Exhibit 10.28
AVALONBAY COMMUNITIES, INC.
Officer Severance Plan
(As adopted September 9, 1999 and amended and restated November 18, 2008)
     1. Purpose. AvalonBay Communities, Inc. (the “Company”) considers it
essential to the best interests of its stockholders to foster the continuous
employment of key management personnel. The Board of Directors of the Company
(the “Board”) recognizes, however, that, as is the case with many publicly held
corporations, the possibility of a Change in Control (as defined in Section 2
hereof) exists and that such possibility, and the uncertainty and questions
which it may raise among management, may result in the departure or distraction
of management personnel to the detriment of the Company and its stockholders.
Therefore, the Board has determined that the AvalonBay Communities, Inc. Officer
Severance Plan (the “Plan”) should be adopted to reinforce and encourage the
continued attention and dedication of the Covered Employees (as defined below)
to their assigned duties without distraction in the face of potentially
disturbing circumstances arising from the possibility of a Change in Control.
The term “Covered Employee” means any officer of the Company holding the
position of Vice President or higher (it being noted that any officer receiving
severance payments under any other agreement or arrangement with the Company
shall be subject to the limitation on benefits hereunder set forth in the last
sentence of Section 4 hereof) (each, a “Covered Employee”). Nothing in this Plan
shall be construed as creating an express or implied contract of employment and,
except as otherwise agreed in writing between the Covered Employee and the
Company or any of its subsidiaries or affiliates (together with the Company, the
“Employers”), the Covered Employee shall not have any right to be retained in
the employ of the Employers.
     2. Change in Control. For purposes of this Plan, a “Change in Control”
shall mean the occurrence of any one of the following events:
     (a) Any individual, entity or group (a “Person”) within the meaning of
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (the “Act”)
(other than the Company, any corporation, partnership, trust or other entity
controlled by the Company (a “Subsidiary”), or any trustee, fiduciary or other
person or entity holding securities under any employee benefit plan or trust of
the Company or any of its Subsidiaries), together with all “affiliates” and
“associates” (as such terms are defined in Rule 12b-2 under the Act) of such
Person, shall become the “beneficial owner” (as such term is defined in
Rule 13d-3 under the Act) of securities of the Company representing 30% or more
of the combined voting power of the Company’s then outstanding securities having
the right to vote generally in an election of the Company’s Board of Directors
(“Voting Securities”), other than as a result of (i) an acquisition of
securities directly from the Company or any Subsidiary or (ii) an acquisition by
any corporation pursuant to a reorganization, consolidation or merger if,
following such reorganization, consolidation or merger the conditions described
in clauses (i), (ii) and (iii) of subparagraph (c) of this Section 2 are
satisfied; or
     (b) Individuals who, as of the Effective Date, constitute the Company’s
Board of Directors (the “Incumbent Directors”) cease for any reason to
constitute at least a majority of the Board, provided, however, that any
individual becoming a director of the Company subsequent to the date hereof
(excluding, for this purpose, (i) any such individual whose initial assumption
of office is in connection with an actual or threatened election contest
relating to the election of members of the Board of Directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other
than the Board of Directors, including by reason of agreement intended to avoid
or settle any such actual or threatened contest or solicitation, and (ii) any
individual whose initial assumption of office is in connection with a
reorganization, merger or consolidation, involving an unrelated entity and
occurring after the date hereof), whose election or nomination for election by
the Company’s shareholders was approved by a vote of at

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least a majority of the persons then comprising Incumbent Directors shall for
purposes of this Plan be considered an Incumbent Director; or
     (c) Consummation of a reorganization, merger or consolidation of the
Company, unless, following such reorganization, merger or consolidation,
(i) more than 50% of, respectively, the then outstanding shares of common stock
