EXHIBIT 4.4
AVALONBAY COMMUNITIES, INC.
Issuer
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to
STATE STREET BANK AND TRUST COMPANY
Trustee
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THIRD SUPPLEMENTAL INDENTURE
Dated as of December 21 , 1998
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$400,000,000
OF
MEDIUM-TERM NOTES DUE NINE MONTHS OR MORE
FROM DATE OF ISSUE
THIRD SUPPLEMENTAL INDENTURE, dated as of December 21, 1998 (the
"Supplemental Indenture"), between AVALONBAY COMMUNITIES, INC., a corporation
organized under the laws of the State of Maryland (herein called the "Company"),
and STATE STREET BANK AND TRUST COMPANY, a trust company organized and existing
under the laws of the Commonwealth of Massachusetts, as Trustee (herein called
the "Trustee").
RECITALS OF THE COMPANY
The Company has heretofore delivered to the Trustee an Indenture dated
as of January 16, 1998 (the "Senior Indenture"), a First Supplemental Indenture
dated as of January 20, 1998 and a Second Supplemental Indenture dated as of
July 7, 1998, the forms of which have been filed with the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended, and incorporated by reference as exhibits to the Company's Registration
Statement on Form S-3 (Registration No. 333-60875), providing for the issuance
from time to time of Senior Debt Securities of the Company (the "Securities").
The Company intends by this Supplemental Indenture to (i) create a series of
debt securities to be issued from time to time, in an aggregate initial
principal amount not to exceed $400,000,000, entitled "Medium-Term Notes Due
Nine Months or More from Date of Issue" and (ii) establish the form and the
terms and conditions of such Notes.
Section 301 of the Senior Indenture provides for various matters with
respect to any series of Securities issued under the Senior Indenture to be
established in an indenture supplemental to the Senior Indenture.
Section 901(7) of the Senior Indenture provides for the Company and
the Trustee to enter into an indenture supplemental to the Senior Indenture to
establish the form or terms of Securities of any series as provided by Sections
201 and 301 of the Senior Indenture.
The Board of Directors of the Company has duly adopted resolutions
authorizing the Company to execute and deliver this Supplemental Indenture.
All the conditions and requirements necessary to make this
Supplemental Indenture, when duly executed and delivered, a valid and binding
agreement in accordance with its terms and for the purposes herein expressed,
have been performed and fulfilled.
NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of each of
the series of Securities provided for herein by the Holders thereof, it is
mutually covenanted and agreed, for the equal and proportionate benefit of all
Holders of the
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Notes (as herein defined) or of any series thereof, as follows:
ARTICLE ONE
RELATION TO SENIOR INDENTURE; DEFINITIONS
-----------------------------------------
SECTION 1.1. Relation to Senior Indenture.
----------------------------
This Supplemental Indenture constitutes an integral part of the Senior
Indenture.
SECTION 1.2. Definitions.
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For all purposes of this Supplemental Indenture, except as otherwise
expressly provided for or unless the context otherwise requires:
(1) Capitalized terms used but not defined herein shall have the
respective meanings assigned to them in the Senior Indenture;
(2) All references herein to Articles and Sections, unless otherwise
specified, refer to the corresponding Articles and Sections of this
Supplemental Indenture; and
(3) In the event that any of the following definitions differs from
its respective definition set forth in the Senior Indenture, the definition
set forth herein shall control.
"Acquired Indebtedness" means Indebtedness of a Person (i) existing at
the time such Person becomes a Subsidiary or (ii) assumed in connection with the
acquisition of assets from such Person, in each case, other than Indebtedness
incurred in connection with, or in contemplation of, such Person becoming a
Subsidiary or such acquisition. Acquired Indebtedness shall be deemed to be
incurred on the date of the related acquisition of assets from any Person or the
date the acquired Person becomes a Subsidiary.
"Annual Service Charge" for any period means the maximum amount which
is payable during such period for interest on, and original issue discount of,
Indebtedness of the Company and its Subsidiaries and the amount of dividends
which are payable during such period in respect of any Disqualified Stock.
"Capital Stock" means, with respect to any Person, any capital stock
(including preferred stock), shares, interests, participations or other
ownership interests (however designated) of such Person and any rights (other
than debt
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securities convertible into or exchangeable for corporate stock), warrants or
options to purchase any thereof.
"Consolidated Income Available for Debt Service" for any period means
Earnings from Operations of the Company and its Subsidiaries plus amounts which
have been deducted, and minus amounts which have been added, for the following
(without duplication): (i) interest on Indebtedness of the Company and its
Subsidiaries, (ii) provision for taxes of the Company and its Subsidiaries based
on income, (iii) amortization of debt discount and other deferred financing
costs, (iv) provisions for gains and losses on properties and property
depreciation and amortization, (v) the effect of any noncash charge resulting
from a change in accounting principles in determining Earnings from Operations
for such period and (vi) amortization of deferred charges.
"Corporate Trust Office" means the office of the Trustee at which, at
any particular time, its corporate trust business shall be principally
administered, which office at the date hereof is located at Two International
Place, Boston, Massachusetts 02110 and, for purposes of the Place of Payment
provisions of Sections 305 and 1002 of the Senior Indenture and other provisions
requiring a New York City office, is located at the office of State Street Bank
and Trust Company, N.A., 61 Broadway, New York, New York 10005.
"Disqualified Stock" means, with respect to any Person, any Capital
Stock of such Person which by the terms of such Capital Stock (or by the terms
of any security into which it is convertible or for which it is exchangeable or
exercisable), upon the happening of any event or otherwise (i) matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise
(other than Capital Stock which is redeemable solely in exchange for common
stock), (ii) is convertible into or exchangeable or exercisable for Indebtedness
or Disqualified Stock or (iii) is redeemable at the option of the holder
thereof, in whole or in part (other than Capital Stock which is redeemable
solely in exchange for Capital Stock which is not Disqualified Stock), in each
case on or prior to the Stated Maturity of the Notes.
"Earnings from Operations" for any period means net earnings excluding
gains and losses on sales of investments, extraordinary items, and property
valuation losses, net as reflected in the financial statements of the Company
and its Subsidiaries for such period determined on a consolidated basis in
accordance with GAAP.
"Encumbrance" means any mortgage, lien, charge, pledge or security
interest of any kind.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder by the Commission.
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"Fixed Rate Notes" means the Company's Fixed Rate Notes due nine
months or more from the date of issue, a form of which is attached hereto as
Exhibit B.
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"Floating Rate Notes" means the Company's Floating Rate Notes due nine
months or more from the date of issue, a form of which is attached hereto as
Exhibit A.
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"GAAP" means generally accepted accounting principles as used in the
United States applied on a consistent basis as in effect from time to time;
provided that solely for purposes of any calculation required by the financial
covenants contained herein, "GAAP" shall mean generally accepted accounting
principles as used in the United States on the date hereof, applied on a
consistent basis.
"Holder" means, in the case of a Registered Security, the Person in
whose name a Security is registered in the Security Register and, in the case of
a Bearer Security, the bearer thereof and, when used with respect to any coupon,
shall mean the bearer thereof.
"Indebtedness" of the Company or any Subsidiary means, without
duplication, any indebtedness of the Company or any Subsidiary, whether or not
contingent, in respect of (i) borrowed money or evidenced by bonds, notes,
debentures or similar instruments, (ii) indebtedness for borrowed money secured
by any Encumbrance existing on property owned by the Company or any Subsidiary,
(iii) the reimbursement obligations, contingent or otherwise, in connection with
any letters of credit actually issued (other than letters of credit issued to
provide credit enhancement or support with respect to other indebtedness of the
Company or any Subsidiary otherwise reflected as Indebtedness hereunder) or
amounts representing the balance deferred and unpaid of the purchase price of
any property or services, except any such balance that constitutes an accrued
expense or trade payable, or all conditional sale obligations or obligations
under any title retention agreement, (iv) the principal amount of all
obligations of the Company or any Subsidiary with respect to redemption,
repayment or other repurchase of any Disqualified Stock, (v) any lease of
property by the Company or any Subsidiary as lessee which is reflected on the
Company's consolidated balance sheet as a capitalized lease in accordance with
GAAP, or (vi) interest rate swaps, caps or similar agreements and foreign
exchange contracts, currency swaps or similar agreements, to the extent, in the
case of items of indebtedness under (i) through (iii) above, that any such items
(other than letters of credit) would appear as a liability on the Company's
consolidated balance sheet in accordance with GAAP, and also includes, to the
extent not otherwise included, any obligation by the Company or any Subsidiary
to be liable for, or to pay, as obligor, guarantor or otherwise (other than for
purposes of collection in the ordinary course of business), Indebtedness of
another Person (other than the
5
Company or any Subsidiary) (it being understood that Indebtedness shall be
deemed to be incurred by the Company or any Subsidiary whenever the Company or
such Subsidiary shall create, assume, guarantee or otherwise become liable in
respect thereof).
"Notes" has the meaning specified in Section 2.1 hereof.
"Pricing Supplement" means a pricing supplement to the Prospectus,
dated August 18, 1998, as supplemented by the Prospectus Supplement dated
September 30, 1998, setting forth the terms of the applicable Notes.
"Subsidiary" means, with respect to any Person, any corporation,
limited liability company, partnership or other entity of which a majority of
(i) the voting power of the voting equity securities or (ii) the outstanding
equity interests of which are owned, directly or indirectly, by such Person.
For the purposes of this definition, "voting equity securities" means equity
securities having voting power for the election of directors, whether at all
times or only so long as no senior class of security has such voting power by
reason of any contingency.
"Total Assets" as of any date means the sum of (i) the Undepreciated
Real Estate Assets and (ii) all other assets of the Company and its Subsidiaries
determined in accordance with GAAP (but excluding accounts receivable and
intangibles).
"Total Unencumbered Assets" means the sum of (i) those Undepreciated
Real Estate Assets not subject to an Encumbrance for borrowed money and (ii) all
other assets of the Company and its Subsidiaries not subject to an Encumbrance
for borrowed money, determined in accordance with GAAP (but excluding accounts
receivable and intangibles).
"Undepreciated Real Estate Assets" as of any date means the cost
(original cost plus capital improvements) of real estate assets of the Company
and its Subsidiaries on such date, before depreciation and amortization,
determined on a consolidated basis in accordance with GAAP.
"Unsecured Indebtedness" means Indebtedness which is not secured by
any Encumbrance upon any of the properties of the Company or any Subsidiary.
ARTICLE TWO
THE SERIES OF NOTES
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The following provisions of this Article Two are made pursuant to
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Section 301 of the Senior Indenture in order to establish and set forth the
terms of the series of Securities described in Section 2.1.
SECTION 2.1 Title of the Securities.
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There shall be a series of Securities designated the Medium-Term Notes
Due Nine Months or More from Date of Issue (the "Notes").
SECTION 2.2 Limitation on Aggregate Principal Amount.
----------------------------------------
The aggregate principal amount of the Notes shall be limited to
$400,000,000, and, except as provided in this Section and in Section 306 of the
Senior Indenture, the Company shall not execute and the Trustee shall not
authenticate or deliver Notes in excess of such aggregate principal amount;
provided however, as authorized by Section 301 of the Senior Indenture, the
Notes series may be reopened, without the consent of the Holders, for the
issuance of such additional Notes as may be authorized by the Company.
Nothing contained in this Section 2.2 or elsewhere in this
Supplemental Indenture, or in the Notes, is intended to or shall limit execution
by the Company or authentication or delivery by the Trustee of Notes under the
circumstances contemplated by Sections 303, 304, 305, 306, 906, 1107 and 1305 of
the Senior Indenture.
SECTION 2.3 Terms and Conditions of the Notes.
---------------------------------
The Notes shall be governed by all the terms and conditions of the
Indenture, including, without limitation, the terms and conditions set forth in
the forms of Note referred to in Section 2.9 below, as the same may be
supplemented or, to the extent allowed by the Indenture, modified by the
additional or different terms and conditions established from time to time with
respect to the Notes either in resolutions of the Board of Directors of the
Company or by action of authorized officers of the Company and, in either such
case, such additional or different terms and conditions shall be set forth in
the Notes and the related Pricing Supplement. All such terms and conditions set
forth in such Notes and in such Pricing Supplement are incorporated by reference
into this Supplemental Indenture.
SECTION 2.4 Limitations on Incurrence of Indebtedness .
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(1) The Company will not, and will not permit any Subsidiary to, incur
any Indebtedness if, immediately after giving effect to the incurrence of such
additional Indebtedness and the application of the proceeds thereof, the
aggregate principal amount of all outstanding Indebtedness of the Company and
its Subsidiaries on a consolidated basis determined in accordance with GAAP is
greater than 60% of the sum of (without duplication) (i) the Total Assets of the
Company
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and its Subsidiaries as of the end of the calendar quarter covered in the
Company's Annual Report on Form 10-K or Quarterly Report on Form 10-Q, as the
case may be, most recently filed with the Commission (or, if such filing is not
permitted under the Exchange Act, with the Trustee) prior to the incurrence of
such additional Indebtedness and (ii) the purchase price of any real estate
assets or mortgages receivable acquired, and the amount of any securities
offering proceeds received (to the extent that such proceeds were not used to
acquire real estate assets or mortgages receivable or used to reduce
Indebtedness), by the Company or any Subsidiary since the end of such calendar
quarter, including those proceeds obtained in connection with the incurrence of
such additional Indebtedness.
