EXHIBIT 10.26

 

AVALONBAY COMMUNITIES, INC.

NON-QUALIFIED STOCK OPTION AGREEMENT

(1994 STOCK INCENTIVE PLAN, AS AMENDED AND RESTATED)

 

Pursuant to the AvalonBay Communities, Inc. 1994 Stock Incentive Plan, as
amended and restated (the “Plan”), AvalonBay Communities, Inc. (the “Company”)
hereby grants to the Optionee named below an Option to purchase up to the number
of shares of the Company’s Common Stock, par value $.01 per share (“Common
Stock”) set forth below. This option is subject to all of the terms and
conditions as set forth herein, in the Non-Qualified Stock Option Agreement
Terms (the “Terms”) which are attached hereto and incorporated herein in their
entirety, and in the Plan. Capitalized terms used but not defined herein or in
the Terms shall have the respective meanings ascribed thereto in the Plan.

 

Non-Qualified Stock

 

Option:

 

This Option does not qualify as an incentive stock option under Section 422 of
the Internal Revenue Code of 1986, as amended (the “Code”), and consequently
shall be treated as a non-qualified stock option for tax purposes.

 

 

 

Vesting Schedule:

 

Subject to the provisions of Section 4 and 6 of the Terms and the discretion of
the Company to accelerate the vesting schedule, one third of this option shall
become vested and exercisable on each of the first three anniversary dates of
this award.

 

 

 

 

 

In any event this Option shall become fully vested and exercisable with respect
to all of the Option Shares three years after the date hereof.

 

Additional Terms/Acknowledgements: The undersigned Optionee acknowledges receipt
of, and understands and agrees to, this Non-Qualified Stock Option Agreement,
including, without limitation, the Terms. Optionee further acknowledges receipt
of a copy of the Plan. Optionee further acknowledges that as of the Date of
Grant, this Non-Qualified Stock Option Agreement, including, without limitation,
the Terms, and the Plan set forth the entire understanding between Optionee and
the Company regarding the Options described herein and supersede all prior oral
and written agreements on that subject.

 

ATTACHMENT: Non-qualified Stock Option Agreement Terms

 

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AVALONBAY COMMUNITIES, INC.

1994 STOCK INCENTIVE PLAN, AS AMENDED AND RESTATED

NON-QUALIFIED STOCK OPTION AGREEMENT TERMS

 

1. Vested Option Shares. Subject to Section 4, when this Option is vested with
respect to any of the Option Shares, this Option shall continue to be
exercisable with respect to such Option Shares (“Vested Option Shares”) at any
time or times prior to the Expiration Date.

 

2. Manner of Exercise. The Optionee may exercise this Option only in the
following manner: from time to time on or prior to the Expiration Date, the
Optionee may give written notice to the Company of his election to purchase some
or all of the Vested Option Shares purchasable at the time of such notice, which
this notice shall specify the number of Option Shares to be purchased.

 

Payment of the purchase price for the Option Shares to be purchased may be made
by one or more of the following methods: (a) in cash, by certified bank check or
other instrument acceptable to the Company; (b) through the delivery (or
attestation to the ownership) of shares of Common Stock that have been
beneficially owned by the Optionee for at least six (6) months and are not then
subject to restrictions under any Company plan and were not used in a “stock
swap” within the six (6) months preceding the option exercise, such surrendered
shares to be valued at the closing price of the Common Stock on the principal
exchange on which the Common Stock is listed on the date the Company receives
the exercise notice; (c) by the Optionee delivering to the Company a properly
executed exercise notice together with irrevocable instructions to a broker to
promptly deliver to the Company cash or a check payable and acceptable to the
Company to pay the purchase price; provided that in the event the Optionee
chooses to pay the purchase price as provided in this subsection (c), the
Optionee and the broker shall comply with such procedures and enter into such
agreements of indemnity and other agreements as the Company shall prescribe as a
condition of such payment procedure; or (d) with the consent of the Company, a
combination of (a), (b) and (c) above. Payment instruments will be received
subject to collection.

 

The delivery of certificates representing the Option Shares will be contingent
upon (i) the Company’s receipt from the Optionee of full payment for the Option
Shares, (ii) the satisfaction of section 10 hereof, and (iii) any agreement,
statement or other evidence that the Company may require to satisfy itself that
the issuance of Option Shares to be purchased pursuant to the exercise of
Options under the Plan and any subsequent resale of the shares will be in
compliance with applicable laws and regulations.

 

If requested upon the exercise of this Option, certificates for Option Shares
may be issued in the name of the Optionee jointly with another person or in the
name of the executor or administrator of the Optionee’s estate. The Optionee
shall not have the rights of a stockholder with respect to any Option Shares
prior to his acquisition of such Option Shares upon the exercise of this Option.

 

Notwithstanding any other provision hereof or of the Plan, no portion of this
Option shall be exercisable after the Expiration Date hereof.

 

3. Non-transferability of Option. This Option shall not be transferable by the
Optionee otherwise than by will or by the laws of descent and distribution and
this Option shall be exercisable, during the Optionee’s lifetime, only by the
Optionee.

 

4. Termination of Employment. If the Optionee’s employment (or other business
relationship) by the Company or a Subsidiary (as defined in the Plan) is
terminated, the period within which to exercise the Option may be subject to
earlier termination as set forth below.