of the corporation resulting from such reorganization, merger or consolidation
and the combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
outstanding Voting Securities immediately prior to such reorganization, merger
or consolidation, (ii) no Person (excluding the Company, any employee benefit
plan (or related trust) of the Company, a Subsidiary or the corporation
resulting from such reorganization, merger or consolidation or any subsidiary
thereof, and any Person beneficially owning, immediately prior to such
reorganization, merger or consolidation, directly or indirectly, 30% or more of
the outstanding Voting Securities), beneficially owns, directly or indirectly,
30% or more of, respectively, the then outstanding shares of common stock of the
corporation resulting from such reorganization, merger or consolidation or the
combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors, and
(iii) at least a majority of the members of the board of directors of the
corporation resulting from such reorganization, merger or consolidation were
members of the Incumbent Board at the time of the execution of the initial
agreement providing for such reorganization, merger or consolidation;
     (d) Approval by the shareholders of the Company of a complete liquidation
or dissolution of the Company; or
     (e) The sale, lease, exchange or other disposition of all or substantially
all of the assets of the Company, other than to a corporation, with respect to
which following such sale, lease, exchange or other disposition (i) more than
50% of, respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial owners
of the outstanding Voting Securities immediately prior to such sale, lease,
exchange or other disposition, (ii) no Person (excluding the Company and any
employee benefit plan (or related trust) of the Company or a Subsidiary or such
corporation or a subsidiary thereof and any Person beneficially owning,
immediately prior to such sale, lease, exchange or other disposition, directly
or indirectly, 30% or more of the outstanding Voting Securities), beneficially
owns, directly or indirectly, 30% or more of, respectively, the then outstanding
shares of common stock of such corporation and the combined voting power of the
then outstanding voting securities of such corporation entitled to vote
generally in the election of directors and (iii) at least a majority of the
members of the board of directors of such corporation were members of the
Incumbent Board at the time of the execution of the initial agreement or action
of the Board of Directors providing for such sale, lease, exchange or other
disposition of assets of the Company.
     Notwithstanding the foregoing, a “Change in Control” shall not be deemed to
have occurred for purposes of this Plan solely as the result of an acquisition
of securities by the Company which, by reducing the number of shares of Voting
Securities outstanding, increases the proportionate voting power represented by
the Voting Securities beneficially owned by any Person to 30% or more of the
combined voting power of all then outstanding Voting Securities; provided,
however, that if any Person referred to in this sentence shall thereafter become
the beneficial owner of any additional shares of Stock or other Voting
Securities (other than pursuant to a stock split, stock dividend, or similar
transaction), then a “Change in Control” shall be deemed to have occurred for
purposes of this Plan.
     3. Terminating Event. A “Terminating Event” shall mean the termination of
employment of a Covered Employee in connection with any of the events provided
in this Section 3 occurring within twenty-four (24) months following a Change in
Control. In addition, notwithstanding the foregoing, in the event of the
termination of employment of a Covered Employee in connection with any of the
events provided in this Section 3 within six (6) months prior to the occurrence
of a Change in Control (based on an event, such as a Notice of Termination, that
occurred within such six (6) month period prior to a Change in Control), such
termination shall, upon the occurrence

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of a Change in Control, be deemed a Terminating Event under this Plan. To give
effect to the prior sentence, references in Sections 3(b)(ii), (iii) and (iv) to
circumstances existing “immediately prior to a Change in Control” will be
interpreted to mean, in a case where the six month look-back of the prior
sentence is being applied, to circumstances existing immediately prior to the
change in circumstances.
