.4
1990/1995
588
97.3
%
96.8
%
96.9
%
1,957
3.22
28,191
San Rafael, CA
254
222,685
21.9
1973/1996
877
95.3
%
96.8
%
97.8
%
1,509
1.67
33,100
Foster City, CA
288
222,364
11.0
1973/1994
772
97.2
%
97.1
%
97.1
%
1,633
2.05
44,168
San Francisco, CA
227
285,881
1.0
1999
1,259
97.4
%
97.5
%
97.6
%
3,140
2.43
67,049
Pacifica, CA
220
186,800
21.9
1971/1995
849
97.3
%
97.0
%
96.9
%
1,682
1.92
32,360
San Francisco, CA
243
171,854
16.0
1961/1996
707
97.1
%
96.3
%
96.9
%
1,943
2.64
28,879
San Francisco, CA
154
123,566
3.0
1972/1994
802
94.2
%
95.9
% (2)
97.7
%
1,852
2.21
(2)
27,679
San Francisco, CA
250
240,368
1.4
2003
961
96.8
%
96.0
%
94.5
%
3,320
3.32
92,936
(Dollars in thousands, except per apartment home data)
Average economic
Average
Approx.
Year of
Average
Physical
occupancy
rental rate
Financial
Number of
rentable area
completion /
size
occupancy at
$ per
$ per
reporting cost
City and state
homes
(Sq. Ft.)
Acres
acquisition
(Sq. Ft.)
12/31/08
2008
2007
Apt (4)
Sq. Ft.
(5)
Campbell, CA
348
329,816
10.8
1995
948
96.0
%
96.9
%
97.7
%
1,761
1.80
60,533
San Jose, CA
360
322,992
14.0
1985/1996
897
95.0
%
95.9
%
97.0
%
1,584
1.69
52,751
San Jose, CA
226
211,750
4.0
1990/1996
937
95.1
%
97.3
%
98.3
%
1,713
1.78
45,008
Sunnyvale, CA
192
204,510
8.0
1991/1996
1,065
98.4
%
97.3
%
97.5
%
1,987
1.82
38,327
San Jose, CA
305
320,464
8.9
1999
1,051
94.8
%
97.3
%
97.7
%
2,108
1.95
56,905
San Jose, CA
456
459,162
16.6
1997/1999
1,007
97.4
%
96.4
%
97.2
%
1,748
1.67
79,863
Sunnyvale, CA
710
659,729
13.6
1997
929
95.8
%
96.1
%
96.2
%
2,049
2.12
123,316
Mountain View, CA
248
211,552
10.5
1986
853
84.7
%
88.0
% (2)
96.6
%
1,923
1.98
(2)
56,180
Mountain View, CA
294
215,680
13.0
1962/1997
734
94.6
%
97.6
%
98.0
%
1,536
2.05
43,471
San Jose, CA
218
221,933
3.8
2002
1,018
97.7
%
97.6
%
97.7
%
2,121
2.03
52,707
Mountain View, CA
211
218,392
1.9
2002
1,035
97.2
%
97.3
%
97.0
%
2,810
2.64
65,753
San Jose, CA
80
64,554
3.6
2007
807
91.3
%
96.8
%
95.9
% (3)
1,552
1.86
17,891
Costa Mesa, CA
145
122,415
6.6
1956/1996
844
98.6
%
96.3
%
97.7
%
1,707
1.95
10,417
Mission Viejo, CA
166
124,770
7.8
1984/1996
752
92.8
%
95.4
%
96.1
%
1,351
1.71
14,095
Costa Mesa, CA
258
210,922
8.0
1973/1996
818
93.8
%
94.4
%
96.4
%
1,467
1.70
26,030
Rancho Santa Margarita, CA
301
229,593
20.0
1990/1997
763
95.0
%
96.7
%
95.0
%
1,386
1.76
24,528
Huntington Beach, CA
304
268,720
9.7
1971/1997
884
97.4
%
96.1
%
96.1
%
1,544
1.68
32,915
Canoga Park, CA
210
186,402
3.3
2007
888
91.9
%
57.2
% (3)
N/A
1,420
2.74
(3)
52,599
San Diego, CA
564
402,320
12.9
1969/1997
713
96.8
%
95.0
%
94.8
%
1,438
1.92
66,809
San Diego, CA
200
208,125
4.0
1960/1997
1,041
94.5
%
94.9
%
96.2
%
1,656
1.51
22,633
San Diego, CA
294
227,373
1.4
1973/1998
773
96.3
%
96.4
%
94.9
%
1,513
1.89
34,746
San Diego, CA
161
186,766
10.0
2008
1,160
30.4
%
15.3
% (3)
N/A
2,380
0.25
(3)
63,641
(Dollars in thousands, except per apartment home data)
Average economic
Average
Approx.
Year of
Average
Physical
occupancy
rental rate
Financial
Number of
rentable area
completion /
size
occupancy at
$ per
$ per
reporting cost
City and state
homes
(Sq. Ft.)
Acres
acquisition
(Sq. Ft.)
12/31/08
2008
2007
Apt (4)
Sq. Ft.
(5)
Burbank, CA
748
532,264
14.1
1961/1997
712
94.3
%
95.6
%
95.9
%
1,514
2.03
76,877
Woodland Hills, CA
663
597,871
18.2
1989/1997
902
85.5
%
76.9
% (2)
94.8
%
1,593
1.36
(2)
91,010
Woodland Hills, CA
227
195,224
7.0
1979/1998
860
95.2
%
94.7
%
96.9
%
1,693
1.87
27,313
Burbank, CA
223
241,714
5.1
2003
1,084
89.7
%
94.2
%
95.0
%
2,357
2.05
41,480
Burbank, CA
400
360,587
6.9
1988/2002
901
92.0
%
96.7
% (2)
97.8
%
1,936
2.08
(2)
77,672
Camarillo, CA
249
233,267
10.0
2006
937
91.6
%
94.5
%
94.9
%
1,623
1.64
48,210
Los Angeles, CA
123
125,193
1.6
2007
1,018
93.5
%
94.7
%
55.8
% (3)
2,684
2.50
46,732
Los Angeles, CA
131
131,220
2.0
N/A
1,002
38.9
%
15.7
% (3)
N/A
2,475
0.69
(3)
61,017
Anaheim, CA
251
302,480
3.5
N/A
1,205
N/A
N/A
N/A
N/A
N/A
92,029
Union City, CA
438
428,730
6.0
N/A
979
N/A
N/A
N/A
N/A
N/A
97,057
Irvine, CA
279
243,157
4.5
N/A
872
N/A
N/A
N/A
N/A
N/A
55,581
San Francisco, CA
260
261,361
1.5
N/A
1,005
N/A
N/A
N/A
N/A
N/A
109,420
Walnut Creek, CA
422
448,384
5.3
N/A
1,063
N/A
N/A
N/A
N/A
N/A
36,591
Norwalk, CT
311
312,018
4.5
N/A
1,003
N/A
N/A
N/A
N/A
N/A
20,238
Hingham, MA
235
298,981
12.9
N/A
1,272
N/A
N/A
N/A
N/A
N/A
50,782
Northborough, MA
163
183,000
14.0
N/A
1,123
N/A
N/A
N/A
N/A
N/A
9,225
Randolph, MA
276
307,085
23.1
N/A
1,113
N/A
N/A
N/A
N/A
N/A
29,519
White Plains, NY
407
379,555
0.1
N/A
933
N/A
N/A
N/A
N/A
N/A
131,371
New York, NY
295
243,157
0.8
N/A
824
N/A
N/A
N/A
N/A
N/A
105,801
Coram, NY
200
176,000
39.0
N/A
880
N/A
N/A
N/A
N/A
N/A
38,674
Brooklyn, NY
631
498,632
1.0
N/A
790
N/A
N/A
N/A
N/A
N/A
143,887
Bellevue, WA
396
330,194
1.5
N/A
834
N/A
N/A
N/A
N/A
N/A
13,425
San Francisco, CA
313
291,556
1.5
2006
931
93.6
%
95.0
%
83.3
%
3,226
3.29
N/A
Los Angeles, CA
309
284,387
5.0
2006
920
91.6
%
92.7
%
96.5
%
2,100
2.11
N/A
New York, NY
361
266,940
1.5
2005
739
95.8
%
96.9
%
96.1
%
4,208
5.51
N/A
Kirkland, WA
211
209,335
2.9
2005
992
96.2
%
95.3
%
95.2
%
1,602
1.54
N/A
Redondo Beach, CA
105
86,075
1.2
1971/2004
820
97.1
%
94.3
%
94.0
%
2,015
2.32
N/A
Los Angeles, CA
82
71,037
0.8
1987/2005
866
91.5
%
96.5
%
88.3
% (2)
1,997
2.23
N/A
Norwalk, CA
192
174,378
8.7
1987/2005
908
89.1
%
93.6
%
85.5
% (2)
1,676
1.73
N/A
Fremont, CA
134
106,249
7.0
1987/2005
793
97.0
%
94.8
% (2)
87.3
% (2)
1,433
1.71
(2)
N/A
San Francisco, CA
160
159,604
0.9
2000/2006
998
97.5
%
97.1
%
97.1
%
3,059
2.98
N/A
Corona, CA
320
241,440
13.3
1987/2006
755
81.9
%
87.7
%
94.2
%
1,093
1.27
N/A
San Jose,CA
348
287,918
18.4
1994/2007
827
97.1
%
97.7
%
96.2
% (3)
1,470
1.74
N/A
West Covina, CA
85
107,150
5.3
1966/2007
1,261
89.4
%
88.0
% (2)
97.5
% (3)
1,715
1.20
(2)
N/A
Wheaton, IL
204
162,821
12.4
2004
798
95.6
%
96.2
%
95.1
%
979
1.18
N/A
Schaumburg, IL
196
178,490
12.8
1986/2005
911
94.9
%
91.3
%
88.6
% (2)
1,190
1.19
N/A
Schaumburg, IL
256
201,924
13.2
1988/2006
789
98.0
%
96.2
% (2)
93.1
%
1,069
1.30
(2)
N/A
Billerica, MA
252
188,915
13.0
2007
750
94.8
%
96.0
%
93.6
% (3)
1,248
1.60
N/A
Weymouth, MA
211
154,957
7.7
1971/2007
734
94.8
%
95.8
% (2)
87.9
% (3)
1,043
1.36
(2)
N/A
(Dollars in thousands, except per apartment home data)
Average economic
Average
Approx.
Year of
Average
Physical
occupancy
rental rate
Financial
Number of
rentable area
completion /
size
occupancy at
$ per
$ per
reporting cost
City and state
homes
(Sq. Ft.)
Acres
acquisition
(Sq. Ft.)
12/31/08
2008
2007
Apt (4)
Sq. Ft.
(5)
Columbia, MD
170
180,452
11.3
1989/2004
1,061
96.5
%
96.3
%
96.0
% (2)
1,485
1.35
N/A
Columbia, MD
156
152,923
11.4
1972/2006
980
94.9
%
86.8
% (2)
95.3
%
1,158
1.03
(2)
N/A
Baltimore, MD
392
312,356
6.9
2005/2007
797
94.6
%
90.5
%
92.9
% (3)
909
1.03
N/A
Aberdeen, NJ
290
414,585
16.8
2002/2006
1,430
99.0
%
96.5
%
96.1
%
1,790
1.21
N/A
East Rutherford, NJ
108
131,937
1.5
2005/2007
1,222
95.4
%
95.2
%
89.2
% (3)
2,237
1.74
N/A
Pomona, NY
168
215,203
12.1
2001/2007
1,281
98.2
%
95.2
%
94.9
% (3)
2,020
1.50
N/A
(1)
We own a fee simple interest in the communities listed, excepted as noted below.
(2)
Represents community which was under redevelopment during the year, resulting in lower average economic occupancy and average rental rate per square foot for the year.
(3)
Represents a community that completed development or was purchased during the year, which could result in lower average economic occupancy and average rental rate per square foot for the year.
(4)
Represents the average rental revenue per occupied apartment home.
(5)
Costs are presented in accordance with generally accepted accounting principles. For current Development Communities, cost represents total costs incurred through December 31, 2008.
Financial reporting costs are excluded for unconsolidated communities, see Note 6, Investments in Real Estate Entities.
(6)
We own a 15.2% combined general partnership and indirect limited partner equity interest in this community.
(7)
We own a general partnership interest in a partnership that owns a fee simple interest in this community.
(8)
We own a general partnership interest in a partnership structured as a DownREIT that owns this community.
(9)
We own a membership interest in a limited liability company that holds a fee simple interest in this community.
(10)
This community was transferred to a joint venture entity upon completion of development. We do not hold an equity interest in the entity, but retain a promoted residual interest in the profits of the entity.
We receive a property management fee for this community.
(11)
Community is located on land subject to a land lease.
Total
Number of
capitalized
apartment
cost (1)
Construction
Initial
Estimated
Estimated
homes
($ millions)
start
occupancy (2)
completion
stabilization (3)
1.
295
$
122.8
Q1 2007
Q3 2008
Q2 2009
Q3 2009
2.
407
154.0
Q2 2007
Q3 2008
Q4 2009
Q1 2010
3.
251
102.3
Q2 2007
Q4 2008
Q3 2009
Q1 2010
4.
438
122.2
Q3 2007
Q2 2009
Q4 2009
Q2 2010
5.
235
53.5
Q3 2007
Q3 2008
Q2 2009
Q3 2009
6.
260
153.8
Q4 2007
Q2 2009
Q4 2009
Q2 2010
7.
279
77.4
Q4 2007
Q2 2009
Q1 2010
Q3 2010
8.
631
306.8
Q4 2007
Q4 2009
Q1 2011
Q3 2011
9.
200
47.8
Q1 2008
Q1 2009
Q3 2009
Q1 2010
10.
276
46.6
Q2 2008
Q2 2009
Q4 2009
Q2 2010
11.
422
156.7
Q3 2008
Q3 2010
Q1 2011
Q3 2011
12.
311
86.4
Q3 2008
Q3 2010
Q2 2011
Q4 2011
13.
163
27.4
Q4 2008
Q3 2009
Q1 2010
Q3 2010
14.
396
126.1
Q4 2008
Q2 2010
Q2 2011
Q4 2011
4,564
$
1,583.8
(1)
Total capitalized cost includes all capitalized costs projected to be or actually incurred to
develop the respective Development Community, determined in accordance with GAAP, including
land acquisition costs, construction costs, real estate taxes, capitalized interest and loan
fees, permits, professional fees, allocated development overhead and other regulatory fees.
Total capitalized cost for communities identified as having joint venture ownership, either
during construction or upon construction completion, represents the total projected joint
venture contribution amount.
(2)
Future initial occupancy dates are estimates. There can be no assurance that we will pursue
to completion any or all of these proposed developments.
(3)
Stabilized operations is defined as the earlier of (i) attainment of 95% or greater physical
occupancy or (ii) the one-year anniversary of completion of development.
(4)
This community is being financed in part by third party, tax-exempt debt.
Total cost
Number of
($ millions)
Estimated
Estimated
apartment
Pre-redevelopment
Total capitalized
Reconstruction
reconstruction
restabilized
homes
cost
cost (1)
start
completion
operations (2)
1.
286
$
23.7
$
34.5
Q3 2007
Q2 2009
Q4 2009
2.
663
72.1
109.3
Q4 2007
Q3 2010
Q1 2011
3.
154
25.3
30.2
Q4 2007
Q4 2010
Q2 2011
4.
176
9.4
14.0
Q2 2008
Q3 2009
Q1 2010
5.
216
36.4
42.4
Q2 2008
Q3 2009
Q1 2010
6.
248
51.6
60.1
Q2 2008
Q3 2009
Q1 2010
7.
400
71.0
94.4
Q3 2008
Q2 2010
Q4 2010
8.
256
32.6
34.9
Q4 2008
Q3 2009
Q4 2009
9.
211
21.8
25.8
Q4 2008
Q3 2009
Q4 2009
2,610
$
343.9
$
445.6
(1)
Total capitalized cost includes all capitalized costs projected to be or actually incurred to
develop the respective Redevelopment Community, including land acquisition costs, construction
costs, real estate taxes, capitalized interest and loan fees, permits, professional fees,
allocated development overhead and other regulatory fees, all as determined in accordance with
GAAP.
(2)
Restabilized operations is defined as the earlier of (i) attainment of 95% or greater
physical occupancy or (ii) the one-year anniversary of completion of redevelopment.
(3)
This community is owned by the Fund.
Total
Estimated
capitalized
number
cost
Location
of homes
($ millions) (1)
1.
100
$
30
2.
204
63
3.
349
129
4.
444
118
5.
406
104
6.
200
38
7.
187
35
8.
164
47
9.
115
26
10.
160
58
11.
681
307
12.
92
20
13.
82
18
14.
180
34
15.
240
62
16.
251
66
17.
234
76
18.
173
51
19.
180
106
20.
249
54
21.
405
126
22.
393
99
23.
298
85
24.
130
22
25.
343
57
26.
832
443
27.
212
39
7,304
$
2,313
(1)
Total capitalized cost includes all capitalized costs incurred to date (if any) and projected
to be incurred to develop the respective community, determined in accordance with GAAP,
including land acquisition costs, construction costs, real estate taxes, capitalized interest
and loan fees, permits, professional fees, allocated development overhead and other regulatory
fees.
Estimated
Total
number
capitalized
Gross
of apartment
cost (1)
Date
acres
homes
($ millions)
acquired
1.
1.4
234
$
320
January 2008
2.
2.2
164
85
May 2008
3.
4.4
311
41
July 2008
4.
4.2
832
158
November / December 2008
5.
4.5
92
103
December 2008
16.7
1,633
$
707
(1)
Total capitalized cost includes all capitalized costs incurred to date (if any) and projected
to be incurred to develop the respective community, determined in accordance with GAAP,
including land acquisition costs, construction costs, real estate taxes, capitalized interest
and loan fees, permits, professional fees, allocated development overhead and other regulatory
fees.
(2)
This represents a portion of the aggregate land purchase that we will transact under a
non-cancelable commitment related to this expected development, as discussed in Note 8,
Commitments and Contingencies, of the Consolidated Financial Statements set forth in Item
8 of this report.
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
ITEM 5.
MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
2008
2007
Sales Price
Dividends
Sales Price
Dividends
High
Low
declared
High
Low
declared
$
105.98
$
79.78
$
0.8925
$
149.94
$
125.30
$
0.85
$
107.37
$
87.65
$
0.8925
$
134.62
$
115.38
$
0.85
$
109.45
$
82.97
$
0.8925
$
128.46
$
105.91
$
0.85
$
96.68
$
41.43
$
2.70
$
125.48
$
88.97
$
0.85
(c)
(d)
Total Number of
Maximum Dollar Amount
(b)
Shares Purchased
that May Yet be Purchased
(a)
Average Price
as Part of Publicly
Under the Plans or
Total Number of
Paid per
Announced Plans
Programs
Shares Purchased
Share
or Programs
(in thousands)
Period
(1)
(1)
(2)
(2)
4,000,206
$
25.00
$
200,000
$
$
200,000
$
$
200,000
(1)
Includes shares surrendered to the Company in connection with employee stock
option exercises or vesting of restricted stock as payment of exercise price or as
payment of taxes. Amounts for the month ended October 31, 2008 include the redemption
of all 4,000,000 outstanding shares of the Companys Series H Cumulative Redeemable
Preferred Stock (Preferred Stock) that occurred on October 15, 2008. The redemption
of the Preferred stock was not part of the Companys publicly announced stock
repurchase program.
(2)
As disclosed in our Form 10-Q for the quarter ended March 31, 2008, on
February 6, 2008, we disclosed that our Board of Directors voted to further increase
the authorized limit of our stock repurchase program to $500,000,000. All amounts
presented in the table above include this further increase. In determining whether to
repurchase shares, we consider a variety of factors, including our liquidity needs, the
then current market price of our shares and the effect of the share repurchases on our
per share earnings and FFO. There is no scheduled expiration date to this program.
For the year ended
12-31-08
12-31-07
12-31-06
12-31-05
12-31-04
$
847,640
$
760,521
$
671,382
$
613,434
$
561,752
6,568
6,142
6,259
4,304
604
854,208
766,663
677,641
617,738
562,356
258,162
231,688
206,059
187,824
178,229
77,267
70,562
62,651
60,535
54,435
114,878
94,540
106,271
122,787
127,123
194,150
168,324
149,352
146,225
139,436
42,781
28,494
24,767
25,761
18,074
57,899
745,137
593,608
549,100
543,132
517,297
4,566
59,169
7,455
7,198
1,100
(1,178
)
741
(1,585
)
(573
)
(1,481
)
(150
)
545
13,519
4,479
1,138
114,378
231,184
148,942
84,802
45,969
12,208
20,489
20,193
30,379
35,976
284,901
106,487
97,411
195,287
121,287
297,109
126,976
117,604
225,666
157,263
411,487
358,160
266,546
310,468
203,232
4,547
411,487
358,160
266,546
310,468
207,779
(10,454
)
(8,700
)
(8,700
)
(8,700
)
(8,700
)
$
401,033
$
349,460
$
257,846
$
301,768
$
199,079
$
1.35
$
2.83
$
1.89
$
1.05
$
0.58
3.87
1.61
1.59
3.09
2.20
$
5.22
$
4.44
$
3.48
$
4.14
$
2.78
76,783,515
78,680,043
74,125,795
72,952,492
71,564,202
$
1.34
$
2.79
$
1.86
$
1.03
$
0.58
3.83
1.59
1.56
3.02
2.17
$
5.17
$
4.38
$
3.42
$
4.05
$
2.75
77,578,852
79,856,927
75,586,898
74,759,318
73,354,956
$
3.57
$
3.40
$
3.12
$
2 .84
$
2.80
(1)
Weighted average common shares outstanding diluted for 2008
includes the impact of approximately 2.6 million common shares issued under the special dividend
declared on December 17, 2008.
(2)
Does not include the special dividend of 1.8075, which was declared on December 17,
2008, and paid for by the Company using common stock par value $0.01.
(3)
Earnings per common share basic and Earnings per common share diluted include
$0.06 per share related to the cumulative effect of a change in
accounting principle.
For the year ended
12-31-08
12-31-07
12-31-06
12-31-05
12-31-04
$
411,487
$
358,160
$
266,546
$
310,468
$
207,779
194,150
168,324
149,352
146,225
139,436
5,302
13,401
14,777
17,072
24,464
114,878
94,540
106,271
122,787
127,123
1,490
3,692
4,775
4,311
4,505
$
727,307
$
638,117
$
541,721
$
600,863
$
503,307
$
315,947
$
368,057
$
320,199
$
271,096
$
235,514
164
163
150
143
138
45,728
45,932
43,141
41,412
40,142
$
8,002,487
$
7,556,740
$
6,615,593
$
5,940,146
$
5,734,122
$
7,173,374
$
6,736,484
$
5,848,507
$
5,198,598
$
5,116,019
$
3,674,457
$
3,208,202
$
2,866,433
$
2,334,017
$
2,451,354
$
386,855
$
454,874
$
351,660
$
306,248
$
275,617
$
(266,309
)
$
(809,247
)
$
(511,371
)
$
(19,761
)
$
(251,683
)
$
(75,111
)
$
366,360
$
162,280
$
(282,293
)
$
(29,471
)
Notes to Selected Financial Data
(1)
EBITDA is defined as net income before interest income and expense, income taxes,
depreciation and amortization from both continuing and discontinued operations. Under this
definition, EBITDA includes gains on sale of assets and gain on sale of partnership interests.
Management generally considers EBITDA to be an appropriate supplemental measure to net income
of our operating performance because it helps investors to understand our ability to incur and
service debt and to make capital expenditures. EBITDA should not be considered as an
alternative to net income (as determined in accordance with generally accepted accounting
principles, or GAAP), as an indicator of our operating performance, or to cash flows from
operating activities (as determined in accordance with GAAP) as a measure of liquidity. Our
calculation of EBITDA may not be comparable to EBITDA as calculated by other companies.
(2)
We generally consider Funds from Operations, or FFO, as defined below, to be an appropriate
supplemental measure of our operating and financial performance because, by excluding gains or
losses related to dispositions of previously depreciated property and excluding real estate
depreciation, which can vary among owners of identical assets in similar condition based on
historical cost accounting and useful life estimates, FFO can help one compare the operating
performance of a real estate company between periods or as compared to different companies.
We believe that in order to understand our operating results, FFO should be examined with net
income as presented in the Consolidated Statements of Operations and Other Comprehensive
Income included elsewhere in this report.
(3)
Current Communities consist of all communities other than those which are still under
construction and have not received a certificate of occupancy.
gains or losses on sales of previously depreciated operating communities;
extraordinary gains or losses (as defined by GAAP);
cumulative effect of change in accounting principle;
depreciation of real estate assets; and
adjustments for unconsolidated partnerships and joint ventures.
For the year ended
12-31-08
12-31-07
12-31-06
12-31-05
12-31-04
$
411,487
$
358,160
$
266,546
$
310,468
$
207,779
(10,454
)
(8,700
)
(8,700
)
(8,700
)
(8,700
)
203,082
184,731
165,982
163,252
159,221
216
280
391
1,363
3,048
(3,483
)
(59,927
)
(6,609
)
(4,547
)
(284,901
)
(106,487
)
(97,411
)
(195,287
)
(121,287
)
$
315,947
$
368,057
$
320,199
$
271,096
$
235,514
77,578,852
79,856,927
75,586,898
74,759,318
73,354,956
$
4.07
$
4.61
$
4.24
$
3.63
$
3.21
ITEM 7.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Net Income and EPS/FFO Decrease (Increase)
Full Year 2008
Amount
Per Share (1)
$
57,899,000
$
0.75
3,400,000
0.04
3,200,000
0.04
1,209,000
0.02
(1,839,000
)
(0.02
)
3,566,000
0.05
5,537,000
0.07
$
72,972,000
$
0.94
(1)
Per share amounts are computed using the weighted average common shares-diluted at December 31, 2008.
2008
2007
$ Change
% Change
2007
2006
$ Change
% Change
$
847,640
$
760,521
$
87,119
11.5
%
$
760,521
$
671,382
$
89,139
13.3
%
6,568
6,142
426
6.9
%
6,142
6,259
(117
)
(1.9
%)
854,208
766,663
87,545
11.4
%
766,663
677,641
89,022
13.1
%
200,990
181,324
19,666
10.8
%
181,324
164,852
16,472
10.0
%
77,267
70,562
6,705
9.5
%
70,562
62,651
7,911
12.6
%
278,257
251,886
26,371
10.5
%
251,886
227,503
24,383
10.7
%
39,874
38,627
1,247
3.2
%
38,627
34,177
4,450
13.0
%
17,298
11,737
5,561
47.4
%
11,737
7,030
4,707
67.0
%
114,878
94,540
20,338
21.5
%
94,540
106,271
(11,731
)
(11.0
%)
194,150
168,324
25,826
15.3
%
168,324
149,352
18,972
12.7
%
42,781
28,494
14,287
50.1
%
28,494
24,767
3,727
15.0
%
57,899
57,899
N/A
466,880
341,722
125,158
36.6
%
341,722
321,597
20,125
6.3
%
4,566
59,169
(54,603
)
(92.3
%)
59,169
7,455
51,714
693.7
%
741
(1,585
)
2,326
146.8
%
(1,585
)
(573
)
(1,012
)
(176.6
%)
545
(545
)
N/A
545
13,519
(12,974
)
(96.0
%)
114,378
231,184
(116,806
)
(50.5
%)
231,184
148,942
82,242
55.2
%
12,208
20,489
(8,281
)
(40.4
%)
20,489
20,193
296
1.5
%
284,901
106,487
178,414
167.5
%
106,487
97,411
9,076
9.3
%
297,109
126,976
170,133
134.0
%
126,976
117,604
9,372
8.0
%
411,487
358,160
53,327
14.9
%
358,160
266,546
91,614
34.4
%
(10,454
)
(8,700
)
(1,754
)
20.2
%
(8,700
)
(8,700
)
$
401,033
$
349,460
$
51,573
14.8
%
$
349,460
$
257,846
$
91,614
35.5
%
For the year ended
12-31-08
12-31-07
12-31-06
$
411,487
$
358,160
$
266,546
33,045
31,285
28,811
17,298
11,737
7,030
114,878
94,540
106,271
42,781
28,494
24,767
(4,566
)
(59,169
)
(7,455
)
(741
)
1,585
573
194,150
168,324
149,352
57,899
(284,901
)
(107,032
)
(110,930
)
(12,208
)
(20,489
)
(20,193
)
$
569,122
$
507,435
$
444,772
2008
2007
Increase
Increase
$
14,257
$
27,665
14,982
10,186
32,448
24,812
$
61,687
$
62,663
For the year ended
12-31-08
12-31-07
$
605,657
$
587,436
5,973
5,316
(7,271
)
(5,469
)
$
604,359
$
587,283
3.1
%
n/a
2.9
%
n/a
development and redevelopment activity in which we are currently engaged;
the minimum dividend payments on our common stock required to maintain our REIT
qualification under the Internal Revenue Code of 1986;
debt service and maturity payments;
normal recurring operating expenses;
DownREIT partnership unit distributions; and
capital calls for the Fund and Fund II, as required.
We acquired six parcels of land in connection with Development Rights, for a purchase
price of approximately $97,174,000
.
We had capital expenditures of $20,824,000 for real estate and non-real estate assets.
We invested approximately $881,503,000 in the development of communities, including the
commencement of the development of six communities which are expected to contain an
aggregate of 1,768 apartment homes for an expected aggregate total capitalized cost of
$491,000,000.
limitation on the amount of total and secured debt in
relation to our overall capital structure,
limitation on the amount of our unsecured debt
relative to the undepreciated basis of real estate assets that are
not encumbered by property-specific financing, and
minimum levels of debt service coverage.
we repaid $50,000,000, 6.625% principal amount of previously issued unsecured
notes, along with any unpaid interest, pursuant to their scheduled maturity;
we redeemed $10,000,000 principal amount of our $150,000,000, 7.5% unsecured notes that
mature in August 2009 for $10,287,500 with the premium above par recorded as a charge to
earnings;
we repaid $146,000,000 of unsecured notes with an annual interest rate of 8.25% pursuant
to their scheduled maturity;
we redeemed $15,000,000 principal amount of our $250,000,000, 5.5% unsecured notes that
mature in January 2012 at a discount price of 87% of par;
we repaid the loans secured by Avalon Knoll, which is located in Germantown, Maryland
and had a fixed rate of 6.95%, Avalon Landing, which is located in Annapolis, Maryland and
had a fixed rate of 6.85%, and Avalon at Fairway Hills, which is located in Columbia,
Maryland and had a variable rate. These loans, which had contractual maturities of 2026
and an aggregate amount outstanding of $28,707,000, were repaid early at par;
we repaid the $4,368,000, 6.99% fixed rate loan secured by a development right in
Wheaton, Maryland pursuant to its scheduled maturity;
we borrowed $170,125,000 under an interest-only mortgage note secured by Avalon at
Arlington Square, located in Arlington, Virginia at an effective rate of 4.69% for five
years;
we borrowed $94,572,000 under an interest-only mortgage note secured by Avalon at
Cameron Court, located in Alexandria, Virginia at an effective rate of 4.95% for five
years;
we borrowed $110,600,000 under an interest-only mortgage note secured by Avalon
Crescent, located in McLean, Virginia at an effective rate of 5.48% for seven years;
we borrowed $150,000,000 under an interest-only mortgage note secured by Avalon Silicon
Valley, located in Sunnyvale, California at an effective rate of 5.66% for seven years;
we entered into a $330,000,000, variable rate unsecured term loan comprised of three
tranches bearing interest at LIBOR plus a spread of 1.25%, of which approximately one third
matures in each of the next three years beginning in 2009;
we closed both a variable rate bond financing relating to Avalon Walnut Creek in the
aggregate amount of $135,000,000, of which $126,000,000 is tax-exempt, as well as an
associated 4.0% fixed-rate construction loan of $2,500,000;
we closed a $62,400,000, 6.02% fixed rate loan secured by Avalon at Greyrock Place,
located in Stamford, Connecticut;
we closed a $51,749,000, 6.12% fixed rate loan secured by Avalon Darien, located in
Darien, Connecticut;
we closed a $55,100,000, 5.875% fixed rate loan secured by Avalon Commons, located in
Smithtown, New York;
we repaid $390,500,000 outstanding under our Credit Facility;
we repurchased 482,100 shares of our common stock at an average price of $87.42 per
share, for a total approximate purchase price of $42,144,000;
we redeemed 44,592 limited partnership units in certain DownREITs for $1,756,000; and
we exercised our option to redeem all 4,000,000 outstanding shares of our 8.70% Series H
Cumulative Redeemable Preferred Stock for $100,701,000, inclusive of accrued but unpaid
dividends through the redemption date.
(1)
Includes credit enhancement fees, facility fees, trustees fees and other fees.
(2)
Financed by variable rate, tax-exempt debt, but the interest rate on a portion of this debt
is effectively fixed at December 31, 2008 and December 31, 2007 through a swap agreement. The
portion of the debt fixed through a swap agreement decreases (and therefore the variable
portion of the debt increases) monthly as payments are made to a principal reserve fund.
(3)
Variable rates are given as of December 31, 2008.
(4)
Financed by variable rate debt, but interest rate is capped through an interest rate
protection agreement.
(5)
Represents full amount of the debt as of December 31, 2008. Actual amounts drawn on the debt
as of December 31, 2008 are $93,279 for Bowery Place I, $44,678 for Bowery Place II, $44,148
for Avalon Acton, $78,505 for Morningside Park, and $0 for Walnut Creek.
(6)
Balances outstanding represent total amounts due at maturity, and are not net of $2,035 of
debt discount as of December 31, 2008 and $2,501 of debt discount as of December 31, 2007, as
reflected in unsecured notes on our Consolidated Balance Sheets included elsewhere in this
report.
(7)
In April 2008, we redeemed $10,000 aggregate principal amount of our $150,000, 7.5% unsecured
notes due in August 2009. In January 2009, we redeemed $37,438 principal amount of our
$150,000, 7.5% unsecured notes due August 2009.
(8)
In January 2009, we redeemed $64,423 principal amount of our $200,000, 7.5% unsecured notes
due December 2010.
(9)
In November 2008, we redeemed $15,000 aggregate principal amount of our $250,000, 5.5%
unsecured notes due January 2012.
cash currently on hand invested in highly liquid overnight money market funds and
repurchase agreements, and short-term investment vehicles;
the remaining capacity under our $1,000,000,000 Credit Facility;
retained operating cash;
the net proceeds from sales of existing communities;
the issuance of debt or equity securities; and/or
private equity funding, including joint venture activity.
CVP I, LLC has outstanding tax-exempt, variable rate bonds maturing in November 2036 in
the amount of $117,000,000, which have permanent credit enhancement. We have agreed to
guarantee, under limited circumstances, the repayment to the credit enhancer of any
advances it may make in fulfillment of CVP I, LLCs repayment obligations under the bonds
.
We have also guaranteed to the credit enhancer that CVP I, LLC will obtain a final
certificate of occupancy for the project (Chrystie Place in New York City) overall once
tenant improvements related to a retail tenant are complete, which is expected in 2009.
Our 80% partner in this venture has agreed that it will reimburse us its pro rata share of
any amounts paid relative to these guaranteed obligations. The estimated fair value of,
and our obligation under these guarantees, both at inception and as of December 31, 2008
were not significant. As a result we have not recorded any obligation associated with
these guarantees at December 31, 2008.
The Fund has 22 loans secured by individual assets with amounts outstanding in the
aggregate of $436,698,000. These mortgage loans have varying maturity dates (or dates
after which the loans can be prepaid), ranging from October 2011 to September 2016. These
mortgage loans are secured by the underlying real estate. The Fund has two credit
facilities that mature in December 2008. The Fund had $3,000,000 outstanding as of
December 31, 2008 under its credit facilities. The mortgage loans and the credit facility
are payable by the Fund with operating cash flow or disposition proceeds from the
underlying real estate, and the credit facility is secured by capital commitments. We have
not guaranteed the debt of the Fund, nor do we have any obligation to fund this debt should
the Fund be unable to do so.
In addition, as part of the formation of the Fund, we have provided to one of the limited
partners a guarantee. The guarantee provides that if, upon final liquidation of the Fund,
the total amount of all distributions to that partner during the life of the Fund (whether
from operating cash flow or property sales)
does not equal a minimum of the total capital contributions made by that partner, then we
will pay the
partner an amount equal to the shortfall, but in no event more than 10% of the
total capital contributions made by the partner (maximum of approximately $7,192,000 as of
December 31, 2008). As of December 31, 2008, the expected
realizable value of the real estate assets owned
by the Fund is considered adequate to cover such potential payment to
that partner under the expected Fund
liquidation scenario. The estimated fair value of, and our obligation under this guarantee,
both at inception and as of December 31, 2008 was not significant and therefore we have not
recorded any obligation for this guarantee as of December 31, 2008.
MVP I, LLC, the entity that owns Avalon at Mission Bay North II, has a loan secured by
the underlying real estate assets of the community for $105,000,000. The loan is a
fixed-rate, interest-only note bearing interest at 6.02%, maturing in December 2015. We
have not guaranteed the debt of MVP I, LLC, nor do we have any obligation to fund this debt
should MVP I, LLC be unable to do so.
Avalon Del Rey Apartments, LLC has a loan secured by the underlying real estate assets
of the community for $40,763,000. The variable-rate loan had an interest rate of 3.40% at
December 31, 2008. We have not guaranteed the debt of Avalon Del Rey Apartments, LLC, nor
do we have any obligation to fund this debt should Avalon Del Rey Apartments, LLC be unable
to do so.
Aria at Hathorne Hill, LLC is a joint venture in which we have a non-managing member
interest. The LLC is developing 64 for-sale town homes in Danvers, Massachusetts. The LLC
has two separate variable rate loans with aggregate borrowings of $4,476,000 and an
interest rate of 2.875% at December 31, 2008. In addition, Aria at Hathorne has a
short-term variable rate note for approximately $263,000 at an interest rate of 3.7% due in
2009. We have not guaranteed the debt of Aria at Hathorne, nor do we have any obligation
to fund this debt should Aria at Hathorne be unable to do so.
PHVP I, LLC, a consolidated joint venture in which we hold a 99.0% controlling interest,
is constructing a public garage adjacent to our Walnut Creek development. As part of the
construction management services we provide to PHVP I, LLC for the construction of the
public garage, we have provided a construction completion guarantee to the related lender
in order to fulfill their standard financing requirements related to the garage
construction financing. Our obligations under this guarantee terminate upon (i) the
issuance of a certificate of substantial completion and (ii) completion of a list of lender
requirements. The certificate of substantial completion was issued on July 11, 2008 and
the completion of the lenders requirements list is nearing completion. We expect
termination of the guarantee in the first half of 2009.
In 2007 we entered into a non-cancelable commitment (the Commitment) to acquire
parcels of land in Brooklyn, New York for an aggregate purchase price of approximately
$111,000,000. Under the terms of the Commitment, we will close on the various parcels over
a period determined by the sellers ability to execute unrelated purchase transactions and
achieve deferral of gains for the land sold under this Commitment. However, under no
circumstances will the Commitment extend beyond 2011, at which time either we or the seller
can compel execution of the remaining transactions. At December 31, 2008, we have an
outstanding commitment to purchase the remaining land for approximately $62,519,000.
Payments due by period
Less than 1
More than 5
Total
Year
1-3 Years
3-5 Years
Years
$
3,676,492
$
433,563
$
848,433
$
936,457
$
1,458,039
2,316,449
16,262
32,777
32,914
2,234,496
$
5,992,941
$
449,825
$
881,210
$
969,371
$
3,692,535
(1)
Includes $124,000 outstanding under our variable rate Credit Facility as of December 31,
2008. The table of contractual obligations assumes repayment of this amount in 2009 See
Liquidity and Capital Resources. Amounts exclude interest payable as of December 31, 2008.
(2)
Includes land leases expiring between November 2028 and March 2142. Amounts do not include
any adjustment for purchase options available under the land leases.
our potential development, redevelopment, acquisition or disposition of communities;
the timing and cost of completion of apartment communities under construction,
reconstruction, development or redevelopment;
the timing of lease-up, occupancy and stabilization of apartment communities;
the pursuit of land on which we are considering future development;
the anticipated operating performance of our communities;
cost, yield, revenue, NOI and earnings estimates;
our declaration or payment of distributions;
our joint venture and discretionary fund activities;
our policies regarding investments, indebtedness, acquisitions, dispositions,
financings and other matters;
our qualification as a REIT under the Internal Revenue Code;
the real estate markets in Northern and Southern California and markets in
selected states in the Mid-Atlantic, Midwest, New England, Metro NY/NJ and Pacific
Northwest regions of the United States and in general;
the availability of debt and equity financing;
interest rates;
general economic conditions including the recent economic downturn; and
trends affecting our financial condition or results of operations.
we may fail to secure development opportunities due to an inability to reach
agreements with third parties to obtain land at attractive prices or to obtain
desired zoning and other local approvals;
we may abandon or defer development opportunities for a number of reasons,
including changes in local market conditions which make development less desirable,
increases in costs of development, increases in the cost of capital or lack of
capital availability, resulting in losses;
construction costs of a community may exceed our original estimates;
we may not complete construction and lease-up of communities under development
or redevelopment on schedule, resulting in increased interest costs and
construction costs and a decrease in our expected rental revenues;
occupancy rates and market rents may be adversely affected by competition and
local economic and market conditions which are beyond our control;
financing may not be available on favorable terms or at all, and our cash flows
from operations and access to cost effective capital may be insufficient for the
development of our pipeline which could limit our pursuit of opportunities;
our cash flows may be insufficient to meet required payments of principal and
interest, and we may be unable to refinance existing indebtedness or the terms of
such refinancing may not be as favorable as the terms of existing indebtedness;
we may be unsuccessful in our management of the Fund, Fund II
or the REIT vehicles that are used with each respective Fund; and
we may be unsuccessful in managing changes in our portfolio composition.
For entities not considered to be variable interest entities under FIN 46(R), the nature
of the entity changed such that it would be considered a variable interest entity and if we
were considered the primary beneficiary.
For entities in which we do not hold a controlling voting and/or variable interest, the
contractual arrangement changed resulting in our investment interest being either a
controlling voting and/or variable interest.
we agree to pay to a counterparty the interest that would have been incurred on a
fixed principal amount at a fixed interest rate (generally, the interest rate on a
particular treasury bond on the date the agreement is entered into, plus a fixed
increment); and
the counterparty agrees to pay to us the interest that would have been incurred on
the same principal amount at an assumed floating interest rate tied to a particular
market index.
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
(a)
Evaluation of Disclosure Controls and Procedures
. As required by Rule 13a-15 under the
Securities Exchange Act of 1934, as of the end of the period covered by this report, the
Company carried out an evaluation under the supervision and with the participation of the
Companys management, including the Companys Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the design and operation of the Companys disclosure controls
and procedures. Based upon that evaluation, the Chief Executive Officer and Chief Financial
Officer concluded that the Companys disclosure controls and procedures are effective to
ensure that information required to be disclosed by the Company in the reports it files or
submits under the Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commissions rules and forms. We continue to
review and document our disclosure controls and procedures, including our internal control
over financial reporting, and may from time to time make changes aimed at enhancing their
effectiveness and to ensure that our systems evolve with our business.
(b)
Managements Report on Internal Control Over Financial Reporting
. Our management is
responsible for establishing and maintaining adequate internal control over financial
reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the
supervision and with the participation of our management, including our Chief Executive
Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our
internal control over financial reporting as of December 31, 2008 based on the framework in
Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of
the Treadway Commission (COSO). Based on that evaluation, our management concluded that our
internal control over financial reporting was effective as of December 31, 2008.
(c)
Changes in Internal Control Over Financial Reporting
. There was no change in our internal
control over financial reporting that occurred during the fourth quarter of the period covered
by this Annual Report on Form 10-K that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.
64
65
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
(1)
Consists of the 1994 Plan.
(2)
Includes 110,418 deferred units granted under the 1994 Plan, which, subject to vesting
requirements, will convert in the future to common stock on a one-for-one basis, but does not
include 207,070 shares of restricted stock that are outstanding and that are already reflected
in the Companys outstanding shares.
(3)
Excludes deferred units granted under the 1994 Plan, which, subject to vesting requirements,
will convert in the future to common stock on a one-for-one basis.
(4)
Consists of the ESPP.
66
Financial Statements
Index to Financial Statements
Consolidated Financial Statements and Financial Statement Schedule:
Reports of Independent Registered Public Accounting Firm
F-1
Consolidated
Balance Sheets as of December 31, 2008 and 2007
F-3
Consolidated Statements of Operations and Other Comprehensive Income for
the years ended December 31, 2008, 2007 and 2006
F-4
Consolidated Statements of Stockholders Equity for
the years ended December 31, 2008, 2007 and 2006
F-5
Consolidated Statements of Cash Flows for
the years ended December 31, 2008, 2007 and 2006
F-6
Notes to Consolidated Financial Statements
F-8
Financial Statement Schedule
Schedule III Real Estate and Accumulated Depreciation
F-39
All other schedules for
which provision is made in the applicable accounting regulation of
the Securities and Exchange Commission are not required under the
related instructions or are inapplicable and therefore have been
omitted.
Exhibits
The exhibits listed on the accompanying Index to Exhibits are filed as a part of this report.
3(i).1
|
| Articles of Amendment and Restatement of Articles of Incorporation of the Company, dated as of June 4, 1998. (Incorporated by reference to Exhibit 3(i).1 to Form 10-K of the Company filed March 1, 2007.) | ||
3(i).2
|
| Articles of Amendment, dated as of October 2, 1998. (Incorporated by reference to Exhibit 3(i).2 to Form 10-K of the Company filed March 1, 2007.) | ||
3(ii).1
|
| Amended and Restated Bylaws of the Company, as adopted by the Board of Directors on February 13, 2003. (Filed herewith.) | ||
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. (Incorporated by reference to Exhibit 4.1 to Registration Statement on Form S-3 of the Company (File No. 333-139839), filed January 8, 2007.) | ||
4.2
|
| First Supplemental Indenture, dated as of January 20, 1998, between the Company and State Street Bank and Trust Company as Trustee. (Incorporated by reference to Exhibit 4.2 to Registration Statement on Form S-3 of the Company (File No. 333-139839), filed January 8, 2007.) | ||
4.3
|
| Second Supplemental Indenture, dated as of July 7, 1998, between the Company and State Street Bank and Trust Company as Trustee. (Incorporated by reference to Exhibit 4.3 to Registration Statement on Form S-3 of the Company (File No. 333-139839), filed January 8, 2007.) | ||
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. (Incorporated by reference to Exhibit 4.4 to Registration Statement on Form S-3 of the Company (File No. 333-139839), filed January 8, 2007.) | ||
4.5
|
| Fourth Supplemental Indenture, dated as of September 18, 2006, between the Company and U.S. Bank National Association as Trustee. (Incorporated by reference to Exhibit 4.5 to Registration Statement on Form S-3 of the Company (File No. 333-139839), filed January 8, 2007.) | ||
4.6
|
| Dividend Reinvestment and Stock Purchase Plan of the Company. (Incorporated by reference to Exhibit 8.1 to Registration Statement on Form S-3 of the Company (File No. 333-87063), filed September 14, 1999.) | ||
4.7
|
| Amendment to the Companys Dividend Reinvestment and Stock Purchase Plan filed on December 17, 1999. (Incorporated by reference to the Prospectus Supplement filed pursuant to Rule 424(b)(2) of the Securities Act of 1933 on December 17, 1999.) | ||
4.8
|
| Amendment to the Companys Dividend Reinvestment and Stock Purchase Plan filed on March 26, 2004. (Incorporated by reference to the Prospectus Supplement filed pursuant to Rule 424(b)(3) of the Securities Act of 1933 on March 26, 2004.) | ||
10.1
|
| Amended and Restated Distribution Agreement, dated August 6, 2003, among the Company and the Agents, including Administrative Procedures, relating to the MTNs. (Filed herewith.) |
67
10.2
|
| Amended and Restated Limited Partnership Agreement of AvalonBay Value Added Fund, L.P., dated as of March 16, 2005. (Incorporated by reference to Exhibit 10.1 to Form 10-Q of the Company filed May 6, 2005.) | ||
10.3
|
| Term Loan Agreement, dated May 15, 2008, among the Company, as Borrower, JPMorgan Chase Bank, N.A., as Syndication Agent, Sumitomo Mitsui Banking Corporation, Wells Fargo Bank, N.A., and Deutsche Bank Trust Company Americas, each as a Documentation Agent, the other banks signatory thereto, each as a Bank, J.P. Morgan Securities, Inc., as Sole Bookrunner and Lead Arranger, and Bank of America, N.A., as Administrative Agent. (Incorporated by reference to Exhibit 10.1 to Form 8-K of the Company filed on May 19, 2008.) | ||
10.4+
|
| Endorsement Split Dollar Agreements and Amendments thereto with Messrs. Blair, Naughton, Fuller, Sargeant, Horey and Meyer (Incorporated by reference to Exhibit 10.2 to Form 10-Q of the Company filed May 6, 2005.) | ||
10.5+
|
| Form of Amendment to Endorsement Split Dollar Agreement with Messrs. Blair, Naughton, Sargeant, and Horey. (Filed herewith.) | ||
10.6+
|
| Employment Agreement, dated as of July 1, 2003, between the Company and Thomas J. Sargeant. (Incorporated by reference to Exhibit 10.1 to Amendment No. 3 to the Companys Registration Statement on Form S-3 (File No. 333-103755), filed July 7, 2003.) | ||
10.7+
|
| First Amendment to Employment Agreement between the Company and Thomas J. Sargeant, dated as of March 31, 2005. (Incorporated by reference to Exhibit 10.5 to Form 10-Q of the Company filed May 6, 2005.) | ||
10.8+
|
| Form of Second Amendment to Employment Agreements between the Company and Certain Executive Officers. (Incorporated by reference to Exhibit 10.2 to form 8-K of the Company filed on May 22, 2008.) | ||
10.9+
|
| Third Amendment to Employment Agreement between the Company and Thomas J. Sargeant, dated as of December 14, 2008. (Filed herewith.) | ||
10.10+
|
| Employment Agreement, dated as of January 10, 2003, between the Company and Bryce Blair. (Filed herewith.) | ||
10.11+
|
| First Amendment to Employment Agreement between the Company and Bryce Blair, dated as of March 31, 2005. (Incorporated by reference to Exhibit 10.3 to Form 10-Q of the Company filed May 6, 2005.) | ||
10.12+
|
| Third Amendment to Employment Agreement between the Company and Bryce Blair, dated as of December 14, 2008. (Filed herewith.) | ||
10.13+
|
| Employment Agreement, dated as of February 26, 2001, between the Company and Timothy J. Naughton. (Incorporated by reference to Exhibit 10.8 to Form 10-K of the Company filed March 1, 2007.) | ||
10.14+
|
| First Amendment to Employment Agreement between the Company and Timothy J. Naughton, dated as of March 31, 2005. (Incorporated by reference to Exhibit 10.4 to Form 10-Q of the Company filed May 6, 2005.) | ||
10.15+
|
| Third Amendment to Employment Agreement between the Company and Timothy J. Naughton, dated as of December 14, 2008. (Filed herewith.) |
68
10.16+
|
| Employment Agreement, dated as of September 10, 2001, between the Company and Leo S. Horey. (Incorporated by reference to Exhibit 10.10 to Form 10-K of the Company filed March 1, 2007.) | ||
10.17+
|
| First Amendment to Employment Agreement between the Company and Leo S. Horey, dated as of March 31, 2005. (Incorporated by reference to Exhibit 10.6 to Form 10-Q of the Company filed May 6, 2005.) | ||
10.18+
|
| Third Amendment to Employment Agreement between the Company and Leo S. Horey, dated as of December 14, 2008.) (Filed herewith.) | ||
10.19+
|
| Retirement Agreement, dated as of March 24, 2000, between the Company and Gilbert M. Meyer. (Incorporated by reference to Exhibit 10.15 to Form 10-K of the Company filed March 1, 2007.) | ||
10.20+
|
| First Amendment to Retirement Agreement between the Company and Gilbert M. Meyer, dated as of March 31, 2005. (Incorporated by reference to Exhibit 10.8 to Form 10-Q of the Company filed May 6, 2005.) | ||
10.21+
|
| AvalonBay Communities, Inc. 1994 Stock Incentive Plan, as amended and restated in full on December 8, 2004. (Filed herewith.) | ||
10.22+
|
| Amendment, dated February 9, 2006, to the AvalonBay Communities, Inc. 1994 Stock Incentive Plan, as amended and restated on December 8, 2004. (Incorporated by reference to Exhibit 10.32 to Form 10-K of the Company filed March 14, 2006.) | ||
10.23+
|
| Amendment, dated December 6, 2006, to the AvalonBay Communities, Inc. 1994 Stock Incentive Plan, as amended and restated on December 8, 2004. (Incorporated by reference to Exhibit 10.22 1 to Form 10-K of the Company filed March 1, 2007.) | ||
10.24+
|
| Amendment, dated September 20, 2007, to the AvalonBay Communities, Inc. 1994 Stock Incentive Plan, as amended and restated on December 8, 2004. (Incorporated by reference to Exhibit 10.1 to Form 10-Q of the Company filed November 9, 2007.) | ||
10.25+
|
| 1996 Non-Qualified Employee Stock Purchase Plan, dated June 26, 1997, as amended and restated. (Incorporated by reference to Exhibit 99.1 to Post-effective Amendment No. 1 to Registration Statement on Form S-8 of the Company (File No. 333-16837), filed June 26, 1997.) | ||
10.26+
|
| 1996 Non-Qualified Employee Stock Purchase Plan Plan Information Statement dated June 26, 1997. (Incorporated by reference to Exhibit 99.2 to Registration Statement on Form S-8 of the Company (File No. 333-16837), filed November 26, 1996.) | ||
10.27+
|
| Form of Indemnity Agreement between the Company and its Directors. (Incorporated by reference to Exhibit 10.1 to Form 10-Q of the Company filed November 9, 2005.) | ||
10.28+
|
| The Companys Officer Severance Plan, as amended and restated on November 18, 2008. (Filed herewith.) | ||
10.29+
|
| Form of AvalonBay Communities, Inc. Non-Qualified Stock Option Agreement (1994 Stock Incentive Plan, as Amended and Restated). (Incorporated by reference to Exhibit 10.1 to the Companys Form 8-K filed on February 12, 2008.) |
69
10.30+
|
| Form of Addendum to AvalonBay Communities, Inc. Non-Qualified Stock Option Agreement for Certain Officers. (Filed herewith.) | ||
10.31+
|
| Form of AvalonBay Communities, Inc. Incentive Stock Option Agreement (1994 Stock Incentive Plan, as Amended and Restated). (Incorporated by reference to Exhibit 10.2 to the Companys Form 8-K filed on February 12, 2008.) | ||
10.32+
|
| Form of Addendum to AvalonBay Communities, Inc. Incentive Stock Option Agreement for Certain Officers. (Filed herewith.) | ||
10.33+
|
| Form of AvalonBay Communities, Inc. Employee Stock Grant and Restricted Stock Agreement. (Filed herewith.) | ||
10.34+
|
| Form of AvalonBay Communities, Inc. Director Restricted Unit Agreement. (Incorporated by reference to Exhibit 10.4 to the Companys Form 10-Q filed on November 9, 2007.) | ||
10.35+
|
| Form of AvalonBay Communities, Inc. Director Restricted Stock Agreement. (Incorporated by reference to Exhibit 10.3 to the Companys Form 10-Q filed on November 9, 2007.) | ||
10.36.1
|
| Second Amended and Restated Revolving Loan Agreement, dated as of November 14, 2006, among the Company, as Borrower, JPMorgan Chase Bank, N.A., and Wachovia Bank, National Association, each as a Bank and Syndication Agent, Bank of America, N.A., as a Bank, Swing Lender and Issuing Bank, Morgan Stanley Bank, Wells Fargo Bank, National Association, and Deutsche Bank Trust Company Americas, each as a Bank and Documentation Agent, the other banks signatory thereto, each as a Bank, J.P. Morgan Securities, Inc., as Sole Bookrunner and Lead Arranger, and Bank of America, N.A., as Administrative Agent. (Incorporated by reference to Exhibit 10.1 to Form 8-K of the Company filed November 17, 2006.) | ||
10.36.2
|
| First Amendment to the Second Amended and Restated Revolving Loan Agreement, dated as of November 13, 2007, among the Company, as Borrower, the banks signatory thereto, each as a Bank, and Bank of America, N.A., as Administrative Agent. (Incorporated by reference to Exhibit 10.1 to Form 8-K of the Company filed November 16, 2007.) | ||
10.37+
|
| Rules and Procedures for Non-Employee Directors Deferred Compensation Program. (Incorporated by reference to Exhibit 10.33 to Form 10-K of the Company filed March 1, 2007.) | ||
10.38+
|
| Amendment to Rules and Procedures for Non-Employee Directors Deferred Compensation Program adopted December 11, 2008. (Filed herewith.) | ||
10.39+
|
| Compensation Arrangements for Directors and Named Executive Officers. (Incorporated by reference to Item 5.02 of the Companys Current Report on Form 8-K filed February 12, 2008.) | ||
10.40+
|
| Amendment, effective September 30, 2007, to the Companys quarterly compensation of Non-Employee Directors. (Incorporated by reference to Exhibit 10.2 to the Companys Form 10-Q filed on November 9, 2007.) |
70
10.41+
|
| Form of AvalonBay Communities, Inc. 2008 Performance Plan Deferred Stock Award Agreement. (Incorporated by reference to Exhibit 10.1 to Form 8-K of the Company filed on May 22, 2008). | ||
10.42+
|
| Amended and Restated AvalonBay Communities, Inc. Deferred Compensation Plan. (Filed herewith.) | ||
12.1
|
| Statements re: Computation of Ratios. (Filed herewith.) | ||
21.1
|
| Schedule of Subsidiaries of the Company. (Filed herewith.) | ||
23.1
|
| Consent of Ernst & Young LLP. (Filed herewith.) | ||
31.1
|
| Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer). (Filed herewith.) | ||
31.2
|
| Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer). (Filed herewith.) | ||
32
|
| Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer and Chief Financial Officer). (Furnished herewith.) |
+ | Management contract or compensatory plan or arrangement required to be filed or incorporated by reference as an exhibit to this Form 10-K pursuant to Item 15(a)(3) of Form 10-K. |
71
72
AvalonBay Communities, Inc.
Date: February 27, 2009
By:
/s/ Bryce Blair
Bryce Blair, Chairman of the Board and Chief
Executive Officer
Date: February 27, 2009
By:
/s/
Bryce Blair
Bryce Blair, Director, Chairman of the Board
and Chief Executive Officer
(Principal Executive Officer)
Date: February 27, 2009
By:
/s/ Thomas J. Sargeant
Thomas J. Sargeant, Chief Financial Officer
(Principal Financial and Accounting Officer)
Date: February 27, 2009
By:
/s/ Bruce A. Choate
Bruce A. Choate, Director
Date: February 27, 2009
By:
/s/ John J. Healy, Jr.
