Exhibit 10.2

 

EXECUTION COPY

 

AVALONBAY COMMUNITIES, INC.
SHAREHOLDERS AGREEMENT

 

This Shareholders Agreement (this “Agreement”) is entered into as of
February 27, 2013, by and among AvalonBay Communities, Inc., a Maryland
corporation (“AVB”), Archstone Enterprise LP, a Delaware limited partnership
(“Archstone”) and Lehman Brothers Holdings Inc., a Delaware corporation
(“LBHI”).  AVB, Archstone and LBHI are sometimes referred to herein as the
“Parties” and each, a “Party.”

 

WHEREAS, on November 26, 2012, Archstone, LBHI, AVB, ERP Operating Limited
Partnership, an Illinois limited partnership (“ERPOP”), and Equity Residential,
a Maryland real estate investment trust, entered into an Asset Purchase
Agreement (as it may be amended from time to time, the “Asset Purchase
Agreement”) pursuant to which, among other things, (i) ERPOP and AVB or one or
more Buyer Designees (as defined in the Asset Purchase Agreement) have agreed to
acquire all of the assets and assume all of the liabilities of Archstone (other
than as provided therein), (ii) ERPOP has agreed to deliver, or cause its Buyer
Designees to deliver, to Archstone (or, if so directed by Archstone, to LBHI
and/or a Lehman Designee (as defined in the Asset Purchase Agreement)) the ERPOP
Equity Consideration (as defined in the Asset Purchase Agreement), and (iii) AVB
has agreed to deliver, or cause its Buyer Designees to deliver, to Archstone
(or, if so directed by Archstone, to LBHI and/or a Lehman Designee) the AVB
Equity Consideration (as defined in the Asset Purchase Agreement); and

 

WHEREAS, pursuant to and in accordance with Section 10.1.6(a) of the Asset
Purchase Agreement, as a condition precedent to receiving the AVB Equity
Consideration, each of the LBHI Parties have agreed to be bound by the terms and
conditions of this Agreement.

 

NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties hereto, intending to be legally bound hereby,
agree as follows:

 

ARTICLE 1
DEFINITIONS

 

1.1              Definitions.  When used in this Agreement, the following terms
in all of their tenses, cases and correlative forms shall have the meanings
assigned to them in this Section 1.1 or elsewhere in this Agreement. Capitalized
terms used herein and not otherwise defined have the meanings assigned to them
in the Asset Purchase Agreement.  “Beneficial Ownership” and “Beneficially Own”
shall have the meaning given to such term in Rule 13d-3 under the Exchange Act
(disregarding the reference to “within 60 days” in Rule 13d-3(d)(1)(i)).

 

“Extraordinary Transactions” means (a) any merger, consolidation, sale of all or
substantially all of the assets, other business combination, liquidation,
reclassification, recapitalization, restructuring or other similar action to
which AVB is a constituent party, or (b) any issuance of securities to any
Person or Group (within the meaning of Section 13(d)(3) of the

 

--------------------------------------------------------------------------------

 

Exchange Act) requiring approval of the common shareholders of AVB in accordance
with any Law or the rules and regulations of the New York Stock Exchange as to
such matters, as in effect from time to time.

 

“LBHI Party” means Archstone, LBHI and any Lehman Designee holding AVB Common
Shares.

 

“Permitted Transfers” shall mean, in each case, so long as (x) such Transfer is
in accordance with applicable Law and (y) each LBHI Party is and at all times
has been in compliance with Article 3 of this Agreement (other than any
unintentional noncompliance that was cured as promptly as practicable upon the
applicable LBHI Parties becoming aware of such noncompliance): (i) any Transfer
to an Affiliate of the applicable LBHI Party or a liquidating trust established
pursuant to the Plan, so long as such Person, in connection with such Transfer,
executes a joinder to this Agreement in the form attached hereto as Exhibit A,
pursuant to which such Person or Group (within the meaning of
Section 13(d)(3) of the Exchange Act) agrees to become a Party to this Agreement
and subject to the restrictions applicable to a LBHI Party and otherwise become
a Party for all purposes of this Agreement; provided that no such
Transfer(s) shall relieve the transferring LBHI Party or LBHI Parties from the
obligations of such LBHI Party or LBHI Parties under this Agreement, and
(ii) any Transfer solely to tender any of the AVB Equity Consideration into a
tender or exchange offer commenced by AVB or a third party if the board of
directors of AVB has affirmatively publicly recommended to the AVB shareholders
acceptance of such tender offer or exchange offer pursuant to Rule 14d-9 under
the Exchange Act with respect to a third party tender or exchange offer or has
determined not to oppose (as evidenced by its filings pursuant to such
Rule 14d-9) the tender or exchange offer.