     (a) termination by the Employers of the employment of the Covered Employee
with the Employers for any reason other than (i) for Cause or (ii) as a result
of the death or disability (as determined under the Employers’ then existing
long-term disability coverage) of such Covered Employee. “Cause” shall mean, and
shall be limited to, the occurrence of any one or more of the following events:
     (i) the Covered Employee is convicted of or enters a plea of nolo
contendere to an act which is defined as a felony under any federal, state or
local law, not based upon a traffic violation, which conviction or plea has or
can be expected to have, in the good faith opinion of the Board of Directors or
the CEO, a material adverse impact on the business or reputation of the Company;
or
     (ii) any one or more acts of theft, larceny, embezzlement, fraud or
material intentional misappropriation from or with respect to the Company; or
     (iii) a breach by the Covered Employee of his fiduciary duties under
Maryland law as an officer, or a material breach by the Covered Employee of any
rule, regulation, policy or procedure of the Company that is generally announced
or distributed to, and applies to, all employees of the Company or a subset of
employees that includes the Covered Employee (including, without limitation, in
all events the Company’s ethics, sexual harassment and insider trading
policies); or
     (iv) the Covered Employee’s commission of any one or more acts of gross
negligence or willful misconduct which in the good faith opinion of the Board of
Directors or the CEO has resulted in material harm to the business or reputation
of the Company; or
     (v) the deliberate or willful failure by the Covered Employee (other than
by reason of the Covered Employee’s physical or mental illness, incapacity or
disability) to substantially perform the Covered Employee’s duties with the
Employers and the continuation of such failure for a period of fifteen (15) days
after written notice thereof.
     A Terminating Event shall not be deemed to have occurred pursuant to this
Section 3(a) solely as a result of the Covered Employee being an employee of any
direct or indirect successor to the business or assets of any of the Employers,
rather than continuing as an employee of the Employers following a Change in
Control. For purposes of clauses (iv) and (v) of this Section 3(a), no act, or
failure to act, on the Covered Employee’s part shall be deemed “willful” unless
done, or omitted to be done, by the Covered Employee without reasonable belief
that the Covered Employee’s act, or failure to act, was in the best interest of
the Employers; or
     (b) termination by the Covered Employee of the Covered Employee’s
employment with the Employers for Good Reason. “Good Reason” shall mean the
occurrence of any of the following events:
     (i) a material adverse change in the functions, duties or responsibilities
of the Covered Employee’s position (other than a termination of employment for
Cause) which would reduce the level, importance or scope of such position (a
change in the person and/or department to whom the Covered Employee is required
to report, or a change in the personnel that report to the Covered Employee,
shall not by itself constitute a material adverse change in the Covered
Employee’s position); or
     (ii) the relocation of the office at which the Covered Employee is
principally located immediately prior to the Change in Control (the “Original
Office”) to a new location outside of the metropolitan area of the Original
Office or the failure to locate the Covered Employee’s own office

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at the Original Office (or at the office to which such office is relocated which
is within the metropolitan area of the Original Office); or
     (iii) either (X) the failure by the Company to continue in effect any
compensation plan or program in which the Covered Employee participates
immediately prior to a Change in Control which is material to the Covered
Employee’s total compensation, unless comparable alternative arrangements
(embodied in ongoing substitute or alternative plans or programs) have been
implemented with respect to such plans or programs, or (Y) the failure by the
Company to continue the Covered Employee’s participation therein following a
Change in Control (or in such substitute or alternative plans or programs) on a
basis not materially less favorable, in terms of the amount of benefits provided
and the level of the Covered Employee’s participation relative to other
participants, as existed during the last completed fiscal year of the Company
prior to the Change in Control (the occurrence of either failure in clause
(X) or (Y), a “CIC Compensation Failure”); provided, however, that in no event
shall a CIC Compensation Failure have occurred if:
     (A) the value of the Covered Employee’s total annual compensation following
a Change in Control, including, but not limited to, cash compensation (including
salary and bonus), stock grants (valued using stock price less consideration
paid), stock options (valued using the Black-Scholes method or a variation
thereof, as determined by the Board of Directors or a compensation consultant
engaged by the Board of Directors) and benefits (valued using an actuarial or
similar valuation method), is at least 90% of the Covered Employee’s total
annual compensation in the last fiscal year prior to the Change in Control; or
     (B) (I) the Covered Employee’s total annual cash compensation (including
salary and bonus) following a Change in Control is at least 90% of what it was
in the year prior to the Change in Control, with such reasonable adjustments
thereto as are necessary to give effect to performance based bonuses (with
respect to which the performance criteria may reasonably be modified) and the
level of performance achieved with respect thereto;
     (II) the total value of the Covered Employee’s annual stock grants (valued
using stock price less consideration paid) following a Change in Control are at
least 90% of what they were in the year prior to the Change in Control, with
such reasonable adjustments thereto as are necessary to give effect to (x)
performance based bonuses (with respect to which the performance criteria may
reasonably be modified) and the level of performance achieved with respect
thereto, and (y) to changes in the price of the Company’s or the successor’s
stock due to market fluctuations;
     (III) the Covered Employee’s total annual stock option grants (measured
either by (a) total value, as determined as described in the preceding paragraph
(A), or (b) total “leverage potential” (i.e., the number of options granted
multiplied by the exercise price, after giving effect to changes in the price of
the Company’s or the successor’s stock due to market fluctuations)) are at least
90% of what they were in the year prior to the Change in Control, with such
reasonable adjustments thereto as are necessary to give effect to performance
based bonuses (with respect to which the performance criteria may reasonably be
modified) and the level of performance achieved with respect thereto; and
     (IV) there is not a material reduction in the Covered Employee’s benefits
as compared to the last fiscal year prior to the Change in Control; or

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     (iv) the failure by the Employers to obtain an effective agreement from any
successor to assume and agree to perform this Plan.