John J. Healy, Jr., Director
Date: February 27, 2009
By:
/s/ Gilbert M. Meyer
Gilbert M. Meyer, Director
Date: February 27, 2009
By:
/s/ Timothy J. Naughton
Timothy J. Naughton, Director
Date: February 27, 2009
By:
/s/ Lance R. Primis
Lance R. Primis, Director
Date: February 27, 2009
By:
/s/ Peter S. Rummell
Peter S. Rummell, Director
Date: February 27, 2009
By:
/s/ H. Jay Sarles
H. Jay Sarles, Director
Date: February 27, 2009
By:
/s/ W. Edward Walter
W. Edward Walter, Director
F-1
AvalonBay Communities, Inc.:
February 25, 2009
F-2
AvalonBay Communities, Inc.:
February 25, 2009
F-3
For the year ended | ||||||||||||
12-31-08 | 12-31-07 | 12-31-06 | ||||||||||
Revenue:
|
||||||||||||
Rental and other income
|
$ | 847,640 | $ | 760,521 | $ | 671,382 | ||||||
Management, development and other fees
|
6,568 | 6,142 | 6,259 | |||||||||
|
||||||||||||
Total revenue
|
854,208 | 766,663 | 677,641 | |||||||||
|
||||||||||||
|
||||||||||||
Expenses:
|
||||||||||||
Operating expenses, excluding property taxes
|
258,162 | 231,688 | 206,059 | |||||||||
Property taxes
|
77,267 | 70,562 | 62,651 | |||||||||
Interest expense, net
|
114,878 | 94,540 | 106,271 | |||||||||
Depreciation expense
|
194,150 | 168,324 | 149,352 | |||||||||
General and administrative expense
|
42,781 | 28,494 | 24,767 | |||||||||
Impairment loss land holdings
|
57,899 | | | |||||||||
|
||||||||||||
Total expenses
|
745,137 | 593,608 | 549,100 | |||||||||
|
||||||||||||
|
||||||||||||
Equity in income of unconsolidated entities
|
4,566 | 59,169 | 7,455 | |||||||||
Minority interest income (expense) in
consolidated partnerships
|
741 | (1,585 | ) | (573 | ) | |||||||
Gain on sale of land
|
| 545 | 13,519 | |||||||||
|
||||||||||||
Income from continuing operations
|
114,378 | 231,184 | 148,942 | |||||||||
|
||||||||||||
Discontinued operations:
|
||||||||||||
Income from discontinued operations
|
12,208 | 20,489 | 20,193 | |||||||||
Gain on sale of communities
|
284,901 | 106,487 | 97,411 | |||||||||
|
||||||||||||
Total discontinued operations
|
297,109 | 126,976 | 117,604 | |||||||||
|
||||||||||||
|
||||||||||||
Net income
|
411,487 | 358,160 | 266,546 | |||||||||
Dividends attributable to preferred stock
|
(10,454 | ) | (8,700 | ) | (8,700 | ) | ||||||
|
||||||||||||
|
||||||||||||
Net income available to common stockholders
|
$ | 401,033 | $ | 349,460 | $ | 257,846 | ||||||
|
||||||||||||
Other comprehensive income:
|
||||||||||||
Unrealized gain on cash flow hedges
|
434 | 213 | 891 | |||||||||
|
||||||||||||
Comprehensive income
|
$ | 401,467 | $ | 349,673 | $ | 258,737 | ||||||
|
||||||||||||
|
||||||||||||
Earnings per common share basic:
|
||||||||||||
Income from continuing operations
(net of dividends attributable to preferred stock)
|
$ | 1.35 | $ | 2.83 | $ | 1.89 | ||||||
Discontinued operations
|
3.87 | 1.61 | 1.59 | |||||||||
|
||||||||||||
Net income available to common stockholders
|
$ | 5.22 | $ | 4.44 | $ | 3.48 | ||||||
|
||||||||||||
|
||||||||||||
Earnings per common share diluted:
|
||||||||||||
Income from continuing operations
(net of dividends attributable to preferred stock)
|
$ | 1.34 | $ | 2.79 | $ | 1.86 | ||||||
Discontinued operations
|
3.83 | 1.59 | 1.56 | |||||||||
|
||||||||||||
Net income available to common stockholders
|
$ | 5.17 | $ | 4.38 | $ | 3.42 | ||||||
|
F-4
|
||||||||||||||||||||||||||||||||
Accumulated | Accumulated | |||||||||||||||||||||||||||||||
Shares issued | Additional | earnings | other | Total | ||||||||||||||||||||||||||||
Preferred | Common | Preferred | Common | paid-in | less | comprehensive | stockholders | |||||||||||||||||||||||||
stock | stock | stock | stock | capital | dividends | loss | equity | |||||||||||||||||||||||||
Balance at December 31, 2005
|
4,000,000 | 73,663,048 | $ | 40 | $ | 737 | $ | 2,429,568 | $ | 71,950 | $ | (4,470 | ) | $ | 2,497,825 | |||||||||||||||||
|
||||||||||||||||||||||||||||||||
Net income
|
| | | | | 266,546 | | 266,546 | ||||||||||||||||||||||||
Unrealized gain on cash flow hedges
|
| | | | | | 891 | 891 | ||||||||||||||||||||||||
Change in redemption value of minority interest
|
| | | | | (2,593 | ) | | (2,593 | ) | ||||||||||||||||||||||
Dividends declared to common
and preferred stockholders
|
| | | | | (241,155 | ) | | (241,155 | ) | ||||||||||||||||||||||
Issuance of common stock
|
| 1,005,324 | | 10 | 38,839 | (1,318 | ) | | 37,531 | |||||||||||||||||||||||
Amortization of deferred compensation
|
| | | | 14,109 | | | 14,109 | ||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Balance at December 31, 2006
|
4,000,000 | 74,668,372 | 40 | 747 | 2,482,516 | 93,430 | (3,579 | ) | 2,573,154 | |||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Net income
|
| | | | | 358,160 | | 358,160 | ||||||||||||||||||||||||
Unrealized gain on cash flow hedges
|
| | | | | | 213 | 213 | ||||||||||||||||||||||||
Change in redemption value of minority interest
|
| | | | | (6,124 | ) | | (6,124 | ) | ||||||||||||||||||||||
Dividends declared to common
and preferred stockholders
|
| | | | | (276,823 | ) | | (276,823 | ) | ||||||||||||||||||||||
Issuance of common stock
|
| 5,130,855 | | 51 | 619,359 | (1,741 | ) | | 617,669 | |||||||||||||||||||||||
Purchase of common stock
|
| (2,480,616 | ) | | (25 | ) | (93,501 | ) | (164,403 | ) | | (257,929 | ) | |||||||||||||||||||
Amortization of deferred compensation
|
| | | | 18,334 | | | 18,334 | ||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Balance at December 31, 2007
|
4,000,000 | 77,318,611 | 40 | 773 | 3,026,708 | 2,499 | (3,366 | ) | 3,026,654 | |||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Net income
|
| | | | | 411,487 | | 411,487 | ||||||||||||||||||||||||
Unrealized gain on cash flow hedges
|
| | | | | | 434 | 434 | ||||||||||||||||||||||||
Change in redemption value of minority interest
|
| | | | | 11,443 | | 11,443 | ||||||||||||||||||||||||
Dividends declared to common
and preferred stockholders
|
| | | | | (423,118 | ) | | (423,118 | ) | ||||||||||||||||||||||
Issuance of common stock
|
| 323,085 | | 3 | 5,838 | (185 | ) | | 5,656 | |||||||||||||||||||||||
Purchase of common stock
|
| (521,733 | ) | | (5 | ) | (18,086 | ) | (24,068 | ) | | (42,159 | ) | |||||||||||||||||||
Redemption of preferred stock
|
(4,000,000 | ) | | (40 | ) | | (96,425 | ) | | (96,465 | ) | |||||||||||||||||||||
Amortization of deferred compensation
|
| | | | 22,464 | | | 22,464 | ||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Balance at December 31, 2008
|
| 77,119,963 | $ | | $ | 771 | $ | 2,940,499 | $ | (21,942 | ) | $ | (2,932 | ) | $ | 2,916,396 | ||||||||||||||||
|
F-5
For the year ended | ||||||||||||
12-31-08 | 12-31-07 | 12-31-06 | ||||||||||
Cash flows from operating activities:
|
||||||||||||
Net income
|
$ | 411,487 | $ | 358,160 | $ | 266,546 | ||||||
Adjustments to reconcile net income to cash provided
by operating activities:
|
||||||||||||
Depreciation expense
|
194,150 | 168,324 | 149,352 | |||||||||
Depreciation expense from discontinued operations
|
5,302 | 13,401 | 14,777 | |||||||||
Amortization of deferred financing costs and debt premium/discount
|
6,003 | 4,934 | 4,474 | |||||||||
Amortization of stock-based compensation
|
11,888 | 14,353 | 10,095 | |||||||||
(Income) Loss allocated to minority interest in consolidated partnerships
|
(741 | ) | 1,585 | 573 | ||||||||
Equity in income of unconsolidated entities, net of eliminations
|
(3,436 | ) | (58,122 | ) | (6,480 | ) | ||||||
Return on investment of unconsolidated entities
|
| 130 | 298 | |||||||||
Impairment loss land holdings
|
57,899 | | | |||||||||
Gain on retirement of unsecured notes
|
(1,950 | ) | | | ||||||||
Abandonment of
development pursuits
|
9,428 | 3,429 | | |||||||||
Gain on sale of real estate assets
|
(284,901 | ) | (107,032 | ) | (110,930 | ) | ||||||
Decrease (increase) in cash in operating escrows
|
3,054 | (7,403 | ) | (844 | ) | |||||||
(Increase) decrease in resident security deposits,
prepaid expenses and other assets
|
(4,902 | ) | 8,747 | (4,381 | ) | |||||||
(Decrease) increase in accrued expenses, other liabilities
and accrued interest payable
|
(16,426 | ) | 54,368 | 28,180 | ||||||||
|
||||||||||||
Net cash provided by operating activities
|
386,855 | 454,874 | 351,660 | |||||||||
|
||||||||||||
|
||||||||||||
Cash flows from investing activities:
|
||||||||||||
Development/redevelopment of real estate assets including
land acquisitions and deferred development costs
|
(881,503 | ) | (1,112,590 | ) | (735,167 | ) | ||||||
Acquisition of real estate assets, including partner equity interest
|
| (13,841 | ) | (74,924 | ) | |||||||
Capital expenditures existing real estate assets
|
(15,534 | ) | (13,851 | ) | (21,289 | ) | ||||||
Capital expenditures non-real estate assets
|
(5,290 | ) | (1,424 | ) | (957 | ) | ||||||
Proceeds from sale of real estate
communities, net of selling costs
|
529,777 | 261,089 | 272,223 | |||||||||
(Decrease)
increase in payables for construction
|
(27,018 | ) | 32,348 | 34,542 | ||||||||
Decrease in cash in construction escrows
|
126,611 | 54,149 | 19,572 | |||||||||
Decrease (increase) in investments in unconsolidated real estate entities
|
6,648 | (15,127 | ) | (5,371 | ) | |||||||
|
||||||||||||
Net cash used in investing activities
|
(266,309 | ) | (809,247 | ) | (511,371 | ) | ||||||
|
||||||||||||
|
||||||||||||
Cash flows from financing activities:
|
||||||||||||
Issuance of common stock
|
7,433 | 621,029 | 26,551 | |||||||||
Repurchase of common stock
|
(42,159 | ) | (257,929 | ) | | |||||||
Redemption of preferred stock
|
(100,000 | ) | | | ||||||||
Dividends paid
|
(278,795 | ) | (268,966 | ) | (234,958 | ) | ||||||
Net (repayments) borrowings under unsecured credit facility
|
(390,500 | ) | 514,500 | (66,800 | ) | |||||||
Issuance of mortgage notes payable and draws on construction loans
|
697,046 | 59,126 | 113,849 | |||||||||
Repayments of mortgage notes payable
|
(67,442 | ) | (27,256 | ) | (6,827 | ) | ||||||
Issuance of unsecured debt
|
330,000 | | 343,743 | |||||||||
Repayment of unsecured notes
|
(219,050 | ) | (260,000 | ) | | |||||||
Payment of deferred financing costs
|
(9,491 | ) | (6,550 | ) | (12,698 | ) | ||||||
Redemption of units for cash by minority partners
|
(1,756 | ) | (6,851 | ) | (80 | ) | ||||||
Contributions from minority and profit-sharing partners
|
| 1,333 | | |||||||||
Distributions to DownREIT partnership unitholders
|
(216 | ) | (280 | ) | (392 | ) | ||||||
Distributions to joint venture and profit-sharing partners
|
(181 | ) | (1,796 | ) | (108 | ) | ||||||
|
||||||||||||
Net cash
(used in) provided by financing activities
|
(75,111 | ) | 366,360 | 162,280 | ||||||||
|
||||||||||||
|
||||||||||||
Net increase in cash and cash equivalents
|
45,435 | 11,987 | 2,569 | |||||||||
|
||||||||||||
Cash and cash equivalents, beginning of year
|
20,271 | 8,284 | 5,715 | |||||||||
|
||||||||||||
|
||||||||||||
Cash and cash equivalents, end of year
|
$ | 65,706 | $ | 20,271 | $ | 8,284 | ||||||
|
||||||||||||
|
||||||||||||
Cash paid during the period for interest, net of amount capitalized
|
$ | 110,290 | $ | 98,594 | $ | 102,640 | ||||||
|
F- 6
| 130,325 shares of common stock valued at $11,646 were issued in connection with stock grants, 5,703 shares valued at $458 were issued through the Companys dividend reinvestment plan, 24,407 shares valued at $1,357 were issued to members of the Board of Directors in fulfillment of deferred stock awards, 39,633 shares valued at $3,483 were withheld to satisfy employees tax withholding and other liabilities and 1,101 shares valued at $109 were forfeited, for a net value of $9,869. In addition, the Company granted 401,212 options for common stock at a value of $3,976. | ||
| The Company recorded a decrease to other liabilities and a corresponding gain to other comprehensive income of $434 to adjust the Companys Hedging Derivatives (as defined in Note 5, Derivative Instruments and Hedging Activities) to their fair value. | ||
| The Company issued $135,000 of variable rate debt relating to Avalon Walnut Creek. The proceeds were placed in an escrow account until requisitioned for construction funding and no amounts have been drawn for use in the development of the community. | ||
| Common and preferred dividends declared but not paid totaled $208,209. | ||
| The Company recorded a decrease of $11,443 to minority interest with a corresponding gain to accumulated earnings less dividends to adjust the redemption value associated with the put option held by a joint venture partner. This put option allows our partner to require the Company to purchase their interest in the investment at the future fair market value, payable in cash or, at the Companys option, shares of the Companys common stock. For further discussion of the nature and valuation of the put option, see Note 11, Fair Value Measurements. |
| 75,231 shares of common stock valued at $10,971 were issued in connection with stock grants, 2,929 shares valued at $365 were issued through the Companys dividend reinvestment plan, 41,000 shares valued at $4,381 were withheld to satisfy employees tax withholding and other liabilities and 8,609 shares valued at $231 were forfeited, for a net value of $6,724. In addition, the Company granted 331,356 options for common stock, net of forfeitures, at a value of $7,518. | ||
| 19,231 units of limited partnership, valued at $887, were presented for redemption to the DownREIT partnerships that issued such units and were acquired by the Company in exchange for an equal number of shares of the Companys common stock. | ||
| The Company recorded a decrease to other liabilities and a corresponding gain to other comprehensive income of $213 to adjust the Companys Hedging Derivatives to their fair value. | ||
| The Company issued $100,000 of variable rate tax-exempt debt relating to Avalon Morningside Park. The proceeds were placed in an escrow account until requisitioned for construction funding, none of which was drawn for use in the development of the community. | ||
| Common and preferred dividends declared but not paid totaled $67,909. | ||
| The Company recorded an increase of $6,124 to minority interest with a corresponding decrease to accumulated earnings less dividends to adjust the redemption value associated with a put option held by a joint venture partner. This put option allows our partner to require the Company to purchase their interest in the investment at the future fair market value, payable in cash or, at the Companys option, shares of the Companys common stock. |
| 122,172 shares of common stock valued at $12,568 were issued in connection with stock grants, 2,306 shares valued at $256 were issued through the Companys dividend reinvestment plan, 47,111 shares valued at $3,449 were withheld to satisfy employees tax withholding and other liabilities and 5,910 shares valued at $193 were forfeited, for a net value of $9,182. In addition, the Company granted 849,769 options for common stock, net of forfeitures, at a value of $9,946. | ||
| 308,345 units of limited partnership, valued at $14,166, were presented for redemption to the DownREIT partnerships that issued such units and were acquired by the Company in exchange for an equal number of shares of the Companys common stock. | ||
| The Company issued $187,300 of variable rate, tax-exempt debt, of which $107,451 in proceeds were not received, but placed in an escrow until requisitioned for construction funding. | ||
| The Company recorded a decrease to other liabilities and a corresponding gain to other comprehensive income of $891 to adjust the Companys Hedging Derivatives to their fair value. | ||
| The Company recorded an increase of $2,593 to minority interest with a corresponding decrease to accumulated earnings less dividends to adjust the redemption value associated with a put option held by a joint venture partner. This put option allows our partner to require the Company to purchase their interest in the investment at the future fair market value, payable in cash or, at the Companys option, shares of the Companys common stock. | ||
| Common and preferred dividends declared but not paid totaled $60,417. |
F- 7
F- 8
F- 9
F- 10
2008 | 2007 | 2006 | ||||||||||
Estimate | Actual | Actual | ||||||||||
Net income available to common stockholders
|
$ | 401,033 | $ | 349,460 | $ | 257,846 | ||||||
Dividends attributable to preferred stock,
not deductible for tax
|
7,215 | 8,700 | 8,700 | |||||||||
GAAP gain on sale of communities less than tax gain
|
70,398 | 12,245 | 7,242 | |||||||||
Depreciation/Amortization timing differences on real estate
|
(21,929 | ) | (78,438 | ) | (21,974 | ) | ||||||
Tax compensation expense less than (in excess of) GAAP
|
11,479 | (24,239 | ) | (26,540 | ) | |||||||
Impairment loss
|
53,399 | | | |||||||||
Other adjustments
|
3,694 | 17,186 | 13,335 | |||||||||
|
||||||||||||
Taxable net income
|
$ | 525,289 | $ | 284,914 | $ | 238,609 | ||||||
|
2008 | 2007 | 2006 | ||||
Ordinary income
|
16% | 35% | 48% | |||
15% capital gain
|
60% | 54% | 43% | |||
Unrecaptured §1250 gain
|
24% | 11% | 9% |
F- 11
F- 12
For the year ended | ||||||||||||
12-31-08 | 12-31-07 | 12-31-06 | ||||||||||
Basic and diluted shares outstanding
|
||||||||||||
|
||||||||||||
Weighted average common shares basic
|
76,783,515 | 78,680,043 | 74,125,795 | |||||||||
Weighted average DownREIT units outstanding
|
59,886 | 105,859 | 172,255 | |||||||||
Effect of dilutive securities
|
735,451 | 1,071,025 | 1,288,848 | |||||||||
|
||||||||||||
Weighted average common shares diluted
|
77,578,852 | 79,856,927 | 75,586,898 | |||||||||
|
||||||||||||
|
||||||||||||
Calculation of Earnings
per Share basic
|
||||||||||||
|
||||||||||||
Net income available to common stockholders
|
$ | 401,033 | $ | 349,460 | $ | 257,846 | ||||||
|
||||||||||||
Weighted average common shares basic
|
76,783,515 | 78,680,043 | 74,125,795 | |||||||||
|
||||||||||||
Earnings per common share basic
|
$ | 5.22 | $ | 4.44 | $ | 3.48 | ||||||
|
||||||||||||
|
||||||||||||
Calculation of Earnings per Share diluted
|
||||||||||||
|
||||||||||||
Net income available to common stockholders
|
$ | 401,033 | $ | 349,460 | $ | 257,846 | ||||||
Add: Minority interest of DownREIT unitholders
in consolidated partnerships, including discontinued operations |
216 | 280 | 391 | |||||||||
|
||||||||||||
Adjusted net income available to common stockholders
|
$ | 401,249 | $ | 349,740 | $ | 258,237 | ||||||
|
||||||||||||
Weighted average common shares diluted
|
77,578,852 | 79,856,927 | 75,586,898 | |||||||||
|
||||||||||||
Earnings per common share diluted
|
$ | 5.17 | $ | 4.38 | $ | 3.42 | ||||||
|
F- 13
F- 14
F- 15
12-31-08 | 12-31-07 | |||||||
Fixed rate
unsecured notes
(1)
|
$ | 1,672,965 | $ | 1,893,499 | ||||
Variable rate unsecured notes
|
330,000 | | ||||||
Fixed rate mortgage notes payable conventional and tax-exempt
|
901,181 | 224,299 | ||||||
Variable rate mortgage notes payable conventional and tax-exempt
|
646,311 | 525,763 | ||||||
|
||||||||
Total notes payable and unsecured notes
|
3,550,457 | 2,643,561 | ||||||
Variable rate unsecured credit facility
|
124,000 | 514,500 | ||||||
|
||||||||
Total mortgage notes payable, unsecured notes and unsecured credit facility
|
$ | 3,674,457 | $ | 3,158,061 | ||||
|
(1) | Balances at December 31, 2008 and December 31, 2007 include $2,035 and $2,501 of debt discount, respectively. |
| the Company repaid $50,000 in previously issued 6.625% unsecured notes, along with any unpaid interest, pursuant to their scheduled maturity; | ||
| the Company repurchased $10,000 principal amount of its $150,000, 7.5% unsecured notes, due August 2009 for $10,288 with the premium above par recorded as a charge to earnings; | ||
| the Company repaid the 6.95% loan in the amount of $11,522 secured by Avalon Knoll located in Gaithersburg, Maryland, and a variable-rate loan secured by Avalon at Fairway Hills in Columbia, Maryland in the amount of $11,500 early at par. The loans for Avalon Knoll and Avalon at Fairway Hills had contractual maturities of June 2026; | ||
| the Company repaid $146,000 of unsecured notes with an annual interest rate of 8.25% pursuant to their scheduled maturity; | ||
| the Company repaid the $4,368, 6.99% loan secured by a development right in Wheaton, Maryland pursuant to its scheduled maturity; | ||
| the Company repurchased $15,000 of its $250,000, 5.5% unsecured notes due January 2012 for $13,050 with the discount below par recorded as a gain; | ||
| the Company executed two separate five-year, interest only mortgage loans for aggregate borrowings of approximately $264,697 at a weighted average effective interest rate of approximately 4.78%. One mortgage loan for approximately $170,125 is secured by Avalon at Arlington Square, located in Arlington, Virginia. The second mortgage loan, for approximately $94,572 is secured by Avalon at Cameron Court, located in Alexandria, Virginia; | ||
| the Company executed two separate seven-year, interest only mortgage loans for aggregate borrowings of approximately $260,600 at a weighted average effective interest rate of approximately 5.58%. One mortgage loan for approximately $110,600 is secured by Avalon Crescent, located in McLean, Virginia. The second mortgage loan, for approximately $150,000 is secured by Avalon Silicon Valley, located in Sunnyvale, California; | ||
| the Company entered into a $330,000 variable rate, unsecured term loan comprised of three tranches, each representing approximately one third of the borrowing, bearing interest at LIBOR plus a spread of 1.25%. One tranche matures in each of the next three years, with the final tranche maturing in January 2011; | ||
| the Company closed variable-rate bond financing relating to Avalon Walnut Creek in the aggregate amount of $135,000, of which $126,000 is tax-exempt. In addition, the Company also closed a 4.0% fixed rate construction loan for $2,500 related to Avalon Walnut Creek; | ||
| the Company executed three fixed rate mortgage loans for an aggregate borrowing of $169,249 with a weighted average interest rate of 6.0% of which $55,100 is secured by Avalon Commons, located in |
F- 16
Smithtown, New York, $51,749 is secured by Avalon Darien, located in Darien, Connecticut and $62,400 is secured by Avalon at Greyrock Place, located in Stamford, Connecticut; and | |||
| the Company used a portion of the net proceeds from these borrowings to reduce the amounts outstanding under its unsecured credit facility to $124,000. |
Stated | ||||||||||||||||
Unsecured | interest rate | |||||||||||||||
Secured notes | Secured notes | notes | of unsecured | |||||||||||||
Year | payments (1) | maturities | maturities | notes (2) | ||||||||||||
2009
|
$ | 5,108 | $ | 58,855 | $ | 140,000 | 7.500 | % | ||||||||
|
105,600 | 3.720 | % | |||||||||||||
|
||||||||||||||||
2010
|
4,626 | 29,388 | 200,000 | 7.500 | % | |||||||||||
|
112,200 | 3.720 | % | |||||||||||||
|
||||||||||||||||
2011
|
3,425 | 36,594 | 300,000 | 6.625 | % | |||||||||||
|
50,000 | 6.625 | % | |||||||||||||
|
112,200 | 3.720 | % | |||||||||||||
|
||||||||||||||||
2012
|
2,181 | 27,156 | 250,000 | 6.125 | % | |||||||||||
|
235,000 | 5.500 | % | |||||||||||||
|
||||||||||||||||
2013
|
2,323 | 319,797 | 100,000 | 4.950 | % | |||||||||||
|
||||||||||||||||
2014
|
2,475 | 33,100 | 150,000 | 5.375 | % | |||||||||||
|
||||||||||||||||
2015
|
2,637 | 374,749 | | | ||||||||||||
|
||||||||||||||||
2016
|
2,806 | | 250,000 | 5.750 | % | |||||||||||
|
||||||||||||||||
2017
|
2,989 | 18,300 | | | ||||||||||||
|
||||||||||||||||
2018
|
3,185 | | | | ||||||||||||
|
||||||||||||||||
Thereafter
|
369,114 | 248,684 | | | ||||||||||||
|
||||||||||||||||
|
||||||||||||||||
|
$ | 400,869 | $ | 1,146,623 | $ | 2,005,000 | ||||||||||
|
(1) | Secured notes payments are comprised of the principal pay downs for amortizing mortgage notes. | |
(2) | The stated interest rate for variable-rate unsecured notes is the rate as of December 31, 2008. |
F- 17
(i) | issued 155,291 shares of common stock in connection with stock options exercised; | ||
(ii) | recognized 24,407 common shares granted to members of the Board of Directors in fulfillment of deferred stock awards; | ||
(iii) | issued 5,703 common shares through the Companys dividend reinvestment plan; | ||
(iv) | issued 130,325 common shares in connection with stock grants; | ||
(v) | issued 8,460 common shares through the Companys employee stock purchase plan; | ||
(vi) | withheld 39,633 common shares to satisfy employees tax withholding and other liabilities; | ||
(vii) | purchased 482,100 common shares through the Companys stock repurchase program; | ||
(viii) | had 1,101 shares of restricted common stock forfeited; and | ||
(ix) | redeemed all 4,000,000 shares of outstanding preferred stock. |
F-18
Interest | Interest | |||||||
Rate Caps | Rate Swaps | |||||||
Notional balance
|
$ | 188,885 | $ | 44,937 | ||||
Weighted
average interest rate
(1)
|
3.6 | % | 6.5 | % | ||||
Weighted average capped interest rate
|
7.2 | % | n/a | |||||
Earliest maturity date
|
May-09 | Jun-10 | ||||||
Latest maturity date
|
Mar-14 | Jun-10 | ||||||
Estimated fair value, asset/(liability)
|
$ | 116 | $ | (2,561 | ) |
(1) | For interest rate caps, this represents the weighted average interest rate on the debt. |
F-19
| Arna Valley View LP In connection with the municipal approval process for the development of a consolidated community, the Company agreed to participate in the formation of a limited partnership in February 1999 to develop, finance, own and operate Arna Valley View, a 101 apartment-home community located in Arlington, Virginia. This community has affordable rents for 100% of apartment homes related to the tax-exempt bond financing and tax credits used to finance construction of the community. A subsidiary of the Company is the general partner of the partnership with a 0.01% ownership interest. The Company is responsible for the day-to-day operations of the community and is the management agent subject to the terms of a management agreement. As of December 31, 2008, Arna Valley View has $5,520 of variable rate, tax-exempt bonds outstanding, which mature in June 2032. In addition, Arna Valley View has $5,121 of 4% fixed rate county bonds outstanding that mature in December 2030. Arna Valley Views debt is neither guaranteed by, nor recourse to the Company. Due to the Companys limited ownership in this venture and the terms of the management agreement regarding the rights of the limited partners, it is accounted for using the cost method. |
| CVP I, LLC In February 2004, the Company entered into a joint venture agreement with an unrelated third-party for the development of Avalon Chrystie Place, a 361 apartment-home community located in New York, New York, for which construction was completed in late 2005. The Company has contributed $6,270 to this joint venture and holds a 20% equity interest (with a right to 50% of distributions after achievement of a threshold return, which was achieved in 2008). The Company is the managing member of CVP I, LLC, however, property management services at the community are performed by an unrelated third party. |
F-20
| Avalon Del Rey Apartments, LLC In March 2004, the Company entered into an agreement with an unrelated third party which provided that, upon construction completion, Avalon Del Rey would be owned and operated by a joint venture between the Company and the third party. Avalon Del Rey is a 309 apartment-home community located in Los Angeles, California that was developed by the Company, with construction completed during the third quarter of 2006. During the fourth quarter of 2006, the third-party venture partner invested $49,000 and was granted a 70% ownership interest in the venture, with the Company retaining a 30% equity interest. The Company continues to be responsible for the day-to-day operations of the community and is the management agent subject to the terms of a management agreement. Avalon Del Rey Apartments, LLC has a variable rate $50,000 secured construction loan, of which $40,763 is outstanding as of December 31, 2008 and which matures in September 2009, subject to the exercise of an additional one-year extension option. In conjunction with the construction management services that the Company provided to Avalon Del Rey Apartments, LLC, the Company has provided a construction completion guarantee to the construction loan lender in order to fulfill their standard financing requirements related to construction financing. Although the obligation of the Company under this guarantee exists at December 31, 2008, the Company does not have any potential liability at December 31, 2008, as construction has been completed. This guarantee will terminate at the time that Avalon Del Rey Apartments LLC refinances the note. |
| Juanita Construction, Inc. In April 2004, a taxable REIT subsidiary of the Company entered into an agreement to develop Avalon at Juanita Village, a 211 apartment-home community located in Kirkland, Washington, for which construction was completed in late 2005. Avalon at Juanita Village was developed through Juanita Construction, Inc., a wholly owned taxable REIT subsidiary and was sold to a joint venture in the first quarter of 2006, at which point, the subsidiary was reimbursed for all the costs of construction and retained a promoted interest in the residual profits of the joint venture. The third-party joint venture partner received a 100% equity interest in the joint venture and will control the joint venture. The Company was engaged to manage the community for a property management fee. This community is unconsolidated for financial reporting purposes effective with the sale to the joint venture. |
| Aria at Hathorne LLC In the second quarter of 2007, a wholly owned taxable REIT subsidiary of the Company entered into an LLC agreement with a joint venture partner to develop 64 for-sale town homes with a total capital cost of $23,621 in Danvers, Massachusetts. The homes will be developed between 2008 and 2010 on an out parcel adjacent to our Avalon Danvers rental apartment community. The out parcel was zoned for for-sale activity, and was contributed to the LLC by the subsidiary of the Company in exchange for a 50% ownership interest. The LLC has $1,868 outstanding on a variable rate $5,400 secured construction loan and $2,608 outstanding on a $3,200 variable rate development loan as of December 31, |
F-21
| MVP I, LLC In December 2004, the Company entered into a joint venture agreement with an unrelated third-party for the development of Avalon at Mission Bay North II. Construction for Avalon at Mission Bay North II, a 313 apartment-home community located in San Francisco, California, was completed in December 2006. The Company has contributed $5,902 to this venture and holds a 25% equity interest. The Company is responsible for the day-to-day operations of the community and is the management agent subject to the terms of a management agreement. In December 2007, MVP I, LLC executed a seven-year, fixed rate conventional loan. The Company has guaranteed, under limited circumstance, the repayment to the credit enhancer of any advance in fulfillment of MVP I, LLCs repayment obligations under the bonds. The Companys 75% partner in this venture has agreed that it will reimburse the Company its pro rata share of any amounts paid relative to this guarantee obligation. The Company does not currently expect to incur any liability under this guarantee. The estimated fair value of, and the Companys obligation under this guarantee, both at inception and as of December 31, 2008 was not significant. As a result, the Company has not recorded any obligation associated with this guarantee at December 31, 2008. This community is unconsolidated for financial reporting purposes and is accounted for under the equity method. |
| AvalonBay Value Added Fund, LP (the Fund) In March 2005, the Company admitted outside investors into the Fund, a private, discretionary investment vehicle, which acquired and operates communities in the Companys markets. The Fund served as the principal vehicle through which the Company acquired investments in apartment communities, subject to certain exceptions until March 2008. The Fund has nine institutional investors, including the Company, and a combined equity capital commitment of $330,000. A significant portion of the investments made in the Fund by its investors were made through AvalonBay Value Added Fund, Inc., a Maryland corporation that qualifies as a REIT under the Internal Revenue Code (the Fund REIT). A wholly owned subsidiary of the Company is the general partner of the Fund and has committed $50,000 to the Fund and the Fund REIT, representing a 15.2% combined general partner and limited partner equity interest. At December 31, 2008, the Fund was fully invested. The Company receives asset management fees, property management fees and redevelopment fees, as well as a promoted interest if certain thresholds are met (which were not achieved in 2008). |
F-22
Outstanding Debt | ||||||||||||||||||||||||
# of apt | Interest | Maturity | ||||||||||||||||||||||
Community Name | Location | homes | Amount | Type | Rate | Date | ||||||||||||||||||
Avalon at Redondo Beach
|
Los Angeles, CA
|
105 | $ | 21,033 | Fixed | 4.87 | % | Oct 2011 | ||||||||||||||||
Avalon Lakeside
|
Chicago, IL
|
204 | 12,056 | Fixed | 5.74 | % | Mar 2012 | |||||||||||||||||
Avalon Columbia
|
Baltimore, MD
|
170 | 22,275 | Fixed | 5.48 | % | Apr 2012 | |||||||||||||||||
Avalon Sunset
|
Los Angeles, CA
|
82 | 12,750 | Fixed | 5.41 | % | Feb 2014 | |||||||||||||||||
Avalon at Poplar Creek
|
Chicago, IL
|
196 | 16,500 | Fixed | 4.83 | % | Oct 2012 | |||||||||||||||||
Avalon at Civic Center
|
Norwalk, CA
|
192 | 27,001 | Fixed | 5.38 | % | Aug 2013 | |||||||||||||||||
Avalon Paseo Place
|
Fremont, CA
|
134 | 11,800 | Fixed | 5.74 | % | Nov 2013 | |||||||||||||||||
Avalon at Yerba Buena
|
San Francisco, CA
|
160 | 41,500 | Fixed | 5.88 | % | Mar 2014 | |||||||||||||||||
Avalon at Aberdeen Station
|
Aberdeen, NJ
|
290 | 39,842 | Fixed | 5.64 | % | Sep 2013 | |||||||||||||||||
The Springs
|
Corona, CA
|
320 | 26,000 | Fixed | 6.06 | % | Oct 2014 | |||||||||||||||||
The Covington
|
Lombard, IL
|
256 | 17,243 | Fixed | 5.43 | % | Jan 2014 | |||||||||||||||||
Avalon Cedar Place
|
Columbia, MD
|
156 | 12,000 | Fixed | 5.68 | % | Feb 2014 | |||||||||||||||||
Avalon Centerpoint
|
Baltimore, MD
|
392 | 45,000 | Fixed | 5.74 | % | Dec 2013 | |||||||||||||||||
Middlesex Crossing
|
Billerica, MA
|
252 | 24,100 | Fixed | 5.49 | % | Dec 2013 | |||||||||||||||||
Avalon Crystal Hill
|
Ponoma, NY
|
168 | 24,500 | Fixed | 5.43 | % | Dec 2013 | |||||||||||||||||
Skyway Terrace
|
San Jose, CA
|
348 | 37,500 | Fixed | 6.11 | % | Mar 2014 | |||||||||||||||||
Avalon Rutherford Station
|
East Rutherford, NJ
|
108 | 20,382 | Fixed | 6.13 | % | Sep 2016 | |||||||||||||||||
South Hills Apartments
|
West Covina, CA
|
85 | 11,761 | Fixed | 5.92 | % | Dec 2013 | |||||||||||||||||
Colonial Towers/South Shore Manor
|
Weymouth, MA
|
211 | 13,455 | Fixed | 5.12 | % | Mar 2015 |
F-23
12-31-08 | 12-31-07 | |||||||
(unaudited) | (unaudited) | |||||||
Assets:
|
||||||||
Real estate, net
|
$ | 995,680 | $ | 997,319 | ||||
Other assets
|
12,869 | 31,772 | ||||||
|
||||||||
Total assets
|
$ | 1,008,549 | $ | 1,029,091 | ||||
|
||||||||
Liabilities and partners capital:
|
||||||||
Mortgage notes payable and credit facility
|
$ | 705,332 | $ | 719,310 | ||||
Other liabilities
|
18,063 | 20,494 | ||||||
Partners capital
|
285,154 | 289,287 | ||||||
|
||||||||
Total liabilities and partners capital
|
$ | 1,008,549 | $ | 1,029,091 | ||||
|
For the year ended | ||||||||||||
12-31-08 | 12-31-07 | 12-31-06 | ||||||||||
(unaudited) | (unaudited) | (unaudited) | ||||||||||
Rental and other income
|
$ | 105,421 | $ | 92,078 | $ | 67,207 | ||||||
Operating and other expenses
|
(43,992 | ) | (39,952 | ) | (30,913 | ) | ||||||
Gain on sale of communities
|
25,417 | | 26,661 | |||||||||
Interest expense, net
|
(38,478 | ) | (40,791 | ) | (23,545 | ) | ||||||
Depreciation expense
|
(31,152 | ) | (26,622 | ) | (18,054 | ) | ||||||
|
||||||||||||
Net income (loss)
|
$ | 17,216 | $ | (15,287 | ) | $ | 21,356 | |||||
|
F-24
For the year ended | ||||||||||||
12-31-08 | 12-31-07 | 12-31-06 | ||||||||||
Town Grove, LLC
(1)
|
$ | 31 | $ | 57,821 | $ | 1,457 | ||||||
Avalon Del Rey, LLC
(2)
|
241 | 3,616 | | |||||||||
CVP I, LLC
|
1,109 | 567 | (68 | ) | ||||||||
Town Run Associates
|
| 107 | 298 | |||||||||
Avalon Terrace, LLC
(3)
|
| 22 | 6,736 | |||||||||
MVP I, LLC
|
(474 | ) | (1,261 | ) | (662 | ) | ||||||
AvalonBay Value Added Fund, L.P.
(4)
|
2,532 | (1,775 | ) | (799 | ) | |||||||
Rent.com
|
| | 433 | |||||||||
Constellation Real Technologies
|
| 72 | 60 | |||||||||
Aria at Hathorne, LLC
|
1,127 | | | |||||||||
|
||||||||||||
|
||||||||||||
Total
|
$ | 4,566 | $ | 59,169 | $ | 7,455 | ||||||
|
(1) | Equity in income from this entity for 2007 includes a gain of $56,320 for the Company from the fourth quarter disposition of its partnership interest in Avalon Grove, an asset held by Town Grove, LLC. | |
(2) | Equity in income from this entity for 2007 includes a gain of $3,607 for the Company from the fourth quarter disposition of its ownership interest in Avalon Del Rey, the sole asset held by Avalon Del Rey, LLC. | |
(3) | Equity in income from this entity for 2006 includes a gain of $6,609 for the Companys 25% share of the gain from the fourth quarter disposition of Avalon Bedford, the sole asset held by Avalon Terrace, LLC. | |
(4) | Equity in income from this entity for 2008 includes a gain of $3,483 for the Companys 15.2% share of the gain from the second quarter disposition of Avalon Redmond, an asset held by AvalonBay Value Added Fund, L.P. |
| PHVP I LP In the third quarter of 2008, the Company became the general partner of PHVP I, LP, acquiring a 99% controlling interest in the entity. The Company also entered into a ground lease in connection with the land related to the proposed development of Avalon at Walnut Creek, and became the borrower under the increased bond financing of $135,000 and a $2,500, 4.0% fixed rate loan in order to fund construction of Avalon at Walnut Creek, the multifamily portion of the development. | ||
| On September 2, 2008, the Company announced the formation of AvalonBay Value Added Fund II, LP (Fund II), a private, discretionary investment vehicle with commitments from five institutional investors including the Company. Fund II has equity commitments totaling $333,000. The Company has committed $150,000 to Fund II, representing a 45% equity interest. |
F-25
Period | Apartment | Gross sales | Net | |||||||||||||||||
Community Name | Location | of sale | homes | Debt | price | proceeds | ||||||||||||||
Avalon at West Grove
|
Westmont, IL | Q208 | 400 | $ | | $ | 38,650 | $ | 36,829 | |||||||||||
Avalon Haven
|
North Haven,IL | Q208 | 128 | | 23,750 | 22,953 | ||||||||||||||
Avalon at Foxchase I and II
|
San Jose, CA | Q208 | 396 | 26,400 | 91,250 | 62,478 | ||||||||||||||
Avalon Landing
|
Annapolis, MD | Q308 | 158 | | 25,750 | 24,935 | ||||||||||||||
Avalon Walk
|
Hamden, CT | Q308 | 764 | | 124,000 | 120,816 | ||||||||||||||
Avalon at Pruneyard
|
Campbell, CA | Q308 | 252 | | 53,800 | 53,093 | ||||||||||||||
Avalon Wynhaven
|
Issaquah, WA | Q308 | 333 | | 66,250 | 59,780 | ||||||||||||||
Avalon Blossom Hill
|
San Jose, CA | Q308 | 324 | | 84,000 | 83,193 | ||||||||||||||
Avalon Ledges
|
Weymouth, MA | Q408 | 304 | 17,315 | 57,500 | 39,300 | ||||||||||||||
|
||||||||||||||||||||
Total of all 2008 asset sales
|
3,059 | $ | 43,715 | $ | 564,950 | $ | 503,377 | |||||||||||||
|
||||||||||||||||||||
Total of all 2007 asset sales
|
1,384 | $ | 8,116 | $ | 268,096 | $ | 257,396 | |||||||||||||
|
||||||||||||||||||||
Total of all 2006 asset sales
|
1,036 | $ | 37,200 | $ | 261,850 | $ | 218,492 | |||||||||||||
|
F-26
For the year ended | ||||||||||||
12-31-08 | 12-31-07 | 12-31-06 | ||||||||||
Rental income
|
$ | 28,497 | $ | 56,989 | $ | 61,446 | ||||||
Operating and other expenses
|
(9,497 | ) | (19,407 | ) | (21,701 | ) | ||||||
Interest expense, net
|
(1,490 | ) | (3,692 | ) | (4,775 | ) | ||||||
Depreciation expense
|
(5,302 | ) | (13,401 | ) | (14,777 | ) | ||||||
|
||||||||||||
|
||||||||||||
Income from discontinued operations
|
$ | 12,208 | $ | 20,489 | $ | 20,193 | ||||||
|
F-27
F-28
Payments due by period | ||||||||||||||||||||
2009 | 2010 | 2011 | 2012 | 2013 | Thereafter | |||||||||||||||
$16,262
|
$ | 16,328 | $ | 16,449 | $ | 16,347 | $ | 16,567 | $ | 2,234,496 |
| Established Communities (also known as Same Store Communities) are communities where a comparison of operating results from the prior year to the current year is meaningful, as these communities were owned and had stabilized occupancy and operating expenses as of the beginning of the prior year. For the year 2008, the Established Communities are communities that are consolidated for financial reporting purposes, had stabilized occupancy and operating expenses as of January 1, 2007, are not conducting or planning to conduct substantial redevelopment activities and are not held for sale or planned for disposition within the current year. A community is considered to have stabilized occupancy at the earlier of (i) attainment of 95% physical occupancy or (ii) the one-year anniversary of completion of development or redevelopment. | ||
| Other Stabilized Communities includes all other completed communities that have stabilized occupancy, as defined above. Other Stabilized Communities do not include communities that are conducting or planning to conduct substantial redevelopment activities within the current year. | ||
| Development/Redevelopment Communities consists of communities that are under construction and have not received a final certificate of occupancy, communities where substantial redevelopment is in progress or is planned to begin during the current year and communities under lease-up, that had not reached stabilized occupancy, as defined above, as of January 1, 2007. |
F-29
For the year ended | ||||||||||||
12-31-08 | 12-31-07 | 12-31-06 | ||||||||||
Net income
|
$ | 411,487 | $ | 358,160 | $ | 266,546 | ||||||
Indirect operating expenses, net of corporate income
|
33,045 | 31,285 | 28,811 | |||||||||
Investments and investment management
|
17,298 | 11,737 | 7,030 | |||||||||
Interest expense, net
|
114,878 | 94,540 | 106,271 | |||||||||
General and administrative expense
|
42,781 | 28,494 | 24,767 | |||||||||
Equity in income of unconsolidated entities
|
(4,566 | ) | (59,169 | ) | (7,455 | ) | ||||||
Minority interest in consolidated partnerships
|
(741 | ) | 1,585 | 573 | ||||||||
Depreciation expense
|
194,150 | 168,324 | 149,352 | |||||||||
Impairment loss
|
57,899 | | | |||||||||
Gain on sale of real estate assets
|
(284,901 | ) | (107,032 | ) | (110,930 | ) | ||||||
Income from discontinued operations
|
(12,208 | ) | (20,489 | ) | (20,193 | ) | ||||||
|
||||||||||||
Net operating income
|
$ | 569,122 | $ | 507,435 | $ | 444,772 | ||||||
|
F-30
Total | % NOI change | Gross | ||||||||||||||
revenue | NOI | from prior year | real estate (1) | |||||||||||||
For the year ended December 31, 2008
|
||||||||||||||||
|
||||||||||||||||
Established
New England
|
$ | 126,958 | $ | 82,181 | 2.7 | % | $ | 824,369 | ||||||||
Metro NY/NJ
|
144,295 | 99,060 | 2.0 | % | 931,783 | |||||||||||
Mid-Atlantic/Midwest
|
124,067 | 78,490 | 2.0 | % | 765,501 | |||||||||||
Pacific Northwest
|
21,524 | 15,493 | 7.5 | % | 175,503 | |||||||||||
Northern California
|
127,659 | 94,862 | 8.0 | % | 1,039,280 | |||||||||||
Southern California
|
61,449 | 44,048 | 1.1 | % | 377,841 | |||||||||||
|
||||||||||||||||
Total Established (2)
|
605,952 | 414,134 | 3.6 | % | 4,114,277 | |||||||||||
|
||||||||||||||||
Other Stabilized
|
111,952 | 74,864 | n/a | 1,013,232 | ||||||||||||
Development / Redevelopment
|
129,736 | 80,124 | n/a | 2,502,820 | ||||||||||||
Land Held for Future Development
|
n/a | n/a | n/a | 239,456 | ||||||||||||
Non-allocated (3)
|
6,568 | n/a | n/a | 132,702 | ||||||||||||
|
||||||||||||||||
|
||||||||||||||||
Total
|
$ | 854,208 | $ | 569,122 | 12.1 | % | $ | 8,002,487 | ||||||||
|
||||||||||||||||
|
||||||||||||||||
For the year ended December 31, 2007
|
||||||||||||||||
|
||||||||||||||||
Established
New England
|
$ | 127,596 | $ | 81,860 | 2.6 | % | $ | 851,473 | ||||||||
Metro NY/NJ
|
141,424 | 97,860 | 4.7 | % | 903,347 | |||||||||||
Mid-Atlantic/Midwest
|
119,817 | 75,517 | 6.5 | % | 741,691 | |||||||||||
Pacific Northwest
|
28,294 | 19,671 | 16.1 | % | 237,464 | |||||||||||
Northern California
|
144,052 | 104,670 | 12.5 | % | 1,239,407 | |||||||||||
Southern California
|
56,091 | 40,219 | 5.9 | % | 349,719 | |||||||||||
|
||||||||||||||||
Total
Established (2)
|
617,274 | 419,797 | 7.1 | % | 4,323,101 | |||||||||||
|
||||||||||||||||
Other Stabilized
|
47,821 | 30,324 | n/a | 356,038 | ||||||||||||
Development / Redevelopment
|
95,426 | 57,314 | n/a | 2,171,207 | ||||||||||||
Land Held for Future Development
|
n/a | n/a | n/a | 288,423 | ||||||||||||
Non-allocated (3)
|
6,142 | n/a | n/a | 47,793 | ||||||||||||
|
||||||||||||||||
|
||||||||||||||||
Total
|
$ | 766,663 | $ | 507,435 | 14.1 | % | $ | 7,186,562 | ||||||||
|
||||||||||||||||
|
||||||||||||||||
For the year ended December 31, 2006
|
||||||||||||||||
|
||||||||||||||||
Established
New England
|
$ | 84,572 | $ | 55,410 | 3.0 | % | $ | 564,627 | ||||||||
Metro NY/NJ
|
106,251 | 73,840 | 7.4 | % | 617,609 | |||||||||||
Mid-Atlantic/Midwest
|
105,740 | 65,269 | 14.3 | % | 678,737 | |||||||||||
Pacific Northwest
|
28,202 | 19,025 | 13.9 | % | 263,245 | |||||||||||
Northern California
|
134,525 | 94,196 | 12.0 | % | 1,251,531 | |||||||||||
Southern California
|
57,632 | 41,115 | 9.3 | % | 374,605 | |||||||||||
|
||||||||||||||||
Total
Established (2)
|
516,922 | 348,855 | 9.7 | % | 3,750,354 | |||||||||||
|
||||||||||||||||
Other Stabilized
|
88,546 | 55,337 | n/a | 876,127 | ||||||||||||
Development / Redevelopment
|
65,914 | 40,580 | n/a | 1,259,469 | ||||||||||||
Land Held for Future Development
|
n/a | n/a | n/a | 202,314 | ||||||||||||
Non-allocated (3)
|
6,259 | n/a | n/a | 42,437 | ||||||||||||
|
||||||||||||||||
|
||||||||||||||||
Total
|
$ | 677,641 | $ | 444,772 | 11.7 | % | $ | 6,130,701 | ||||||||
|
(1) | Does not include gross real estate assets held for sale of $0, $370,178 and $484,891 as of December 31, 2008, 2007 and 2006, respectively. | |
(2) | Gross real estate for the Companys established communities includes capitalized additions of approximately $15,534, $13,851 and $21,289 in 2008, 2007 and 2006, respectively. | |
(3) | Revenue represents third-party management, accounting and developer fees and miscellaneous income which are not allocated to a reportable segment. |
F-31
F-32
Weighted | Avalon 1995 | Weighted | ||||||||||||||
average | and Avalon | average | ||||||||||||||
1994 Plan | exercise price | 1993 Plan | exercise price | |||||||||||||
shares | per share | shares | per share | |||||||||||||
Options Outstanding, December 31, 2005
|
2,229,778 | $ | 51.40 | 26,624 | $ | 37.09 | ||||||||||
Exercised
|
(592,308 | ) | 50.09 | (22,384 | ) | 37.15 | ||||||||||
Granted
|
867,113 | 99.28 | | | ||||||||||||
Forfeited
|
(17,344 | ) | 79.72 | | | |||||||||||
|
||||||||||||||||
Options Outstanding, December 31, 2006
|
2,487,239 | $ | 69.65 | 4,240 | $ | 36.81 | ||||||||||
|
||||||||||||||||
Exercised
|
(471,024 | ) | 56.57 | (3,472 | ) | 36.86 | ||||||||||
Granted
|
344,429 | 147.39 | | | ||||||||||||
Forfeited
|
(38,929 | ) | 110.28 | | | |||||||||||
|
||||||||||||||||
Options Outstanding, December 31, 2007
|
2,321,715 | $ | 83.15 | 768 | $ | 36.61 | ||||||||||
|
||||||||||||||||
Exercised
|
(154,523 | ) | 46.15 | (768 | ) | 36.61 | ||||||||||
Granted
|
401,212 | 89.06 | | | ||||||||||||
Forfeited
|
(23,413 | ) | 112.51 | | | |||||||||||
Special Dividend Option Adjustment
(1)
|
78,144 | N/A | | | ||||||||||||
|
||||||||||||||||
Options Outstanding, December 31, 2008
|
2,623,135 | $ | 83.49 | | N/A | |||||||||||
|
||||||||||||||||
|
||||||||||||||||
Options Exercisable:
|
||||||||||||||||
December 31, 2006
|
1,041,360 | $ | 47.99 | 4,240 | $ | 36.81 | ||||||||||
|
||||||||||||||||
December 31, 2007
|
1,230,428 | $ | 60.84 | 768 | $ | 36.61 | ||||||||||
|
||||||||||||||||
December 31, 2008
(1)
|
1,711,508 | $ | 72.97 | | N/A | |||||||||||
|
F-33
2008 | 2007 | 2006 | ||||||||||
Weighted average fair value
per share
|
$ | 9.91 | $ | 21.83 | $ | 11.47 | ||||||
Life of options (in years)
|
7.0 | 7.0 | 7.0 | |||||||||
Dividend yield
|
5.5 | % | 4.0 | % | 5.0 | % | ||||||
Volatility
|
22.17 | % | 17.32 | % | 17.61 | % | ||||||
Risk-free interest rate
|
3.09 | % | 4.73 | % | 4.55 | % |
F-34
F-35
| Cash equivalents, rents receivable, accounts and construction payable and accrued expenses, and other liabilities are carried at their face amounts, which reasonably approximate their fair values. | ||
| Bond indebtedness and notes payable with an aggregate outstanding par amount of approximately $3,676,000 and $3,160,500 had an estimated aggregate fair value of $3,612,130 and $3,220,330 at December 31, 2008 and 2007, respectively. |
F-36
For the three months ended | ||||||||||||||||
3-31-08 | 6-30-08 | 9-30-08 | 12-31-08 | |||||||||||||
Total revenue
(1)
|
$ | 204,172 | $ | 211,191 | $ | 218,492 | $ | 220,353 | ||||||||
Income from continuing operations
(1)(3)
|
$ | 43,635 | $ | 48,088 | $ | 48,177 | $ | (25,523 | ) | |||||||
Income from discontinued operations
(1)
|
$ | 4,814 | $ | 79,246 | $ | 185,404 | $ | 27,645 | ||||||||
Net income available to common stockholders
|
$ | 46,274 | $ | 125,159 | $ | 231,406 | $ | (1,806 | ) | |||||||
Net income per common share basic
(2)
|
$ | 0.60 | $ | 1.63 | $ | 3.01 | $ | (0.02 | ) | |||||||
Net income per common share diluted
(2)
|
$ | 0.60 | $ | 1.61 | $ | 2.98 | $ | (0.02 | ) |
For the three months ended | ||||||||||||||||
3-31-07 | 6-30-07 | 9-30-07 | 12-31-07 | |||||||||||||
Total revenue
(1)
|
$ | 181,452 | $ | 188,128 | $ | 196,531 | $ | 200,552 | ||||||||
Income from continuing operations
(1)
|
$ | 41,490 | $ | 45,064 | $ | 45,684 | $ | 98,946 | ||||||||
Income from discontinued operations
(1)
|
$ | 5,030 | $ | 5,988 | $ | 83,085 | $ | 32,873 | ||||||||
Net income available to common stockholders
|
$ | 44,345 | $ | 48,877 | $ | 126,594 | $ | 129,644 | ||||||||
Net income per common share basic
(2)
|
$ | 0.57 | $ | 0.62 | $ | 1.60 | $ | 1.66 | ||||||||
Net income per common share diluted
(2)
|
$ | 0.56 | $ | 0.61 | $ | 1.58 | $ | 1.65 |
(1) | Amounts may not equal previously reported results due to reclassification between income from continuing operations and income from discontinued operations. | |
(2) | Amounts may not equal full year results due to rounding. | |
(3) | Income from continuing operations for the fourth quarter of 2008 includes an impairment charge of approximately $57,899 associated with the Companys planned reduction in development activity. |
F-37
F-38
Initial Cost | Total Cost | |||||||||||||||||||||||||||||||||||||||
Building / | Costs | Building / | ||||||||||||||||||||||||||||||||||||||
Construction in | Subsequent to | Construction in | Total Cost, Net of | Year of | ||||||||||||||||||||||||||||||||||||
Progress & | Acquisition / | Progress & | Accumulated | Accumulated | Completion | |||||||||||||||||||||||||||||||||||
Land | Improvements | Construction | Land | Improvements | Total | Depreciation | Depreciation | Encumbrances | / Acquisition | |||||||||||||||||||||||||||||||
Current Communities
|
||||||||||||||||||||||||||||||||||||||||
Avalon at Lexington
|
2,124 | 12,599 | 1,738 | 2,124 | 14,337 | 16,461 | 7,067 | 9,394 | 11,665 | 1994 | ||||||||||||||||||||||||||||||
Avalon Oaks
|
2,129 | 18,656 | 490 | 2,129 | 19,146 | 21,275 | 6,704 | 14,571 | 16,940 | 1999 | ||||||||||||||||||||||||||||||
Avalon Summit
|
1,743 | 14,670 | 1,281 | 1,743 | 15,951 | 17,694 | 7,005 | 10,689 | | 1986/1996 | ||||||||||||||||||||||||||||||
Avalon Essex
|
5,230 | 16,303 | 423 | 5,230 | 16,726 | 21,956 | 5,282 | 16,674 | | 2000 | ||||||||||||||||||||||||||||||
Avalon at Faxon Park
|
1,292 | 14,001 | 591 | 1,292 | 14,592 | 15,884 | 5,594 | 10,290 | | 1998 | ||||||||||||||||||||||||||||||
Avalon at Prudential Center
|
25,811 | 104,399 | 27,085 | 25,811 | 131,484 | 157,295 | 43,897 | 113,398 | | 1968/1998 | ||||||||||||||||||||||||||||||
Avalon Oaks West
|
3,303 | 13,467 | 104 | 3,303 | 13,571 | 16,874 | 3,431 | 13,443 | 16,795 | 2002 | ||||||||||||||||||||||||||||||
Avalon Orchards
|
2,975 | 18,037 | 339 | 2,975 | 18,376 | 21,351 | 4,505 | 16,846 | 19,322 | 2002 | ||||||||||||||||||||||||||||||
Avalon at Flanders Hill
|
3,572 | 33,504 | 488 | 3,572 | 33,992 | 37,564 | 7,697 | 29,867 | 19,735 | 2003 | ||||||||||||||||||||||||||||||
Avalon at Newton Highlands
|
11,038 | 45,527 | 250 | 11,038 | 45,777 | 56,815 | 8,719 | 48,096 | 34,945 | 2003 | ||||||||||||||||||||||||||||||
Avalon at The Pinehills I
|
3,623 | 16,292 | 69 | 3,623 | 16,361 | 19,984 | 2,557 | 17,427 | | 2004 | ||||||||||||||||||||||||||||||
Avalon at Crane Brook
|
12,381 | 42,298 | 145 | 12,381 | 42,443 | 54,824 | 6,675 | 48,149 | 31,530 | 2004 | ||||||||||||||||||||||||||||||
Essex Place
|
4,643 | 19,007 | 10,915 | 4,643 | 29,922 | 34,565 | 3,105 | 31,460 | | 2004 | ||||||||||||||||||||||||||||||
Avalon at Bedford Center
|
4,258 | 20,547 | | 4,258 | 20,547 | 24,805 | 2,232 | 22,573 | 16,361 | 2005 | ||||||||||||||||||||||||||||||
Avalon Chestnut Hill
|
14,572 | 45,781 | | 14,572 | 45,781 | 60,353 | 3,507 | 56,846 | 41,834 | 2007 | ||||||||||||||||||||||||||||||
Avalon Shrewsbury
|
5,147 | 30,608 | 6 | 5,147 | 30,614 | 35,761 | 2,389 | 33,372 | | 2007 | ||||||||||||||||||||||||||||||
Avalon Danvers
|
7,002 | 78,548 | | 7,002 | 78,548 | 85,550 | 3,313 | 82,237 | | 2006 | ||||||||||||||||||||||||||||||
Avalon Woburn
|
20,631 | 62,351 | 4 | 20,631 | 62,355 | 82,986 | 3,775 | 79,211 | | 2007 | ||||||||||||||||||||||||||||||
Avalon at Lexington Hills
|
8,659 | 77,692 | | 8,659 | 77,692 | 86,351 | 2,492 | 83,859 | | 2007 | ||||||||||||||||||||||||||||||
Avalon Acton
|
13,124 | 50,561 | | 13,124 | 50,561 | 63,685 | 1,266 | 62,419 | 45,000 | 2007 | ||||||||||||||||||||||||||||||
Avalon Sharon
|
4,735 | 25,276 | | 4,735 | 25,276 | 30,011 | 465 | 29,546 | | 2007 | ||||||||||||||||||||||||||||||
Avalon at Center Place
|
| 26,816 | 2,438 | | 29,254 | 29,254 | 11,908 | 17,346 | | 1991/1997 | ||||||||||||||||||||||||||||||
Avalon Gates
|
4,414 | 31,268 | 1,902 | 4,414 | 33,170 | 37,584 | 13,235 | 24,349 | | 1997 | ||||||||||||||||||||||||||||||
Avalon Glen
|
5,956 | 23,993 | 2,602 | 5,956 | 26,595 | 32,551 | 13,494 | 19,057 | | 1991 | ||||||||||||||||||||||||||||||
Avalon Springs
|
2,116 | 14,664 | 496 | 2,116 | 15,160 | 17,276 | 6,176 | 11,100 | | 1996 | ||||||||||||||||||||||||||||||
Avalon Valley
|
2,277 | 23,781 | 339 | 2,277 | 24,120 | 26,397 | 8,152 | 18,245 | | 1999 | ||||||||||||||||||||||||||||||
Avalon Orange
|
2,108 | 19,983 | 6 | 2,108 | 19,989 | 22,097 | 2,737 | 19,360 | | 2005 | ||||||||||||||||||||||||||||||
Avalon on Stamford Harbor
|
10,836 | 51,989 | 106 | 10,836 | 52,095 | 62,931 | 12,143 | 50,788 | | 2003 | ||||||||||||||||||||||||||||||
Avalon New Canaan
|
4,835 | 19,485 | 59 | 4,835 | 19,544 | 24,379 | 4,609 | 19,770 | | 2002 | ||||||||||||||||||||||||||||||
Avalon at Greyrock Place
|
13,819 | 56,499 | 526 | 13,819 | 57,025 | 70,844 | 12,789 | 58,055 | 62,400 | 2002 | ||||||||||||||||||||||||||||||
Avalon Danbury
|
4,905 | 30,581 | 48 | 4,905 | 30,629 | 35,534 | 3,751 | 31,783 | | 2005 | ||||||||||||||||||||||||||||||
Avalon Darien
|
6,922 | 34,594 | 82 | 6,922 | 34,676 | 41,598 | 6,326 | 35,272 | 51,749 | 2004 | ||||||||||||||||||||||||||||||
Avalon Milford I
|
8,746 | 22,699 | 57 | 8,746 | 22,756 | 31,502 | 3,603 | 27,899 | | 2004 | ||||||||||||||||||||||||||||||
Avalon Huntington
|
3,146 | 20,810 | | 3,146 | 20,810 | 23,956 | 72 | 23,884 | | 2008 | ||||||||||||||||||||||||||||||
Avalon Commons
|
4,679 | 28,509 | 880 | 4,679 | 29,389 | 34,068 | 11,453 | 22,615 | 55,100 | 1997 | ||||||||||||||||||||||||||||||
Avalon Towers
|
3,118 | 12,709 | 5,655 | 3,118 | 18,364 | 21,482 | 7,504 | 13,978 | | 1990/1995 | ||||||||||||||||||||||||||||||
Avalon Court
|
9,228 | 50,021 | 940 | 9,228 | 50,961 | 60,189 | 17,601 | 42,588 | | 1997/2000 | ||||||||||||||||||||||||||||||
Avalon at Glen Cove South
|
7,871 | 59,969 | 125 | 7,871 | 60,094 | 67,965 | 9,388 | 58,577 | | 2004 | ||||||||||||||||||||||||||||||
Avalon Pines I
|
6,029 | 41,053 | (206 | ) | 6,029 | 40,847 | 46,876 | 5,614 | 41,262 | | 2005 | |||||||||||||||||||||||||||||
Avalon at Glen Cove North
|
2,577 | 37,336 | | 2,577 | 37,336 | 39,913 | 2,135 | 37,778 | | 2007 | ||||||||||||||||||||||||||||||
Avalon Pines II
|
2,877 | 21,878 | | 2,877 | 21,878 | 24,755 | 2,096 | 22,659 | | 2006 | ||||||||||||||||||||||||||||||
Avalon Cove
|
8,760 | 82,453 | 2,248 | 8,760 | 84,701 | 93,461 | 34,242 | 59,219 | | 1997 | ||||||||||||||||||||||||||||||
Avalon at Edgewater
|
14,529 | 60,240 | 586 | 14,529 | 60,826 | 75,355 | 15,604 | 59,751 | | 2002 |
F-39
Initial Cost | Total Cost | |||||||||||||||||||||||||||||||||||||||
Building / | Costs | Building / | ||||||||||||||||||||||||||||||||||||||
Construction in | Subsequent to | Construction in | Total Cost, Net of | Year of | ||||||||||||||||||||||||||||||||||||
Progress & | Acquisition / | Progress & | Accumulated | Accumulated | Completion | |||||||||||||||||||||||||||||||||||
Land | Improvements | Construction | Land | Improvements | Total | Depreciation | Depreciation | Encumbrances | / Acquisition | |||||||||||||||||||||||||||||||
Avalon at Florham Park
|
6,647 | 34,906 | 561 | 6,647 | 35,467 | 42,114 | 10,306 | 31,808 | | 2001 | ||||||||||||||||||||||||||||||
Avalon Lyndhurst
|
18,620 | 62,358 | | 18,620 | 62,358 | 80,978 | 3,790 | 77,188 | | 2006 | ||||||||||||||||||||||||||||||
Avalon Run East
|
1,579 | 14,668 | 215 | 1,579 | 14,883 | 16,462 | 6,205 | 10,257 | | 1996 | ||||||||||||||||||||||||||||||
Avalon Watch
|
5,585 | 22,394 | 2,217 | 5,585 | 24,611 | 30,196 | 13,186 | 17,010 | | 1988 | ||||||||||||||||||||||||||||||
Avalon at Freehold
|
4,116 | 30,514 | 180 | 4,116 | 30,694 | 34,810 | 7,765 | 27,045 | | 2002 | ||||||||||||||||||||||||||||||
Avalon Run East II
|
6,765 | 45,377 | 59 | 6,765 | 45,436 | 52,201 | 6,665 | 45,536 | | 2003 | ||||||||||||||||||||||||||||||
Avalon Run
|
13,071 | 45,818 | 1,374 | 13,071 | 47,192 | 60,263 | 3,696 | 56,567 | | 1994 | ||||||||||||||||||||||||||||||
Avalon at Tinton Falls
|
7,939 | 32,579 | | 7,939 | 32,579 | 40,518 | 541 | 39,977 | | 2007 | ||||||||||||||||||||||||||||||
Avalon Gardens
|
8,428 | 45,660 | 1,492 | 8,428 | 47,152 | 55,580 | 17,888 | 37,692 | | 1998 | ||||||||||||||||||||||||||||||
Avalon Green
|
1,820 | 10,525 | 1,606 | 1,820 | 12,131 | 13,951 | 5,320 | 8,631 | | 1995 | ||||||||||||||||||||||||||||||
Avalon Willow
|
6,207 | 40,791 | 572 | 6,207 | 41,363 | 47,570 | 13,206 | 34,364 | | 2000 | ||||||||||||||||||||||||||||||
The Avalon
|
2,889 | 28,324 | 331 | 2,889 | 28,655 | 31,544 | 9,374 | 22,170 | | 1999 | ||||||||||||||||||||||||||||||
Avalon on the Sound
|
| 116,231 | 1,029 | | 117,260 | 117,260 | 27,190 | 90,070 | | 2001 | ||||||||||||||||||||||||||||||
Avalon Riverview I
|
| 94,166 | 532 | | 94,698 | 94,698 | 21,514 | 73,184 | | 2002 | ||||||||||||||||||||||||||||||
Avalon Bowery Place I
|
18,575 | 72,900 | 741 | 18,575 | 73,641 | 92,216 | 5,683 | 86,533 | 93,800 | 2006 | ||||||||||||||||||||||||||||||
Avalon Riverview North
|
| 173,788 | | | 173,788 | 173,788 | 6,920 | 166,868 | | 2007 | ||||||||||||||||||||||||||||||
Avalon on the Sound East
|
| 179,477 | | | 179,477 | 179,477 | 7,537 | 171,940 | | 2007 | ||||||||||||||||||||||||||||||
Avalon Bowery Place II
|
9,104 | 46,425 | 94 | 9,104 | 46,519 | 55,623 | 1,928 | 53,695 | 48,500 | 2007 | ||||||||||||||||||||||||||||||
Avalon at Fairway Hills I, II & III
|
8,612 | 34,432 | 9,644 | 8,612 | 44,076 | 52,688 | 18,424 | 34,264 | | 1987/1996 | ||||||||||||||||||||||||||||||
Avalon Symphony Woods (SGlen)
|
1,594 | 6,384 | 3,728 | 1,594 | 10,112 | 11,706 | 4,490 | 7,216 | 9,780 | 1986 | ||||||||||||||||||||||||||||||
Avalon Symphony Woods (SGate)
|
7,207 | 29,151 | 2,424 | 7,207 | 31,575 | 38,782 | 2,150 | 36,632 | | 1986/2006 | ||||||||||||||||||||||||||||||
Avalon at Foxhall
|
6,848 | 27,614 | 10,532 | 6,848 | 38,146 | 44,994 | 16,599 | 28,395 | | 1982 | ||||||||||||||||||||||||||||||
Avalon at Gallery Place I
|
8,800 | 39,731 | 514 | 8,800 | 40,245 | 49,045 | 8,128 | 40,917 | | 2003 | ||||||||||||||||||||||||||||||
Avalon at Decoverly
|
6,157 | 24,800 | 1,885 | 6,157 | 26,685 | 32,842 | 12,118 | 20,724 | | 1991/1995 | ||||||||||||||||||||||||||||||
Avalon Fields I & II
|
4,047 | 18,553 | 201 | 4,047 | 18,754 | 22,801 | 7,964 | 14,837 | 9,988 | 1998 | ||||||||||||||||||||||||||||||
Avalon Knoll
|
1,412 | 5,673 | 1,915 | 1,412 | 7,588 | 9,000 | 4,531 | 4,469 | | 1985 | ||||||||||||||||||||||||||||||
Avalon at Rock Spring
|
| 81,796 | 544 | | 82,340 | 82,340 | 16,925 | 65,415 | | 2003 | ||||||||||||||||||||||||||||||
Avalon at Grosvenor Station
|
29,151 | 52,940 | 90 | 29,151 | 53,030 | 82,181 | 9,580 | 72,601 | | 2004 | ||||||||||||||||||||||||||||||
Avalon at Traville
|
14,360 | 55,400 | 254 | 14,360 | 55,654 | 70,014 | 9,674 | 60,340 | | 2004 | ||||||||||||||||||||||||||||||
Avalon at Decoverly II
|
5,708 | 24,886 | | 5,708 | 24,886 | 30,594 | 1,947 | 28,647 | | 2007 | ||||||||||||||||||||||||||||||
Avalon Fairlakes
|
6,096 | 24,400 | 7,376 | 6,096 | 31,776 | 37,872 | 10,892 | 26,980 | | 1989/1996 | ||||||||||||||||||||||||||||||
Avalon at Ballston Washington
Towers
|
7,291 | 29,177 | 2,747 | 7,291 | 31,924 | 39,215 | 15,683 | 23,532 | | 1990 | ||||||||||||||||||||||||||||||
Avalon at Cameron Court
|
10,292 | 32,930 | 902 | 10,292 | 33,832 | 44,124 | 12,644 | 31,480 | 94,572 | 1998 | ||||||||||||||||||||||||||||||
Avalon at Providence Park
|
2,152 | 8,907 | 815 | 2,152 | 9,722 | 11,874 | 3,945 | 7,929 | | 1988/1997 | ||||||||||||||||||||||||||||||
Avalon Crescent
|
13,851 | 43,397 | 667 | 13,851 | 44,064 | 57,915 | 17,587 | 40,328 | 110,600 | 1996 | ||||||||||||||||||||||||||||||
Avalon at Arlington Square
|
22,041 | 90,296 | 864 | 22,041 | 91,160 | 113,201 | 23,737 | 89,464 | 170,125 | 2001 | ||||||||||||||||||||||||||||||
Avalon at Danada Farms
|
7,535 | 31,299 | 1,196 | 7,535 | 32,495 | 40,030 | 11,986 | 28,044 | | 1997 | ||||||||||||||||||||||||||||||
Avalon at Stratford Green
|
4,326 | 17,569 | 343 | 4,326 | 17,912 | 22,238 | 6,757 | 15,481 | | 1997 | ||||||||||||||||||||||||||||||
Avalon Arlington Heights
|
9,728 | 39,661 | 7,558 | 9,728 | 47,219 | 56,947 | 12,313 | 44,634 | | 1987/2000 | ||||||||||||||||||||||||||||||
Avalon Redmond Place
|
4,558 | 18,368 | 8,956 | 4,558 | 27,324 | 31,882 | 8,671 | 23,211 | | 1991/1997 | ||||||||||||||||||||||||||||||
Avalon at Bear Creek
|
6,786 | 27,641 | 1,431 | 6,786 | 29,072 | 35,858 | 10,253 | 25,605 | | 1998 | ||||||||||||||||||||||||||||||
Avalon Bellevue
|
6,664 | 24,119 | 183 | 6,664 | 24,302 | 30,966 | 6,990 | 23,976 | | 2001 | ||||||||||||||||||||||||||||||
Avalon RockMeadow
|
4,777 | 19,742 | 474 | 4,777 | 20,216 | 24,993 | 6,060 | 18,933 | | 2000 | ||||||||||||||||||||||||||||||
Avalon WildReed
|
4,253 | 18,676 | 167 | 4,253 | 18,843 | 23,096 | 5,634 | 17,462 | | 2000 |
F-40
Initial Cost | Total Cost | |||||||||||||||||||||||||||||||||||||||
Building / | Costs | Building / | ||||||||||||||||||||||||||||||||||||||
Construction in | Subsequent to | Construction in | Total Cost, Net of | Year of | ||||||||||||||||||||||||||||||||||||
Progress & | Acquisition / | Progress & | Accumulated | Accumulated | Completion | |||||||||||||||||||||||||||||||||||
Land | Improvements | Construction | Land | Improvements | Total | Depreciation | Depreciation | Encumbrances | / Acquisition | |||||||||||||||||||||||||||||||
Avalon HighGrove
|
7,569 | 32,041 | 269 | 7,569 | 32,310 | 39,879 | 9,238 | 30,641 | | 2000 | ||||||||||||||||||||||||||||||
Avalon ParcSquare
|
3,789 | 15,146 | 581 | 3,789 | 15,727 | 19,516 | 4,719 | 14,797 | | 2000 | ||||||||||||||||||||||||||||||
Avalon Brandemoor
|
8,630 | 36,679 | 362 | 8,630 | 37,041 | 45,671 | 10,179 | 35,492 | | 2001 | ||||||||||||||||||||||||||||||
Avalon Belltown
|
5,644 | 12,733 | 122 | 5,644 | 12,855 | 18,499 | 3,523 | 14,976 | | 2001 | ||||||||||||||||||||||||||||||
Avalon Meydenbauer
|
12,654 | 76,465 | | 12,654 | 76,465 | 89,119 | 1,634 | 87,485 | | 2008 | ||||||||||||||||||||||||||||||
Avalon Fremont
|
10,746 | 43,399 | 2,794 | 10,746 | 46,193 | 56,939 | 17,179 | 39,760 | | 1994 | ||||||||||||||||||||||||||||||
Avalon Dublin
|
5,276 | 19,642 | 3,448 | 5,276 | 23,090 | 28,366 | 8,375 | 19,991 | | 1989/1997 | ||||||||||||||||||||||||||||||
Avalon Pleasanton
|
11,610 | 46,552 | 4,843 | 11,610 | 51,395 | 63,005 | 19,652 | 43,353 | | 1988/1994 | ||||||||||||||||||||||||||||||
Avalon at Union Square
|
4,249 | 16,820 | 1,669 | 4,249 | 18,489 | 22,738 | 7,070 | 15,668 | | 1973/1996 | ||||||||||||||||||||||||||||||
Waterford
|
11,324 | 45,717 | 5,149 | 11,324 | 50,866 | 62,190 | 19,629 | 42,561 | 33,100 | 1985/1986 | ||||||||||||||||||||||||||||||
Avalon at Willow Creek
|
6,581 | 26,583 | 3,329 | 6,581 | 29,912 | 36,493 | 11,458 | 25,035 | | 1985/1994 | ||||||||||||||||||||||||||||||
Avalon at Dublin Station I
|
10,058 | 74,211 | | 10,058 | 74,211 | 84,269 | 2,151 | 82,118 | | 2006 | ||||||||||||||||||||||||||||||
Avalon at Cedar Ridge
|
4,230 | 9,659 | 13,645 | 4,230 | 23,304 | 27,534 | 8,550 | 18,984 | | 1972/1997 | ||||||||||||||||||||||||||||||
Avalon at Nob Hill
|
5,403 | 21,567 | 1,221 | 5,403 | 22,788 | 28,191 | 8,401 | 19,790 | 20,800 | 1990/1995 | ||||||||||||||||||||||||||||||
Crowne Ridge
|
5,982 | 16,885 | 10,233 | 5,982 | 27,118 | 33,100 | 10,587 | 22,513 | | 1973/1996 | ||||||||||||||||||||||||||||||
Avalon Foster City
|
7,852 | 31,445 | 4,871 | 7,852 | 36,316 | 44,168 | 12,884 | 31,284 | | 1973/1994 | ||||||||||||||||||||||||||||||
Avalon Towers by the Bay
|
9,155 | 57,631 | 263 | 9,155 | 57,894 | 67,049 | 18,475 | 48,574 | | 1999 | ||||||||||||||||||||||||||||||
Avalon Pacifica
|
6,125 | 24,796 | 1,439 | 6,125 | 26,235 | 32,360 | 9,746 | 22,614 | 17,600 | 1971/1995 | ||||||||||||||||||||||||||||||
Avalon Sunset Towers
|
3,561 | 21,321 | 3,997 | 3,561 | 25,318 | 28,879 | 9,892 | 18,987 | | 1961/1996 | ||||||||||||||||||||||||||||||
Avalon at Diamond Heights
|
4,726 | 19,130 | 3,823 | 4,726 | 22,953 | 27,679 | 7,884 | 19,795 | | 1972/1994 | ||||||||||||||||||||||||||||||
Avalon at Mission Bay North
|
13,814 | 78,452 | 670 | 13,814 | 79,122 | 92,936 | 16,173 | 76,763 | | 2003 | ||||||||||||||||||||||||||||||
Avalon Campbell
|
11,830 | 47,828 | 875 | 11,830 | 48,703 | 60,533 | 17,628 | 42,905 | 38,800 | 1995 | ||||||||||||||||||||||||||||||
CountryBrook
|
9,384 | 38,791 | 4,576 | 9,384 | 43,367 | 52,751 | 14,843 | 37,908 | 14,680 | 1985/1996 | ||||||||||||||||||||||||||||||
Avalon at River Oaks
|
8,904 | 35,121 | 983 | 8,904 | 36,104 | 45,008 | 13,034 | 31,974 | | 1990/1996 | ||||||||||||||||||||||||||||||
Avalon at Parkside
|
7,406 | 29,823 | 1,098 | 7,406 | 30,921 | 38,327 | 11,417 | 26,910 | | 1991/1996 | ||||||||||||||||||||||||||||||
Avalon on the Alameda
|
6,119 | 50,230 | 556 | 6,119 | 50,786 | 56,905 | 17,287 | 39,618 | | 1999 | ||||||||||||||||||||||||||||||
Avalon Rosewalk
|
15,814 | 62,028 | 2,021 | 15,814 | 64,049 | 79,863 | 22,735 | 57,128 | | 1997/1999 | ||||||||||||||||||||||||||||||
Avalon Silicon Valley
|
20,713 | 99,573 | 3,030 | 20,713 | 102,603 | 123,316 | 37,224 | 86,092 | 150,000 | 1997 | ||||||||||||||||||||||||||||||
Avalon Mountain View
|
9,755 | 39,393 | 7,032 | 9,755 | 46,425 | 56,180 | 15,558 | 40,622 | 18,300 | 1986 | ||||||||||||||||||||||||||||||
Avalon at Creekside
|
6,546 | 26,301 | 10,624 | 6,546 | 36,925 | 43,471 | 13,002 | 30,469 | | 1962/1997 | ||||||||||||||||||||||||||||||
Avalon at Cahill Park
|
4,760 | 47,600 | 347 | 4,760 | 47,947 | 52,707 | 10,954 | 41,753 | | 2002 | ||||||||||||||||||||||||||||||
Avalon Towers on the Peninsula
|
9,560 | 56,136 | 57 | 9,560 | 56,193 | 65,753 | 13,570 | 52,183 | | 2002 | ||||||||||||||||||||||||||||||
Countrybrook II
|
3,534 | 14,256 | 101 | 3,534 | 14,357 | 17,891 | 714 | 17,177 | | 2007 | ||||||||||||||||||||||||||||||
Avalon Newport
|
1,975 | 3,814 | 4,628 | 1,975 | 8,442 | 10,417 | 3,141 | 7,276 | | 1956/1996 | ||||||||||||||||||||||||||||||
Avalon Mission Viejo
|
2,517 | 9,257 | 2,321 | 2,517 | 11,578 | 14,095 | 4,524 | 9,571 | 7,635 | 1984/1996 | ||||||||||||||||||||||||||||||
Avalon at South Coast
|
4,709 | 16,063 | 5,258 | 4,709 | 21,321 | 26,030 | 8,201 | 17,829 | | 1973/1996 | ||||||||||||||||||||||||||||||
Avalon Santa Margarita
|
4,607 | 16,911 | 3,010 | 4,607 | 19,921 | 24,528 | 7,524 | 17,004 | | 1990/1997 | ||||||||||||||||||||||||||||||
Avalon at Pacific Bay
|
4,871 | 19,745 | 8,299 | 4,871 | 28,044 | 32,915 | 10,153 | 22,762 | | 1971/1997 | ||||||||||||||||||||||||||||||
Avalon Warner Place
|
7,885 | 44,714 | | 7,885 | 44,714 | 52,599 | 850 | 51,749 | | 2007 | ||||||||||||||||||||||||||||||
Avalon at Mission Bay
|
9,922 | 40,633 | 16,254 | 9,922 | 56,887 | 66,809 | 20,068 | 46,741 | | 1969/1997 | ||||||||||||||||||||||||||||||
Avalon at Mission Ridge
|
2,710 | 10,924 | 8,999 | 2,710 | 19,923 | 22,633 | 7,518 | 15,115 | | 1960/1997 | ||||||||||||||||||||||||||||||
Avalon at Cortez Hill
|
2,768 | 20,134 | 11,844 | 2,768 | 31,978 | 34,746 | 11,484 | 23,262 | | 1973/1998 | ||||||||||||||||||||||||||||||
Avalon Fashion Valley
|
19,627 | 44,014 | | 19,627 | 44,014 | 63,641 | 238 | 63,403 | | 2008 | ||||||||||||||||||||||||||||||
Avalon at Media Center
|
22,483 | 28,104 | 26,290 | 22,483 | 54,394 | 76,877 | 19,064 | 57,813 | | 1961/1997 |
F-41
Initial Cost | Total Cost | |||||||||||||||||||||||||||||||||||||||
Building / | Costs | Building / | ||||||||||||||||||||||||||||||||||||||
Construction in | Subsequent to | Construction in | Total Cost, Net of | Year of | ||||||||||||||||||||||||||||||||||||
Progress & | Acquisition / | Progress & | Accumulated | Accumulated | Completion | |||||||||||||||||||||||||||||||||||
Land | Improvements | Construction | Land | Improvements | Total | Depreciation | Depreciation | Encumbrances | / Acquisition | |||||||||||||||||||||||||||||||
Avalon Woodland Hills
|
23,828 | 40,372 | 26,810 | 23,828 | 67,182 | 91,010 | 19,117 | 71,893 | | 1989/1997 | ||||||||||||||||||||||||||||||
Avalon at Warner Center
|
7,045 | 12,986 | 7,282 | 7,045 | 20,268 | 27,313 | 8,314 | 18,999 | | 1979/1998 | ||||||||||||||||||||||||||||||
Avalon Glendale
|
| 41,434 | 46 | | 41,480 | 41,480 | 7,858 | 33,622 | | 2003 | ||||||||||||||||||||||||||||||
The Promenade
|
14,052 | 56,827 | 6,793 | 14,052 | 63,620 | 77,672 | 12,917 | 64,755 | 30,142 | 1988/2002 | ||||||||||||||||||||||||||||||
Avalon Camarillo
|
8,469 | 39,741 | | 8,469 | 39,741 | 48,210 | 3,689 | 44,521 | | 2006 | ||||||||||||||||||||||||||||||
Avalon Wilshire
|
5,452 | 41,076 | 204 | 5,452 | 41,280 | 46,732 | 2,234 | 44,498 | | 2007 | ||||||||||||||||||||||||||||||
Avalon Encino
|
12,834 | 48,183 | | 12,834 | 48,183 | 61,017 | 189 | 60,828 | | 2008 | ||||||||||||||||||||||||||||||
|
1,032,388 | 5,264,784 | 361,294 | 1,032,388 | 5,626,079 | 6,658,467 | 1,323,153 | 5,335,314 | 1,291,798 | |||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||
Development Communities
|
||||||||||||||||||||||||||||||||||||||||
Avalon Anaheim
|
2,663 | 89,366 | | 2,663 | 89,366 | 92,029 | 21 | 92,008 | | N/A | ||||||||||||||||||||||||||||||
Avalon Union City
|
| 97,057 | | | 97,057 | 97,057 | | 97,057 | | N/A | ||||||||||||||||||||||||||||||
Avalon Jamboree Village
|
| 55,581 | | | 55,581 | 55,581 | | 55,581 | | N/A | ||||||||||||||||||||||||||||||
Avalon at Mission Bay North III
|
| 109,420 | | | 109,420 | 109,420 | | 109,420 | | N/A | ||||||||||||||||||||||||||||||
Avalon Walnut Creek
|
| 36,591 | | | 36,591 | 36,591 | | 36,591 | 137,500 | N/A | ||||||||||||||||||||||||||||||
Avalon Norwalk
|
| 20,238 | | | 20,238 | 20,238 | | 20,238 | | N/A | ||||||||||||||||||||||||||||||
Avalon at Hingham Shipyard
|
4,204 | 46,578 | | 4,204 | 46,578 | 50,782 | 155 | 50,627 | | N/A | ||||||||||||||||||||||||||||||
Avalon Northborough I
|
| 9,225 | | | 9,225 | 9,225 | | 9,225 | | N/A | ||||||||||||||||||||||||||||||
Avalon Blue Hills
|
| 29,519 | | | 29,519 | 29,519 | | 29,519 | | N/A | ||||||||||||||||||||||||||||||
Avalon White Plains
|
3,578 | 127,793 | | 3,578 | 127,793 | 131,371 | 244 | 131,127 | | N/A | ||||||||||||||||||||||||||||||
Avalon Morningside Park
|
| 105,801 | | | 105,801 | 105,801 | 696 | 105,105 | 100,000 | N/A | ||||||||||||||||||||||||||||||
Avalon Charles Pond
|
| 38,674 | | | 38,674 | 38,674 | | 38,674 | | N/A | ||||||||||||||||||||||||||||||
Avalon Fort Greene
|
| 143,887 | | | 143,887 | 143,887 | | 143,887 | | N/A | ||||||||||||||||||||||||||||||
Avalon Towers Bellevue
|
| 13,425 | | | 13,425 | 13,425 | | 13,425 | | N/A | ||||||||||||||||||||||||||||||
|
10,445 | 923,155 | | 10,445 | 923,155 | 933,600 | 1,116 | 932,484 | 237,500 | |||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||
Land held for development
|
239,456 | | | 239,456 | | 239,456 | | 239,456 | 18,194 | |||||||||||||||||||||||||||||||
Corporate Overhead
|
108,623 | 31,052 | 31,289 | 108,623 | 62,341 | 170,964 | 28,475 | 142,489 | 2,126,965 | |||||||||||||||||||||||||||||||
|
$ | 1,390,912 | $ | 6,218,992 | $ | 392,583 | $ | 1,390,912 | $ | 6,611,575 | $ | 8,002,487 | $ | 1,352,744 | $ | 6,649,743 | $ | 3,674,457 | ||||||||||||||||||||||
F-42
Years ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
Balance, beginning of period
|
$ | 7,556,740 | $ | 6,615,593 | $ | 5,940,146 | ||||||
Acquisitions, construction costs and improvements
|
757,835 | 1,097,959 | 825,981 | |||||||||
Dispositions, including impairment loss on planned dispositions
|
(312,088 | ) | (156,812 | ) | (150,534 | ) | ||||||
|
||||||||||||
Balance, end of period
|
$ | 8,002,487 | $ | 7,556,740 | $ | 6,615,593 | ||||||
|
Years ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
Balance, beginning of period
|
$ | 1,259,558 | $ | 1,105,231 | $ | 960,821 | ||||||
Depreciation, including discontinued operations
|
199,452 | 180,697 | 164,128 | |||||||||
Dispositions
|
(106,266 | ) | (26,370 | ) | (19,718 | ) | ||||||
|
||||||||||||
Balance, end of period
|
$ | 1,352,744 | $ | 1,259,558 | $ | 1,105,231 | ||||||
|
EXHIBIT 3(ii).1
AMENDED AND RESTATED BYLAWS
OF
AVALONBAY COMMUNITIES, INC.