(2) In addition to the limitation set forth in subsection (1) of this
Section 2.4, the Company will not, and will not permit any Subsidiary to, incur
any Indebtedness if the ratio of Consolidated Income Available for Debt Service
to the Annual Service Charge for the four consecutive fiscal quarters most
recently ended prior to the date on which such additional Indebtedness is to be
incurred shall have been less than 1.5:1, on a pro forma basis after giving
effect thereto and to the application of the proceeds therefrom, and calculated
on the assumption that (i) such Indebtedness and any other Indebtedness incurred
by the Company and its Subsidiaries since the first day of such four-quarter
period and the application of the proceeds therefrom, including to refinance
other Indebtedness, had occurred at the beginning of such period; (ii) the
repayment or retirement of any other Indebtedness by the Company and its
Subsidiaries since the first day of such four-quarter period had been repaid or
retired at the beginning of such period (except that, in making such
computation, the amount of Indebtedness under any revolving credit facility
shall be computed based upon the average daily balance of such Indebtedness
during such period); (iii) in the case of Acquired Indebtedness or Indebtedness
incurred in connection with any acquisition since the first day of such four-
quarter period, the related acquisition had occurred as of the first day of such
period with the appropriate adjustments with respect to such acquisition being
included in such pro forma calculation; and (iv) in the case of any acquisition
or disposition by the Company or its Subsidiaries of any asset or group of
assets since the first day of such four-quarter period, whether by merger, stock
purchase or sale, or asset purchase or sale, such acquisition or disposition or
any related repayment of Indebtedness had occurred as of the first day of such
period with the appropriate adjustments with respect to such acquisition or
disposition being included in such pro forma calculation.
(3) In addition to the limitations set forth in subsections (1) and
(2) of this Section 2.4, the Company will not, and will not permit any
Subsidiary to, incur any Indebtedness secured by any Encumbrance upon any of the
property of the Company or any Subsidiary if, immediately after giving effect to
the incurrence of such additional Indebtedness and the application of the
proceeds thereof, the aggregate principal amount of all outstanding Indebtedness
of the Company and its Subsidiaries on a consolidated basis which is secured by
any Encumbrance on property of the Company or any Subsidiary is greater than 40%
of the sum of
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(without duplication) (i) the Total Assets of the Company and its Subsidiaries
as of the end of the calendar quarter covered in the Company's Annual Report on
Form 10-K or Quarterly Report on Form 10-Q, as the case may be, most recently
filed with the Commission (or, if such filing is not permitted under the
Exchange Act, with the Trustee) prior to the incurrence of such additional
Indebtedness and (ii) the purchase price of any real estate assets or mortgages
receivable acquired, and the amount of any securities offering proceeds received
(to the extent that such proceeds were not used to acquire real estate assets or
mortgages receivable or used to reduce Indebtedness), by the Company or any
Subsidiary since the end of such calendar quarter, including those proceeds
obtained in connection with the incurrence of such additional Indebtedness.
(4) The Company and its Subsidiaries may not at any time own Total
Unencumbered Assets equal to less than 150% of the aggregate outstanding
principal amount of the Unsecured Indebtedness of the Company and its
Subsidiaries on a consolidated basis.
(5) For purposes of this Section 2.4, Indebtedness shall be deemed to
be "incurred" by the Company or a Subsidiary whenever the Company or such
Subsidiary shall create, assume, guarantee or otherwise become liable in respect
thereof.
SECTION 2.5 Defeasance.
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The provisions of Sections 1402 and 1403 of the Senior Indenture,
together with the other provisions of Article Fourteen of the Senior Indenture,
shall be applicable to the Notes. The provisions of Section 1403 of the Senior
Indenture shall apply to the covenants set forth in Sections 2.4 and 2.10 of
this Supplemental Indenture and to those covenants specified in Section 1403 of
the Senior Indenture.
SECTION 2.6 Events of Default
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The provisions of clause (5) of Section 501 of the Senior Indenture as
applicable with respect to the Notes shall be deemed to be amended and restated
in their entirety to read as follows:
(5) default under any bond, debenture, note, mortgage, indenture
or instrument under which there may be issued or by which there may be
secured or evidenced any indebtedness for money borrowed by the Company (or
by any Subsidiary, the repayment of which the Company has guaranteed or for
which the Company is directly responsible or liable as obligor or
guarantor), having an aggregate principal amount outstanding of at least
$10,000,000, whether such indebtedness now exists or shall hereafter be
created, which default shall have resulted in such indebtedness becoming or
being declared due and payable prior to the date on which it would
otherwise
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have become due and payable, without such indebtedness having been
discharged, or such acceleration having been rescinded or annulled, within
a period of 10 days after there shall have been given written notice, by
registered or certified mail, to the Company by the Trustee or to the
Company and the Trustee by the Holders of at least 10% in principal amount
of the Outstanding Securities of that series a written notice specifying
such default and requiring the Company to cause such indebtedness to be
discharged or cause such acceleration to be rescinded or annulled and
stating that such notice is a "Notice of Default" hereunder; provided,
however, that such a default on indebtedness which constitutes tax-exempt
financing having an aggregate principal amount outstanding not exceeding
$25,000,000 that results solely from a failure of an entity providing
credit support for such indebtedness to honor a demand for payment on a
letter of credit shall not constitute an Event of Default; or
SECTION 2.7 Acceleration of Maturity; Rescission and Annulment.
--------------------------------------------------
The provisions of the first paragraph of Section 502 of the Senior
Indenture as applicable with respect to the Notes shall be deemed to be amended
and restated in their entirety to read as follows:
If an Event of Default with respect to Securities of any series at the
time Outstanding occurs and is continuing, then in every such case the Trustee
or the Holders of not less than 25% in principal amount of the Outstanding
Securities of that series may declare the principal amount (or, if Securities of
that series are Original Issue Discount Securities or Indexed Securities, such
portion of the principal as may be specified in the terms thereof) of all the
Securities of that series to be due and payable immediately, by a notice in
writing to the Company (and to the Trustee if given by the Holders), and upon
any such declaration such principal, or specified portion thereof, plus accrued
interest to the date the Securities of that series are paid, shall become
immediately due and payable. With respect to the Securities of any series, if
an Event of Default set forth in Section 501(6) of the Senior Indenture occurs
and is continuing, then in every such case all the Securities of that series
shall become immediately due and payable, without notice to the Company, at the
principal amount thereof (or, if any Securities are Original Issue Discount
Securities or Indexed Securities, such portion of the principal as may be
specified in the terms thereof) plus accrued interest to the date the Securities
of that series are paid.
SECTION 2.8 Registered Securities.
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Each Note shall be issuable and transferable in fully registered book-
entry form or certificated form as specified in the applicable Pricing
Supplement.
SECTION 2.9 Form of Notes.
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The Floating Rate Notes shall be substantially in the form attached as
Exhibit A hereto. The Fixed Rate Notes shall be substantially in the form
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attached as Exhibit B hereto.
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SECTION 2.10 Provision of Financial Information.
----------------------------------
Whether or not the Company is subject to Section 13 or 15(d) of the
Exchange Act, the Company will, to the extent permitted under the Exchange Act,
file with the Commission the annual reports, quarterly reports and other
documents which the Company would have been required to file with the Commission
pursuant to such Section 13 or 15(d) if the Company were so subject, such
documents to be filed with the Commission on or prior to the respective dates
(the "Required Filing Dates") by which the Company would have been required so
to file such documents if the Company were so subject.
The Company will also in any event (x) within 15 days of each Required
Filing Date (i) if the Company is not then subject to Section 13 or 15(d) of the
Exchange Act, transmit by mail to all Holders, as their names and addresses
appear in the Security Register, without cost to such Holders, copies of the
annual reports, quarterly reports and other documents which the Company would
have been required to file with the Commission pursuant to Section 13 or 15(d)
of the Exchange Act if the Company were subject to such Sections and (ii) file
with the Trustee copies of annual reports, quarterly reports and other documents
which the Company would have been required to file with the Commission pursuant
to Section 13 or 15(d) of the Exchange Act if the Company were subject to such
Sections and (y) supply, promptly upon written request and payment of the
reasonable cost of duplication and delivery, copies of such documents to any
prospective Holder.
The Trustee shall not be required to examine any of the reports and
other documents filed therewith pursuant to the provisions of this Section 2.10
or Section 7.03 of the Senior Indenture in order to determine whether the
Company is in compliance with the provisions of Section 2.4 of this Supplemental
Indenture.
SECTION 2.11 Waiver of Certain Covenants.
----------------------------
Notwithstanding the provisions of Section 1009 of the Senior
Indenture, the Company may omit in any particular instance to comply with any
term, provision or condition set forth in Sections 1004 to 1008, inclusive, of
the Senior Indenture, with Sections 2.4 and 2.10 of this Supplemental Indenture
and with any other term, provision or condition with respect to the Notes or any
series thereof (except any such term, provision or condition which could not be
amended without the consent of all Holders of the Notes or such series thereof,
as applicable), if before or after the time for such compliance the Holders of
at least a majority in principal amount of all outstanding Notes or such series
thereof, as applicable, by Act of such
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Holders, either waive such compliance in such instance or generally waive
compliance with such covenant or condition. Except to the extent so expressly
waived, and until such waiver shall become effective, the obligations of the
Company and the duties of the Trustee in respect of any such term, provision or
condition shall remain in full force and effect.
ARTICLE THREE
MISCELLANEOUS PROVISIONS
------------------------
SECTION 3.1. Ratification of Senior Indenture.
--------------------------------
Except as expressly modified or amended hereby, the Senior Indenture
continues in full force and effect and is in all respects confirmed and
preserved.
SECTION 3.2. Governing Law.
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This Supplemental Indenture and each Note shall be governed by and
construed in accordance with the laws of the State of New York. This
Supplemental Indenture is subject to the provisions of the Trust Indenture Act
of 1939, as amended, and shall, to the extent applicable, be governed by such
provisions.
SECTION 3.3. Counterparts.
------------
This Supplemental Indenture may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, but
all such counterparts shall together constitute but one and the same instrument.
[Signature page follows.]
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IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed by their respective officers hereunto duly
authorized, all as of the day and year first written above.
AVALONBAY COMMUNITIES, INC.
By: /s/ Richard L. Michaux
------------------------
Richard L. Michaux
Chief Executive Officer
Attest:
Name:
Title:
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By: /s/ Robert J. Dunn
------------------------
Robert J. Dunn
Vice President
Attest:
Name:
Vice President
S-13
EXHIBIT A
Form of Floating Rate Note
--------------------------
[Face of Note]
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY (THE "DEPOSITARY") (55 WATER STREET, NEW YORK, NEW YORK) TO THE
ISSUER HEREOF OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME
AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY AND ANY PAYMENT
IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN./1/
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING SET FORTH IN THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF CEDE & CO., AS NOMINEE
OF THE DEPOSITARY. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN
THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE. UNLESS AND UNTIL IT IS
EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED FORM, THIS NOTE MAY NOT
BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE
DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER
NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. /2/
Registered No. FLR-__________ [PRINCIPAL AMOUNT]
CUSIP No: __________
AVALONBAY COMMUNITIES, INC.
MEDIUM-TERM NOTE
(Floating Rate)
INTEREST RATE BASIS OR BASES: ORIGINAL ISSUE DATE: STATED MATURITY DATE:
___________ ____________ ____________
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/1/ This paragraph applies to global Notes only.
/2/ This paragraph applies to global Notes only.
