Exhibit 10.4

 

FORM OF AVALONBAY COMMUNITIES, INC.
EMPLOYEE STOCK GRANT AND RESTRICTED STOCK AGREEMENT

 

Pursuant to the terms of the AvalonBay Communities, Inc. Amended and Restated
1994 Stock Incentive Plan )(as amended from time to time, the “Plan”), in
consideration for services rendered and to be rendered to AvalonBay Communities,
Inc. (the “Company”) and for other good and valuable consideration, which the
Company has determined to be equal to the fair market value of the Shares, as
defined below, the Company is issuing to the Employee named below
contemporaneously herewith the Shares, upon the terms and conditions set forth
herein and in the Restricted Stock Agreement Terms (the “Terms”) which are
attached hereto and incorporated herein in their entirety.  Capitalized terms
used but not defined herein shall have the respective meanings ascribed thereto
in the Terms.

Employee:

 

 

Award Date:

 

 

Vesting Commencement Date:

 

 

Number of Shares Granted (“Shares”):

 

 

 

Vesting Schedule:                   Subject to the provisions of the Terms and
the discretion of the Company to accelerate the vesting schedule, the Employee’s
ownership interest in the Shares shall vest, and the status of the Shares as
Restricted Stock and all Restrictions with respect to the Shares shall
terminate, in accordance with the following schedule of events:

 

Vesting Event

 

Shares Vested

 

 

 

March 1, 200 [year of award]

 

[20%]

March 1, 200 [1st anniversary]

 

[20%]

March 1, 200 [2nd anniversary]

 

[20%]

March 1, 200 [3rd anniversary]

 

[20%]

March 1, 200 [4th anniversary]

 

[20%]

 

 

 

Termination of the Employee’s Employment by the Company, other than for Cause

 

[Total RSA]*

 

 

 

The death or disability of the Employee

 

[Total RSA]*

 

 

 

The Employee’s Retirement (as defined in the Plan)

 

[Total RSA]*

 

 

 

If earlier than any of the above events, a Change of Control

 

[Total RSA]*

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*or, if fewer, all Restricted Shares

 

 

 

 

 

[General Vesting Schedule provided above]

 

 

 

Additional Terms/Acknowledgements: The undersigned Employee acknowledges receipt
of, and understands and agrees to, this Stock Grant and Restricted Stock
Agreement, including, without limitation, the Terms.  Employee further
acknowledges that as of the Award Date, this Stock Grant and Restricted Stock
Agreement, including, without limitation, the Terms, sets forth the entire
understanding between Employee and the Company regarding the stock grant
described herein and supersedes all prior oral and written agreements on that
subject.

 

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AVALONBAY COMMUNITIES, INC.

 

EMPLOYEE:

 

 

 

 

By:

 

 

 

 

 

Signature

 

Signature

 

 

 

 

 

Title:

 

 

Name (Print):

 

Date:

 

 

Date:

 

 

 

ATTACHMENT:  Restricted Stock Agreement Terms

 

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AVALONBAY COMMUNITIES, INC.

 

RESTRICTED STOCK AGREEMENT TERMS

 

 

ARTICLE I

 

DEFINITIONS

 

                The following terms used below in this Agreement shall have the
meaning specified below unless the context clearly indicates to the contrary. 
Capitalized terms not otherwise defined herein shall have the meanings set forth
in the Plan.

 

Section 1.1 – Cause

 

                “Cause” means and shall be limited to a vote of the Board of
Directors resolving that the Employee should be dismissed as a result of (i) any
material breach by the Employee of any agreement to which the Employee and the
Company are parties, (ii) any act (other than retirement) or omission to act by
the Employee which may have a material and adverse effect on the business of the
Company or any Subsidiary (as hereinafter defined) or on the Employee’s ability
to perform services for the Company or any Subsidiary, including, without
limitation, the Employee being convicted of any crime (other than ordinary
traffic violations) or (iii) any material misconduct or neglect of duties by the
Employee in connection with the business or affairs of the Company or any
Subsidiary.