 

“Plan” shall mean that certain Modified Third Amended Joint Chapter 11 Plan of
Lehman Brothers Holdings Inc. and its Affiliated Debtors, dated December 6, 2011
and that certain Order Confirming Modified Third Amended Joint Chapter 11 Plan
of Lehman Brothers Holdings Inc. and its Affiliated Debtors, dated December 6,
2011, [Docket No. 23023].

 

“Qualified Successor Transfer” shall mean any Transfer of common equity
securities of AVB: (i) through an underwritten offering, (ii) to an underwriter
that participates in a public offering (including a “bought deal” or a
registered block trade) of common equity securities of AVB, but only to the
extent necessary to facilitate such public offering, (iii) to Persons that are
and will remain (for so long as such Persons own a sufficient number of common
equity securities of AVB to require a filing on Schedule 13G under the Exchange
Act) eligible to file a Schedule 13G with the Securities and Exchange Commission
with respect to such common equity securities of AVB, (iv) pursuant to Rule 144
under the Securities Act, (v) to any bona fide financing source pursuant to a
pledge by any LBHI Party of any of the AVB Equity Consideration as collateral
securing indebtedness of such LBHI Party or any of its Affiliates, (vi) pursuant
to a sale conducted by a bona fide financing source described in the preceding
clause (v) in connection with a foreclosure with respect to any of the AVB
Equity Consideration or a conveyance in lieu of foreclosure to any such
financing source or its Affiliates, (vii) in a transaction described in clause
(ii) of the definition of Permitted Transfers or (viii) during a “subsequent
offering period” (as referenced in Rule 14d-11 of the Exchange Act) to any
Person who has made a tender or exchange offer for all outstanding AVB Common
Shares and who has purchased a number of AVB Common Shares tendered pursuant to
such tender or exchange offer

 

2

--------------------------------------------------------------------------------

 

such that such Person, together with its Affiliates, Beneficially Owns in excess
of 50% of the outstanding AVB Common Shares following the expiration of the
initial offering period for such tender or exchange offer.

 

“Standstill Period” shall mean the period beginning on the date hereof and
ending on the first date on which the LBHI Parties (and any Affiliate
transferees) in the aggregate cease to Beneficially Own 5% or more of the
outstanding common equity securities of AVB.

 

“Transfer” means (i) any direct or indirect offer, sale, assignment,
encumbrance, pledge, hypothecation, disposition, loan or other transfer (by
operation of law or otherwise), either voluntary or involuntary, or entry into
any contract, option or other arrangement or understanding with respect to any
offer, sale, assignment, encumbrance, pledge, hypothecation, disposition, loan
or other transfer (by operation of law or otherwise), of any capital stock (or
any security convertible or exchangeable into capital stock) or interest in any
capital stock or (ii) during the Lock-Up Period only, in respect of any capital
stock or interest in any capital stock, to enter into any swap or any other
agreement, transaction or series of transactions that hedges or transfers, in
whole or in part, directly or indirectly, the economic consequence of ownership
of such capital stock or interest in capital stock, whether any such swap,
agreement, transaction or series of transactions is to be settled by delivery of
securities, in cash or otherwise (and with respect to the AVB Equity
Consideration, this clause (ii) shall be deemed to include, without limitation,
any hedging arrangement or transfer based on the FTSE NAREIT All Residential
Capped Index, the FTSE NAREIT Equity Residential Index, the FTSE NAREIT Equity
Apartments Index or any other index of which the capital stock of AVB represents
at least 5% of the value at the time such hedging arrangement or transfer is
entered into).