     4. Special Termination Benefits. In the event a Terminating Event occurs
with respect to a Covered Employee,
     (a) the Employers shall pay to the Covered Employee an amount equal to all
accrued but unpaid annual base salary and all earned but unpaid cash incentive
compensation earned through such Covered Employee’s Date of Termination. Said
amount shall be paid in one lump sum payment no later than thirty-one (31) days
following the Date of Termination (as such term is defined in Section 8(b)); and
     (b) if and only if such Terminating Event is not described in
Section 3(b)(ii), the Employers shall pay to the Covered Employee an amount
equal to the sum of the following:
     (i) one times the amount of the current annual base salary of the Covered
Employee, determined prior to any reductions for pre-tax contributions to a cash
or deferred arrangement or a cafeteria plan; and
     (ii) one times the amount of the average annual cash bonus earned by the
Covered Employee with respect to the two (2) calendar years immediately prior to
the Change in Control determined prior to any reductions for pre-tax
contributions to a cash or deferred arrangement or a cafeteria plan (provided,
however, that if the Covered Employee’s tenure with the Company is such that
prior to the Terminating Event the Covered Employee has earned an annual bonus
only with respect to the calendar year immediately prior to the Change in
Control, then such annual bonus shall be deemed to have been earned with respect
to the two (2) calendar years immediately prior to the Change in Control; and,
provided further, however, that if the Covered Employee’s tenure with the
Company is such that prior to the Terminating Event the Covered Employee has not
earned an annual bonus, then the Covered Employee’s target annual bonus
immediately prior to the Change in Control shall be deemed to have been earned
with respect to the two (2) calendar years immediately prior to the Change in
Control).
Said amount shall be paid in one lump sum payment no later than thirty-one
(31) days following the Date of Termination; and
     (c) if and only if such Terminating Event is described in Section 3(b)(ii),
the Employers shall pay to the Covered Employee an amount equal to the sum of
the following:
     (i) one-half times (0.5) the amount of the current annual base salary of
the Covered Employee, determined prior to any reductions for pre-tax
contributions to a cash or deferred arrangement or a cafeteria plan; and
     (ii) one-half times (0.5) times the amount of the average annual cash bonus
earned by the Covered Employee with respect to the two (2) calendar years
immediately prior to the Change in Control determined prior to any reductions
for pre-tax contributions to a cash or deferred arrangement or a cafeteria plan,
with procedures similar to those described in Section 4(b)(ii) to determine such
average.