 

Section 1.2 – Change of Control

 

                “Change of Control” means the occurrence of any one of the
following events:

 

                                                                (i)           
any “person,” as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the “Act”) (other than the Company, any of its
Subsidiaries, 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),
directly or indirectly, of securities of the Company representing 30% or more of
either (A) the combined voting power of the Company’s then outstanding
securities having the right to vote in an election of the Company’s Board of
Directors (“Voting Securities”) or (B) the then outstanding shares of Common
Stock (as hereinafter defined), in either such case other than as a result of an
acquisition of securities directly from the Company; or

 

                                                                (ii)          
persons who, as of the Award Date, constitute the Company’s Board of Directors
(the “Incumbent Directors”) cease for any reason, including, without limitation,
as a result of a tender offer, proxy contest, merger, acquisition of Voting
Securities or similar transaction, to constitute at least a majority of the
Board of Directors, provided that any person becoming a director of the Company
subsequent to the Award Date whose election or nomination for election was
approved by a vote of at least a majority of the Incumbent Directors shall, for
purposes of this Agreement, be considered an Incumbent Director; or

 

                                                                (iii)         
the stockholders of the Company shall approve (A) any consolidation or merger of
the Company or any Subsidiary where the stockholders of the Company, immediately
prior to the consolidation or merger, would not, immediately after the
consolidation or merger, beneficially own (as such term is defined in Rule 13d–3
under the Act), directly or indirectly, shares representing in the aggregate 30%
of the voting shares of the corporation or other entity issuing cash or
securities in the consolidation or merger (or of its ultimate parent corporation
or other entity, if any), (B) any sale, lease, exchange or other transfer (in
one transaction or a series of transactions contemplated or arranged by any
party as a single plan) of all or substantially all of the assets of the Company
or (C) any plan or proposal for the liquidation or dissolution of the Company.

 

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                Notwithstanding the foregoing, a “Change of Control” shall not
be deemed to have occurred for purposes of the foregoing clause (i) solely as
the result of an acquisition of securities by the Company which, by reducing the
number of shares of Common Stock or other Voting Securities outstanding,
increases (x) the proportionate number of shares of Common Stock beneficially
owned by any person to 30% or more of the shares of Common Stock then
outstanding or (y) 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 clause (x) or (y) of this sentence shall thereafter
become the beneficial owner of any additional shares of Common Stock or other
Voting Securities (other than pursuant to a stock split, stock dividend, or
similar transaction), then a “Change of Control” shall be deemed to have
occurred for purposes of the foregoing clause (i).

 

Section 1.3 – Common Stock

 

                “Common Stock” shall mean the common stock of the Company, $.01
par value.

 

Section 1.4 – Fair Market Value

 

                “Fair Market Value” on any given date means the last reported
sale price at which the Common Stock is traded on such date or, if no Common
Stock is traded on such date, the most recent date on which Common Stock was
traded, as reflected on the New York Stock Exchange or, if applicable, any other
national stock exchange on which the Common Stock is traded.

 

Section 1.5 – Restricted Stock

 

                “Restricted Stock” shall mean the Shares issued under this
Agreement for as long as such shares are subject to the Restrictions (as
hereinafter defined) imposed by this Agreement.

 

Section 1.6 – Restrictions

 

                “Restrictions” shall mean the restrictions set forth in Article
III of this Agreement.

 

Section 1.7 – Secretary

 

                “Secretary” shall mean the secretary of the Company.

 

Section 1.8 – Subsidiary

 

                “Subsidiary” means any corporation or other entity (other than
the Company) in any unbroken chain of corporations or other entities, beginning
with the Company if each of the corporations or entities (other than the last
corporation or entity in the unbroken chain) owns stock or other interests
possessing 50% or more of the economic interest or the total combined voting
power of all classes of stock or other interests in one of the other
corporations or entities in the chain.

 

ARTICLE II

 

RESTRICTED STOCK

 

Section 2.1 – Restricted Stock

 

                Any shares of Common Stock granted pursuant to this Agreement
which vest on a date other than the Award Date shall be considered Restricted
Stock for purposes of this Agreement and shall be subject to the Restrictions
until such time or times and except to the extent that the Employee’s ownership
interest in Shares vests in accordance with the Vesting Schedule set forth on
the first page of this Agreement.