 

ARTICLE 2
LOCK-UP AGREEMENT

 

2.1                               Other than in the case of a Permitted
Transfer, no LBHI Party shall Transfer any of the AVB Equity Consideration for
the period beginning on the date hereof and ending on April 26, 2013 (such
period, the “Lock-Up Period”).  For the avoidance of doubt, nothing in this
Section 2.1 shall prohibit any LBHI Party, from and after the expiration of the
Lock-Up Period, from entering into any swap, derivative or any other agreement,
transaction or series of transactions that hedges or transfers, in whole or in
part, directly or indirectly, the economic consequence or ownership of the AVB
Equity Consideration or interest in the AVB Equity Consideration, whether any
such swap, derivative, agreement, transaction or series of transactions is to be
settled by delivery of securities, in cash or otherwise, including, without
limitation, any hedging arrangement or transfer based on any index referenced in
the definition of “Transfer”.

 

2.2                               Any Transfer or attempted Transfer of any of
the AVB Equity Consideration in violation of this Article 2 shall, to the
fullest extent permitted by Law, be null and void ab initio, and AVB shall not,
and shall instruct its transfer agent and other third parties not to, record or
recognize any such purported Transfer on the share register of AVB.

 

3

--------------------------------------------------------------------------------

 

ARTICLE 3
STANDSTILL AGREEMENT

 

3.1                               During the Standstill Period, the LBHI Parties
shall not, directly or indirectly, without the prior written consent of AVB:

 

3.1.1                     Acquire, agree to acquire or make any public proposal
to acquire, directly or indirectly, Beneficial Ownership of common equity
securities of AVB or any other securities of AVB entitled to vote generally in
the election of directors of AVB (collectively, “Voting Securities”), or
securities of the Company that are convertible, exchangeable or exercisable into
Voting Securities (other than (i) the receipt of common equity securities of AVB
pursuant to the Asset Purchase Agreement, (ii) the acquisition of common equity
securities of AVB or other Voting Securities as a result of any stock splits,
stock dividends or other distributions or recapitalizations, reclassifications,
reorganizations or similar transactions or offerings made available by AVB to
holders of Voting Securities, including rights offerings, and (iii) from an
Affiliate of any LBHI Party in a Permitted Transfer);

 

3.1.2                     Deposit any Voting Securities in a voting trust or
similar arrangement or subject any Voting Securities to any voting agreement,
pooling arrangement or similar arrangement (other than (x) with another LBHI
Party or any direct or indirect subsidiary of the LBHI Parties or (y) in
connection with any transaction contemplated by the Asset Purchase Agreement or
this Agreement), or grant any proxy with respect to any Voting Securities (other
than (x) to AVB or a person specified by AVB, in a proxy card provided to
shareholders of AVB by or on behalf of AVB, (y) to another LBHI Party or any
direct or indirect subsidiary of the LBHI Parties, or (z) as otherwise necessary
to permit any LBHI Party to vote Voting Securities as expressly permitted by
Section 4.2);

 

3.1.3                     Enter, agree to enter, propose or offer to enter into
or facilitate any merger, business combination, tender offer, recapitalization,
restructuring, change in control transaction or other similar extraordinary
transaction involving AVB or any of its subsidiaries (excluding voting as a
shareholder with respect to such a transaction, to the extent permitted by
Section 4.2, or tendering shares in a tender offer);

 

3.1.4                     Make, or in any way participate or engage in, any
“solicitation” of “proxies” (as such terms are used in the proxy rules of the
Securities and Exchange Commission) to vote, or advise or knowingly influence
any Person (other than a controlled Affiliate of any LBHI Party) with respect to
the voting of, any voting securities of AVB or any of its subsidiaries;

 

3.1.5                     Call, or seek to call, a meeting of the shareholders
of AVB or initiate any shareholder proposal for action by the shareholders of
AVB;

 

3.1.6                     Form, join or in any way participate in a Group
(within the meaning of Section 13(d)(3) of the Exchange Act) (other than with
another LBHI Party or an Affiliate of any LBHI Party, or any direct or indirect
subsidiary, of any LBHI Party), with respect to any voting securities of AVB;

 

4

--------------------------------------------------------------------------------

 

3.1.7                     Otherwise act, alone or in concert with others, to
seek to control or influence the board of directors of AVB, or the management or
policies of AVB (including, without limitation, the submission of nominees for
election to the board of directors of AVB);