February 13, 2003
AMENDED AND RESTATED BYLAWS
OF
AVALONBAY COMMUNITIES, INC.
TABLE OF CONTENTS
Page ARTICLE I MEETINGS OF STOCKHOLDERS...............................................................................1 1.01 PLACE...........................................................................................1 1.02 ANNUAL MEETINGS.................................................................................1 1.03 MATTERS TO BE CONSIDERED AT ANNUAL MEETING......................................................1 1.04 SPECIAL MEETINGS................................................................................3 1.05 NOTICE..........................................................................................5 1.06 SCOPE OF NOTICE.................................................................................6 1.07 QUORUM..........................................................................................6 1.08 VOTING..........................................................................................6 1.09 PROXIES.........................................................................................7 1.10 CONDUCT OF MEETINGS.............................................................................7 1.11 TABULATION OF VOTES.............................................................................7 1.12 INFORMAL ACTION BY STOCKHOLDERS.................................................................8 1.13 VOTING BY BALLOT................................................................................8 ARTICLE II DIRECTORS.............................................................................................8 2.01 GENERAL POWERS..................................................................................8 2.02 OUTSIDE ACTIVITIES..............................................................................8 2.03 NUMBER, TENURE AND QUALIFICATION................................................................9 2.04 NOMINATION OF DIRECTORS.........................................................................9 2.05 ANNUAL AND REGULAR MEETINGS....................................................................11 2.06 SPECIAL MEETINGS...............................................................................12 2.07 NOTICE AND CALL OF MEETINGS....................................................................12 2.08 QUORUM.........................................................................................12 2.09 VOTING.........................................................................................12 2.10 CONDUCT OF MEETINGS............................................................................13 2.11 RESIGNATIONS...................................................................................13 2.12 REMOVAL OF DIRECTORS...........................................................................13 2.13 VACANCIES......................................................................................13 2.14 INFORMAL ACTION BY DIRECTORS...................................................................13 2.15 COMPENSATION...................................................................................13 2.16 LEAD INDEPENDENT DIRECTOR......................................................................13 ARTICLE III COMMITTEES..........................................................................................14 3.01 NUMBER, TENURE AND QUALIFICATION...............................................................14 3.02 DELEGATION OF POWER............................................................................14 3.03 QUORUM AND VOTING..............................................................................15 3.04 CONDUCT OF MEETINGS............................................................................15 3.05 INFORMAL ACTION BY COMMITTEES..................................................................15 |
ARTICLE IV OFFICERS.............................................................................................15 4.01 TITLES AND ELECTION............................................................................15 4.02 REMOVAL AND RESIGNATION........................................................................16 4.03 OUTSIDE ACTIVITIES.............................................................................16 4.04 VACANCIES......................................................................................16 4.05 CHAIRMAN OF THE BOARD..........................................................................16 4.06 CHIEF EXECUTIVE OFFICER........................................................................17 4.07 PRESIDENT......................................................................................17 4.08 VICE PRESIDENTS................................................................................17 4.09 SECRETARY......................................................................................17 4.10 TREASURER AND CHIEF FINANCIAL OFFICER..........................................................17 4.11 ASSISTANT SECRETARIES AND ASSISTANT TREASURERS.................................................18 4.12 SUBORDINATE OFFICERS...........................................................................18 4.13 COMPENSATION...................................................................................18 ARTICLE V SHARES OF STOCK.......................................................................................18 5.01 FORM OF CERTIFICATES...........................................................................18 5.02 TRANSFER OF SHARES.............................................................................18 5.03 STOCK LEDGER...................................................................................19 5.04 RECORDING TRANSFERS OF STOCK...................................................................19 5.05 LOST CERTIFICATE...............................................................................19 5.06 EMPLOYEE STOCK PURCHASE PLANS..................................................................19 5.07 CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE.............................................20 ARTICLE VI DIVIDENDS AND DISTRIBUTIONS..........................................................................21 6.01 AUTHORIZATION..................................................................................21 6.02 CONTINGENCIES..................................................................................21 ARTICLE VII INDEMNIFICATION.....................................................................................22 7.01 INDEMNIFICATION TO THE EXTENT PERMITTED BY LAW.................................................22 7.02 INDEMNIFICATION OF EMPLOYEES AND AGENTS OF THE CORPORATION.....................................22 7.03 INSURANCE......................................................................................22 7.04 NON-EXCLUSIVE RIGHTS TO INDEMNITY; HEIRS AND PERSONAL REPRESENTATIVES..........................22 7.05 NO LIMITATION..................................................................................23 7.06 AMENDMENT, REPEAL OR MODIFICATION..............................................................23 7.07 RIGHT OF CLAIMANT TO BRING SUIT................................................................23 ARTICLE VIII NOTICES............................................................................................23 8.01 NOTICES........................................................................................23 8.02 SECRETARY TO GIVE NOTICE.......................................................................24 8.03 WAIVER OF NOTICE...............................................................................24 |
ARTICLE IX MISCELLANEOUS........................................................................................24 9.01 EXEMPTION FROM MARYLAND CONTROL SHARE ACQUISITION ACT..........................................24 9.02 OFFICES OF THE CORPORATION.....................................................................24 9.03 BOOKS AND RECORDS..............................................................................24 9.04 INSPECTION OF BYLAWS AND CORPORATE RECORDS.....................................................25 9.05 CONTRACTS......................................................................................25 9.06 CHECKS, DRAFTS, ETC............................................................................25 9.07 LOANS..........................................................................................25 9.08 FISCAL YEAR....................................................................................26 9.09 ANNUAL REPORT..................................................................................26 9.10 INTERIM REPORTS................................................................................26 9.11 BYLAWS SEVERABLE...............................................................................26 ARTICLE X AMENDMENT OF BYLAWS...................................................................................26 10.01 BY DIRECTORS...................................................................................26 10.02 BY STOCKHOLDERS................................................................................26 |
ARTICLE I
MEETINGS OF STOCKHOLDERS
1.01 PLACE. All meetings of the holders (the "Stockholders") of the issued and outstanding common stock and preferred stock of AvalonBay Communities, Inc. (the "Corporation") shall be held at the principal executive office of the Corporation or such other place within the United States as shall be set by the Board of Directors and stated in the notice of the meeting.
1.02 ANNUAL MEETINGS. An annual meeting of the Stockholders for the election of directors of the Corporation ("Directors") and the transaction of such other business as may be properly brought before the meeting shall be held on the second Wednesday of May of each year, or on such other date which is not more than fifteen (15) days prior to or after such second Wednesday of May, and at such time as shall be fixed by the Board of Directors. If the date fixed for the annual meeting shall be a legal holiday, such meeting shall be held on the next succeeding Business Day (as defined in Section 1.04(b)(7) below). Failure to hold an annual meeting shall not invalidate the Corporation's existence or affect any otherwise valid acts of the Corporation.
1.03 MATTERS TO BE CONSIDERED AT ANNUAL MEETING.
(a) A proposal of business to be considered by the Stockholders may be made at an annual meeting of Stockholders (i) pursuant to the Corporation's notice of meeting, (ii) by or at the direction of the Board of Directors or (iii) by any Stockholder who was a Stockholder of record of a class of stock of the Corporation ("Stock") entitled to vote on the matter being proposed (A) at the time of giving of notice provided for in this Section 1.03, (B) as of the record date for the annual meeting in question and (C) at the time of such annual meeting, and who complied with the notice procedures set forth in this Section 1.03. For a proposal of business to be properly brought before an annual meeting by a Stockholder, the Stockholder must have given timely notice thereof in writing to the Secretary of the Corporation, such business must otherwise be a proper matter for action by the Stockholders and such Stockholder must be present in person or by proxy at the annual meeting.
To be timely, a Stockholder's notice shall set forth all information required under this Section 1.03 and be delivered to the Secretary at the principal executive offices of the Corporation not less than ninety (90) days nor more than 120 days prior to the first anniversary of the date of mailing of the notice for the preceding year's annual meeting (the "Notice Anniversary Date"); provided, however, that in the event that the date of the mailing of the notice for the annual meeting is advanced or delayed by more than thirty (30) days from the Notice Anniversary Date, notice by the Stockholder to be timely must be so delivered not earlier than the 120th day prior to the date of mailing of the notice for such annual meeting and not later than the close of business on the later of the 90th day prior to the date of mailing of the notice for such annual meeting or the tenth (10th) day following the day on which public announcement of the date of mailing of the notice for such annual meeting is first made.
In no event shall the public announcement of a postponement or an adjournment of an annual meeting commence a new time period for the giving of a stockholder's notice as described above.
For purposes of these Bylaws, (a) the "date of mailing of the notice" for an annual meeting shall mean the date of the formal notice of annual meeting that accompanies the distribution of the proxy statement for the solicitation of proxies for election of Directors and (b) "public announcement" shall mean disclosure in a (i) press release reported by the Dow Jones News Service, Associated Press or comparable news service, (ii) document publicly filed by the Corporation with the United States Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or (iii) letter or report sent to Stockholders of record of the Corporation entitled to vote at the meeting.
(b) A Stockholder's notice to the Secretary shall set forth as to
each matter the Stockholder proposes to bring before the annual meeting, (i) a
description of the proposal desired to be brought before the annual meeting,
(ii) the reasons for proposing such business at the annual meeting and any
material interest in such business of such Stockholder and any Stockholder
Associated Person (as defined below), individually or in the aggregate,
including any anticipated benefit to the Stockholder or any Stockholder
Associated Person therefrom and (iii) as to the Stockholder giving the notice
and any Stockholder Associated Person, (x) the name and address of such
Stockholder, as they appear on the Corporation's stock ledger and current name
and address, if different, and of any such Stockholder Associated Person and (y)
the class, series and number of all shares of Stock of the Corporation which are
owned by such Stockholder and by any such Stockholder Associated Person, and the
nominee holder for, and number of, shares owned beneficially but not of record
by such Stockholder and by any such Stockholder Associated Person.
For purposes of these Bylaws, "Stockholder Associated Person" of
any Stockholder shall mean (i) any person controlling, directly or indirectly,
or acting in concert with, such Stockholder, (ii) any beneficial owner of shares
of stock of the Corporation owned of record or beneficially by such Stockholder,
(iii) any person controlling, controlled by or under common control with such
Stockholder Associated Person, and (iv) any person acting in concert with the
Stockholder or any other Stockholder Associated Person to support the proposal
of or nomination by such Stockholder as of the date on which notice of such
proposal or nomination is given to the Secretary of the Corporation.
(c) Upon written request by the Secretary of the Corporation or
the Board of Directors or a designated committee thereof, any Stockholder
proposing business for consideration at a meeting of Stockholders shall provide,
within ten (10) days after delivery of such request (or such longer period as
may be specified in such request), in addition to any verification previously
provided, written verification, satisfactory to the Secretary or the Board of
Directors or any such committee thereof, in his, her or its sole discretion, of
the accuracy of any information submitted by the Stockholder pursuant to this
Section 1.03. If a Stockholder fails to provide such written verification within
such period, the Secretary or the Board of Directors or any such committee
thereof may treat the information as to which written
verification was requested as not having been provided in accordance with the procedures set forth in this Section 1.03.
(d) Only such business shall be conducted at an annual meeting of Stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section 1.03. The Presiding Officer (as defined in Section 1.10 hereof) of the meeting shall have the power and duty to determine whether any business proposed to be brought before the meeting was proposed in accordance with the procedures set forth in this Section 1.03 and, if any business is not proposed in compliance with this Section 1.03, to declare that such defective proposal be disregarded and not be presented for action at the annual meeting.
(e) Notwithstanding the foregoing provisions of this Section 1.03, a Stockholder shall also comply with all applicable requirements of state law and of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 1.03. Nothing in this Section 1.03 shall be deemed to affect any right of a Stockholder to request inclusion of a proposal in, nor the right of the Corporation to omit a proposal from, the Corporation's proxy statement pursuant to Rule 14a-8 (or any successor provision) under the Exchange Act.
(f) This Section 1.03 shall not prevent the consideration and approval or disapproval at the annual meeting of reports of officers, Directors and committees of the Board of Directors, but in connection with such reports, no new business shall be acted upon at such annual meeting except in accordance with the provisions of this Section 1.03.
1.04 SPECIAL MEETINGS.
(a) The Chairman of the Board of Directors, the Chief Executive Officer, the President or the Board of Directors may call special meetings of the Stockholders. In addition, subject to subsection (b) of this Section 1.04, the Secretary of the Corporation shall call a special meeting of the Stockholders on the written request of Stockholders entitled to cast a majority of all the votes entitled to be cast at the meeting.
(b) (1) Any Stockholder of record seeking to have Stockholders
request a special meeting shall, by sending written notice to the Secretary (the
"Record Date Request Notice") by registered mail, return receipt requested,
request the Board of Directors to fix a record date to determine the
Stockholders entitled to request a special meeting (the "Request Record Date").
The Record Date Request Notice shall set forth the purpose of the meeting and
the matters proposed to be acted on at such meeting, shall be signed by one or
more Stockholders of record as of the date of signature (or their agents duly
authorized in writing), shall bear the date of signature of each such
Stockholder (or such agent) and shall set forth all information relating to each
such Stockholder that would be disclosed in solicitations of proxies for the
election of Directors in an election contest (even if an election contest is not
involved), or would otherwise be required, in each case pursuant to Regulation
14A (or any successor provision) under the Exchange Act. Upon receiving the
Record Date Request Notice, the Board of Directors may fix a Request Record
Date. The Request Record Date shall not precede and shall not be more than ten
(10) days after the close of business on the date on which the resolution
fixing the Request Record Date is adopted by the Board of Directors. If the Board of Directors, within fifteen (15) days after the date on which a valid Record Date Request Notice is received, fails to adopt a resolution fixing the Request Record Date and make a public announcement of such Request Record Date, the Request Record Date shall be the close of business on the fifteenth (15th) day after the first date on which the Record Date Request Notice is received by the Secretary.
(2) In order for any Stockholder to request a special meeting,
one or more written requests for a special meeting signed by Stockholders of
record (or their agents duly authorized in writing) as of the Request Record
Date entitled to cast not less than a majority (the "Special Meeting
Percentage") of all of the votes entitled to be cast at such meeting (the
"Special Meeting Request") shall be delivered to the Secretary. In addition, the
Special Meeting Request (i) shall set forth the purpose of the meeting and the
matters proposed to be acted on at such meeting (which shall be limited to the
matters set forth in the Record Date Request Notice received by the Secretary),
(ii) shall bear the date of signature of each such Stockholder (or other agent)
signing the Special Meeting Request, (iii) shall set forth the name and address,
as they appear in the Corporation's stock ledger, of each Stockholder signing
such request (or on whose behalf the Special Meeting Request is signed), the
class, series and number of all shares of Stock of the Corporation which are
owned by each such Stockholder, and the nominee holder for, and number of,
shares owned beneficially but not of record by each such Stockholder, (iv) shall
be sent to the Secretary by registered mail, return receipt requested, and (v)
shall be received by the Secretary within sixty (60) days after the Request
Record Date. Any requesting Stockholder may revoke his, her or its request for a
special meeting at any time by written revocation delivered to the Secretary.
(3) The Secretary shall inform the requesting Stockholders of the reasonably estimated cost of preparing and mailing the notice of meeting (including the Corporation's proxy materials). The Secretary shall not be required to call a special meeting upon Stockholder request and such meeting shall not be held unless, in addition to the documents required by paragraph (2) of this Section 1.04(b), the Secretary receives payment of such reasonably estimated cost prior to the mailing of any notice of the meeting.
(4) Except as provided in the next sentence, any special meeting shall be held at such place, date and time as may be designated by the Chairman of the Board of Directors, the President, the Chief Executive Officer or the Board of Directors, whoever has called the meeting. In the case of any special meeting called by the Secretary upon the request of Stockholders (a "Stockholder Requested Meeting"), such meeting shall be held at such place, date and time as may be designated by the Board of Directors; provided, however, that the date of any Stockholder Requested Meeting shall be not more than ninety (90) days after the record date for such meeting (the "Meeting Record Date"); and provided further that if the Board of Directors fails to designate, within fifteen (15) days after the date that a valid Special Meeting Request is actually received by the Secretary (the "Delivery Date"), a date and time for a Stockholder Requested Meeting, then such meeting shall be held at 2:00 p.m. local time on the ninetieth (90th) day after the Meeting Record Date or, if such ninetieth (90th) day is not a Business Day, on the first preceding Business Day; and provided further that in the event that the Board of Directors
fails to designate a place for a Stockholder Requested Meeting within fifteen
(15) days after the Delivery Date, then such meeting shall be held at the
principal executive offices of the Corporation. In fixing a date for any special
meeting, the Chairman of the Board of Directors, the President, the Chief
Executive Officer or the Board of Directors may consider such factors as he, she
or it deems relevant within the good faith exercise of business judgment,
including, without limitation, the nature of the matters to be considered, the
facts and circumstances surrounding any request for the meeting and any plan of
the Board of Directors to call an annual meeting or a special meeting. In the
case of any Stockholder Requested Meeting, if the Board of Directors fails to
fix a Meeting Record Date that is a date within thirty (30) days after the
Delivery Date, then the close of business on the thirtieth (30th) day after the
Delivery Date shall be the Meeting Record Date.
(5) If at any time, as a result of written revocations of requests for the special meeting, the Stockholders of record (or their agents duly authorized in writing) as of the Request Record Date who have delivered and not revoked requests for a special meeting are not entitled to cast at least the Special Meeting Percentage, the Secretary may refrain from mailing the notice of the meeting or, if the notice of the meeting has been mailed, the Secretary may revoke the notice of the meeting at any time before the tenth (10th) day prior to the meeting if the Secretary has first sent to all other requesting Stockholders written notice of any revocation of a request for the special meeting and written notice of the Secretary's intention to revoke the notice of the meeting. Any request for a special meeting received after a revocation by the Secretary of a notice of a meeting shall be considered a request for a new special meeting.
(6) The Chairman of the Board of Directors, the President, the Chief Executive Officer or the Board of Directors may appoint regionally or nationally recognized independent inspectors of elections to act as the agent of the Corporation for the purpose of promptly performing a ministerial review of the validity of any purported Special Meeting Request received by the Secretary. For the purpose of permitting the inspectors to perform such review, no such purported request shall be deemed to have been delivered to the Secretary until the earlier of (i) five (5) Business Days after receipt by the Secretary of such purported request and (ii) such date as the independent inspectors certify to the Corporation that the valid requests received by the Secretary represent at least a majority of the issued and outstanding shares of Stock that would be entitled to vote at such meeting. Nothing contained in this paragraph (6) shall in any way be construed to suggest or imply that the Corporation or any Stockholder shall not be entitled to contest the validity of any request, whether during or after such five (5) Business Day period, or to take any other action (including, without limitation, the commencement, prosecution or defense of any litigation with respect thereto, and the seeking of injunctive relief in such litigation).
(7) For purposes of these Bylaws, "Business Day" shall mean any day other than a Saturday, a Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close.
1.05 NOTICE. Not fewer than ten (10) nor more than ninety (90) days before the date of every meeting of Stockholders, written notice of such meeting shall be given, in accordance
with Article VIII, to each Stockholder entitled to vote at the meeting or entitled to receive notice of the meeting by statute, stating the time and place of the meeting and, in the case of a special meeting or as otherwise may be required by statute, the purpose or purposes for which the meeting is called.
1.06 SCOPE OF NOTICE. No business shall be transacted at a special meeting of Stockholders except such business that is specifically designated in the notice of the meeting. Subject to the provisions of Section 1.03, any business of the Corporation may be transacted at the annual meeting without being specifically designated in the notice, except such business as is required by statute to be stated in such notice.
1.07 QUORUM. At any meeting of Stockholders, the presence in person or by proxy of Stockholders entitled to cast a majority of all the votes entitled to be cast at the meeting shall constitute a quorum; but this Section 1.07 shall not affect any requirement under any statute or the charter of the Corporation, as amended from time to time (the "Charter"), for the vote necessary for the adoption of any measure. If, however, a quorum is not present at any meeting of Stockholders, the Presiding Officer shall have the power to adjourn the meeting from time to time without further notice other than announcement at the meeting to a date not more than 120 days after the original record date or with further notice to a date more than 120 days after the original record date. At any meeting called to resume an adjourned meeting at which a quorum is present, any business may be transacted that might have been transacted at the meeting as originally notified. The Stockholders present at a meeting which has been duly called and convened and at which a quorum is present at the time counted may continue to transact business until adjournment, notwithstanding the withdrawal of enough Stockholders to leave less than a quorum.
1.08 VOTING. A majority of the votes cast at a meeting of Stockholders duly called and at which a quorum is present shall be sufficient to take or authorize action upon any matter which may properly come before the meeting, unless more than a majority of the votes cast is specifically required by statute, the Charter or these Bylaws. Unless otherwise provided by statute or the Charter, each outstanding share (a "Share") of Stock of the Corporation, regardless of class, shall be entitled to one vote upon each matter submitted to a vote at a meeting of Stockholders. Any holder of shares entitled to vote on any matter may vote part of the shares in favor of the proposal and refrain from voting the remaining shares or vote them against the proposal, other than elections to office, but, if the Stockholder fails to specify the number of shares such Stockholder is voting affirmatively, it shall be conclusively presumed that the Stockholder's approving vote is with respect to all votes said Stockholder is entitled to cast. Shares of its own Stock directly or indirectly owned by the Corporation shall not be voted at any meeting and shall not be counted in determining the total number of outstanding Shares entitled to vote at any given time, but Shares of its own voting Stock held by it in a fiduciary capacity may be voted and shall be counted in determining the total number of outstanding Shares at any given time. Notwithstanding anything else contained in these Bylaws, the rights of any class of "Excess Stock" (as such term is defined in the Charter) and the rights of holders of any class of Excess Stock shall be limited to the rights with respect thereto provided in the Charter.
Notwithstanding the foregoing, the affirmative vote of holders of a majority of all of the Shares entitled to be cast in the election of Directors shall be required to elect a Director.
1.09 PROXIES. A Stockholder may vote the Shares owned of record by him or her, either in person or by proxy executed by the Stockholder or by his or her duly authorized agent in any manner permitted by law. Such proxy shall be filed with the Secretary of the Corporation before or at the time of the meeting. No proxy shall be valid after eleven (11) months from the date of its execution, unless otherwise provided in the proxy.
1.10 CONDUCT OF MEETINGS.
(a) The Chairman or, in the absence of the Chairman, the Chief Executive Officer or, in the absence of both the Chairman and the Chief Executive Officer, the President, or, in the absence of all of the foregoing officers, a presiding officer appointed by the Board of Directors, shall preside over meetings of the Stockholders. The Secretary of the Corporation, or, in the absence of the Secretary and Assistant Secretaries, the person appointed by the presiding officer (the "Presiding Officer") of the meeting shall act as secretary of such meeting. Unless otherwise approved by the Presiding Officer, attendance at a meeting of Stockholders is restricted to Stockholders of record, persons authorized in accordance with Section 1.09 to act by proxy, and officers of the Corporation.
(b) The order of business and all other matters of procedure at any meeting of Stockholders shall be determined by the Presiding Officer. The Presiding Officer may prescribe such rules, regulations and procedures and take such action as, in the discretion of such Presiding Officer, are appropriate for the proper conduct of the meeting, including, without limitation, (i) restricting admission to the time set for the commencement of the meeting; (ii) limiting attendance at the meeting to Stockholders of record of the Corporation, their duly authorized proxies and such other individuals as the Presiding Officer may determine; (iii) limiting participation at the meeting on any matter to Stockholders of record of the Corporation entitled to vote on such matter, their duly authorized proxies and such other individuals as the Presiding Officer may determine; (iv) limiting the time allotted to questions or comments by participants; (v) maintaining order and security at the meeting; (vi) removing any Stockholder or any other individual who refuses to comply with meeting procedures, rules or guidelines as set forth by the Presiding Officer; and (vii) recessing or adjourning the meeting to a time, date and place announced at the meeting. A meeting of stockholders convened on the date for which it was called may be recessed or adjourned from time to time without further notice other than announcement at the meeting to a date not more than 120 days after the original record date or with further notice to a date more than 120 days after the original record date. Unless otherwise determined by the Presiding Officer, meetings of Stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.
1.11 TABULATION OF VOTES. At any annual or special meeting of Stockholders, the Presiding Officer shall be authorized to appoint one or more persons as tellers for such meeting (the "Teller" or "Tellers"). The Teller may, but need not, be an officer or employee of the Corporation. The Teller shall be responsible for tabulating or causing to be tabulated shares voted at the meeting and reviewing or causing to be reviewed all proxies. In tabulating votes, the
Teller shall be entitled to rely in whole or in part on tabulations and analyses made by personnel of the Corporation, its counsel, its transfer agent, its registrar or such other organizations that are customarily employed to provide such services. The Teller may be authorized by the Presiding Officer to determine on a preliminary basis the legality and sufficiency of all votes cast and proxies delivered under the Corporation's Charter, Bylaws and applicable law. The Presiding Officer may review all preliminary determinations made by the Teller hereunder, and in doing so, the Presiding Officer shall be entitled to exercise his or her sole judgment and discretion and he or she shall not be bound by any preliminary determinations made by the Teller. Each report of the Teller shall be in writing and signed by him or her or by a majority of them if there is more than one. The report of the majority shall be the report of the Tellers.
1.12 INFORMAL ACTION BY STOCKHOLDERS. Any action required or permitted to be taken at a meeting of Stockholders may be taken without a meeting if a consent in writing, setting forth such action, is signed by all the Stockholders entitled to vote on the matter and any other Stockholders entitled to notice of a meeting of Stockholders (but not to vote thereat) have waived in writing any rights which they may have to dissent from such action, and such consents and waivers are filed with the records of Stockholders meetings. Such consents and waivers may be signed by different Stockholders on separate counterparts.
1.13 VOTING BY BALLOT. Voting on any question or in any election may be viva voce unless the Presiding Officer shall order or any Stockholder shall demand that voting be by ballot.
ARTICLE II
DIRECTORS
2.01 GENERAL POWERS. The business and affairs of the Corporation shall be managed under the direction of its Board of Directors. All powers of the Corporation may be exercised by or under the authority of the Board of Directors, except as conferred on or reserved to the Stockholders by statute, the Charter or these Bylaws.
2.02 OUTSIDE ACTIVITIES. The Board of Directors and its members are required to spend only such time managing the business and affairs of the Corporation as is necessary to carry out their duties in accordance with Section 2-405.1 of the Maryland General Corporation Law, as amended from time to time (the "MGCL"). Except as set forth in the Charter or by separate agreement, arrangement or policy of the Corporation, the Board of Directors, each Director, and the agents, officers and employees of the Corporation or of the Board of Directors or of any Director may engage with or for others in business activities of the types conducted by the Corporation. Except as set forth in the Charter or by separate agreement, arrangement or policy of the Corporation, none of such individuals has an obligation to notify or present to the Corporation or each other any investment opportunity that may come to such person's attention even though such investment might be within the scope of the Corporation's purposes or various investment objectives. Any interest that a Director has in any investment opportunity presented to the Corporation must be disclosed by such Director to the Board of Directors (and, if voting thereon, to the Stockholders or to any committee of the Board of Directors) within ten (10) days
after the later of the date upon which such Director becomes aware of such interest or the date upon which such Director becomes aware that the Corporation is considering such investment opportunity. If such interest comes to the interested Director's attention after a vote to take such investment opportunity, the voting body shall be notified of such interest and shall reconsider such investment opportunity if not already consummated or implemented.
2.03 NUMBER, TENURE AND QUALIFICATION. The number of Directors of the
Corporation shall be that number set forth in the Charter or such other number
as may be designated from time to time by resolution of a majority of the entire
Board of Directors; provided, however, that the number of Directors shall be not
less than five (5) nor greater than fifteen (15) and further provided that the
tenure of office of a Director shall not be affected by any decrease in the
number of Directors. The minimum or maximum number of Directors provided in this
Section 2.03 may be changed only by amendment to these Bylaws or by amendment to
the Corporation's Charter, provided that any such amendment shall be both duly
adopted by the affirmative vote of a majority of the outstanding shares entitled
to vote and deemed advisable or approved by the Board of Directors. Each
Director shall serve for the term set forth in the Charter and until his or her
successor is elected and qualified.
2.04 NOMINATION OF DIRECTORS.
(a) Nominations of persons for election to the Board of Directors
may be made at an annual meeting of Stockholders (i) pursuant to the
Corporation's notice of meeting, (ii) by or at the direction of the Board of
Directors or (iii) by any Stockholder of the Corporation who was a Stockholder
of record of a class of Stock entitled to vote in the election of Directors (A)
at the time of giving of notice provided for in this Section 2.04, (B) as of the
record date for the annual meeting in question and (C) at the time of such
annual meeting, and who complied with the notice procedures set forth in this
Section 2.04. Any Stockholder who seeks to make such a nomination must be
present in person or by proxy at the annual meeting. Only persons nominated in
accordance with the procedures set forth in this Section 2.04 shall be eligible
for election as Directors at an annual meeting of Stockholders.
(b) For nominations to be properly brought before an annual
meeting by a Stockholder pursuant to clause (iii) of paragraph (a) of this
Section 2.04, the Stockholder must have given timely notice thereof in writing
to the Secretary of the Corporation. To be timely, a Stockholder's notice shall
be delivered to the Secretary at the principal executive offices of the
Corporation not less than ninety (90) days nor more than 120 days prior to the
Notice Anniversary Date; provided, however, that in the event that the date of
the mailing of the notice for the annual meeting is advanced or delayed by more
than thirty (30) days from the Notice Anniversary Date, notice by the
Stockholder to be timely must be so delivered not earlier than the 120th day
prior to the date of mailing of the notice for such annual meeting and not later
than the close of business on the later of the ninetieth (90th) day prior to the
date of mailing of the notice for such annual meeting or the tenth (10th) day
following the day on which public announcement of the date of mailing of the
notice for such meeting is first made. In no event shall the public announcement
of a postponement or adjournment of an annual meeting commence a new time period
for the giving of a Stockholder's notice as described above.
(c) A Stockholder's notice of nomination shall set forth (i) as to each individual whom the Stockholder proposes to nominate for election or reelection as a Director, (A) the name, age, business address and residence address of such individual, (B) the principal occupation or employment of such individual for the past five (5) years, (C) the class, series and number of shares of Stock of the Corporation that are beneficially owned by such individual, (D) the date such shares of Stock were acquired and the investment intent of such acquisition, (E) such individual's written consent to be named in the proxy statement as a nominee and to serve as a Director if elected and (F) all other information relating to such individual that is required to be disclosed in solicitations of proxies for election of Directors in an election contest (even if an election contest is not involved), or is otherwise required, in each case pursuant to Regulation 14A (or any successor provision) under the Exchange Act and the rules thereunder; (ii) as to the Stockholder giving the notice and any Stockholder Associated Person, the class, series and number of all shares of Stock of the Corporation which are owned by such Stockholder and by such Stockholder Associated Person, if any, and the nominee holder for, and number of, shares owned beneficially but not of record by such Stockholder and by any such Stockholder Associated Person; and (iii) as to the Stockholder giving the notice and any Stockholder Associated Person covered by clause (ii) of this Section 2.04(c), the name and address of such Stockholder, as they appear on the Corporation's stock ledger and current name and address, if different, and of such Stockholder Associated Person. At the request of the Board of Directors, any person nominated by or at the direction of the Board of Directors for election as a Director at an annual meeting shall furnish to the Secretary of the Corporation that information which would be required to be set forth in a Stockholder's notice of nomination of such nominee.
(d) Notwithstanding anything in this Section 2.04 to the contrary, in the event the Board of Directors increases the number of Directors to be elected at an annual meeting in accordance with Article II, Section 2.03 of these Bylaws, and there is no public announcement of such action at least 100 days prior to the Notice Anniversary Date, a Stockholder's notice required by this Section 2.04 shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the tenth (10th) day following the day on which such public announcement is first made by the Corporation.
(e) Nominations of persons for election to the Board of Directors may be made at a special meeting of Stockholders at which Directors are to be elected (i) pursuant to the Corporation's notice of meeting, (ii) by or at the direction of the Board of Directors or (iii) provided that the Board of Directors has determined that Directors shall be elected at such special meeting, by any Stockholder of the Corporation who is a Stockholder of record of a class of Stock entitled to vote in the election of Directors (A) at the time of giving of notice provided for in this Section 2.04, (B) as of the record date for the special meeting in question and (C) at the time of such special meeting, and who complied with the notice procedures set forth in this Section 2.04. Any Stockholder who seeks to make such a nomination must be present in person or by proxy at the special meeting. In the event the Corporation calls a special meeting of Stockholders for the purpose of electing one or more individuals to the Board of Directors, any such Stockholder may nominate an individual or individuals (as the case may be) for election as
a Director as specified in the Corporation's notice of meeting, if the Stockholder's notice required by paragraphs (b) and (c) of this Section 2.04 shall be delivered to the Secretary at the principal executive offices of the Corporation not earlier than the 120th day prior to such special meeting and not later than the close of business on the later of the 90th day prior to such special meeting or the tenth (10th) day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. In no event shall the public announcement of a postponement or an adjournment of a special meeting commence a new time period for the giving of a Stockholder's notice as described above.
(f) Upon written request by the Secretary of the Corporation or the Board of Directors or a designated committee thereof, any Stockholder proposing a nominee for election as a Director at a meeting of Stockholders shall provide, within five (5) business days of delivery of such request (or such other period as may be specified in such request), in addition to any verification previously provided, written verification, satisfactory to the Secretary or the Board of Directors or any such committee thereof, in his, her or its sole discretion, of the accuracy of any information submitted by the Stockholder pursuant to this Section 2.04. If a Stockholder fails to provide such written verification within such period, the Secretary or the Board of Directors or any such committee thereof may treat the information as to which written verification was requested as not having been provided in accordance with the procedures set forth in this Section 2.04.
(g) Only such individuals who are nominated in accordance with the procedures set forth in this Section 2.04 of these Bylaws shall be eligible for election as Directors. The Presiding Officer of the meeting shall have the power to determine whether a nomination was made in accordance with the procedures set forth in this Section 2.04 and, if any proposed nomination is not in compliance with this Section 2.04, to declare that such defective nomination be disregarded and not be presented for action at the meeting.
(h) Notwithstanding the foregoing provisions of this Section 2.04, a Stockholder shall also comply with all applicable requirements of state law and of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 2.04. Nothing in this Section 2.04 shall be deemed to affect any right of a Stockholder to request inclusion of a proposal in, nor the right of the Corporation to omit a proposal from, the Corporation's proxy statement pursuant to Rule 14a-8 (or any successor provision) under the Exchange Act.
2.05 ANNUAL AND REGULAR MEETINGS. An annual meeting of the Board of Directors may be held immediately after and at the same place as the annual meeting of Stockholders, or at such other time and place, either within or without the State of Maryland, as is selected by resolution of the Board of Directors, and no notice other than this Bylaw or such resolution shall be necessary. The Board of Directors may provide, by resolution, the time and place, either within or without the State of Maryland, for the holding of regular meetings of the Board of Directors without other notice than such resolutions.
2.06 SPECIAL MEETINGS. Special meetings of the Board of Directors may be called by or at the request of the Chairman, the Chief Executive Officer or a majority of the Directors then in office. The person or persons authorized to call special meetings of the Board of Directors may fix any place, either within or without the State of Maryland, as the place for holding any special meeting of the Board of Directors called by them.
2.07 NOTICE AND CALL OF MEETINGS. Notice of any special meeting of the Board of Directors to be provided herein shall be delivered personally, or by telephone, electronic mail, facsimile transmission, United States mail or courier to each Director at his or her business or residence address. Notice by personal delivery, telephone, electronic mail or facsimile transmission shall be given at least one (1) Business Day prior to the meeting. Notice by United States mail shall be given at least five (5) days prior to the meeting and shall be deemed to be given when deposited in the United States mail properly addressed, with postage thereon prepaid. Notice by courier shall be given at least two (2) Business Days prior to the meeting and shall be deemed to be given when deposited with or delivered to a courier properly addressed. Telephone notice shall be deemed to be given when the Director or his or her agent is personally given such notice in a telephone call to which the Director or his or her agent is a party. Electronic mail notice shall be deemed to be given upon receipt of the message at the electronic mail address given to the Corporation by the Director. Facsimile transmission notice shall be deemed to be given upon completion of the transmission of the message to the number given to the Corporation by the Director and receipt of a completed answer-back indicating receipt. Neither the business to be transacted at, nor the purpose of, any annual, regular or special meeting of the Board of Directors need be specified in the notice, unless specifically required by statute, the Charter or these Bylaws.
2.08 QUORUM. A majority of the Board of Directors then in office shall constitute a quorum for the transaction of business at any meeting of the Board of Directors; provided, however, that a quorum for the transaction of business with respect to any matter in which any Director (or affiliate of such Director) who is not an Independent Director (as defined in the Charter) has any interest shall consist of a majority of the Directors that includes a majority of the Independent Directors then in office. If less than a majority of the Board of Directors is present at said meeting, a majority of the Directors present may adjourn the meeting from time to time without further notice. The Directors present at a meeting which has been duly called and convened may continue to transact business until adjournment, notwithstanding the withdrawal of enough Directors to leave less than a quorum.
2.09 VOTING. The action of a majority of the Directors present at a meeting at which a quorum is present shall be the action of the Board of Directors, unless the concurrence of a greater proportion is required for such action by applicable statute, the Charter or these Bylaws; provided, however, that no act relating to any matter in which a Director (or affiliate of such Director) who is not an Independent Director has any interest shall be the act of the Board of Directors unless such act has been approved by a majority of the Board of Directors that includes a majority of the Independent Directors. If enough Directors have withdrawn from a meeting to leave less than a quorum but the meeting is not adjourned, the action of a majority of the Directors necessary to constitute a quorum at such meeting shall be the action of the Board of
Directors, unless the concurrence of a greater proportion is required for such action by applicable statutes, the Charter or the Bylaws.
2.10 CONDUCT OF MEETINGS. All meetings of the Board of Directors shall be called to order and presided over by the Chairman, or in the absence of the Chairman, by the Chief Executive Officer (if a member of the Board of Directors) or, in the absence of the Chairman and the Chief Executive Officer, by a member of the Board of Directors selected by the members present. The Secretary of the Corporation, or in the absence of the Secretary, any Assistant Secretary, shall act as secretary at all meetings of the Board of Directors, and in the absence of the Secretary and Assistant Secretaries, the presiding officer of the meeting shall designate any person to act as secretary of the meeting. Members of the Board of Directors shall be entitled to participate in meetings of the Board of Directors by conference telephone or similar communications equipment by means of which all Directors participating in the meeting can hear each other at the same time, and participation in a meeting in accordance herewith shall constitute presence in person at such meeting for all purposes of these Bylaws.
2.11 RESIGNATIONS. Any Director may resign from the Board of Directors or any committee thereof in the manner provided in the Charter.
2.12 REMOVAL OF DIRECTORS. Any Director may be removed in the manner provided in the Charter.
2.13 VACANCIES. Vacancies on the Board of Directors shall be filled in the manner provided in the Charter.
2.14 INFORMAL ACTION BY DIRECTORS. Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if a consent in writing to such action is signed by all of the Directors and such written consent is filed with the minutes of the Board of Directors. Consents may be signed by different Directors on separate counterparts.
2.15 COMPENSATION. An annual fee for services and payment for expenses of attendance at each meeting of the Board of Directors, or of any committee thereof, may be allowed to any Director by resolution of the Board of Directors.
2.16 LEAD INDEPENDENT DIRECTOR. From time to time the Independent Directors then serving on the Board of Directors may appoint from among them one member to serve as "Lead Independent Director," which position shall have such description as the Independent Directors shall in their discretion determine, but only to the extent not inconsistent with the Charter or these Bylaws.
ARTICLE III
COMMITTEES
3.01 NUMBER, TENURE AND QUALIFICATION. The Board of Directors may appoint from among its members certain committees as described below. The term of office of any committee member shall be as provided in the resolution of the Board of Directors designating such member but shall not exceed such member's term as Director. Any member of a committee may be removed at any time by resolution of the Board of Directors. A committee may not take or authorize any act as to any matter in which any Director (or affiliate of such Director) who is not an Independent Director has or is reasonably likely to have any interest unless a majority of the members of such committee shall be Independent Directors.
(a) Executive Committee. The Board of Directors may, by resolution adopted by a majority of the Directors, appoint an Executive Committee consisting of one or more Directors. The Board may designate one or more Directors as an alternate member of the Executive Committee, who may replace any absent member at any meeting of the Executive Committee.
(b) Audit Committee. The Board of Directors shall, by resolution adopted by a majority of the Directors, appoint an Audit Committee consisting of three or more Directors whose membership on the Audit Committee shall satisfy the requirements set forth in the applicable rules, if any, of the New York Stock Exchange ("NYSE"), as amended from time to time. The Board may designate one or more Directors as an alternate member of the Audit Committee, who may replace any absent member at any meeting of the Audit Committee.
(c) Compensation Committee. The Board of Directors shall, by resolution adopted by a majority of the Directors, appoint a Compensation Committee consisting of two or more Directors whose membership on the Compensation Committee shall satisfy the requirements set forth in the applicable rules, if any, of the NYSE, as amended from time to time. The Board may designate one or more Directors as an alternate member of the Compensation Committee, who may replace any absent member at any meeting of the Compensation Committee.
(d) Other Committees. The Board of Directors may, by resolution adopted by a majority of the Directors, appoint such other standing or special committees, each consisting of one or more Directors, as it may from time to time deem advisable to perform such general or special duties as may from time to time be delegated to any such committee by the Board of Directors, subject to the limitations contained in the MGCL or imposed by the Charter or these Bylaws. The Board may designate one or more Directors as an alternate member of any committee designated pursuant to this Section 3.01(d), who may replace any absent member at any meeting of such committee.
3.02 DELEGATION OF POWER. The Board of Directors may, by resolution or adoption of a committee charter, delegate to these committees any of the powers of the Board of Directors, except those powers which the Board of Directors is specifically prohibited from delegating pursuant to Section 2-411 of the MGCL, and may prescribe rules governing the conduct and proceedings of these committees.
3.03 QUORUM AND VOTING. Subject to such terms as may appear in the delegation of authority to such committee (which may be contained in the charter for such committee), a majority of the members of any committee shall constitute a quorum for the transaction of business by such committee, and the act of a majority of the committee members present at a meeting shall constitute the act of the committee. Notwithstanding the foregoing, no act relating to any matter in which any Director (or affiliate of such Director) who is not an Independent Director has any interest shall be the act of any committee unless a majority of the Independent Directors on the committee vote for such act.
3.04 CONDUCT OF MEETINGS. Subject to such terms as may appear in the delegation of authority to such committee (which may be contained in the charter for such committee), the Board of Directors shall designate for each committee a chairman, and if such chairman is not present at a particular meeting, the committee shall select a presiding officer for such meeting. Subject in each case to any provisions to the contrary in any effective resolution of the Board of Directors relating to the appointment or authority of a committee of the Board of Directors (including any committee charter adopted by such resolution), each committee shall (i) adopt its own rules governing the time and place of holding and the method of calling its meetings and the conduct of its proceedings and (ii) meet at the call of the chairman of such committee or the Chairman of the Board of Directors. Members of any committee shall be entitled to participate in meetings of such committee by conference telephone or similar communications equipment by means of which all Directors participating in the meeting can hear each other at the same time, and participation in a meeting in accordance herewith shall constitute presence in person at such meeting for all purposes of these Bylaws. Each committee shall keep minutes of its meetings and report the results of any proceedings to the Board of Directors.
3.05 INFORMAL ACTION BY COMMITTEES. Any action required or permitted to be taken at any meeting of a committee of the Board of Directors may be taken without a meeting, if a written consent to such action is signed by all members of the committee and such written consent is filed with the minutes of proceedings of such committee. Consents may be signed by different members on separate counterparts.
ARTICLE IV
OFFICERS
4.01 TITLES AND ELECTION. The Corporation shall have a Chairman of the Board, a Chief Executive Officer, a President, a Chief Operating Officer, a Chief Financial Officer, one or more Vice Presidents (including Vice Presidents of varying degrees, such as Executive, Regional or Senior Vice Presidents), a Secretary, a Treasurer (who shall also be the Chief Financial Officer of the Corporation) and such Assistant Secretaries and Assistant Treasurers and such other officers as the Board of Directors, or any committee or officer appointed by the Board of Directors for such purpose, may from time to time elect. Notwithstanding the foregoing, the Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Secretary and the Treasurer shall be elected by a majority of the
Directors at the time in office. The officers of the Corporation elected by the Board of Directors shall be elected annually at the first meeting of the Board of Directors following each annual meeting of Stockholders. If the election of such officers shall not take place at such meeting, such election shall be held as soon thereafter as may be convenient. Each officer shall hold office until the first meeting of the Board of Directors following the next annual meeting of Stockholders and until his successor is duly elected and qualified or until his death, resignation or removal in the manner hereinafter provided. Any two or more offices, except President and Vice President, may be held by the same person. Election or appointment of an officer or agent shall not of itself create contract rights between the Corporation and such officer or agent. No officer need be a Stockholder or a Director of the Corporation.
4.02 REMOVAL AND RESIGNATION. Any officer may be removed, either with or without cause, by a majority of the Directors at the time in office, at any regular or special meeting of the Board of Directors, or, except in the case of an officer elected by the Board of Directors, by a committee or an officer upon whom such power of removal may be conferred by the Board of Directors. Any officer may resign at any time by giving written notice to the Corporation. Any such resignation shall take effect at the date of the receipt of such notice or at any later time specified therein; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.