 

Section 2.2 – Escrow

 

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                The Secretary or such other escrow holder as the Company may
from time to time appoint shall retain physical custody of the certificates
representing Restricted Stock, including shares of Restricted Stock issued
pursuant to Section 3.5, until all of the Restrictions expire or shall have been
removed; provided, however, that in no event shall the Employee retain physical
custody of any certificates representing Restricted Stock issued to him.

 

Section 2.3 – Rights as Stockholder

 

                From and after the Award Date, the Employee shall have all the
rights of a stockholder with respect to the Shares, subject to the Restrictions
herein (including the provisions of Article IV), including the right to vote the
Shares and to receive all dividends or other distributions paid or made with
respect to the Shares unless and to the extent that the Employee’s interest in
Restricted Stock shall have terminated and the Restricted Stock reverts to the
Company as provided in Section 3.1 of this Agreement.

 

ARTICLE III

 

RESTRICTIONS

 

Section 3.1 – Reversion of Restricted Stock

 

                Except as provided in Section 2.3, this Section 3.1, and the
Vesting Schedule set forth on the first page of this Agreement, the Restricted
Stock shall be the property of the Company for as long as and to the extent that
the Shares are Restricted Stock pursuant to Section 2.1.  In the event that the
Employee’s employment by the Company terminates for any reason other than (a)
death, (b) disability or (c) termination of the Employee’s employment by the
Company other than for Cause, any interest of the Employee in Shares that are
Restricted Stock shall thereupon immediately terminate and all rights with
respect to the Restricted Stock shall immediately revert to and unconditionally
be the property of the Company; provided, however, that the Employee shall be
entitled to retain any cash dividends paid before the date of such event on the
Restricted Stock.

 

Section 3.2 – Restricted Stock Not Transferable

 

                No Restricted Stock or any interest or right therein or part
thereof shall be liable for the debts, contracts or engagements of the Employee
or his successors in interest or shall be subject to disposition by transfer,
alienation, anticipation, pledge, encumbrance, assignment or any other means
whether such disposition be voluntary or involuntary or by operation of law or
judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted disposition thereof shall
be null and void and of no effect; provided, however, that the Employee may
designate one or more trusts or other similar arrangements for the benefit of
the Employee or members of his immediate family as the registered holders of
Restricted Stock if and as long as the Employee acts as trustee or in a similar
capacity with respect to such trust or arrangement.  Any Restricted Stock so
registered shall for all purposes hereunder be deemed to be held of record by
the Employee and shall be subject to all of the terms and conditions of this
Agreement, including but not limited to the Restrictions and the provisions of
Article III of this Agreement.

 

Section 3.3 – Legend

 

                (a)           Certificates representing shares of Restricted
Stock issued pursuant to this Agreement shall, until all Restrictions lapse and
new certificates are issued pursuant to Section 3.4, bear the following legend:

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN VESTING
REQUIREMENTS AND MAY BE SUBJECT TO FORFEITURE TO AVALONBAY COMMUNITIES, INC.
(THE “COMPANY”) UNDER THE TERMS OF THAT CERTAIN RESTRICTED STOCK AGREEMENT BY
AND BETWEEN THE COMPANY AND THE HOLDER OF THE SECURITIES.  PRIOR TO VESTING OF
OWNERSHIP IN THE SECURITIES, THEY MAY NOT BE, DIRECTLY OR INDIRECTLY, OFFERED,
TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
UNDER ANY CIRCUMSTANCES.  COPIES OF THE ABOVE

 

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REFERENCED AGREEMENT ARE ON FILE AT AND MAY BE OBTAINED ON REQUEST AND WITHOUT
CHARGE FROM THE OFFICES OF THE COMPANY AT 2900 EISENHOWER AVENUE, SUITE 300,
ALEXANDRIA, VA 22314.”

 

                (b)           Certificates representing any shares of Common
Stock issued pursuant to this Agreement shall bear the following or
substantially similar legend:

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”).  NO SALE,
HYPOTHECATION, TRANSFER OR OTHER DISPOSITION OF THESE SECURITIES MAY BE MADE
UNLESS EITHER (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR (B) PURSUANT TO AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT.”

