EXHIBIT 1.1
AVALONBAY COMMUNITIES, INC.
MEDIUM-TERM NOTES
DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
TERMS AGREEMENT
April 14, 2004
AvalonBay Communities, Inc.
2900 Eisenhower Avenue, Suite 300
Alexandria, VA 22314
Reference is made to (i) that certain Amended and Restated Distribution
Agreement, dated as of August 6, 2003 (including any exhibits and schedules
thereto, the "Distribution Agreement"), by and among AvalonBay Communities,
Inc., a Maryland corporation (the "Company" or "AvalonBay"), each of Banc of
America Securities LLC, Citigroup Global Markets Inc., Fleet Securities, Inc.,
J.P. Morgan Securities Inc., Lehman Brothers Inc., Morgan Stanley & Co.
Incorporated and Wachovia Capital Markets, LLC, (ii) that certain Appointment
Agreement, dated the date hereof, by and between the Company and SunTrust
Capital Markets, Inc., (iii) that certain Appointment Agreement, dated the date
hereof, by and between the Company and Deutsche Bank Securities Inc., and (iv)
that certain Appointment Agreement, dated the date hereof, by and between the
Company and McDonald Investments Inc. (the agreements in (ii), (iii) and (iv)
are collectively, the "Appointment Agreements" and the entities listed on
SCHEDULE 1 hereto are collectively the "Agents"). Wachovia Capital Markets, LLC
and Banc of America Securities LLC have agreed to act as the representatives
(the "Representatives") of the Agents in connection with this Terms Agreement
(this "Agreement"). Capitalized terms used, but not defined, in this Agreement
are used in this Agreement as defined in the Distribution Agreement. This
Agreement is one of the Written Terms Agreements referred to in Section 4(a) of
the Distribution Agreement.
In accordance with and subject to the terms and conditions stated in
this Agreement, the Distribution Agreement and the Appointment Agreements, which
agreements are incorporated herein in their entirety and made a part hereof, the
Company agrees to sell to the Agents, and each of the Agents severally agrees to
purchase, as principal, from the Company the aggregate principal amount set
forth opposite its name in SCHEDULE 1 hereto of the Company's Notes identified
on SCHEDULE 2 hereto. If one or more of the Agents shall fail at the Settlement
Date to purchase the Notes which it or they are obligated to purchase under this
Agreement, the procedures set forth in Section 4(a) of the Distribution
Agreement shall apply.
The obligations of the Agents to purchase Notes shall be subject, in
addition to the conditions precedent listed in the Distribution Agreement and
the Appointment Agreements, to the delivery of the following documents to the
Representatives, on or before the Settlement Date:
1. the opinions and letters referred to in Sections 6(a), 6(b) and
6(c) and of the Distribution Agreement, each dated the Settlement
Date and otherwise in substantially the same form as was
delivered in connection with the Company's November 7, 2002
public offering of medium-term notes (the "Prior Offering");
2. the letters of Ernst & Young LLP referred to in Section 6(d) of
the Distribution Agreement, dated the date hereof and the
Settlement Date and otherwise in substantially the same forms as
were delivered in connection with the Prior Offering; and
3. the officers' certificate referred to in Section 6(e) of the
Distribution Agreement, dated the Settlement Date and otherwise
in substantially the same form as was delivered in connection
with the Prior Offering.
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
in form and substance to the Representatives of
the Agents and their counsel. The Company will furnish the Agents with such
conformed copies of such opinions, certificates, letters and other documents as
the Agents shall reasonably request.
This Agreement shall be governed by the laws of the State of New York.
This Agreement, the Distribution Agreement and the Appointment Agreements
constitute the entire agreement of the parties regarding the offering of Notes
contemplated by this Agreement and supersede all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations with respect to
the subject matter hereof. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
[SIGNATURE PAGE FOLLOWS.]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
AVALONBAY COMMUNITIES, INC.
By: /s/ THOMAS J. SARGEANT
----------------------------
Name: Thomas J. Sargeant
Title: Executive Vice President and
Chief Financial Officer
WACHOVIA CAPITAL MARKETS, LLC
For itself and as the Representative
of the several Agents named
in SCHEDULE 1 hereto
----------
By: /s/ TERESA HEE
--------------
Name: Teresa Hee
Title: Director
BANC OF AMERICA SECURITIES LLC
For itself and as the Representative
of the several Agents named
in SCHEDULE 1 hereto
----------
By: /s/ PETER J. CARBONE
--------------------
Name: Peter J. Carbone
Title: Vice President
SCHEDULE 1
AGENTS' ALLOCATIONS
AGGREGATE
PRINCIPAL AMOUNT
AGENT OF NOTES
- ----- --------
Wachovia Capital Markets, LLC ................................ $ 37,500,000
Banc of America Securities LLC ............................... 37,500,000
J.P. Morgan Securities Inc.................................... 29,545,000
Deutsche Bank Securities Inc.................................. 15,909,000
McDonald Investments Inc...................................... 11,364,000
Morgan Stanley & Co. Incorporated............................. 9,091,000
SunTrust Capital Markets, Inc................................. 9,091,000
============
$150,000,000
SCHEDULE 2
TERMS OF THE NOTES
Medium-Term Notes - Fixed Rate
Principal Amount: $150,000,000 Issue Price (Public Offering Price): 99.445%
Net Proceeds to Issuer: $148,230,000 Agents' Discount Commission: 0.625%
Stated Maturity Date: April 15, 2014 Interest Rate: 5.375%
Original Issue Date: April 21, 2004 CUSIP 05348E AH2
Interest Payment Dates: April 15 and October 15 First Interest Payment Date: October 15, 2004
Redemption:
[ ] The Notes cannot be redeemed prior to the Stated Maturity Date at the
option of the Company.