A-14
IF LIBOR: IF CMT RATE:
[ ] LIBOR Reuters Designated CMT Telerate
Page: _____ Page: __________
[ ] LIBOR Telerate If Telerate Page 7052:
Page: _____ [ ] Weekly Average
[ ] Monthly Average
Designated CMT Maturity
Index: __________
INDEX CURRENCY:
INDEX MATURITY: INITIAL INTEREST RATE: _____ % INTEREST PAYMENT DATE(S):
SPREAD (PLUS OR MINUS): SPREAD MULTIPLIER: INITIAL INTEREST RESET DATE:
MINIMUM INTEREST RATE: _____% MAXIMUM INTEREST RATE _____% INTEREST RESET DATE(S):
INITIAL REDEMPTION DATE: INITIAL REDEMPTION PERCENTAGE: ANNUAL REDEMPTION
_____% PERCENTAGE REDUCTION:
OPTIONAL PAYMENT DATE(S): CALCULATION AGENT:
INTEREST CATEGORY: DAY COUNT CONVENTION:
[ ] Regular Floating Rate Note [ ] 30/360 for the period
[ ] Floating Rate/Fixed Rate Note from __________ to
Fixed Rate Commencement Date: __________
Fixed Interest Rate: % [ ] Actual/360 for the
[ ] Inverse Floating Rate Note period
Fixed Interest Rate: % from __________ to
[ ] Original Issue Discount Note __________
Issue Price: % [ ] Actual/Actual for the
period
from __________ to
__________
Applicable Interest Rate
Basis:
SPECIFIED CURRENCY: AUTHORIZED DENOMINATION:
[ ] US Dollars [ ] $1,000 and integral
[ ] Other: multiples thereof
[ ] Other:
EXCHANGE RATE:
U.S. $1.00 = ______
EXCHANGE RATE AGENT:
A-15
AMORTIZATION FORMULA:
AMORTIZATION PAYMENT DATE(S):
DEFAULT RATE: %
ADDENDUM ATTACHED:
[ ] Yes
[ ] No
OTHER/ADDITIONAL PROVISIONS:
AVALONBAY COMMUNITIES, INC., a corporation duly organized and existing
under the laws of Maryland (hereinafter referred to as the "Company", which term
includes any successor entity under the Indenture hereinafter referred to), for
value received, hereby promises to pay to ____________________, or registered
assigns, the principal sum of ____________________, on the Stated Maturity Date
specified above (or any Redemption Date or Repayment Date, each as defined
below) (each such Stated Maturity Date, Redemption Date or Repayment Date being
hereinafter referred to as the "Maturity Date" with respect to the principal
repayable on such date) and to pay interest thereon, at a rate per annum equal
to the initial Interest Rate specified above until the Initial Interest Reset
Date specified above and thereafter at a rate determined in accordance with the
provisions specified above and on the reverse hereof or in an Addendum hereto
with respect to one or more Interest Rate Bases specified above until the
principal hereof is paid or duly made available for payment, and (to the extent
that the payment of such interest shall be legally enforceable) at the Default
Rate per annum specified above on any overdue principal, premium and/or
interest, including any overdue sinking fund or redemption payment. The Company
will pay interest in arrears on each Interest Payment Date, if any, specified
above (each, an "Interest Payment Date"), commencing with the first Interest
Payment Date next succeeding the Original Issue Date specified above, and on the
Maturity Date; provided, however, that if the Original Issue Date occurs between
a Record Date (as defined below) and the next succeeding Interest Payment Date,
interest payments will commence on the second Interest Payment Date next
succeeding the Original Issue Date to the holder of this Note on the Record Date
with respect to such second Interest Payment Date.
Interest on this Note will accrue from, and including, the immediately
preceding Interest Payment Date to which interest has been paid or duly provided
for (or from, and including, the Original Issue Date if no interest has been
paid or duly provided for) to, but excluding, the applicable Interest Payment
Date or the Maturity Date, as the case may be (each, an "Interest Period"). The
interest so payable, and punctually paid or duly provided for, on any
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Interest Payment Date will, subject to certain exceptions described herein, be
paid to the person in whose name this Note (or one or more predecessor Notes) is
registered at the close of business on the fifteenth calendar day (whether or
not a Business Day, as defined on the reverse hereof) immediately preceding such
Interest Payment Date (the "Record Date"); provided, however, that interest
payable on the Maturity Date will be payable to the person to whom the principal
hereof and premium, if any, hereon shall be payable. Any such interest not so
punctually paid or duly provided for ("Defaulted Interest") will forthwith cease
to be payable to the holder on any Record Date, and shall be paid to the person
in whose name this Note is registered at the close of business on a special
record date (the "Special Record Date") for the payment of such Defaulted
Interest to be fixed by the Trustee hereinafter referred to, notice whereof
shall be given to the holder of this Note by the Trustee not more than 15 days
and not less than 10 days prior to such Special Record Date or may be paid at
any time in any other lawful manner not inconsistent with the requirements of
any securities exchange on which this Note may be listed, and upon such notice
as may be required by such exchange, all as more fully provided for in the
Indenture.
Payment of principal, premium, if any, and interest in respect of this
Note due on the Maturity Date, or any prior date on which the principal or an
installment of principal of this Note becomes due and payable, whether by the
declaration of acceleration or otherwise, will be made in immediately available
funds upon presentation and surrender of this Note (and, with respect to any
applicable repayment of this Note, upon presentation and surrender of this Note
and a duly completed election form as contemplated on the reverse hereof) at the
office or agency maintained by the Company for that purpose in the Borough of
Manhattan, The City of New York; provided, however, that if the Specified
Currency specified above is other than United States dollars and such payment is
to be made in the Specified Currency in accordance with the provisions set forth
below, such payment may be made by wire transfer of immediately available funds
to an account with a bank designated by the holder hereof at least 15 calendar
days prior to the Maturity Date, provided that such bank has appropriate
facilities therefor and that this Note (and, if applicable, a duly completed
repayment election form) is presented and surrendered at the aforementioned
office or agency maintained by the Company in time for the Trustee to make such
payment in such funds in accordance with its normal procedures. Payment of
interest due on any Interest Payment Date other than the Maturity Date will be
made at the aforementioned office or agency maintained by the Company or, at the
option of the Company, by check mailed to the address of the person entitled
thereto as such address shall appear in the Security Register maintained by the
Trustee; provided, however, that a holder of U.S. $10,000,000 (or, if the
Specified Currency is other than United States dollars, the equivalent thereof
in the Specified Currency) or more in aggregate principal amount of Notes
(whether having identical or different terms and provisions) will be entitled to
receive interest payments on any Interest Payment Date other than the Maturity
Date by wire transfer of immediately available funds if appropriate wire
transfer instructions have been received in writing by the Trustee not less than
15 calendar days prior to such Interest Payment Date. Any such wire transfer
instructions received by the Trustee shall remain in effect until revoked by
such holder.
If any Interest Payment Date other than the Maturity Date would
otherwise be a day that is not a Business Day, such Interest Payment Date shall
be postponed to the next succeeding Business Day, except that if LIBOR is an
applicable Interest Rate Basis and such
A-17
Business Day falls in the next succeeding calendar month, such Interest Payment
Date shall be the immediately preceding Business Day. If the Maturity Date falls
on a day that is not a Business Day, the required payment of principal, premium,
if any, and interest shall be made on the next succeeding Business Day with the
same force and effect as if made on the date such payment was due, and no
interest shall accrue with respect to such payment for the period from and after
the Maturity Date to the date of such payment on the next succeeding Business
Day.
As used herein, "Business Day" means any day, other than a Saturday or
Sunday, that is neither a legal holiday nor a day on which banking institutions
are authorized or required by law, regulation or executive order to close in The
City of New York or Chicago; provided, however, that if the Specified Currency
is other than United States dollars, such day is also not a day on which banking
institutions are authorized or required by law, regulation or executive order to
close in the Principal Financial Center (as defined below) of the country
issuing the Specified Currency (or, if the Specified Currency is European
Currency Units ("ECU"), such day is not a day that appears as an ECU non-
settlement day on the display designated as "ISDE" on the Reuter Monitor Money
Rates Service (or a day so designated by the ECU Banking Association), or, if
ECU non-settlement days do not appear on that page (and are not so designated),
is not a day on which payments in ECU cannot be settled in the international
interbank market); provided, further, that if LIBOR is an applicable Interest
Rate Basis, such day is also a London Business Day (as defined below). "London
Business Day" means (i) if the Index Currency (as defined below) is other than
ECU, any day on which dealings in such Index Currency are transacted in the
London interbank market or (ii) if the Index Currency is ECU, any day that does
not appear as an ECU non-settlement day on the display designated as "ISDE" on
the Reuter Monitor Money Rates Service (or a day so designated by the ECU
Banking Association) or, if ECU non-settlement days do not appear on that page
(and are not so designated), is not a day on which payments in ECU cannot be
settled in the international interbank market. "Principal Financial Center"
means the capital city of the country issuing the Specified Currency or, solely
with respect to the calculation of LIBOR, the Index Currency, except that with
respect to United States dollars, Australian dollars, Deutsche marks, Dutch
guilders, Italian lire, Swiss francs and ECU, the Principal Financial Center
shall be The City of New York, Sydney, Frankfurt, Amsterdam, Milan, Zurich and
Luxembourg, respectively.
The Company is obligated to make payments of principal, premium, if
any, and interest in respect of this Note in the Specified Currency (or, if the
Specified Currency is not at the time of such payment legal tender for the
payment of public and private debts, in such other coin or currency of the
country which issued the Specified Currency as at the time of such payment is
legal tender for the payment of such debts). If the Specified Currency is other
than United States dollars, except as provided below, any such amounts so
payable by the Company will be converted by the Exchange Rate Agent specified
above into United States dollars for payment to the holder of this Note.
If the Specified Currency is other than United States dollars, the
holder of this Note may elect to receive such amounts in such Specified
Currency. If the holder of this Note shall not have duly made an election to
receive all or a specified portion of any payment of principal, premium, if any,
and/or interest in respect of this Note in the Specified Currency, any
A-18
United States dollar amount to be received by the holder of this Note will be
based on the highest bid quotation in The City of New York received by the
Exchange Rate Agent at approximately 11:00 A.M., New York City time, on the
second Business Day preceding the applicable payment date from three recognized
foreign exchange dealers (one of whom may be the Exchange Rate Agent) selected
by the Exchange Rate Agent and approved by the Company for the purchase by the
quoting dealer of the Specified Currency for United States dollars for
settlement on such payment date in the aggregate amount of such Specified
Currency payable to all holders of Foreign Currency Notes scheduled to receive
United States dollar payments and at which the applicable dealer commits to
execute a contract. All currency exchange costs will be borne by the holder of
this Note by deductions from such payments. If three such bid quotations are not
available, payments on this Note will be made in the Specified Currency.
If the Specified Currency is other than United States dollars, the
holder of this Note may elect to receive all or a specified portion of any
payment of principal, premium, if any, and/or interest in respect of this Note
in the Specified Currency by submitting a written request for such payment to
the Trustee at its Corporate Trust Office in The City of New York on or prior to
the applicable Record Date or at least 15 calendar days prior to the Maturity
Date, as the case may be. Such written request may be mailed or hand delivered
or sent by cable, telex or other form of facsimile transmission. The holder of
this Note may elect to receive all or a specified portion of all future payments
in the Specified Currency in respect of such principal, premium, if any, and/or
interest and need not file a separate election for each payment. Such election
will remain in effect until revoked by written notice to the Trustee, but
written notice of any such revocation must be received by the Trustee on or
prior to the applicable Record Date or at least 15 calendar days prior to the
Maturity Date, as the case may be. If the Specified Currency is other than
United States dollars or a composite currency and the holder of this Note shall
have duly made an election to receive all or a specified portion of any payment
of principal, premium, if any, and/or interest in respect of this Note in the
Specified Currency and if the Specified Currency is not available due to the
imposition of exchange controls or other circumstances beyond the reasonable
control of the Company, the Company will be entitled to satisfy its obligations
to the holder of this Note by making such payment in United States dollars on
the basis of the Market Exchange Rate (as defined below) on the second Business
Day prior to such payment date or, if such Market Exchange Rate is not then
available, on the basis of the most recently available Market Exchange Rate or
as otherwise specified on the face hereof. The "Market Exchange Rate" for the
Specified Currency means the noon dollar buying rate in The City of New York for
cable transfers for such Specified Currency as certified for customs purposes by
(or if not so certified, as otherwise determined by) the Federal Reserve Bank of
New York. Any payment made under such circumstances in United States dollars
will not constitute an Event of Default (as defined in the Indenture) with
respect to this Note.
If the Specified Currency is a composite currency and the holder of
this Note shall have duly made an election to receive all or a specified portion
of any payment of principal, premium, if any, and/or interest in respect of this
Note in the Specified Currency and if such composite currency is unavailable due
to the imposition of exchange controls or other circumstances beyond the
reasonable control of the Company, then the Company will be entitled to satisfy
its obligations to the holder of this Note by making such payment in United
States
A-19
dollars. The amount of each payment in United States dollars shall be
computed by the Exchange Rate Agent on the basis of the equivalent of the
composite currency in United States dollars. The component currencies of the
composite currency for this purpose (collectively, the "Component Currencies"
and each, a "Component Currency") shall be the currency amounts that were
components of the composite currency as of the last day on which the composite
currency was used. The equivalent of the composite currency in United States
dollars shall be calculated by aggregating the United States dollar equivalents
of the Component Currencies. The United States dollar equivalent of each of the
Component Currencies shall be determined by the Exchange Rate Agent on the basis
of the most recently available Market Exchange Rate for each such Component
Currency, or as otherwise specified on the face hereof.
If the official unit of any Component Currency is altered by way of
combination or subdivision, the number of units of the currency as a Component
Currency shall be divided or multiplied in the same proportion. If two or more
Component Currencies are consolidated into a single currency, the amounts of
those currencies as Component Currencies shall be replaced by an amount in such
single currency equal to the sum of the amounts of the consolidated Component
Currencies expressed in such single currency. If any Component Currency is
divided into two or more currencies, the amount of the original Component
Currency shall be replaced by the amounts of such two or more currencies, the
sum of which shall be equal to the amount of the original Component Currency.
All determinations referred to above made by the Exchange Rate Agent
shall be at its sole discretion and shall, in the absence of manifest error, be
conclusive for all purposes and binding on the holder of this Note.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof and, if so specified above on the face hereof, in
the Addendum hereto, which further provisions shall have the same force and
effect as if set forth on the face hereof.