 

Section 3.4 – Lapse of Restrictions

 

                Upon the vesting of some or all of the Restricted Stock as
provided in the Vesting Schedule set forth on the first page of this Agreement,
and subject to the conditions to issuance set forth in Article IV, the Company
shall cause new certificates to be issued with respect to such vested Shares and
delivered to the Employee or his legal representative, free from the legend
provided for in Section 3.3(a).

 

Section 3.5 – Restrictions on New Shares

 

                In the event that the outstanding shares of the Company’s Common
Stock are changed into or exchanged for a different number or kind of shares or
other securities of the Company, or a stock split–up or stock dividend, such
new, additional or different shares or securities which are held or received by
the Employee (or his designee) in his capacity as a holder of Restricted Stock
shall be considered to be Restricted Stock and shall be subject to all of the
terms and conditions of this Agreement, including but not limited to the
Restrictions.

 

ARTICLE IV

 

MISCELLANEOUS

 

Section 4.1 – Conditions to Issuance of Stock Certificates

 

                The Company shall not be required to issue or deliver any
certificate or certificates for shares of stock pursuant to this Agreement prior
to fulfillment of all of the following conditions:

 

                                                                (a)          
The admission of such shares to listing on all stock exchanges on which such
class of stock is then listed; and

 

                                                                (b)          
The completion of any registration or other qualification of such shares under
any state or Federal law or under rulings or regulations of the Securities and
Exchange Commission or of any other governmental regulatory body, which the
Company shall deem necessary or advisable; and

 

                                                                (c)          
The obtaining of any approval or other clearance from any state or Federal
governmental agency which the Company shall, in its absolute discretion,
determine to be necessary or advisable; and

 

                                                                (d)          
The payment by the Employee of all amounts required to be withheld under
federal, state and local tax laws, with respect to the issuance of Restricted
Stock and/or the lapse or removal of any of the Restrictions; and

 

Section 4.2 – Notices

 

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                Any notice to be given under the terms of this Agreement to the
Company shall be addressed to the Company in care of its Secretary, and any
notice to be given to the Employee shall be addressed to him at his address as
set forth in the Company’s records.  By a notice given pursuant to this
Section 4.2, either party may hereafter designate a different address for
notices to be given to it or him.  Any notice which is required to be given to
the Employee shall, if the Employee is then deceased, be given to the Employee’s
personal representative if such representative has previously informed the
Company of his status and address by written notice under this Section 4.2.  Any
notice shall have been deemed duly given when enclosed in a properly sealed
envelope or wrapper addressed as aforesaid and deposited (with postage prepaid)
in a post office or branch post office regularly maintained by the United States
Postal Service.

 

Section 4.3 – Titles

 

                Titles and captions are provided herein for convenience only and
are not to serve as a basis for interpretation or construction of this
Agreement.

 

Section 4.4 – Amendment

 

                This Agreement may be amended only by a writing executed by the
parties hereto which specifically states that it is amending this Agreement.

 

Section 4.5 – Tax Withholding

 

                The Company’s obligation (i) to issue or deliver to the Employee
any certificate or certificates for unrestricted shares of stock or (ii) to pay
to the Employee any dividends or make any distributions with respect to the
Common Stock issued under this Agreement is expressly conditioned on the
Company’s satisfaction of its obligation, if any, to withhold taxes.  The
Company may, if the employee so elects in writing, withhold from any
distribution made to the Employee under this Agreement shares of Common Stock
valued at Fair Market Value on the date of such withholding to cover any
applicable withholding and employment taxes.  In lieu of withholding shares of
Common Stock, the Employee may elect to pay to the Company any amounts required
to be withheld in cash.

 

Section 4.6 – Governing Law

 

                The laws of the State of Maryland shall govern the
interpretation, validity, administration, enforcement and performance of the
terms of this Agreement regardless of the law that might be applied under
principles of conflicts of laws.

 

Section 4.7 – Counterparts

 

                This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

 

Section 4.8 – No Special Employment Rights

 

                This Agreement does not, and shall not be interpreted to, create
any right on the part of the Employee to continue in the employ of the Company
or any subsidiary or affiliate thereof, nor to any continued compensation,
prerequisites or other current or future benefits or other incidents of
employment.

 

[End of Text]

 

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