[X] The Notes may be redeemed prior to the Stated Maturity Date at the
option of the Company.
Initial Redemption Date: See Additional/Other Terms.
Initial Redemption Percentage/Redemption Price: See Additional/Other
Terms.
Annual Redemption Percentage Reduction: N/A
Optional Repayment:
[X] The Notes cannot be repaid prior to the Stated Maturity Date at the
option of the Holder of the Notes.
[ ] The Notes can be repaid prior to the Stated Maturity Date at the option
of the Holder of the Notes.
Optional Repayment Dates:
Repayment Price: ____%
Currency:
Specified Currency: U.S. Dollars
(If other than U.S. Dollars, see attached)
Minimum Denominations:
(Applicable only if Specified Currency is other than U.S. Dollars)
Original Issue Discount ("OID"): [ ] Yes [X] No
Total Amount of OID:
Yield to Maturity:
Initial Accrual Period:
Form: [X] Book-Entry [ ] Certificated
Additional/Other Terms:
REOPENING OF ISSUE. The Company may, from time to time and without the
consent of the noteholders, reopen an issue of notes and issue additional notes
having the same terms and conditions (including maturity, interest payment terms
and CUSIP number) as notes issued on an earlier date, except for the issue date,
issue price and, if applicable, the first payment of interest. After such
additional notes are issued, they will be fungible with the notes issued on such
earlier date.
OPTIONAL REDEMPTION. The Notes may be redeemed at any time at the
option of AvalonBay, in whole or in part, upon notice of not more than 60 and
not less than 30 days prior to the Redemption Date, at a Redemption Price equal
to the sum of (i) the principal amount of the Notes being redeemed plus accrued
interest thereon to the Redemption Date and (ii) the Make-Whole Amount, if any,
with respect to such Note.
ACCELERATION OF MATURITY; MAKE-WHOLE AMOUNT. If an Event of Default
with respect to the Notes that are then outstanding occurs and is continuing,
and pursuant to Section 2.7 of the Amended and Restated Third Supplemental
Indenture dated as of July 10, 2000 (the "Third Supplemental Indenture") the
Trustee or the Holders of not less than 25% in principal amount of the then
outstanding Notes of this series shall have declared the principal amount (or,
if the
Notes of this series are Original Issue Discount Securities or Indexed
Securities, such portion of the principal as may be specified in the terms
hereof) of all the Notes of this series to be due and payable immediately, by a
notice in writing to AvalonBay (and to the Trustee if given by the Holders),
then upon any such declaration such principal, or specified portion thereof,
plus accrued interest to the date the Notes of this series are paid, plus the
Make-Whole Amount on the Notes shall become immediately due and payable. With
respect to the Notes of this series, if an Event of Default set forth in Section
501(6) of the Indenture, dated as of January 16, 1998, between AvalonBay and the
Trustee (the "Indenture") occurs and is continuing, such that pursuant to
Section 2.7 of the Third Supplemental Indenture all the Notes of this series are
immediately due and payable, without notice to AvalonBay, at the principal
amount thereof (or, if the Notes of this series are Original Issue Discount
Securities or Indexed Securities, such portion of the principal as may be
specified in the terms of the Notes) plus accrued interest to the date the Notes
are paid, then the Make-Whole Amount on the Notes shall also be immediately due
and payable.
DEFINITIONS. Terms used but not defined herein shall have the meanings
set forth in the Indenture and the Third Supplemental Indenture. The following
terms shall have the following meanings:
"Make-Whole Amount" means, in connection with any optional redemption
or accelerated payment of any Note, the excess, if any, of (i) the aggregate
present value as of the date of such redemption or accelerated payment of each
dollar of principal being redeemed or paid and the amount of interest (exclusive
of interest accrued to the date of redemption or accelerated payment) that would
have been payable in respect of such dollar if such redemption or accelerated
payment had not been made, determined by discounting, on a semi-annual basis,
such principal and interest at the Reinvestment Rate (determined on the third
Business Day preceding the date such notice of Redemption is given or
declaration of acceleration is made) from the respective dates on which such
principal and interest would have been payable if such redemption or accelerated
payment had not been made, over (ii) the aggregate principal amount of the Notes
being redeemed or paid.
"Reinvestment Rate" means 0.20% (twenty one hundredths of one percent)
plus the arithmetic mean of the yields under the respective headings "This Week"
and "Last Week" published in the Statistical Release under the caption "Treasury
Constant Maturities" for the maturity (rounded to the nearest month)
corresponding to the remaining life to maturity, as of the payment date of the
principal being redeemed or paid. If no maturity exactly corresponds to such
maturity, yields for the two published maturities most closely corresponding to
such maturity shall be calculated pursuant to the immediately preceding sentence
and the Reinvestment Rate shall be interpolated or extrapolated from such yields
on a straight-line basis, rounding in each of such relevant periods to the
nearest month. For such purposes of calculating the Reinvestment Rate, the most
recent Statistical Release published prior to the date of determination of the
Make-Whole Amount shall be used.
"Statistical Release" means the statistical release designated
"H.15(519)" or any successor publication which is published weekly by the
Federal Reserve System and which establishes yields on actively traded United
States government securities adjusted to constant maturities or, if such
statistical release is not published at the time of any determination of the
Make-Whole Amount, then such other reasonably comparable index which shall be
designated by AvalonBay.