Notwithstanding any provisions to the contrary contained herein, if
the face of this Note specifies that an Addendum is attached hereto or that
"Other/Additional Provisions" apply to this Note, this Note shall be subject to
the terms set forth in such Addendum or such "Other/Additional Provisions".
Unless the Certificate of Authentication hereon has been executed by
the Trustee or its Authenticating Agent by manual signature, this Note shall not
be entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.
IN WITNESS WHEREOF, AvalonBay Communities, Inc. has caused this Note
to be duly executed under its corporate seal.
Dated: AVALONBAY COMMUNITIES, INC.
A-20
By:
Richard J. Michaux
Chief Executive Officer
[Corporate Seal]
Attest:
Mary M. Stafford
Assistant Secretary
TRUSTEE'S CERTIFICATE OF AUTHENTICATION:
This is one of the Securities of the series designated therein referred to in
the within-mentioned Indenture.
STATE STREET BANK AND TRUST COMPANY,
as Trustee
Dated: By______________________________
Robert J. Dunn
Vice President
A-21
[Reverse Of Note]
AVALONBAY COMMUNITIES, INC.
MEDIUM-TERM NOTE
(Floating Rate)
This Note is one of a duly authorized series of Securities (the
"Securities") of the Company issued and to be issued under an Indenture, dated
as of January 16, 1998, as amended and supplemented by the First Supplemental
Indenture dated as of January 20, 1998, the Second Supplemental Indenture dated
July 7, 1998 and the Third Supplemental Indenture dated December 21, 1998, as
further amended, modified or supplemented from time to time (the "Indenture"),
between the Company and State Street Bank and Trust Company, as Trustee (the
"Trustee," which term includes any successor trustee under the Indenture), to
which Indenture and all indentures supplemental thereto reference is hereby made
for a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Trustee and the holders of the
Securities, and of the terms upon which the Securities are, and are to be,
authenticated and delivered. This Note is one of the series of Securities
designated as "Medium-Term Notes Due Nine Months or More from Date of Issue"
(the "Notes"). All terms used but not defined in this Note or in an Addendum
hereto shall have the meanings assigned to such terms in the Indenture or on the
face hereof, as the case may be.
This Note is issuable only in registered form without coupons in
minimum denominations of U.S. $1,000 and integral multiples thereof or the
minimum Authorized Denomination specified on the face hereof.
This Note will not be subject to any sinking fund and, unless
otherwise specified on the face hereof in accordance with the provisions of the
following two paragraphs, will not be redeemable or repayable prior to the
Stated Maturity Date.
This Note will be subject to redemption at the option of the Company
on any date on and after the Initial Redemption Date, if any, specified on the
face hereof, in whole or from time to time in part in increments of U.S. $1,000
or the minimum Authorized Denomination (provided that any remaining principal
amount hereof shall be at least U.S. $1,000 or such minimum Authorized
Denomination), at the Redemption Price (as defined below), together with unpaid
interest accrued thereon to the date fixed for redemption (each, a "Redemption
Date"), on notice given not more than 60 nor less than 30 calendar days prior to
the Redemption Date and in accordance with the provisions of the Indenture. The
"Redemption Price" shall initially be the Initial Redemption Percentage
specified on the face hereof multiplied by the unpaid principal amount of this
Note to be redeemed. The Initial Redemption Percentage shall decline at each
anniversary of the Initial Redemption Date by the Annual Redemption Percentage
Reduction, if any, specified on the face hereof until the Redemption Price is
100% of the unpaid principal amount to be redeemed. In the event of redemption
of this Note in part only, a new Note of like tenor for the unredeemed portion
hereof and otherwise having the same terms as this Note shall
A-22
be issued in the name of the holder hereof upon the presentation and surrender
hereof.
This Note will be subject to repayment by the Company at the option of
the holder hereof on the Optional Repayment Date(s), if any, specified on the
face hereof, in whole or in part in increments of U.S. $1,000 or the minimum
Authorized Denomination (provided that any remaining principal amount hereof
shall be at least U.S. $1,000 or such minimum Authorized Denomination), at a
repayment price equal to 100% of the unpaid principal amount to be repaid,
together with unpaid interest accrued thereon to the date fixed for repayment
(each, a "Repayment Date"). For this Note to be repaid, the Trustee must receive
at its office in the Borough of Manhattan, The City of New York, referred to on
the face hereof, at least 30 days but not more than 60 days prior to the
Repayment Date (i) this Note and the form hereon entitled "Option to Elect
Repayment" duly completed or (ii) a telegram, telex, facsimile transmission, or
a letter from a member of a national securities exchange or the National
Association of Securities Dealers, Inc. or a commercial bank or trust company in
the United States setting forth the name of the holder hereof, the principal
amount of this Note, the principal amount of this Note to be repaid, the
certificate number or a description of the tenor and terms of this Note, a
statement that the option to elect repayment is being exercised thereby, and a
guarantee that this Note, together with the form hereon entitled "Option to
Elect Repayment" duly completed, will be received by the Trustee not later than
the fifth Business Day after the date of such telegram, telex, facsimile
transmission or letter, provided that such telegram, telex, facsimile
transmission or letter shall only be effective if this Note and duly completed
form are received by the Trustee by such fifth Business Day. Exercise of such
repayment option by the holder hereof will be irrevocable. In the event of
repayment of this Note in part only, a new Note of like tenor for the unrepaid
portion hereof and otherwise having the same terms as this Note shall be issued
in the name of the holder hereof upon the presentation and surrender hereof.
If this Note is an Original Issue Discount Note as specified on the
face hereof, the amount payable to the holder of this Note in the event of
redemption, repayment or acceleration of maturity of this Note will be equal to
the sum of (i) the Issue Price specified on the face hereof (increased by any
accruals of the Discount, as defined below) and, in the event of any redemption
of this Note (if applicable), multiplied by the Initial Redemption Percentage
(as adjusted by the Annual Redemption Percentage Reduction, if applicable) and
(ii) any unpaid interest on this Note accrued from the Original Issue Date to
the Redemption Date, Repayment Date or date of acceleration of maturity, as the
case may be. The difference between the Issue Price and 100% of the principal
amount of this Note is referred to herein as the "Discount."
For purposes of determining the amount of Discount that has accrued as
of any Redemption Date, Repayment Date or date of acceleration of maturity of
this Note, such Discount will be accrued using a constant yield method. The
constant yield will be calculated using a 30-day month, 360-day year convention,
a compounding period that, except for the Initial Period (as defined below),
corresponds to the shortest period between Interest Payment Dates (with ratable
accruals within a compounding period), a coupon rate equal to the initial coupon
rate applicable to this Note and an assumption that the maturity of this Note
will not be accelerated. If the period from the Original Issue Date to the
initial Interest Payment Date (the "Initial Period") is shorter than the
compounding period for this Note, a proportionate amount of
A-23
the yield for an entire compounding period will be accrued. If the Initial
Period is longer than the compounding period, then such period will be divided
into a regular compounding period and a short period, with the short period
being treated as provided in the preceding sentence.
The interest rate borne by this Note will be determined as follows:
(i) Unless the Interest Category of this Note is specified on the face
hereof as a "Floating Rate/Fixed Rate Note" or an "Inverse Floating Rate Note"
or as otherwise specified as Other/Additional Provisions on the face hereof or
in an Addendum hereto, this Note shall be designated as a "Regular Floating Rate
Note" and, except as set forth below or specified on the face hereof or in an
Addendum hereto, shall bear interest at the rate determined by reference to the
applicable Interest Rate Basis or Bases (a) plus or minus the Spread, if any,
and/or (b) multiplied by the Spread Multiplier, if any, in each case as
specified on the face hereof.
Commencing on the Initial Interest Reset Date, the rate at which
interest on this Note shall be payable shall be reset as of each Interest Reset
Date specified on the face hereof; provided, however, that the interest rate in
effect for the period, if any, from the Original Issue Date to the Initial
Interest Reset Date shall be the Initial Interest Rate.
(ii) If the Interest Category of this Note is specified on the face
hereof as a "Floating Rate/Fixed Rate Note", then, except as set forth below or
specified on the face hereof or in an Addendum hereto, this Note shall bear
interest at the rate determined by reference to the applicable Interest Rate
Basis or Bases (a) plus or minus the Spread, if any, and/or (b) multiplied by
the Spread Multiplier, if any. Commencing on the Initial Interest Reset Date,
the rate at which interest on this Note shall be payable shall be reset as of
each Interest Reset Date; provided, however, that (y) the interest rate in
effect for the period, if any, from the Original Issue Date to the Initial
Interest Reset Date shall be the Initial Interest Rate and (z) the interest rate
in effect for the period commencing on the Fixed Rate Commencement Date
specified on the face hereof to the Maturity Date shall be the Fixed Interest
Rate specified on the face hereof or, if no such Fixed Interest Rate is
specified, the interest rate in effect hereon on the day immediately preceding
the Fixed Rate Commencement Date.
(iii) If the Interest Category of this Note is specified on the face
hereof as an "Inverse Floating Rate Note," then, except as set forth below or
specified on the face hereof or in an Addendum hereto, this Note shall bear
interest at the Fixed Interest Rate minus the rate determined by reference to
the applicable Interest Rate Basis or Bases (a) plus or minus the Spread, if
any, and/or (b) multiplied by the Spread Multiplier, if any; provided, however,
that, unless otherwise specified on the face hereof or in an Addendum hereto,
the interest rate hereon shall not be less than zero. Commencing on the Initial
Interest Reset Date, the rate at which interest on this Note shall be payable
shall be reset as of each Interest Reset Date; provided, however, that the
interest rate in effect for the period, if any, from the Original Issue Date to
the Initial Interest Reset Date shall be the Initial Interest Rate.
Except as set forth above or specified on the face hereof or in an
Addendum hereto, the interest rate in effect on each day shall be (i) if such
day is an Interest Reset Date, the
A-24
interest rate determined as of the Interest Determination Date (as defined
below) immediately preceding such Interest Reset Date or (ii) if such day is not
an Interest Reset Date, the interest rate determined as of the Interest
Determination Date immediately preceding the most recent Interest Reset Date. If
any Interest Reset Date would otherwise be a day that is not a Business Day,
such Interest Reset Date shall be postponed to the next succeeding Business Day,
except that if LIBOR is an applicable Interest Rate Basis and such Business Day
falls in the next succeeding calendar month, such Interest Reset Date shall be
the immediately preceding Business Day. In addition, if the Treasury Rate is an
applicable Interest Rate Basis and the Interest Determination Date would
otherwise fall on an Interest Reset Date, then such Interest Reset Date will be
postponed to the next succeeding Business Day.
The interest rate applicable to each Interest Reset Period commencing
on the related Interest Reset Date will be determined by the Calculation Agent
as of the applicable Interest Determination Date and will be calculated by the
Calculation Agent on or prior to the Calculation Date (as defined below), except
with respect to LIBOR and the Eleventh District Cost of Funds Rate, which will
be calculated on such Interest Determination Date. The "Interest Determination
Date" with respect to the CD Rate, the CMT Rate, the Commercial Paper Rate, the
Federal Funds Rate and the Prime Rate will be the second Business Day
immediately preceding the applicable Interest Reset Date; the "Interest
Determination Date" with respect to the Eleventh District Cost of Funds Rate
shall be the last business day of the month immediately preceding the applicable
Interest Reset Date on which the Federal Home Loan Bank of San Francisco (the
"FHLB of San Francisco") publishes the Index (as defined below); and the
"Interest Determination Date" with respect to LIBOR shall be the second London
Business Day immediately preceding the applicable Interest Reset Date, unless
the Index Currency is British pounds sterling, in which case the "Interest
Determination Date" will be the applicable Interest Reset Date. The "Interest
Determination Date", with respect to the Treasury Rate shall be the day in the
week in which the applicable Interest Reset Date falls on which day Treasury
Bills (as defined below) are normally auctioned (Treasury Bills are normally
sold at an auction held on Monday of each week, unless that day is a legal
holiday, in which case the auction is normally held on the following Tuesday,
except that such auction may be held on the preceding Friday); provided,
however, that if an auction is held on the Friday of the week preceding the
applicable Interest Reset Date, the "Interest Determination Date" shall be such
preceding Friday. If the interest rate of this Note is determined with reference
to two or more Interest Rate Bases specified on the face hereof, the "Interest
Determination Date" pertaining to this Note shall be the most recent Business
Day which is at least two Business Days prior to the applicable Interest Reset
Date on which each Interest Rate Basis is determinable. Each Interest Rate Basis
shall be determined as of such date, and the applicable interest rate shall take
effect on the applicable Interest Reset Date.