4.03 OUTSIDE ACTIVITIES. The officers and agents of the Corporation are required to spend only such time managing the business and affairs of the Corporation as is necessary to carry out their duties in accordance with applicable law and these Bylaws. Except as set forth in the Charter or by the terms of any separate agreement, arrangement or policy of the Corporation, the officers and agents of the Corporation may engage with or for others in business activities of the types conducted by the Corporation. Except as set forth in the Charter or by the terms of any separate agreement, arrangement or policy of the Corporation, the officers and agents of the Corporation (other than those serving who are also Directors) do not have an obligation to notify or present to the Corporation or each other any investment opportunity that may come to such person's attention even though such investment might be within the scope of the Corporation's purposes or various investment objectives. Any interest that an officer or an agent has in any investment opportunity presented to the Corporation must be disclosed by such officer or agent to the Board of Directors (and, if voting thereon, to the Stockholders or to any committee of the Board of Directors) within ten (10) days after the later of the date upon which such officer or agent becomes aware of such interest or that the Corporation is considering such investment opportunity. If such interest comes to the attention of the interested officer or agent after a vote to take such investment opportunity, the voting body shall reconsider such investment opportunity if not already consummated or implemented.
4.04 VACANCIES. A vacancy in any office may be filled by the Board of Directors for the unexpired portion of the term.
4.05 CHAIRMAN OF THE BOARD. The Chairman of the Board shall, if present, preside at all meetings of the Stockholders and the Board of Directors, and shall exercise and
perform such other powers and duties as may be from time to time assigned to him by the Board of Directors or prescribed by these Bylaws.
4.06 CHIEF EXECUTIVE OFFICER. Unless otherwise determined by the Board of Directors and subject to such supervisory powers, if any, as may be given by the Board of Directors to the Chairman, the Chief Executive Officer shall, subject to the control of the Board of Directors, have general supervision, direction, and control of the business of the Corporation and shall exercise and perform such other powers and duties as may be from time to time assigned to him by the Board of Directors or prescribed by these Bylaws.
4.07 PRESIDENT. The President shall exercise and perform such duties as may be from time to time assigned to him by the Board of Directors or prescribed by these Bylaws.
4.08 VICE PRESIDENTS. In the absence or disability of the President, the Vice Presidents in order of their rank as fixed by the Board of Directors, or if not ranked, the Vice President designated by the Board of Directors, shall perform the duties of the President, and when so acting shall have all the powers of, and be subject to all the restrictions upon, the President. The Vice Presidents shall have such other powers and perform such other duties as may be from time to time assigned to them by the Board of Directors or prescribed by these Bylaws.
4.09 SECRETARY.
(a) The Secretary shall keep, or cause to be kept, a book of minutes in written form of the proceedings of the Board of Directors, committees of the Board of Directors, and Stockholders. Such minutes shall include all waivers of notice, consents to the holding of meetings, and approvals of the minutes of meetings executed pursuant to these Bylaws or the MGCL. The Secretary shall keep, or cause to be kept at the principal executive office or at the office of the Corporation's transfer agent or registrar, a record of its Stockholders, giving the names and addresses of all Stockholders and the number and class of shares held by each.
(b) The Secretary shall give, or cause to be given, notice of all meetings of the Stockholders and may give, or cause to be given, notice of all meetings of the Board of Directors required by these Bylaws or by law to be given, and shall keep the seal of the Corporation in safe custody, and shall have such other powers and perform such other duties as may be from time to time assigned to him by the Board of Directors or prescribed by these Bylaws.
4.10 TREASURER AND CHIEF FINANCIAL OFFICER.
(a) The Treasurer and Chief Financial Officer shall keep and maintain, or cause to be kept and maintained, adequate and correct books and records of account in written form or any other form capable of being converted into written form.
(b) The Treasurer and Chief Financial Officer shall deposit all monies and other valuables in the name and to the credit of the Corporation with such depositaries as may be designated by the Board of Directors. He shall disburse all funds of the Corporation as may be
ordered by the Board of Directors, shall render to the Chairman, Chief Executive Officer, President and Directors, whenever any of them requests it, an account of all of his transactions as Treasurer and Chief Financial Officer and of the financial condition of the Corporation, and shall have such other powers and perform such other duties as may be from time to time assigned to him by the Board of Directors or prescribed by these Bylaws.
4.11 ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The Board of Directors, or any committee or officer appointed by the Board of Directors for such purpose, may appoint one or more Assistant Secretaries or Assistant Treasurers. The Assistant Secretaries and Assistant Treasurers (i) shall have the power to perform and shall perform all the duties of the Secretary and the Treasurer, respectively, in such respective officer's absence and (ii) shall perform such duties as shall be assigned to them by the Secretary or Treasurer, respectively, or by the Chairman, Chief Executive Officer, President or the Board of Directors, or any such designated committee or officer.
4.12 SUBORDINATE OFFICERS. The Corporation shall have such subordinate officers as the Board of Directors, or any committee or officer appointed by the Board of Directors for such purpose, may from time to time elect. Each such officer shall hold office for such period and perform such duties as the Board of Directors, Chairman, Chief Executive Officer, President or any designated committee or officer may prescribe.
4.13 COMPENSATION. The salaries and other compensation and remuneration, of any kind, if any, of the officers shall be fixed from time to time by the Board of Directors or a committee thereof. No officer shall be prevented from receiving such compensation, if any, by reason of the fact that he is also a Director of the Corporation. The Board of Directors may authorize any committee or officer, upon whom the power of appointing assistant and subordinate officers may have been conferred, to fix the compensation and remuneration of such assistant and subordinate officers.
ARTICLE V
SHARES OF STOCK
5.01 FORM OF CERTIFICATES. Certificates for shares of stock of the Corporation shall be in such form and design as the Board of Directors shall determine and shall be signed in the name of the Corporation by (i) the Chairman of the Board, the President or a Vice President and (ii) the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary. Each certificate shall contain the statements and information required by the MGCL. In the event that the Corporation issues shares of Stock without certificates, the Corporation shall provide to holders of such shares a written statement of the information required by the MGCL to be included on stock certificates.
5.02 TRANSFER OF SHARES. Shares of Stock may only be transferred in accordance with all restrictions on transfer set forth in the Charter. Before any transfer of Stock is entered upon the books of the Corporation, or any new certificate is issued therefor, the older
certificate, properly endorsed, shall be surrendered and canceled, except when a certificate has been lost, stolen or destroyed.
5.03 STOCK LEDGER. The Corporation shall maintain at its principal executive office or at the office of its counsel, accountants or transfer agent or at such other place designated by the Board of Directors an original or duplicate stock ledger containing the names and addresses of all the Stockholders and the number of shares of each class of Stock held by each Stockholder. The stock ledger shall be maintained pursuant to a system that the Corporation shall adopt allowing for the issuance, recordation and transfer of its Stock by electronic or other means that can be readily converted into written form for visual inspection and not involving any issuance of certificates. Such system shall include provisions for notice to acquirers of Stock (whether upon issuance or transfer of Stock) in accordance with Sections 2-210 and 2-211 of the MGCL, and Section 8-204 of the Commercial Law Article of the State of Maryland. The Corporation shall be entitled to treat the holder of record of any Share or Shares as the holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such Share on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of Maryland. Until a transfer is duly effected on the stock ledger, the Corporation shall not be affected by any notice of such transfer, either actual or constructive. Nothing herein shall impose upon the Corporation, the Board of Directors or officers or their agents and representatives a duty or limit their rights to inquire as to the actual ownership of Shares.
5.04 RECORDING TRANSFERS OF STOCK. If transferred in accordance with any restrictions on transfer contained in the Charter, these Bylaws or otherwise, Shares shall be recorded as transferred in the stock ledger upon provision to the Corporation or the transfer agent of the Corporation of an executed stock power duly guaranteed and any other documents reasonably requested by the Corporation, and the surrender of the certificate or certificates, if any, representing such Shares. Upon receipt of such documents, the Corporation shall issue the statements required by Sections 2-210 and 2-211 of the MGCL and Section 8-204 of the Commercial Law Article of the State of Maryland, issue as needed a new certificate or certificates (if the transferred Shares were certificated) to the persons entitled thereto, cancel any old certificates and record the transaction upon its books.
5.05 LOST CERTIFICATE. The Board of Directors may direct a new certificate to be issued in the place of any certificate theretofore issued by the Corporation alleged to have been stolen, lost or destroyed upon the making of an affidavit of that fact by the person claiming the certificate of Stock to be stolen, lost or destroyed. When authorizing such issue of a new certificate, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such stolen, lost or destroyed certificate or his legal representative to advertise the same in such manner as it shall require and/or to give bond, with sufficient surety, to indemnify the Corporation against any loss or claim which may arise by reason of the issuance of a new certificate.
5.06 EMPLOYEE STOCK PURCHASE PLANS. The Board of Directors shall have the authority, in its discretion, to adopt one or more employee stock purchase plans or
agreements, containing such terms and conditions as the Board may prescribe, for the issue and sale of unissued shares of the Corporation, or of its issued shares acquired or to be acquired, to the employees of the Corporation or to the employees of its subsidiary corporations or to a trustee on their behalf, and for the payment of such shares in installments or at one time, and for such consideration as may be fixed by the Board or any committee thereof, and may provide for aiding any such employees in paying for such shares by compensation for services rendered, promissory notes or otherwise. The Board of Directors, or any committee thereof, may carry out and administer any such plan or delegate part or all of the administration of any such plan to any other entity or person.
5.07 CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE.
(a) The Board of Directors may fix, in advance, a date as the record date for the purpose of determining Stockholders entitled to receive notice of, or to vote at, any meeting of Stockholders, or Stockholders entitled to receive payment of any dividend or the allotment of any rights, or in order to make a determination of Stockholders for any other proper purpose. Such date, in any case, shall not be prior to the close of business on the day the record date is fixed and shall be not more than ninety (90) days, and in case of a meeting of Stockholders not less than ten (10) days, prior to the date on which the meeting or particular action requiring such determination of Stockholders is to be held or taken.
(b) In lieu of fixing a record date, the stock transfer books may be closed by the Board of Directors in accordance with Section 2-511 of the MGCL for the purpose of determining Stockholders entitled to receive notice of or to vote at a meeting of Stockholders.
(c) Except as otherwise provided in these Bylaws, if no record date is fixed and the stock transfer books are not closed for the determination of Stockholders, (i) the record date for the determination of Stockholders entitled to receive notice of, or to vote at, a meeting of Stockholders shall be at the close of business on the day on which the notice of meeting is mailed or the thirtieth (30th) day before the meeting, whichever is the closer date to the meeting; and (ii) the record date for the determination of Stockholders entitled to receive payment of a dividend or an allotment of any rights shall be at the close of business on the day on which the resolution of the Board of Directors declaring the dividend or allotment of rights is adopted.
(d) When a determination of Stockholders entitled to vote at any meeting of Stockholders has been made as provided in this section, such determination shall apply to any adjournment thereof, except where (i) the determination has been made through the closing of the stock transfer books and the stated period of closing has expired or (ii) the meeting is adjourned to a date more than 120 days after the record date fixed for the original meeting, in either of which case a new record date shall be determined as set forth herein.
ARTICLE VI
DIVIDENDS AND DISTRIBUTIONS
6.01 AUTHORIZATION. Dividends and other distributions upon the Stock may be authorized by the Board of Directors as set forth in the applicable provisions of the Charter and any applicable law, at any meeting, limited only to the extent of Section 2-311 of the MGCL. Dividends and other distributions upon the Stock may be paid in cash, property or Stock of the Corporation, subject to the provisions of law and of the Charter.
6.02 CONTINGENCIES. Before payment of any dividends or other distributions upon the Stock, there may be set aside (but there is no duty to set aside) out of any funds of the Corporation available for dividends or other distributions such sum or sums as the Board of Directors may from time to time, in its absolute discretion, think proper as a reserve fund to meet contingencies, for repairing or maintaining any property of the Corporation or for such other purpose as the Board of Directors shall determine to be in the best interests of the Corporation, and the Board of Directors may modify or abolish any such reserve in the manner in which it was created.
ARTICLE VII
INDEMNIFICATION
7.01 INDEMNIFICATION TO THE EXTENT PERMITTED BY LAW. The Corporation
shall indemnify, to the full extent authorized or permitted by Maryland
statutory or decisional law or any other applicable law, any person made, or
threatened to be made, a party to any action or proceeding (whether civil or
criminal or otherwise) by reason of the fact he, his testator or intestate is or
was a Director or officer of the Corporation or any predecessor of the
Corporation, or is or was serving at the request of the Corporation or any
predecessor of the Corporation as a director or officer of, or in any other
capacity with respect to, any other corporation, partnership, joint venture,
trust, employee benefit plan, or other enterprise (an "Indemnified Person"),
including the advancement of expenses under procedures provided under such law;
provided, however, that no indemnification shall be provided for expenses
relating to any willful or grossly negligent failure to make disclosures
required by the next to last sentence of Sections 2.02 or 4.03 hereof as applied
to Directors and officers respectively. The Corporation shall indemnify any
Indemnified Person's spouse (whether by statute or at common law and without
regard to the location of the governing jurisdiction) and children to the same
extent and subject to the same limitations applicable to any Indemnified Person
hereunder for claims arising out of the status of such person as a spouse or
child of such Indemnified Person, including claims seeking damages from marital
property (including community property) or property held by such Indemnified
Person and such spouse or property transferred to such spouse or child, but such
indemnity shall not otherwise extend to protect the spouse or child against
liabilities caused by the spouse's or child's own acts. The provisions of this
Section 7.01 shall constitute a contract with each Indemnified Person who serves
at any time while these provisions are in effect and may be modified adversely
only with the consent of affected Indemnified Persons and each such Indemnified
Person shall be deemed to be serving as such in reliance on these provisions.
7.02 INDEMNIFICATION OF EMPLOYEES AND AGENTS OF THE CORPORATION. The Corporation may, to the extent authorized from time to time by the Board of Directors, grant rights to indemnification and to the advancement of expenses to any employee or agent of the Corporation to the fullest extent of the provisions of this Article VII with respect to the indemnification of and advancement of expenses to Directors and officers of the Corporation.
7.03 INSURANCE. The Corporation shall have the power to purchase and maintain insurance to protect itself and any Indemnified Person, employee or agent of the Corporation against any liability, whether or not the Corporation would have the power to indemnify him or her against such liability.
7.04 NON-EXCLUSIVE RIGHTS TO INDEMNITY; HEIRS AND PERSONAL REPRESENTATIVES. The rights to indemnification set forth in this Article VII are in addition to all rights which any Indemnified Person may be entitled as a matter of law or by contract, and shall inure to the benefit of the heirs and personal representatives of each Indemnified Person.
7.05 NO LIMITATION. In addition to any indemnification permitted by these Bylaws, the Board of Directors shall, in its sole discretion, have the power to grant such indemnification to such persons as it deems in the interest of the Corporation to the full extent permitted by law. This Article shall not limit the Corporation's power to indemnify against liabilities other than those arising from a person's serving the Corporation as a Director or officer.
7.06 AMENDMENT, REPEAL OR MODIFICATION. Any amendment, repeal or modification of any provision of this Article VII by the Stockholders or the Directors of the Corporation is effective on a prospective basis only and neither repeal nor modification of such provisions shall adversely affect any right or protection of a Director or officer of the Corporation under this Article VII existing at the time of such amendment, repeal or modification.
7.07 RIGHT OF CLAIMANT TO BRING SUIT. If a claim under Section 7.01 of this Article VII is not paid in full by the Corporation within ninety (90) days after a written claim has been received by the Corporation, the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any, has been tendered to the Corporation) that the claimant has not met the standards of conduct which make it permissible under the MGCL for the Corporation to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors, independent legal counsel, or its Stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the MGCL, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel, or its Stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that claimant has not met the applicable standard of conduct.
ARTICLE VIII
NOTICES
8.01 NOTICES. Unless otherwise provided in these Bylaws, whenever notice is required to be given pursuant to these Bylaws, it shall be construed to mean either written notice personally delivered against written receipt, or notice in writing transmitted by mail, by depositing the same in a post office or letter box, in a post-paid sealed wrapper, addressed, if to the Corporation, to 2900 Eisenhower Avenue, Suite 300, Alexandria, Virginia 22314 (or any subsequent address selected by the Board of Directors), attention Chief Executive Officer, or if to a Stockholder, Director or officer, at the address of such person as it appears on the records of the Corporation. In addition, whenever notice is required to be given to a Stockholder, such
requirement shall be satisfied when written notice is left at such Stockholder's residence or usual place of business or is delivered to such Stockholder by any other means permitted by Maryland law. Unless otherwise specified, notice sent by mail shall be deemed to be given at the time mailed.
8.02 SECRETARY TO GIVE NOTICE. All notices required by law or these Bylaws to be given by the Corporation shall be given by the Secretary or any other officer of the Corporation designated by the Chairman or the Chief Executive Officer. If the Secretary and Assistant Secretary are absent or refuse or neglect to act, the notice may be given by, or by any person directed to do so by, the Chairman or the Chief Executive Officer or, with respect to any meeting called pursuant to these Bylaws upon the request of any Stockholders or Directors, by any person directed to do so by the Stockholders or Directors upon whose request the meeting is called.
8.03 WAIVER OF NOTICE. Whenever any notice is required to be given pursuant to the Charter or these Bylaws or pursuant to applicable law, a waiver thereof in writing, signed by the person or persons entitled to such notice, whether before or after the time stated therein for which notice is given, shall be deemed equivalent to the giving of such notice. A written waiver of notice of a Stockholders meeting shall be filed with the records of such meeting. Neither the business to be transacted at nor the purpose of any meeting need be set forth in the waiver of notice, unless specifically required by statute. The attendance of any person at any meeting shall constitute a waiver of notice of such meeting, except where such person attends a meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened.
ARTICLE IX
MISCELLANEOUS
9.01 EXEMPTION FROM MARYLAND CONTROL SHARE ACQUISITION ACT. The provisions of the Maryland Control Share Acquisition Act (Sections 3-701 to 3-710 of the MGCL, as amended from time to time) shall not apply to any Share of Stock of the Corporation now or hereafter held by any current or future Stockholders. All shares of Stock currently outstanding or issued in the future are exempted from the Maryland Control Share Acquisition Act to the fullest extent permitted by Maryland law.
9.02 OFFICES OF THE CORPORATION. The principal executive office for the transaction of the business of the Corporation is hereby fixed and located at 2900 Eisenhower Avenue, Suite 300, Alexandria, Virginia 22314. The Board of Directors is hereby granted full power and authority to change said principal office from one location to another. Branch and subordinated offices may at any time be established by the Board of Directors.
9.03 BOOKS AND RECORDS. The Corporation shall keep correct and complete books and records of its accounts and transactions and minutes of the proceedings of its Stockholders and Board of Directors meetings and of its executive or other committees when exercising any of the powers or authority of the Board of Directors. The books and records of
the Corporation may be in written form or in any other form that can be converted within a reasonable time into written form for visual inspection. Minutes shall be recorded in written form but may be maintained in the form of a reproduction.
9.04 INSPECTION OF BYLAWS AND CORPORATE RECORDS. These Bylaws, the minutes of proceedings of the Stockholders, annual statements of affairs and any voting trust agreements on record shall be open to inspection upon written demand delivered to the Corporation by any Stockholder or holder of a voting trust certificate at any reasonable time during usual business hours, for a purpose reasonably related to such holder's interests as a Stockholder or as the holder of such voting trust certificate, in each case as set forth in the MGCL. Other documents, such as the Corporation's books of account, stock ledger and Stockholder lists, may be made available for inspection by any Stockholder or holder of a voting trust certificate to the extent required by the MGCL.
9.05 CONTRACTS. The Board of Directors may authorize any officer(s) or agent(s) to enter into any contract or to execute and deliver any instrument in the name of and on behalf of the Corporation, and such authority may be general or confined to specific instances.
9.06 CHECKS, DRAFTS, ETC. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation shall be signed by such officers or agents of the Corporation and in such manner as shall from time to time be determined by resolution of the Board of Directors.
9.07 LOANS.
(a) Such officers or agents of the Corporation as from time to time have been designated by the Board of Directors shall have authority (i) to effect loans, advances, or other forms of credit at any time or times for the Corporation, from such banks, trust companies, institutions, corporations, firms, or persons, in such amounts and subject to such terms and conditions, as the Board of Directors from time to time has designated; (ii) as security for the repayment of any loans, advances, or other forms of credit so authorized, to assign, transfer, endorse, and deliver, either originally or in addition or substitution, any or all personal property, real property, stocks, bonds, deposits, accounts, documents, bills, accounts receivable, and other commercial paper and evidences of debt or other securities, or any rights or interests at any time held by the Corporation; (iii) in connection with any loans, advances, or other forms of credit so authorized, to make, execute, and deliver one or more notes, mortgages, deeds of trust, financing statements, security agreements, acceptances, or written obligations of the Corporation, on such terms and with such provisions as to the security or sale or disposition of them as those officers or agents deem proper; and (iv) to sell to, or discount or rediscount with, the banks, trust companies, institutions, corporations, firms or persons making those loans, advances, or other forms of credit, any and all commercial paper, bills, accounts receivable, acceptances, and other instruments and evidences of debt at any time held by the Corporation, and, to that end, to endorse, transfer, and deliver the same.
(b) From time to time the Corporation shall certify to each bank, trust company, institution, corporation, firm or person so designated, the signatures of the officers or
agents so authorized. Each bank, trust company, institution, corporation, firm or person so designated is authorized to rely upon such certification until it has received written notice that the Board of Directors has revoked the authority of those officers or agents.
9.08 FISCAL YEAR. The Board of Directors shall have the power, from time to time, to fix the fiscal year of the Corporation by a duly adopted resolution, and, in the absence of such resolution, the fiscal year shall be the year ending December 31.
9.09 ANNUAL REPORT. Each fiscal year, the Board of Directors of the Corporation shall cause to be sent to the Stockholders an Annual Report in such form as may be deemed appropriate by the Board of Directors. The Annual Report shall include audited financial statements and shall be accompanied by the report thereon of an independent certified public accountant.
9.10 INTERIM REPORTS. The Corporation may send interim reports to the Stockholders having such form and content as the Board of Directors deems proper.
9.11 BYLAWS SEVERABLE. The provisions of these Bylaws are severable, and if any provision shall be held invalid or unenforceable, that invalidity or unenforceability shall attach only to that provision and shall not in any manner affect or render invalid or unenforceable any other provision of these Bylaws, and these Bylaws shall be carried out as if the invalid or unenforceable provision were not contained herein.
ARTICLE X
AMENDMENT OF BYLAWS
10.01 BY DIRECTORS. The Board of Directors shall have the power, at any
annual or regular meeting, or at any special meeting if notice thereof is
included in the notice of such special meeting, to alter or repeal any Bylaws of
the Corporation and to make new Bylaws, except that the Board of Directors shall
not alter or repeal (i) Section 2.03 to change the minimum or maximum number of
Directors without the vote of the Stockholders required therein, (ii) Section
7.01 without a vote of the Stockholders and the consent of any Indemnified
Persons whose rights to indemnification, based on conduct prior to such
amendment, would be adversely affected by such proposed alteration or repeal;
(iii) this Section 10.01; or (iv) Section 10.02.
10.02 BY STOCKHOLDERS. With the approval of the Board of Directors, the Stockholders shall have the power, by affirmative vote of a majority of the outstanding shares of common stock of the Corporation, at any annual meeting (subject to the requirements of Section 1.03), or at any special meeting if notice thereof is included in the notice of such special meeting, to alter or repeal any Bylaws of the Corporation and to make new Bylaws, except that the Stockholders shall not alter or repeal Section 7.01 without the consent of any Indemnified Persons adversely affected by such proposed alteration or repeal, and except that a vote of two-thirds of the outstanding shares of common stock of the Corporation is required to amend Sections 1.03, 2.04 and 2.13.
The foregoing are certified as the Bylaws of the Corporation as in effect at the close of business on February 13, 2003.
/s/ Edward M. Schulman ----------------------------------------- Edward M. Schulman |
Exhibit 10.1
AvalonBay Communities, Inc.
Medium-Term Notes
Amended & Restated Distribution Agreement
August 6, 2003
Banc Of America Securities LLC
Citigroup Global Markets Inc.
Fleet Securities, Inc.
J.P. Morgan Securities Inc.
Lehman Brothers Inc.
TABLE OF CONTENTS
Page
|
||||||||||
1. | Description of Notes | 2 | ||||||||
2. | Appointment as Agent | 3 | ||||||||
(a)
|
Appointment | 3 | ||||||||
(b)
|
Sale of Notes | 4 | ||||||||
(c)
|
Purchases as Principal | 4 | ||||||||
(d)
|
Solicitations as Agent | 4 | ||||||||
(e)
|
Reliance | 4 | ||||||||
3. | Representations and Warranties of the Company | 4 | ||||||||
(a)
|
Effectiveness of Registration Statement; Filing of Prospectus | 5 | ||||||||
(b)
|
Compliance with Securities Act | 5 | ||||||||
(c)
|
Incorporated Documents | 5 | ||||||||
(d)
|
Organization, Power and Authority of Company | 6 | ||||||||
(e)
|
Organization, Power and Authority and Capitalization of Subsidiaries | 6 | ||||||||
(f)
|
Capital Stock Matters | 6 | ||||||||
(g)
|
Financial Statements | 7 | ||||||||
(h)
|
Companys Internal Accounting System | 7 | ||||||||
(i)
|
Notes | 7 | ||||||||
(j)
|
Distribution Agreement and Indenture | 8 | ||||||||
(k)
|
Rating | 9 | ||||||||
(l)
|
No Material Adverse Change | 9 | ||||||||
(m)
|
Company Not an Investment Company | 9 | ||||||||
(n)
|
No Material Actions or Proceedings | 9 | ||||||||
(o)
|
Filing and Enforceability of Contracts | 10 | ||||||||
(p)
|
Compliance With Law | 10 | ||||||||
(q)
|
No Further Consents Required | 10 | ||||||||
(r)
|
Title to Properties | 10 | ||||||||
(s)
|
Mortgages; Community Matters | 11 | ||||||||
(t)
|
Title Insurance | 11 | ||||||||
(u)
|
Accuracy of Companys Statements | 11 | ||||||||
(v)
|
No Price Stabilization or Manipulation | 12 | ||||||||
(w)
|
No Labor Disputes | 12 | ||||||||
(x)
|
No Unlawful Contributions | 12 | ||||||||
(y)
|
Compliance With Environmental Laws | 12 | ||||||||
(z)
|
Hazardous Materials | 12 | ||||||||
(aa)
|
Periodic Review of Costs of Environmental Compliance | 13 | ||||||||
(bb)
|
Property and Casualty Insurance | 14 | ||||||||
(cc)
|
REIT Status | 14 | ||||||||
(dd)
|
No Plan Assets | 14 | ||||||||
(ee)
|
Distribution of Offering Materials | 14 | ||||||||
(ff)
|
Form S-3 Eligibility | 14 |
i
Page
|
||||||||||
4. | Purchases as Principal; Solicitations as Agent | 14 | ||||||||
(a)
|
Purchases as Principal | 14 | ||||||||
(b)
|
Solicitations as Agent | 16 | ||||||||
(c)
|
Administrative Procedures | 16 | ||||||||
(d)
|
Agents Obligations Several and Not Joint | 16 | ||||||||
5. | Covenants of the Company . The Company covenants and agrees with the Agents as follows: | 16 | ||||||||
(a)
|
Amendments and Supplements | 17 | ||||||||
(b)
|
Notification Upon Certain Events | 17 | ||||||||
(c)
|
Compliance With Securities Laws | 17 | ||||||||
(d)
|
Copies of Offering Documents | 17 | ||||||||
(e)
|
Copies of Securities Filings and Distributions | 18 | ||||||||
(f)
|
Earnings Statements | 18 | ||||||||
(g)
|
Payment of Expenses | 18 | ||||||||
(h)
|
Blue Sky Qualification | 19 | ||||||||
(i)
|
No Price Stabilization or Manipulation | 19 | ||||||||
(j)
|
Rating Agency Matters | 19 | ||||||||
(k)
|
Establishing Terms of Notes | 19 | ||||||||
(l)
|
Use of Proceeds | 19 | ||||||||
(m)
|
Preparation of Pricing Supplements | 19 | ||||||||
(n)
|
Unaudited Financial Information | 19 | ||||||||
(o)
|
Audited Financial Information | 20 | ||||||||
(p)
|
REIT Status | 20 | ||||||||
(q)
|
Market Stand-Off Pending Settlement | 20 | ||||||||
(r)
|
Market Stand-Off Generally | 20 | ||||||||
6. | Conditions of Agents Obligations at the Closing | 20 | ||||||||
(a)
|
Opinion of Company Counsel | 20 | ||||||||
(b)
|
Opinion of Company Tax Counsel | 21 | ||||||||
(c)
|
Opinion of Counsel to the Agents | 21 | ||||||||
(d)
|
Comfort Letter | 21 | ||||||||
(e)
|
Officers Certificate | 22 | ||||||||
(f)
|
No Stop Orders or Unmet Commission Requests | 24 | ||||||||
(g)
|
No Material Adverse Change | 24 | ||||||||
(h)
|
No Material Litigation Commenced | 24 | ||||||||
(i)
|
Accuracy of Representations and Warranties; Observance of Covenants | 24 | ||||||||
(j)
|
Blue Sky Qualification | 25 | ||||||||
(k)
|
Other Documents | 25 | ||||||||
(l)
|
Special Conditions for Agents Purchases as Principal | 25 | ||||||||
7. | Delivery of and Payment for Notes Sold through the Agents | 26 | ||||||||
8. | Additional Covenants of the Company | 26 | ||||||||
(a)
|
Reaffirmation of Representations and Warranties | 26 | ||||||||
(b)
|
Subsequent Delivery of Certificates | 26 | ||||||||
(c)
|
Subsequent Delivery of Legal Opinions | 27 |
ii
Page
|
||||||||||
(d)
|
Subsequent Delivery of Comfort Letters | 27 | ||||||||
9. | Indemnification and Contribution . | 28 | ||||||||
(a)
|
Indemnification of the Agents by the Company | 28 | ||||||||
(b)
|
Indemnification of the Company and its Directors, Certain Officers and Control Persons by the Agents | 28 | ||||||||
(c)
|
Procedures | 29 | ||||||||
(d)
|
Contribution | 30 | ||||||||
(e)
|
Survival of Indemnity and Contribution Provisions | 31 | ||||||||
10. | Reimbursement of Agents Expenses | 31 | ||||||||
11. | Representations and Agreements to Survive Delivery | 31 | ||||||||
12. | Role of Agents | 31 | ||||||||
13. | Termination | 31 | ||||||||
14. | Notices | 32 | ||||||||
15. | Parties | 34 | ||||||||
16. | Governing Law | 35 | ||||||||
17. | Counterparts | 35 | ||||||||
18. | Enforceability | 35 | ||||||||
19. | Waiver of Rights to Trial by Jury | 35 | ||||||||
20. | Amendments and Modifications | 35 |
EXHIBIT A
|
Terms of Notes | |
EXHIBIT B
|
Administrative Procedures Agreement |
Part I
|
Administrative Procedures for Certificates Notes and Generally Applicable Administrative Procedures | |
Part II
|
Administrative Procedures for Global Note Method of Book-Entry Notes | |
Part III
|
Administrative Procedures for Master Note Method of Book-Entry Notes |
EXHIBIT C | Form of Opinion of Counsel to the Company | |
SCHEDULE I | Information in the Prospectus Furnished by any Agent | |
SCHEDULE II | List of Subsidiaries | |
SCHEDULE III | Commissions |
iii
AVALONBAY COMMUNITIES INC.
MEDIUM-TERM NOTES
AMENDED AND RESTATED DISTRIBUTION AGREEMENT
August 6, 2003
Banc of America Securities LLC
100 No. Tryon Street, 7
th
Floor
Charlotte, NC 28255
Citigroup Global Markets Inc.
Medium-Term Note Department
388 Greenwich Street
New York, NY 10013
Fleet Securities, Inc.
100 Federal Street, MADE 10012H
Boston, MA 02110
J.P. Morgan Securities Inc.
270 Park Avenue, 7
th
Floor
New York, NY 10017
Attention: Transaction Execution Group
Lehman Brothers Inc.
745 Seventh Avenue
New York, NY 10019
Attention: Fixed Income Syndicate/Medium Term Note Desk
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, NY 10036
Wachovia Capital Markets, LLC
301 So. College Street, DC-8
One Wachovia Center
Charlotte, NC 28288
Ladies and Gentlemen:
AvalonBay Communities, Inc., a Maryland corporation (the Company), confirms its agreement with Banc of America Securities LLC, Citigroup Global Markets Inc., Fleet Securities, Inc., J.P. Morgan Securities Inc., Lehman Brothers Inc., Morgan Stanley & Co. Incorporated, and Wachovia Capital Markets, LLC, (each, an Agent and collectively, the
Agents), with respect to the issue and sale from time to time by the Company of its Medium-Term Notes Due Nine Months or More From Date of Issue (the Notes), as follows:
Capitalized terms used but not otherwise defined herein shall have the meanings given to those terms in the Prospectus (as defined herein).
1. Description of Notes . The Company proposes to issue the Notes under that certain Indenture, dated as of January 16, 1998 (the Original Indenture), as supplemented by that certain First Supplemental Indenture, dated as of January 20, 1998, that certain Second Supplemental Indenture, dated as of July 7, 1998, and that certain Amended and Restated Third Supplemental Indenture, dated as of July 10, 2000 (collectively and together with the Original Indenture and any additional indentures supplemental thereto entered into after the date hereof, the Indenture) between the Company and US Bank, National Association (as successor to State Street Bank and Trust Company), as trustee (the Trustee). As of the date of this agreement (this Distribution Agreement), the Company has authorized the issuance and sale of up to U.S. $750,000,000 aggregate initial offering price (or its equivalent, based upon the applicable exchange rate at the time of issuance, in such foreign or composite currencies as the Company shall designate at the time of issuance) of Notes to or through the Agents pursuant to the terms of this Distribution Agreement, as such amount may be reduced by the aggregate initial offering price of any other debt securities issued by the Company, whether within or without the United States, pursuant to the registration statement referred to below. It is understood, however, that the Company may from time to time authorize the issuance of additional Notes and that such additional Notes may be sold to or through the Agents or through or to other agents pursuant to the terms of this Distribution Agreement, all as though the issuance of such Notes were authorized as of the date hereof.
This Distribution Agreement provides both for the sale of Notes by the Company to one or more Agents as principal for resale to investors and other purchasers and for the sale of Notes by the Company directly to investors (as may from time to time be agreed to by the Company and the applicable Agent), in which case the applicable Agent will act as an agent of the Company in soliciting offers for the purchase of Notes.
The Company has filed with the Securities and Exchange Commission (the Commission) a registration statement on Form S-3 (File No. 333-103755) for the registration of debt securities, including the Notes, under the Securities Act of 1933, as amended (the Securities Act), and the offering thereof from time to time in accordance with Rule 430A or Rule 415 of the rules and regulations of the Commission thereunder (the Securities Act Rules and Regulations). Such registration statement has been declared effective by the Commission. Such registration statement (and any further registration statements which may be filed by the Company for the purpose of registering additional Notes and in connection with which this Distribution Agreement is included or incorporated by reference as an exhibit) and the prospectus constituting a part thereof (including in each case the information, if any, deemed to be part thereof pursuant to Rule 430A(b) of the Securities Act Rules and Regulations), and any prospectus supplement and pricing supplement relating to the Notes, including all documents incorporated therein by reference, as from time to time amended or supplemented by the filing of documents pursuant to the Securities Exchange Act of 1934, as amended (the Exchange Act), or the Securities Act or otherwise, is referred to herein as the Registration Statement. A
2
prospectus supplement (the Prospectus Supplement) setting forth the terms of the offer of the Notes contemplated by this Distribution Agreement, and additional information concerning the Company has been or will be prepared and will be filed by the Company pursuant to Rule 424(b) of the Securities Act Rules and Regulations, on or before the second business day after it is first used in connection with the offer and sale of Notes under this Distribution Agreement (or such earlier time as may be required by the Securities Act Rules and Regulations). The final form of prospectus included in the Registration Statement, as supplemented by the Prospectus Supplement (including any supplement to the Prospectus that sets forth the purchase price, interest rate or formula, maturity date and other terms of a particular issue of Notes and all documents incorporated therein by reference (each, a Pricing Supplement)), is referred to herein as the Prospectus, except that if any revised prospectus, whether or not such revised prospectus is required to be filed by the Company pursuant to Rule 424(b) of the Securities Act Rules and Regulations, shall be provided to the Agents by the Company for use in connection with the offer and sale of any of the Notes under this Distribution Agreement, the term Prospectus shall refer to such revised prospectus from and after the time such documents are first provided to the Agents for such use. If the Company elects to rely on Rule 434 promulgated pursuant to the Securities Act, all references to the Prospectus shall be deemed to include, without limitation, the form of prospectus and the term sheet, taken together, provided to the Agents by the Company in reliance on such Rule 434. Any registration statement (including any supplement thereto or information which is deemed part thereof) filed by the Company under Rule 462(b) of the Securities Act Rules and Regulations (a Rule 462(b) Registration Statement) shall be deemed to be part of the Registration Statement. Any prospectus (including any amendment or supplement thereto or information which is deemed part thereof) included in the Rule 462(b) Registration Statement shall be deemed to be part of the Prospectus. For purposes of this Distribution Agreement, all references to the Registration Statement, the Prospectus, any preliminary prospectus or any amendment or supplement thereto shall be deemed to include any copy filed with the Commission pursuant to its Electronic Data Gathering Analysis and Retrieval System (EDGAR), and such copy shall be identical (except to the extent permitted by Regulation S-T) to any Prospectus delivered to any Agent for use in connection with the offering of the Notes by the Company.
2. Appointment as Agent .
(a) Appointment . Subject to the terms and conditions stated herein and subject to the reservation by the Company of the right to solicit, sell or accept offers for Notes directly on its own behalf, the Company hereby appoints the Agents as its exclusive agents (except as described below), for the purpose of soliciting and receiving offers to purchase Notes from the Company by others and, on the basis of the representations and warranties herein contained, but subject to the terms and conditions herein set forth, each Agent agrees to use reasonable efforts to solicit and receive offers to purchase Notes upon terms acceptable to the Company at such times and in such amounts as the Company shall from time to time specify. The Company agrees that Notes will be sold exclusively to or through the Agents except as otherwise described below. The Company may accept offers to purchase Notes through an agent other than an Agent (and, in connection therewith, may respond to inquiries and requests for information from any such agents), provided that (i) the Company and such agent shall have executed an agreement with respect to such purchases having terms and conditions (including, without limitation, commission rates) with respect to such purchases substantially the same as
3
the terms and conditions that would apply to such purchases under this Distribution Agreement if such agent were an Agent (which may be accomplished by incorporating by reference in such agreement the terms and conditions of this Distribution Agreement) and (ii) the Company shall provide the Agents with a copy of such agreement promptly following the execution thereof.
(b) Sale of Notes . The Company shall not sell or approve the solicitation of offers for the purchase of Notes in excess of the amount which shall be authorized by the Company from time to time or in excess of the aggregate initial offering price of Notes registered pursuant to the Registration Statement. The Agents shall have no responsibility for maintaining records with respect to the aggregate initial offering price of Notes sold, or of otherwise monitoring the availability of Notes for sale, under the Registration Statement.
(c) Purchases as Principal . The Agents shall not have any obligation to purchase Notes from the Company as principal, but one or more Agents may agree from time to time to purchase Notes as principal for resale to investors and other purchasers determined by such Agent or Agents. Any such purchase of Notes by an Agent or Agents as principal shall be made in accordance with Section 4(a) hereof.
(d) Solicitations as Agent . If agreed upon by an Agent and the Company, such Agent, acting solely as agent for the Company and not as principal, will solicit offers for the purchase of Notes. Such Agent will communicate to the Company, orally, each offer to purchase Notes solicited by it on an agency basis, other than those offers rejected by such Agent. Such Agent shall have the right, in its discretion reasonably exercised, to reject any proposed purchase of Notes, in whole or in part, and any such rejection shall not be deemed a breach of its agreement contained herein. The Company shall have the right to withdraw, cancel or modify any offer hereunder without notice and the sole right to accept offers to purchase the Notes and may reject any such offer in whole or in part and any such rejection shall not be deemed a breach of its agreements contained herein. Such Agent shall make reasonable efforts to assist the Company in obtaining performance by each purchaser whose offer to purchase Notes has been solicited by it and accepted by the Company. Such Agent shall not have any liability to the Company in the event that any such purchase is not consummated for any reason. If the Company shall default on its obligation to deliver Notes to a purchaser whose offer it has accepted, the Company shall (i) hold such Agent harmless against any loss, claim or damage arising from or as a result of such default by the Company and (ii) notwithstanding such default, pay to such Agent any commission to which it would otherwise be entitled.
(e) Reliance . The Company and the Agents agree that any Notes purchased by one or more Agents as principal shall be purchased, and any Notes the placement of which an Agent arranges as agent shall be placed by such Agent, in reliance on the representations, warranties, covenants and agreements of the Company contained herein and on the terms and conditions and in the manner provided herein.
3. Representations and Warranties of the Company . The Company represents and warrants to and agrees with each Agent as of the date hereof, as of the date of each acceptance by the Company of an offer for the purchase of Notes (whether to an Agent as principal or through an Agent as agent), as of the date of each delivery of Notes (whether to an Agent as principal or through an Agent as agent (each a Delivery Date)) (the date of each such
4
delivery to an Agent as principal being hereafter referred to as a Settlement Date), and as of any time that the Registration Statement or the Prospectus shall be amended or supplemented (it being understood that such representations, warranties and agreements shall be deemed to relate to the Registration Statement and the Prospectus as amended or supplemented to each such time) as follows:
(a) Effectiveness of Registration Statement; Filing of Prospectus. The Company has filed with the Commission a registration statement on Form S-3 (File No. 333-103755) for the registration of debt securities, including the Notes, under the Securities Act, and the offering thereof from time to time in accordance with Rule 430A or Rule 415 of the Securities Act Rules and Regulations. Such registration statement has been declared effective by the Commission. The Prospectus Supplement setting forth the terms of the offer of the Notes contemplated by this Distribution Agreement, and additional information concerning the Company has been or will be prepared and will be filed by the Company pursuant to Rule 424(b) of the Securities Act Rules and Regulations, on or before the second business day after it is first used in connection with the offer and sale of Notes under this Distribution Agreement (or such earlier time as may be required by the Securities Act Rules and Regulations).
(b) Compliance with Securities Act . Each part of the Registration Statement, when such part became or becomes effective, and the Prospectus and any amendment or supplement to such Registration Statement or such Prospectus, on the date of filing thereof with the Commission and as of the date hereof, complied or will comply in all material respects with the requirements of the Securities Act and the Securities Act Rules and Regulations; the Indenture, on the date of filing thereof with the Commission and as of the date hereof complied or will comply in all material respects with the requirements of the Trust Indenture Act of 1939, as amended, and the rules and regulations of the Commission thereunder (the TIA); each part of the Registration Statement, when such part became or becomes effective did not or will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; the Prospectus and any amendment or supplement thereto, on the date of filing thereof with the Commission and as of the date hereof did not or will not include an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; except that the foregoing shall not apply to (i) that part of the Registration Statement which constitutes the Statement of Eligibility and Qualification under the TIA and (ii) statements in, or omissions from, any such document in reliance upon, and in conformity with, information concerning the Agents that was furnished to the Company by the Agents specifically for use in the preparation thereof. The Company acknowledges that the only information furnished to the Company by the Agents on or before the date hereof specifically for inclusion in the Registration Statement or the Prospectus is the information set forth in Schedule I hereto.
(c) Incorporated Documents. The documents incorporated by reference in the Registration Statement, the Prospectus and any amendment or supplement to such Registration Statement or such Prospectus, when they became or become effective under the Securities Act or were or are filed with the Commission under the Exchange Act, as the case may be, conformed or will conform in all material respects with the requirements of the Securities Act, the Securities
5
Act Rules and Regulations, the Exchange Act and the rules and regulations of the Commission thereunder (the Exchange Act Rules and Regulations), as applicable.
(d) Organization, Power and Authority of Company. The Company has been duly organized and is validly existing as a corporation in good standing under the laws of the State of Maryland with the power and authority to conduct all the activities conducted by it, to own or lease all the assets owned or leased by it and otherwise to conduct its business as described in the Registration Statement and Prospectus. The Company is duly licensed or qualified to do business and in good standing in each jurisdiction in which the nature of the activities conducted by it or the character of the assets owned or leased by it makes such licensing or qualification necessary except where the failure to be so qualified, considering all such cases in the aggregate, will not have a material adverse effect on the business, properties, business prospects, condition (financial or otherwise) or results of operations of the Company and its Subsidiaries (as hereinafter defined), taken as a whole.
(e) Organization, Power and Authority and Capitalization of Subsidiaries. As of the date of this Agreement, the only subsidiaries (as defined in the Securities Act Rules and Regulations) of the Company are the entities listed on Schedule II , attached hereto. Each of the Companys subsidiaries is an entity duly organized or formed, as the case may be, and, in the case of each such subsidiary that is a corporation, limited partnership or limited liability company (each a Subsidiary and, collectively, the Subsidiaries) is validly existing and in good standing under the laws of its respective jurisdiction of organization or incorporation. Each of the Companys subsidiaries has full power and authority to conduct all the activities conducted by it, to own or lease all the assets owned or leased by it and otherwise to conduct its business as described in the Registration Statement and the Prospectus. Each of the Subsidiaries is duly licensed or qualified to do business in good standing as a corporation, limited partnership or limited liability company, as the case may be, in all jurisdictions in which the nature of the activities conducted by it or the character of the assets owned or leased by it makes such licensing or qualification necessary except where the failure to be so qualified, considering all such cases in the aggregate, will not have a material adverse effect on the business, properties, business prospects, condition (financial or otherwise) or results of operations of the Company and its Subsidiaries, taken as a whole. Except for the stock or other interests in the subsidiaries and as disclosed in the Registration Statement, the Company does not own, directly or indirectly, any shares of stock or any other equity or long-term debt securities of any corporation or have any equity interest in any firm, partnership, joint venture, trust, association or other entity. Complete and correct copies of the charter of the Company, as amended through the date hereof (collectively, the Charter), and the bylaws of the Company, as amended through the date hereof (the Bylaws), and the charter documents of each of its subsidiaries and all amendments thereto have been delivered to counsel for the Agents. Except as otherwise described in the Registration Statement or the Prospectus, or as described in Schedule II , all of the issued and outstanding capital stock of each corporate Subsidiary of the Company has been duly authorized and will be, as of the Closing Date, validly issued, fully paid and non-assessable and owned by the Company.
(f) Capital Stock Matters. The outstanding securities of the Company, including the outstanding shares of common stock, $0.01 par value (the Common Stock), and the outstanding shares of each series of preferred stock (the Preferred Stock) have been duly
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authorized and are validly issued, fully paid and nonassessable by the Company and conform to the description thereof in the Prospectus. Except as set forth in the Registration Statement or the Prospectus, the Company does not have outstanding any option to purchase, or any rights or warrants to subscribe for, or any securities or obligations convertible into, or any contracts or commitments to issue or sell, any of its securities or any shares of capital stock of any subsidiary or any such warrants, convertible securities or obligations, except for shares of Common Stock to be issued to certain employees in connection with the deferment of income, shares of Common Stock issuable pursuant to awards granted or to be granted under the Companys 1994 Stock Incentive Plan, as amended and restated, shares of Common Stock issuable under the Companys 1996 Non-Qualified Employee Stock Purchase Plan, shares of Common Stock issuable under the Companys Dividend Reinvestment and Stock Purchase Plan and shares of Common Stock issuable upon redemption or conversion of units of limited partnership interests.
(g) Financial Statements. The financial statements and schedules included or incorporated by reference in the Registration Statement and the Prospectus set forth fairly the financial condition of the respective entity or entities presented as of the dates indicated and the results of operations and changes in financial position for the periods therein specified in conformity with generally accepted accounting principles consistently applied throughout the periods involved (except as otherwise stated therein and except to the extent that Avalon Properties, Inc. applied different principles than the Company prior to its merger with and into the Company and except, in the case of interim periods, for the notes thereto and normal year-end adjustment). The pro forma financial statements of the Company included in the Registration Statement and the Prospectus comply in all material respects with the applicable requirements of Rule 11-02 of Regulation S-X of the Commission and the pro forma adjustments have been properly applied to the historical amounts in the compilation of such statements. No other financial statements (or schedules) of the Company or any predecessor of the Company are required by the Securities Act or the Securities Act Rules and Regulations to be included in the Registration Statement or the Prospectus. Ernst & Young LLP (together with any other nationally recognized accounting firm that the Company may from time to time engage, the Accountants), who have reported on the financial statements and schedules which are audited, are independent accountants with respect to the Company as required by the Securities Act and the Securities Act Rules and Regulations. The statements included in the Registration Statement with respect to the Accountants pursuant to Rule 509 of Regulation S-K of the Securities Act Rules and Regulations are true and correct in all material respects.
(h) Companys Internal Accounting System. The Company maintains a system of internal accounting controls sufficient to provide reasonable assurances that: (i) transactions are executed in accordance with managements general or specific authorization; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain accountability for assets; (iii) access to assets and financial and corporate books and records is permitted only in accordance with managements general or specific authorization; and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences.
(i) Notes. The Notes are as of the date hereof duly authorized by the Company for issuance and sale pursuant to this Distribution Agreement and the Indenture; and
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when duly authenticated and delivered by the Trustee in accordance with the terms of the Indenture (assuming the due authorization, execution and delivery of the Indenture by the Trustee), against payment of the consideration therefor, the Notes will be valid and legally binding obligations of the Company entitled to the benefit of the Indenture and will be enforceable against the Company in accordance with their terms, subject, as to enforcement, to (i) applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors rights and remedies generally, (ii) general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or law), (iii) the discretion of the court before which any proceeding therefor may be brought, (iv) requirements that a claim with respect to any Notes payable in a foreign or composite currency (or a foreign or composite currency judgment in respect of such claim) be converted into U.S. dollars at a rate of exchange prevailing on a date determined pursuant to applicable law and (v) governmental authority to limit, delay or prohibit the making of payments outside the United States (collectively, the Enforceability Limitations) and authorization of the Notes did not, and the execution, delivery and performance of the Notes will not, constitute a breach or violation of, or a default under, or conflict with, or give any other party a right to terminate any of its obligations under, or result in the acceleration of any obligation under, or result in the creation or imposition of any lien, charge or encumbrance upon the Communities or any of the other assets of the Company or any of its subsidiaries pursuant to the terms or provisions of, the Charter or Bylaws of the Company, the articles or certificate of incorporation or bylaws or partnership agreement or operating agreement of any of the Companys subsidiaries or any Contract (as defined herein) or any judgment, ruling, decree, order, law, statute, rule or regulation of any court or other governmental agency or body applicable to the Communities or the business or properties of the Company or any of its subsidiaries, except as disclosed in the Prospectus or except for such instances as, individually or in the aggregate, do not involve a material risk to the business, properties, condition (financial or otherwise) or results of operations of the Company and its subsidiaries, taken as a whole; the Indenture has been duly qualified under the TIA and prior to the issuance of the Notes will be duly authorized, executed and delivered by the Company, and assuming due authorization, execution and delivery thereof by the Trustee, will constitute a valid and legally binding obligation of the Company, enforceable against the Company in accordance with its terms, except to the extent that enforcement thereof may be limited by the Enforceability Limitations; the Notes and the Indenture will conform in all material respects to the statements relating thereto contained in the Prospectus; and the Notes are, in all material respects, in the form contemplated by the Indenture. Upon payment of the purchase price and delivery of the Notes in accordance with this Distribution Agreement, each of the purchasers thereof will receive good, valid and marketable title to such Notes, free and clear of all liens, charges and encumbrances.
(j) Distribution Agreement and Indenture. The Company has the corporate power and authority to enter into this Distribution Agreement, the Indenture, the Notes and each Terms Agreement (as defined herein). This Distribution Agreement and the Indenture have been duly authorized, executed and delivered by the Company and constitute valid and binding agreements of the Company, enforceable against the Company in accordance with the terms hereof and thereof, except to the extent that enforcement thereof may be limited by the Enforceability Limitations. The execution, delivery and the performance of this Distribution Agreement, the Indenture and each Written Terms Agreement (as defined herein) and the entry into, and the performance of, each non-written Terms Agreement and the consummation of the transactions contemplated herein and therein did not and will not constitute a breach or violation
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of, or a default under, or conflict with, or give any other party a right to terminate any of its obligations under, or result in the acceleration of any obligation under, or result in the creation or imposition of any lien, charge or encumbrance upon the Communities or any of the other assets of the Company or any of its subsidiaries pursuant to the terms or provisions of, the Charter or Bylaws of the Company, the articles or certificate of incorporation or bylaws or partnership agreement or operating agreement of any of the Companys subsidiaries or any material contract, lease or other instrument to which the Company or any of its subsidiaries is a party or by which any of their property may be bound or any judgment, ruling, decree, order, law, statute, rule or regulation of any court or other governmental agency or body applicable to the Communities or the business or properties of the Company or any of its subsidiaries, except as disclosed in the Prospectus or except for such instances as, individually or in the aggregate, do not involve a material risk to the business, properties, condition (financial or otherwise) or results of operations of the Company and its subsidiaries, taken as a whole.
(k) Rating. At the time of each Settlement Date, the Notes will be rated at least Baa1 by Moodys Investors Service, Inc. (Moodys) and at least BBB+ by Standard & Poors Ratings Service (S&P and, together with Moodys, the Rating Agencies), or such other rating as to which the Company shall have most recently notified the Agents pursuant to Section 5(b)(iv) hereof.
(l) No Material Adverse Change . Except as contemplated in the Prospectus, subsequent to the respective dates as of which information is given in the Registration Statement and the Prospectus, the Company and its subsidiaries, taken as a whole, have not incurred any liabilities or obligations, direct or contingent, or entered into any transactions, not in the ordinary course of business, that are material to the Company and its subsidiaries taken as a whole, and there has not been any material change in the capital stock, short-term debt or long-term debt of the Company, or any material adverse change, or any development involving a prospective material adverse change, in the condition (financial or other), business, prospects, net worth or results of operations of the Company and its subsidiaries taken as a whole.
(m) Company Not an Investment Company . The Company is not an investment company or an entity controlled by an investment company as such terms are defined in the Investment Company Act of 1940, as amended (the 1940 Act).
(n) No Material Actions or Proceedings. Except as set forth in the Registration Statement and the Prospectus, there is no pending or, to the knowledge of the Company, threatened any action, suit or proceeding against or affecting the Company or any of its subsidiaries or any of their respective directors, partners or officers in their capacity as such, or any of the Current Communities, the Development Communities or the Redevelopment Communities (each as defined in the Prospectus and collectively, the Communities) before or by any Federal or state court, commission, regulatory body, administrative agency or other governmental body, domestic or foreign, wherein an unfavorable ruling, decision or finding might, individually or in the aggregate, have a material adverse effect on the business, properties, business prospects, condition (financial or otherwise) or results of operations of the Company and its subsidiaries, taken as a whole.
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(o) Filing and Enforceability of Contracts. There are no contracts or documents of a character required to be described in the Prospectus or to be filed as exhibits to the Registration Statement by the Securities Act or the Securities Act Rules and Regulations that have not been so described or filed (the Contracts). All Contracts executed and delivered on or before the date hereof to which the Company or any subsidiary of the Company is a party have been duly authorized, executed and delivered by the Company or such subsidiary and, assuming due authorization, execution and delivery thereof by the other parties thereto, constitute valid and binding agreements of the other parties thereto, enforceable against such parties in accordance with the terms thereof, subject to the Enforceability Limitations.
(p) Compliance With Law. Each of the Company and its subsidiaries has complied in all material respects with all laws, regulations and orders applicable to it or their respective businesses and properties where the failure to comply would, individually or in the aggregate, have a material adverse effect on the business, properties, business prospects, condition (financial or otherwise) or results of operations of the Company and its subsidiaries, taken as a whole; neither the Company nor any of its subsidiaries is, and upon consummation of each sale of a Note, none of them will be, in default under any Contract, the violation of which would individually or in the aggregate have a material adverse effect on the Company and its subsidiaries taken as a whole, and no other party under any such Contract to which the Company or any of its subsidiaries is a party is, to the knowledge of the Company, in default in any material respect thereunder; the Company is not in violation of its Charter or Bylaws; except as disclosed in the Prospectus, the Company and each of its subsidiaries have or, upon each Delivery Date, will have all governmental licenses (including, without limitation, a California real estate brokerage license and a California general contractors license, if applicable), permits, consents, orders, approvals and other authorizations required to carry on its business as contemplated in the Prospectus, and none of them has received any notice of proceedings relating to the revocation or modification of any such governmental license, permit, consent, order, approval or other authorization which, individually or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would have a material adverse effect on the business, properties, business prospects, condition (financial or otherwise) or results of operations of the Company and its subsidiaries, taken as a whole.
(q) No Further Consents Required . No consent, approval, authorization or order of, or filing with, any court or governmental agency or body is required for the consummation of the transactions contemplated by this Distribution Agreement and the Indenture in connection with the issuance or sale of the Notes by the Company, except such as may be required under the Securities Act, the Exchange Act, the TIA or state securities or blue sky laws; and the Company has full power and authority to authorize, issue and sell the Notes as contemplated by this Distribution Agreement and the Indenture, free of any preemptive or similar rights.
(r) Title to Properties. The Company, or its subsidiaries, as applicable, has good and marketable title to the Communities, and the Communities are not subject to any liens or encumbrances except for monetary liens as set forth in the Prospectus or the Registration Statement, non-delinquent property taxes, utility easements and other immaterial non-monetary liens or encumbrances of record. All liens, charges, encumbrances, claims or restrictions on or affecting the Communities which are required to be disclosed in the Prospectus are disclosed
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therein. Except as is disclosed in the Registration Statement or the Prospectus and except as would not, in the aggregate, have a material adverse effect on the business, properties, business prospects, condition (financial or otherwise) or results of operations of the Company and its subsidiaries, taken as a whole, (i) each of the Company and each of its subsidiaries has valid, subsisting and enforceable leases with its tenants for the properties described in the Prospectus as leased by it, (ii) no tenant under any of the leases pursuant to which the Company or any subsidiary leases its properties has an option or right of first refusal to purchase the premises demised under such lease, (iii) the use and occupancy of each of the properties of the Company and its subsidiaries complies in all material respects with all applicable codes and zoning laws and regulations, (iv) the Company has no knowledge of any pending or threatened condemnation or zoning change that will in any material respect affect the size of, use of, improvements of, construction on, or access to any of the properties of the Company or its subsidiaries, and (v) the Company has no knowledge of any pending or threatened proceeding or action that will in any manner affect the size of, use of, improvements on, construction on, or access to any of the properties of the Company or its subsidiaries.
(s) Mortgages; Community Matters. Except as disclosed in the Registration Statement, the mortgages and deeds of trust encumbering the Communities are not convertible nor will the Company or any of its subsidiaries hold a participating interest therein and such mortgages and deeds of trust are not cross-defaulted or cross-collateralized to any property not to be owned directly or indirectly by the Company. To the knowledge of the Company (i) the present use and occupancy of each of the Communities complies with all applicable codes and zoning laws and regulations, if any, except for such failures to comply which would not individually or in the aggregate have a material adverse effect on the condition, financial or otherwise, or on the earnings, business affairs or business prospects of the Company and its subsidiaries taken as a whole; and (ii) there is no pending or, to the Companys knowledge, threatened condemnation, zoning change, environmental or other proceeding or action that will in any material respect affect the size of, use of, improvements on, construction on, or access to the Communities, except for such proceedings or actions that would not individually or in the aggregate have a material adverse effect on the condition, financial or otherwise, or on the earnings, business affairs or business prospects of the Company and its subsidiaries taken as a whole.
(t) Title Insurance. Title insurance in favor of the mortgagee, the Company or its Subsidiaries is maintained with respect to each of the Communities, in an amount at least equal to the greater of (i) the cost of acquisition of such property and (ii) the cost of construction by the Company and its subsidiaries of the improvements located on such property (measured at the time of such construction), except, in each case, where the failure to maintain such title insurance would not have a material adverse effect on the condition, financial or otherwise, or the earnings, business affairs or business prospects of the Company and its subsidiaries taken as a whole.
(u) Accuracy of Companys Statements. No statement, representation, warranty or covenant made by the Company in this Distribution Agreement or made in any certificate or document required by this Distribution Agreement to be delivered to the Agents was or will be, when made, inaccurate, untrue or incorrect.
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(v) No Price Stabilization or Manipulation. Except as stated in the Prospectus, neither the Company nor any of its directors, officers or controlling persons has taken, nor will it take, directly or indirectly, any action designed to or that might reasonably be expected to cause or result in stabilization or manipulation of the price of the Notes to facilitate the sale or resale of the Notes.
(w) No Labor Disputes . No labor dispute with the employees of the Company or any subsidiary exists or, to the knowledge of the Company after due inquiry and investigation, is threatened, which, in either case, would have a material adverse effect on the business, properties, business prospects, condition (financial or otherwise) or results of operations of the Company and its subsidiaries, taken as a whole.
(x) No Unlawful Contributions. Neither the Company nor any of its subsidiaries nor, to the Companys knowledge, any employee or agent of the Company of any subsidiary has made any payment of funds of the Company or any subsidiary or received or retained any funds in violation of any law, rule or regulation or of a character required to be disclosed in the Prospectus which has not been so disclosed.
(y) Compliance With Environmental Laws. As of each Delivery Date the Company, and each of its subsidiaries (i) will be in compliance in all material respects with any and all applicable foreign, Federal, state and local laws and regulations relating to the protection of human health and safety, the Hazardous Materials (as defined below), or hazardous or toxic wastes, pollutants or contaminants (the Environmental Laws); (ii) will have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses; and (iii) will be in compliance with all terms and conditions of any such permit, license or approval, except where such noncompliance with Environmental Laws, failure to receive required permits, licenses or other approvals or failure to comply with the terms and conditions of such permits, licenses or approvals are otherwise disclosed in the Prospectus or would not, individually or in the aggregate, have a material adverse effect on the Company and its subsidiaries taken as a whole.
(z) Hazardous Materials .
(i) None of the Company or any partnership or other subsidiary that owns a Community (each a Partnership) has at any time, and, to the best knowledge of the Company after due inquiry and investigation, no other party has, at any time, handled, buried, stored, retained, refined, transported, processed, manufactured, generated, produced, spilled, allowed to seep, leak, escape or leach, or be pumped, poured, emitted, emptied, discharged, released, injected, dumped, transferred or otherwise disposed of or dealt with, Hazardous Materials (as hereinafter defined) on, to, above under, in, into or from the Communities, except as disclosed in the environmental reports previously delivered to the Agents or referred to in the Prospectus, or such as would not individually or in the aggregate have a material adverse effect on the Company and its subsidiaries, taken as a whole. Neither the Company nor its subsidiaries intends to use the Communities or any subsequently acquired properties described in the Prospectus for the purpose of handling, burying, storing, retaining, refining, transporting, processing, manufacturing, generating, producing, spilling, seeping, leaking, escaping, leaching,
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pumping, pouring, emitting, emptying, discharging, releasing, injecting, dumping, transferring or otherwise disposing of or dealing with Hazardous Materials, except for the use, storage and transportation of small quantities of substances that are regularly used as office supplies, household cleaning supplies, gardening supplies, or pool maintenance supplies in compliance with applicable Environmental Laws and in accordance with prudent business practices and good hazardous materials storage and handling practices.
(ii) None of the Company or the Partnerships, to the best knowledge of the Company after due inquiry and investigation, knows of any seepage, leak, escape, leach, discharge, injection, release, emission, spill, pumping, pouring, emptying or dumping of Hazardous Materials into waters on, under or adjacent to the Communities or onto lands from which such hazardous or toxic waste or substances might seep, flow or drain into such waters, except as disclosed in the environmental reports previously delivered to the Agents or referred to in the Prospectus or such as would not individually or in the aggregate have a material adverse effect on the Company and its subsidiaries, taken as a whole.
(iii) None of the Company or the Partnerships to the best knowledge of the Company after due inquiry and investigation, has received notice of, or has knowledge of any occurrence or circumstance which, with notice or passage of time or both, would give rise to, any claim under or pursuant to any Environmental Law pertaining to Hazardous Materials, hazardous or toxic waste or substances on or originating from the Communities arising out of the conduct of any such party, including, without limitation, pursuant to any Environmental Law, except as disclosed in the environmental reports previously delivered to the Agents or referred to in the Prospectus or such as would not individually or in the aggregate have a material adverse effect on the Company and its subsidiaries, taken as a whole.
As used herein, Hazardous Material shall include, without limitation, any flammable materials or explosives, petroleum or petroleum-based products, radioactive materials, hazardous materials, hazardous wastes, hazardous or toxic substances, or related materials, asbestos or any material as defined by any Federal, state or local environmental law, ordinance, rule, or regulation including, without limitation, Environmental Laws, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (42 U.S.C. Section 9601, et seq .) (CERCLA), the Hazardous Materials Transportation Act, as amended (49 U.S.C. Section 1801, et seq .), the Resource Conservation and Recovery Act, as amended (42 U.S.C. Section 9601, et seq .), and in the regulations adopted and publications promulgated pursuant to each of the foregoing or by any Federal, state or local governmental authority having or claiming jurisdiction over the Communities as described in the Prospectus.