 

3.1.8                     Publicly disclose any intention, plan or arrangement
prohibited by, or inconsistent with, the foregoing;

 

3.1.9                     Advise or knowingly assist or encourage or enter into
any discussions, negotiations, agreements or arrangements with any other Person
or Group (within the meaning of Section 13(d)(3) of the Exchange Act) in
connection with the foregoing; or

 

3.1.10              Propose, seek or request permission to do any of the
foregoing, request to amend or waive any provision of this Article 3 (including,
without limitation, this clause 3.1.10), make or seek permission to make any
public announcement with respect to any of the foregoing or take any action that
such Person reasonably believes will require AVB to make a public announcement
regarding the possibility of a business combination, merger or other type or
transaction described above.

 

ARTICLE 4
VOTING AGREEMENT

 

4.1                               From and after the date hereof through and
including the first anniversary of the date hereof (but in any event only so
long as the Standstill Period is continuing), the LBHI Parties shall vote
(including, through the execution of one or more written consents, if
applicable) all common equity securities of AVB with respect to which the LBHI
Parties have the power to vote (including the AVB Equity Consideration), in
accordance with the recommendations of the board of directors of AVB with
respect to any action, proposal or other matter to be voted on by the respective
common equity holders of AVB; provided that, so long as each of the LBHI Parties
is and has at all times been in compliance with the provisions of Article 3 of
this Agreement (other than any unintentional noncompliance that was cured as
promptly as practicable upon the applicable LBHI Parties becoming aware of such
noncompliance), the LBHI Parties may vote their common equity securities of AVB
in their sole discretion with respect to Extraordinary Transactions if and to
the extent submitted to a vote of AVB common equity holders.

 

4.2                               Following the first anniversary of the date
hereof and continuing until the termination of the Standstill Period, the LBHI
Parties shall vote (including, through the execution of one or more written
consents, if applicable) all common equity securities of AVB held by the LBHI
Parties (including the AVB Equity Consideration): (i) in accordance with the
recommendation of the board of directors of AVB with respect to (A) any election
of directors, (B) compensation matters and matters relating to equity or other
incentive plans (including the adoption of any new plan or the amendment of any
existing plan, including to increase the amount of equity or other compensation
issuable thereunder), and (C) any amendment to AVB’s articles of incorporation
to increase the authorized capital stock, (ii) on all shareholder proposals, in
one of the following two manners, at the election of the LBHI Parties
(x) proportionally in accordance with the votes of other shareholders of AVB or
(y) in accordance with the

 

5

--------------------------------------------------------------------------------

 

recommendation of the board of directors of AVB, and (iii) on all other matters,
in the sole and absolute discretion of the LBHI Parties.

 

ARTICLE 5
TRANSFERS

 

5.1                               Until the one-year anniversary of the last day
of the Standstill Period, prior to and as a condition to any Transfer (other
than solely in the case of a Qualified Successor Transfer) by a LBHI Party of
AVB Common Shares (including the AVB Equity Consideration) to any Person or
Group (within the meaning of Section 13(d)(3) of the Exchange Act) that would
result in such Person or Group acquiring more than 5% of AVB’s outstanding
common equity securities from the LBHI Parties or their Affiliates, such Person
or Group shall be required to execute a joinder to this Agreement, in the form
attached hereto as Exhibit A, pursuant to which such Person or Group agrees to
become a Party to this Agreement and subject to the restrictions applicable to a
LBHI Party and otherwise become a Party for all purposes of this Agreement;
provided that no such Transfer(s) shall relieve the transferring LBHI Party or
LBHI Parties from their obligations under this Agreement.

 

ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF AVB

 

6.1                               AVB hereby represents and warrants to the
other Parties as follows:

 

6.1.1                     AVB has been duly formed, is validly existing, and,
where such concept is applicable, is in good standing under the laws of its
jurisdiction of organization. AVB has all requisite power and authority to
execute and deliver this Agreement and to perform its obligations under this
Agreement.