Said amount shall be paid in one lump sum payment no later than thirty-one
(31) days following the Date of Termination (as such term is defined in
Section 8(b)); and
     (d) the Employers shall continue to provide health, dental and life
insurance (or contribute a portion of the cost thereof) to the Covered Employee,
on the same terms and conditions as though the Covered Employee had remained an
active employee, for eighteen (18) months after the Terminating Event or until
such earlier date as the Covered Employee obtains comparable benefits through
other employment (provided, however, that this clause (d) shall in no event
obligate the Company to continue to fund the

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premiums on any split dollar life insurance policy pursuant to arrangements that
were in effect while the Covered Employee was employed); and
     (e) the Employers shall take whatever action is necessary (i) to cause the
Covered Employee to become vested as of the Date of Termination in all stock
options, restricted stock grants, and all other equity-based awards and (ii) to
be entitled (A) to exercise and continue to exercise all stock options and all
other equity-based awards having an exercise schedule and (B) to retain such
grants and awards, but in each case under clauses (A) and (B) such right to
exercise and retain shall last only for so long as, and shall apply only to the
same extent as, if such options, grants and awards had vested prior to
termination of employment and their treatment following such termination were
determined in accordance with the terms of the applicable stock option
agreement, grant agreement or other equity award agreement and the incentive
plans governing such agreements. Reference in this regard is made to the
clarification set forth in Section 5; and
     (f) the Employers shall provide COBRA benefits to the Covered Employee
following the end of the period referred to in Section 4(d) above, such benefits
to be determined as though the Covered Employee’s employment had terminated at
the end of such period; and
     (g) notwithstanding the foregoing, if the Terminating Event occurs before
the Change in Control, the special termination benefits required by this
Section 4 shall be paid, or commence, as the case may be, no later than
thirty-one (31) days after the consummation of the Change in Control.
     Notwithstanding the foregoing, the special termination benefits required by
Sections 4(b) or 4(c) shall be reduced by any amount paid or payable to the
Covered Employee by the Employers under the terms of any employment agreement or
other plan or arrangement providing for compensation upon such Covered
Employee’s termination of employment (other than payment of accrued vacation
benefits and payments under any deferred compensation plan). Other benefits
under this Plan shall also be reduced or eliminated to the extent provided to
the Covered Employee under other agreements or arrangements. Therefore, a
Covered Employee with an employment agreement or arrangement that provides
greater severance benefits than those provided in this Officer Severance Program
will receive no payments or benefits under this Officer Severance Program.
     5. Clarification Regarding Treatment of Options and Restricted Stock. The
stock option and restricted stock agreements (the “Equity Award Agreements”)
that the Covered Employee has or may receive may contain language regarding the
effect of a termination of the Covered Employee’s employment under certain
circumstances. Notwithstanding such language in the Equity Award Agreements, for
so long as this Plan is in effect, the Company will be obligated, if the terms
of this Plan are more favorable in this regard than the terms of the Equity
Award Agreements, to take the actions required under Section 4(e) hereof upon
the happening of a Terminating Event. That section provides that the Company
will cause the Covered Employee to become vested as of the Date of Termination
in all equity-based awards, and that such equity-based awards will thereafter be
subject to the provisions of the applicable Equity Award Agreement as it applies
to vested awards upon a termination. For purposes of clarification, although an
option grant may vest under termination circumstances described above, such
option will thereafter be exercisable only for so long as the related option
agreement provides, except that the Compensation Committee of the Board of
Directors may, in its sole discretion, elect to extend the expiration date of
such option. For example, in general the Covered Employees’ option agreements
provide that (in the absence of an extension by the Compensation Committee) upon
a termination of employment for any reason other than death, disability,
retirement or cause, any vested options will only be exercisable for three
months from the date of termination or, if earlier, the expiration date of the
option.
     6. Additional Benefits.
     (a) Anything in this Plan to the contrary notwithstanding, in the event
that any compensation, payment or distribution by the Employers to or for the
benefit of a Covered Employee, whether paid or payable or distributed or
distributable pursuant to the terms of this Plan or otherwise, (the “Severance
Payments”), would be subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended (the “Code”), the following provisions
shall apply to such Covered Employee:

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     (i) If the Severance Payments, reduced by the sum of (1) the Excise Tax and
(2) the total of the Federal, state, and local income and employment taxes
payable by the Covered Employee on the amount of the Severance Payments which
are in excess of the Threshold Amount, are greater than or equal to the
Threshold Amount, the Covered Employee shall be entitled to the full benefits
payable under this Plan.