(aa) Periodic Review of Costs of Environmental Compliance. In the ordinary course of its business, each of the Company and the Partnerships conducts a periodic review of the effect of Environmental Laws on its business, operations and properties in the course of which it identifies and evaluates associated costs and liabilities (including, without limitation, any capital or operating expenditures required for investigation, clean-up, closure of properties or compliance with Environmental Laws or any permit, license or approval, any related constraints on operating activities and any potential liabilities to third parties). On the basis of such review
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and on the basis of the reviews conducted by the Company in connection with the Communities, the Company has reasonably concluded that such associated costs and liabilities would not individually or in the aggregate, have a material adverse effect on the Company and its subsidiaries taken as a whole.
(bb) Property and Casualty Insurance. The Company and its subsidiaries maintain property and casualty insurance (other than earthquake insurance) in favor of the Company and its subsidiaries with respect to each of the Communities, in an amount and on such terms as is reasonable for businesses of the type proposed to be conducted by the Company and its subsidiaries. The Company maintains earthquake insurance on the Communities to the extent described in the Prospectus. Neither the Company nor any subsidiary has received from any insurance company notice of any material defects or deficiencies affecting the insurability of any of the Communities (other than with respect to seismic activities).
(cc) REIT Status. The Company has elected to be taxed as a REIT under the Code and will use its best efforts to continue to be organized and will continue to operate in a manner so as to qualify as a real estate investment trust (REIT) under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the Code), unless the Board of Directors determines that it is no longer in the best interest of the Company to continue to be so qualified.
(dd) No Plan Assets. Neither the assets of the Company nor its subsidiaries constitute, nor will such assets, as of the Closing Date, constitute, plan assets under the Employee Retirement Income Security Act of 1974, as amended (ERISA).
(ee) Distribution of Offering Materials . The Company has not distributed and, prior to the later to occur of (i) the Closing Date and (ii) completion of the distribution of the Notes, will not distribute any offering material in connection with the offering and sale of the Notes other than the Registration Statement, the Prospectus or other materials, if any, permitted by the Securities Act.
(ff) Form S-3 Eligibility. The Company satisfies all conditions and requirements for the use of a Registration Statement on Form S-3 under the Securities Act and the Securities Act Rules and Regulations.
4. Purchases as Principal; Solicitations as Agent .
(a) Purchases as Principal . If so agreed by one or more of the Agents and the Company in each instance, Notes may be purchased by such Agent or Agents as principal. An Agents commitment to purchase Notes as principal shall be deemed to have been made on the basis of the representations and warranties of the Company herein contained and shall be subject to the terms and conditions herein set forth. In addition, in connection with each such sale, the Company and such Agent or Agents will enter into a supplemental agreement (a Terms Agreement) that will provide for the terms of the sale of such Notes to, and the purchase thereof by, such Agent or Agents (which terms, unless otherwise agreed, shall, to the extent applicable, include those terms specified in Exhibit A hereto). Each Terms Agreement shall take the form of either (i) an oral agreement between such Agent or Agents and the Company, with written
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confirmation prepared by such Agent or Agents and mailed to the Company, or (ii) a written agreement between such Agent or Agents and the Company (a Written Terms Agreement). Unless the context otherwise requires, references herein to this Distribution Agreement shall include the applicable Terms Agreement of one or more Agents to purchase Notes from the Company as principal. Each purchase of Notes, unless otherwise agreed, shall be at a discount from the principal amount of each such Note equivalent to the applicable commission set forth in Schedule III hereto. The Agents may engage the services of any other broker or dealer in connection with the resale of the Notes purchased by them as principal and may allow any portion of the discount received in connection with such purchases from the Company to such brokers and dealers. At the time of each purchase of Notes by one or more Agents as principal, the Company and such Agent or Agents shall agree in the Terms Agreement whether any stand-off provision (as referred to in Section 5(r) hereof) or any officers certificate, opinion of counsel or comfort letter (as referred to in Sections 8(b), 8(c) and 8(d) hereof) will be required. If the Company and two or more Agents enter into an agreement pursuant to which such Agents agree to purchase Notes from the Company as principal and one or more of such Agents shall fail at the Settlement Date to purchase the Notes which it or they are obligated to purchase (the Defaulted Notes), then the nondefaulting Agents shall have the right, within 24 hours thereafter, to make arrangements for one of them or one or more other Agents or underwriters to purchase all, but not less than all, of the Defaulted Notes in such amounts as may be agreed upon and upon the terms herein set forth; provided, however, that if such arrangements shall not have been completed within such 24-hour period, then:
(i) if the aggregate principal amount of Defaulted Notes does not exceed 10% of the aggregate principal amount of Notes to be so purchased by all of such Agents on the Settlement Date, the nondefaulting Agents shall be obligated, severally and not jointly, to purchase the full amount thereof in the proportions that their respective initial underwriting obligations bear to the underwriting obligations of all nondefaulting Agents; or
(ii) if the aggregate principal amount of Defaulted Notes exceeds 10% of the aggregate principal amount of Notes to be so purchased by all of such Agents on the Settlement Date, such agreement shall terminate without liability on the part of any nondefaulting Agent.
No action taken pursuant to this paragraph shall relieve any defaulting Agent from liability in respect of its default. In the event of any such default which does not result in a termination of such agreement, either the nondefaulting Agents or the Company shall have the right to postpone the Settlement Date for a period not exceeding seven days in order to effect any required changes in the Registration Statement or the Prospectus or in any other documents or arrangements.
Unless otherwise specified in a Terms Agreement, if an Agent or Agents are purchasing Notes as principal, it or they, as the case may be, may resell such Notes to other dealers. Any such sales may be at a discount, which shall not exceed the amount set forth in the Prospectus Supplement relating to such Notes.
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(b) Solicitations as Agent . On the basis of the representations and warranties herein contained, but subject to the terms and conditions herein set forth, when agreed by the Company and an Agent, such Agent, as an agent of the Company, will use its reasonable efforts to solicit offers to purchase the Notes upon the terms and conditions set forth herein and in the Prospectus. The Agents are not authorized to appoint sub-agents with respect to Notes sold through them as agents. All Notes sold through an Agent as agent will be sold at 100% of their principal amount unless otherwise agreed to by the Company and such Agent.
The Company reserves the right, in its sole discretion, to suspend solicitation of offers for the purchase of Notes through an Agent, as agent, commencing at any time for any period of time or permanently. As soon as practicable, but not later than one business day, after receipt of instructions from the Company, such Agent will suspend solicitation of offers for the purchase of Notes from the Company until such time as the Company has advised such Agent that such solicitation may be resumed. During the period of time that such solicitation is suspended, the Company shall not be required to deliver, or cause to be delivered, any opinions, letters, or certificates in accordance with Section 8 hereof; provided that if the Registration Statement or Prospectus is amended or supplemented during the period of suspension (other than by an amendment or supplement providing solely for a change in the interest rates, redemption provisions, amortization schedules or maturities offered for the Notes or for a change that the Agents deem to be immaterial), no Agent shall be required to resume soliciting offers to purchase Notes until the Company have delivered, or cause to be delivered, such opinions, letters and certificates in accordance with Section 8 hereof or as such Agent may reasonably request.
Upon settlement, the Company agrees to pay to each Agent, as consideration for the sale of each Note resulting from a solicitation made or an offer to purchase received by such Agent, a commission, in the form of a discount from the purchase price of such Note equal to the applicable percentage of the principal amount of such Note as set forth in Schedule III hereto.
(c) Administrative Procedures . The purchase price, interest rate or formula, maturity date and other terms of the Notes (as applicable) specified in Exhibit A hereto shall be agreed upon by the Company and the applicable Agent or Agents and specified in a Pricing Supplement to the Prospectus to be prepared by the Company in connection with each sale of Notes. Except as otherwise specified in the applicable Pricing Supplement, the Notes will be issued in denominations of U.S. $1,000 or any larger amount that is an integral multiple of U.S. $1,000. Administrative procedures with respect to the issuance and sale of Notes shall be agreed upon from time to time by the Company, the Agents and the Trustee (the Procedures), and initially such Procedures shall be as set forth in Exhibit B hereto. The Agents and the Company agree to perform, and the Company agrees to cause the Trustee to agree to perform, their respective duties and obligations specifically provided to be performed by them in the Procedures.
(d) Agents Obligations Several and Not Joint . The Company acknowledges that the obligations of the Agents under this Agreement are several and not joint.
5. Covenants of the Company . The Company covenants and agrees with the Agents as follows:
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(a) Amendments and Supplements. During the period in which a prospectus relating to the Notes is required to be delivered under the Securities Act, the Company shall (i) notify the Agents promptly of the time when any subsequent amendment to the Registration Statement has become effective or any supplement to the Prospectus has been filed and of any request by the Commission for any amendment or supplement to the Registration Statement or Prospectus or for additional information, (ii) prepare and file with the Commission, promptly upon your request, any amendments or supplements to the Registration Statement or Prospectus that, in your opinion, may be necessary or advisable in connection with your distribution of the Notes, and (iii) file no amendment or supplement to the Registration Statement or Prospectus (other than any document required to be filed under the Exchange Act that upon filing is deemed to be incorporated by reference therein) to which the Agents or your counsel shall reasonably object by notice to the Company after having been furnished a copy a reasonable time prior to the filing.
(b) Notification Upon Certain Events. The Company shall advise you, promptly after it receives notice or otherwise learns, (i) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement, (ii) of the suspension of the qualification or registration of the Notes for offering or sale in any jurisdiction, (iii) of the initiation or threatening (in writing) of any proceeding for any such purpose or (iv) of any change in the rating assigned by the Rating Agencies or any other nationally recognized statistical rating organization, as such term is defined for purposes of Rule 436(g)(2) under the Securities Act, to any debt securities (including the Notes) of the Company, or the public announcement by any nationally recognized statistical rating organization that it has under surveillance or review, with possible negative implications, its rating of any such debt securities, or the withdrawal by any nationally recognized statistical rating organization of its rating of such debt securities; and the Company will promptly use its best efforts to prevent the issuance of any stop order or to obtain its withdrawal if such a stop order should be issued.
(c) Compliance With Securities Laws. The Company shall comply with all requirements imposed upon it by the Securities Act, the Securities Act Rules and Regulations, the Exchange Act, the Exchange Act Rules and Regulations and the TIA as from time to time in force, so far as is necessary to permit the continuance of sales of, or dealings in, the Notes as contemplated by the provisions hereof and the Prospectus. If during such period any event occurs as a result of which, in the opinion of counsel to the Agents, the Registration Statement contains an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading or the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances then existing, not misleading, or if during such period it is necessary to amend or supplement the Registration Statement or Prospectus to comply with the Securities Act, the Company will promptly notify the Agents and will amend or supplement the Registration Statement or Prospectus (at the expense of the Company) so as to correct such statement or omission or effect such compliance.
(d) Copies of Offering Documents. The Company shall furnish to the Agents copies of the Registration Statement, the Prospectus (including all documents incorporated by reference therein) and all amendments and supplements to the Registration Statement and the
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Prospectus that are filed with the Commission during the period in which a prospectus relating to the Notes is required to be delivered under the Securities Act (including all documents filed with the Commission during such period that are deemed to be incorporated by reference therein), in each case as soon as available and in such quantities as the Agents may from time to time reasonably request.
(e) Copies of Securities Filings and Distributions. The Company shall furnish the Agents with copies of filings of the Company under the Securities Act and Exchange Act and with all other financial statements and reports it distributes generally to the holders of any class of its capital stock during the period of five years commencing on the date upon which the Prospectus Supplement is filed pursuant to Rule 424(b) of the Securities Act Rules and Regulations.
(f) Earnings Statements. The Company shall make generally available to its security holders and to the Agents as soon as practicable after each sale of Notes, earning statements (which need not be audited) that satisfy the provisions of Section 11(a) of the Securities Act and the Securities Act Rules and Regulations (including, without limitation, Rule 158 of the Securities Act Rules and Regulations) with respect to each sale of Notes.
(g) Payment of Expenses. The Company shall pay, or reimburse if paid by you, whether or not the transactions contemplated by this Distribution Agreement are consummated or this Distribution Agreement is terminated, all costs and expenses incident to the performance of the obligations of the Company under this Distribution Agreement, including but not limited to costs and expenses of or relating to (i) the preparation, printing and filing of the Registration Statement and exhibits thereto, the Prospectus and any amendment or supplement to the Registration Statement or the Prospectus, (ii) the word processing and reproduction of the Indenture and the Notes and the delivery of the Notes, (iii) the costs incurred by the Company in furnishing (including costs of shipping, mailing and courier) such copies of the Registration Statement, the Prospectus and all amendments and supplements thereto, as may be requested for use in connection with the offering and sale of the Notes by the Agents or by dealers to whom Notes may be sold, (iv) the filing fees and the fees and expenses of counsel to the Agents in connection with any filings required to be made with the National Association of Securities Dealers or its subsidiary NASD Regulation Inc., (iv) any registration or qualification of the Notes for offer and sale under the securities or blue sky laws of such jurisdictions designated by you, including the reasonable fees, disbursements and other charges of your counsel in connection therewith, and the preparation of any blue sky or legal investment memoranda, (iv) the fees charged by each of the Rating Agencies for the rating of the Notes at the request of the Company, (v) counsel (including local and special counsel) to the Company and any surveyors, engineers, appraisers, photographers, accountants and other professionals engaged by the Company, (vi) the transfer agent for the Notes, (vii) the costs and expenses of the Trustee under the Indenture, (viii) Ernst & Young LLP or such other nationally-recognized accountants as may be engaged by the Company in connection with the offering of the Notes (the Accountants) and (ix) the reasonable fees and disbursements of counsel to the Agents incurred in connection with the establishment of the program relating to the Notes and incurred from time to time in connection with the transactions contemplated hereby.
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(h) Blue Sky Qualification. The Company shall qualify the notes for offering and sale under the applicable securities laws and real estate syndication laws of such states and other jurisdictions of the United States or Canada as the Agents may designate, and will maintain such qualifications in effect for as long as may be required for the distribution of the Notes; provided, however , that the Company shall not be obligated to file any general consent to service of process or to qualify as a foreign corporation in any jurisdiction in which it is not so qualified. The Company will file such statements and reports as may be required by the laws of each jurisdiction in which the Notes have been qualified as above provided. The Company will promptly advise the Agents of the receipt by the Company of any notification with respect to the suspension of the qualification of the Notes for sale in any such state or jurisdiction or the initiating or threatening of any proceeding for such purpose.
(i) No Price Stabilization or Manipulation. The Company shall not take, at any time, directly or indirectly, other than in connection with this Distribution Agreement, any action designed to stabilize, or which might reasonably be expected to cause or result in, or which has constituted or which might reasonably be expected to constitute the stabilization of, the price of the Notes.
(j) Rating Agency Matters. The Company shall take all reasonable action necessary to enable the Rating Agencies to provide their respective credit ratings of the Notes.
(k) Establishing Terms of Notes . The Company shall execute and deliver a Supplemental Indenture or officers certificate, as applicable, designating the Notes as the debt securities to be offered, and establishing the applicable terms and provisions of each Note in accordance with the provisions of the Indenture and any applicable Terms Agreement.
(l) Use of Proceeds. The Company shall apply the net proceeds to the Company from the sale of the Notes by the Company as set forth under the caption Use of Proceeds in the Prospectus.
(m) Preparation of Pricing Supplements. The Company shall prepare, with respect to any Notes to be sold to or through an Agent or Agents pursuant to this Distribution Agreement, a Pricing Supplement with respect to such Notes in a form previously approved by such Agent or Agents. The Company will deliver such Pricing Supplement no later than 11:00 a.m., New York City time, on the business day following the date of the Companys acceptance of the offer for the purchase of such Notes and will file such Pricing Supplement pursuant to Rule 424(b)(3) under the Securities Act not later than the close of business of the Commission on the fifth business day after the date on which such Pricing Supplement is first used.
(n) Unaudited Financial Information. The Company shall furnish to the Agents, within two business days following the date on which such information is first released to the general public, interim financial statement information related to the Company with respect to each of the first three quarters of any fiscal year and preliminary financial statement information with respect to any fiscal year; and the Company shall cause the Prospectus to be amended or supplemented to include or incorporate by reference financial information with respect thereto and corresponding information for the comparable period of the preceding fiscal year, as well as such other information and explanations as shall be necessary for an
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understanding thereof and as shall be required by the Securities Act or the Securities Act Rules and Regulations.
(o) Audited Financial Information . The Company shall furnish to the Agents, within two business days following the date on which such information is first released to the general public, financial information included in or derived from the audited financial statements of the Company for the preceding fiscal year; and the Company shall cause the Registration Statement and the Prospectus to be amended, whether by the filing of documents pursuant to the Exchange Act or the Securities Act or otherwise, to include or incorporate by reference such audited financial statements and the report or reports, and consent or consents to such inclusion or incorporation by reference, of the independent accountants with respect thereto, as well as such other information and explanations as shall be necessary for an understanding of such financial statements and as shall be required by the Securities Act or the Securities Act Rules and Regulations.
(p) REIT Status. Unless the Board of Directors of the Company determines in its reasonable business judgment and pursuant the Charter that continued qualification as a real estate investment trust under the Code is not in the Companys best interest, the Company will use its best efforts to, and will continue to meet the requirements to, qualify as a real estate investment trust under the Code.
(q) Market Stand-Off Pending Settlement. Between the date of any Terms Agreement and the Settlement Date with respect to such Terms Agreement, the Company will not, without such Agents prior consent, offer, sell, contract to sell or otherwise dispose of any debt securities of the Company substantially similar to such Notes (other than (i) the Notes that are to be sold pursuant to such Terms Agreement, (ii) Notes previously agreed to be sold by the Company, and (iii) commercial paper and short-term bank loans issued in the ordinary course of business (collectively, the Market Stand-Off Exceptions)), except as may otherwise be provided in such Terms Agreement.
(r) Market Stand-Off Generally. If requested by any Agent in connection with a purchase by it of Notes as principal in accordance with Section 4(a) hereof, the Company shall cause such transaction to be subject to the terms of such market stand-off provision as shall be agreed upon by the Company and such Agent at the time of such agreement to purchase Notes as principal.
6. Conditions of Agents Obligations at the Closing . The obligations of the Agents to purchase Notes as principal and to solicit offers for the purchase of Notes as agent of the Company, and the obligations of any purchasers of the Notes sold through an Agent as agent, shall be subject to the accuracy of the representations and warranties of the Company herein, to the accuracy of the statements of the officers of the Company made in any certificate furnished pursuant to the provisions hereof, to the performance and observance by the Company of all of its covenants and agreements contained herein and to the following additional conditions precedent:
(a) Opinion of Company Counsel. On the Commencement Date and, if called for by any Terms Agreement, on the corresponding Settlement Date, the relevant Agents shall
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have received the opinion of Goodwin Procter llp, counsel for the Company, dated the date of its delivery, to the effect set forth in Exhibit C .
(b) Opinion of Company Tax Counsel. On the Commencement Date and, if called for by any Terms Agreement, on the corresponding Settlement Date, the relevant Agents shall have received the opinion of Goodwin Procter llp, tax counsel to the Company, dated the date of its delivery, to the effect that, subject to the assumptions and qualifications historically included by such counsel in opinions rendered in recent public offerings by AvalonBay Communities, Inc., commencing with the taxable year ending December 31, 1994, the form of organization of the Company and its operations are such as to enable the Company to qualify as a real estate investment trust under the applicable provisions of the Code.
(c) Opinion of Counsel to the Agents. On the Commencement Date and, if called for by any Terms Agreement, on the corresponding Settlement Date, the relevant Agents shall have received from OMelveny & Myers llp, counsel to the Agents, such opinion or opinions, dated the date of its delivery, with respect to the organization of each of the Company, the validity of the Indenture, the Notes, the Registration Statement, the Prospectus and other related matters as the Agents reasonably may request, and such counsel shall have received such documents and information as they request to enable them to pass upon such matters.
(d) Comfort Letter. On the Commencement Date and, if called for by any Terms Agreement, on the corresponding Settlement Date, the relevant Agents shall have received a letter from the Accountants, dated the date of its delivery, containing information of the type ordinarily included in accountants comfort letters delivered according to Statement of Auditing Standards No. 72 (or any successor bulletin) published by the American Institute of Certified Public Accountants, including, without limitation, statements to the effect that:
(i) They are independent public accountants with respect to the Company and the Subsidiaries within the meaning of the Securities Act and the Securities Act Rules and Regulations, and no information concerning their relationship with or interest in either of the Company is required by Item 10 of the Registration Statement.
(ii) In their opinion, the financial statements and supporting schedules examined by them and included or incorporated by reference in the Registration Statement and Prospectus and audited by them and covered by their opinions therein comply as to form in all material respects with the applicable accounting requirements of the Securities Act and the Securities Act Rules and Regulations with respect to registration statements on Form S-3 and the Exchange Act and the Exchange Act Rules and Regulations.
(iii) They have performed limited procedures, not constituting an audit, including a reading of the latest available unaudited interim consolidated financial statements of the Company, a reading of the minute books of the Company, inquiries of certain officials of the Company who have responsibility for financial and accounting matters and such other inquiries and procedures as may be specified in such letter, and on the basis of such limited review and procedures nothing came to their attention that caused them to believe that:
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(A) the unaudited financial statements of the Company included in the Registration Statement, or incorporated by reference therein, do not comply as to form in all material respects with the applicable accounting requirements of the Securities Act and the Securities Act Rules and Regulations and the Exchange Act and the Exchange Act Rules and Regulations, or material modifications are required for them to be presented in conformity with generally accepted accounting principles;
(B) the operating data and balance sheet data included or incorporated by reference in the Prospectus were not determined on a basis substantially consistent with that used in determining the corresponding amounts in the audited financial statements included or incorporated by reference in the Registration Statement;
(C) the pro forma financial information included or incorporated by reference in the Registration Statement was not determined on a basis substantially consistent with that of the audited financial statements included or incorporated by reference in the Registration Statement; or
(D) at a specified date not more than five days prior to the date hereof, there had been any change in the capital stock of the Company or the Subsidiaries, or any increase in the debt of the Company or the Subsidiaries or any decrease in the net assets of the Company or the Subsidiaries, as compared with the amounts shown in the most recent consolidated balance sheet of the Company and the Subsidiaries, included in the Registration Statement or incorporated by reference therein, or, during the period from the date of the most recent consolidated statement of operations included in the Registration Statement or incorporated by reference therein to a specified date not more than five days prior to the date hereof, there were any decreases, as compared with the corresponding period in the preceding year, in revenues, net income or funds from operations of the Company and the Subsidiaries, except in all instances for changes, increases or decreases which the Registration Statement and the Prospectus disclose have occurred or may occur.
(iv) In addition to the examination referred to in their report included in the Registration Statement and the Prospectus and the limited procedures referred to in clause (iii) above, they have carried out certain other specified procedures, not constituting an audit, with respect to certain amounts, percentages and financial information which are included in the Registration Statement and the Prospectus and which are specified by the Agents, and have found such amounts, percentages and financial information to be in agreement with the relevant accounting, financial and other records of the Company and the Subsidiaries identified in such letter.
(e) Officers Certificate. On the Commencement Date and, if called for by any Terms Agreement, on the corresponding Settlement Date, the Agents shall have received from the Company a certificate, dated the date of its delivery, signed by each of the Chief
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Executive Officer and the Chief Financial Officer of the Company, in form and substance satisfactory to the Agents, to the effect that:
(i) No stop order suspending the effectiveness of the Registration Statement has been issued and, to the best of such officers information and belief, no proceeding for that purpose is pending or threatened by the Commission;
(ii) No order suspending the effectiveness of the Registration Statement or the qualification or registration of the Notes under the securities or Blue Sky laws of any jurisdiction is in effect and, to the best of such officers information and belief, no proceeding for such purpose is pending before or threatened or contemplated by the Commission or the authorities of any such jurisdiction;
(iii) Any request for additional information on the part of the staff of the Commission or any such authorities has been complied with to the satisfaction of the staff of the Commission or such authorities;
(iv) Each signer of such certificate has carefully examined the Registration Statement and the Prospectus (including any documents filed under the Exchange Act and deemed to be incorporated by reference into the Prospectus) and (A) as of the date of such certificate, such documents, taken together, are true and correct in all material respects and do not omit to state a material fact required to be stated therein or necessary in order to make the statements therein not untrue or misleading and (B) no event has occurred as a result of which it is necessary to amend or supplement the Prospectus in order (1) to make the statements therein not untrue or misleading in any material respect or (2) to otherwise comply with the disclosure requirements of Form S-3. There has been no document required to be filed under the Exchange Act and the Exchange Act Rules and Regulations that upon such filing would be deemed to be incorporated by reference into the Prospectus that has not been so filed;
(v) Each of the representations and warranties of the Company contained in this Distribution Agreement was, when originally made, and is, at the time such certificate is delivered, true and correct in all material respects;
(vi) Each of the covenants required to be performed by the Company herein on or prior to the delivery of such certificate has been duly, timely and fully performed in all material respects, and each condition herein required to be complied with by the Company on or prior to the date of such certificate has been duly, timely and fully complied with, in all material respects; and
(vii) Subsequent to the latter of the execution and delivery of the Distribution Agreement and the date of the most recent Terms Agreement through the date of such certificate, there has not occurred any downgrading in the rating accorded the Notes or any other debt securities of the Company by any Rating Agency nor has any notice been given to the Company of (A) any intended or potential downgrading by any Rating Agency in such securities, or (B) any review or possible change by any Rating
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Agency that does not indicate a stable, positive or improving rating accorded such securities.
(f) No Stop Orders or Unmet Commission Requests. (i) No stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceedings for that purpose shall be pending or threatened by the Commission, (ii) no order suspending the effectiveness of the Registration Statement or the qualification or registration of the Notes under the securities or Blue Sky laws of any jurisdiction shall be in effect and no proceeding for such purpose shall be pending before or threatened or contemplated by the Commission or the authorities of any such jurisdiction, (iii) any request for additional information on the part of the staff of the Commission or any such authorities shall have been complied with to the satisfaction of the staff of the Commission or such authorities, and (iv) after the date hereof no amendment or supplement to the Registration Statement or the Prospectus (other than any document required to be filed under the Exchange Act that upon filing is deemed to be incorporated by reference therein) shall have been filed unless a copy thereof was first submitted to the Agents and the Agents did not object thereto in good faith.
(g) No Material Adverse Change. Since the respective dates as of which information is given in the Registration Statement and the Prospectus, (i) there shall not have been a material adverse change in the general affairs, business, business prospects, properties, management, condition (financial or otherwise) or results of operations of the Company and its subsidiaries, taken as a whole, whether or not arising from transactions in the ordinary course of business, in each case other than as set forth in or contemplated by the Registration Statement and the Prospectus, (ii) there shall not have been any material change on a consolidated basis, in the equity capitalization or long-term debt of the Company, or any adverse change in the rating assigned to any securities of the Company, in each case other than as set forth in or contemplated by the Registration Statement and the Prospectus, and (iii) neither the Company nor any of its subsidiaries shall have sustained any material loss or interference with its business or properties from fire, explosion, flood or other casualty, whether or not covered by insurance, or from any labor dispute or any court or legislative or other governmental action, order or decree, which is not set forth in the Registration Statement and the Prospectus, if in the judgment of the Agents any such development makes it impracticable or inadvisable to offer or deliver the Notes on the terms and in the manner contemplated in the Prospectus.
(h) No Material Litigation Commenced. Since the respective dates as of which information is given in the Registration Statement and the Prospectus, there shall have been no litigation or other proceeding instituted against the Company or any of its subsidiaries or any of their respective officers or directors in their capacities as such, before or by any Federal, state or local court, commission, regulatory body, administrative agency or other governmental body, domestic or foreign, in which litigation or proceeding an unfavorable ruling, decision or finding would materially and adversely affect the business, properties, business prospects, condition (financial or otherwise) or results of operations of the Company and its subsidiaries taken as a whole.
(i) Accuracy of Representations and Warranties; Observance of Covenants. At each Delivery Date, each of the representations and warranties of the Company contained herein shall be true and correct in all material respects, as if made at such Delivery Date, and all
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covenants and agreements contained herein to be performed on the part of the Company and all conditions contained herein to be fulfilled or complied with by the Company at or prior to such Delivery Date, shall have been duly performed, fulfilled or complied with.
(j) Blue Sky Qualification. The Notes shall be qualified for sale in the jurisdictions designated pursuant to Section 5(h), each such qualification shall be in effect and not subject to any stop order or other proceeding.
(k) Other Documents. On the Commencement Date and on each Delivery Date, counsel to the Agents shall have been furnished with such other documents and opinions as such counsel may reasonably require for the purpose of enabling such counsel to pass upon the issuance and sale of Notes as herein contemplated and related proceedings, or in order to evidence the accuracy and completeness of any of the representations and warranties, or the fulfillment of any of the conditions, herein contained; and all proceedings taken by the Company in connection with the issuance and sale of Notes as herein contemplated shall be satisfactory in form and substance to the Agents and to counsel to the Agents.
(l) Special Conditions for Agents Purchases as Principal. The obligations of the Agents to purchase Notes as principal will be subject to the following further conditions: (i) the rating assigned by each of the Rating Agencies, or any other nationally recognized securities rating agency, to any debt securities of the Company as of the date of the agreement to purchase Notes as principal shall not have been lowered and no such rating agency shall have publicly announced that it has under surveillance or review, with possible negative implications, its ratings of any debt securities of the Company since that date and (ii) there shall not have come to the attention of any Agent any facts that would cause such Agent to believe that the Prospectus, at the time it was required to be delivered to a purchaser of the Notes, contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in light of the circumstances existing at such time, not misleading.
The documents required to be delivered by this Section 6 as a condition precedent to each Agents obligation to begin soliciting offers to purchase Notes as an agent of the Company were originally delivered to the Agents at the San Francisco office of OMelveny & Myers llp, counsel for the Agents, on December 21, 1998. The date of delivery of such documents is referred to herein as the Commencement Date.
All such opinions, certificates, letters and other documents will be in compliance with the provisions hereof only if they are reasonably satisfactory in form and substance to the Agents and their counsel. The Company will furnish the Agents with such conformed copies of such opinions, certificates, letters and other documents as the Agents shall reasonably request.
If any condition specified in this Section 6 shall not have been fulfilled when and as required to be fulfilled, this Distribution Agreement may be terminated by any Agent in accordance with Section 13 below (such termination to be effective only with respect to such Agent) and any such termination shall be without liability of any party to any other party, except that the covenant regarding provision of an earnings statement set forth in Section 5(f) hereof, the indemnity and contribution agreements set forth in Section 9 hereof, the provisions concerning payment of expenses under Section 10 hereof, the provisions concerning the
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representations, warranties and agreements to survive delivery of Section 11 hereof, the provisions relating to parties set forth in Section 15 and the provisions relating to governing law set forth in Section 16 hereof shall remain in effect.
7. Delivery of and Payment for Notes Sold through the Agents . Delivery of Notes sold through any Agent as agent shall be made by the Company to such Agent for the account of any purchaser only against payment therefor in immediately available funds. In the event that a purchaser shall fail either to accept delivery of or to make payment for a Note on the date fixed for settlement, such Agent shall promptly notify the Company and deliver such Note to the Company and, if such Agent has theretofore paid the Company for such Note, the Company will promptly return such funds to such Agent unless the failure arose from the gross negligence or willful misconduct of such Agent or from a default by such Agent in the performance of its obligations hereunder. If such failure occurred for any reason other than the gross negligence or willful misconduct of such Agent or from a default by such Agent in the performance of its obligations hereunder, the Company will reimburse such Agent on an equitable basis for its loss of the use of the funds for the period such funds were credited to the Companys account.
8. Additional Covenants of the Company . The Company covenants and agrees with the Agents that:
(a) Reaffirmation of Representations and Warranties . Each acceptance by the Company of an offer for the purchase of Notes (whether to an Agent as principal or through an Agent as agent), and each delivery of Notes (whether to an Agent as principal or through an Agent as agent), shall be deemed to be an affirmation that the representations and warranties of the Company contained in this Distribution Agreement and in the most recent certificate (for each type of certificate) theretofore delivered to any Agent pursuant hereto (and if the applicable Agent has not received a copy of such certificate, one shall be supplied) are true and correct in all material respects at the time of such acceptance or sale, as the case may be, and an undertaking that such representations and warranties will be true and correct at the time of delivery to such Agent or to the purchaser, as the case may be, of the Note or Notes relating to such acceptance or sale, as the case may be, as though made at and as of each such time (and it is understood that such representations and warranties shall relate to the Registration Statement and Prospectus as amended and supplemented to each such time).
(b) Subsequent Delivery of Certificates . Upon the written request of any Agent within 45 days of the Companys filing with the Commission of any Quarterly Report on Form 10-Q or Annual Report on Form 10-K incorporated by reference into the Prospectus, and otherwise only (i) as may be required in connection with a sale pursuant to Section 4(a) or (ii) at such times as may be reasonably requested by an Agent following the occurrence of any event that such Agent reasonably considers to be a material adverse change to the business, prospects, properties, financial position or results of operations of the Company and its subsidiaries, taken as a whole, the Company shall furnish or cause to be furnished to the Agents forthwith a certificate, dated the date of filing with the Commission of such document, the date of such sale or the date requested by such Agent, as applicable, in form reasonably satisfactory to such Agent, to the effect that the statements contained in the certificate referred to in Section 6(e) hereof which were last furnished to the Agents are true and correct at the time of such filing, as though
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made at and as of such time (except that such statements shall be deemed to relate to the Registration Statement and the Prospectus as amended and supplemented to such time) or, in lieu of such certificate, a certificate substantially similar to the certificate referred to in Section 6(e) hereof, modified as necessary to relate to the Registration Statement and the Prospectus as amended and supplemented to the time of delivery of such certificate.
(c) Subsequent Delivery of Legal Opinions . Upon the written request of any Agent within 45 days of the Companys filing with the Commission of any Quarterly Report on Form 10-Q or Annual Report on Form 10-K incorporated by reference into the Prospectus, and otherwise only (i) as may be required in connection with a sale pursuant to Section 4(a) or (ii) at such times as may be reasonably requested by an Agent following the occurrence of any event that such Agent reasonably considers to be material adverse change to the business, prospects, properties, financial position or results of operations of the Company taken as a whole, the Company shall furnish or cause to be furnished forthwith, and in any case promptly upon request, to the Agents and to counsel to the Agents the written opinions of counsel to the Company, dated the date of filing with the Commission of such document, the date of such sale or the date requested by such Agent, as applicable, to the effect of the opinions and statements referred to in Sections 6(a)and 6(b) and in form and substance reasonably satisfactory to the Agents, which opinions may include such reductions or limitations as shall be reasonably satisfactory to the Agents, and shall be modified, as necessary, to relate to the Registration Statement and the Prospectus as amended and supplemented to the time of delivery of such opinion or, in lieu of such opinion, counsel last furnishing such opinion to the Agents may furnish the Agents with a letter substantially to the effect that the Agents may rely on such last opinion to the same extent as though it were dated the date of such letter authorizing reliance (except that statements in such last opinion shall be deemed to relate to the Registration Statement and the Prospectus as amended and supplemented to the time of delivery of such letter authorizing reliance).
(d) Subsequent Delivery of Comfort Letters . Upon the written request of any Agent within 45 days of the Companys filing with the Commission of any Quarterly Report on Form 10-Q or Annual Report on Form 10-K incorporated by reference into the Prospectus, and otherwise only (i) as may be required in connection with a sale pursuant to Section 4(a) or (ii) at such times as may be reasonably requested by an Agent following the occurrence of any event that such Agent reasonably believes may have caused a material adverse change to the financial position or results of operations of the Company and its consolidated subsidiaries, taken as a whole, the Company shall cause the Accountants forthwith to furnish the Agents a letter, dated the date of the filing of such document with the Commission, the date of such sale or the date requested by such Agent, as applicable, in form and substance reasonably satisfactory to the Agents, substantially similar to the portions of the letter referred to in clauses (i) and (ii) of Section 6(d) hereof (but modified to relate to the Registration Statement and Prospectus as amended and supplemented to the date of such letter) and substantially similar to the portions of the letter referred to in clauses (iii) and (iv) of said Section 6(d) with such changes as may be necessary to reflect changes in the financial statements and other information derived from the accounting records of the Company.
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9. Indemnification and Contribution .
(a) Indemnification of the Agents by the Company. The Company will indemnify and hold harmless the Agents and their directors, officers, employees and agents and each person, if any, who controls any Agent within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act from and against any and all losses, claims, liabilities, expenses and damages (including, but not limited to, any and all investigative, legal and other expenses reasonably incurred in connection with, and any and all amounts paid in settlement of, any action, suit or proceeding between any of the indemnified parties and any indemnifying parties or between any indemnified party and any third party, or otherwise, or any claim asserted), as and when incurred, to which an Agent, or any such person, may become subject under the Securities Act, the Exchange Act or other federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, liabilities, expenses or damages arise out of or are based on (i) any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus, the Registration Statement or the Prospectus or any amendment or supplement to the Registration Statement or the Prospectus or in any documents filed under the Exchange Act and deemed to be incorporated by reference into the Prospectus, or in any application or other document executed by or on behalf of the Company or based on written information furnished by or on behalf of the Company filed in any jurisdiction in order to qualify the Notes under the securities laws thereof or filed with the Commission, (ii) the omission or alleged omission to state in such document a material fact required to be stated in it or necessary to make the statements in it not misleading or (iii) any act or failure to act or any alleged act or failure to act by an Agent in connection with, or relating in any manner to, the Notes or the offering contemplated hereby, and which is included as part of or referred to in any loss, claim, liability, expense or damage arising out of or based upon matters covered by clause (i) or (ii) above ( provided that the Company shall not be liable under this clause (iii) to the extent it is finally judicially determined by a court of competent jurisdiction that such loss, claim, liability, expense or damage resulted directly from any such acts or failures to act undertaken or omitted to be taken by an Agent through gross negligence or willful misconduct); provided that the Company will not be liable to the extent that such loss, claim, liability, expense or damage arises from the sale of the Notes to any person by an Agent and is based on an untrue statement or omission or alleged untrue statement or omission made in reliance on and in conformity with information relating to an Agent furnished in writing to the Company by such Agent expressly for inclusion in the Registration Statement, any preliminary prospectus or the Prospectus.
(b) Indemnification of the Company and its Directors, Certain Officers and Control Persons by the Agents. The Agents will indemnify and hold harmless the Company and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, each director of the Company and each officer of the Company who signs the Registration Statement to the same extent as the foregoing indemnity from the Company to the each Agent, but only insofar as losses, claims, liabilities, expenses or damages arise out of or are based on any untrue statement or omission or alleged untrue statement or omission made in reliance on and in conformity with information relating to an Agent furnished in writing to the Company by such Agent expressly for use in the Registration Statement, any preliminary prospectus or the Prospectus. This indemnity will be in addition to any liability that an Agent might otherwise have; provided, however , that in no case shall an Agent be liable or responsible for any amount in excess of the total discount or
28
commission received by such Agent in connection with the offering of the Notes that were the subject of the claim for indemnification.
(c) Procedures. Any party that proposes to assert the right to be indemnified under this Section 9 will, promptly after receipt of notice of commencement of any action against such party in respect of which a claim is to be made against an indemnifying party or parties under this Section 9, notify each such indemnifying party of the commencement of such action, enclosing a copy of all papers served, but the omission so to notify such indemnifying party will not relieve it from any liability that it may have to any indemnified party under the foregoing provisions of this Section 9 unless, and only to the extent that, such omission results in the forfeiture of substantive rights or defenses by the indemnifying party. If any such action is brought against any indemnified party and it notifies the indemnifying party of its commencement, the indemnifying party will be entitled to participate in and, to the extent that it elects by delivering written notice to the indemnified party promptly after receiving notice of the commencement of the action from the indemnified party, jointly with any other indemnifying party similarly notified, to assume the defense of the action, with counsel satisfactory to the indemnified party, and after notice from the indemnifying party to the indemnified party of its election to assume the defense, the indemnifying party will not be liable to the indemnified party for any legal or other expenses except as provided below and except for the reasonable costs of investigation subsequently incurred by the indemnified party in connection with the defense. The indemnified party will have the right to employ its own counsel in any such action, but the fees, expenses and other charges of such counsel will be at the expense of such indemnified party unless (i) the employment of counsel by the indemnified party has been authorized in writing by the indemnifying party, (ii) the indemnified party has reasonably concluded (based on advice of counsel) that there may be legal defenses available to it or other indemnified parties that are different from or in addition to those available to the indemnifying party, (iii) a conflict or potential conflict exists (based on advice of counsel to the indemnified party) between the indemnified party and the indemnifying party (in which case the indemnifying party will not have the right to direct the defense of such action on behalf of the indemnified party) or (iv) the indemnifying party has not in fact employed counsel to assume the defense of such action within a reasonable time after receiving notice of the commencement of the action, in each of which cases the reasonable fees, disbursements and other charges of counsel will be at the expense of the indemnifying party or parties. It is understood that the indemnifying party or parties shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees, disbursements and other charges of more than one separate firm admitted to practice in such jurisdiction at any time for all such indemnified party or parties. All such fees, disbursements and other charges will be reimbursed by the indemnifying party promptly as they are incurred. An indemnifying party will not be liable for any settlement of any action or claim effected without its written consent (which consent will not be unreasonably withheld). No indemnifying party shall, without the prior written consent of each indemnified party, settle or compromise or consent to the entry of any judgment in any pending or threatened claim, action or proceeding relating to the matters contemplated by this Section 9 (whether or not any indemnified party is a party thereto), unless such settlement, compromise or consent includes a unconditional release of each indemnified party from all liability arising or that may arise out of such claim, action or proceeding.
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(d) Contribution. In order to provide for just and equitable contribution in circumstances in which the indemnification provided for in the foregoing paragraphs of this Section 9 is applicable in accordance with its terms but for any reason is held to be unavailable from the Company or the Agents, the Company and any applicable Agent will contribute to the total losses, claims, liabilities, expenses and damages (including any investigative, legal and other expenses reasonably incurred in connection with, and any amount paid in settlement of, any action, suit or proceeding or any claim asserted, but after deducting any contribution received by the Company from persons other than an Agent, such as persons who control the Company within the meaning of the Securities Act and officers of the Company who signed the Registration Statement, who also may be liable for contribution) to which the Company and any applicable Agent may be subject in such proportion as shall be appropriate to reflect the relative benefits received by the Company on the one hand and any applicable Agent on the other. The relative benefits received by the Company on the one hand and any applicable Agent on the other shall be deemed to be in the same proportion as the total net proceeds from the offering of any Notes (before deducting expenses) received by the Company bear to the total commissions received by applicable Agent or Agents. If, but only if, the allocation provided by the foregoing sentence is not permitted by applicable law, the allocation of contribution shall be made in such proportion as is appropriate to reflect not only the relative benefits referred to in the foregoing sentence but also the relative fault of the Company, on the one hand, and any applicable Agent, on the other, with respect to the statements or omissions which resulted in such loss, claim, liability, expense or damage, or action in respect thereof, as well as any other relevant equitable considerations with respect to such offering. Such relative fault shall be determined by reference to whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company or an Agent, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid or payable by an indemnified party as a result of the loss, claim, liability, expense or damage, or action in respect thereof, referred to above in this Section 9(d) shall be deemed to include, for purpose of this Section 9(d), any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 9(d), no Agent shall be required to contribute any amount in excess of the commissions and other compensation received by such Agent and no person found guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 9(d), any person who controls a party to this Distribution Agreement within the meaning of the Securities Act will have the same rights to contribution as that party, and each officer of the Company who signed the Registration Statement will have the same rights to contribution as the Company, subject in each case to the provisions hereof. Any party entitled to contribution, promptly after receipt of notice of commencement of any action against such party in respect of which a claim for contribution may be made under this Section 9(d), will notify any such party or parties from whom contribution may be sought but the omission so to notify will not relieve the party or parties from whom contribution may be sought from any other obligation it or they may have under this Section 9(d). No party will be liable for contribution with respect to any action or claim settled without its written consent (which consent will not be unreasonably withheld).
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(e) Survival of Indemnity and Contribution Provisions. The indemnity and contribution agreements contained in this Section 9 and the representations and warranties of the Company contained in this Distribution Agreement shall remain operative and in full force and effect regardless of (i) any investigation made by an Agent or on its behalf, (ii) acceptance of any of the Notes and payment therefore or (iii) any termination of this Distribution Agreement.
10. Reimbursement of Agents Expenses . If the Company shall fail to perform any agreement on its part to be performed hereunder, or if any condition of the Agents obligations hereunder required to be fulfilled by the Company is not fulfilled, the Company will reimburse any applicable Agent for all reasonable out-of-pocket expenses (including fees and disbursements of counsel) incurred by such Agent in connection with this Distribution Agreement, and upon demand the Company shall pay the full amount thereof to such Agent. If this Distribution Agreement is terminated pursuant to Section 13 by reason of the default of any Agent, the Company shall not be obligated to reimburse such Agent on account of those expenses.
11. Representations and Agreements to Survive Delivery . All representations, warranties and agreements contained in this Distribution Agreement or in certificates of officers of the Company submitted pursuant hereto shall remain operative and in full force and effect, regardless of any investigation made by or on behalf of any Agent or any con-trolling person of such Agent, or by or on behalf of the Company or of any of its Subsidiaries, and shall survive each delivery of and payment for any of the Notes.
12. Role of Agents . In acting under this Agreement and in connection with the sale of any Notes by the Company (other than Notes sold to an Agent as principal), each Agent is acting solely as agent of the Company and does not assume any obligation towards or relationship of agency or trust with any purchaser of Notes. An Agent shall make reasonable efforts to assist the Company in obtaining performance by each purchaser whose offer to purchase Notes has been solicited by such Agent and accepted by the Company, but such Agent shall not have any liability to the Company in the event any such purchase is not consummated for any reason. If the Company shall default in its obligations to deliver Notes to a purchaser whose offer it has accepted, the Company shall hold the relevant Agent harmless against any loss, claim, damage or liability arising from or as a result of such default and shall, in particular, pay to such Agent the commission it would have received had such sale been consummated.
13. Termination . The Company shall have the right to terminate this Distribution Agreement with respect to any or all of the Agents at any time by giving notice hereunder to the Agents as hereinafter specified. Each Agent shall have the right by giving notice as hereinafter specified to terminate this Distribution Agreement and/or any Terms Agreement hereunder at any time, provided that if such termination would occur on or after the date of such Terms Agreement and prior to the Settlement Date with respect to such Terms Agreement, any Agent may terminate this Distribution Agreement and such Terms Agreement only if (i) the Company shall have failed, refused or been unable, at any time, to perform any agreement on its part to be performed hereunder, (ii) any other condition of the Agents obligations hereunder is not fulfilled when due, (iii) the rating assigned by either of the Rating Agencies to the Company or the Notes as of or subsequent to the date of this Distribution Agreement shall have been lowered since that date or if either of the Rating Agencies shall have publicly announced that it has under
31
surveillance or review for the purpose of considering lowering such rating, its rating of the Company or the Notes, (iv) trading in any of the equity securities of the Company shall have been suspended by the Commission, the NASD, by an exchange that lists such equity securities or by the Nasdaq Stock Market, (v) trading in securities generally on the New York Stock Exchange or the Nasdaq Stock Market shall have been suspended or limited or minimum or maximum prices shall have been generally established on such exchange or over the counter market, or additional material governmental restrictions, not in force on the date of this Agreement, shall have been imposed upon trading in securities generally by such exchange or by order of the Commission or the NASD or any court or other governmental authority, (vi) a general banking moratorium shall have been declared by either Federal or New York State authorities, (vii) any material adverse change in the financial or securities markets in the United States or in political, financial or economic conditions in the United States or any outbreak or material escalation of hostilities or declaration by the United States of a national emergency or war or other calamity or crisis shall have occurred the effect of any of which is such as to make it, in the sole judgment of the Agents, impracticable or inadvisable to market the Shares on the terms and in the manner contemplated by the Prospectus, or (viii) if there shall have come to the attention of the Agents any facts that would cause them to believe that the Prospectus, at the time it was required to be delivered to a purchaser of Notes, included an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in light of the circumstances existing at the time of such delivery, not misleading. Any such termination notice shall be effective only with respect to such Agent. As used in this Section 13, the term Prospectus means the Prospectus in the form first provided to the Agents for use in confirming sales of the related Notes. In the event of any such termination, neither party will have any liability to the other party hereto, except that (i) an Agent shall be entitled to any commission earned in accordance with the third paragraph of Section 4(b) hereof, (ii) if at the time of termination (a) such Agent shall own any Notes purchased by it as principal with the intention of reselling them or (b) an offer to purchase any of the Notes has been accepted by the Company but the time of delivery to the purchaser or his agent of the Note or Notes relating thereto has not occurred, the covenants set forth in Sections 5 and 8 hereof shall remain in effect until such Notes are so resold or delivered, as the case may be, and (iii) the covenant set forth in Section 5(f) hereof, the provisions of Section 10 hereof, the indemnity and contribution agreements set forth in Section 9 hereof, and the provisions of Sections 11, 15 and 16 hereof shall remain in effect.
14. Notices . All notices or communications hereunder shall be in writing and shall be mailed, delivered or telecopied and confirmed (a) if to the Company, to:
AvalonBay Communities, Inc.
2900 Eisenhower Avenue, Suite 300 Alexandria, Virginia 22314 Attention: Thomas J. Sargeant Telephone: 703-317-4635 Telecopy: 703-329-0060 |
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with a copy to:
Goodwin Procter llp
Exchange Place 53 State Street Boston, Massachusetts 02109-2881 Attention: Gilbert G. Menna, P.C. Telephone: 617-570-1433 Telecopy: 617-523-1231 |
(b) and if to the Agents to:
Banc of America Securities LLC
100 N. Tryon Street, 7 th Floor Charlotte, NC 28255 Mail Code: NC 1007-07-01 Telecopy: (704) 388-9939 |
Citigroup Global Markets Inc.
Medium-Term Note Department 388 Greenwich Street New York, NY 10013 Telephone: (212) 816-5831 Telecopy: (212) 816-0949 |
Fleet Securities, Inc.
100 Federal Street, MADE 10012H Boston, MA 02110 Attention: John Crees Telephone: (617) 434-5983 Telecopy: (617) 434-8702 |
J.P. Morgan Securities Inc.
270 Park Avenue, 7 th Floor New York, NY 10017 Attention: Transaction Execution Group Telephone: (212) 834-5710 Telecopy: (212) 834-6702 |
Lehman Brothers Inc.
745 Seventh Avenue New York, NY 10019 Attention: Fixed Income Syndicate/Medium Term Notes Desk Telephone: (212) 526-9664 Telecopy: (212) 526-0943 |
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Morgan Stanley & Co. Incorporated
1585 Broadway New York, NY 10036 Attention: Legal Department Telephone: (212) 761-4000 Telecopy: (212) 761-0783 |
Wachovia Capital Markets, LLC
301 So. College Street, DC-8 One Wachovia Center Charlotte, NC 28288 Attention: Corporate Syndicate Desk Telephone: (704) 383-7727 Telecopy: (704) 383-9165 |
with a copy to: |
OMelveny & Myers llp
275 Battery Street, Suite 2600 San Francisco, CA 94111-3305 Attention: Peter T. Healy, Esq. Telephone: (415) 984-8833 Telecopy: (415) 984-8701 |
Morgan Stanley & Co. Incorporated
1585 Broadway New York, NY 10036 Attention: Debt Syndicate Desk Telephone: (212) 761-2000 |
Any party to this Distribution Agreement may change such address for notices by sending to the other parties to this Distribution Agreement written notice of a new address for such purpose.
15. Parties . This Distribution Agreement shall inure to the benefit of and be binding upon the Agents and the Company and their respective successors. Nothing expressed or mentioned in this Distribution Agreement is intended, or shall be construed, to give any person, firm or corporation, other than the parties hereto and their respective successors and the controlling persons and officers and directors referred to in Section 9 hereof and their heirs and legal representatives, any legal or equitable right, remedy or claim under or in respect of this Distribution Agreement or any provision herein contained. This Distribution Agreement and all conditions and provisions hereof are intended to be for the sole and exclusive benefit of the parties hereto and respective successors and said controlling persons and officers and directors and their heirs and legal representatives, and for the benefit of no other person, firm or corporation. No purchaser of Notes shall be deemed to be a successor by reason merely of such purchase.
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16. Governing Law . THIS DISTRIBUTION AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF SUCH STATE.
17. Counterparts . This Distribution Agreement may be executed in one or more counterparts, signature pages may be detached from such separately executed counterparts and reattached to other counterparts and, in each such case, the executed counterparts hereof shall constitute a single instrument. Signature pages may be delivered by telecopy.
18. Enforceability . In case any provision of this Distribution Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
19. Waiver of Rights to Trial by Jury . The Company and the Agents each hereby irrevocably waive any right they may have to a trial by jury in respect of any claim based upon or arising out of this Distribution Agreement or the transactions contemplated hereby.
20. Amendments and Modifications . This Distribution Agreement may not be amended or otherwise modified or any provision hereof waived except by an instrument in writing signed by the Agents and the Company.
[Signature page follows]
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If the foregoing correctly sets forth the understanding between the Company and the several Agents, please so indicate in the space provided below for that purpose, whereupon this letter shall constitute a binding agreement between the Company and the several Agents.
AvalonBay Communities, Inc. | ||||
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By: | /s/ Thomas J. Sargeant | ||
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Name: | Thomas J. Sargeant | ||
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Title: | Executive Vice President and | ||
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Chief Executive Officer |
ACCEPTED as of the date first above written: | ||
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Banc of America Securities LLC | ||
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By:
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/s/ Lily Chang | |
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Name:
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Lily Chang | |
Title:
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Principal | |
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Citigroup Global Markets Inc. | ||
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By:
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/s/ Douglas Sesler | |
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Name:
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Douglas Sesler | |
Title:
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Managing Director | |
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Fleet Securities, Inc. | ||
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By:
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/s/ John Crees | |
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Name:
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John Crees | |
Title:
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Managing Director | |
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J.P. Morgan Securities Inc. | ||
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By:
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/s/ Carl J. Mehldau, Jr. | |
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Name:
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Carl J. Mehldau, Jr. | |
Title:
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Vice President | |
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Lehman Brothers Inc. | ||
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By:
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/s/ Martin Goldberg | |
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Name:
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Martin Goldberg | |
Title:
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Senior Vice President | |
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S-1
MORGAN STANLEY & CO. INCORPORATED | ||
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By:
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/s/ Michael Fusco | |
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Name:
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Michael Fusco | |
Title:
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Executive Director | |
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Wachovia Capital Markets, LLC | ||
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By:
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/s/ William Ingram | |
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Name:
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William Ingram | |
Title:
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Managing Director |
S-2
EXHIBIT A
Terms of Notes
The following terms, if applicable, shall be agreed to by an Agent or Agents and the Company in connection with each sale of Notes:
Principal Amount: $
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Issue Price (Public Offering Price): % | |
Net Proceeds to Issuer: $
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Agents Discount Commission: % | |
Stated Maturity Date:
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Interest Rate: % | |
Original Issue Date:
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CUSIP: | |
Interest Payment Dates:
and
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First Interest Payment Date: |
Exhibit A Page 1
Agent acting in the capacity as indicated below: | ||||||||||
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o | Agent | o Principal | |||||||
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If as Principal: | ||||||||||
o | The Notes are being offered at varying prices related to prevailing market prices at the time of resale. | |||||||||
o | The Notes are being offered at a fixed initial public offering price of ____% of principal amount. | |||||||||
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If as Agent: | ||||||||||
The Notes are being offered at a fixed initial public offering price of __% of Principal Amount. | ||||||||||
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Exchange Rate Agent: | ||||||||||
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Additional/Other Terms: | ||||||||||
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Also, in connection with the purchase of Notes by an Agent as principal, agreement as to whether the following will be required: | ||||||||||
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o | Officers Certificate pursuant to Section 8(b) of the Distribution Agreement. | |||||||||
o | Legal Opinions of Company Counsel pursuant to Section 8(c) of the Distribution Agreement. | |||||||||
o | Legal Opinion of Agents Counsel pursuant to Section 6(c) of the Distribution Agreement. | |||||||||
o | Comfort Letter pursuant to Section 8(d) of the Distribution Agreement. | |||||||||
o | Stand-off Agreement pursuant to Section 5(r) of the Distribution Agreement. |
Exhibit A Page 2
EXHIBIT B
Administrative Procedures Agreement
AVALONBAY COMMUNITIES, INC.
MEDIUM-TERM NOTE PROGRAM
ADMINISTRATIVE PROCEDURES
The Medium-Term Notes Due Nine Months or More from Date of Issue (the Notes) are to be offered on a continuous basis by AvalonBay Communities, Inc., a Maryland corporation (the Issuer). Banc of America Securities LLC, Citigroup Global Markets Inc., Fleet Securities, Inc., J.P. Morgan Securities Inc., Lehman Brothers Inc., Morgan Stanley & Co. Incorporated, and Wachovia Capital Markets, LLC, (the Agents), have each agreed to use their best efforts to solicit purchases of the Notes. The Issuer reserves the right to sell Notes directly or indirectly on its own behalf to investors (other than broker-dealers). The Agents will not be obligated to, but may from time to time, purchase Notes as principal for their own account. The Notes are being sold pursuant to a Distribution Agreement dated August 6, 2003 (the Agency Agreement), among the Issuer, and the Agents, and will be issued pursuant to an indenture dated as of January 16, 1998 and all indentures supplemental thereto, including that certain First Supplemental Indenture, dated as of January 20, 1998, that certain Second Supplemental Indenture, dated as of July 7, 1998, and that certain Amended and Restated Third Supplemental Indenture, dated as of July 10, 2000 (collectively, the Indenture), between the Issuer and US Bank, National Association (as successor to State Street Bank and Trust Company), as Trustee (the Trustee). Capitalized terms used herein and not defined herein shall have the meanings ascribed to such terms in the Agency Agreement. The Notes have been registered under the Securities Act of 1933, as amended (the Act).
Each Note will be represented by either a Global Security (as defined in the Indenture), such Global Security, for purposes hereof either a global note (a Global Note) or a master note (a Master Note), registered in the name of a nominee of The Depository Trust Company, as Depositary (DTC) (a Book-Entry Note), or a certificate issued in definitive form (a Certificated Note). It is currently contemplated that both Notes that bear interest at a fixed rate (a Fixed Rate Note) and Notes that bear interest at a variable rate (a Floating Rate Note) and that are denominated and payable in U.S. dollars may be issued as Book-Entry Notes.
Administrative procedures and specific terms of the offering are explained below. The Issuer will advise the Agents in writing of those persons handling administrative responsibilities with whom the Agents are to communicate regarding offers to purchase Notes and the details of their delivery. Administrative procedures may be modified from time to time as reflected in the applicable Pricing Supplement (as defined below) or elsewhere.
Exhibit B Page 1
PART I
ADMINISTRATIVE PROCEDURES FOR CERTIFICATED NOTES
AND GENERALLY APPLICABLE ADMINISTRATIVE PROCEDURES
Issue/Authentication Date
:
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Each Note shall be dated as of the date of its authentication by the Trustee or an agent designated by the Issuer for such purpose (the Designated Agent). Each Note will also bear an original issue date (the Issue Date) which, with respect to any Note (or portion thereof), shall mean the date of its original issuance (i.e., the settlement date) and shall be specified therein. The issue date will remain the same for all Notes subsequently issued upon transfer, exchange or substitution of an original Note regardless of their dates of authentication. | |
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Maturities
:
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Each Note shall mature on a Business Day, selected by the purchaser and agreed to by the Issuer, which shall be nine months or more from the date of issue. | |
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Price to Public
:
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Each Note shall be issued at 100% of principal amount unless otherwise specified in a supplement to the Prospectus (a Pricing Supplement). | |
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Denominations
:
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The denominations of the Notes shall be $1,000 and integral multiples of $1,000 in excess thereof. (Any Notes denominated other than in U.S. dollars will be issuable in denominations as set forth in such Notes.) | |
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Registration
:
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Notes shall be issued only in fully registered form. | |
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Minimum Purchase
:
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The minimum aggregate amount of Notes denominated and payable in U.S. dollars which may be offered to any purchaser will be $1,000. | |
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Interest
:
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General. Each Note shall bear interest in accordance with its terms, as described in the Prospectus Supplement (as defined in the Agency Agreement), as supplemented by the applicable Pricing Supplement. | |
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Calculation of Interest
:
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Interest on Fixed Rate Notes and interest rates on Floating Rate Notes will be determined as set forth in the form of Notes. With respect to Floating Rate Notes, the Calculation Agent shall determine the interest rate for each Interest Reset Date and communicate such interest rate to the Issuer, and the Issuer will promptly notify the Trustee, or the |
Exhibit B Page 2
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Designated Agent, and the Paying Agent of each such determination. | |
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Payments of Interest and Principal
:
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All interest payments (excluding interest payments made at maturity) will be made by check mailed to the person entitled thereto; provided, however, that if a holder of one or more Notes of like tenor and terms with an aggregate principal amount equal to or greater than U.S. $10,000,000 (or the equivalent thereof in foreign currencies or currency units) shall designate in writing to the Paying Agent at its corporate trust office in The City of New York on or prior to the Regular Record Date relating to the Interest Payment Date an appropriate account with a bank, the Paying Agent will, subject to applicable laws and regulations and until it receives notice to the contrary, make such payment and all succeeding payments to such person by wire transfer to the designated account. If a payment cannot be made by wire transfer because the information received by the Paying Agent is incomplete, a notice will be mailed to the holder at its registered address requesting such information. Upon presentation of the relevant Note, the Trustee, or the Designated Agent, (or any duly appointed Paying Agent) will pay in immediately available funds the principal amount of such Note at maturity and accrued interest, if any, due at maturity; provided that the Note is presented to the Trustee, or the Designated Agent, (or any such Paying Agent) to make payments in accordance with its normal procedures. The Issuer will provide the Trustee, or the Designated Agent, (and any such Paying Agent) with funds available for such purpose. Notes presented to the Trustee, or the Designated Agent, at maturity for payment will be canceled and destroyed by the Trustee, or the Designated Agent, and a certificate of destruction will be delivered to the Issuer. On the fifth Business Day (as defined below) immediately preceding each interest payment date, the Trustee, or the Designated Agent, will furnish to the Issuer a statement showing the total amount of the interest payments to be made on such interest payment date. The Trustee, or the Designated Agent, will provide monthly to the Issuer a list of the principal and interest to be paid on Notes maturing in the next succeeding six months. The Trustee, or the Designated Agent, will assume required by law. |
Exhibit B Page 3
Acceptance of Offers
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The Agents will promptly advise the Issuer of each reasonable offer to purchase Notes received by it, other than those rejected by the Agents. The Agents may, in their discretion reasonably exercised, without notice to the Issuer, reject any offer received by it, in whole or in part. The Issuer will have the right to withdraw, cancel or modify such offer without notice and will have the sole right to accept offers to purchase Notes and may reject any such offer, in whole or in part. If the Issuer rejects an offer, the Issuer will promptly notify the Agents. | |
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Settlement
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All offers accepted by the Issuer will be settled on the third Business Day next succeeding the date of acceptance unless otherwise agreed by any purchaser, the Agents and the Issuer. The settlement date shall be specified upon receipt of an offer. Prior to 3:00 p.m., New York City time, on the business day prior to the settlement date, the Issuer will instruct the Trustee, or the Designated Agent, to authenticate and deliver the Notes pursuant to the terms communicated by the Presenting Agent (as defined below) pursuant to the next succeeding section no later than 2:15 p.m., New York City time, on that day. | |
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Details for Settlement
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For each offer accepted by the Issuer, the Agent who presented the offer (the Presenting Agent) shall communicate to the Issuer, Attention: Thomas J. Sargeant, CFO (Fax No.: (703) 329-0060) who will provide a copy to the Trustee, Attention: Ward Spooner (Fax No.: (212) 361-6153) and the Designated Agent, if any, by facsimile transmission or other acceptable means the following information (the Purchase Information): |
| Exact name in which the Note or Notes are to be registered (registered owner). | |||
| Exact address of registered owner. | |||
| Taxpayer identification number of registered owner. | |||
| Principal amount of each Note to be delivered to the registered owner. | |||
| Specified Currency and, if other than U.S. dollar, denominations. |
Exhibit B Page 4
| In the case of a Fixed Rate Note, the interest rate or, in the case of a Floating Rate Note, the interest rate formula, the Initial Interest Rate (if known at such time), Index Maturity, Interest Reset Period, Interest Reset Dates, Spread or Spread Multiplier (if any), minimum interest rate (if any) and maximum interest rate (if any). | |||
| Interest Payment Period and Interest Payment Dates. | |||
| Maturity Date of Notes. | |||
| Issue Price of Notes. | |||
| Settlement date for Notes. | |||
| Presenting Agents commission (to be paid in the form of a discount from the proceeds remitted to the Issuer upon settlement). | |||
| Redemption provisions, if any. | |||
| Repayment provisions, if any. | |||
| Original issue discount provisions, if any. | |||
| In the case of Currency Indexed Notes, the above-listed information, as applicable and the Base Exchange Rate(s), Base Interest Rate and Indexed Currencies. | |||
| In the case of Dual Currency Notes, the above listed information, as applicable, and the Optional Payment Currency, Designated Exchange Rate and Option Election Dates. |
The issue date of, and the settlement date for, Notes will be
the same. Before accepting any offer to purchase Notes to be
settled in less than three days, the Issuer shall verify that
the Trustee, or the Designated Agent, will have adequate time
to prepare and authenticate the Notes. Prior to preparing the
Notes for delivery, the Trustee, or the Designated Agent, will
confirm the Purchase Information by telephone with the
Presenting Agent and the Issuer.