 

6.1.2                     The execution and delivery by AVB of this Agreement
and the performance by AVB of its obligations under this Agreement do not and
will not conflict with or violate any provision of, or require the consent or
approval of any Person (except for any such consents or approvals which have
been obtained) under, (i) applicable Law, or (ii) the organizational documents
of AVB.

 

6.1.3                     The execution and delivery by AVB of this Agreement
and the performance by AVB of its obligations under this Agreement have been
duly authorized by all necessary corporate or other analogous action on the part
of AVB. This Agreement has been duly executed and delivered by AVB and, assuming
the due authorization, execution and delivery by the other Parties hereto,
constitutes a legal, valid and binding obligation of AVB, enforceable against
AVB in accordance with its terms, subject to bankruptcy, insolvency and other
Laws of general applicability relating to or affecting creditors’ rights and to
general principles of equity.

 

ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF LBHI AND ARCHSTONE

 

7.1                               Each of LBHI and Archstone hereby severally,
and not jointly and severally, represents and warrants to the other Parties as
follows:

 

6

--------------------------------------------------------------------------------

 

7.1.1                     Each LBHI Party has been duly formed, is validly
existing, and, where such concept is applicable, is in good standing under the
laws of its jurisdiction of organization. LBHI and Archstone have all requisite
power and authority to execute and deliver this Agreement and each LBHI Party
has all requisite power and authority to perform its obligations under this
Agreement.

 

7.1.2                     The execution and delivery by LBHI and Archstone of
this Agreement and the performance by each of the LBHI Parties of their
obligations under this Agreement do not and will not conflict with or violate
any provision of, or require the consent or approval of any Person (except for
any such consents or approvals which have been obtained) under, (i) applicable
Law, or (ii) the organizational documents of any LBHI Party.

 

7.1.3                     The execution and delivery by LBHI and Archstone of
this Agreement and the performance by LBHI and Archstone of their obligations
under this Agreement have been duly authorized by all necessary corporate or
other analogous action on the part of LBHI and Archstone. This Agreement has
been duly executed and delivered by LBHI and Archstone and, assuming the due
authorization, execution and delivery by the other parties hereto, constitutes a
legal, valid and binding obligation of LBHI and Archstone, enforceable against
LBHI and Archstone in accordance with its terms, subject to bankruptcy,
insolvency and other laws of general applicability relating to or affecting
creditors’ rights and to general principles of equity.

 

7.1.4                     Each of LBHI and Archstone acknowledges that the
securities included in the AVB Equity Consideration have not been registered
under the Securities Act or any state securities laws.

 

ARTICLE 8
MISCELLANEOUS PROVISIONS

 

8.1                               Notices.  All notices, consents and other
communications hereunder shall be in writing (including telecopy or similar
writing) and shall be deemed to have been duly given (a) when delivered by hand
or by Federal Express or a similar overnight courier to (or if that day is not a
Business Day, or if delivered after 5:00 p.m., New York, New York time on a
Business Day, on the first following day that is a Business Day), (b) five
(5) days after being deposited in any United States Post Office enclosed in a
postage prepaid, registered or certified envelope addressed to, or (c) when
successfully transmitted by facsimile to, the Party for whom intended, at the
address or facsimile number for such Party set forth in Section 16.1 of the
Asset Purchase Agreement.

 

8.2                               LBHI Parties.  LBHI shall cause each LBHI
Party to perform and observe all obligations applicable to such LBHI Party
hereunder.

 

8.3                               Entire Agreement.  This Agreement sets forth
the entire agreement and understanding of the Parties in respect of the
provisions contained herein and supersedes all prior discussions, negotiations,
agreements, arrangements and understandings, whether oral or written, relating
to the subject matter hereof and thereof. There are no warranties,
representations or other agreements between the Parties in connection with the
subject matter of this Agreement, except as specifically set forth in this
Agreement.

 

7

--------------------------------------------------------------------------------

 

8.4                               Amendments and Waivers.

 

8.4.1                     Any provision of this Agreement may be amended or
modified only by a written instrument signed by all of the Parties hereto.