 

(a) Termination Due to Death. If the Optionee’s employment (or other business
relationship) terminates by reason of death, any Option held by the Optionee
shall be automatically vested on the date of termination and shall be
exercisable by the Optionee’s legal representative or legatee for a period of
twelve (12) months from the date of termination, or until the Expiration Date,
if earlier.

 

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(b) Termination Due to Disability. If the Optionee’s employment (or other
business relationship) terminates by reason of Disability (as defined in the
Plan), any Option held by the Optionee shall be automatically vested on the date
of termination, and shall be exercisable for a period of twelve (12) months from
the date of termination, or until the Expiration Date, if earlier. The death of
the Optionee during the twelve (12) month period provided in this
Section 4(b) shall extend such period for six (6) months from the date of death
or until the Expiration Date, if earlier.

 

(c) Termination by Reason of Retirement. If the Optionee’s employment terminates
by reason of Retirement (as defined in the Plan), any Option held by the
Optionee shall be automatically vested on the date of termination, and shall be
exercisable for a period of twelve (12) months from the date of termination, or
until the Expiration Date, if earlier. The death of the Optionee during the
twelve (12) month period provided in this Section 4(c) shall extend such period
for six (6) months from the date of death, or until the Expiration Date, if
earlier.

 

(d) Termination for Cause. If the Optionee’s employment (or other business
relationship) terminates for Cause (as defined in the Plan), any Option held by
the Optionee shall immediately terminate and be of no further force and effect.

 

(e) Termination Without Cause. If the Optionee’s employment (or other business
relationship) is terminated by the Company without Cause (as defined in the
Plan), any option held by the Optionee shall be automatically vested on the date
of termination, and shall be exercisable for a period of twelve (12) months from
the date of termination, or until the Expiration Date, if earlier. The death of
the Optionee during the twelve (12) month period provided in this
Section 4(e) shall extend such period for six (6) months from the date of death,
or until the Expiration Date, if earlier.

 

(f) Termination at the Election of the Optionee. If the Optionee’s employment
(or other business relationship) is voluntarily terminated at the election of
the Optionee (i.e., is terminated other than for death, Disability, Retirement,
or a termination at the Company’s election whether for Cause or without Cause),
any option held by the Optionee may be exercised, to the extent exercisable on
the date of termination, for a period of three (3) months from the date of
termination, or until the Expiration Date, if earlier. For clarification, it is
noted that this means that the remaining unvested portion of the Option shall
terminate immediately and be of no further force or effect.

 

For this purpose, neither a transfer of employment from the Company to a
Subsidiary (or from a Subsidiary to the Company) nor an approved leave of
absence shall be deemed a “termination of employment.”

 

5. Option Shares. The Option Shares are shares of the Common Stock of the
Company as constituted on the date of this Option, subject to adjustment as
provided in the Plan.

 

6. Effect of Change of Control. Upon the occurrence of a Change of Control, as
defined in the Plan, this Option shall automatically become fully exercisable.

 

7. No Special Employment Rights. This Option will not confer upon the Optionee
any right with respect to continuance of employment by the Company or a
Subsidiary, nor will it interfere in any way with any right of the Optionee’s
employer to terminate the Optionee’s employment at any time.

 

8. Rights as a Shareholder. The Optionee shall have no rights as a shareholder
with respect to any shares of Common Stock that may be purchased upon exercise
of this Option unless and until a certificate or certificates representing such
shares are duly issued and delivered to the Optionee. Except as otherwise
expressly provided in the Plan, no adjustment shall be made for dividends or
other rights for which the record date is prior to the date such stock
certificate is issued.

 

9. The Plan. In the event of any discrepancy or inconsistency between this
Agreement and the Plan, the terms and conditions of the Plan shall control.

 

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10. Withholding Taxes. The Optionee shall, not later than the date as of which
the exercise of this Option becomes a taxable event for federal income tax
purposes, pay to the Company (or make arrangements satisfactory to the Company
for payment of) any federal, state and local taxes required by law to be
withheld on account of such taxable event. The Optionee acknowledges and agrees
that the Company has the right to deduct from payments of any kind otherwise due
to the Optionee, or from the Option Shares to be issued in respect of an
exercise of this Option, any federal, state or local taxes of any kind required
by law to be withheld with respect to the issuance of shares of Stock to the
Optionee.

 

11. Non-Solicitation. Optionee hereby agrees that, for a period of at least 12
months following Optionee’s termination of employment with the Company for any
reason, Optionee shall not, without the prior written consent of the Company,
solicit or attempt to solicit for employment with or on behalf of any other
person, firm or 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.

 

12. Miscellaneous. Notices hereunder shall be mailed or delivered to the Company
at its principal place of business, 2900 Eisenhower Avenue, Suite 300,
Alexandria, Virginia 22314, Attention: Director of Compensation and Benefits,
and shall be mailed or delivered to Optionee at his address set forth in the
Company’s records, or in either case at such other address as one party may
subsequently furnish to the other party in writing. This Option shall be
governed by the laws of the State of Maryland, except to the extent such law is
preempted by federal law.

 

[End of Text]

 

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