Unless otherwise specified on the face hereof or in an Addendum
hereto, the rate with respect to each Interest Rate Basis will be determined in
accordance with the following provisions:
CD Rate. If an Interest Rate Basis for this Note is specified on the
face hereof as the CD Rate, the CD Rate shall be determined as of the applicable
Interest Determination Date (a
A-25
"CD Rate Interest Determination Date") as the rate on such date for negotiable
United States dollar certificates of deposit having the Index Maturity specified
on the face hereof as published by the Board of Governors of the Federal Reserve
System in "Statistical Release H.15(519), Selected Interest Rates" or any
successor publication ("H.15(519)") under the heading "CDS (Secondary Market),"
or, if not published by 3:00 P.M., New York City time, on the related
Calculation Date, the rate on such CD Rate Interest Determination Date for
negotiable United States dollar certificates of deposit of the Index Maturity as
published by the Federal Reserve Bank of New York in its daily statistical
release "Composite 3:30 P.M. Quotations for United States Government Securities"
or any successor publication ("Composite Quotations") under the heading
"Certificates of Deposit." If such rate is not yet published in either H.15(519)
or Composite Quotations by 3:00 P.M., New York City time, on the related
Calculation Date, then the CD Rate on such CD Rate Interest Determination Date
will be calculated by the Calculation Agent specified on the face hereof and
will be the arithmetic mean of the secondary market offered rates as of 10:00
A.M., New York City time, on such CD Rate Interest Determination Date, of three
leading nonbank dealers in negotiable United States dollar certificates of
deposit in The City of New York selected by the Calculation Agent for negotiable
United States dollar certificates of deposit of major United States money center
banks in the market for negotiable United States dollar certificates of deposit
with a remaining maturity closest to the Index Maturity in an amount that is
representative for a single transaction in that market at that time; provided,
however, that if the dealers so selected by the Calculation Agent are not
quoting as mentioned in this sentence, the CD Rate determined as of such CD Rate
Interest Determination Date will be the CD Rate in effect on such CD Rate
Interest Determination Date.
CMT Rate. If an Interest Rate Basis for this Note is specified on the
face hereof as the CMT Rate, the CMT Rate shall be determined as of the
applicable Interest Determination Date (a "CMT Rate Interest Determination
Date") as the rate displayed on the Designated CMT Telerate Page (as defined
below) under the caption ". . . Treasury Constant Maturities . . . Federal
Reserve Board Release H.15 . . . Mondays Approximately 3:45 P.M.," under the
column for the Designated CMT Maturity Index (as defined below) for (i) if the
Designated CMT Telerate Page is 7055, the rate on such CMT Rate Interest
Determination Date and (ii) if the Designated CMT Telerate Page is 7052, the
weekly or monthly average, as specified on the face hereof, for the week or
month, as applicable, ended immediately preceding the week or month, as
applicable, in which the related CMT Rate Interest Determination Date occurs. If
such rate is no longer displayed on the relevant page or is not displayed by
3:00 P.M., New York City time, on the related Calculation Date, then the CMT
Rate for such CMT Rate Interest Determination Date will be such treasury
constant maturity rate for the Designated CMT Maturity Index as published in
H.15(519). If such rate is no longer published or is not published by 3:00 P.M.,
New York City time, on the related Calculation
A-26
Date, then the CMT Rate on such CMT Rate Interest Determination Date will be
such treasury constant maturity rate for the Designated CMT Maturity Index (or
other United States Treasury rate for the Designated CMT Maturity Index) for the
CMT Rate Interest Determination Date with respect to such Interest Reset Date as
may then be published by either the Board of Governors of the Federal Reserve
System or the United States Department of the Treasury that the Calculation
Agent determines to be comparable to the rate formerly displayed on the
Designated CMT Telerate Page and published in H.15(519). If such information is
not provided by 3:00 P.M., New York City time, on the related Calculation Date,
then the CMT Rate on the CMT Rate Interest Determination Date will be calculated
by the Calculation Agent and will be a yield to maturity, based on the
arithmetic mean of the secondary market closing offer side prices as of
approximately 3:30 P.M., New York City time, on such CMT Rate Interest
Determination Date reported, according to their written records, by three
leading primary United States government securities dealers (each, a "Reference
Dealer") in The City of New York selected by the Calculation Agent (from five
such Reference Dealers selected by the Calculation Agent and eliminating the
highest quotation (or, in the event of equality, one of the highest) and the
lowest quotation (or, in the event of equality, one of the lowest)), for the
most recently issued direct noncallable fixed rate obligations of the United
States ("Treasury Notes") with an original maturity of approximately the
Designated CMT Maturity Index and a remaining term to maturity of not less than
such Designated CMT Maturity Index minus one year. If the Calculation Agent is
unable to obtain three such Treasury Note quotations, the CMT Rate on such CMT
Rate Interest Determination Date will be calculated by the Calculation Agent and
will be a yield to maturity based on the arithmetic mean of the secondary market
offer side prices as of approximately 3:30 P.M., New York City time, on such CMT
Rate Interest Determination Date of three Reference Dealers in The City of New
York (from five such Reference Dealers selected by the Calculation Agent and
eliminating the highest quotation (or, in the event of equality, one of the
highest) and the lowest quotation (or, in the event of equality, one of the
lowest)), for Treasury Notes with an original maturity of the number of years
that is the next highest to the Designated CMT Maturity Index and a remaining
term to maturity closest to the Designated CMT Maturity Index and in an amount
of at least U.S.$100 million. If three or four (and not five) of such Reference
Dealers are quoting as described above, then the CMT Rate will be based on the
arithmetic mean of the offer prices obtained and neither the highest nor the
lowest of such quotes will be eliminated; provided, however, that if fewer than
three Reference Dealers selected by the Calculation Agent are quoting as
mentioned herein, the CMT Rate determined as of such CMT Rate Interest
Determination Date will be the CMT Rate in effect on such CMT Rate Interest
Determination Date. If two Treasury Notes with an original maturity as described
in the second preceding sentence have remaining terms to maturity equally close
to the Designated CMT Maturity Index, the Calculation Agent will obtain
quotations for the Treasury Note with the shorter remaining term to maturity and
will use such quotations to calculate the CMT Rate as set forth above.
"Designated CMT Telerate Page" means the display on the Dow Jones
Telerate Service (or any successor service) on the page specified on the face
hereof (or any other page as may replace such page on that service (or any
successor service) for the purpose of displaying Treasury Constant Maturities as
reported in H.15(519)). If no such page is specified on the face hereof, the
Designated CMT Telerate Page shall be 7052, for the most recent week.
"Designated CMT Maturity Index" means the original period to maturity
of the United States Treasury securities (either one, two, three, five, seven,
10, 20 or 30 years) specified on the face hereof with respect to which the CMT
Rate will be calculated. If no such maturity is specified on the face hereof,
the Designated CMT Maturity Index shall be two years.
Commercial Paper Rate. If an Interest Rate Basis for this Note is
specified on the face hereof as the Commercial Paper Rate, the Commercial Paper
Rate shall be determined as of
A-27
the applicable Interest Determination Date (a "Commercial Paper Rate Interest
Determination Date") as the Money Market Yield (as defined below) on such date
of the rate for commercial paper having the Index Maturity as published in
H.15(519) under the heading "Commercial Paper -NonFinancial."
In the event that such rate is not published by 3:00 P.M., New York
City time, on the related Calculation Date, then the Commercial Paper Rate on
such Commercial Paper Rate Interest Determination Date will be the Money Market
Yield of the rate or commercial paper having the Index Maturity as published in
Composite Quotations under the heading "Commercial Paper" (with an Index
Maturity of one month or three months being deemed to be equivalent to an Index
Maturity of 30 days or 90 days, respectively). If such rate is not yet published
in either H.l5(519) or Composite Quotations by 3:00 P.M., New York City time, on
the related Calculation Date, then the Commercial Paper Rate on such Commercial
Paper Rate Interest Determination Date will be calculated by the Calculation
Agent and shall be the Money Market Yield of the arithmetic mean of the offered
rates at approximately 11:00 A.M., New York City time, on such Commercial Paper
Rate Interest Determination Date of three leading dealers of commercial paper in
The City of New York selected by the Calculation Agent for commercial paper
having the Index Maturity placed for an industrial issuer whose bond rating is
"AAA," or the equivalent, from a nationally recognized statistical rating
organization; provided, however, that if the dealers so selected by the
Calculation Agent are not quoting as mentioned in this sentence, the Commercial
Paper Rate determined as of such Commercial Paper Rate Interest Determination
Date will be the Commercial Paper Rate in effect on such Commercial Paper Rate
Interest Determination Date.
"Money Market Yield" means a yield (expressed as a percentage)
calculated in accordance with the following formula:
Money Market Yield = D x 360 x 100
------------------
360 - (D x M)
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the Interest Period for which interest is being calculated.
Eleventh District Cost of Funds Rate. If an Interest Rate Basis for
this Note is specified on the face hereof as the Eleventh District Cost of Funds
Rate, the Eleventh District Cost of Funds Rate shall be determined as of the
applicable Interest Determination Date (an "Eleventh District Cost of Funds Rate
Interest Determination Date") as the rate equal to the monthly weighted average
cost of funds for the calendar month immediately preceding the month in which
such Eleventh District Cost of Funds Rate Interest Determination Date falls, as
set forth under the caption "llth District" on Telerate Page 7058 as of 11:00
A.M., San Francisco time, on such Eleventh District Cost of Funds Rate Interest
Determination Date. If such rate does not appear on Telerate Page 7058 on such
Eleventh District Cost of Funds Rate Interest Determination Date, then the
Eleventh District Cost of Funds Rate on such Eleventh District Cost of Funds
Rate Interest Determination Date shall be the monthly weighted average cost of
A-28
funds paid by member institutions of the Eleventh Federal Home Loan Bank
District that was most recently announced (the "Index") by the FHLB of San
Francisco as such cost of funds for the calendar month immediately preceding
such Eleventh District Cost of Funds Rate Interest Determination Date. If the
FHLB of San Francisco fails to announce the Index on or prior to such Eleventh
District Cost of Funds Rate Interest Determination Date for the calendar month
immediately preceding such Eleventh District Cost of Funds Rate Interest
Determination Date, the Eleventh District Cost of Funds Rate determined as of
such Eleventh District Cost of Funds Rate Interest Determination Date will be
the Eleventh District Cost of Funds Rate in effect on such Eleventh District
Cost of Funds Rate Interest Determination Date.
Federal Funds Rate. If an Interest Rate Basis for this Note is
specified on the face hereof as the Federal Funds Rate, the Federal Funds Rate
shall be determined as of the applicable Interest Determination Date (a "Federal
Funds Rate Interest Determination Date") as the rate on such date for United
States dollar federal funds as published in H.15(519) under the heading "Federal
Funds (Effective)" or, if not published by 3:00 P.M., New York City time, on the
Calculation Date, the rate on such Federal Funds Rate Interest Determination
Date as published in Composite Quotations under the heading "Federal
Funds/Effective Rate." If such rate is not published in either H.15(519) or
Composite Quotations by 3:00 P.M., New York City time, on the related
Calculation Date, then the Federal Funds Rate on such Federal Funds Interest
Determination Date shall be calculated by the Calculation Agent and will be the
arithmetic mean of the rates for the last transaction in overnight United States
dollar federal funds arranged by three leading brokers of federal funds
transactions in The City of New York selected by the Calculation Agent, prior to
9:00 A.M., New York City time, on such Federal Funds Rate Interest Determination
Date; provided, however, that if the brokers so selected by the Calculation
Agent are not quoting as mentioned in this sentence, the Federal Funds Rate
determined as of such Federal Funds Rate Interest Determination Date will be the
Federal Funds Rate in effect on such Federal Funds Rate Interest Determination
Date.
LIBOR. If an Interest Rate Basis for this Note is specified on the
face hereof as LIBOR, LIBOR shall be determined by the Calculation Agent as of
the applicable Interest Determination Date (a "LIBOR Interest Determination
Date") in accordance with the following provisions:
(i) if (a) "LIBOR Reuters" is specified on the face hereof, the
arithmetic mean of the offered rates (unless the Designated LIBOR Page (as
defined below) by its terms provides only for a single rate, in which case
such single rate will be used) for deposits in the Index Currency having
the Index Maturity, commencing on the applicable Interest Reset Date, that
appear (or, if only a single rate is required as aforesaid, appears) on the
Designated LIBOR Page (as defined below) as of 11:00 A.M., London time, on
such LIBOR Interest Determination Date, or (b) "LIBOR Telerate" is
specified on the face hereof, or if neither "LIBOR Reuters" nor "LIBOR
Telerate" is specified on the face hereof as the method for calculating
LIBOR, the rate for deposits in the Index Currency having the Index
Maturity, commencing on such Interest Reset Date, that appears on the
Designated LIBOR Page as of 11:00 A.M., London time, on such LIBOR Interest
Determination Date. If fewer than two such offered rates appear, or if no
A-29
such rate appears, as applicable, LIBOR on such LIBOR Interest
Determination Date shall be determined in accordance with the provisions
described in clause (ii) below.