 

8.4.2                     No waiver hereunder shall be valid or binding unless
set forth in writing and duly executed by the Party against whom enforcement of
the waiver is sought. Any such waiver shall constitute a waiver only with
respect to the specific matter described in such writing and shall in no way
impair the rights of the Party granting such waiver in any other respect or at
any other time. Neither the waiver by any of the Parties of a breach of or a
default under any of the provisions of this Agreement, nor the failure by any of
the Parties, on one or more occasions, to enforce any of the provisions of this
Agreement or to exercise any right or privilege hereunder, shall be construed as
a waiver of any other breach or default of a similar nature, or as a waiver of
any of such provisions, rights or privileges hereunder. Except as otherwise
provided herein, no action taken pursuant to this Agreement, including any
investigation by or on behalf of any Party, shall be deemed to constitute a
waiver by the Party taking such action of compliance with any representations,
warranties, covenants or agreements contained in this Agreement.

 

8.5                               Governing Law.  This Agreement shall be
construed, performed and enforced in accordance with the laws of the State of
Maryland (without giving effect to its principles or rules of conflict of laws
to the extent such principles or rules would require or permit the application
of the laws of another jurisdiction).

 

8.6                               Remedies; Specific Performance.  The Parties
hereto agree that monetary damages would not be an adequate remedy in the event
that any of the provisions of this Agreement were not performed in accordance
with their specific terms. It is expressly agreed that the Parties hereto shall
be entitled to equitable relief, including injunctive relief and specific
performance of the terms hereof, this being in addition to any other remedies to
which they are entitled at law or in equity.

 

8.7                               WAIVER OF TRIAL BY JURY.  EACH PARTY
ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY OR CLAIM WHICH MAY ARISE UNDER THIS
AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE
IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT. THIS WAIVER MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER
THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 8.7 AND
EXECUTED BY EACH OF THE PARTIES HERETO). The scope of this waiver is intended to
be all-encompassing of any and all disputes that may be filed in any court and
that relate to the subject matter herein, including contract claims, tort
claims, breach of duty claims and all other common law and statutory claims. In
the event of litigation, this Agreement may be filed as a written consent to a
trial by the court.

 

8

--------------------------------------------------------------------------------

 

EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE EITHER OF
SUCH WAIVERS, (II) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH
WAIVERS, (III) IT MAKES SUCH WAIVERS VOLUNTARILY, AND (IV) IT HAS BEEN INDUCED
TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 8.7.

 

8.8                               Binding Effect.  This Agreement will be
binding upon, inure solely to the benefit of and be enforceable by the Parties
and their respective permitted successors and assigns.

 

8.9                               Severability.  If any term, provision,
covenant or restriction of this Agreement is held by a court of competent
jurisdiction or other Governmental Authority to be invalid, void or
unenforceable, such term, provision, covenant or restriction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this
Agreement, and the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.

 

8.10                        Counterparts.  This Agreement may be executed and
delivered in multiple counterparts, each of which shall be deemed an original,
and all of which together shall constitute one and the same instrument. It is
the express intent of the Parties to be bound by the exchange of signatures on
this Agreement via facsimile or electronic mail via the portable document format
(PDF). A facsimile or other copy of a signature shall be deemed an original.
This Agreement shall become effective when each Party hereto shall have received
a counterpart hereof signed by all of the other Parties hereto. Until and unless
each Party has received a counterpart hereof signed by the other Parties hereto,
this Agreement shall have no effect and no Party shall have any right or
obligation hereunder (whether by virtue of any other oral or written agreement
or other communication).

 

8.11                        Third Parties.  Except as otherwise expressly
provided herein, no provision of this Agreement is intended or shall confer on
any Person, other than the Parties (and their successors and permitted assigns),
any rights under this Agreement and no other Person shall be entitled to rely
thereon.

 

8.12                        Assignment.  Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned, delegated or
otherwise transferred by any Party (whether by operation of law or otherwise)
without the prior written consent of the other Parties. Notwithstanding the
foregoing, (i) AVB shall have the right to assign all or certain provisions of
this Agreement, or any interest herein, and may delegate any duty or obligation
hereunder, without the consent of the other Parties, to any Affiliate of AVB,
and (ii) the LBHI Parties shall have the right to assign certain provisions of
this Agreement, without the consent of the other Parties, only as specifically
permitted by Articles 2 and 5 of this Agreement; provided that, in the case of
each of clauses (i) and (ii), no such assignment or delegation shall relieve
such Party of

 

9

--------------------------------------------------------------------------------

 

any of its obligations hereunder. Any attempted assignment, delegation or
transfer in violation of this Section 8.12 shall be null and void.

