Exhibit 10.49
 
RULES AND PROCEDURES
FOR
DIRECTORS’ DEFERRED COMPENSATION PROGRAM
 
The following rules and procedures have been adopted by the Compensation
Committee (the “Committee”) of the Board of Directors of AvalonBay Communities,
Inc. (the “Company”) to govern the deferral by a Non-Employee Director pursuant
to Section 7(b) of the AvalonBay Communities, Inc. 1994 Stock Option and
Incentive Plan, as amended and restated on December 8, 2004 and as subsequently
amended (the “Plan”).  All capitalized terms used herein shall have the same
meaning as used in the Plan unless otherwise specifically provided herein.
 
1.           Election to Defer.  A Non-Employee Director may elect in advance to
receive all or a portion of the cash compensation or Restricted Stock Award
otherwise due him in the form of a Deferred Stock Award.  To make such an
election, the Non-Employee Director must execute and deliver to the Company an
election form specifying the percentage of his cash compensation he wishes to
defer and whether or not he wishes to receive his Restricted Stock Award in the
form of a Deferred Stock Award.  Except with respect to a newly elected or
appointed Non-Employee Director, any election under this paragraph shall apply
only to cash fees that are earned with respect to services to be performed
beginning on or after the start of the next calendar year after such receipt and
to stock awards to be granted after the start of the next calendar year.  A
newly elected or appointed Non-Employee Director, may, no later than 30 days
after becoming a Non-Employee Director, file a deferral election which shall
apply only to cash fees that are earned with respect to services to be performed
subsequent to the election and to stock awards to be granted subsequent to the
election.  An election shall remain in effect from year to year, until a new
election becomes effective with respect to cash fees payable, and a stock award
to be granted, in the next calendar year.  A Non-Employee Director may revoke or
modify his deferral election with respect to cash fees that are payable, and a
stock award to be granted, in the calendar year beginning after receipt by the
Company of his written revocation (for clarification, this means that in the
absence of a revocation or modification, an election will remain in effect for
subsequent calendar years)..

2.           Deferred Account.  As of the last day of each calendar quarter, a
Non-Employee Director’s deferred account (“Account”) shall be credited with a
number of whole and fractional stock units determined by dividing his aggregate
deferred cash fees for the calendar quarter by the Fair Market Value of a share
of Stock.  If a Non-Employee Director has elected to receive his Restricted
Stock Award in the form of a Deferred Stock Award, at such time as provided in
Section 6(b)(i) of the Plan for issuance of Restricted Stock, his Account shall
also be credited with a number of stock units determined pursuant to the
provisions of Section 6(b)(i) of the Plan.  Except as otherwise provided in the
award agreement, the stock units credited in lieu of a Restricted Stock Award
shall vest twenty percent (20%) on the date of issuance and twenty percent (20%)
on each of the four anniversaries of the date of issuance.

3.           Dividend Equivalent Amounts.  Whenever dividends (other than
dividends payable only in shares of Stock) are paid with respect to Stock, each
Account shall be credited with a number of whole and fractional stock units
determined by multiplying the dividend value per share by the stock unit balance
of the Account on the record date and dividing the result by the Fair Market
Value of a share of Stock on the dividend payment date.

4.           Period of Deferral.  The period of deferral shall cease when a
Non-Employee Director ceases to serve as a member of the Board of Directors of
the Company.

 
 

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

 
5.           Designation of Beneficiary.  A Non-Employee Director may designate
one or more beneficiaries to receive payments from his Account in the event of
his death.  A designation of beneficiary shall apply to a specified percentage
of a Non-Employee Director’s entire interest in his Account.  Such designation,
or any change therein, must be in writing and shall be effective upon receipt by
the Company.  If there is no effective designation of beneficiary, or if no
beneficiary survives the Non-Employee Director, the estate of the Non-Employee
Director shall be deemed to be the beneficiary.  All payments to a beneficiary
or estate shall be made in a lump sum in shares of Stock, with any fractional
share paid in cash.

6.           Payment.  All vested stock units credited to a Non-Employee
Director’s Account shall be paid in shares of Stock to the Non-Employee
Director, or his designated beneficiary (or beneficiaries) or estate, in a lump
sum within 30 days after the Non-Employee Director ceases to serve on the Board;
provided, however, that fractional shares shall be paid in
cash.  Notwithstanding the foregoing, in the event of a Change in Control of the
Company (as defined in Section 16(b) of the Plan), all Accounts under this
deferred compensation arrangement shall become immediately payable in a lump
sum.

7.           Adjustments.  In the event of a stock dividend, stock split or
similar change in capitalization affecting the Stock, the Committee shall make
appropriate adjustments in the number of stock units credited to Non-Employee
Directors’ Accounts.

8.           Nontransferability of Rights.  During a Non-Employee Director’s
lifetime, any payment under this deferred compensation arrangement shall be made
only to him.  No sum or other interest under this deferred compensation
arrangement shall be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance or charge, and any attempt by a
Non-Employee Director or any beneficiary under this deferred compensation
arrangement to do so shall be void.  No interest under this deferred
compensation arrangement shall in any manner be liable for or subject to the
debts, contracts, liabilities, engagements or torts of a Non-Employee Director
or beneficiary entitled thereto.

9.           Company’s Obligations to Be Unfunded and Unsecured.  The Accounts
maintained under this deferred compensation arrangement shall at all times be
entirely unfunded, and no provision shall at any time be made with respect to
segregating assets of the Company (including Stock) for payment of any amounts
hereunder.  No Non-Employee Director or other person shall have any interest in
any particular assets of the Company (including Stock) by reason of the right to
receive payment under this deferred compensation arrangement, and any
Non-Employee Director or other person shall have only the rights of a general
unsecured creditor of the Company with respect to any rights under this deferred
compensation arrangement.
 