Exhibit B Page 5
Confirmation:
|
For each accepted offer, the Presenting Agent will issue a confirmation, in writing, telephonically or through any other commonly used method of communication to the purchaser and a confirmation to the Issuer, Attention: Thomas J. Sargeant, CFO (Fax No.: (703) 329-0060). | |
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Note Deliveries and
Cash Payment:
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Upon the receipt of appropriate documentation and instructions from the Issuer and verification thereof, the Trustee, or the Designated Agent, will cause the Notes to be prepared and authenticated and hold the Notes for delivery against payment. | |
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The Trustee, or the Designated Agent, will deliver the Notes, in accordance with instructions from the Issuer, to the Presenting Agent, as the Issuers agent, for the benefit of the purchaser only against payment in immediately available funds in an amount equal to the face amount of the Notes less the Presenting Agents commission plus any premium or less any discount; provided, however , that the Trustee, or the Designated Agent, may deliver Notes to the Presenting Agent against receipt therefor and, later the same day, receipt of such funds in such amount. Upon receipt of such payment, the Trustee, or the Designated Agent, shall pay promptly an amount equal thereto to the Issuer in immediately available funds by wire transfer to the following account of the Issuer : |
Bank Name:
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Bank of America | ||
Account Name:
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AvalonBay Communities, Inc. | ||
|
Concentration Account | ||
Account Number:
|
3752291106 | ||
ABA Number:
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111000012 |
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The Presenting Agent, as the Issuers agent, will deliver the Notes (with the written confirmation provided for above) to the purchaser thereof against payment by such purchaser in immediately available funds. Delivery of any confirmation or Note will be made in compliance with Delivery of Prospectus below. | |
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Failure of Purchaser:
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In the event that a purchaser shall fail to accept delivery of and make payment for a Note on the settlement date, the Presenting Agent will notify the Trustee or the Designated Agent and the Issuer, by telephone, confirmed in writing. If the Note has been delivered to the Presenting Agent, as the Issuers agent, the Presenting Agent shall return such Note |
Exhibit B Page 6
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to the Trustee, or the Designated Agent. If funds have been advanced for the purchase of such Note, the Trustee, or the Designated Agent, will, immediately upon receipt of such Note contact the Issuer to the attention of Thomas J. Sargeant, CFO (Fax No.: (703) 329-0060) advising the Issuer of such failure. At such time, the Issuer will refund the payment previously made by the Presenting Agent in immediately available funds. Such payments will be made on the settlement date, if possible, and in any event not later than the business day following the settlement date. If such failure shall have occurred for any reason other than the failure of the Presenting Agent to provide the Purchase Information to the Issuer or to provide a confirmation to the purchaser, the Issuer will reimburse the Presenting Agent on an equitable basis for its loss of the use of funds during the period when they were credited to the account of the Issuer. | |
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Immediately upon receipt of the Note in respect of which the failure occurred, the Trustee, or the Designated Agent, will cause the Security Registrar to make appropriate entries to reflect the fact that the Note was never issued and will destroy the Note. | |
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Procedure for Rate
Changes: |
The Issuer and the Agents will discuss from time to time the price of, and the rates to be borne by, the Notes that may be sold as a result of the solicitation of offers by the Agent. Once an Agent has recorded any indication of interest in Notes upon certain terms, and communicated with the Issuer, if the Issuer plans to accept an offer to purchase Notes upon such terms, it will prepare a Pricing Supplement to the Prospectus, as then amended or supplemented, reflecting the terms of such Notes and will arrange to transmit such Pricing Supplement to the Commission for filing in accordance with and within the time prescribed by the applicable paragraph of Rule 424(b) under the Act. The Issuer will supply at least two copies of the Prospectus as then amended or supplemented, and bearing such Pricing Supplement, to the Presenting Agent. The Issuer shall use its reasonable best efforts to send such Pricing Supplement by telecopy or overnight express (for delivery by the close of business on the applicable trade date, but in no event later than 11:00 a.m. New York City time, on the Business Day following the applicable trade date) to the Presenting Agent and the Trustee at the |
Exhibit B Page 7
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following applicable address: |
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If to: | Banc of America Securities LLC | ||
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to both: | Continuously Offered Products | ||
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100 No. Tryon Street | |||
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Charlotte, NC 28255 | |||
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Mail Code: NC 1007-07-01 | |||
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Telecopy Number: (704) 388-9939 1 | |||
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||||
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and | |||
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Syndicate Operations | |||
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100 North Tryon Street | |||
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Charlotte, NC 28255 | |||
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Mail Code: NC 1007-07-01 | |||
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Telecopy Number: (704) 388-9212 2 | |||
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||||
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if to: | Citigroup Global Markets Inc. | ||
|
to: | Attention: Annabelle Avila | ||
|
Brooklyn Army Terminal | |||
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140 58 th Street, 8 th Floor | |||
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Brooklyn, NY 11220 | |||
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Telephone Number: (718) 765-6725 | |||
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Telecopy Number: (718) 765-6734 | |||
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||||
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if to: | Fleet Securities, Inc. | ||
|
to: | Attention: John Crees | ||
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100 Federal Street MADE 10012H | |||
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Boston, MA 02110 | |||
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Telephone Number: (617) 434-5983 | |||
|
Telecopy Number: (617) 434-8702 | |||
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if to: | J.P. Morgan Securities Inc. | ||
|
to: | Attention: Medium-Term Note Desk | ||
|
270 Park Avenue, 8 th Floor | |||
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New York, NY 10017 | |||
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Telephone Number: (212) 834-4421 | |||
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Telecopy Number: (212) 834-6081 3 | |||
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||||
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if to: | Lehman Brothers Inc. | ||
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to: | Attention: Fixed Income Syndicate/ |
1 Please send by telecopy rather than mail. | ||
2 Please send by telecopy rather than mail. | ||
3 Please send by telecopy with original to follow by mail. |
Exhibit B Page 8
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Medium Term Notes Desk | |||
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745 Seventh Avenue | |||
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New York, NY 10019 | |||
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Telephone Number: (212) 526-9664 | |||
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Telecopy Number: (212) 526-0943 | |||
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||||
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with a copy to: | |||
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||||
|
ADP Prospectus Services | |||
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For Lehman Brothers Inc. | |||
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Attention: Client Services Desk | |||
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1155 Long Island Avenue | |||
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Edgewood, NY 11717 | |||
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Telecopy Number: (631) 254-7268 | |||
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if to: | Morgan Stanley & Co. Incorporated | ||
|
to: | Attention: Legal Department | ||
|
1585 Broadway | |||
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New York, NY 10036 | |||
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Telephone Number: (212) 761-4000 | |||
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Telecopy Number: (212) 761-0783 | |||
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with a copy to: | |||
|
||||
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Morgan Stanley & Co. Incorporated | |||
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Attention: Debt Syndicate Desk | |||
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1585 Broadway | |||
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New York, NY 10036 | |||
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Telephone Number: (212) 761-2000 | |||
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if to: | Wachovia Capital Markets, LLC | ||
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to: | Attention: Corporate Syndicate Desk | ||
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301 South College St., DC-8 | |||
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One Wachovia Center | |||
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Charlotte, NC 28288 | |||
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Telephone Number: 704-383-7727 | |||
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Telecopy Number: 704-383-9165 | |||
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if to: | US Bank, National Association (the Trustee) | ||
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to: | Attention: Ward Spooner | ||
|
100 Wall Street | |||
|
New York, NY 10005 | |||
|
Telephone Number: (212) 361-6175 | |||
|
Telecopy Number: (212) 361-6153 |
Exhibit B Page 9
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and to: the Designated Agent, if any. |
For record keeping purposes, one copy of such Pricing
Supplement shall also be mailed to:
|
OMelveny & Myers LLP
|
|
275 Battery Street, Suite 2600
|
|
San Francisco, CA 94111-3305
|
|
Attention: Peter T. Healy, Esq.
|
|
Telecopy Number: (415) 984-8701
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and
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Goodwin Procter LLp
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|
Exchange Place
|
|
53 State Street
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Boston, MA 02109-2281
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Attention: Gilbert G. Menna, P.C.
|
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Telephone Number: (617) 570-1433
|
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Telecopy Number: (617) 523-1231
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In each instance that a Pricing Supplement is prepared, the Presenting Agent will provide a copy of such Pricing Supplement to each investor or purchaser of the relevant Notes or its agent. Pursuant to Rule 434 of the Securities Act of 1933, as amended, the Pricing Supplement may be delivered separately from the Prospectus. No settlements with respect to Notes upon such terms may occur prior to such transmitting and such Agent will not, prior to such transmitting, mail confirmations to customers who have offered to purchase Notes upon such terms. After such transmitting, sales, mailing of confirmations and settlements may occur with respect to Notes upon such terms, subject to the provisions of Delivery of Prospectus below.
Outdated Pricing Supplements and copies of the Prospectus to
which they are attached (other than those retained for files),
will be destroyed.
Exhibit B Page 10
As provided in the Agency Agreement, the Issuer may suspend
solicitation of purchases at any time and, upon receipt of
notice from the Issuer, the Agents will, as promptly as
practicable, but in no event later than one business day
following such notice, suspend solicitation until such time as
the Issuer has advised them that
solicitation of purchases may be resumed. If the Agents receive the notice from the Issuer contemplated by Section 4(b) of the Agency Agreement, they will promptly suspend solicitation and will only resume solicitation as provided in the Agency Agreement. If the Issuer decides to amend or supplement the Registration Statement or the Prospectus relating to the Notes, it will promptly advise the Agents and will furnish the Agents with the proposed amendment or supplement in accordance with the terms of the Agency Agreement. The Issuer will promptly file or mail to the Commission for filing such amendment or supplement, provide the Agents with copies of any such amendment or supplement, confirm to the Agents that such amendment or supplement has been filed with the Commission and advise the Agents that solicitation may be resumed. Any such suspension shall not affect the Issuers obligations under the Agency Agreement; and in the event that at the time the Issuer suspends solicitation of purchases there shall be any offers already accepted by the Issuer outstanding for settlement, the Issuer will have the sole responsibility for fulfilling such obligations; the Agents will make reasonable efforts to assist the Issuer to fulfill such obligations, but the Agents will not be obligated to fulfill such obligations. The Issuer will in addition promptly advise the Agents and the Trustee, or the Designated Agent, if such offers are not to be settled and if copies of the Prospectus as in effect at the time of the suspension may not be delivered in connection with the settlement of such offers. | ||
Delivery of Prospectus
:
|
A copy of the Prospectus, as most recently amended or supplemented on the date of delivery thereof (except as provided below), must be delivered to a purchaser prior to or together with the earlier of delivery of (i) the written confirmation provided for above, and (ii) any Note purchased by such purchaser at the following address: |
If to:
|
Banc of America Securities LLC | ||
to both:
|
Continuously Offered Products | ||
|
100 No. Tryon Street | ||
|
Charlotte, NC 28255 | ||
|
Mail Code: NC 1007-07-01 | ||
|
Telecopy Number: (704) 388-9939 4 |
4 Please send by telecopy rather than mail.
Exhibit B Page 11
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and | |||
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||||
|
Syndicate Operations | |||
|
100 North Tryon Street | |||
|
Charlotte, NC 28255 | |||
|
Mail Code: NC 1007-07-01 | |||
|
Telecopy Number: (704) 388-9212 5 | |||
|
||||
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if to: | Citigroup Global Markets Inc. | ||
|
to: | Attention: Annabelle Avila | ||
|
Brooklyn Army Terminal | |||
|
140 58 th Street, 8 th Floor | |||
|
Brooklyn, NY 11220 | |||
|
Telephone Number: (718) 765-6725 | |||
|
Telecopy Number: (718) 765-6734 | |||
|
||||
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if to: | Fleet Securities, Inc. | ||
|
to: | Attention: John Crees | ||
|
100 Federal Street MADE 10012H | |||
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Boston, MA 02110 | |||
|
Telephone Number: (617) 434-5983 | |||
|
Telecopy Number: (617) 434-8702 | |||
|
||||
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if to: | J.P. Morgan Securities Inc. | ||
|
to: | Attention: Medium-Term Note Desk | ||
|
270 Park Avenue, 8 th Floor | |||
|
New York, NY 10017 | |||
|
Telephone Number: (212) 834-4421 | |||
|
Telecopy Number: (212) 834-6081 6 | |||
|
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if to: | Lehman Brothers Inc. | ||
|
to: | Attention: Fixed Income Syndicate/ | ||
|
Medium Term Notes Desk | |||
|
745 Seventh Avenue | |||
|
New York, NY 10019 | |||
|
Telephone Number: (212) 526-9664 | |||
|
Telecopy Number: (212) 526-0943 | |||
|
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|
with a copy to: | |||
|
||||
|
ADP Prospectus Services | |||
|
For Lehman Brothers Inc. |
_____________________
5 Please send by telecopy rather than mail. | ||||
6 Please send by telecopy with original to follow by mail. |
Exhibit B Page 12
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Attention: Client Services Desk | |||
|
1155 Long Island Avenue | |||
|
Edgewood, NY 11717 | |||
|
Telecopy Number: (631) 254-7268 | |||
|
||||
|
if to: | Morgan Stanley & Co. Incorporated | ||
|
to: | Attention: Legal Department | ||
|
1585 Broadway | |||
|
New York, NY 10036 | |||
|
Telephone Number: (212) 761-4000 | |||
|
Telecopy Number: (212) 761-0783 | |||
|
||||
|
with a copy to: | |||
|
||||
|
Morgan Stanley & Co. Incorporated | |||
|
Attention: Debt Syndicate Desk | |||
|
1585 Broadway | |||
|
New York, NY 10036 | |||
|
Telephone Number: (212) 761-2000 | |||
|
||||
|
if to: | Wachovia Capital Markets, LLC | ||
|
to: | Attention: Corporate Syndicate Desk | ||
|
301 South College St., DC-8 | |||
|
One Wachovia Center | |||
|
Charlotte, NC 28288 | |||
|
Telephone Number: 704-383-7727 | |||
|
Telecopy Number: 704-383-9165 | |||
|
||||
|
if to: | US Bank, National Association (the Trustee) | ||
|
to: | Attention: Ward Spooner | ||
|
100 Wall Street | |||
|
New York, NY 10005 | |||
|
Telephone Number: (212) 361-6175 | |||
|
Telecopy Number: (212) 361-6153 | |||
|
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|
and to: | the Designated Agent, if any. | ||
|
For record keeping purposes, one copy of such Pricing
Supplement shall also be mailed to:
Exhibit B Page 13
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OMelveny & Myers LLP | |||
|
275 Battery Street, Suite 2600 | |||
|
San Francisco, CA 94111-3305 | |||
|
Attention: Peter T. Healy, Esq. | |||
|
Telecopy Number: (415) 984-8701 | |||
|
||||
|
and | |||
|
||||
|
Goodwin Procter llp | |||
|
Exchange Place | |||
|
53 State Street | |||
|
Boston, MA 02109-2281 | |||
|
Attention: Gilbert G. Menna, P.C. | |||
|
Telephone Number: (617) 570-1433 | |||
|
Telecopy Number: (617) 523-1231 |
|
The Issuer shall ensure that the Presenting Agent receives copies of the Prospectus and each amendment or supplement thereto (including appropriate Pricing Supplements) in such quantities and within such time limits as will enable the Presenting Agent to deliver such confirmation or Note to a purchaser as contemplated by these procedures and in compliance with the preceding sentence. If, since the date of acceptance of a purchasers offer, the Prospectus shall have been supplemented solely to reflect any sale of Notes on terms different from those agreed to between the Issuer and such purchaser or a change in posted rates not applicable to such purchaser, such purchaser shall not receive the Prospectus as supplemented by such new supplement, but shall receive the Prospectus as supplemented to reflect the terms of the Notes being purchased by such purchaser and otherwise as most recently amended or supplemented on the date of delivery of the Prospectus. | |
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Authenticity of
Signatures:
|
The Issuer will cause the Trustee, or the Designated Agent, to furnish the Agent from time to time with the specimen signatures of each of the officers, employees or agents of the Trustee, or the Designated Agent, who have been authorized by the Trustee, or the Designated Agent, respectively, to authenticate Notes, but the Agent will have no obligation or liability to the Issuer or the Trustee, or the Designated Agent, in respect of the authenticity of the signature of any officer, employee or agent of the Issuer or the Trustee, or the Designated Agent, on any Note. |
Exhibit B Page 14
Advertising Cost:
|
The Issuer and the Company will determine with the Agent the amount of advertising that may be appropriate in offering the Notes. | |
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Business Day:
|
Business Day means any day (other than a Saturday, Sunday or legal holiday) on which banking institutions in The City of New York are open for business (and, (i) with respect to LIBOR Notes which is also a day on which dealings in the Specified Currency, or if no currency is so specified, in deposits in U.S. dollars, are transacted in the London interbank market, and (ii) with respect to Notes denominated in a Specified Currency other than U.S. dollars, on which banking institutions in the principal financial center of the country of the Specified Currency are open for business). |
Exhibit B Page 15
PART II
ADMINISTRATIVE PROCEDURES FOR GLOBAL NOTE METHOD
OF BOOK-ENTRY NOTES
The following explains the administrative procedures for the Global Note
method of the DTC book-entry system. Any reference to Book-Entry Notes in
this Part II refers to the Global Note method (for a discussion of the Master
Note method of the DTC book-entry system, see Part III below). Certain
generally applicable administrative procedures are set forth in Part I above
(See Issue/Authentication Date, Price to Public, Minimum Purchase,
Authenticity of Signatures, Advertising Cost, and Business Day). In
connection with the qualification of the Book-Entry Notes for eligibility in
the book-entry system maintained by DTC, the Trustee will perform the
custodial, document control and administrative functions described below, in
accordance with its respective obligations under a Letter of Representations
(the Letter) from the Issuer and the Trustee to DTC dated December 21, 1998,
and a Medium-Term Note Certificate Agreement between the Trustee and DTC and
its obligations as a participant in DTC, including DTCs Same-Day Funds
Settlement System (SDFS). Both Fixed and Floating Rate Notes denominated and
payable in U.S. dollars may be issued in book-entry form. Single and
Multi-Indexed Notes may also be issued in book-entry form.
Exhibit B Page 16
On any date of settlement (as defined under Settlement
below) for one or more Book-Entry Notes, the Issuer will
issue a single global security in fully registered form
without coupons (a Global Note) representing up to
$150,000,000 principal amount of all such Notes that have
the same Stated Maturity, redemption provisions, if any,
repayment provisions, if any, Interest Payment Dates,
Original Issue Date, original issue discount provisions,
if any, and, in the case of Fixed Rate Notes, interest
rate, or in the case of Floating Rate Notes, interest
rate formula, initial interest rate, Index Maturity,
Interest Reset Period, Interest Reset Dates, Spread or
Spread Multiplier (if any), minimum interest rate (if
any) and maximum interest rate (if any) and, in the case
of Fixed Rate Notes or Floating Rate Notes that are also
Currency Indexed Notes, Specified Currency, Indexed
Currency, Face Amount and Base Exchange Rate and the Base
Interest Rate, if any, or that are also other Indexed
Notes, the same terms (all of the foregoing are
collectively referred to as the Terms). Each Global
Note will be dated and issued as of the date of its
settlement date, which will be (i) with respect to an
original Global Note (or any portion thereof), its
original issue date, and (ii) following a consolidation
of Global Notes, the most recent Interest Payment Date to
which interest has been paid or duly provided for on the
predecessor Global Notes, regardless of the date of
authentication of such subsequently
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issued Global Note. Each Book-Entry Note will be deemed to have been dated and issued as of the settlement date, which date shall be the Original Issue Date. No Global Note will represent any Certificated Note. | |
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Identification
Numbers: |
The Issuer has arranged with the CUSIP Service Bureau of Standard & Poors Ratings Services (the CUSIP Service Bureau) for the reservation of a series of CUSIP numbers consisting of approximately 900 CUSIP numbers relating to Book-Entry Notes. The Trustee, the Issuer and DTC have obtained from the CUSIP Service Bureau a written list of such reserved CUSIP numbers. The Trustee will assign CUSIP numbers to Global Notes as described below under Settlement Procedure B. DTC will notify the CUSIP Service Bureau periodically of the CUSIP numbers that the Trustee has assigned to Global Notes. The Trustee will notify the Issuer at any time when fewer than 100 of the reserved CUSIP numbers remain unassigned to Global Notes, and, if it deems necessary, the Issuer will reserve additional CUSIP numbers for assignment to Global Notes representing Book Entry Notes. Upon obtaining such additional CUSIP numbers, the Issuer shall deliver a list of such additional CUSIP numbers to the Trustee and DTC. | |
|
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Registration:
|
Each Global Note will be issued only in fully registered form without coupons. Each Global Note will be registered in the name of Cede & Co., as nominee for DTC, on the Securities Register maintained under the Indenture. The beneficial owner of a Book-Entry Note (or one or more indirect participants in DTC designated by such owner) will designate one or more participants in DTC (with respect to such Note, the Participants) to act as agent or agents for such owner in connection with the book-entry system maintained by DTC, and DTC will record in book-entry form, in accordance with instructions provided by such Participants, a credit balance with respect to such Note in the account of such Participants. The ownership interest of such beneficial owner in such Note will be recorded through the records of such Participants or through the separate records of such Participants and one or more indirect participants in DTC. | |
|
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Transfers:
|
Transfers of a Book-Entry Note will be accomplished by book entries made by DTC and, in turn, by Participants (and, in certain cases, one or more indirect participants in DTC acting on behalf of beneficial transferors and transferees of such |
Exhibit B Page 17
|
Note). | |
|
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Exchanges:
|
The Trustee may deliver to DTC and the CUSIP Service Bureau at any time a written notice of consolidation (a copy of which shall be attached to the Global Note resulting from such consolidation) specifying (i) the CUSIP numbers set forth on two or more outstanding Global Notes that represent Book-Entry Notes having the same Terms and for which interest has been paid to the same date, (ii) a date, occurring at least thirty days after such written notice is delivered and at least thirty days before the next Interest Payment Date for such Book-Entry Notes, on which such Global Notes shall be exchanged for a single replacement Global Note and (iii) a new CUSIP number to be assigned to such replacement Global Note. Upon receipt of such a notice, DTC will send to its Participants (including the Trustee) a written reorganization notice to the effect that such exchange will occur on such date. Prior to the specified exchange date, the Trustee will deliver to the CUSIP Service Bureau a written notice setting forth such exchange date and the new CUSIP number and stating that, as of such exchange date, the CUSIP numbers of the Global Notes to be exchanged will no longer be valid. On the specified exchange date, the Trustee will exchange such Global Notes for a single Global Note bearing the new CUSIP number and a new Original Issue Date and the CUSIP numbers of the exchanged Global Notes will, in accordance with CUSIP Service Bureau procedures, be canceled and not immediately reassigned. Notwithstanding the foregoing, if the Global Notes to be exchanged exceed $150,000,000 in aggregate principal amount, one Global Note will be authenticated and issued to represent each $150,000,000 of principal amount of the exchanged Global Notes and an additional Global Note will be authenticated and issued to represent any remaining principal amount of such Global Notes (see Denominations below). | |
|
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Maturities:
|
Each Book-Entry Note will mature on a Business Day nine months or more from the settlement date for such Note. | |
|
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Notice of Repayment
Terms:
|
With respect to each Book-Entry Note that is repayable at the option of the Holder, the Trustee will furnish DTC on the settlement date pertaining to such Book-Entry Note a notice setting forth the terms of such repayment option. Such terms shall include the start date and end dates of the first exercise period, the purchase date following such exercise period, the frequency that such exercise periods occur ( e.g. , quarterly, |
Exhibit B Page 18
|
semiannually, annually, etc.) and if the repayment option expires before maturity, the same information (except frequency) concerning the last exercise period. It is understood that the exercise period shall be at least 15 calendar days long and that the purchase date shall be at least seven calendar days after the last day of the exercise period. | |
|
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Redemption and
Repayment:
|
The Trustee will comply with the terms of the Letter with regard to redemptions and repayments of the Notes. If a Global Note is to be redeemed or repaid in part, the Trustee will exchange such Global Note for two Global Notes, one of which shall represent the portion of the Global Note being redeemed or repaid and shall be canceled immediately after issuance and the other of which shall represent the remaining portion of such Global Note and shall bear the CUSIP number of the surrendered Global Note. | |
|
||
Denominations:
|
Book Entry Notes will be issued in principal amounts of $1,000 or any amount in excess thereof that is an integral multiple of $1,000. Global Notes will be denominated in principal amounts not in excess of $150,000,000. If one or more Book Entry Notes having an aggregate principal amount in excess of $150,000,000 would, but for the preceding sentence, be represented by a single Global Note, then one Global Note will be issued to represent each $150,000,000 principal amount of such Book-Entry Note or Notes and an additional Global Note will be issued to represent any remaining principal amount of such Book-Entry Note or Notes. In such a case, each of the Global Notes representing such Book-Entry Note or Notes shall be assigned the same CUSIP number. | |
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Interest:
|
General. Interest on each Book-Entry Note will begin to accrue from the Original Issue Date of the Global Note representing such Note or from the most recent date to which interest has been paid, as the case may be, in accordance with the terms of the Note, as described in the Prospectus Supplement (as defined in the Agency Agreement), as supplemented by the applicable Pricing Supplement. Standard & Poors Ratings Services will use the information received in the pending deposit message described under the Settlement Procedure C below in order to include the amount of any interest payable and certain other information regarding the related Global Note in the appropriate weekly bond report published by Standard & Poors Ratings Services. |
Exhibit B - Page 19
Notice of Interest
Payment and Regular
Record Dates:
|
On the first Business Day of January, April, July and October of each year, the Trustee will deliver to the Issuer and DTC a written list of Regular Record Dates and Interest Payment Dates that will occur with respect to Book-Entry Notes during the six-month period beginning on such first Business Day. Promptly after each Interest Determination Date or Calculation Date, as applicable (as defined in or pursuant to the applicable Note) for Floating Rate Notes, the Issuer, upon receiving notice thereof, will notify Standard & Poors Ratings Services of the interest rate determined on such Interest Determination Date or Calculation Date, as applicable. | |
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Calculation of
Interest:
|
Interest on Fixed Rate Book-Entry Notes (including interest for partial periods) and interest rates on Floating Rate Book-Entry Notes will be determined as set forth in the form of Notes. With respect to Floating Rate Book-Entry Notes, the Calculation Agent shall determine the interest for each Interest Reset Date and communicate such interest rate to the Issuer and the Issuer will promptly notify the Trustee and the Paying Agent of each such determination. | |
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Payments of
Principal and
Interest:
|
Promptly after each Regular Record Date, the Trustee will deliver to the Issuer and DTC a written notice specifying by CUSIP number the amount of interest to be paid on each Global Note on the following Interest Payment Date (other than an Interest Payment Date coinciding with maturity) and the total of such amounts. The Issuer will confirm with the Trustee the amount payable on each Global Note on such Interest Payment Date. DTC will confirm the amount payable on each Global Note on such Interest Payment Date by reference to the daily or weekly bond reports published by Standard & Poors Ratings Services. The Issuer will pay to the Trustee, as paying agent, the total amount of interest due on such Interest Payment Date (other than at maturity), and the Trustee will pay such amount to DTC at the times and in the manner set forth below under Manner of Payment. | |
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Payments at Maturity:
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On or about the first Business Day of each month, the Trustee will deliver to the Issuer and DTC a written list of principal and interest to be paid on each Global Note maturing either at Stated Maturity or on a Redemption or Repayment Date in the following month. The Issuer, the Trustee and DTC will confirm the amounts of such principal and interest payments with respect to each such Global Note on or about the fifth Business Day preceding the maturity of such Global Note. The Issuer will pay to the Trustee, as paying agent, the |
Exhibit B Page 20
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principal amount of such Global Note, together with interest due at such maturity. The Trustee will pay such amounts to DTC at the times and in the manner set forth below under Manner of Payment. Promptly after payment to DTC of the principal and interest due at the maturity of such Global Note, the Trustee will cancel and destroy such Global Note in accordance with the terms of the Indenture and deliver a certificate of destruction to the Issuer. | |
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Manner of Payment:
|
The total amount of any principal and interest due on Global Notes on any Interest Payment Date or at maturity shall be paid by the Issuer to the Trustee in funds available for use by the Trustee as of 9:30 A.M. (New York City time), or as soon as practicable thereafter on such date. The Issuer will confirm instructions regarding payment in writing to the Trustee. Prior to 10:00 A.M. (New York City time) on each Maturity Date or as soon as possible thereafter, following receipt of such funds from the Issuer, the Trustee will pay by separate wire transfer (using Fedwire message entry instructions in a form previously specified by DTC) to an account at the Federal Reserve Bank of New York previously specified by DTC, in funds available for immediate use by DTC, each payment of principal (together with interest thereon) due on Global Notes on any Maturity Date. On each Interest Payment Date, interest payments shall be made to DTC in same-day funds in accordance with existing arrangements between the Trustee and DTC. Thereafter, on each such date, DTC will pay, in accordance with its SDFS operating procedures then in effect, such amounts in funds available for immediate use to the respective Participants in whose names the Book-Entry Notes represented by such Global Notes are recorded in the book-entry system maintained by DTC. Neither the Issuer nor the Trustee shall have any direct responsibility or liability for the payment by DTC to such Participants of the principal of and interest on the Book-Entry Notes. | |
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Withholding Taxes:
|
The amount of any taxes required under applicable law to be withheld from any interest payment on a Book-Entry Note will be determined and withheld by the Participant, indirect participant in DTC or other Person responsible for forwarding payments and materials directly to the beneficial owner of such Note. | |
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Acceptance
of Offers:
|
Each Agent will promptly advise the Issuer of each reasonable offer to purchase Notes received by it, other than those rejected by such Agent. Each Agent may, in its discretion |
Exhibit B Page 21
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reasonably exercised, without notice to the Issuer, reject any offer received by it, in whole or in part. The Issuer will have the right to withdraw, cancel or modify such offer without notice and will have the sole right to accept offers to purchase Notes and may reject any such offer, in whole or in part. If the Issuer rejects an offer, the Issuer will promptly notify such Agent. | |
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Settlement:
|
The receipt by the Issuer of immediately available funds in payment for a Book-Entry Note and the authentication and issuance of the Global Note or Global Notes representing such Note shall constitute settlement with respect to such Note. All orders accepted by the Issuer will be settled on the third Business Day from the date of the sale pursuant to the timetable for settlement set forth below unless the Issuer and the purchaser agree to settlement on another day which shall be no earlier than the next Business Day. | |
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Settlement Procedures:
|
Settlement Procedures with regard to each Book-Entry Note sold by the For Issuer through an Agent as agent, shall be as follows: | |
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For each offer accepted by the Issuer, the Presenting Agent shall communicate to the Issuer, Attention: Thomas J. Sargeant, CFO (Fax No.: (703) 329-0060), who will provide a copy to the Trustee, Attention: Ward Spooner (Fax No.: (212) 361-6153) and the Designated Agent, if any, by facsimile transmission or other acceptable means, the information set forth below: |
| Principal amount. | |||
| Maturity Date of Notes. | |||
| In the case of a Fixed Rate Book-Entry Note, the interest rate or, in the case of a Floating Rate Book-Entry Note, the Interest Rate Formula, the Initial Interest Rate (if known at such time), Index Maturity, Interest Reset Period, Interest Reset Dates, Spread or Spread Multiplier (if any), Minimum Interest Rate (if any) and Maximum Interest Rate (if any). | |||
| Interest Payment Period and Interest Payment Dates. | |||
| Redemption provisions, if any. |
Exhibit B Page 22
| Repayment provisions, if any. | |||
| Settlement date (Original Issue Date). | |||
| Price to public of the Note (expressed as a percentage). | |||
| Agents commission (to be paid in the form of a discount from the proceeds remitted to the Issuer upon settlement). | |||
| Original issue discount provisions if any. | |||
| In the case of Currency Indexed Notes, the above-listed information, as applicable, and the Base Exchange Rate(s), Base Interest Rate and Indexed Currencies. | |||
| In the case of Dual Currency Notes, the above-listed information, as applicable, and the Optional Payment Currency, Designated Exchange Rate and Optional Election Dates. |
Net proceeds to the Issuer. |
The Trustee will confirm the information set forth in Settlement Procedure A above by telephone with such Agent and the Issuer. |
The Trustee will assign a CUSIP number to the Global Note representing such Note and will telephone the Issuer and advise the Issuer of such CUSIP number. The Trustee will enter a pending deposit message through DTCs Participant Terminal System, providing the following settlement information to DTC (which shall route such information to Standard & Poors Ratings Services) and the Presenting Agent: |
| The applicable information set forth in Settlement Procedure A. | |||
| Identification as a Fixed Rate Book-Entry Note or a Floating Rate Book-Entry Note. | |||
| Initial Interest Payment Date for such Note, number of days by which such date succeeds the related DTC Record Date (which, in the case of Floating Rate Notes which reset daily or weekly shall be the date five |
Exhibit B - Page 23
calendar days immediately preceding the applicable Interest Payment Date and in the case of all other Notes shall be the Regular Record Date as defined in the Note), the amount of interest payable on such Interest Payment Date per $1,000 principal amount of Notes at Maturity, and amount of interest payable per $1,000 principal amount of Notes in the case of Fixed Rate Notes. | ||||
| CUSIP number of the Global Note representing such Note. | |||
| Whether such Global Note will represent any other Book-Entry Note (to the extent known at such time). |
To the extent the Issuer has not already done so, the Issuer will deliver to the Trustee a Pricing Supplement in a form that has been approved by the Issuer and the Agents. The Issuer will also deliver to the Trustee a Global Note representing such Note. | ||||
The Trustee will complete and authenticate the Global Note representing such Note. | ||||
DTC will credit such Note to the Trustees participant account at DTC. | ||||
The Trustee will enter an SDFS deliver order through DTCs Participant Terminal System instructing DTC to (i) debit such Note to the Trustees participant account and credit such Note to such Agents participant account and (ii) debit such Agents settlement account and credit the Trustees settlement account for an amount equal to the price of such Note less such Agents commission. The entry of such a deliver order shall constitute a representation and warranty by the Trustee to DTC that (i) the Global Note representing such Book-Entry Note has been executed, delivered and authenticated and (ii) the Trustee is holding such Global Note pursuant to the relevant Medium-Term Note Certificate Agreement between the Trustee and DTC. | ||||
An Agent will enter an SDFS deliver order through DTCs Participant Terminal System instructing DTC (i) to debit such Note to such Agents participant account and credit such Note to the participant accounts of the Participants with respect to such Note and (ii) to debit the settlement accounts of such |
Exhibit B Page 24
Participants and credit the settlement account of such Agent for an amount equal to the price of such Note. | ||||
Transfers of funds in accordance with SDFS deliver orders described in Settlement Procedures G and H will be settled in accordance with SDFS operating procedures in effect on the settlement date. | ||||
The Trustee, upon confirming receipt of such funds in accordance with Settlement Procedure G, will wire transfer to the following account of the Issuer: |
Bank Name:
|
Bank of America | ||
Account Name
|
AvalonBay Communities, Inc. | ||
|
Concentration Account | ||
Account Number:
|
3752291106 | ||
ABA Number:
|
111000012 |
in funds available for immediate use, the amount transferred to the Trustee in accordance with Settlement Procedure G. | ||||
An Agent will confirm the purchase of such Note to the purchaser either by transmitting to the Participants with respect to such Note a confirmation order or orders through DTCs institutional delivery system or by mailing a written confirmation to such purchaser. |
Settlement
Procedure Timetable: |
For orders of Book-Entry Notes solicited by the Agent, as agent, and accepted by the Issuer for settlement on the first Business Day after the sale date, Settlement Procedures A through K set forth above shall be completed as soon as possible but not later than the respective times (New York City time) set forth below: | |
|
Settlement
|
Procedure Time
|
||
A
|
11:00 a.m. on the sale date | ||
B
|
12:00 noon on the sale date | ||
C
|
2:00 p.m. on the sale date | ||
D
|
3:00 p.m. on the day before settlement | ||
E
|
9:00 a.m. on settlement date | ||
F
|
10:00 a.m. on settlement date | ||
G-H
|
2:00 p.m. on settlement date | ||
I
|
4:45 p.m. on settlement date | ||
J-K
|
5:00 p.m. on settlement date |
|
If a sale is to be settled two Business Days after the sale date, |
Exhibit B Page 25
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Settlement Procedures A, B and C shall be completed as soon as practicable but not later than 11:00 a.m., 12:00 noon and 2:00 p.m., as the case may be, on the first Business Day after the sale date. | |
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If a sale is to be settled more than two Business Days after the sale date, Settlement Procedure A shall be completed as soon as practicable but no later than 11:00 a.m. on the first Business Day after the sale date and Settlement Procedures B and C shall be completed as soon as practicable but no later than 12:00 noon and 2:00 p.m., as the case may be, on the second Business Day before the settlement date. If the initial interest rate for a Floating Rate Book-Entry Note has not been determined at the time that Settlement Procedure A is completed, Settlement Procedures B and C shall be completed as soon as such rate has been determined but not later than 12:00 noon and 2:00 p.m., respectively, on the Business Day before the settlement date. Settlement Procedure I is subject to extension in accordance with any extension of Fedwire closing deadlines and in the other events specified in the SDFS operating procedures in effect on the settlement date. | |
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If settlement of a Book-Entry Note is rescheduled or canceled, the Trustee, upon receipt of notice from the Issuer, will deliver to DTC, through DTCs Participant Terminal System, a cancellation message to such effect by no later than 2:00 p.m. on the Business Day immediately preceding the scheduled settlement date. | |
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Failure to Settle:
|
If an Agent or Trustee fails to enter an SDFS deliver order with respect to a Book-Entry Note pursuant to Settlement Procedure G, the Trustee may deliver to DTC, through DTCs Participant Terminal System, as soon as practicable, a withdrawal message instructing DTC to debit such Note to the Trustees participant account. DTC will process the withdrawal message, provided that the Trustees participant account contains a principal amount of the Global Note representing such Note that is at least equal to the principal amount to be debited. If a withdrawal message is processed with respect to all the Book-Entry Notes represented by a Global Note, the Trustee will mark such Global Note canceled, make appropriate entries in its records and send such canceled Global Note to the Issuer. The CUSIP number assigned to such Global Note shall, in accordance with CUSIP Service Bureau procedures, be canceled and not immediately |
Exhibit B Page 26
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reassigned. If a withdrawal message is processed with respect to one or more, but not all, of the Book-Entry Notes represented by a Global Note, the Trustee will exchange such Global Note for two Global Notes, one of which shall represent such Book-Entry Note or Notes and shall be canceled immediately after issuance and the other of which shall represent the remaining Book-Entry Notes previously represented by the surrendered Global Note and shall bear the CUSIP number of the surrendered Global Note. | |
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If the purchase price for any Book-Entry Note is not timely paid to the Participants with respect to such Note by the beneficial purchaser thereof (or a person, including an indirect participant in DTC, acting on behalf of such purchaser), such Participants and, in turn, the Presenting Agent may enter SDFS deliver orders through DTCs Participant Terminal system reversing the orders entered pursuant to Settlement Procedures G and H, respectively. Thereafter, the Trustee will deliver the withdrawal message and take the applicable related actions described in the preceding paragraph. If such failure shall have occurred for any reason other than the failure of the Presenting Agent to provide the Purchase Information to the Issuer or to provide a confirmation to the purchaser, the Issuer will reimburse the Presenting Agent on an equitable basis for its loss of the use of funds during the period when they were credited to the account of the Issuer. | |
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Notwithstanding the foregoing, upon any failure to settle with respect to a Book-Entry Note, DTC may take any actions in accordance with its SDFS operating procedures then in effect. In the event of a failure to settle with respect to one or more, but not all, of the Book-Entry Notes to have been represented by a Global Note, the Trustee will provide, in accordance with Settlement Procedures D and E, for the authentication and issuance of a Global Note representing the other Book-Entry Notes to have been represented by such Global Note and will make appropriate entries in its records. | |
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Procedure for Rate
Changes: |
The Issuer and each Agent will discuss from time to time the price of, and the rates to be borne by, the Notes that may be sold as a result of the solicitation of offers by any Agent. Once an Agent has recorded any indication of interest in Notes upon certain terms, and communicated with the Issuer, if the Issuer plans to accept an offer to purchase Notes upon such terms, it will prepare a Pricing Supplement to the Prospectus, as then amended or supplemented, reflecting the terms of such |
Exhibit B Page 27
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Notes and will arrange to transmit such Pricing Supplement to the Commission for filing in accordance with and within the time prescribed by the applicable paragraph of Rule 424(b) under the Act. The Issuer will supply at least two copies of the Prospectus as then amended or supplemented, and bearing such Pricing Supplement, to the Presenting Agent. The Issuer shall use its reasonable best efforts to send such Pricing Supplement by telecopy or overnight express (for delivery by the close of business on the applicable trade date, but in no event later than 11:00 a.m. New York City time, on the Business Day following the applicable trade date) to the Presenting Agent and the Trustee at the following applicable address: | |
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If to: | Banc of America Securities LLC | ||
|
to both: | Continuously Offered Products | ||
|
100 No. Tryon Street | |||
|
Charlotte, NC 28255 | |||
|
Mail Code: NC 1007-07-01 | |||
|
Telecopy Number: (704) 388-9939 7 | |||
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||||
|
and | |||
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||||
|
Syndicate Operations | |||
|
100 North Tryon Street | |||
|
Charlotte, NC 28255 | |||
|
Mail Code: NC 1007-07-01 | |||
|
Telecopy Number: (704) 388-9212 8 | |||
|
||||
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if to: | Citigroup Global Markets Inc. | ||
|
to: | Attention: Annabelle Avila | ||
|
Brooklyn Army Terminal | |||
|
140 58th Street, 8th Floor | |||
|
Brooklyn, NY 11220 | |||
|
Telephone Number: (718) 765-6725 | |||
|
Telecopy Number: (718) 765-6734 | |||
|
||||
|
if to: | Fleet Securities, Inc. | ||
|
to: | Attention: John Crees | ||
|
100 Federal Street MADE 10012H | |||
|
Boston, MA 02110 | |||
|
Telephone Number: (617) 434-5983 |
_________________
7 Please send by telecopy rather than mail. | ||||
8 Please send by telecopy rather than mail. |
Exhibit B Page 28
|
Telecopy Number: (617) 434-8702 | |||
|
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|
if to: | J.P. Morgan Securities Inc. | ||
|
to: | Attention: Medium-Term Note Desk | ||
|
270 Park Avenue, 8 th Floor | |||
|
New York, NY 10017 | |||
|
Telephone Number: (212) 834-4421 | |||
|
Telecopy Number: (212) 834-6081 9 | |||
|
||||
|
if to: | Lehman Brothers Inc. | ||
|
to: | Attention: Fixed Income Syndicate/ | ||
|
Medium Term Notes Desk | |||
|
745 Seventh Avenue | |||
|
New York, NY 10019 | |||
|
Telephone Number: (212) 526-9664 | |||
|
Telecopy Number: (212) 526-0943 | |||
|
with a copy to: | |||
|
||||
|
ADP Prospectus Services | |||
|
For Lehman Brothers Inc. | |||
|
Attention: Client Services Desk | |||
|
1155 Long Island Avenue | |||
|
Edgewood, NY 11717 | |||
|
Telecopy Number: (631) 254-7268 | |||
|
||||
|
if to: | Morgan Stanley & Co. Incorporated | ||
|
to: | Attention: Legal Department | ||
|
1585 Broadway | |||
|
New York, NY 10036 | |||
|
Telephone Number: (212) 761-4000 | |||
|
Telecopy Number: (212) 761-0783 | |||
|
||||
|
with a copy to: | |||
|
||||
|
Morgan Stanley & Co. Incorporated | |||
|
Attention: Debt Syndicate Desk | |||
|
1585 Broadway | |||
|
New York, NY 10036 | |||
|
Telephone Number: (212) 761-2000 | |||
|
||||
|
if to: | Wachovia Capital Markets, LLC | ||
|
to: | Attention: Corporate Syndicate Desk | ||
|
301 South College St., DC-8 |
____________________
9 Please send by telecopy with original to follow by mail. |
Exhibit B Page 29
|
One Wachovia Center | |||
|
Charlotte, NC 28288 | |||
|
Telephone Number: 704-383-7727 | |||
|
Telecopy Number: 704-383-9165 | |||
|
||||
|
if to: | US Bank, National Association (the Trustee) | ||
|
to: | Attention: Ward Spooner | ||
|
100 Wall Street | |||
|
New York, NY 10005 | |||
|
Telephone Number: (212) 361-6175 | |||
|
Telecopy Number: (212) 361-6153 | |||
|
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|
and to: | the Designated Agent, if any. | ||
|
For record keeping purposes, one copy of such Pricing
Supplement shall also be mailed to: |
|
OMelveny & Myers LLP | |||
|
275 Battery Street, Suite 2600 | |||
|
San Francisco, CA 94111-3305 | |||
|
Attention: Peter T. Healy, Esq. | |||
|
Telecopy Number: (415) 984-8701 | |||
|
||||
|
and | |||
|
||||
|
Goodwin Procter llp | |||
|
Exchange Place | |||
|
53 State Street | |||
|
Boston, MA 02109-2281 | |||
|
Attention: Gilbert G. Menna, P.C. | |||
|
Telephone Number: (617) 570-1433 | |||
|
Telecopy Number: (617) 523-1231 |
|
In each instance that a Pricing Supplement is prepared, the Presenting Agent will provide a copy of such Pricing Supplement to each investor or purchaser of the relevant Notes or its agent. Pursuant to Rule 434 of the Securities Act of 1933, as amended, the Pricing Supplement may be delivered separately from the Prospectus. No settlements with respect to Notes upon such terms may occur prior to such transmitting and such Agent will not, prior to such transmitting, mail confirmations to customers who have offered to purchase Notes upon such terms. After such transmitting, sales, mailing of confirmations and settlements may occur with respect to Notes upon such terms, subject to the provisions of Delivery of Prospectus below. Outdated Stickers, and copies of the |
Exhibit B Page 30
|
Prospectus to which they are attached (other than those retained for files), will be destroyed. | |
|
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Suspension of
Solicitation;
Amendment or
Supplement:
|
As provided in the Agency Agreement, the Issuer may suspend solicitation of purchase at any time, and, upon receipt of notice from the Issuer, the Agents will as promptly as practicable, but in no event later than one Business Day following such notice, suspend solicitation until such time as the Issuer has advised them that solicitation of purchases may be resumed. | |
|
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|
If the Agents receive the notice from the Issuer contemplated by Section 4(b) of the Agency Agreement, they will promptly suspend solicitation and will only resume solicitation as provided in the Agency Agreement. If the Issuer decides to amend or supplement the Registration Statement or the Prospectus relating to the Notes, it will promptly advise the Agents and will furnish the Agents with the proposed amendment or supplement in accordance with the terms of the Agency Agreement. The Issuer will promptly file or mail to the Commission for filing such amendment or supplement, provide the Agents with copies of any such amendment or supplement, confirm to the Agents that such amendment or supplement has been filed with the Commission and advise the Agents that solicitation may be resumed. Any such suspension shall not affect the Issuers obligations under the Agency Agreement; and in the event that at the time the Issuer suspends solicitation of purchases there shall be any offers already accepted by the Issuer outstanding for settlement, the Issuer will have the sole responsibility for fulfilling such obligations; the Agents will make reasonable efforts to assist the Issuer to fulfill such obligations, but the Agents will not be obligated to fulfill such obligations. The Issuer will in addition promptly advise the Agents and the Trustee if such offers are not to be settled and if copies of the Prospectus as in effect at the time of the suspension may not be delivered in connection with the settlement of such offers. | |
|
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Delivery of
Prospectus:
|
A copy of the Prospectus, as most recently amended or supplemented on the date of delivery thereof (except as provided below), must be delivered to a purchaser prior to or together with the earlier of delivery of (i) the written confirmation provided for above, and (ii) any Note purchased by such purchaser at the following address: |
Exhibit B Page 31
|
If to: | Banc of America Securities LLC | ||
|
to both: | Continuously Offered Products | ||
|
100 No. Tryon Street | |||
|
Charlotte, NC 28255 | |||
|
Mail Code: NC 1007-07-01 | |||
|
Telecopy Number: (704) 388-9939 10 | |||
|
and | |||
|
||||
|
Syndicate Operations | |||
|
100 North Tryon Street | |||
|
Charlotte, NC 28255 | |||
|
Mail Code: NC 1007-07-01 | |||
|
Telecopy Number: (704) 388-9212 11 | |||
|
||||
|
if to: | Citigroup Global Markets Inc. | ||
|
to: | Attention: Annabelle Avila | ||
|
Brooklyn Army Terminal | |||
|
140 58 th Street, 8 th Floor | |||
|
Brooklyn, NY 11220 | |||
|
Telephone Number: (718) 765-6725 | |||
|
Telecopy Number: (718) 765-6734 | |||
|
||||
|
if to: | Fleet Securities, Inc. | ||
|
to: | Attention: John Crees | ||
|
100 Federal Street MADE 10012H | |||
|
Boston, MA 02110 | |||
|
Telephone Number: (617) 434-5983 | |||
|
Telecopy Number: (617) 434-8702 | |||
|
||||
|
if to: | J.P. Morgan Securities Inc. | ||
|
to: | Attention: Medium-Term Note Desk | ||
|
270 Park Avenue, 8 th Floor | |||
|
New York, NY 10017 | |||
|
Telephone Number: (212) 834-4421 | |||
|
Telecopy Number: (212) 834-6081 12 | |||
|
||||
|
if to: | Lehman Brothers Inc. | ||
|
to: | Attention: Fixed Income Syndicate/ | ||
|
Medium Term Notes Desk | |||
|
745 Seventh Avenue |
___________________
10 Please send by telecopy rather than mail. | ||||
11 Please send by telecopy rather than mail. | ||||
12 Please send by telecopy with original to follow by mail. |
Exhibit B Page 32
|
New York, NY 10019 | |||
|
Telephone Number: (212) 526-9664 | |||
|
Telecopy Number: (212) 526-0943 | |||
|
||||
|
with a copy to: | |||
|
||||
|
ADP Prospectus Services | |||
|
For Lehman Brothers Inc. | |||
|
Attention: Client Services Desk | |||
|
1155 Long Island Avenue | |||
|
Edgewood, NY 11717 | |||
|
Telecopy Number: (631) 254-7268 | |||
|
||||
|
if to: | Morgan Stanley & Co. Incorporated | ||
|
to: | Attention: Legal Department | ||
|
1585 Broadway | |||
|
New York, NY 10036 | |||
|
Telephone Number: (212) 761-4000 | |||
|
Telecopy Number: (212) 761-0783 | |||
|
||||
|
with a copy to: | |||
|
||||
|
Morgan Stanley & Co. Incorporated | |||
|
Attention: Debt Syndicate Desk | |||
|
1585 Broadway | |||
|
New York, NY 10036 | |||
|
Telephone Number: (212) 761-2000 | |||
|
||||
|
if to: | Wachovia Capital Markets, LLC | ||
|
to: | Attention: Corporate Syndicate Desk | ||
|
301 South College St., DC-8 | |||
|
One Wachovia Center | |||
|
Charlotte, NC 28288 | |||
|
Telephone Number: 704-383-7727 | |||
|
Telecopy Number: 704-383-9165 | |||
|
||||
|
if to: | US Bank, National Association (the Trustee) | ||
|
to: | Attention: Ward Spooner | ||
|
100 Wall Street | |||
|
New York, New York 10005 | |||
|
Telephone Number: (212) 361-6175 | |||
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Telecopy Number: (212) 361-6153 | |||
|
||||
|
and to: | the Designated Agent, if any. |
Exhibit B Page 33
For record keeping purposes, one copy of such Pricing
Supplement shall also be mailed to:
|
OMelveny & Myers LLP | |||
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275 Battery Street, Suite 2600 | |||
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San Francisco, CA 94111-3305 | |||
|
Attention: Peter T. Healy, Esq. | |||
|
Telecopy Number: (415) 984-8701 | |||
|
||||
|
and | |||
|
||||
|
Goodwin Procter llp | |||
|
Exchange Place | |||
|
53 State Street | |||
|
Boston, MA 02109-2281 | |||
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Attention: Gilbert G. Menna, P.C. | |||
|
Telephone Number: (617) 570-1433 | |||
|
Telecopy Number: (617) 523-1231 |
The Issuer shall ensure that the Presenting Agent receives copies of the Prospectus and each amendment or supplement thereto (including appropriate Pricing Supplements) in such quantities and within such time limits as will enable the Presenting Agent to deliver such confirmation or Note to a purchaser as contemplated by these procedures and in compliance with the preceding sentence. If, since the date of acceptance of a purchasers offer, the Prospectus shall have been supplemented solely to reflect any sale of Notes on terms different from those agreed to between the Issuer and such purchaser or a change in posted rates not applicable to such purchaser, such purchaser shall not receive the Prospectus as supplemented by such new supplement, but shall receive the Prospectus as supplemented to reflect the terms of the Notes being purchased by such purchaser and otherwise as most recently amended or supplemented on the date of delivery of the Prospectus.
Exhibit B Page 34
PART III
ADMINISTRATIVE PROCEDURES FOR MASTER NOTE
METHOD OF BOOK-ENTRY NOTES
The following explains the administrative procedures for the Master Note
method of the DTC book-entry system. Any reference to Book-Entry Notes in
this Part III refers to the Master Note method (for a discussion of the Global
Note method of the book-entry system, see Part II above). (Certain generally
applicable administrative procedures are set forth in Part I above. See
Issue/Authentication Date, Price to Public, Minimum Purchase,
Authenticity of Signatures, Advertising Cost, and Business Day). In
connection with the qualification of the Book-Entry Notes for eligibility in
the book-entry system maintained by DTC, the Trustee will perform the
custodial, document control and administrative functions described below, in
accordance with its respective obligations under a Letter of Representations
(the Letter) from the Issuer and the Trustee to DTC dated as of December 21,
1998, and a Medium-Term Note Certificate Agreement between the Trustee and DTC
and its obligations as a participant in DTC, including DTCs Same-Day Funds
Settlement System (SDFS). Both Fixed and Floating Rate Notes denominated and
payable in U.S. dollars may be issued in book-entry form. Single and
Multi-Indexed Notes may also be issued in book-entry form.