 

[Signature Page Follows]

 

10

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the Parties have executed and delivered this Agreement as of
the date set forth above.

 

 

AVALONBAY COMMUNITIES, INC.

 

 

 

 

 

By:

/s/ Kevin P. O’Shea

 

 

Name:

Kevin P. O’Shea

 

 

Title:

Executive Vice President - Capital Markets

 

 

 

 

 

ARCHSTONE ENTERPRISE LP

 

 

 

 

 

By:

/s/ Jeffrey Fitts

 

 

Name:

Jeffrey Fitts

 

 

Title:

Authorized Signatory

 

 

 

 

 

LEHMAN BROTHERS HOLDINGS INC.

 

 

 

 

 

By:

/s/ Jeffrey Fitts

 

 

Name:

Jeffrey Fitts

 

 

Title:

Authorized Signatory

 

[SIGNATURE PAGE TO AVALONBAY COMMUNITIES, INC. SHAREHOLDERS AGREEMENT]

 

--------------------------------------------------------------------------------

 

EXHIBIT A

 

FORM OF JOINDER AGREEMENT

 

The undersigned is acquiring, simultaneously with the execution of this Joinder
Agreement, [·] shares of [·] (the “Securities”), of AvalonBay Communities, Inc.,
a Maryland corporation (“AVB”).

 

WHEREAS, as a condition to the acquisition of the Securities, the undersigned
has agreed to join in a certain Shareholders Agreement (as it may be amended
from time to time the “Shareholders Agreement”), dated as of February [·], 2013
among AVB, Archstone Enterprise LP, a Delaware limited partnership
(“Archstone”), Lehman Brothers Holdings, Inc., (“LBHI”) and the other parties
signatory thereto; and

 

WHEREAS, the undersigned understands that the execution of this Joinder
Agreement is a condition precedent to the acquisition of the Securities.

 

NOW, THEREFORE, as an inducement to AVB and to the holder from whom or which the
undersigned is acquiring the Securities to consummate the transfer of the
Securities to the undersigned, the undersigned hereby agrees to join in the
Shareholders Agreement and agrees to be bound by all of the terms, restrictions,
obligations and agreements thereof applicable to an “LBHI Party” thereunder, and
the undersigned hereby represents and warrants that:

 

The undersigned has been duly formed, is validly existing and, where such
concept is applicable, is in good standing under the laws of its jurisdiction of
organization. The undersigned has all requisite power and authority to execute
and deliver this Joinder Agreement and the Shareholders Agreement and to perform
its obligations hereunder and thereunder.

 

The execution and delivery by the undersigned of this Joinder Agreement and the
Shareholders Agreement and the performance by the undersigned of its obligations
hereunder and thereunder do not and will not conflict with or violate any
provision of, or require the consent or approval of any Person (except for any
such consents or approvals which have been obtained) under, (i) applicable Law
(as such term is used in the Shareholders Agreement), or (ii) the organizational
documents of the undersigned.

 

The execution and delivery by the undersigned of this Joinder Agreement and the
performance by the undersigned of its obligations hereunder and under the
Shareholders Agreement have been duly authorized by all necessary corporate or
other analogous action on the part of the undersigned. This Agreement has been
duly executed and delivered by the undersigned, and assuming the due
authorization, execution and delivery by the other parties hereto, each of this
Joinder Agreement and the Shareholders Agreement constitutes a legal, valid and
binding obligation of the undersigned, enforceable against the undersigned in
accordance with its terms, subject only to bankruptcy, insolvency and other laws
of general applicability relating to or affecting creditors’ rights and to
general principles of equity.

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the undersigned has executed this Joinder Agreement as of
the [·] day of [·], 20[·].

 

 

 

[·]

 

a [·]

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

Accepted by:

 

AvalonBay Communities, Inc., a Maryland corporation

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

[SIGNATURE PAGE TO JOINDER AGREEMENT TO AVALONBAY COMMUNITIES, INC. SHAREHOLDER
AGREEMENT]

 

--------------------------------------------------------------------------------