     (ii) If the Threshold Amount is less than (x) the Severance Payments, but
greater than (y) the Severance Payments reduced by the sum of (1) the Excise Tax
and (2) the total of the Federal, state, and local income and employment taxes
on the amount of the Severance Payments which are in excess of the Threshold
Amount, then the benefits payable under this Plan shall be reduced (but not
below zero) to the extent necessary so that the maximum Severance Payments shall
not exceed the Threshold Amount. In such event, the payments shall be reduced in
the following order: (A) cash payments not subject to Section 409A of the Code;
(B) cash payments subject to Section 409A of the Code; and (D) non-cash form of
benefits. To the extent any payment is to be made over time, then the payment
shall be reduced in reverse chronological order.
For the purposes of this Section 6, “Threshold Amount” shall mean three times
the Covered Employee’s “base amount” within the meaning of Section 280G(b)(3) of
the Code and the regulations promulgated thereunder less one dollar ($1.00); and
“Excise Tax” shall mean the excise tax imposed by Section 4999 of the Code, or
any interest or penalties incurred by the Covered Employee with respect to such
excise tax.
     (b) The determination as to which of the alternative provisions of Section
6(a) shall apply to the Covered Employee shall be made by such nationally
recognized accounting firm as may at that time be the Company’s independent
public accountants immediately prior to the Change in Control (the “Accounting
Firm”), which shall provide detailed supporting calculations both to the
Employers and the Covered Employee within 15 business days of the Date of
Termination, if applicable, or at such earlier time as is reasonably requested
by the Employers or the Covered Employee. For purposes of determining which of
the alternative provisions of Section 6(a) shall apply, the Covered Employee
shall be deemed to pay federal income taxes at the highest marginal rate of
federal income taxation applicable to individuals for the calendar year in which
the determination is to be made, and state and local income taxes at the highest
marginal rates of individual taxation in the state and locality of the Covered
Employee’s residence on the Date of Termination, net of the maximum reduction in
federal income taxes which could be obtained from deduction of such state and
local taxes. Any determination by the Accounting Firm shall be binding upon the
Employers and the Covered Employee.
     7. Withholding. All payments made by the Employers under this Plan shall be
net of any tax or other amounts required to be withheld by the Employers under
applicable law.
     8. Notice and Date of Termination; Etc.
     (a) Notice of Termination. Any purported termination by the Employer of a
Covered Employee’s employment (other than by reason of death) within 24 months
following a Change in Control shall be communicated by written Notice of
Termination from the Employers to the Covered Employee in accordance with this
Section 8. For purposes of this Plan, a “Notice of Termination” shall mean a
notice which shall indicate the specific termination provision in this Plan
relied upon and the Date of Termination. Further, a Notice of Termination for
Cause is required to include a written explanation as to the basis for such
termination.
     (b) Date of Termination. “Date of Termination,” with respect to any
purported termination of a Covered Employee’s employment by the Employers within
twenty-four (24) months after a Change in Control, shall mean the date specified
in the Notice of Termination which, in the case of a termination by the
Employers other than a termination for Cause (which may be effective
immediately), shall not be less than 30 days after the Notice of Termination is
given. Notwithstanding Section 3(a) of this Plan, in the event that a Covered
Employee gives a Notice of Termination to the Employers, the Employers may
unilaterally accelerate the date of termination of such Covered Employee and
such acceleration shall not

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constitute an independent Terminating Event for purposes of Section 3(a) of this
Plan or a violation of the preceding sentence (i.e., the Covered Employee will
be entitled to severance payments and benefits hereunder only if such Covered
Employee’s Notice of Termination was with respect to a termination for Good
Reason).