(ii) With respect to a LIBOR Interest Determination Date on
which fewer than two offered rates appear, or no rate appears, as the case
may be, on the Designated LIBOR Page as specified in clause (i) above, the
Calculation Agent shall request the principal London offices of each of
four major reference banks in the London interbank market, as selected by
the Calculation Agent, to provide the Calculation Agent with its offered
quotation for deposits in the Index Currency for the period of the Index
Maturity, commencing on the applicable Interest Reset Date, to prime banks
in the London interbank market at approximately 11:00 A.M., London time, on
such LIBOR Interest Determination Date and in a principal amount that is
representative for a single transaction in such Index Currency in such
market at such time. If at least two such quotations are so provided, then
LIBOR on such LIBOR Interest Determination Date will be the arithmetic mean
of such quotations. If fewer than two such quotations are so provided, then
LIBOR on such LIBOR Interest Determination Date will be the arithmetic mean
of the rates quoted at approximately 11:00 A.M., in the applicable
Principal Financial Center, on such LIBOR Interest Determination Date by
three major banks in such Principal Financial Center selected by the
Calculation Agent for loans in the Index Currency to leading European
banks, having the Index Maturity and in a principal amount that is
representative for a single transaction in such Index Currency in such
market at such time; provided, however, that if the banks so selected by
the Calculation Agent are not quoting as mentioned in this sentence, LIBOR
determined as of such LIBOR Interest Determination Date shall be LIBOR in
effect on such LIBOR Interest Determination Date.
"Index Currency" means the currency or composite currency specified on
the face hereof as to which LIBOR shall be calculated. If no such currency or
composite currency is specified on the face hereof, the Index Currency shall be
United States dollars.
"Designated LIBOR Page" means (a) if "LIBOR Reuters" is specified on
the face hereof, the display on the Reuter Monitor Money Rates Service (or any
successor service) on the page specified on the face hereof (or any other page
as may replace such page on such service (or any successor service)), for the
purpose of displaying the London interbank rates of major banks for the Index
Currency, or (b) if "LIBOR Telerate" is specified on the face hereof or neither
"LIBOR Reuters" nor "LIBOR Telerate" is specified on the face hereof as the
method for calculating LIBOR, the display on the Dow Jones Telerate Service (or
any successor service) on the page specified on the face hereof (or any other
page as may replace such page on such service (or any successor service)), for
the purpose of displaying the London interbank rates of major banks for the
applicable Index Currency.
Prime Rate. If an Interest Rate Basis for this Note is specified on
the face hereto as the Prime Rate, the Prime Rate shall be determined as of the
applicable Interest Determination Date (a "Prime Rate Interest Determination
Date") as the rate on such date as such rate is published in H.15(519) under the
heading "Bank Prime Loan." If such rate is not published prior
A-30
to 3:00 P.M., New York City time, on the related Calculation Date, then the
Prime Rate shall be the arithmetic mean of the rates of interest publicly
announced by each bank that appears on the Reuters Screen USPRIME1 Page (as
defined below) as such bank's prime rate or base lending rate as in effect for
such Prime Rate Interest Determination Date. If fewer than four such rates
appear on the Reuters Screen USPRIME1 Page for such Prime Rate Interest
Determination Date, then the Prime Rate shall be the arithmetic mean of the
prime rates quoted on the basis of the actual number of days in the year divided
by a 360-day year as of the close of business on such Prime Rate Interest
Determination Date by four major money center banks in The City of New York
selected by the Calculation Agent. If fewer than four such quotations are so
provided, the Prime Rate shall be the arithmetic mean of four prime rates quoted
on the basis of the actual number of days in the year divided by a 360-day year
as of the close of business on such Prime Rate Interest Determination Date as
furnished in The City of New York by the major money center banks, if any, that
have provided such quotations and by a reasonable number of substitute banks or
trust companies to obtain four such prime rate quotations, provided such
substitute banks or trust companies are organized and doing business under the
laws of the United States, or any State thereof, each having total equity
capital of at least U.S.$500 million and being subject to supervision or
examination by Federal or State authority, selected by the Calculation Agent to
provide such rate or rates; provided, however, that if the banks or trust
companies so selected by the Calculation Agent are not quoting as mentioned in
this sentence, the Prime Rate determined as of such Prime Rate Interest
Determination Date will be the Prime Rate in effect on such Prime Rate Interest
Determination Date.
"Reuters Screen USPRIME1 Page" means the display designated as page
"USPRIME1" on the Reuter Monitor Money Rates Service (or any successor service)
(or such other page as may replace the USPRIME1 page on such service (or any
successor service) for the purpose of displaying prime rates or base lending
rates of major United States banks).
Treasury Rate. If an Interest Rate Basis for this Note is specified on
the face hereof as the Treasury Rate, the Treasury Rate shall be determined as
of the applicable Interest Determination Date (a "Treasury Rate Interest
Determination Date") as the rate from the auction held on such Treasury Rate
Interest Determination Date (the "Auction") of direct obligations of the United
States ("Treasury Bills") having the Index Maturity, as such rate is published
in H.15(519) under the heading "Treasury bills-auction average (investment)" or,
if not published by 3:00 P.M., New York City time, on the related Calculation
Date, the auction average rate of such Treasury Bills (expressed as a bond
equivalent on the basis of a year of 365 or 366 days, as applicable, and applied
on a daily basis) as otherwise announced by the United States Department of the
Treasury. In the event that the results of the Auction of Treasury Bills having
the Index Maturity are not reported as provided above by 3:00 P.M., New York
City time, on such Calculation Date, or if no such Auction is held, then the
Treasury Rate shall be calculated by the Calculation Agent and shall be a yield
to maturity (expressed as a bond equivalent on the basis of a year of 365 or 366
days, as applicable, and applied on a daily basis) of the arithmetic mean of the
secondary market bid rates, as of approximately 3:30 P.M., New York City time,
on such Treasury Rate Interest Determination Date, of three leading primary
United States government securities dealers selected by the Calculation Agent,
for the issue of Treasury Bills with a remaining maturity closest to the Index
Maturity; provided, however, that if the dealers so
A-31
selected by the Calculation Agent are not quoting as mentioned in this sentence,
the Treasury Rate determined as of such Treasury Rate Interest Determination
Date will be the Treasury Rate in effect on such Treasury Rate Interest
Determination Date.
Notwithstanding the foregoing, the interest rate hereon shall not be
greater than the Maximum Interest Rate, if any, or less than the Minimum
Interest Rate, if any, in each case as specified on the face hereof. The
interest rate on this Note will in no event be higher than the maximum rate
permitted by New York law, as the same may be modified by United States law of
general application.
The "Calculation Date", if applicable, pertaining to any Interest
Determination Date shall be the earlier of (i) the tenth calendar day after such
Interest Determination Date or, if such day is not a Business Day, the next
succeeding Business Day or (ii) the Business Day immediately preceding the
applicable Interest Payment Date or the Maturity Date, as the case may be. At
the request of the Holder hereof, the Calculation Agent will provide to the
Holder hereof the interest rate hereon then in effect and, if determined, the
interest rate that will become effective as a result of a determination made for
the next succeeding Interest Reset Date.
Accrued interest hereon shall be an amount calculated by multiplying
the principal amount hereof by an accrued interest factor. Such accrued interest
factor shall be computed by adding the interest factor calculated for each day
in the applicable Interest Period. Unless otherwise specified as the Day Count
Convention on the face hereof, the interest factor for each such date shall be
computed by dividing the interest rate applicable to such day by 360 if the CD
Rate, the Commercial Paper Rate, the Eleventh District Cost of Funds Rate, the
Federal Funds Rate, LIBOR or the Prime Rate is an applicable Interest Rate Basis
or by the actual number of days in the year if the CMT Rate or the Treasury Rate
is an applicable Interest Rate Basis. Unless otherwise specified as the Day
Count Convention on the face hereof, the interest factor for this Note, if the
interest rate is calculated with reference to two or more Interest Rate Bases,
shall be calculated in each period in the same manner as if only the Applicable
Interest Rate Basis specified on the face hereof applied. All percentages
resulting from any calculation on this Note shall be rounded to the nearest one
hundred-thousandth of a percentage point, with five one-millionths of a
percentage point rounded upwards (e.g., 5.876545% (or .05876545) would be
rounded to 5.87655% (or .0587655)), and all amounts used in or resulting from
such calculation on this Note shall be rounded, in the case of United States
dollars, to the nearest cent or, in the case of a Specified Currency other than
United States dollars or a composite currency, to the nearest unit (with one-
half cent or unit being rounded upwards).
If an Event of Default, as defined in the Indenture, shall occur and
be continuing, the principal of the Notes may be declared due and payable in the
manner and with the effect provided in the Indenture.
The Indenture contains provisions for defeasance of (i) the entire
indebtedness of the Notes or (ii) certain covenants and Events of Default with
respect to the Notes, in each case upon compliance with certain conditions set
forth therein, which provisions apply to the Notes.
A-32
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the holders of the Securities at any time by the
Company and the Trustee with the consent of the holders of not less than a
majority of the aggregate principal amount of all Securities at the time
outstanding and affected thereby. The Indenture also contains provisions
permitting the holders of not less than a majority of the aggregate principal
amount of the outstanding Securities of any series, on behalf of the holders of
all such Securities, to waive compliance by the Company with certain provisions
of the Indenture. Furthermore, provisions in the Indenture permit the holders of
not less than a majority of the aggregate principal amount of the outstanding
Securities of any series, in certain instances, to waive, on behalf of all of
the holders of Securities of such series, certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the holder of
this Note shall be conclusive and binding upon such holder and upon all future
holders of this Note and other Notes issued upon the registration of transfer
hereof or in exchange hereof or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Note.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay principal, premium, if any, and interest in
respect of this Note at the times, places and rate or formula, and in the coin
or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein and herein set forth, the transfer of this Note is registrable in the
Security Register of the Company upon surrender of this Note for registration of
transfer at the office or agency of the Company in any place where the principal
hereof and any premium or interest hereon are payable, duly endorsed by, or
accompanied by a written instrument of transfer, in form satisfactory to the
Company and the Security Registrar, duly executed by the holder hereof or by his
attorney duly authorized in writing, and thereupon one or more new Notes, of
authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.
As provided in the Indenture and subject to certain limitations
therein and herein set forth, this Note is exchangeable for a like aggregate
principal amount of Notes of different authorized denominations but otherwise
having the same terms and conditions, as requested by the holder hereof
surrendering the same.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the holder in whose name this Note is registered as the owner thereof for all
purposes, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
A-33
This Note and all documents, agreements, understandings and
arrangements relating to any transaction contemplated hereby or thereby have
been executed or entered into by the undersigned in his/her capacity as an
officer of the Company which has been formed as a Maryland corporation, and not
individually. No recourse under or upon any obligation, covenant or agreement
contained in the Indenture or in this Note, or because of any indebtedness
evidenced hereby or thereby, shall be had against any promoter, as such, or
against any past, present or future shareholder, officer or director, as such,
of the Company or of any successor, either directly or through the Company or
any successor, under any rule of law, statute or constitutional provision or by
the enforcement of any assessment or by any legal or equitable proceeding or
otherwise, all such liability being expressly waived and released by the
acceptance of this Note by the holder thereof and as part of the consideration
for the issue of this Note.
THE INDENTURE AND THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAWS.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused "CUSIP" numbers to be
printed on the Securities of this series as a convenience to the holders of such
Securities. No representation is made as to the correctness or accuracy of such
CUSIP numbers as printed on the Securities, and reliance may be placed only on
the other identification numbers printed hereon.
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this Note, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as tenants in
common
UNIF GIFT MIN ACT - Custodian
---------- ----------
(Cust) (Minor)
Under Uniform Gifts to Minors Act
---------------------
(State)
Additional abbreviations may also be used though not in the above list.
A-34
- --------------------------------------------------------------------------------
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned hereby
sell(s), assign(s) and transfer(s) unto
PLEASE INSERT SOCIAL
SECURITY OR OTHER IDENTIFYING
NUMBER OF ASSIGNEE
- -----------------------------------------
| |
- -----------------------------------------
(Please Print or Typewrite Name and Address including
Postal Zip Code of Assignee)
this Note and all rights thereunder and hereby does irrevocably constitute and
appoint
....................................................................... Attorney
to transfer this Note on the books of the within-named Company with full power
of substitution in the premises.
Dated:
(signature)
(signature)
(signature)
NOTICE: The signature(s) on this Assignment must correspond with the name(s) as
written on the first page of this Note in every particular, without alteration
or enlargement or any change whatsoever.
- --------------------------------------------------------------------------------
A-35
- --------------------------------------------------------------------------------
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably request(s) and instruct(s) the
Company to repay this Note (or portion hereof specified below) pursuant to its
terms at a price equal to 100% of the principal amount to be repaid, together
with unpaid interest accrued hereon to the Repayment Date, to the undersigned,
at
- --------------------------------------------------------------------------------
(Please print or typewrite name and address, including postal Zip Code, of the
undersigned)
For this Note to be repaid, the Trustee must receive at its Corporate
Trust Office in the Borough of Manhattan, The City of New York, this Note with
this "Option to Elect Repayment" form duly completed.
If less than the entire principal amount of this Note is to be repaid,
specify the portion hereof (which shall be increments of U.S. $1,000 (or, if the
Specified Currency is other than United States dollars, the minimum Authorized
Denomination specified on the face hereof)) which the holder elects to have
repaid and specify the denomination or denominations (which shall be an
Authorized Denomination) of the Notes to be issued to the holder for the portion
of this Note not being repaid (in the absence of any such specification, one
such Note will be issued for the portion not being repaid).