Exhibit B Page 35
On or before any date of settlement (as defined under Settlement
below) for one or more Book-Entry Notes represented by one or more
Master Notes, the Issuer will deliver one or more Pricing Supplements
(with a Prospectus and a Prospectus Supplement attached thereto
unless previously delivered to the Trustee) to the Trustee
identifying each issue of Book-Entry Notes that have the same Stated
Maturity, redemption provisions, if any, Interest Payment Dates,
Original Issue Date, original issue discount provisions, if any, and,
in the case of Fixed Rate Notes, interest rate, or, in case of
Floating Rate Notes, interest rate formula, initial interest rate,
Index Maturity, Interest Reset Period, Interest Reset Dates, Spread
or Spread Multiplier (if any), minimum interest rate (if any) and
maximum interest rate (if any) and, in the case of Fixed Rate Notes
or Floating Rate Notes that are also Currency Indexed Notes,
Specified Currency, Indexed Currency, Face Amount and Base Exchange
Rate and the Base Interest Rate, if any, or that are also Other
Indexed Notes, the same terms (all of the foregoing are collectively
referred to as the Terms). Each Pricing Supplement shall be
accompanied by a letter from the
|
Issuer (i) advising the Trustee that as of the date of such letter, the Issuer has issued Notes pursuant to the Indenture having the Terms specified in such Pricing Supplement, (ii) confirming that such Notes are debt obligations of the Issuer referred to and evidenced by the Master Note registered in the name of Cede & Co., as nominee for DTC and (iii) requesting the Trustee to make an appropriate entry identifying such debt obligations on the records of the Issuer maintained by the Trustee. Each Book-Entry Note will be deemed to have been dated and issued as of the settlement date, which date shall be the Original Issue Date. No Master Note will represent any Certificated Note. | |
|
||
Identification Numbers:
|
The Issuer has arranged with the CUSIP Service Bureau of Standard & Poors Ratings Services (the CUSIP Service Bureau) for the reservation of a series of CUSIP numbers, consisting of approximately 900 CUSIP numbers relating to Book-Entry Notes. The Trustee, the Issuer and DTC have obtained from the CUSIP Service Bureau a written list of such reserved CUSIP numbers. The Trustee will assign CUSIP numbers to each issue of Book-Entry Notes identified by a Pricing Supplement as described below under Settlement Procedure B. DTC will notify the CUSIP Service Bureau periodically of the CUSIP numbers that the Trustee has assigned to each issue of Book-Entry Notes. The Trustee will notify the Issuer at any time when fewer than 100 of the reserved CUSIP numbers remain unassigned to issue of Book-Entry Notes, and, if it deems necessary, the Issuer will reserve additional CUSIP numbers for assignment to issues of Book-Entry Notes. Upon obtaining such additional CUSIP numbers, the Issuer shall deliver a list of such additional CUSIP numbers to the Trustee and DTC. |
Exhibit B Page 36
Registration:
|
The Master Note representing the Book-Entry Notes will be issued only in fully registered form without coupons. The Master Note will be registered in the name of Cede & Co., as nominee for DTC, on the Securities Register maintained under the Indenture. The beneficial owner of a Book-Entry Note (or one or more indirect participants in DTC designated by such owner) will designate one or more direct participants in DTC (with respect to such Book-Entry Note, the Participants) to act as agent or agents for such owner in connection with the book-entry system maintained by DTC, and DTC will record in book-entry form, in accordance with instructions provided by such Participants, a credit balance with respect to such Note in the account of such Participants. The ownership interest of such beneficial owner in such Book-Entry Note will be recorded through the records of such Participants or through the separate records of such Participants and one or more indirect participants in DTC. | |
|
||
Transfers:
|
Transfers of a Book-Entry Note will be accomplished by book entries made by DTC and, in turn, by Participants (and, in certain cases, one or more indirect participants in DTC) acting on behalf of beneficial transferors and transferees of such Note. | |
|
||
Exchanges:
|
The Trustee may deliver to DTC and the CUSIP Service Bureau at any time a written notice of consolidation specifying (i) the CUSIP numbers set forth on two or more Pricing Supplements that identify issues of Book-Entry Notes having the same Terms and for which interest has been paid to the same date, (ii) a date, occurring at least thirty days after such written notice is delivered and at least thirty days before the next Interest Payment Date for such issues of Book-Entry Notes, and (iii) a new CUSIP number to be assigned to such issues of Book-Entry Notes having the same terms. Upon receipt of such a notice, DTC will send to its Participants (including the Trustee) a written reorganization notice to the effect that such exchange will occur on such date. Prior to the specified exchange date, the Trustee will deliver to the CUSIP Service Bureau a written notice setting forth such exchange date and the new CUSIP number and |
Exhibit B Page 37
|
stating that, as of such exchange date, the CUSIP numbers of the relevant issues of Book-Entry Notes will no longer be valid. On the specified exchange date, the CUSIP numbers of the relevant issues of Book-Entry Notes will, in accordance with CUSIP Service Bureau procedures, be canceled and not immediately reassigned. | |
|
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Maturities:
|
Each Issue of Book-Entry Notes will mature on a Business Day nine months or more from the settlement date for such issue of Book-Entry Notes. | |
|
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Notice of Repayment:
|
With respect to each Book-Entry Note that is repayable at the option of the Holder the Trustee will furnish DTC on the settlement date pertaining to such Book-Entry Note a notice setting forth the terms of such repayment option. Such terms shall include the start date and end dates of the first exercise period, the purchase date following such exercise period, the frequency that such exercise periods occur ( e.g.. , quarterly, semiannually, annually, etc.) and if the repayment option expires before maturity, the same information (except frequency) concerning the last exercise period. It is understood that the exercise period shall be at least 15 calendar days long and that the purchase date shall be at least seven calendar days after the last day of the exercise period. | |
|
||
Redemption and
Repayment:
|
The Trustee will comply with the terms of the Letter with regard to redemptions and repayments of the Notes. If an issue of Book-Entry Notes is to be redeemed or repaid in part, the Trustee will make appropriate entries in its records to reflect the remaining portion of such issue of Book Entry Notes, which portion shall bear the same CUSIP number as prior to the redemption or repayment, as the case may be. | |
|
||
Denominations:
|
Book-Entry Notes will be issued in principal amounts of $1,000 or any amount in excess thereof that is an integral multiple of $1,000. |
Exhibit B Page 38
Interest:
|
General. Interest on each Book-Entry Note will begin to accrue from the Original Issue Date of an issue of Book-Entry Notes or from the most recent date to which interest has been paid, as the case may be, and will be calculated and paid in the manner described in the Prospectus Supplement (as defined in the Agency Agreement), as supplemented by the applicable Pricing Supplement. Standard & Poors Ratings Services will use the information received in the pending deposit message described under the Settlement Procedure C below in order to include the amount of any interest payable and certain other information regarding the related issue of Book-Entry Notes in the appropriate weekly bond report published by Standard & Poors Ratings Services. | |
|
||
Notice of Interest Payment
and Regular Record Dates:
|
On the first Business Day of January, April, July and October of each year, the Trustee will deliver to the Issuer and DTC a written list of Regular Record Dates and Interest Payment Dates that will occur with respect to Book-Entry Notes during the six-month period beginning on such first Business Day. Promptly after each Interest Determination Date or Calculation Date, as applicable (as set forth in the Prospectus Supplement, as supplemented by the applicable Pricing Supplement and pursuant to the applicable Note) for Floating Rate Notes, the Issuer, upon receiving notice thereof, will notify Standard & Poors Ratings Services of the interest rate determined on such Interest Determination Date or Calculation Date, as applicable. | |
|
||
Calculation of Interest:
|
Interest on Fixed Rate Book-Entry Notes (including interest for partial periods) and interest rates on Floating Rate Book-Entry Notes will be determined as set forth in the Prospectus Supplement, as supplemented by the applicable Pricing Supplement, and pursuant to the applicable form of Notes. With respect to Floating Rate Book-Entry Notes, the Calculation Agent shall determine the interest for each Interest Reset Date and communicate such interest rate to the Issuer and the Issuer will promptly notify the Trustee and the Paying Agent of each such determination. |
Exhibit B Page 39
Payments of Principal and
Payment of Interest Only
Interest:
|
Promptly after each Regular Record Date, the Trustee will deliver to the Issuer and DTC a written notice specifying by CUSIP number the amount of interest to be paid on each issue of Book-entry Notes on the following Interest Payment Date (other than an Interest Payment Date coinciding with maturity) and the total of such amounts. The Issuer will confirm with the Trustee the amount payable on each issue of Book-Entry Notes on such Interest Payment Date. DTC will confirm the amount payable on each issue of Book-Entry Notes on such Interest Payment Date by reference to the daily or weekly bond reports published by Standard & Poors Ratings Services. The Issuer will pay to the Trustee, as paying agent, the total amount of interest due on such Interest Payment Date (other than the maturity), and the Trustee will pay such amount to DTC at the times and in the manner set forth below under Manner of Payment. | ||||
|
|||||
Payments at Maturity:
|
On or about the first Business Day of each month, the Trustee will deliver to the Issuer and DTC a written list of principal and interest to be paid on each issue of Book-Entry Notes represented by a single CUSIP number maturing either at Stated Maturity or on a Redemption or Repayment Date in the following month. The Issuer, the Trustee and DTC will confirm the amounts of such principal and interest payments with respect to each such issue of Book-Entry Notes on or about the fifth Business Day preceding the maturity of such issue of Book-Entry Notes. The Issuer will pay to the Trustee, as paying agent, the principal amount of each issue of Book-Entry Notes identified by a single CUSIP number, together with interest due at such maturity. The Trustee will pay such amounts to DTC at the times and in the manner set forth below under Manner of Payment. Promptly after payment to DTC of the principal and interest due at the maturity of each issue of Book-Entry Notes, the Trustee will reduce the principal amount of the Master Note representing the issue of Book-Entry Notes and so advise the Issuer. |
Exhibit B Page 40
Manner of Payment:
|
The total amount of any principal and interest due on each issue of Book-Entry Notes identified by a single CUSIP number on any Interest Payment Date or at maturity shall be paid by the Issuer to the Trustee in funds available for use by the Trustee as of 9:30 A.M. (New York City time), or as soon as practicable thereafter on such date. The Issuer will confirm instructions regarding payment in writing to the Trustee. Prior to 10:00 A.M. (New York City time) on each Maturity Date or as soon as possible thereafter, following receipt of such funds from the Issuer, the Trustee will pay by separate wire transfer (using Fedwire message entry instructions in a form previously specified by DTC) to an account at the Federal Reserve Bank of New York previously specified by DTC, in funds available for immediate use by DTC, each payment of principal (together with interest thereon) due on each issue of Book-Entry Notes on any Maturity Date. On each Interest Payment Date, interest payments shall be made to DTC in same-day funds in accordance with existing arrangements between the Trustee and DTC. Thereafter, on each such date, DTC will pay, in accordance with its SDFS operating procedures then in effect, such amounts in funds available for immediate use to the respective Participants in whose names the Book-Entry represented by the Master Note are recorded in the book-entry system maintained by DTC. Neither the Issuer nor the Trustee shall have any direct responsibility or liability for the payment by DTC to such Participants of the principal of and interest on the Book-Entry Notes. | |
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||
Withholding Taxes:
|
The amount of any taxes required under applicable law to be withheld from any interest payment on a Book-Entry Note will be determined and withheld by the Participant, indirect participant in DTC or other Person responsible for forwarding payments and materials directly to the beneficial owner of such Note. |
Exhibit B Page 41
Acceptance of Offers:
|
Each Agent will promptly advise the Issuer of each reasonable offer to purchase Notes received by it, other than those rejected by the Agent. Such Agent may, in its discretion reasonably exercised, without notice to the Issuer, reject any offer received by it, in whole or in part. The Issuer will have the sole right to accept offers to purchase Notes and may reject any such offer, in whole or in part. If the Issuer rejects an offer, the Issuer will promptly notify such Agent. | |
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||
Settlement:
|
The receipt by the Issuer of immediately available funds in payment for a Book-Entry Note and receipt by the Trustee of a property completed by the Trustee of a properly completed Pricing Supplement shall constitute settlement with respect to such Book-Entry Note. All orders accepted by the Issuer will be settled on the third Business Day from the date of the sale pursuant to the timetable for settlement set forth below unless the Issuer and the purchaser agree to settlement on another day which shall be no earlier than the next Business Day. | |
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Settlement
Procedures:
|
Settlement Procedures with regard to each Book-Entry Note sold by the Issuer through an Agent as agent, shall be as follows: | |
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||
|
For each offer accepted by the Issuer, the Presenting Agent shall communicate to the Issuer, Attention: Thomas J. Sargeant, CFO (Fax No.: (703) 329-0060) who will provide a copy to the Trustee, Attention: Ward Spooner (Fax No.: (212) 361-6153) and the Designated Agent, if any, by facsimile transmission or other acceptable means, the information set forth below: |
| Principal amount. | |||
| Maturity Date of Notes. |
Exhibit B Page 42
| In the case of a Fixed Rate Book-Entry Note, the interest rate or, in the case of a Floating Rate Book-Entry Note, the interest rate formula, the Initial Interest Rate (if known at such time), Index Maturity, Interest Reset Period, Interest Reset Dates, Spread or Spread Multiplier (if any), minimum interest rate (if any) and maximum interest rate (if any). | |||
| Interest Payment Period and Interest Payment Dates. | |||
| Redemption provisions, if any. | |||
| Repayment provisions, if any. | |||
| Settlement date (Original Issue Date). | |||
| Price to public of the Note (expressed as a percentage). | |||
| Agents commission (to be paid in the form of a discount from the proceeds remitted to the Issuer upon settlement). | |||
| Original issue discount provisions if any. | |||
| In the case of Currency Indexed Notes, the above-listed information, as applicable, and the Base Exchange Rate(s), Base Interest Rate and Indexed Currencies. | |||
| In the case of Dual Currency Notes, the above-listed information, as applicable, and the Optional Payment Currency, Designated Exchange Rate and Optional Election Dates. | |||
| Net proceeds to the Issuer. |
The Trustee will confirm the information set forth in Settlement Procedure A above by telephone with such Agent and the Issuer. |
Exhibit B Page 43
The Trustee will assign a CUSIP number to the issue of Book-Entry Notes and will telephone the Issuer and notify the Issuer of such CUSIP number. The Trustee will enter a pending deposit message through DTCs Participant Terminal System, providing the following settlement information to DTC (which shall route such information to Standard & Poors Ratings Services) and the Presenting Agent: |
| The applicable information set forth in Settlement Procedure A. | |||
| Identification as a Fixed Rate Book-Entry Note or a Floating Rate Book-Entry Note. | |||
| Initial Interest Payment Date for each issue of Book-Entry Notes of days by which such date succeeds the related DTC Record Date (which, in the case of Floating Rate Notes which reset daily or weekly shall be the date five calendar days immediately preceding the applicable Interest Payment Date and in the case of all other Notes shall be the Regular Record Date as defined in the Prospectus Supplement), the amount of interest payable on such Interest Payment Date per $1,000 principal amount of Notes at Maturity, and amount of interest payable per $1,000 principal amount of Notes in the case of Fixed Rate Notes. | |||
| CUSIP number of the such issue of Book-Entry Notes. | |||
| Whether such CUSIP number will identify any other issue of Book-Entry Notes (to the extent known at such time). | |||
To the extent the Issuer has not already done so, the Issuer will deliver to the Trustee a Pricing Supplement in a form that has been approved by the Issuer and the Agents and a letter advising of the relevant Issuance. | ||||
DTC will credit such Book-Entry Notes to the Trustees participant account at DTC. |
Exhibit B Page 44
The Trustee will enter an SDFS deliver order through DTCs Participant Terminal System instructing DTC to (i) debit such Book-Entry Notes to the Trustees participant account and credit such Book-Entry Notes to such Agents participant account and (ii) debit such Agents settlement account and credit the Trustees settlement account for an amount equal to the price of such Book-Entry Notes less such Agents commission. The entry of such a deliver order shall constitute a representation and warranty by the Trustee to DTC that (i) such Book-Entry Notes have been executed, delivered and authenticated and (ii) the Trustee is holding the Master Note representing such Book-Entry Notes pursuant to the relevant Medium-Term Note Certificate Agreement between the Trustee and DTC. | ||||
An Agent will enter an SDFS deliver order through DTCs Participant Terminal System instructing DTC (i) to debit such Note to such Agents participant account and credit such Note to the participant accounts of the Participants with respect to such Note and (ii) to debit the settlement accounts of such Participants and credit the settlement account of such Agent for an amount equal to the price of such Note. | ||||
Transfers of funds in accordance with SDFS deliver orders described in Settlement Procedures F and G will be settled in accordance with SDFS operating procedures in effect on the settlement date. | ||||
The Trustee, upon confirming receipt of such funds in accordance with Settlement Procedure F, will wire transfer to the following account of the Issuer: |
Bank Name:
|
Bank of America | ||
Account Name:
|
AvalonBay Communities, Inc. | ||
Account Number:
|
Concentration Account | ||
ABA Number:
|
3752291106 | ||
|
111000012 |
|
in funds available for immediate use, the amount transferred to the Trustee in accordance with Settlement Procedure F. |
Exhibit B Page 45
|
An Agent will confirm the purchase of such Note to the purchaser either by transmitting to the Participants with respect to such Note a confirmation order or orders through DTCs institutional delivery system or by mailing a written confirmation to such purchaser. | |
|
||
Settlement Procedures
Timetable: |
For orders of Book-Entry Notes solicited by an Agent, as agent, and accepted by the Issuer for settlement on the first Business Day after the sale date, Settlement Procedures A through J set forth above shall be completed as soon as possible but not later than the respective times (New York City time) set forth below: |
Settlement
|
|||
Procedure
|
Time
|
||
A
|
11:00 a.m. on the sale date | ||
B
|
12:00 noon on the sale date | ||
C
|
2:00 p.m. on the sale date | ||
D
|
3:00 p.m. on the day before settlement | ||
E
|
9:00 a.m. on settlement date | ||
F-G
|
2:00 p.m. on settlement date | ||
H
|
4:45 p.m. on settlement date | ||
I-J
|
5:00 p.m. on settlement date |
|
If a sale is to be settled two Business Days after the sale date, Settlement Procedure A, B and C shall be completed as soon as practicable but not later than 11:00 a.m., 12:00 noon and 2:00 p.m., as the case may be, on the first Business Day after the sale date. |
Exhibit B Page 46
|
If a sale is to be settled more than two Business Days after the sale date, Settlement Procedure A shall be completed as soon as practicable but no later than 11:00 a.m. on the first Business Day after the sale date and Settlement Procedures B and C shall be completed as soon as practicable but no later than 12:00 noon and 2:00 p.m., as the case may be, on the second Business Day before the settlement date. If the initial interest rate for a Floating Rate Book-Entry Note has not been determined at the time that Settlement Procedure A is completed, Settlement Procedures B and C shall be completed as soon as such rate has been determined but not later than 12:00 noon and 2:00 p.m., respectively, on the Business Day before the settlement date. Settlement Procedure H is subject to extension in accordance with any extension of Fedwire closing deadlines and in the other events specified in the SDFS operating procedures in effect on the settlement date. | |
|
||
|
If settlement of a Book-Entry Note is rescheduled or canceled, the Trustee, upon receipt of notice from the Issuer, will deliver to DTC, through DTCs Participant Terminal System, a cancellation message to such effect by no later than 2:00 p.m. on the Business Day immediately preceding the scheduled settlement date. | |
|
||
Failure to Settle:
|
If an Agent or Trustee fails to enter an SDFS deliver order with respect to a Book-Entry Note pursuant to Settlement Procedure F, the Trustee may deliver to DTC, through DTCs Participant Terminal System, as soon as practicable, a withdrawal message instructing DTC to debit such note to the Trustees participant account. DTC will process the withdrawal message, provided that the Trustees participant account contains a principal amount of Book-Entry Notes represented by the Master Note that is at least equal to the principal amount to be debited. If a withdrawal message is processed with respect to all the Book-Entry Notes identified by a single CUSIP number, the Trustee will advise the Issuer and will make appropriate entries in its records. The CUSIP number assigned to such issue of Book-Entry Notes shall, in accordance with CUSIP Service Bureau procedures, be canceled and not immediately reassigned. If a |
Exhibit B Page 47
withdrawal message is processed with respect to one or more, but not all, of the issue of Book-Entry Notes identified by a single CUSIP number, the Trustee will advise the Issuer and will make appropriate entries in its records. | ||
If the purchase price for any Book-Entry Note is not timely paid to the Participants with respect to such Note by the beneficial purchaser thereof (or a person, including an indirect participant in DTC, acting on behalf of such purchaser), such Participants and, in turn, the Presenting Agent may enter SDFS deliver orders through DTCs Participant Terminal system reversing the orders entered pursuant to Settlement Procedures F and G, respectively. Thereafter, the Trustee will deliver the withdrawal message and take the applicable related actions described in the preceding paragraph. If such failure shall have occurred for any reason other than the failure by the Presenting Agent to provide the Purchase Information to the Issuer or to provide a confirmation to the purchaser, the Issuer will reimburse the Presenting Agent on an equitable basis for its loss of the use of the funds during the period when they were credited to the account of the Issuer. | ||
Notwithstanding the foregoing, upon any failure to settle with respect to a Book-Entry Note, DTC may take any actions in accordance with its SDFS operating procedures then in effect. | ||
Periodic Statements
from the Trustee : |
Periodically, the Trustee will send to the Issuer a statement setting forth the principal amount of Book-Entry Notes outstanding as of that date and setting forth a brief description of any sales of Book-Entry Notes of which the Issuer has advised the Trustee but which have not yet been settled. |
Exhibit B Page 48
Procedure for Rate Changes : | The Issuer and each Agent will discuss from time to time the price of, and the rates to be borne by, the Notes that may be sold as a result of the solicitation of offers by any Agent. Once an Agent has recorded any indication of interest in Notes upon certain terms, and communicated with the Issuer, if the Issuer plans to accept an offer to purchase Notes upon such terms, it will prepare a Pricing Supplement to the Prospectus, as then amended or supplemented, reflecting the terms of such Notes and will arrange to transmit such Pricing Supplement to the Commission for filing in accordance with and within the time prescribed by the applicable paragraph of Rule 424(b) under the Act. The Issuer will supply at least two copies of the Prospectus as then amended or supplemented, and bearing such Pricing Supplement, to the Presenting Agent. No settlements with respect to Notes upon such terms may occur prior to such transmitting and such Agent will not, prior to such transmitting, mail confirmations to customers who have offered to purchase Notes upon such terms. After such transmitting, sales and mailing of confirmations and settlements may occur with respect to Notes upon such terms, subject to the provisions of Delivery of Prospectus below. | |
Outdated Stickers, and copies of the Prospectus to which they are attached (other than those retained for files), will be destroyed. | ||
Suspension of Solicitation; Amendment or Supplement : | As provided in the Agency Agreement, the Issuer may suspend solicitation of purchase at any time, and, upon receipt of notice from the Issuer, the Agents will as promptly as practicable, but in no event later than one Business Day following such notice, suspend solicitation until such time as the Issuer has advised them that solicitation of purchases may be resumed. |
Exhibit B Page 49
If the Agents receive the notice from the Issuer contemplated by Section 4(b) of the Agency Agreement, they will promptly suspend solicitation and will only resume solicitation as provided in the Agency Agreement. If the Issuer decides to amend or supplement the Registration Statement or the Prospectus relating to the Notes, it will promptly advise the Agents and will furnish the Agents with the proposed amendment or supplement in accordance with the terms of the Agency Agreement. The Issuer will promptly file or mail to the Commission for filing such amendment or supplement, provide the Agents with copies of any such amendment or supplement, confirm to the Agents that such amendment or supplement has been filed with the Commission and advise the Agents that solicitation may be resumed. Any such suspension shall not affect the Issuers obligations under the Agency Agreement; and in the event that at the time the Issuer suspends solicitation of purchases there shall be any offers already accepted by the Issuer outstanding for settlement, the Issuer will have the sole responsibility for fulfilling such obligations; the Agents will make reasonable efforts to assist the Issuer to fulfill such obligations, but the Agents will not be obligated to fulfill such obligations. The Issuer will in addition promptly advise the Agents and the Trustee if such offers are not to be settled and if copies of the Prospectus as in effect at the time of the suspension may not be delivered in connection with the settlement of such offers. | ||
Delivery of Prospectus : | A copy of the Prospectus, as most recently amended or supplemented on the date of delivery thereof (except as provided below), must be delivered to a purchaser prior to or together with the earlier of delivery of (i) the written confirmation provided for above, and (ii) any Note purchased by such purchaser at the following address: |
If to: | Banc of America Securities LLC | ||
to both: | Attn: Continuously Offered Products | ||
100 No. Tryon Street | |||
Charlotte, NC 28255 | |||
Mail Code: NC 1007-07-01 |
Exhibit B Page 50
Telecopy Number: (704) 388-9939 13 | ||||
and | ||||
Syndicate Operations | ||||
100 No. Tryon Street | ||||
Charlotte, NC 28255 | ||||
Mail Code: NC 1007-07-01 | ||||
Telecopy Number: (704) 388-92122 14 | ||||
if to: | Citigroup Global Markets Inc. | |||
to: | Attention: Annabelle Avila | |||
Brooklyn Army Terminal | ||||
140 58 th Street, 8 th Floor | ||||
Brooklyn, NY 11220 | ||||
Telephone Number: (718) 765-6725 | ||||
Telecopy Number: (718) 765-6734 | ||||
if to: | Fleet Securities, Inc. | |||
to: | Attention: John Crees | |||
100 Federal Street MADE 10012H | ||||
Boston, MA 02110 | ||||
Telephone Number: (617) 434-5983 | ||||
Telecopy Number: (617) 434-8702 | ||||
if to: | J.P. Morgan Securities Inc. | |||
to: | Attention: Medium-Term Note Desk | |||
270 Park Avenue, 8 th Floor | ||||
New York, NY 10017 | ||||
Telephone Number: (212) 834-4421 | ||||
Telecopy Number: (212) 834-60813 15 | ||||
if to: | Lehman Brothers Inc. | |||
to: | Attention: Fixed Income Syndicate/ | |||
Medium Term Notes Desk | ||||
745 Seventh Avenue | ||||
New York, NY 10019 | ||||
Telephone Number: (212) 526-9664 | ||||
Telecopy Number: (212) 526-0943 |
13 Please send by telecopy rather than mail. | ||
14 Please send by telecopy rather than mail. | ||
15 Please send by telecopy with original to follow by mail. |
Exhibit B Page 51
with a copy to:
ADP Prospectus Services
For Lehman Brothers Inc.
Attention: Client Services Desk
1155 Long Island Avenue
Edgewood, NY 11717
Telecopy Number: (631) 254-7268
if to:
Morgan Stanley & Co. Incorporated
to:
Attention: Legal Department
1585 Broadway
New York, NY 10036
Telephone Number: (212) 761-4000
Telecopy Number: (212) 761-0783
with a copy to:
Morgan Stanley & Co. Incorporated
Attention: Debt Syndicate Desk
1585 Broadway
New York, NY 10036
Telephone Number: (212) 761-2000
if to:
Wachovia Capital Markets, LLC
to:
Attention: Corporate Syndicate Desk
301 South College St., DC-8
One Wachovia Center
Charlotte, NC 28288
Telephone Number: 704-383-7727
Telecopy Number: 704-383-9165
if to:
US Bank, National Association (the Trustee)
to:
Attention: Ward Spooner
100 Wall Street
New York, New York 10005
Telephone Number: (212) 361-6175
Telecopy Number: (212) 361-6153
and to: the Designated Agent, if any.
For record keeping purposes, one copy of such Pricing Supplement shall also be mailed to: |
Exhibit B Page 52
OMelveny & Myers LLP | ||||
275 Battery Street, Suite 2600 | ||||
San Francisco, CA 94111-3305 | ||||
Attention: Peter T. Healy, Esq. | ||||
Telecopy Number: (415) 984-8701 | ||||
and | ||||
Goodwin Procter LLP | ||||
Exchange Place | ||||
53 State Street | ||||
Boston, MA 02109-2281 | ||||
Attention: Gilbert G. Menna, P.C. | ||||
Telephone Number: (617) 570-1433 | ||||
Telecopy Number: (617) 523-1231 | ||||
The Issuer shall ensure that the Presenting Agent receives copies of the Prospectus and each amendment or supplement thereto (including appropriate Pricing Supplements) in such quantities and within such time limits as will enable the Presenting Agent to deliver such confirmation or Note to a purchaser as contemplated by these procedures and in compliance with the preceding sentence. If, since the date of acceptance of a purchasers offer, the Prospectus shall have been supplemented solely to reflect any sale of Notes on terms different from those agreed to between the Issuer and such purchaser or a change in posted rates not applicable to such purchaser, such purchaser shall not receive the Prospectus as supplemented by such new supplement, but shall receive the Prospectus as supplemented to reflect the terms of the Notes being purchased by such purchaser and otherwise as most recently amended or supplemented on the date of delivery of the Prospectus. |
Exhibit B Page 53
EXHIBIT C
Form of Opinion of
Counsel to the Company
In rendering the following opinion, counsel may rely, to the extent they deem such reliance proper, on the opinions (in form and substance reasonably satisfactory to counsel to the Agents) of other counsel reasonably acceptable to counsel to the Agents as to matters governed by the laws of jurisdictions other than the United States, and as to matters of fact, upon certificates of officers of the Company and of government officials; provided that counsel to the Company shall state that the opinion of any such other counsel is in form satisfactory to counsel to the Company and, in the opinion of counsel to the company, counsel to the Company and the Agents are justified in relying on such opinions of other counsel. Copies of all such opinions and certificates shall be furnished to counsel to the Agents.
* * * *
1. The Registration Statement has been declared effective under the 1933 Act. The Prospectus Supplement has been filed with the Commission pursuant to Rule 424(b) under the 1933 Act. To our knowledge (based solely on an oral confirmation of a member of the Commissions staff), no stop order suspending the effectiveness of the Registration Statement has been issued under the 1933 Act and no proceeding for that purpose has been instituted or threatened by the Commission.
2. Each part of the Registration Statement, when such part became effective, and the Prospectus, on the date of filing thereof with the Commission and as of the date hereof, complied as to form in all material respects with the requirements of the 1933 Act and the rules and regulations thereunder (other than (i) the financial statements and supporting schedules and other financial and statistical information and data included therein or omitted therefrom, and (ii) any documents incorporated by reference into the Registration Statement, as to which we express no opinion) it being understood that, in passing upon compliance as to the form of the Registration Statement, we assume that the statements made therein are correct and complete.
3. The descriptions in the Registration Statement (other than the documents incorporated by reference) and the Prospectus of statutes are accurate in all material respects and fairly present the information required to be disclosed therein. We do not know of any statutes or legal or governmental proceedings required to be described in the Prospectus that are not described as required, or of any contracts or documents of a character required to be described in the Registration Statement or Prospectus or to be filed as exhibits to the Registration Statement that are not so described or filed.
4. The Company is not and, after giving effect to the offering and sale of the Notes and the application of the proceeds therefrom as described in the Prospectus, will
Exhibit C Page 1
not be an investment company as such term is defined in the Investment Company Act of 1940, as amended.
5. The Company is a corporation validly existing and in good standing under the laws of the State of Maryland with corporate power under its organizational documents and the applicable statutory law necessary to conduct its business as described in the Registration Statement and the Prospectus.
6. Each of the Subsidiaries that owns a Current Community or Development Community (as such terms are defined in the Companys Quarterly Report on Form 10-Q for the quarterly period ended , 200 , filed with the Commission on , 200 ) is a corporation, limited partnership, or limited liability company, as the case may be, that has corporate or other power under its organizational documents and the applicable statutory law necessary to conduct its business as described in the Registration Statement and the Prospectus.
7. Subject to the completion of the exchange of the common stock of Avalon Properties, Inc. (Avalon) for the Common Stock of the Company in connection with the merger of Avalon with and into the Company as of June 4, 1998 (the Merger), all of the outstanding shares of Common Stock and Preferred Stock identified in the Prospectus that were issued in (a) the Merger and (b) offerings for cash registered under the 1933 Act and sold to underwriters or through agents in transactions in which we acted as counsel for the Company, have been duly authorized and are validly issued, fully paid and nonassessable and conform to the description thereof in the Prospectus.
8. The Notes are in substantially the forms annexed to the Amended and Restated Third Supplemental Indenture as Exhibit A or Exhibit B thereto. The issuance of the Notes has been duly authorized by the Company and, assuming (i) the due execution of the Notes on behalf of the Company, (ii) the due authentication of the Notes by the Trustee in accordance with the terms of the Indenture, and (iii) the delivery of the Notes and payment therefor in full by the purchasers of the Notes, (A) the Notes will be valid and binding obligations of the Company entitled to the benefits provided by the Indenture and enforceable against the Company in accordance with their terms, subject, as to enforcement, to (i) applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors rights and remedies generally, (ii) general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or law), (iii) the discretion of the court before which any proceeding therefor may be brought, (iv) requirements that a claim with respect to any Notes payable in a foreign or composite currency (or a foreign or composite currency judgment in respect of such claim) be converted into U.S. dollars at a rate of exchange prevailing on a date determined pursuant to applicable law and (v) governmental authority to limit, delay or prohibit the making of payments outside the United States (collectively, the Enforceability Limitations), and (B) the Indenture and the Notes conform in all material respects to the descriptions thereof in the Registration Statement and the Prospectus.
9. The Company has full corporate power and authority to enter into the Indenture. The Indenture has been duly authorized, executed and delivered by the
Exhibit C Page 2
Company and constitutes a valid and binding agreement of the Company enforceable against the Company in accordance with its terms, subject to the Enforceability Limitations.
10. The Indenture has been duly qualified under the Trust Indenture Act of 1939, as amended (the TIA).
11. The Company has full corporate power and authority to enter into the Distribution Agreement, the Terms Agreement and each Appointment Agreement, and each of the Distribution Agreement, the Terms Agreement and each Appointment Agreement has been duly authorized, executed and delivered by the Company. The execution, delivery and performance of the Indenture, the Distribution Agreement, the Terms Agreement and the Appointment Agreements and the issuance and sale of the Notes on the terms contemplated in the Distribution Agreement and the Terms Agreement will not (alone or with the giving of notice or the passage of time or both) (A) to our knowledge, result in the creation or imposition of any lien, charge or encumbrance upon any of the assets of the Company or any of the Subsidiaries, pursuant to the terms or provisions of any Contract (i) which we have prepared or negotiated on behalf of the Company and (ii) to which any of the Subsidiaries is a party or by or pursuant to which any of them or their respective properties is bound, affected or financed or (B) result in a breach or violation of any of the terms or provisions of, or constitute a default or result in the acceleration of any obligation under, (i) the Charter or Bylaws of the Company, (ii) the articles or certificate of incorporation, bylaws, limited partnership agreements or other organizational documents of any of the Subsidiaries, (iii) to our knowledge, any Contract to which the Company or any of the Subsidiaries is a party or by or pursuant to which any of them or their respective properties is bound, affected or financed or (iv) any statute, rule or regulation or judgment, ruling, decree or order, known to us, of any court or other governmental agency or body applicable to the business or properties of the Company or any of the Subsidiaries (except that we express no opinion as to the securities or Blue Sky laws of any jurisdiction other than the United States), in each case where such violation or default, individually or in the aggregate, might have a material adverse effect on the business, properties, business prospects, condition (financial or otherwise) or results of operations of the Company and the Subsidiaries taken as a whole.
12. To our knowledge, no consent, approval, authorization or order of, or filing with, any court or governmental agency or body is required in connection with the issuance or sale of the Notes by the Company, except (i) such as have been obtained under the 1933 Act, the Securities Exchange Act of 1934, as amended, or the TIA, or (ii) such as may be required under state securities laws or the bylaws or rules of the NASD in connection with the purchase and distribution of the Notes through or by the Agents.
The limitations inherent in the independent verification of factual matters and the character of determinations involved in the registration process are such that we are not passing upon and do not assume any responsibility for the accuracy, completeness or fairness of the statements contained in or incorporated by reference into the Registration Statement or the Prospectus and we make no representation that we have
Exhibit C Page 3
independently verified the accuracy, completeness or fairness of such statements. Without limiting the foregoing, we assume no responsibility for, and have not independently verified, the accuracy, completeness or fairness of the financial statements or notes thereto, financial schedules and other financial and statistical data contained in or incorporated by reference into the Registration Statement, and we have not examined the accounting, financial or statistical records from which such statements and notes, schedules and data are derived. However, in the course of our acting as counsel to the Company in connection with the preparation of the Registration Statement and the Prospectus and the public offering of the Notes, we have conferred with representatives of the Company, independent accountants for the Company, your representatives and representatives of OMelveny & Myers LLP, your counsel, during which conferences and conversations the contents of the Registration Statement and the Prospectus and related matters were discussed. In addition, we reviewed certain documents made available to us by the Company or otherwise in our possession.
Based on our participation in the above-mentioned conferences and conversations, our review of the documents described above and our understanding of applicable law, we advise you that:
(a) No facts have come to our attention which cause us to believe that the Registration Statement (excluding the financial statements and notes thereto, financial schedules and other financial or statistical information and data included therein or omitted therefrom and the Trustees Statement of Eligibility and Qualification on Form T-1 (the Form T-1), as to which we express no opinion), at the time it became effective, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading.
(b) No facts have come to our attention which cause us to believe that the Prospectus (excluding the financial statements and notes thereto, financial schedules and other financial or statistical information and data included therein or omitted therefrom and the Form T-1, as to which we express no opinion), as of its date or the date hereof, contained or contains an untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.
Such opinion shall also state that it is being rendered to the agents at the request of the Company and shall authorize the reliance of OMelveny & Myers LLP with respect to matters governed by the MGCL for the sole purpose of rendering their opinion to the Agents under the Distribution Agreement.
Exhibit C Page 4
SCHEDULE I
Information in the Prospectus
The following information appearing in the prospectus supplement relating to the Notes, if any, and the Prospectus has been furnished by the Agents in writing specifically for use in the preparation of such preliminary prospectus and the Prospectus:
1. The names of the Agents on the front and back covers.
2. The following information under the caption Supplemental Plan of Distribution:
a. the names of the Agents;
b. the information regarding transactions among the Company and the Agents and/or affiliates of the Agents (it being understood that each Agent has supplied only the information relating to such Agent and its affiliates); and
c. the information concerning stabilization and other syndicate activities in which the Agents may engage.
Schedule I Page 1
SCHEDULE III
Commissions
As compensation for the services of an Agent hereunder, the Company shall
pay such Agent, on a discount basis, a commission for the sale of each Note
equal to the principal amount of such Note multiplied by the appropriate
percentage set forth below:
PERCENT OF
MATURITY RANGES
PRINCIPAL AMOUNT
.125
%
.150
%
.200
%
.250
%
.350
%
.450
%
.500
%
.550
%
.600
%
.625
%
.700
%
.750
%
*
* | As agreed to by the Company and such Agent at the time of sale. |
Schedule III Page 1
2
3
AVALONBAY COMMUNITIES, INC.
|
||||
By: | ||||
Name: | ||||
Title: | ||||
By: | ||||
Name: | ||||
Title: | ||||
Insured |
4
2
3
4
AVALONBAY COMMUNITIES, INC.
|
||||
By: | /s/ Charlene Rothkopf | |||
Name: | Charlene Rothkopf | |||
Title: | EVP-Human Resources | |||
By: | /s/ Edward M. Schulman | |||
Name: | Edward M. Schulman | |||
Title: | SVP, General Counsel & Secretary | |||
/s/ Thomas J. Sargeant | ||||
Executive | ||||
5
EXHIBIT 10.10
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Agreement") made as of the 10th day of January, 2003 (the "Effective Date") by and between Bryce Blair ("Executive") and AvalonBay Communities, Inc., a Maryland corporation (the "Company").
WHEREAS, Executive and the Company have previously entered into an employment agreement dated as of March 9, 1998 (as amended, the "Prior Agreement"); and
WHEREAS, Executive and the Company desire to enter into a new employment agreement, effective as of the Effective Date indicated above, to replace the Prior Agreement.
NOW, THEREFORE, the parties hereto do hereby agree as follows.
1. Term. The Company hereby agrees to employ Executive, and Executive hereby agrees to remain in the employ of the Company subject to the terms and conditions of this Agreement for the period commencing on the Effective Date and terminating on November 30, 2006 (the "Original Term"), unless earlier terminated as provided in Section 7. The Original Term shall be extended automatically for additional two year periods measured from December 1, 2006 (each a "Renewal Term"), unless notice that this Agreement will not be extended is given by either party to the other at least 180 days prior to, but not more than 270 days prior to, the expiration of the Original Term or any Renewal Term. Notwithstanding the foregoing, upon a Change in Control, the Employment Period shall be extended automatically to three years from the date of such Change in Control (but only if such date is later than the then current expiration date). (The period of Executive's employment hereunder within the Original Term and any Renewal Terms is herein referred to as the "Employment Period.")
2. Employment Duties.
(a) During the Employment Period, Executive shall serve as the Chief Executive Officer and President of the Company. In this capacity, Executive shall have such duties, authorities and responsibilities commensurate with the duties, authorities and responsibilities of persons in similar capacities in similarly sized companies, and such other duties and responsibilities as the Board of Directors of the Company (the "Board") shall designate that are consistent with Executive's position as Chief Executive Officer and President of the Company. Executive shall report exclusively to the Board. In addition to Chief Executive Officer and President, Executive currently serves as Chairman of the Board. The appointment by the Board of Directors, from among the independent directors, of a "lead director" with certain defined duties or oversight responsibilities that are of a type that may traditionally be performed by a "chairman of the board" and that overlap with current duties or oversight responsibilities of Executive in his role as Chairman of the Board, shall not be a violation of this Agreement provided the role of such lead director is consistent with the proviso in Section 7(b)(4)(ix) (definition of "Constructive Termination without Cause").
(b) Executive agrees to his employment as described in this Section
2 and agrees to devote substantially all of his working time and efforts to the
performance of his duties under this Agreement; provided that nothing in this
Section 2(b) shall be interpreted to preclude Executive from (i) participating
with the prior written consent of the Board as an officer or director of, or
advisor to, any other entity or organization that is not a customer or material
service provider to the Company or a Competing Enterprise, as defined in Section
8, so long as such participation does not interfere with the performance of
Executive's duties hereunder, whether or not such entity or organization is
engaged in religious, charitable or other community or non-profit activities,
(ii) investing in any entity or organization which is not a
customer or material service provider to the Company or a Competing Enterprise, so long as such investment does not interfere with the performance of Executive's duties hereunder, or (iii) delivering lectures or fulfilling speaking engagements so long as such lectures or engagements do not interfere with the performance of Executive's duties hereunder. The Company consents to Executive's status as a "former partner" with a current financial interest in certain projects of Trammell Crow Residential ("TCR"), and such activity shall not be treated as a Competing Enterprise.
(c) In performing his duties hereunder, Executive shall be available for reasonable travel as the needs of the business require. Executive shall be based in Alexandria, Virginia (or, if such headquarters office shall move, to a headquarters office of the Company that is within 50 miles of Alexandria, Virginia). The Company acknowledges that Executive's principal residence is currently in Massachusetts, and it shall not be a violation of this agreement for Executive to maintain a principal residence in Massachusetts and to utilize on a regular basis the Company's current Quincy, Massachusetts office (or a successor Massachusetts office within 50 miles of Quincy, Massachusetts or other office facilities provided by the Company in or near Quincy, Massachusetts). The Company agrees to reimburse Executive for travel to and from the Alexandria office from Massachusetts and for reasonable related lodging, including, at the Company's option, at a nearby community owned by the Company.
(d) Breach by either party of any of his or its respective obligations under this Section 2 shall be deemed a material breach of that party's obligations hereunder.
3. Compensation/Benefits. In consideration of Executive's services hereunder, the Company shall provide Executive the following:
(a) Base Salary. During the Employment Period, the Executive shall receive an annual rate of base salary ("Base Salary") in an amount not less than $543,490. Executive's Base Salary will be reviewed by the Company annually and may be adjusted upward (but not downward) at such time. Base Salary shall be payable in accordance with the Company's normal business practices, but in no event less frequently than monthly.
(b) Bonuses. Commencing at the close of each fiscal year during the Employment Period, the Company shall review the performance of the Company and of Executive during the prior fiscal year, and the Company may provide Executive with additional compensation in the form of a cash bonus ("Cash Bonus") and in the form of long term equity incentives such as stock options and restricted stock grants ("LT Equity Bonus") if the Board, or any compensation committee thereof, in its discretion, determines that the performance of the Company and Executive's contribution to the Company warrants such additional payment and the Company's anticipated financial performance of the present period permits such payment. Any Cash Bonuses hereunder shall be paid as a lump sum not later than 75 days after the end of the Company's preceding fiscal year.
(c) Medical and Disability Insurance/Physical. During the Employment Period, the Company shall provide (i) to Executive and Executive's immediate family a comprehensive policy of health insurance in accordance with the Company's general practice applicable to officers (including payment of all or a portion of the premiums due thereon) and (ii) to Executive a disability policy in accordance with the Company's general practice applicable to officers (including payment of all or a portion of the premiums due thereon) (the "Base Disability Policy") and a supplemental disability policy (the "Supplemental Policy") providing for coverage mutually reasonably acceptable to the Company and Executive. During the Employment Period, Executive shall be entitled to a comprehensive annual physical performed, at the expense of the Company (but not including any related travel expense), by the physician or medical group of Executive's choosing.
(d) Split Dollar Life Insurance. Subject to Section 12(b), during the Employment Period, the Company shall keep in force and pay the premiums on the split-dollar life insurance policy referenced in the Split Dollar Insurance Agreement between the Company (or Avalon Properties, Inc., a predecessor) and Executive, subject to reimbursement by Executive as provided in such Split Dollar Insurance Agreement. Executive agrees to submit to such medical examinations as may be required in order to maintain such policy of insurance.
(e) Vacations. Executive shall be entitled to reasonable paid vacations during the Employment Period in accordance with the then regular procedures of the Company governing officers.
(f) Office/Secretary, etc. During the Employment Period, Executive shall be entitled to secretarial services and a private office in each of the Alexandria, Virginia and Quincy, Massachusetts offices (or in successor offices or office facilities as permitted hereunder) commensurate with his title and duties.
(g) Annual Allowance. The Company will provide the Executive with an annual allowance of up to $10,000 per year (the "Allowance"). The Executive may draw on the Allowance for expenses incurred in his discretion for items such as country club membership, financial counseling or tax preparation. Payment of the Allowance shall be subject to substantiation of expenses in accordance with the Company's policies in effect from time to time for executive officers of the Company. Unused portions of the Allowance shall be forfeited (i.e., not carried over from year to year or paid out in cash). For purposes of this Section 3(g), a new year shall be deemed to commence on each January 1. Payments under this annual allowance will not be grossed up to reflect any income taxes that may be due thereon. Executive shall be entitled to a full Allowance for 2002.
(h) Automobile. The Company shall provide Executive with a monthly car allowance during the Employment Period in accordance with the Company's current practices but in no event less than Executive's current monthly car allowance.
(i) Other Benefits. During the Employment Period, the Company shall provide to Executive such other benefits, excluding severance benefits, but including the right to participate in such retirement or pension plans, as are made generally available to officers of the Company from time to time. Executive shall be given credit for purposes of eligibility and vesting of employee benefits and benefit accrual for service prior to the Effective Date with Avalon Properties, Inc. and its affiliates ("Avalon"), and Trammell Crow Residential ("TCR") under each benefit plan of the Company and its subsidiaries to the extent such service had been credited under employee benefit plans of Avalon or TCR, provided that no such crediting of service results in duplication of benefits.
(j) Total Compensation. The Company acknowledges that the Executive's Cash Bonus and LT Equity Bonus awarded to the Executive by the Board or Compensation Committee of the Board in its discretion from time to time, are a material part of total compensation for the Executive. The Company will endeavor to provide Executive with a reasonable bonus program (which program will provide for a reasonable Cash Bonus and/or reasonable LT Equity Bonus on an annual basis to compensate Executive for the achievement by the Company and/or Executive of reasonable goals and objectives) such that the Executive's total compensation, in light of the Company's performance and his performance and service as CEO and President and Chairman of the Board, is reasonable under the circumstances and reasonable relative to the Cash Bonuses and LT Equity Bonuses awarded other officers of the Company. The Company shall not be in breach of this provision unless it can be demonstrated that the Company acted in bad faith in determining whether to award (or the size of an award of) a Cash Bonus or LT Equity Bonus, which determination of bad faith shall specifically be made with reference to the target awards set for other officers and the actual awards paid other officers.
4. Expenses/Indemnification.
(a) During the Employment Period, the Company shall reimburse Executive for the reasonable business expenses incurred by Executive in the course of performing his duties for the Company hereunder, upon submission of invoices, vouchers or other appropriate documentation, as may be required in accordance with the policies in effect from time to time for executive employees of the Company.
(b) To the fullest extent permitted by law, the Company shall indemnify Executive with respect to any actions commenced against Executive in his capacity as an officer or director or former officer or director of the Company, or any affiliate thereof for which he may render service in such capacity, whether by or on behalf of the Company, its shareholders or third parties, and the Company shall advance to Executive on a timely basis an amount equal to the reasonable fees and expenses incurred in defending such actions, after receipt of an itemized request for such advance, and an undertaking from Executive to repay the amount of such advance, with interest at a reasonable rate from the date of the request, as determined by the Company, if it shall ultimately be determined that he is not entitled to be indemnified against such expenses. The Company agrees that it shall use reasonable best efforts to secure and maintain officers' and directors' liability insurance that shall include coverage with respect to Executive.
5. Employer's Authority/Policies.
(a) General. Executive agrees to observe and comply with the rules and regulations of the Company as adopted by its Board respecting the performance of his duties and to carry out and perform orders, directions and policies communicated to him from time to time by the Board.
(b) Ethics Policies. Executive agrees to comply with and be bound by the Ethics Policies of the Company, as reflected in the attachment at Annex A hereto and made a part hereof. Executive agrees to comply with and be bound by the Company's insider trading policies and procedures that are generally applicable to employees and/or senior officers.
(c) SEC Certifications. Executive's duties shall include taking such
actions as are necessary so that Executive is in a position to give, and does
give, all certifications that a Chief Executive Officer, under federal law or
regulations, is required to give with the submission by the Company of reports
or other filings to the Securities and Exchange Commission ("SEC filings"),
provided, however, that Executive shall not have violated this Agreement if
Executive is not in a position to give or does not give any such certification
because (i) Executive determines that he cannot make such certification
truthfully or with sufficient certainty due to the existence of conditions or
information, or the inability to confirm such conditions or information, and
(ii) the existence of such conditions or information or the inability to confirm
such conditions or information, or the failure to have properly reported in an
SEC filing in a timely and appropriate fashion such conditions or information,
was in each case not due to the gross negligence or willful misconduct of
Executive while serving in his capacity as Chief Executive Officer.
6. Records/Nondisclosure/Company Policies.
(a) General. All records, manuals, financial statements and similar documents obtained, reviewed or compiled by Executive in the course of the performance by him of services for the Company, whether or not confidential information or trade secrets, shall be the exclusive property of the Company. Executive shall have no rights in such documents upon any termination of this Agreement.
(b) Nondisclosure Agreement. Without limitation of the Company's rights under Section 6(a), Executive agrees to abide by and be bound by the Nondisclosure Agreement of the Company executed by Executive and the Company as reflected in the attachment at Annex B and made a part hereof.
7. Termination; Severance and Related Matters.
(a) At-Will Employment. Executive's employment hereunder is "at
will" and, therefore, may be terminated at any time, with or without Cause, at
the option of the Company, subject only to the severance obligations under this
Section 7. Upon any termination hereunder, the Employment Period shall expire.
(b) Definitions. For purposes of this Section 7, the following terms shall have the indicated definitions:
(1) Cause. "Cause" shall mean:
(i) Executive is convicted of or enters a plea of nolo contendere to an act which is defined as a felony under any federal, state or local law, not based upon a traffic violation, which conviction or plea has or can be expected to have, in the good faith opinion of the Board, a material adverse impact on the business or reputation of the Company;
(ii) any one or more acts of theft, larceny, embezzlement, fraud or material intentional misappropriation from or with respect to the Company;
(iii) a breach by Executive of his fiduciary duties under Maryland law as an officer; or material breach by Executive of any rule, regulation, policy or procedure, the Company (including, without limitation, as described in Section 5 hereof);
(iv) Executive's commission of any one or more acts of gross negligence or willful misconduct which in the good faith opinion of the Board has resulted in material harm to the business or reputation of the Company; or
(v) default by Executive in the performance of his material duties under this Agreement, without correction of such action within 15 days of written notice thereof.
Notwithstanding the foregoing, no termination of Executive's employment by the Company shall be treated as for Cause or be effective until and unless all of the steps described in subparagraphs (A) through (C) below have been complied with:
(A) Notice of intention to terminate for Cause has been given by the Company within 120 days after the Board learns of the act, failure or event (or latest in a series of acts, failures or events) constituting "Cause";
(B) The Board has voted (at a meeting of the Board duly called and held as to which termination of Executive is an agenda item) to terminate Executive for Cause after Executive has been given notice of the particular acts or circumstances which are the basis for the termination for Cause and has been afforded at least 20 days notice of the meeting and an opportunity to present his position in writing; and
(C) The Board has given a Notice of Termination to Executive within 20 days after such Board meeting.
The Company may suspend Executive with pay at any time during the period commencing with the giving of notice to Executive under clause (A) above until final Notice of Termination is given under clause (C) above. Upon the giving of notice as provided in clause (C) above, no further payments shall be due Executive except as provided in Section 7(c)(vi).
(2) Change in Control. A "Change in Control" shall mean the occurrence of any one or more of the following events following the Effective Date:
(i) Any individual, entity or group (a "Person") within the
meaning of Sections 13(d) and 14(d) of the Securities Exchange Act of
1934 (the "Act") (other than the Company, any corporation,
partnership, trust or other entity controlled by the Company (a
"Subsidiary"), or any trustee, fiduciary or other person or entity
holding securities under any employee benefit plan or trust of the
Company or any of its Subsidiaries), together with all "affiliates"
and "associates" (as such terms are defined in Rule 12b-2 under the
Act) of such Person, shall become the "beneficial owner" (as such term
is defined in Rule 13d-3 under the Act) of securities of the Company
representing 30% or more of the combined voting power of the Company's
then outstanding securities having the right to vote generally in an
election of the Company's Board of Directors ("Voting Securities"),
other than as a result of (A) an acquisition of securities directly
from the Company or any Subsidiary or (B) an acquisition by any
corporation pursuant to a reorganization, consolidation or merger if,
following such reorganization, consolidation or merger the conditions
described in clauses (A), (B) and (C) of subparagraph (iii) of this
Section 7(b)(2) are satisfied; or
(ii) Individuals who, as of the Effective Date, constitute the Company's Board (the "Incumbent Directors") cease for any reason to constitute at least a majority of the Board, provided, however, that any individual becoming a director of the Company subsequent to the date hereof (excluding, for this purpose, (A) any such individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of members of the Board or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board, including by reason of agreement intended to avoid or settle any such actual or threatened contest or solicitation, and (B) any individual whose initial assumption of office is in connection with a reorganization, merger or consolidation, involving an unrelated entity and occurring during the Employment Period), whose election or nomination for election by the Company's shareholders was approved by a vote of at least a majority of the persons then comprising Incumbent Directors shall for purposes of this Agreement be considered an Incumbent Director; or
(iii) Consummation of a reorganization, merger or
consolidation of the Company, unless, following such reorganization,
merger or consolidation, (A) more than 50% of, respectively, the then
outstanding shares of common stock of the corporation resulting from
such reorganization, merger or consolidation and the combined voting
power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the outstanding Voting Securities immediately prior
to such reorganization, merger or consolidation, (B) no Person
(excluding the Company, any employee benefit plan (or related trust)
of the Company, a Subsidiary or the corporation resulting from such
reorganization, merger or consolidation or any subsidiary thereof, and
any Person beneficially owning, immediately prior to such
reorganization, merger or consolidation, directly or indirectly, 30%
or more of the outstanding Voting Securities), beneficially owns,
directly or indirectly, 30% or more of, respectively, the then
outstanding shares of
common stock of the corporation resulting from such reorganization, merger or consolidation or the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors, and (C) at least a majority of the members of the board of directors of the corporation resulting from such reorganization, merger or consolidation were members of the Incumbent Board at the time of the execution of the initial agreement providing for such reorganization, merger or consolidation;
(iv) Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company; or
(v) The sale, lease, exchange or other disposition of all or substantially all of the assets of the Company, other than to a corporation, with respect to which following such sale, lease, exchange or other disposition (A) more than 50% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners of the outstanding Voting Securities immediately prior to such sale, lease, exchange or other disposition, (B) no Person (excluding the Company and any employee benefit plan (or related trust) of the Company or a Subsidiary or such corporation or a subsidiary thereof and any Person beneficially owning, immediately prior to such sale, lease, exchange or other disposition, directly or indirectly, 30% or more of the outstanding Voting Securities), beneficially owns, directly or indirectly, 30% or more of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors and (C) at least a majority of the members of the board of directors of such corporation were members of the Incumbent Board at the time of the execution of the initial agreement or action of the Board of Directors providing for such sale, lease, exchange or other disposition of assets of the Company.
Notwithstanding the foregoing, a "Change in Control" shall not be deemed to have occurred for purposes of this Agreement solely as the result of an acquisition of securities by the Company which, by reducing the number of shares of Voting Securities outstanding, increases the proportionate voting power represented by the Voting Securities beneficially owned by any Person to 30% or more of the combined voting power of all then outstanding Voting Securities; provided, however, that if any Person referred to in this sentence shall thereafter become the beneficial owner of any additional shares of Stock or other Voting Securities (other than pursuant to a stock split, stock dividend, or similar transaction), then a "Change in Control" shall be deemed to have occurred for purposes of this Agreement.
(3) Complete Change in Control. A "Complete Change in Control" shall mean that a Change in Control has occurred, after modifying the definition of "Change in Control" by deleting clause (i) from Section 7(b)(2) of this Agreement.
(4) Constructive Termination Without Cause. "Constructive Termination Without Cause" shall mean a termination of Executive's employment initiated by Executive not later than 12 months following the occurrence (not including any time during which an arbitration proceeding referenced below is pending), without Executive's prior written consent, of one or more of the following events (or the latest to occur in a series of events), and effected after giving the Company not less than 10 working days' written notice of the specific act or acts relied upon and right to cure:
(i) a material adverse change in the functions, duties or responsibilities of Executive's position which would reduce the level, importance or scope of such position, except in connection with the termination of Executive's employment for Disability, Cause, as a result of Executive's death or by Executive other than for a Constructive Termination Without Cause;
(ii) any material breach by the Company of this Agreement;
(iii) any purported termination of Executive's employment
for Cause by the Company which does not comply with the terms of
Section 7(b)(1) of this Agreement;
(iv) the failure of the Company to obtain an agreement, satisfactory to the Executive, from any successor or assign of the Company, to assume and agree to perform this Agreement, as contemplated in Section 10 of this Agreement;
(v) the failure by the Company to continue in effect any compensation plan in which Executive participates immediately prior to a Change in Control which is material to Executive's total compensation, unless comparable alternative arrangements (embodied in ongoing substitute or alternative plans) have been implemented with respect to such plans, or the failure by the Company to continue Executive's participation therein (or in such substitute or alternative plans) on a basis not materially less favorable, in terms of the amount of benefits provided and the level of Executive's participation relative to other participants, as existed during the last completed fiscal year of the Company prior to the Change in Control;
(vi) (a) the relocation of the Company's Alexandria, Virginia headquarters to a new location more than 50 miles away from Alexandria, Virginia or the failure to locate Executive's own office at the Alexandria office or at a successor office which is not more than 50 miles away from Alexandria, Virginia or (b) the relocation of the Company's Quincy, Massachusetts offices to a new location more than 50 miles away from Quincy, Massachusetts unless other office facilities, which need not be a formal office of the Company, in or near the Quincy, Massachusetts area are made available by the Company for Executive's use;
(vii) any voluntary termination of employment by the Executive for any reason during the 12-month period immediately following a Complete Change in Control of the Company if such Complete Change in Control occurs during the Employment Period;
(viii) the failure of the Board to take action as may be necessary to re-elect Executive to the Board, provided, however, that it will not be a Constructive Termination Without Cause if Executive shall fail to be re-elected by the stockholders, or if the Board's failure to take action is in connection with the termination of Executive's employment for Disability, Cause, as a result of Executive's death or by Executive other than for a Constructive Termination Without Cause; or
(ix) the failure of the Board of Directors, following each annual meeting of stockholders, to re-appoint Executive as Chairman of the Board or to maintain such appointment, provided, however, that it shall not be a Constructive Termination without Cause if the Board fails to appoint Executive as Chairman of the Board (or removes such title) and instead appoints a non-executive Chairman of the Board if
(a) there is a law, rule or regulation, or a listing requirement of the New York Stock Exchange, that provides that the Chairman and CEO shall not be the same person, or
(b) the Board, in its good faith judgment following a shareholder vote, or in its good faith judgment in light of then evolving and well-publicized standards of good corporate governance, determines that it is in the best interest of the Company that Executive not serve as Chairman and that a non-executive Chairman be appointed,
provided further, however, that in such event,
(x) the non-executive Chairman shall not serve in a full time or executive capacity, and
(y) Executive shall continue to report directly and exclusively to the full Board and not to the non-executive Chairman, and (without limiting the Board's or any Board committee's right to meet or confer with any individual officer and to take actions as are customary for a Board of Directors and consistent with its fiduciary duties) all other officers shall continue to report directly or indirectly to Executive.
In addition, under no circumstances will a Constructive Termination without Cause be deemed to occur solely on account of the appointment by the Board of Directors, and public announcement thereof, of a "lead independent director" so long as the same limitations as apply immediately above in the case of a non-executive Chairman apply to such lead independent director.
Notwithstanding the foregoing, a Constructive Termination Without Cause shall not be treated as having occurred unless Executive has given a final Notice of Termination delivered after expiration of the Company's cure period. Executive or the Company may, at any time after the expiration of the Company's cure period and either prior to or up until three months after giving a final Notice of Termination, commence an arbitration proceeding to determine the question of whether, taking into account the actions complained of and any efforts made by the Company to cure such actions, a termination by Executive of his employment should be treated as a Constructive Termination Without Cause for purposes of this Agreement. If the Executive or the Company commences such a proceeding prior to delivery by Executive of a final Notice of Termination, the commencement of such a proceeding shall be without prejudice to either party and Executive's and the Company's rights and obligations under this Agreement shall continue unaffected unless and until the arbitrator has determined such question in the affirmative, or, if earlier, the date on which Executive or the Company has delivered a Notice of Termination in accordance with the provisions of this Agreement.
(5) Covered Average Compensation. "Covered Average Compensation" shall mean the sum of Executive's Covered Compensation as calculated for the calendar year in which the Date of Termination occurs and for each of the two preceding calendar years, divided by three.
(6) Covered Compensation. "Covered Compensation," for any calendar year, shall mean an amount equal to the sum of (i) Executive's Base Salary for the calendar year, (ii) the cash bonus actually earned by Executive with respect to such calendar year, and (iii) the value of all stock and other equity-based compensation awards made to Executive during such calendar year. In the event that the Company has or hereafter makes any special, mid-year or other non-routine grant of equity outside of the Company's recurring annual equity compensation programs, the value of any such mid-year, special, or additional equity based compensation shall not be included in clause (iii) of the preceding sentence and therefore shall not be included in the calculation of
Covered Compensation or Covered Average Compensation, and the value of such equity shall have no impact on any cash payments made under Section 7(c) of the Agreement.
Covered Compensation shall be calculated according to the following rules:
(A) In valuing awards for purposes of clause (iii)
above, all such awards shall be treated as if fully vested when
granted, stock grants shall be valued by reference to the fair
market value on the date of grant of the Company's common stock,
par value $.01 per share and other equity-based compensation
awards shall be valued at the value established by the
Compensation Committee of the Board of Directors. Reference is
made to Section 7(c)(vii) for further clarification regarding
this matter.
(B) In determining the cash bonus actually paid with respect to a calendar year, if no cash bonus has been paid with respect to the calendar year in which the Date of Termination occurs, the cash bonus paid with respect to the immediately preceding calendar year shall be assumed to have been paid in each of the current and immediately preceding calendar years, and if no cash bonus has been paid by the Date of Termination with respect to the immediately preceding calendar year, the cash bonus paid with respect to the second preceding calendar year shall be assumed to have been paid in all three of the calendar years taken into account in determining Covered Average Compensation.
(C) If (i) any cash bonus paid with respect to the current or immediately preceding calendar year was paid within three months of Executive's Date of Termination, (ii) such cash bonus is lower than the last cash bonus paid more than three months from the Date of Termination, and (iii) it is determined that the Board acted in bad faith in setting such cash bonus (which determination of bad faith shall specifically be made with reference to the target cash bonuses set for other officers and the actual cash bonuses paid other officers), then in such event any such cash bonus paid within three months of the Date of Termination shall be disregarded and the last cash bonus paid more than three months from the Date of Termination shall be substituted for each cash bonus so disregarded.
(D) In determining the amount of stock and other equity-based compensation awards made during a calendar year during the averaging period, rules similar to those set forth in subparagraphs (B) and (C) of this Section 7(b)(6) shall be followed.
(7) Disability. "Disability" shall mean Executive has been determined to be disabled and to qualify for long-term disability benefits under the long-term disability insurance policy obtained pursuant to Section 3(c) of this Agreement.
(c) Rights Upon Termination.
(i) Payment of Benefits Earned Through Date of Termination. Upon any termination of Executive's employment during the Employment Period, Executive, or his estate, shall in all events be paid (I) all accrued but unpaid Base Salary and (II) (except in the case of a termination by the Company for Cause or a voluntary termination by Executive which is not due to a Constructive Termination Without Cause, in either of which cases this clause (II) shall not apply) a pro rata portion of the Executive's Cash
Bonus and LT Equity Bonus. For purposes of fulfilling the requirements of clause (II) of the prior sentence, the following shall apply:
(a) In all events, any stock options issued will be issued prior to Executive's Date of Termination so that such stock options are employee stock options. Such stock options shall have an exercise price equal to the closing price of the Company's stock on the date of grant of such options, and such options shall expire one year after the date of grant.
(b) The Company and Executive shall work in good faith to determine an appropriate Cash Bonus and LT Equity Bonus for the year in which the Date of Termination occurs. Such determination shall be based in good faith on an evaluation of Executive's and the Company's performance. If the Company and Executive cannot agree on appropriate amounts, then:
(A) The Company may defer the determination of the Cash Bonus and the restricted stock portion of the LT Equity Bonus until such bonuses in respect of such year are determined for other officers, and at such time the amounts to be used for determining Executive's pro rata bonuses shall be a percentage of his target Cash Bonus and a percentage of his target number of restricted shares with such percentages being equal to the average of the percentages that apply to the Cash Bonus and restricted shares, respectively, of other officers ranked Senior Vice President or higher; and
(B) The Company may grant to Executive a number of stock options based on the assumption that the percentage of the target number of options Executive would have received in respect of the year in which the Date of Termination occurs would equal the average of the percentage realization applied to options granted with respect to the prior three calendar years.
(c) Once the determination in the preceding paragraph is made, the pro rata portion of such amounts shall equal such amounts multiplied by a fraction, the numerator of which is the number of days from January 1 to the Date of Termination in the year of termination and the denominator of which is 365.
Executive shall also retain all such rights with respect to vested equity-based awards as are provided under the circumstances under the applicable grant or award agreement, and shall be entitled to all other benefits which are provided under the circumstances in accordance with the provisions of the Company's generally applicable employee benefit plans, practices and policies, other than severance plans.
(ii) Death. In the event of Executive's death during the Employment Period, the Company shall, in addition to paying the amounts set forth in Section 7(c)(i), take whatever action is necessary to cause all of Executive's unvested equity-based awards to become fully vested as of the date of death and, in the case of equity-based awards which have an exercise schedule, to become fully exercisable and continue to be exercisable for a period of (a) two years following death (or such greater exercise period as may be provided in the applicable award agreement for awards that are vested and exercisable at the time of death) or (b) if less, the end of the original term of the options.
(iii) Disability. In the event the Company elects to terminate Executive's employment during the Employment Period on account of Disability, the Company shall, in addition to paying the amounts set forth in Section 7(c)(i) and subject to Executive first entering into a separation agreement, including a general release of all claims, in a form reasonably acceptable to the Company ("Separation Agreement"), pay to Executive, in one lump sum, no later than the later of the effective date of said Separation Agreement or 31 days following the Date of Termination, an amount equal to two times Covered Average Compensation. The Company shall also, commencing upon the Date of Termination and subject to Executive entering into a Separation Agreement:
(A) Continue, without cost to Executive, benefits comparable to the medical benefits provided to Executive immediately prior to the Date of Termination under Section 3(c) for a period of 24 months following the Date of Termination or until such earlier date as Executive obtains comparable benefits through other employment;
(B) Subject to Section 12(b), continue to pay, or reimburse Executive, for all premiums then due or thereafter payable on the whole-life portion of the split-dollar insurance policy referenced under Section 3(d) for so long as such payments are due; provided, that the Company's obligations under this Section 7(c)(iii)(B) are contingent on Executive's timely payment of the premiums then due or thereafter payable on the term portion of said split-dollar insurance policy; and
(C) Take whatever action is necessary to cause Executive to become vested as of the Date of Termination in all stock options, restricted stock grants, and all other equity-based awards and be entitled to exercise and continue to exercise all stock options and all other equity-based awards having an exercise schedule and to retain such grants and awards to the same extent as if they were vested upon termination of employment in accordance with their terms.
(D) If Executive obtains a disability policy on commercially reasonable terms with the same or similar coverage as provided by the Company in the Base Disability Policy and the Supplemental Policy prior to the Date of Termination then, until that date that is 24 months following the Date of Termination (or, if earlier, until Executive obtains comparable benefits through other employment), reimburse Executive for an amount equal to the difference between (i) the monthly premiums for such disability policy, less (ii) such amount as may be paid, prior to the Date of Termination, by Executive in respect of a portion of the premiums on the Base Disability Policy provided by Company prior to the Date of Termination.
(iv) Non-Renewal. In the event the Company gives Executive
a notice of non-renewal pursuant to Section 1 above, the Company
shall, in addition to paying the amounts set forth in Section
7(c)(i), commencing upon the Date of Termination:
(A) Pay to Executive, for 12 consecutive months, commencing with the first day of the month immediately following the Date of Termination, a monthly amount equal to the result obtained by dividing Covered Average Compensation by twelve;
(B) Continue, without cost to Executive, benefits comparable to the medical benefits provided to Executive immediately prior to the Date of Termination under Section 3(c) for a period of 24 months following the Date of Termination or until such earlier date as Executive obtains comparable benefits through other employment; and
(C) Take whatever action is necessary to cause Executive to become vested as of the Date of Termination in all stock options, restricted stock grants, and all other equity-based awards and be entitled to exercise and continue to exercise all stock options and all other equity-based awards having an exercise schedule and to retain such grants and awards to the same extent as if they were vested upon termination of employment in accordance with their terms;
(D) If Executive obtains a disability policy on commercially reasonable terms with the same or similar coverage as provided by the Company in the Base Disability Policy and the Supplemental Policy prior to the Date of Termination then, until that date that is 24 months following the Date of Termination (or, if earlier, until Executive obtains comparable benefits through other employment), reimburse Executive for an amount equal to the difference between (i) the monthly premiums for such disability policy, less (ii) such amount as may be paid, prior to the Date of Termination, by Executive in respect of a portion of the premiums on the Base Disability Policy provided by Company prior to the Date of Termination; and
(E) Subject to Section 12(b), continue to pay, or reimburse Executive for, all premiums then due or thereafter payable on the whole-life portion of the split-dollar insurance policy referenced under Section 3(d) for so long as such payments are due; provided, that the Company's obligations under this Section 7(c)(iv)(E) are contingent on Executive's timely payment of the premiums then due or thereafter payable on the term portion of said split-dollar insurance policy.
(v) Termination Without Cause; Constructive Termination Without Cause. In the event the Company or any successor to the Company terminates Executive's employment without Cause, or if Executive terminates his employment in a Constructive Termination without Cause, the Company shall, in addition to paying the amounts provided under Section 7(c)(i), pay to Executive, in one lump sum no later than 31 days following the Date of Termination, an amount equal to three times Covered Average Compensation. The Company shall also, commencing upon the Date of Termination:
(A) Continue, without cost to Executive, benefits comparable to the medical benefits provided to Executive immediately prior to the Date of Termination under Section 3(c) for a period of 36 months following the Date of Termination or until such earlier date as Executive obtains comparable benefits through other employment;
(B) Subject to Section 12(b), continue to pay, or reimburse Executive, for so long as such payments are due, all premiums then due or payable on the whole-life portion of the split-dollar insurance policy referenced under Section 3(d); provided, that the Company's obligations under this Section 7(c)(v)(B) are contingent on Executive's timely payment of the premiums then due or thereafter payable on the term portion of said split-dollar insurance policy.; and
(C) Take whatever action is necessary to cause Executive to become vested as of the Date of Termination in all stock options, restricted stock grants, and all other equity-based awards and be entitled to exercise and continue to exercise all stock options and all other equity-based awards having an exercise schedule and to retain such grants and awards to the same extent as if they were vested upon termination of employment in accordance with their terms.
(D) If Executive obtains a disability policy on commercially reasonable terms with the same or similar coverage as provided by the Company in the Base Disability Policy and the Supplemental Policy prior to the Date of Termination then, until that date that is 36 months following the Date of Termination (or, if earlier, until Executive obtains comparable benefits through other employment), reimburse Executive for an amount equal to the difference between (i) the premium for such disability policy, less (ii) such amount as may be paid, prior to the Date of Termination, by Executive in respect of a portion of the premiums on the Base Disability Policy provided by Company prior to the Date of Termination.
(vi) Termination for Cause; Voluntary Resignation. In the event Executive's employment terminates during the Employment Period other than in connection with a termination meeting the conditions of subparagraphs (ii), (iii), (iv) or (v) of this Section 7(c), Executive shall receive the amounts set forth in Section 7(c)(i) in full satisfaction of all of his entitlements from the Company. All equity-based awards not vested as of the Date of Termination shall terminate (unless otherwise provided in the applicable award agreement) and Executive shall have no further entitlements with respect thereto.
(vii) Clarification Regarding Treatment of Options and Restricted Stock. The stock option and restricted stock agreements (the "Equity Award Agreements") that Executive has or may receive may contain language regarding the effect of a termination of Executive's employment under certain circumstances.