     (c) No Mitigation. The Covered Employee is not required to seek other
employment or to attempt in any way to reduce any amounts payable to the Covered
Employee by the Employers under this Plan. Further, the amount of any payment
provided for in this Plan shall not be reduced by any compensation earned by the
Covered Employee as the result of employment by another employer, by retirement
benefits, by offset against any amount claimed to be owed by the Covered
Employee to the Employers, or otherwise.

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     9. Resolution of Disputes; Procedures and Scope of Arbitration.
     (a) All controversies and claims arising under or in connection with this
Plan or relating to the interpretation, breach or enforcement thereof and all
other disputes between a Covered Employee and the Company, shall be resolved by
expedited, binding arbitration, to be held in California or Virginia, as
selected by the Covered Employee, in accordance with the applicable rules of the
American Arbitration Association governing employment disputes. In any
proceeding relating to the amount owed to a Covered Employee in connection with
his termination of employment, it is the contemplation under this Plan that the
only remedy that the arbitrator may award in such a proceeding is an amount
equal to the termination payments and benefits required to be provided under the
applicable provisions of Section 4 and, if applicable, Section 6 hereof, to the
extent not previously paid, plus the costs of arbitration and the Covered
Employee’s reasonable attorneys fees and expenses as provided below. Any award
made by such arbitrator shall be final, binding and conclusive on the Company
and the Covered Employee for all purposes, and judgment upon the award rendered
by the arbitrator may be entered in any court having jurisdiction thereof.
     (b) Except as otherwise provided in this paragraph, each party shall pay
the cost of his or its own legal fees and expenses incurred in connection with
an arbitration proceeding. Provided an award is made in favor of the Covered
Employee in such proceeding, all of his reasonable attorneys fees and expenses
incurred in pursuing or defending such proceeding shall be promptly reimbursed
to the Covered Employee by the Company within five days of the entry of the
award. Any award of reasonable attorneys’ fees shall take into account any offer
of the Company, such that an award of attorneys’ fees to the Covered Employee
may be limited or eliminated to the extent that the final decision in favor of
the Covered Employee does not represent a material increase in value over the
offer that was made by the Company during the course of such proceeding.
However, any elimination or limitation on attorneys’ fees shall only apply to
those attorneys’ fees incurred after the offer by the Company.
     (c) In any case where the Company or any other person seeks to stay or
enjoin the commencement or continuation of an arbitration proceeding, whether
before or after an award has been made, or where a Covered Employee seeks
recovery of amounts due after an award has been made, or where the Company
brings any proceeding challenging or contesting the award, all of a Covered
Employee’s reasonable attorneys fees and expenses incurred in connection
therewith shall be promptly reimbursed by the Company to the Covered Employee,
within five days of presentation of an itemized request for reimbursement,
regardless of whether the Covered Employee prevails and regardless of the forum
in which such proceeding is brought.
     10. Benefits and Burdens. This Plan shall inure to the benefit of and be
binding upon the Employers and the Covered Employees, their respective
successors, executors, administrators, heirs and permitted assigns. In the event
of a Covered Employee’s death after a Terminating Event but prior to the
completion by the Employers of all payments due him under this Plan, the
Employers shall continue such payments to the Covered Employee’s beneficiary
designated in writing to the Employers prior to his death (or to his estate, if
the Covered Employee fails to make such designation).
     11. Enforceability. If any portion or provision of this Plan shall to any
extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Plan, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Plan shall be valid and enforceable to the fullest
extent permitted by law.
     12. Waiver. No waiver of any provision hereof shall be effective unless
made in writing and signed by the waiving party. The failure of any party to
require the performance of any term or obligation of this Plan, or the waiver by
any party of any breach of this Plan, shall not prevent any subsequent
enforcement of such term or obligation or be deemed a waiver of any subsequent
breach.
     13. Notices. Any notices, requests, demands, and other communications
provided for by this Plan shall be sufficient if in writing and delivered in
person or sent by registered or certified mail, postage prepaid, to a Covered
Employee at the last address the Covered Employee has filed in writing with the
Employers, or to the Employers at their main office, attention of the Board of
Directors.