Principal Amount to be Repaid: $ ..............................
Dated:
(signature)
(signature)
(signature)
NOTICE: The signature(s) on this Option to Elect Repayment must correspond with
the name(s) as written upon the face of this Note in every particular, without
alteration or enlargement or any change whatsoever.
- --------------------------------------------------------------------------------
A-36
EXHIBIT B
Form of Fixed Rate Note
-----------------------
[Face of Note]
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY (THE "DEPOSITARY") (55 WATER STREET, NEW YORK, NEW YORK) TO THE
ISSUER HEREOF OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME
AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY AND ANY PAYMENT
IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN./3/
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING SET FORTH IN THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF CEDE & CO., AS NOMINEE
OF THE DEPOSITARY. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN
THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE. UNLESS AND UNTIL IT IS
EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED FORM, THIS NOTE MAY NOT
BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE
DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER
NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY./4/
Registered No. FXR-__________ [PRINCIPAL AMOUNT]
CUSIP No: __________
AVALONBAY COMMUNITIES, INC.
MEDIUM-TERM NOTE
(Fixed Rate)
- ------------------
/3/ This paragraph applies to global Notes only.
/4/ This paragraph applies to global Notes only.
B-37
ORIGINAL ISSUE DATE: INTEREST RATE: _____% STATED MATURITY
INTEREST PAYMENT DATE(S) DEFAULT RATE: _____% DATE: ____________
____ and ____
Other:
INITIAL REDEMPTION INITIAL REDEMPTION ANNUAL REDEMPTION PERCENTAGE
DATE: ____________ PERCENTAGE: _____% REDUCTION: _____%
OPTIONAL REPAYMENT DATE(S): CHECK IF AN ORIGINAL
____________ ISSUE DISCOUNT NOTE
Issue Price: %
REPAYMENT PRICE: %
SPECIFIED CURRENCY: AUTHORIZED DENOMINATION: EXCHANGE RATE
[ ] United States dollars [ ] $1,000 and integral AGENT:
[ ] Other: multiples thereof
[ ] Other:
EXCHANGE RATE: ADDENDUM ATTACHED: OTHER/ADDITIONAL
U.S. $1.00 = ________ [ ] Yes PROVISIONS:
[ ] No
AVALONBAY COMMUNITIES, INC., a corporation duly organized and existing
under the laws of Maryland (hereinafter referred to as the "Company," which term
includes any successor entity under the Indenture hereinafter referred to), for
value received, hereby promises to pay to _______________________, or registered
assigns, the principal sum of _____________________, on the Stated Maturity Date
specified above (or any Redemption Date or Repayment Date, each as defined on
the reverse hereof) (each such Stated Maturity Date, Redemption Date or
Repayment Date being hereinafter referred to as the "Maturity Date" with respect
to the principal repayable on such date) and to pay interest thereon, at the
Interest Rate per annum specific above, until the principal hereof is paid or
duly made available for payment, and (to the extent that the payment of such
interest shall be legally enforceable) at the Default Rate per annum specified
above on any overdue principal, premium and/or interest, including any overdue
sinking fund or redemption payment. The Company will pay interest in arrears on
each Interest Payment Date, if any, specified above (each, an "Interest Payment
Date"), commencing with the first Interest Payment Date next succeeding the
Original Issue Date specified above, and on the Maturity Date; provided,
however, that if the Original Issue Date occurs between a Record Date (as
defined below) and the next succeeding Interest Payment Date, interest payments
will commence on the second Interest Payment Date next succeeding the Original
Issue Date to the holder of this Note on the Record Date with respect to such
second
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Interest Payment Date. Interest on this Note will be computed on the
basis of a 360-day year of twelve 30-day months.
Interest on this Note will accrue from, and including, the immediately
preceding Interest Payment Date to which interest has been paid or duly provided
for (or from, and including, the Original Issue Date if no interest has been
paid or duly provided for) to, but excluding, the applicable Interest Payment
Date or the Maturity Date, as the case may be (each, an "Interest Period"). The
interest so payable, and punctually paid or duly provided for, on any Interest
Payment Date will, subject to certain exceptions described herein, be paid to
the person in whose name this Note (or one or more predecessor Notes) is
registered at the close of business on the fifteenth calendar day (whether or
not a Business Day, as defined below) immediately preceding such Interest
Payment Date (the "Record Date"); provided, however, that interest payable on
the Maturity Date will be payable to the person to whom the principal hereto and
premium, if any, hereon shall be payable. Any such interest not so punctually
paid or duly provided for ("Defaulted Interest") will forthwith cease to be
payable to the holder on any Record Date, and shall be paid to the person in
whose name this Note is registered at the close of business on a special record
date (the "Special Record Date") for the payment of such Defaulted Interest to
be fixed by the Trustee hereinafter referred to, notice whereof shall be given
to the holder of this Note by the Trustee not more than 15 days and not less
than 10 days prior to such Special Record Date or may be paid at any time in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which this Note may be listed, and upon such notice as may be
required by such exchange, all as more fully provided for in the Indenture.
Payment of principal, premium, if any, and interest in respect of this
Note due on the Maturity Date or any prior date on which the principal or an
installment of principal of this Note becomes due and payable, whether by the
declaration of acceleration or otherwise, will be made in immediately available
funds upon presentation and surrender of this Note (and, with respect to any
applicable repayment of this Note, upon presentation and surrender of this Note
and a duly completed election form as contemplated on the reverse hereof) at the
office or agency maintained by the Company for that purpose in the Borough of
Manhattan, The City of New York, currently the office of the Trustee; provided,
however, that if the Specified Currency specified above is other than United
States dollars and such payment is to be made in the Specified Currency in
accordance with the provisions set forth below, such payment may be made by wire
transfer of immediately available funds to an account with a bank designated by
the holder hereof at least 15 calendar days prior to the Maturity Date, provided
that such bank has appropriate facilities therefor and that this Note (and, if
applicable, a duly completed repayment election form) is presented and
surrendered at the aforementioned office or agency maintained by the Company in
time for the Trustee to make such payment in such funds in accordance with its
normal procedures. Payment of interest due on any Interest Payment Date other
than the Maturity Date will be made at the aforementioned office or agency
maintained by the Company or, at the option of the Company, by check mailed to
the address of the person entitled thereto as such address shall appear in the
Security Register maintained by the Trustee; provided, however, that a holder of
U.S. $10,000,000 (or, if the Specified Currency is other than
B-39
United States dollars, the equivalent thereof in the Specified Currency) or more
in aggregate principal amount of Notes (whether having identical or different
terms and pro-visions) will be entitled to receive interest payments on any
Interest Payment Date other than the Maturity Date by wire transfer of
immediately available funds if appropriate wire transfer instructions have been
received in writing by the Trustee not less than 15 calendar days prior to such
Interest Payment Date. Any such wire transfer instructions received by the
Trustee shall remain in effect until revoked by such holder.
If any Interest Payment Date or the Maturity Date falls on a day that
is not a Business Day, the required payment of principal, premium, if any,
and/or interest shall be made on the next succeeding Business Day with the same
force and effect as if made on the date such payment was due, and no interest
shall accrue with respect to such payment for the period from and after such
Interest Payment Date or the Maturity Date, as the case may be, to the date of
such payment on the next succeeding Business Day.
As used herein, "Business Day" means any day, other than a Saturday or
Sunday, that is neither a legal holiday nor a day on which banking institutions
are authorized or required by law, regulation or executive order to close in The
City of New York, or Chicago; provided, however, that if the Specified Currency
is other than United States dollars, such day is also not a day on which banking
institutions are authorized or required by law, regulation or executive order to
close in the Principal Financial Center (as defined below) of the country
issuing the Specified Currency (or, if the Specified Currency is European
Currency Units ("ECU"), such day is not a day that appears as an ECU no-
settlement day on the display designated as "ISDE" on the Reuter Monitor Money
Rates Service (or a day so designated by the ECU Banking Association), or, if
ECU non-settlement days do not appear on that page (and are not so designated),
is not a day on which payments in ECU cannot be settled in the international
interbank market). Principal Financial Center means the capital city of the
country issuing the Specified Currency, except that with respect to United
States dollars, Australian dollars, Deutsche marks, Dutch guilders, Italian
lire, Swiss francs and ECU, the Principal Financial Center shall be The City of
New York, Sydney, Frankfurt, Amsterdam, Milan, Zurich and Luxembourg,
respectively.
The Company is obligated to make payments of principal, premium, if
any, and interest in respect of this Note in the Specified Currency (or, if the
Specified Currency is not at the time of such payment legal tender for the
payment of public and private debts, in such other coin or currency of the
country which issued the Specified Currency as at the time of such payment is
legal tender for the payment of such debts). If the Specified Currency is other
than United States dollars, except as provided below, any such amounts so
payable by the Company will be converted by the Exchange Rate Agent specified
above into United States dollars for payment to the holder of this Note.
If the Specified Currency is other than United States dollars, the
holder of this Note may elect to receive such amounts in such Specified
Currency. If the holder of this Note
B-40
shall not have duly made an election to receive all or a specified portion of
any payment of principal, premium, if any, and/or interest in respect of this
Note in the Specified Currency, any United States dollar amount to be received
by the holder of this Note will be based on the highest bid quotation in The
City of New York received by the Exchange Rate Agent at approximately 11:00
A.M., New York City time, on the second Business Day preceding the applicable
payment date from three recognized foreign exchange dealers (one of whom may be
the Exchange Rate Agent) selected by the Exchange Rate Agent and approved by the
Company for the purchase by the quoting dealer of the Specified Currency for
United States dollars for settlement on such payment date in the aggregate
amount of such Specified Currency payable to all holders of Foreign Currency
Notes scheduled to receive United States dollar payments and at which the
applicable dealer commits to execute a contract. All currency exchange costs
will be borne by the holder of this Note by deductions from such payments. If
three such bid quotations are not available, payments on this Note will be made
in the Specified Currency.
If the Specified Currency is other than United States dollars, the
holder of this Note may elect to receive all or a specified portion of any
payment of principal, premium, if any, and/or interest in respect of this Note
in the Specified Currency by submitting a written request for such payment to
the Trustee at its Corporate Trust Office in The City of New York on or prior to
the applicable Record Date or at least 15 calendar days prior to the Maturity
Date, as the case may be. Such written request may be mailed or hand delivered
or sent by cable, telex or other form of facsimile transmission. The holder of
this Note may elect to receive all or a specified portion of all future payments
in the Specified Currency in respect of such principal, premium, if any, and/or
interest and need not file a separate election for each payment. Such election
will remain in effect until revoked by written notice to the Trustee, but
written notice of any such revocation must be received by the Trustee on or
prior to the applicable Record Date or at least 15 calendar days prior to the
Maturity Date, as the case may be.
If the Specified Currency is other than United States dollars or a
composite currency and the holder of this Note shall have duly made an election
to receive all or a specified portion of any payment of principal, premium, if
any, and/or interest in respect of this Note in the Specified Currency and if
the Specified Currency is not available due to the imposition of exchange
controls or other circumstances beyond the reasonable control of the Company,
the Company will be entitled to satisfy its obligations to the holder of this
Note by making such payment in United States dollars on the basis of the Market
Exchange Rate (as defined below) on the second Business Day prior to such
payment date or, if such Market Exchange Rate is not then available, on the
basis of the most recently available Market Exchange Rate or as otherwise
specified on the face hereof. The "Market Exchange Rate" for the Specified
Currency means the noon dollar buying rate in The City of New York for cable
transfers for such Specified Currency as certified for customs purposes by (or
if not so certified, as otherwise determined by) the Federal Reserve Bank of New
York. Any payment made under such circumstances in United States dollars will
not constitute an Event of Default (as defined in the Indenture) with respect to
this Note.
B-41
If the Specified Currency is a composite currency and the holder of
this Note shall have duly made an election to receive all or a specified portion
of any payment of principal, premium, if any, and/or interest in respect of this
Note in the Specified Currency and if such composite currency is unavailable due
to the imposition of exchange controls or other circumstances beyond the
reasonable control of the Company, then the Company will be entitled to satisfy
its obligations to the holder of this Note by making such payment in United
States dollars. The amount of each payment in United States dollars shall be
computed by the Exchange Rate Agent on the basis of the equivalent of the
composite currency in United States dollars. The component currencies of the
composite currency for this purpose (collectively, the "Component Currencies"
and each, a "Component Currency") shall be the currency amounts that were
components of the composite currency as of the last day on which the composite
currency was used. The equivalent of the composite currency in United States
dollars shall be calculated by aggregating the United States dollar equivalents
of the Component Currencies. The United States dollar equivalent of each of the
Component Currencies shall be determined by the Exchange Rate Agent on the basis
of the most recently available Market Exchange Rate for each such Component
Currency, or as otherwise specified on the face hereof.