(A) Notwithstanding such language in the Equity Award
Agreements, for so long as this Agreement is in effect, the
Company will be obligated, if the terms of this Agreement are
more favorable in this regard than the terms of the Equity
Award Agreements, to take the actions required under Sections
7(c)(ii), 7(c)(iii)(C), 7(c)(iv)(C) and 7(c)(v)(C) hereof upon
the happening of the circumstances described therein. Those
sections provide that in certain situations the Company will
cause the Executive to become vested as of the Date of
Termination in all or certain equity-based awards, and that
such equity-based awards will thereafter be subject to the
provisions of the applicable Equity Award Agreement as it
applies to vested awards upon a termination. For purposes of
clarification, although an option grant may vest in accordance
with these above-referenced Sections, such option will
thereafter be exercisable only for so long as the related
option agreement provides, except that the Compensation
Committee of the Board of Directors may, in its sole
discretion, elect to extend the expiration date of such
option. For example, in general Executive's option agreements
granted prior to the date hereof provide that (in the absence
of an extension by the Compensation Committee) upon a
termination of employment for any reason other than death,
disability, retirement or cause, any vested options will only
be exercisable for three months from the date of termination
or, if earlier, the expiration date of the option.
(B) Notwithstanding the definition of "Cause" which may appear in the Equity Award Agreements, for so long as this Agreement is in effect (X) any "for Cause" termination must be in compliance with the terms of this Agreement, including the definition of "Cause" set forth herein, and (Y) only in the event of a "for Cause" termination that meets both the definition in this Agreement and the definition in the Equity Award Agreement will the disposition of options and restricted stock under such Equity Award Agreement be treated in the manner described in such Equity Award Agreement in the case of a termination "for Cause."
(C) For purposes of Section 7(b)(6)(A), the value of any option may be determined by the Compensation Committee of the Board at any time after its grant date by setting such value at the value determined by a nationally recognized accounting firm or employee benefits compensation firm, selected by such Committee, that calculates such value in accordance with a Black-Scholes formula or variations thereof using such parameters and procedures (including, without limitation, parameters and procedures used to measure the historical volatility of the Company's common stock as of the relevant grant date) as the Compensation Committee and/or such firm deems reasonably appropriate. In all events, if the parameters used for valuing any option for purposes of Section 7(b)(6)(A) are the same as the parameters used for valuing any other options for purposes of disclosure or inclusion in the Company's financial statements or financial statement footnotes, then such parameters shall be deemed reasonable.
(D) During the Employment Period any stock options issued to Executive shall provide that if Executive's employment is terminated in any manner which gives rise to an obligation under this Agreement (or any successor Agreement or other severance arrangement) to cause the acceleration of vesting of stock options, then in such event such stock options shall not expire until one year after the Date of Termination (or, if earlier, the expiration of their original term). The Company represents that the stock options awarded to Executive in February 2002 have a provision to the same effect. This covenant of the Company shall not apply to any stock options issued prior to 2002 or to any stock options issued after the expiration of the Employment Period.
(d) Additional Benefits.
(i) Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment or distribution by the Company to or for the benefit of Executive, whether paid or payable or distributed or distributable (1) pursuant to the terms of Section 7 of this Agreement, (2) pursuant to or in connection with any compensatory or employee benefit plan, agreement or arrangement, including but not limited to any stock options, restricted or unrestricted stock grants issued to or for the benefit of Executive and forgiveness of any loans by the Company to Executive or (3) otherwise (collectively, "Severance Payments"), would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), and any interest or penalties are incurred by Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then Executive shall be entitled to receive an additional payment from the Company (a "Partial Gross-Up Payment"), such that the net amount retained by Executive, before accrual or payment of any Federal, state or local income tax or
employment tax, but after accrual or payment of the Excise Tax attributable to the Partial Gross-Up Payment, is equal to the Excise Tax on the Severance Payments.
(ii) Subject to the provisions of Section 7(d)(iii), all
determinations required to be made under this Section 7, including
whether a Partial Gross-Up Payment is required and the amount of such
Partial Gross-Up Payment, shall be made by a nationally recognized
accounting firm reasonably mutually acceptable to Executive and the
Company (the "Accounting Firm"), which shall provide detailed
supporting calculations both to the Company and Executive as soon as
practicable after the Date of Termination, if applicable. The initial
Partial Gross-Up Payment, if any, as determined pursuant to this
Section 7(d)(ii), shall be paid to Executive within five days of the
receipt of the Accounting Firm's determination. If the Accounting
Firm determines that no Excise Tax is payable by Executive, the
Company shall furnish Executive with an opinion of counsel that
failure to report the Excise Tax on Executive's applicable federal
income tax return would not result in the imposition of a negligence
or similar penalty. Any determination by the Accounting Firm shall be
binding upon the Company and Executive. As a result of the
uncertainty in the application of Section 4999 of the Code at the
time of the initial determination by the Accounting Firm hereunder,
it is possible that Partial Gross-Up Payments which will not have
been made by the Company should have been made (an "Underpayment").
In the event that the Company exhausts its remedies pursuant to
Section 7(d)(iii) and Executive thereafter is required to make a
payment of any Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred, consistent with the
calculations required to be made hereunder, and any such
Underpayment, and any interest and penalties imposed on the
Underpayment and required to be paid by Executive in connection with
the proceedings described in Section 7(d)(iii), and any related legal
and accounting expenses, shall be promptly paid by the Company to or
for the benefit of Executive.
(iii) Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Partial Gross-Up Payment. Such notification shall be given as soon as practicable but no later than 10 business days after Executive acquires actual knowledge of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which he gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies Executive in writing prior to the expiration of such period that it desires to contest such claim, Executive shall:
(A) give the Company any information reasonably requested by the Company relating to such claim,
(B) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney selected by the Company,
(C) cooperate with the Company in good faith in order effectively to contest such claim, and
(D) permit the Company to participate in any proceedings relating to such claim; provided, however that the Company shall bear and pay
directly all costs and expenses attributable to the failure to pay the Excise Tax (including related additional interest and penalties) incurred in connection with such contest and shall indemnify and hold Executive harmless, for any Excise Tax up to an amount not exceeding the Partial Gross-Up Payment, including interest and penalties with respect thereto, imposed as a result of such representation, and payment of related legal and accounting costs and expenses (the "Indemnification Limit"). Without limitation on the foregoing provisions of this Section 7(d)(iii), the Company shall control all proceedings taken in connection with such contest and, at its sole option may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs Executive to pay such claim and sue for a refund, the Company shall advance so much of the amount of such payment as does not exceed the Excise Tax, and related interest and penalties, to Executive on an interest-free basis and shall indemnify and hold Executive harmless, from any related legal and accounting costs and expenses, and from any Excise Tax, including related interest or penalties imposed with respect to such advance or with respect to any imputed income with respect to such advance up to an amount not exceeding the Indemnification Limit; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company's control of the contest shall be limited to issues with respect to which a Partial Gross-Up Payment would be payable hereunder and Executive shall be entitled to settle or contest, as the case may be, any other issues raised by the Internal Revenue Service or any other taxing authority.
(iv) If, after the receipt by Executive of an amount
advanced by the Company pursuant to Section 7(d)(iii), Executive
becomes entitled to receive any refund with respect to such claim,
Executive shall (subject to the Company's complying with the
requirements of Section 7(d)(iii)) promptly pay to the Company so
much of such refund (together with any interest paid or credited
thereon after taxes applicable thereto) (the "Refund") as is equal to
(A) if the Company advanced or paid the entire amount required to be
so advanced or paid pursuant to Section 7(d)(iii) hereof (the
"Required Section 7(d) Advance"), the aggregate amount advanced or
paid by the Company pursuant to this Section 7(d) less the portion of
such amount advanced to Executive to reimburse him for related legal
and accounting costs, or (B) if the Company advanced or paid less
than the Required Section 7(d) Advance, so much of the aggregate
amount so advanced or paid by the Company pursuant to this Section
7(d) as is equal to the difference, if any, between (C) the amount
refunded to Executive with respect to such claim and (D) the sum of
the portion of the Required Section 7(d) Advance that was paid by
Executive and not paid or advanced by the Company plus Executive's
related legal and accounting fees, as applicable. If, after the
receipt by Executive of an amount advanced by the Company pursuant to
Section 7(d)(iii), a determination is made that Executive shall not
be entitled to any refund with respect to such claim and the Company
does not notify Executive in writing of its intent to contest such
denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount
of such advance shall offset, to the extent thereof, the amount of Partial Gross-Up Payment required to be paid.
(e) Notice of Termination. Notice of non-renewal of this Agreement pursuant to Section 1 hereof or of any termination of Executive's employment (other than by reason of death) shall be communicated by written notice (a "Notice of Termination") from one party hereto to the other party hereto in accordance with this Section 7 and Section 9.
(f) Date of Termination. "Date of Termination," with respect to any
termination of Executive's employment during the Employment Period, shall mean
(i) if Executive's employment is terminated for Disability, 30 days after Notice
of Termination is given (provided that Executive shall not have returned to the
full-time performance of Executive's duties during such 30 day period), (ii) if
Executive's employment is terminated for Cause, the date on which a Notice of
Termination is given which complies with the requirements of Section 7(b)(1)
hereof, and (iii) if Executive's employment is terminated for any other reason,
the date specified in the Notice of Termination. In the case of a termination by
the Company other than for Cause, the Date of Termination shall not be less than
30 days after the Notice of Termination is given. In the case of a termination
by Executive, the Date of Termination shall not be less than 15 days from the
date such Notice of Termination is given. Notwithstanding the foregoing, in the
event that Executive gives a Notice of Termination to the Company, the Company
may unilaterally accelerate the Date of Termination and such acceleration shall
not result in the termination being treated as a termination without Cause. Upon
any termination of his employment, Executive will concurrently resign his
membership as a director and/or officer of the Company and all subsidiaries of
the Company, to the extent applicable.
(g) No Mitigation. The Company agrees that, if Executive's employment by the Company is terminated during the term of this Agreement, Executive is not required to seek other employment, or to attempt in any way to reduce any amounts payable to Executive by the Company pursuant to Section 7(d)(i) hereof. Further, the amount of any payment provided for in this Agreement shall not be reduced by any compensation earned by Executive as the result of employment by another employer, by retirement benefits, or, except for amounts then due and payable in accordance with the terms of any promissory notes given by Executive in favor of the Company, by offset against any amount claimed to be owed by Executive to the Company or otherwise.
(h) Nature of Payments. The amounts due under this Section 7 are in the nature of severance payments considered to be reasonable by the Company and are not in the nature of a penalty. Such amounts are in full satisfaction of all claims Executive may have in respect of his employment by the Company or its affiliates and are provided as the sole and exclusive benefits to be provided to Executive, his estate, or his beneficiaries in respect of his termination of employment from the Company or its affiliates.
8. Non-Competition; Non-Solicitation; Specific Enforcement.
(a) Non-Competition. Because Executive's services to the Company are special and because Executive has access to the Company's confidential information, Executive covenants and agrees that, during the Employment Period and, for a period of one year following the Date of Termination by the Company for Cause or Disability, or a termination by Executive (other than a Constructive Termination Without Cause) prior to a Change in Control, Executive shall not, without the prior written consent of the Board of Directors, become associated with, or engage in any "Restricted Activities" with respect to any "Competing Enterprise," as such terms are hereinafter defined, whether as an officer, employee, principal, partner, agent, consultant, independent contractor or shareholder. "Competing Enterprise," for purposes of this Agreement, shall mean any person, corporation, partnership, venture or other entity which is engaged in the business of managing, owning, leasing or joint venturing multifamily rental real estate within 30 miles of multifamily rental real estate owned or under management by the Company or its affiliates. "Restricted
Activities," for purposes of this Agreement, shall mean executive, managerial, directorial, administrative, strategic, business development or supervisory responsibilities and activities relating to all aspects of multifamily rental real estate ownership, management, multifamily rental real estate franchising, and multifamily rental real estate joint-venturing.
(b) Non-Solicitation. During the Employment Period, and for a period of one year following the Date of Termination, Executive shall not, without the prior written consent of the Company, except in the course of carrying out his duties hereunder, solicit or attempt to solicit for employment with or on behalf of any corporation, partnership, venture or other business entity, any employee of the Company or any of its affiliates or any person who was formerly employed by the Company or any of its affiliates within the preceding six months, unless such person's employment was terminated by the Company or any of such affiliates.
(c) Specific Enforcement. Executive and the Company agree that the restrictions, prohibitions and other provisions of this Section 8 are reasonable, fair and equitable in scope, terms, and duration, are necessary to protect the legitimate business interests of the Company and are a material inducement to the Company to enter into this Agreement. Should a decision be made by a court of competent jurisdiction that the character, duration or geographical scope of the provisions of this Section 8 is unreasonable, the parties intend and agree that this Agreement shall be construed by the court in such a manner as to impose all of those restrictions on Executive's conduct that are reasonable in light of the circumstances and as are necessary to assure to the Company the benefits of this Agreement. The Company and Executive further agree that the services to be rendered under this Agreement by Executive are special, unique and of extraordinary character, and that in the event of the breach by Executive of the terms and conditions of this Agreement or if Executive, without the prior consent of the Board of Directors, shall take any action in violation of this Section 8, the Company will suffer irreparable harm for which there is no adequate remedy at law. Accordingly, Executive hereby consents to the entry of a temporary restraining order or ex parte injunction, in addition to any other remedies available at law or in equity, to enforce the provisions hereof. Any proceeding or action seeking equitable relief for violation of this Section 8 must be commenced in the federal or state courts, in either case in Massachusetts. Executive and the Company irrevocably and unconditionally submit to the jurisdiction of such courts and agree to take any and all future action necessary to submit to the jurisdiction of and venue in such courts.
9. Notice. Any notice required or permitted hereunder shall be in writing and shall be deemed sufficient when given by hand or by nationally recognized overnight courier or by Express, registered or certified mail, postage prepaid, return receipt requested, and addressed, if to the Company at 2900 Eisenhower Avenue, Suite 300, Alexandria, VA 22303, Attention: Chief Financial Officer (with a second copy, sent by the same means and to the same address, Attention: General Counsel), and if to Executive at the address set forth in the Company's records (or to such other address as may be provided by notice).
10. Miscellaneous. This Agreement, together with Annex A and Annex B and the Split Dollar Insurance Agreement and any Equity Award Agreements now or hereafter in effect, constitutes the entire agreement between the parties concerning the subjects hereof and supersedes any and all prior agreements or understandings, including, without limitation, any plan or agreement providing benefits in the nature of severance, but excluding benefits provided under other Company plans or agreements, except to the extent this Agreement provides greater rights than are provided under such other plans or agreements. As of the Effective Date, this Agreement supersedes the Prior Agreement which will have not further force or effect. This Agreement may not be assigned by Executive without the prior written consent of the Company, and may be assigned by the Company and shall be binding upon, and inure to the benefit of, the Company's successors and assigns. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession had taken place. As used in this Agreement, "Company" shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise. Headings herein are for convenience of reference only and shall not define, limit or interpret the contents hereof.
11. Amendment. This Agreement may be amended, modified or supplemented by the mutual consent of the parties in writing, but no oral amendment, modification or supplement shall be effective. No waiver by either party of any breach by the other party of any condition or provision contained in this Agreement to be performed by such other party shall be deemed a waiver of a similar or dissimilar condition or provision at the same or any prior or subsequent time. Any waiver must be in writing and signed by Executive or an authorized officer of the Company, as the case may be.
12. Severability.
(a) General. The provisions of this Agreement are severable. The invalidity of any provision shall not affect the validity of any other provision, and each provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.
(b) Split-Dollar Insurance Policy. If at any time, including as a result of the Sarbanes-Oxley Act of 2002, the Company is not permitted to make premium payments pursuant to the split-dollar insurance policy arrangement contemplated in any provision of this Agreement, then such provision (but only insofar as it pertains to the split-dollar insurance policy) shall be ineffective and unenforceable, provided, however, that if the Company provides to any other officer a program or arrangement that is intended to be a replacement or substitute for the split-dollar insurance policy arrangements in effect at the beginning of 2002 (a "Substitute Arrangement"), then the Substitute Arrangement shall also be provided to Executive and references herein to a split-dollar insurance policy (including requirements to maintain such policy following termination of employment under certain circumstances) shall be read as references to the Substitute Arrangement.
13. Resolution of Disputes.
(a) Procedures and Scope of Arbitration. Except for any controversy or claim seeking equitable relief pursuant to Section 8 of this Agreement, all controversies and claims arising under or in connection with this Agreement or relating to the interpretation, breach or enforcement thereof and all other disputes between the parties, shall be resolved by expedited, binding arbitration, to be held in Massachusetts in accordance with the applicable rules of the American Arbitration Association governing employment disputes (the "National Rules"). In any proceeding relating to the amount owed to Executive in connection with his termination of employment, it is the contemplation of the parties that the only remedy that the arbitrator may award in such a proceeding is an amount equal to the termination payments, if any, required to be provided under the applicable provisions of Section 7(c) and, if applicable, Section 7(d) hereof, to the extent not previously paid, plus the costs of arbitration and Executive's reasonable attorneys fees and expenses as provided below. Any award made by such arbitrator shall be final, binding and conclusive on the parties for all purposes, and judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.
(b) Attorneys Fees.
(i) Reimbursement After Executive Prevails. Except as otherwise provided in this paragraph, each party shall pay the cost of his or its own legal fees and expenses incurred in connection with an arbitration proceeding. Provided an award is made in favor of Executive in such proceeding, all of his reasonable attorneys fees and
expenses incurred in pursuing or defending such proceeding shall be promptly reimbursed to Executive by the Company within five days of the entry of the award. Any award of reasonable attorneys' fees shall take into account any offer of the Company, such that an award of attorneys' fees to the Executive may be limited or eliminated to the extent that the final decision in favor of the Executive does not represent a material increase in value over the offer that was made by the Company during the course of such proceeding. However, any elimination or limitation on attorneys' fees shall only apply to those attorneys' fees incurred after the offer by the Company.
(ii) Reimbursement in Actions to Stay, Enjoin or Collect. In any case where the Company or any other person seeks to stay or enjoin the commencement or continuation of an arbitration proceeding, whether before or after an award has been made, or where Executive seeks recovery of amounts due after an award has been made, or where the Company brings any proceeding challenging or contesting the award, all of Executive's reasonable attorneys fees and expenses incurred in connection therewith shall be promptly reimbursed by the Company to Executive, within five days of presentation of an itemized request for reimbursement, regardless of whether Executive prevails, regardless of the forum in which such proceeding is brought, and regardless of whether a Change in Control has occurred.
(iii) Reimbursement After a Change in Control. Without limitation on the foregoing, solely in a proceeding commenced by the Company or by Executive after a Change in Control has occurred, the Company shall advance to Executive, within five days of presentation of an itemized request for reimbursement, all of Executive's legal fees and expenses incurred in connection therewith, regardless of the forum in which such proceeding was commenced, subject to delivery of an undertaking by Executive to reimburse the Company for such advance if he does not prevail in such proceeding (unless such fees are to be reimbursed regardless of whether Executive prevails as provided in clause (ii) above).
14. Survivorship. The provisions of Sections 4(b), 6, 8(a) (to the extent described below), 8(b) and 13 of this Agreement shall survive Executive's termination of employment. Other provisions of this Agreement shall survive any termination of Executive's employment to the extent necessary to the intended preservation of each party's respective rights and obligations. The provisions of Section 8(a) shall in no event apply if Executive's employment terminates for any reason after the expiration of the Employment Period (for clarification, this means that if Executive's employment terminates on or prior to the expiration of the Original Term or any later Renewal Term then the one year post-termination non-compete set forth in Section 8(a) will apply if the termination is for one of the reasons set forth in Section 8(a)).
15. Board Action. Where an action called for under this Agreement is required to be taken by the Board of Directors, such action shall be taken by the vote of not less than a majority of the members other than Executive then on the Board and authorized to vote on the matter.
16. Withholding. All amounts required to be paid by the Company shall be subject to reduction in order to comply with applicable federal, state and local tax withholding requirements.
17. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument. The execution of this Agreement may be by actual or facsimile signature.
18. Governing Law. This Agreement shall be construed and regulated in all respects under the laws of the State of Maryland.
IN WITNESS WHEREOF, this Agreement is entered into as of the date and year first above written.
AVALONBAY COMMUNITIES, INC.
By: /s/ Charlene Rothkopf ----------------------------------------- Name: Charlene Rothkopf Title: Senior Vice President - Human Resources By: /s/ Edward M. Schulman ----------------------------------------- Name: Edward M. Schulman Title: Vice President - General Counsel |
EXECUTIVE
/s/ Bryce Blair ---------------------------------------------- Bryce Blair |
Acknowledgment:
/s/ Lance R. Primis ---------------------------------- Lance R. Primis, Chairman of Compensation Committee of the Board of Directors |
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AVALONBAY COMMUNITIES, INC.
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||||
By: | /s/ Charlene Rothkopf | |||
Name: | Charlene Rothkopf | |||
Title: | EVP-Human Resources | |||
By: | /s/ Edward M. Schulman | |||
Name: | Edward M. Schulman | |||
Title: | SVP, General Counsel & Secretary | |||
/s/ Bryce Blair | ||||
Executive | ||||
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AVALONBAY COMMUNITIES, INC.
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By: | /s/ Charlene Rothkopf | |||
Name: | Charlene Rothkopf | |||
Title: | EVP-Human Resources | |||
By: | /s/ Edward M. Schulman | |||
Name: | Edward M. Schulman | |||
Title: | SVP, General Counsel & Secretary | |||
/s/ Timothy J. Naughton | ||||
Executive | ||||
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AVALONBAY COMMUNITIES, INC.
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By: | /s/ Charlene Rothkopf | |||
Name: | Charlene Rothkopf | |||
Title: | EVP-Human Resources | |||
By: | /s/ Edward M. Schulman | |||
Name: | Edward M. Schulman | |||
Title: | SVP, General Counsel & Secretary | |||
/s/ Leo S. Horey | ||||
Executive | ||||
5
Exhibit 10.21
AVALONBAY COMMUNITIES, INC.
1994 STOCK INCENTIVE PLAN
As Amended and Restated on December 8, 2004
SECTION 1. GENERAL PURPOSE OF THE PLAN; DEFINITIONS
The name of the plan is the AvalonBay Communities, Inc. 1994 Stock Incentive Plan (the Plan). The purpose of the Plan is to encourage and enable the officers, employees, Directors and other key persons of AvalonBay Communities, Inc. (the Company) and its Subsidiaries upon whose judgment, initiative and efforts the Company largely depends for the successful conduct of its business to acquire a proprietary interest in the Company. It is anticipated that providing such persons with a direct stake in the Companys welfare will assure a closer identification of their interests with those of the Company, thereby stimulating their efforts on the Companys behalf and strengthening their desire to remain with the Company.
The following terms shall be defined as set forth below:
Act means the Securities Exchange Act of 1934, as amended.
Award or Awards, except where referring to a particular category of grant under the Plan, shall include Incentive Stock Options, Non-Qualified Stock Options, Restricted Stock Awards, Deferred Stock Awards, Unrestricted Stock Awards, Performance Share Awards and Dividend Equivalent Rights.
Board means the Board of Directors of the Company.
Cause means, except as provided in an individual agreement or by the Committee, a vote of the Board of Directors resolving that the participant should be dismissed as a result of (i) any material breach by the participant of any agreement to which the participant and the Company are parties, (ii) any act (other than retirement) or omission to act by the participant which may have a material and adverse effect on the business of the Company or any Subsidiary or on the participants ability to perform services for the Company or any Subsidiary, including, without limitation, the commission of any crime (other than ordinary traffic violations), or (iii) any material misconduct or neglect of duties by the participant in connection with the business or affairs of the Company or any Subsidiary.
Change of Control is defined in Section 16.
Code means the Internal Revenue Code of 1986, as amended, and any successor Code, and related rules, regulations and interpretations.
Committee means the Committee of the Board referred to in Section 2.
Covered Employee means a participant designated prior to the grant of a Qualified Performance-based Award by the Committee who is or may be a covered employee within the
1
PAGE
meaning of Section 162(m)(3) of the Code in the year in which the Qualified Performance-based Award is expected to be taxable to such participant.
Deferred Stock Award means Awards granted pursuant to Section 7.
Disability means, except as provided in an individual agreement or by the Committee, an individuals inability to perform his normal required services for the Company and its Subsidiaries for a period of six consecutive months by reason of the individuals mental or physical disability, as determined by the Committee in good faith in its sole discretion.
Dividend Equivalent Right means Awards granted pursuant to Section 11.
Effective Date means the consummation of the merger contemplated by the Agreement and Plan of Merger, by and between the Company and Avalon Properties, Inc. dated as of March 9, 1998.
Fair Market Value on any given date means the last reported sale price at which Stock is traded on such date or, if no Stock is traded on such date, the most recent date on which Stock was traded, as reflected on the New York Stock Exchange or, if applicable, any other national stock exchange on which the Stock is traded.
Incentive Stock Option means any Stock Option designated as, and qualified as, an incentive stock option as defined in Section 422 of the Code.
Non-Employee Director means a member of the Board who is not also an employee of the Company or any Subsidiary.
Non-Qualified Stock Option means any Stock Option that is not an Incentive Stock Option.
Option or Stock Option means any option to purchase shares of Stock granted pursuant to Section 5.
Performance Cycle means one or more periods of time, which may be of varying and overlapping durations, as the Committee may select, over which the attainment of one or more performance criteria will be measured for the purpose of determining a participants right to and the payment of a Performance Share Award, Restricted Stock Award or Deferred Stock Award.
Performance Share Award means Awards granted pursuant to Section 9.
Qualified Performance-based Award means any Restricted Stock Award, Deferred Stock Award or Performance Share Award that is intended to qualify as performance-based compensation under Section 162(m) of the Code and the regulations promulgated thereunder.
Restricted Stock Award mean Awards granted pursuant to Section 6.
Retirement means:
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(a) with respect to all Awards made on or before December 8, 2004:
the employees termination of employment with the Company and its Subsidiaries, other than for Cause, after attainment of age 55, but only if upon such termination of employment the employee has been employed in the aggregate for a period of at least 120 contiguous months by the Company, by any company of which the Company is the successor by name change or reincorporation, by Avalon Properties, Inc. or by Trammell Crow Residential, or any affiliate of any of the foregoing (a Predecessor Company); and
(b) with respect to all Awards made after December 8, 2004:
the termination of an Award holders employment (and other business relationships) with the Company and its Subsidiaries, other than for Cause, following the date on which the sum of the following equals or exceeds 70 years: (i) the number of full months of the Award holders employment and other business relationships with the Company and any predecessor Company and (ii) the Award holders age on the date of termination; provided that:
(x) the Award holders employment by (or other business relationships with) the Company and any Predecessor Company have continued for a period of at least 120 contiguous full months at the time of termination and, on the date of termination, the Award holder is at least 50 years old;
(y) in the case of termination of employment, the employee gives at least six months prior written notice to the Company of his or her intention to retire; and
(z) in the case of termination of employment, the employee enters into a Non-Compete and Non-Solicitation Agreement, as hereinafter defined, and a general release of all claims in a form that is reasonably satisfactory to the Company.
As used in the foregoing sentence, Non-Compete and Non-Solicitation Agreement shall mean a written agreement between the employee and the Company providing that, for a period of at least 12 months following the employees termination of employment with the Company (A) the employee shall not, without the prior written consent of the Company, become associated with, or engage in any Restricted Activities with respect to any Competing Enterprise, as such terms are hereinafter defined, whether as an officer, employee, principal, partner, agent, consultant, independent contractor or shareholder, and (B) the employee shall not, without the prior written consent of the Company, solicit or attempt to solicit for employment with or on behalf of any Competing Enterprise any employee of the Company or any of its affiliates or any person who was formerly employed by the Company or any of its affiliates within the preceding six months, unless such persons employment was terminated by the Company or any of such affiliates. Competing Enterprise, for purposes of this section, shall mean any person, corporation, partnership, venture or other entity which is engaged in the
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business of managing, owning, leasing, or joint-venturing multifamily rental real estate within 30 miles of multifamily rental real estate owned or under management by the Company or its affiliates. Restricted Activities, for purposes of this section, shall mean executive, managerial, directorial, administrative, strategic, business development or supervisory responsibilities and activities relating to any aspects of multifamily rental real estate ownership, management, multifamily rental real estate franchising, and multifamily rental real estate joint-venturing.
Stock means the Common Stock, $.01 par value per share, of the Company, subject to adjustments pursuant to Section 3.
Subsidiary means any corporation or other entity (other than the Company) in any unbroken chain of corporations or other entities, beginning with the Company if each of the corporations or entities (other than the last corporation or entity in the unbroken chain) owns stock or other interests possessing 50% or more of the total combined voting power of all classes of stock or other interests in one of the other corporations or entities in the chain.
Unrestricted Stock Award means Awards granted pursuant to Section 8.
SECTION 2. ADMINISTRATION OF PLAN; COMMITTEE AUTHORITY TO SELECT PARTICIPANTS AND DETERMINE AWARDS
All decisions and interpretations of the Committee shall be binding on all persons, including the Company and Plan participants.
SECTION 3. SHARES ISSUABLE UNDER THE PLAN; MERGERS; SUBSTITUTION
If shares of Stock underlying those Options granted during the calendar year constitute the following percentage of all shares of Stock underlying all Awards (including Options) made during the calendar year: |
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Then the number of shares of Stock reserved and available for issuance under the Plan would be increased by adding a number of shares of Stock equal to the following percentage of the Year End Outstanding Shares: |
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50.00 to 52.49% |
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0.48% |
52.50 to 54.99 |
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0.50 |
55.00 to 57.49 |
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0.52 |
57.50 to 59.99 |
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0.55 |
60.00 to 62.49 |
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0.58 |
62.50 to 64.99 |
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0.61 |
65.00 to 67.49 |
|
0.64 |
67.50 to 69.99 |
|
0.68 |
70.00 to 72.49 |
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0.72 |
72.50 to 74.99 |
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0.76 |
75.00 to 77.49 |
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0.82 |
77.50 to 79.99 |
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0.87 |
80.00 to 82.49 |
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0.94 |
82.50 to 84.99 |
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0.96 |
85.00% or more |
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1.00 |
For purposes of determining the percentage of all awards made under the Plan during a calendar year that were in the form of Options, only Options that have an exercise price equal to the Fair Market Value on the date of grant shall count as Options. For purposes hereof, subsidiary partnerships structured as DownREITs shall include, but not be limited to, Bay Countrybrook, L.P., Bay Pacific Northwest L.P., Avalon DownREIT V, L.P. and Avalon Ballston II, L.P.
Notwithstanding the foregoing, the maximum number of shares of Stock for which Incentive Stock Options may be issued under the Plan shall not exceed 2,500,000. Further notwithstanding the foregoing, at least 50% of all Awards granted under the Plan during any calendar year shall be in the form of Options with an exercise price not less than 100% of Fair Market Value on the date of grant. For purposes of determining the number of shares of Stock reserved and available for issuance from time to time, the shares of Stock underlying any Awards which are forfeited, canceled, reacquired by the Company, satisfied without the issuance of Stock or otherwise
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terminated (other than by exercise) shall be added back to the shares of Stock available for issuance under the Plan.
Stock Options with respect to no more than 300,000 shares of Stock may be granted to any one individual participant during any one calendar year period. Shares issued under the Plan may be authorized but unissued shares or shares reacquired by the Company.
Example: To illustrate how the formula in the above table would work, assume that during calendar year 2002 the only awards made by the Company under the Stock Incentive Plan were an aggregate of 400,000 stock options and shares of restricted stock. Of these, 320,000 (or 80%) were options and 80,000 (or 20%) were restricted shares. As of December 31, 2002, assume that the Company had outstanding 67,000,000 shares of Common Stock and 1,000,000 units of limited partnership in DownREITs that may be exchanged for shares of Common Stock. Therefore, following the table above, this means that on December 31, 2002, the Company would increase the number of available shares under the Stock Incentive Plan by multiplying 68,000,000 by 0.94%, (i.e., 639,200 shares of Common Stock would be added to the number of available shares reserved under the Stock Incentive Plan).
SECTION 4. ELIGIBILITY
Participants in the Plan will be such full or part-time officers, other employees, Non-Employee Directors and key persons of the Company and its Subsidiaries who are responsible for or contribute to the management, growth or profitability of the Company and its Subsidiaries and who are selected from time to time by the Committee, in its sole discretion. Key persons, for purposes of this Plan, shall include consultants and prospective employees.
SECTION 5. STOCK OPTIONS
Any Stock Option granted under the Plan shall be in such form as the Committee may from time to time approve.
Stock Options granted under the Plan may be either Incentive Stock Options or Non-Qualified Stock Options. Incentive Stock Options may be granted only to employees of the Company or any Subsidiary that is a subsidiary corporation within the meaning of Section 424(f) of the Code. To the extent that any option does not qualify as an Incentive Stock Option, it shall constitute a Non-Qualified Stock Option.
No Awards shall be granted under the Plan after May 8, 2011.
SECTION 6. RESTRICTED STOCK AWARDS
SECTION 7. DEFERRED STOCK AWARDS
SECTION 8. UNRESTRICTED STOCK AWARDS
The Committee may, in its sole discretion, grant (or sell at a purchase price determined by the Committee) an Unrestricted Stock Award to any participant which will entitle such participant to receive shares of Stock free of any restrictions under the Plan (Unrestricted Stock). Unrestricted Stock Awards may be granted or sold as described in the preceding
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sentence in respect of past services or other valid consideration, or in lieu of any cash compensation due to such participant.
SECTION 9. PERFORMANCE SHARE AWARDS
SECTION 10. QUALIFIED PERFORMANCE-BASED AWARDS TO COVERED EMPLOYEES
Notwithstanding anything to the contrary contained herein, if any Restricted Stock Award, Deferred Stock Award or Performance Share Award granted to a Covered Employee is intended to qualify as performance-based compensation under Section 162(m) of the Code and
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the regulations promulgated thereunder (a Performance-based Award), such Award shall comply with the provisions set forth below:
SECTION 11. DIVIDEND EQUIVALENT RIGHTS
SECTION 12. TAX WITHHOLDING
SECTION 13. TRANSFER, LEAVE OF ABSENCE, ETC .
For purposes of the Plan, the following events shall not be deemed a termination of employment (or other business relationship):
SECTION 14. AMENDMENTS AND TERMINATION
The Board may at any time amend or discontinue the Plan and the Committee may at any time amend or cancel any outstanding Award for the purpose of satisfying changes in law or for any other lawful purpose, but no such action shall (a) adversely affect rights under any outstanding Award without the holders written consent or (b) without the prior approval of the Companys stockholders, reduce the exercise price of or otherwise reprice, including through replacement grants, any outstanding Stock Option. To the extent required by the Code to ensure that Options that have been granted hereunder as Incentive Stock Options continue to qualify as Incentive Stock Options, Plan amendments shall be subject to approval by the Companys stockholders.
SECTION 15. STATUS OF PLAN
With respect to the portion of any Award which has not been exercised and any payments in cash, Stock or other consideration not received by a participant, a participant shall have no rights greater than those of a general creditor of the Company unless the Committee shall otherwise expressly determine in connection with any Award or Awards. In its sole discretion, the Committee may authorize the creation of trusts or other arrangements to meet the Companys obligations to deliver Stock or make payments with respect to Awards hereunder, provided that the existence of such trusts or other arrangements is consistent with the provision of the foregoing sentence.
SECTION 16. CHANGE OF CONTROL PROVISIONS
Notwithstanding anything in this Plan to the contrary, upon the occurrence of a Change of Control as defined in this Section 16:
Notwithstanding the foregoing, a Change of Control shall not be deemed to have occurred for purposes of this Agreement solely as the result of an acquisition of securities by the Company which, by reducing the number of shares of Voting Securities outstanding, increases the proportionate voting power represented by the Voting Securities beneficially owned by any Person to 30% or more of the combined voting power of all then outstanding Voting Securities; provided, however, that if any Person referred to in this sentence shall thereafter become the beneficial owner of any additional shares of Stock or other Voting Securities (other than pursuant to a stock split, stock dividend or similar transaction), then a Change of Control shall be deemed to have occurred for purposes of this Agreement.
SECTION 17. GENERAL PROVISIONS
No shares of Stock shall be issued pursuant to an Award until all applicable securities law and other legal and stock exchange requirements have been satisfied. The Committee may require the placing of such stop-orders and restrictive legends on certificates for Stock and Awards as it deems appropriate.
SECTION 18. EFFECTIVE DATE OF PLAN
This Plan was amended and restated as of March 21, 2001.
SECTION 19. GOVERNING LAW
This Plan shall be governed by Maryland law except to the extent such law is preempted by federal law.
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DATE OF APPROVAL OF INITIAL PLAN BY SHAREHOLDERS: |
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February 15, 1994 |
DATE OF APPROVAL OF FIRST AMENDED AND RESTATED PLAN BY BOARD OF DIRECTORS: |
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August 28, 1996 |
DATE OF APPROVAL OF FIRST AMENDED AND RESTATED PLAN BY SHAREHOLDERS: |
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April 25, 1997 |
DATE OF APPROVAL OF SECOND AMENDED AND RESTATED PLAN BY BOARD OF DIRECTORS: |
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February 26, 1998 |
DATE OF APPROVAL OF THIRD AMENDED AND RESTATED PLAN BY BOARD OF DIRECTORS: |
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April 13, 1998 |
DATE OF APPROVAL OF THIRD AMENDED AND RESTATED PLAN BY SHAREHOLDERS: |
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June 4, 1998 |
DATE OF APPROVAL OF AMENDMENTS TO THIRD AMENDED AND RESTATED PLAN BY BOARD OF DIRECTORS: |
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July 24, 1998 |
DATE OF APPROVAL OF FOURTH AMENDED AND RESTATED PLAN BY SHAREHOLDERS: |
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May 8, 2001 |
DATE OF APPROVAL OF AMENDMENTS TO FOURTH AMENDED AND RESTATED PLAN BY BOARD OF DIRECTORS: |
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May 14, 2003 |
DATE OF APPROVAL OF FIFTH AMENDED AND RESTATED PLAN BY BOARD OF DIRECTORS |
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December 8, 2004 |
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AVALONBAY COMMUNITIES, INC. | ||||||
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2
Exhibit 10.33
[Form of Employee Stock Grant and Restricted Stock Agreement]
AVALONBAY COMMUNITIES, INC.
STOCK GRANT AND RESTRICTED STOCK AGREEMENT
In consideration for services
rendered and to be rendered to AvalonBay Communities, Inc. (the Company) and
for other good and valuable consideration, which the Company has determined to
be equal to the fair market value of the Shares, as defined below, the Company
is issuing to the Employee named below contemporaneously herewith the Shares,
upon the terms and conditions set forth herein and in the Restricted Stock
Agreement Terms (the Terms) which are attached hereto and incorporated herein
in their entirety. Capitalized terms used but not defined herein shall have
the respective meanings ascribed thereto in the Terms.
Additional Terms/Acknowledgements:
The undersigned Employee acknowledges
receipt of, and understands and agrees to, this Stock Grant and Restricted
Stock Agreement, including, without limitation, the Terms. Employee further
acknowledges that as of the Award Date, this Stock Grant and Restricted Stock
Agreement, including, without limitation, the Terms, sets forth the entire
understanding between Employee and the Company regarding the stock grant
described herein and supersedes all prior oral and written agreements on that
subject.
ATTACHMENT
: Restricted Stock Agreement Terms
1
Vesting Schedule
:
Subject to the provisions of the Terms and the discretion of the
Company to accelerate the vesting schedule, the Employees
ownership interest in the Shares shall vest, and the status of
the Shares as Restricted Stock and all Restrictions with respect
to the Shares shall terminate, in accordance with the following
schedule of events:
Vesting Event
Shares Vested
March 1, 200_ [Year of Grant]
[20%]
March 1, 200_ [Second Year]
[20%]
March 1, 200_ [Third Year]
[20%]
March 1, 200_ [Fourth Year]
[20%]
March 1
,
200_ [Fifth Year]
[20%]
Termination of the Employees
Employment by the Company, other than
for Cause
[Total RSA]
*
The death or disability of the Employee
[Total RSA]
*
The Retirement of the Employee
[Total RSA]
*
If earlier than any of the above events,
a Change of Control
[Total RSA]
*
*or, if fewer, all Restricted Shares
AVALONBAY COMMUNITIES, INC.
RESTRICTED STOCK AGREEMENT TERMS
ARTICLE I
DEFINITIONS
Section 1.1 - Cause
Cause means and shall be limited to a vote of the Board of Directors resolving that the Employee should be dismissed as a result of (i) any material breach by the Employee of any agreement to which the Employee and the Company are parties, (ii) any act (other than retirement) or omission to act by the Employee which may have a material and adverse effect on the business of the Company or any Subsidiary (as hereinafter defined) or on the Employees ability to perform services for the Company or any Subsidiary, including, without limitation, the Employee being convicted of any crime (other than ordinary traffic violations) or (iii) any material misconduct or neglect of duties by the Employee in connection with the business or affairs of the Company or any Subsidiary.
Section 1.2 - Change of Control
Change of Control means the occurrence of any one of the following events:
(i) any person, as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the Act) (other than the Company, any of its Subsidiaries, or any trustee, fiduciary or other person or entity holding securities under any employee benefit plan or trust of the Company or any of its Subsidiaries), together with all affiliates and associates (as such terms are defined in Rule 12b-2 under the Act) of such person, shall become the beneficial owner (as such term is defined in Rule 13d-3 under the Act), directly or indirectly, of securities of the Company representing 30% or more of either (A) the combined voting power of the Companys then outstanding securities having the right to vote in an election of the Companys Board of Directors (Voting Securities) or (B) the then outstanding shares of Common Stock (as hereinafter defined), in either such case other than as a result of an acquisition of securities directly from the Company; or
(ii) persons who, as of the Award Date, constitute the Companys Board of Directors (the Incumbent Directors) cease for any reason, including, without limitation, as a result of a tender offer, proxy contest, merger, acquisition of Voting Securities or similar transaction, to constitute at least a majority of the Board of Directors, provided that any person becoming a director of the Company subsequent to the Award Date whose election or nomination for election was approved by a vote of at least a majority of the Incumbent Directors shall, for purposes of this Agreement, be considered an Incumbent Director; or
(iii) the stockholders of the Company shall approve (A) any consolidation or merger of the Company or any Subsidiary where the stockholders of the Company, immediately prior to the consolidation or merger, would not, immediately after the consolidation or merger, beneficially own (as such term is defined in Rule 13d-3 under the Act), directly or indirectly, shares representing in the aggregate 30% of the voting shares of the corporation or other entity issuing cash or securities in the consolidation or merger (or of its ultimate parent corporation or other entity, if any), (B) any sale, lease, exchange or other transfer (in one transaction or a series of transactions contemplated or arranged by any party as a single plan) of all or substantially all of the assets of the Company or (C) any plan or proposal for the liquidation or dissolution of the Company.
Notwithstanding the foregoing, a Change of Control shall not be deemed to have occurred for purposes of the foregoing clause (i) solely as the result of an acquisition of securities by the Company which, by reducing the number of shares of Common Stock or other Voting Securities outstanding, increases (x) the proportionate number of shares of Common Stock beneficially owned by any person to 30% or more of the shares of Common Stock then outstanding or (y) the proportionate voting power represented by the Voting Securities beneficially owned by any
2
person to 30% or more of the combined voting power of all then outstanding Voting Securities; provided , however , that if any person referred to in clause (x) or (y) of this sentence shall thereafter become the beneficial owner of any additional shares of Common Stock or other Voting Securities (other than pursuant to a stock split, stock dividend, or similar transaction), then a Change of Control shall be deemed to have occurred for purposes of the foregoing clause (i).
Section 1.3 - Common Stock
Common Stock shall mean the common stock of the Company, $.01 par value.
Section 1.4 - Fair Market Value
Fair Market Value on any given date means the last reported sale price at which the Common Stock is traded on such date or, if no Common Stock is traded on such date, the most recent date on which Common Stock was traded, as reflected on the New York Stock Exchange or, if applicable, any other national stock exchange on which the Common Stock is traded.
Section 1.5 - Restricted Stock
Restricted Stock shall mean the Shares issued under this Agreement for as long as such shares are subject to the Restrictions (as hereinafter defined) imposed by this Agreement.
Section 1.6 - Restrictions
Restrictions shall mean the restrictions set forth in Article III of this Agreement.
Section 1.7 Retirement
Retirement in accordance with the Plan shall mean:
the Employees termination of employment with the Company and its Subsidiaries, other than for Cause, following the date on which the sum of (i) the number of full months the Employee has been employed by the Company and any Predecessor Company (as defined in the Plan) and (ii) the Employees age on the date of termination, equals or exceeds 70 years, provided that:
(x) | the Employee has been employed by the Company and any Predecessor Company for a period of at least 120 contiguous full months at the time of termination; | |||
(y) | the Employee gives at least six months prior written notice to the Company of his intention to retire; and | |||
(z) | upon termination of employment, the Employee enters into a Non-Compete and Non-Solicitation Agreement (as defined in the Plan) and a general release of all claims in a form reasonably satisfactory to the Company. |
Section 1.7 - Secretary
Secretary shall mean the secretary of the Company.
Section 1.8 - Subsidiary
Subsidiary means any corporation or other entity (other than the Company) in any unbroken chain of corporations or other entities, beginning with the Company if each of the corporations or entities (other than the last corporation or entity in the unbroken chain) owns stock or other interests possessing 50% or more of the economic interest or the total combined voting power of all classes of stock or other interests in one of the other corporations or entities in the chain.
3
ARTICLE II
RESTRICTED STOCK
Section 2.1 - Restricted Stock
Any shares of Common Stock granted pursuant to this Agreement which vest on a date other than the Award Date shall be considered Restricted Stock for purposes of this Agreement and shall be subject to the Restrictions until such time or times and except to the extent that the Employees ownership interest in Shares vests in accordance with the Vesting Schedule set forth on the first page of this Agreement.
Section 2.2 - Escrow
The Secretary or such other escrow holder as the Company may from time to time appoint shall retain physical custody of the certificates representing Restricted Stock, including shares of Restricted Stock issued pursuant to Section 3.5, until all of the Restrictions expire or shall have been removed; provided, however, that in no event shall the Employee retain physical custody of any certificates representing Restricted Stock issued to him.
Section 2.3 - Rights as Stockholder
From and after the Award Date, the Employee shall have all the rights of a stockholder with respect to the Shares, subject to the Restrictions herein (including the provisions of Article IV), including the right to vote the Shares and to receive all dividends or other distributions paid or made with respect to the Shares unless and to the extent that the Employees interest in Restricted Stock shall have terminated and the Restricted Stock reverts to the Company as provided in Section 3.1 of this Agreement.
ARTICLE III
RESTRICTIONS
Section 3.1 - Reversion of Restricted Stock
Except as provided in Section 2.3, this Section 3.1, and the Vesting Schedule set forth on the first page of this Agreement, the Restricted Stock shall be the property of the Company for as long as and to the extent that the Shares are Restricted Stock pursuant to Section 2.1. In the event that the Employees employment by the Company terminates for any reason other than (a) death, (b) disability or (c) termination of the Employees employment by the Company other than for Cause, any interest of the Employee in Shares that are Restricted Stock shall thereupon immediately terminate and all rights with respect to the Restricted Stock shall immediately revert to and unconditionally be the property of the Company; provided, however, that the Employee shall be entitled to retain any cash dividends paid before the date of such event on the Restricted Stock.
Section 3.2 - Restricted Stock Not Transferable
No Restricted Stock or any interest or right therein or part thereof shall be liable for the debts, contracts or engagements of the Employee or his successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other means whether such disposition be voluntary or involuntary or by operation of law or judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect; provided, however, that the Employee may designate one or more trusts or other similar arrangements for the benefit of the Employee or members of his immediate family as the registered holders of Restricted Stock if and as long as the Employee acts as trustee or in a similar capacity with respect to such trust or arrangement. Any Restricted Stock so registered shall for all purposes hereunder be deemed to be held of record by the Employee and shall be subject to all of the terms and conditions of this Agreement, including but not limited to the Restrictions and the provisions of Article III of this Agreement.
4
Section 3.3 - Legend
(a) Certificates representing shares of Restricted Stock issued pursuant to this Agreement shall, until all Restrictions lapse and new certificates are issued pursuant to Section 3.4, bear the following legend:
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THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN VESTING REQUIREMENTS AND MAY BE SUBJECT TO FORFEITURE TO AVALONBAY COMMUNITIES, INC. (THE COMPANY) UNDER THE TERMS OF THAT CERTAIN RESTRICTED STOCK AGREEMENT BY AND BETWEEN THE COMPANY AND THE HOLDER OF THE SECURITIES. PRIOR TO VESTING OF OWNERSHIP IN THE SECURITIES, THEY MAY NOT BE, DIRECTLY OR INDIRECTLY, OFFERED, TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNDER ANY CIRCUMSTANCES. COPIES OF THE ABOVE REFERENCED AGREEMENT ARE ON FILE AT AND MAY BE OBTAINED ON REQUEST AND WITHOUT CHARGE FROM THE OFFICES OF THE COMPANY AT 2900 EISENHOWER AVENUE, SUITE 300, ALEXANDRIA, VA 22314. |
(b) Certificates representing any shares of Common Stock issued pursuant to this Agreement shall bear the following or substantially similar legend:
|
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT). NO SALE, HYPOTHECATION, TRANSFER OR OTHER DISPOSITION OF THESE SECURITIES MAY BE MADE UNLESS EITHER (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (B) PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. |
Section 3.4 - Lapse of Restrictions
Upon the vesting of some or all of the Restricted Stock as provided in the Vesting Schedule set forth on the first page of this Agreement, and subject to the conditions to issuance set forth in Article IV, the Company shall cause new certificates to be issued with respect to such vested Shares and delivered to the Employee or his legal representative, free from the legend provided for in Section 3.3(a).
Section 3.5 - Restrictions on New Shares
In the event that the outstanding shares of the Companys Common Stock are changed into or exchanged for a different number or kind of shares or other securities of the Company, or a stock split-up or stock dividend, such new, additional or different shares or securities which are held or received by the Employee (or his designee) in his capacity as a holder of Restricted Stock shall be considered to be Restricted Stock and shall be subject to all of the terms and conditions of this Agreement, including but not limited to the Restrictions.
ARTICLE IV
MISCELLANEOUS
Section 4.1 - Conditions to Issuance of Stock Certificates
The Company shall not be required to issue or deliver any certificate or certificates for shares of stock pursuant to this Agreement prior to fulfillment of all of the following conditions:
5
(a) The admission of such shares to listing on all stock exchanges on which such class of stock is then listed; and
(b) The completion of any registration or other qualification of such shares under any state or Federal law or under rulings or regulations of the Securities and Exchange Commission or of any other governmental regulatory body, which the Company shall deem necessary or advisable; and
(c) The obtaining of any approval or other clearance from any state or Federal governmental agency which the Company shall, in its absolute discretion, determine to be necessary or advisable; and
(d) The payment by the Employee of all amounts required to be withheld under federal, state and local tax laws, with respect to the issuance of Restricted Stock and/or the lapse or removal of any of the Restrictions; and
Section 4.2 - Notices
Any notice to be given under the terms of this Agreement to the Company shall be addressed to the Company in care of its Secretary, and any notice to be given to the Employee shall be addressed to him at his address as set forth in the Companys records. By a notice given pursuant to this Section 4.2, either party may hereafter designate a different address for notices to be given to it or him. Any notice which is required to be given to the Employee shall, if the Employee is then deceased, be given to the Employees personal representative if such representative has previously informed the Company of his status and address by written notice under this Section 4.2. Any notice shall have been deemed duly given when enclosed in a properly sealed envelope or wrapper addressed as aforesaid and deposited (with postage prepaid) in a post office or branch post office regularly maintained by the United States Postal Service.
Section 4.3 - Titles
Titles and captions are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement.
Section 4.4 - Amendment
This Agreement may be amended only by a writing executed by the parties hereto which specifically states that it is amending this Agreement.
Section 4.5 - Tax Withholding
The Companys obligation (i) to issue or deliver to the Employee any certificate or certificates for unrestricted shares of stock or (ii) to pay to the Employee any dividends or make any distributions with respect to the Common Stock issued under this Agreement is expressly conditioned on the Companys satisfaction of its obligation, if any, to withhold taxes. The Company may, if the employee so elects in writing, withhold from any distribution made to the Employee under this Agreement shares of Common Stock valued at Fair Market Value on the date of such withholding to cover any applicable withholding and employment taxes. In lieu of withholding shares of Common Stock, the Employee may elect to pay to the Company any amounts required to be withheld in cash.
Section 4.6 - Governing Law
The laws of the State of Maryland shall govern the interpretation, validity, administration, enforcement and performance of the terms of this Agreement regardless of the law that might be applied under principles of conflicts of laws.
Section 4.7 - Counterparts
This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
6
Section 4.8 - No Special Employment Rights
This Agreement does not, and shall not be interpreted to, create any right on the part of the Employee to continue in the employ of the Company or any subsidiary or affiliate thereof, nor to any continued compensation, prerequisites or other current or future benefits or other incidents of employment.
[End of Text]
7
Page | ||||||
PURPOSE
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1 | |||||
ARTICLE 1 - DEFINITIONS | 1 | |||||
1.1
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"Annual Bonus" | 1 | ||||
1.2
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"Annual Deferral Amount" | 1 | ||||
1.3
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"Base Annual Salary" | 1 | ||||
1.4
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"Beneficiary" | 1 | ||||
1.5
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"Beneficiary Designation Form" | 2 | ||||
1.6
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"Claimant" | 2 | ||||
1.7
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"Code" | 2 | ||||
1.8
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"Compensation Committee" | 2 | ||||
1.9
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"Deferral Account" | 2 | ||||
1.10
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"Election Form" | 2 | ||||
1.11
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"Employee" | 2 | ||||
1.12
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"ERISA" | 2 | ||||
1.13
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"Non-Qualified Predetermined Annuity Account" | 2 | ||||
1.14
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"Participant" | 2 | ||||
1.15
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"Plan" | 2 | ||||
1.16
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"Plan Year" | 2 | ||||
1.17
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"Retirement," "Retire(s)" or "Retired" | 2 | ||||
1.18
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"Retirement Planning Committee" | 3 | ||||
1.19
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"Separation from Service" or "Separates from Service" | 3 | ||||
1.20
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"Sponsor" | 3 | ||||
1.21
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"Trust" | 3 | ||||
1.22
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"Unforeseeable Financial Emergency" | 3 | ||||
1.23
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"Years of Service" | 3 | ||||
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ARTICLE 2 - SELECTION, ENROLLMENT, ELIGIBILITY | 3 | |||||
2.1
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Selection by Compensation Committee | 3 | ||||
2.2
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Enrollment Requirements | 3 | ||||
2.3
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Eligibility; Commencement of Participation | 4 | ||||
2.4
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Termination of Participation and/or Deferrals | 4 | ||||
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ARTICLE 3 - DEFERRAL COMMITMENTS/VESTING/CREDITING/TAXES | 4 | |||||
3.1
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Minimum Deferrals -- Annual Deferral Amount | 4 | ||||
3.2
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Maximum Deferral -- Base Annual Salary and Annual Bonus | 4 | ||||
3.3
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Election to Defer; Effect of Election Form. | 4 | ||||
3.4
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Withholding of Annual Deferral Amounts | 5 | ||||
3.5
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Vesting | 5 | ||||
3.6
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Crediting/Debiting of Deferral Accounts | 5 | ||||
3.7
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FICA and Other Taxes. | 6 |
Page | ||||||
ARTICLE 4 - DEATH BENEFIT | 6 | |||||
4.1
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Death Benefit | 6 | ||||
4.2
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Payment of Death Benefit | 6 | ||||
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ARTICLE 5 - TERMINATION BENEFIT | 6 | |||||
5.1
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Termination Benefit | 6 | ||||
5.2
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Payment of Termination Benefit | 7 | ||||
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ARTICLE 6 - SHORT-TERM PAYOUTS | 7 | |||||
6.1
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Short-Term Payouts | 7 | ||||
6.2
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Grandfathered Election | 7 | ||||
6.3
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Withdrawal for Unforeseeable Financial Emergencies | 7 | ||||
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ARTICLE 7 - BENEFICIARY DESIGNATION | 7 | |||||
7.1
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Beneficiary | 7 | ||||
7.2
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Beneficiary Designation; Change; Spousal Consent | 7 | ||||
7.3
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Acknowledgment | 8 | ||||
7.4
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No Beneficiary Designation | 8 | ||||
7.5
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Doubt as to Beneficiary | 8 | ||||
7.6
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Discharge of Obligations | 8 | ||||
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ARTICLE 8 - LEAVE OF ABSENCE | 8 | |||||
8.1
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Leave of Absence | 8 | ||||
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ARTICLE 9 - TERMINATION, AMENDMENT OR MODIFICATION | 8 | |||||
9.1
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Termination | 8 | ||||
9.2
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Amendment | 9 | ||||
9.3
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Delegation to Retirement Planning Committee | 9 | ||||
9.4
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Effect of Payment | 9 | ||||
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ARTICLE 10 - ADMINISTRATION | 9 | |||||
10.1
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Retirement Planning Committee Duties | 9 | ||||
10.2
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Agents | 9 | ||||
10.3
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Binding Effect of Decisions | 9 | ||||
10.4
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Exculpation and Indemnity of Retirement Planning Committee | 9 | ||||
10.5
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Sponsor Information | 10 | ||||
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ARTICLE 11 - OTHER BENEFITS AND AGREEMENTS | 10 | |||||
11.1
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Coordination with Other Benefits | 10 | ||||
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ARTICLE 12 - CLAIMS PROCEDURES | 10 | |||||
12.1
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Presentation of Claim | 10 | ||||
12.2
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Notification of Decision | 10 | ||||
12.3
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Review of a Denied Claim | 11 | ||||
12.4
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Decision on Review | 11 | ||||
12.5
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Legal Action | 11 |
(ii)
Page | ||||||
ARTICLE 13 - TRUST | 12 | |||||
13.1
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Establishment of the Trust | 12 | ||||
13.2
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Interrelationship of the Plan and the Trust | 12 | ||||
13.3
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Distributions From the Trust | 12 | ||||
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ARTICLE 14 - MISCELLANEOUS | 12 | |||||
14.1
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Status of Plan | 12 | ||||
14.2
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Unsecured General Creditor | 12 | ||||
14.3
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Sponsor's Liability | 12 | ||||
14.4
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Nonassignability | 12 | ||||
14.5
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Not a Contract of Employment | 13 | ||||
14.6
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Furnishing Information | 13 | ||||
14.7
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Terms | 13 | ||||
14.8
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Captions | 13 | ||||
14.9
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Governing Law | 13 | ||||
14.10
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Notice | 13 | ||||
14.11
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Successors | 14 | ||||
14.12
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Spouse's Interest | 14 | ||||
14.13
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Validity | 14 | ||||
14.14
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Incompetent | 14 | ||||
14.15
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Court Order | 14 | ||||
14.16
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Distribution in the Event of Taxation. | 14 |
(iii)
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3
4
5
6
7
8
9
10
11
12
13
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AVALONBAY COMMUNITIES, INC.
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By: | /s/ Edward M. Schulman | |||
Title: SVP, General Counsel & Secretary | ||||
15
Year | Year | Year | Year | Year | ||||||||||||||||
Ended | Ended | Ended | Ended | Ended | ||||||||||||||||
December 31, 2008 | December 31, 2007 (1) | December 31, 2006 (1) | December 31, 2005 (1) | December 31, 2004 (1) | ||||||||||||||||
Income from continuing operations before gain on sale
of communities and cumulative effect of change in
accounting principle
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$ | 114,378 | $ | 231,184 | $ | 148,942 | $ | 84,802 | $ | 45,969 | ||||||||||
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(Plus):
|
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Minority interest in consolidated partnerships
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(741 | ) | 1,585 | 573 | 1,481 | 150 | ||||||||||||||
Amortization of capitalized interest (2)
|
12,428 | 9,941 | 7,503 | 5,957 | 5,114 | |||||||||||||||
|
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|
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Earnings before fixed charges
|
$ | 126,065 | $ | 242,710 | $ | 157,018 | $ | 92,240 | $ | 51,233 | ||||||||||
|
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|
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(Plus) Fixed charges:
|
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Portion of rents representative
of the interest factor
|
$ | 855 | $ | 722 | $ | 518 | $ | 354 | $ | 323 | ||||||||||
Interest expense
|
114,878 | 94,540 | 106,271 | 122,787 | 127,123 | |||||||||||||||
Interest capitalized
|
74,621 | 73,118 | 46,388 | 25,284 | 20,566 | |||||||||||||||
Preferred dividend
|
10,454 | 8,700 | 8,700 | 8,700 | 8,700 | |||||||||||||||
|
||||||||||||||||||||
|
||||||||||||||||||||
Total fixed charges (3)
|
$ | 200,808 | $ | 177,080 | $ | 161,877 | $ | 157,125 | $ | 156,712 | ||||||||||
|
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|
||||||||||||||||||||
(Less):
|
||||||||||||||||||||
Interest capitalized
|
74,621 | 73,118 | 46,388 | 25,284 | 20,566 | |||||||||||||||
Preferred dividend
|
10,454 | 8,700 | 8,700 | 8,700 | 8,700 | |||||||||||||||
|
||||||||||||||||||||
|
||||||||||||||||||||
Earnings (4)
|
$ | 241,798 | $ | 337,972 | $ | 263,807 | $ | 215,381 | $ | 178,679 | ||||||||||
|
||||||||||||||||||||
|
||||||||||||||||||||
Ratio (4 divided by 3)
|
1.20 | 1.91 | 1.63 | 1.37 | 1.14 | |||||||||||||||
|
Year | Year | Year | Year | Year | ||||||||||||||||
Ended | Ended | Ended | Ended | Ended | ||||||||||||||||
December 31, 2008 | December 31, 2007 (1) | December 31, 2006 (1) | December 31, 2005 (1) | December 31, 2004 (1) | ||||||||||||||||
Income from continuing operations before gain on sale
of communities and cumulative effect of change in
accounting principle
|
$ | 114,378 | $ | 231,184 | $ | 148,942 | $ | 84,802 | $ | 45,969 | ||||||||||
|
||||||||||||||||||||
(Plus):
|
||||||||||||||||||||
Minority interest in consolidated partnerships
|
(741 | ) | 1,585 | 573 | 1,481 | 150 | ||||||||||||||
Amortization of capitalized interest (2)
|
12,428 | 9,941 | 7,503 | 5,957 | 5,114 | |||||||||||||||
|
||||||||||||||||||||
|
||||||||||||||||||||
Earnings before fixed charges
|
$ | 126,065 | $ | 242,710 | $ | 157,018 | $ | 92,240 | $ | 51,233 | ||||||||||
|
||||||||||||||||||||
|
||||||||||||||||||||
(Plus) Fixed charges:
|
||||||||||||||||||||
Portion of rents representative
of the interest factor
|
$ | 855 | $ | 722 | $ | 518 | $ | 354 | $ | 323 | ||||||||||
Interest expense
|
114,878 | 94,540 | 106,271 | 122,787 | 127,123 | |||||||||||||||
Interest capitalized
|
74,621 | 73,118 | 46,388 | 25,284 | 20,566 | |||||||||||||||
|
||||||||||||||||||||
|
||||||||||||||||||||
Total fixed charges (3)
|
$ | 190,354 | $ | 168,380 | $ | 153,177 | $ | 148,425 | $ | 148,012 | ||||||||||
|
||||||||||||||||||||
|
||||||||||||||||||||
(Less):
|
||||||||||||||||||||
Interest capitalized
|
74,621 | 73,118 | 46,388 | 25,284 | 20,566 | |||||||||||||||
|
||||||||||||||||||||
|
||||||||||||||||||||
Earnings (4)
|
$ | 241,798 | $ | 337,972 | $ | 263,807 | $ | 215,381 | $ | 178,679 | ||||||||||
|
||||||||||||||||||||
|
||||||||||||||||||||
Ratio (4 divided by 3)
|
1.27 | 2.01 | 1.72 | 1.45 | 1.21 | |||||||||||||||
|
(1) | The results of operations for 2004 through 2007 have been adjusted to reflect discontinued operations for properties sold or held for sale as of December 31, 2008. | |
(2) | Represents an estimate of capitalized interest costs based on the Companys established depreciation policy and an analysis of interest costs capitalized since 1998 (the year in which AvalonBay was formed). |
Page 1
Page 2
Page 3
Page 4
Form S-3 | Form S-8 | |
No. 333-87063
|
No. 333-16837 | |
No. 333-15407
|
No. 333-115290 | |
No. 333-107413
|
No. 333-150742 | |
No. 333-139839
|
/s/ Ernst & Young LLP | ||||
1. | I have reviewed this annual report on Form 10-K of AvalonBay Communities, Inc.; | ||
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | ||
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | ||
4. | The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a 15(e) and 15d 15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a 15(f) and 15d 15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
(c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
(d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants Board of Directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
/s/ Bryce Blair | ||||
Bryce Blair
Chief Executive Officer |
||||
1. | I have reviewed this annual report on Form 10-K of AvalonBay Communities, Inc.; | ||
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | ||
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | ||
4. | The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a 15(e) and 15d 15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a 15(f) and 15d 15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
(c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
(d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants Board of Directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
/s/ Thomas J. Sargeant | ||||
Thomas J. Sargeant
Chief Financial Officer |
||||
/s/ Bryce Blair | ||||
Bryce Blair
Chief Executive Officer |
||||
/s/ Thomas J. Sargeant | ||||
Thomas J. Sargeant
Chief Financial Officer |
||||