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     14. Effect on Other Plans. Nothing in this Plan shall be construed to limit
the rights of the Covered Employees under the Employers’ benefit plans, programs
or policies.
     15. Nature of Payments; Requirement for Release, Confidentiality and
Non-Solicitation Agreement. The amounts due pursuant to this Plan, except for
payment of accrued base salary through the Date of Termination, are in the
nature of severance payments considered to be reasonable by the Company and are
not in the nature of a penalty. The Company may require, as a condition to
making the payments and providing the benefits required hereby, that a Covered
Employee execute and deliver to the Company a Release and a Non-Solicitation
Agreement (as such terms are defined below), and may also require that the
Covered Employee acknowledge in writing that he or she is resigning as an
officer from the Company and as a director and officer of any subsidiary of the
Company for which the Covered Employee serves in such capacity, before any
amounts or benefits under this Plan are paid or provided. A “Release” shall mean
a written release of all employment-related claims by Covered Employee of the
Company in a form and manner reasonably satisfactory to the Company. Such
Release shall in all events preserve Covered Employee’s continuing rights under
this Plan except with respect to any amount paid prior to or simultaneously with
the execution of such Release, in which event Covered Employee shall acknowledge
receipt of such amount and (if such is the case) that such amount was properly
calculated and is in full satisfaction of the Company’s obligation to pay such
amount. “Non-Solicitation Agreement” means an agreement of Covered Employee with
the Company that Covered Employee shall not, without the prior written consent
of the Company for a period of one year following the Covered Employee’s date of
termination, solicit or attempt to solicit for employment with or on behalf of
any corporation, partnership, venture or other business entity, any employee of
the Company or any of its affiliates or any person who was formerly employed by
the Company or any of its affiliates within the preceding six months, unless
such person’s employment was terminated by the Company or any of such
affiliates.
     16. Amendment or Termination of Plan. The Company may, upon one year’s
advance written notice to the Covered Employees, amend or terminate this Plan at
any time or from time to time; provided, however, that, with respect to any such
notice given on or prior to March 29, 2002, the amendment or termination set
forth in such notice shall not, without the written consent of a Covered
Employee, in any material adverse way affect the rights of such Covered
Employee; and provided, further, that during the 24 months following a Change in
Control no such amendment or termination shall have a material adverse effect on
the rights of a Covered Employee with respect to such Change in Control.
     17. Governing Law. This Plan shall be construed under and be governed in
all respects by the laws of the State of Maryland.

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     18. Obligations of Successors. In addition to any obligations imposed by
law upon any successor to the Employers, the Employers will use their best
efforts to require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
or assets of the Employers to expressly assume and agree to perform this Plan in
the same manner and to the same extent that the Employers would be required to
perform if no such succession had taken place.
     19. Section 409A. Anything in this Plan to the contrary notwithstanding, if
at the time of the Covered Employee’s “separation from service” within the
meaning of Section 409A of the Code, the Company determines that the Covered
Employee is a “specified employee” within the meaning of
Section 409A(a)(2)(B)(i) of the Code, then to the extent any payment or benefit
that the Covered Employee becomes entitled to under this Plan would be
considered deferred compensation subject to the 20 percent additional tax
imposed pursuant to Section 409A of the Code as a result of the application of
Section 409A(2)(B)(i) of the Code, such payment shall not be payable and such
benefit shall not be provided prior to the date that is the earlier of (a) six
months and one day after the Covered Employee’s separation from service, or
(b) the Covered Employee’s death. Any such delayed cash payment shall earn
interest at an annual rate equal to the applicable federal short-term rate
published by the Internal Revenue Service for the month in which separation from
service occurs, from the date of separation from service until the payment date.
The parties intend that this Plan will be administered in accordance with
Section 409A of the Code. The determination of whether and when a separation
from service has occurred shall be made in accordance with the presumptions set
forth in Treasury Regulation Section 1.409(A)-1(h).
Adopted by the Compensation Committee of the Board of Directors: as of
September 9, 1999 and amended and restated on November 18, 2008, effective as of
January 1, 2009.

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