If the official unit of any Component Currency is altered by way of
combination or subdivision, the number of units of the currency as a Component
Currency shall be divided or multiplied in the same proportion. If two or more
Component Currencies are consolidated into a single currency, the amounts of
those currencies as Component Currencies shall be replaced by an amount in such
single currency equal to the sum of the amounts of the consolidated Component
Currencies expressed in such single currency. If any Component Currency is
divided into two or more currencies, the amount of the original Component
Currency shall be replaced by the amounts of such two or more currencies, the
sum of which shall be equal to the amount of the original Component Currency.
All determinations referred to above made by the Exchange Rate Agent
shall be at its sole discretion and shall, in the absence of manifest error, be
conclusive for all purposes and binding on the holder of this Note.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof and, if so specified above on the face hereof, in
the Addendum hereto, which further provisions shall have the same force and
effect as if set forth on the face hereof.
Notwithstanding any provisions to the contrary contained herein, if
the face of this Note specifies that an Addendum is attached hereto or that
"Other/Additional Provisions" apply to this Note, this Note shall be subject to
the terms set forth in such Addendum or such "Other/Additional Provisions."
Unless the Certificate of Authentication hereon has been executed by
the Trustee or its Authenticating Agent by manual signature, this Note shall not
be entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.
B-42
IN WITNESS WHEREOF, AvalonBay Communities, Inc. has caused this Note
to be duly executed under its corporate seal.
Dated: AVALONBAY COMMUNITIES, INC.
By:
Richard J. Michaux
Chief Executive Officer
[Corporate Seal]
Attest:
Mary M. Stafford
Assistant Secretary
TRUSTEE'S CERTIFICATE OF AUTHENTICATION:
This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.
STATE STREET BANK AND TRUST COMPANY,
as Trustee
Dated: By
------------------------------
Robert J. Dunn
Vice President
B-43
[Reverse of Note]
AVALONBAY COMMUNITIES, INC.
MEDIUM-TERM NOTE
(Fixed Rate)
This Note is one of a duly authorized series of Securities (the
"Securities") of the Company issued and to be issued under an Indenture, dated
as of January 16, 1998, as amended and supplemented by the First Supplemental
Indenture dated as of January 20, 1998, the Second Supplemental Indenture dated
July 7, 1998 and the Third Supplemental Indenture dated December 21, 1998, as
further amended, modified or supplemented from time to time (the "Indenture"),
between the Company and State Street Bank and Trust Company, as Trustee (the
"Trustee," which term includes any successor trustee under the Indenture), to
which Indenture and all indentures supplemental thereto reference is hereby made
for a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Trustee and the holders of the
Securities, and of the terms upon which the Securities are, and are to be,
authenticated and delivered. This Note is one of the series of Securities
designated as "Medium-Term Notes Due Nine Months or More from Date of Issue"
(the "Notes"). All terms used but not defined in this Note or in an Addendum
hereto shall have the meanings assigned to such terms in the Indenture or on the
face hereof, as the case may be.
This Note is issuable only in registered form without coupons in
minimum denominations of U.S. $1,000 and integral multiples thereof or the
minimum Authorized Denomination specified on the face hereof.
This Note will not be subject to any sinking fund and, unless
otherwise specified on the face hereof in accordance with the provisions of the
following two paragraphs, will not be redeemable or repayable prior to the
Stated Maturity Date.
This Note will be subject to redemption at the option of the Company
on any date on and after the Initial Redemption Date, if any, specified on the
face hereof, in whole or from time to time in part in increments of U.S. $1,000
or the minimum Authorized Denomination (provided that any remaining principal
amount hereof shall be at least U.S. $1,000 or such minimum Authorized
Denomination), at the Redemption Price (as defined below), together with unpaid
interest accrued thereon to the date fixed for redemption (each, a "Redemption
Date"), on notice given not more than 60 nor less than 30 calendar days prior to
the Redemption Date and in accordance with the provisions of the Indenture. The
"Redemption Price" shall initially be the Initial Redemption Percentage
specified on the face hereof multiplied by the unpaid principal amount of this
Note to be redeemed. The Initial Redemption Percentage shall decline at each
anniversary of the Initial Redemption Date by the Annual Redemption Percentage
Reduction, if any, specified on the face hereof until the Redemption Price is
100% of the unpaid principal amount to be redeemed. In the event of redemption
of this Note in part only, a new Note of like tenor for the unredeemed portion
hereof and otherwise having the same terms as this Note shall be issued in the
name of the holder hereof upon the presentation and surrender hereof.
B-44
This Note will be subject to repayment by the Company at the option of
the holder hereof on the Optional Repayment Date(s), if any, specified on the
face hereof, in whole or in part in increments of U.S.$1,000 or the minimum
Authorized Denomination (provided that any remaining principal amount hereof
shall be at least U.S.$1,000 or such minimum Authorized Denomination), at a
repayment price equal to 100% of the unpaid principal amount to be repaid,
together with unpaid interest accrued thereon to the date fixed for repayment
(each, a "Repayment Date"). For this Note to be repaid, the Trustee must receive
at its office in the Borough of Manhattan, The City of New York, referred to on
the face hereof, at least 30 days but not more than 60 days prior to the
Repayment Date (i) this Note and the form hereon entitled "Option to Elect
Repayment" duly completed or (ii) a telegram, telex, facsimile transmission, or
a letter from a member of a national securities exchange or the National
Association of Securities Dealers, Inc. or a commercial bank or trust company in
the United States setting forth the name of the holder hereof, the principal
amount of this Note, the principal amount of this Note to be repaid, the
certificate number or a description of the tenor and terms of this Note, a
statement that the option to elect repayment is being exercised thereby, and a
guarantee that this Note, together with the form hereon entitled "Option to
Elect Repayment" duly completed, will be received by the Trustee not later than
the fifth Business Day after the date of such telegram, telex, facsimile
transmission or letter, provided that such telegram, telex, facsimile
transmission or letter shall only be effective if this Note and duly completed
form are received by the Trustee by such fifth Business Day. Exercise of such
repayment option by the holder hereof will be irrevocable. In the event of
repayment of this Note in part only, a new Note of like tenor for the unrepaid
portion hereof and otherwise having the same terms as this Note shall be issued
in the name of the holder hereof upon the presentation and surrender hereof.
If this Note is an Original Issue Discount Note as specified on the
face hereof, the amount payable to the holder of this Note in the event of
redemption, repayment or acceleration of maturity of this Note will be equal to
the sum of (i) the Issue Price specified on the face hereof (increased by any
accruals of the Discount, as defined below) and, in the event of any redemption
of this Note (if applicable), multiplied by the Initial Redemption Percentage
(as adjusted by the Annual Redemption Percentage Reduction, if applicable) and
(ii) any unpaid interest on this Note accrued from the Original Issue Date to
the Redemption Date, Repayment Date or date of acceleration of maturity, as the
case may be. The difference between the Issue Price and 100% of the principal
amount of this Note is referred to herein as the "Discount."
For purposes of determining the amount of Discount that has accrued as
of any Redemption Date, Repayment Date or date of acceleration of maturity of
this Note, such Discount will be accrued using a constant yield method. The
constant yield will be calculated using a 30-day month, 360-day year convention,
a compounding period that, except for the Initial Period (as defined below),
corresponds to the shortest period between Interest Payment Dates (with ratable
accruals within a compounding period), a coupon rate equal to the initial coupon
rate applicable to this Note and an assumption that the maturity of this Note
will not be
B-45
accelerated. If the period from the Original Issue Date to the initial Interest
Payment Date (the "Initial Period") is shorter than the compounding period for
this Note, a proportionate amount of the yield for an entire compounding-period
will be accrued. If the Initial Period is longer than the compounding period,
then such period will be divided into a regular compounding period and a short
period, with the short period being treated as provided in the preceding
sentence.
If an Event of Default, as defined in the Indenture, shall occur and
be continuing, the principal of the Notes may be declared due and payable in the
manner and with the effect provided in the Indenture.
The Indenture contains provisions for defeasance of (i) the entire
indebtedness of the Notes or (ii) certain covenants and Events of Default with
respect to the Notes, in each case upon compliance with certain conditions set
forth therein, which provisions apply to the Notes.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the holders of the Securities at any time by the
Company and the Trustee with the consent of the holders of not less than a
majority of the aggregate principal amount of all Securities at the time
outstanding and affected thereby. The Indenture also contains provisions
permitting the holders of not less than a majority of the aggregate principal
amount of the outstanding Securities of any series, on behalf of the holders of
all such Securities, to waive compliance by the Company with certain provisions
of the Indenture. Furthermore, provisions in the Indenture permit the holders of
not less than a majority of the aggregate principal amount of the outstanding
Securities of any series, in certain instances, to waive, on behalf of all of
the holders of Securities of such series, certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the holder of
this Note shall be conclusive and binding upon such holder and upon all future
holders of this Note and other Notes issued upon the registration of transfer
hereof or in exchange heretofore or in lieu hereof, whether or not notation of
such consent or waiver is made upon this Note.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay principal, premium, if any, and interest in
respect of this Note at the times, places and rate or formula, and in the coin
or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein and herein set forth, the transfer of this Note is registrable in the
Security Register of the Company upon surrender of this Note for registration of
transfer at the office or agency of the Company in any place where the principal
hereof and any premium or interest hereon are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar, duly executed by, the holder hereof or by
his attorney duly authorized in writing, and thereupon one or more new Notes, of
authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.
B-46
As provided in the Indenture and subject to certain limitations
therein and herein set forth, this Note is exchangeable for a like aggregate
principal amount of Notes of different authorized denominations but otherwise
having the same terms and conditions, as requested by the holder hereof
surrendering the same.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the holder in whose name this Note is registered as the owner thereof for all
purposes, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
This Note and all documents, agreements, understandings and
arrangements relating to any transaction contemplated hereby or thereby have
been executed or entered into by the undersigned in his/her capacity as an
officer of the Company which has been formed as a Maryland corporation, and not
individually. No recourse under or upon any obligation, covenant or agreement
contained in the Indenture or in this Note, or because of any indebtedness
evidenced hereby or thereby, shall be had against any promoter, as such, or
against any past, present or future shareholder, officer or director, as such,
of the Company or of any successor, either directly or through the Company or
any successor, under any rule of law, statute or constitutional provision or by
the enforcement of any assessment or by any legal or equitable proceeding or
otherwise, all such liability being expressly waived and released by the
acceptance of this Note by the holder thereof and as part of the consideration
for the issue of this Note.
THE INDENTURE AND THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAWS.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused "CUSIP" numbers to be
printed on the Securities of this series as a convenience to the holders of such
Securities. No representation is made as to the correctness or accuracy of such
CUSIP numbers as printed on the Securities, and reliance may be placed only on
the other identification numbers printed hereon.
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this Note, shall be construed as though they were written out in full
according to applicable laws or regulations:
B-47
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as tenants in
common
UNIF GIFT MIN ACT - Custodian
---------- ----------
(Cust) (Minor)
Under Uniform Gifts to Minors Act _____________________
(State)
Additional abbreviations may also be used though not in the above list.
B-48
- --------------------------------------------------------------------------------
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned hereby
sell(s), assign(s) and transfer(s) unto
PLEASE INSERT SOCIAL
SECURITY OR OTHER IDENTIFYING
NUMBER OF ASSIGNEE
- -----------------------------------------
| |
- -----------------------------------------
(Please Print or Typewrite Name and Address including
Postal Zip Code of Assignee)
this Note and all rights thereunder and hereby does irrevocably constitute and
appoint
....................................................................... Attorney
to transfer this Note on the books of the within-named Company with full power
of substitution in the premises.
Dated:
(signature)
(signature)
(signature)
NOTICE: The signature(s) on this Assignment must correspond with the name(s) as
written on the first page of this Note in every particular, without alteration
or enlargement or any change whatsoever.
- --------------------------------------------------------------------------------
B-49
- --------------------------------------------------------------------------------
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably request(s) and instruct(s) the
Company to repay this Note (or portion hereof specified below) pursuant to its
terms at a price equal to 100% of the principal amount to be repaid, together
with unpaid interest accrued hereon to the Repayment Date, to the undersigned,
at
- --------------------------------------------------------------------------------
(Please print or typewrite name and address, including postal Zip Code, of the
undersigned)
For this Note to be repaid, the Trustee must receive at its Corporate
Trust Office in the Borough of Manhattan, The City of New York, this Note with
this "Option to Elect Repayment" form duly completed.
If less than the entire principal amount of this Note is to be repaid,
specify the portion hereof (which shall be increments of U.S. $1,000 (or, if the
Specified Currency is other than United States dollars, the minimum Authorized
Denomination specified on the face hereof)) which the holder elects to have
repaid and specify the denomination or denominations (which shall be an
Authorized Denomination) of the Notes to be issued to the holder for the portion
of this Note not being repaid (in the absence of any such specification, one
such Note will be issued for the portion not being repaid).
Principal Amount to be Repaid: $ ..............................
Dated:
(signature)
(signature)
(signature)
NOTICE: The signature(s) on this Option to Elect Repayment must correspond with
the name(s) as written upon the face of this Note in every particular, without
alteration or enlargement or any change whatsoever.
B-50