 

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

 
FIRST AMENDMENT TO
RULES AND PROCEDURES
FOR
DIRECTORS’ DEFERRED COMPENSATION PROGRAM
 
The following amendment to rules and procedures governing the deferral by a
Non-Employee Director pursuant to Section 7(b) of the AvalonBay Communities,
Inc. 1994 Stock Option and Incentive Plan, as amended and restated on December
8, 2004 and as subsequently amended (the “Plan”) was adopted by the Company’s
Board of Directors on December 11, 2008.  All capitalized terms used herein
shall have the same meaning as used in the Plan unless otherwise specifically
provided herein.
 
Section 6 of the Rules and Procedures is amended in its entirety to read as
follows:

Payment.  All vested stock units credited to a Non-Employee Director’s Account
shall be paid in shares of Stock to the Non-Employee Director, or his designated
beneficiary (or beneficiaries) or estate, in a lump sum within 30 days after the
Non-Employee Director ceases to serve on the Board; provided, however, that
fractional shares shall be paid in cash.  Notwithstanding the foregoing, in the
event of a change in the ownership or effective control of the Company, or in
the ownership of a substantial portion of the assets of the Company, within the
meaning of Section 409A of the Internal Revenue Code of 1986, as amended, and
the regulations promulgated thereunder, all Accounts under this deferred
compensation arrangement shall become immediately payable in a lump sum.

Section 8 of the Rules and Procedures is amended in its entirety to read as
follows:

 Nontransferability of Rights.  During a Non-Employee Director’s lifetime, any
payment under this deferred compensation arrangement shall be made only to
him.  No sum or other interest under this deferred compensation arrangement
shall be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or charge, and any attempt by a Non-Employee
Director or any beneficiary under this deferred compensation arrangement to do
so shall be void.  No interest under this deferred compensation arrangement
shall in any manner be liable for or subject to the debts, contracts,
liabilities, engagements or torts of a Non-Employee Director or beneficiary
entitled thereto.  Notwithstanding the foregoing, the Company may make payments
to an individual other than a Non-Employee Director to the extent required by a
domestic relations order.
 
 

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

 

SECOND AMENDMENT TO
RULES AND PROCEDURES
FOR
DIRECTORS’ DEFERRED COMPENSATION PROGRAM
 
The following amendment to rules and procedures governing the deferral by a
Non-Employee Director pursuant to (i) Section 7(b) of the AvalonBay Communities,
Inc. 1994 Stock Option and Incentive Plan, and (ii) Section 8(b) of the
AvalonBay Communities, Inc. 2009 Stock Option and Incentive Plan (the “2009
Plan”), was adopted by the Company’s Board of Directors on February 10,
2010.  All capitalized terms used herein shall have the same meaning as used in
the 2009 Plan unless otherwise specifically provided herein.
 
Section 6 of the Rules and Procedures is amended in its entirety to read as
follows:
 
“6.         Payment.  All vested stock units credited to a Non-Employee
Director’s Account shall be paid in shares of Stock to the Non-Employee
Director, or his designated beneficiary (or beneficiaries) or estate, in a lump
sum within 30 days after the Non-Employee Director incurs a Separation from
Service (within the meaning of Section 409A of the Internal Revenue Code of
1986, as amended (the ‘Code’) and in accordance with the presumptions set forth
in Treasury Regulation Section 1.409A-1(h)) with the Company; provided, however,
that fractional shares shall be paid in cash, and provided, further, that in the
event the Non-Employee Director is a ‘specified employee’ within the meaning of
Section 409A of the Code and the regulations promulgated thereunder, such
distribution shall be made upon the earlier of the Non-Employee Director’s
death, or six months and a day after his Separation from Service, all Accounts
under this deferred compensation arrangement shall become immediately payable in
a lump sum.”
 
 
 

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

 

CORRECTING AMENDMENT TO
RULES AND PROCEDURES
FOR
DIRECTORS’ DEFERRED COMPENSATION PROGRAM
 
The following correcting amendment to rules and procedures governing the
deferral by a Non-Employee Director pursuant to (i) Section 7(b) of the
AvalonBay Communities, Inc. 1994 Stock Option and Incentive Plan, and (ii)
Section 8(b) of the AvalonBay Communities, Inc. 2009 Stock Option and Incentive
Plan (the “2009 Plan”), was adopted by the Company’s Board of Directors on
November 10, 2010.  All capitalized terms used herein shall have the same
meaning as used in the 2009 Plan unless otherwise specifically provided herein.
 
The following amendment is hereby adopted, clarifying that Section 6 of the
Company’s Rules and Procedures for Directors’ Deferred Compensation Program
shall read as follows (previously inadvertently omitted language is underlined
and bold):
 
“6.           Payment.  All vested stock units credited to a Non-Employee
Director’s Account shall be paid in shares of Stock to the Non-Employee
Director, or his designated beneficiary (or beneficiaries) or estate, in a lump
sum within 30 days after the Non-Employee Director incurs a Separation from
Service (within the meaning of Section 409A of the Internal Revenue Code of
1986, as amended (the ‘Code’) and in accordance with the presumptions set forth
in Treasury Regulation Section 1.409A-1(h)) with the Company; provided, however,
that fractional shares shall be paid in cash, and provided, further, that in the
event the Non-Employee Director is a ‘specified employee’ within the meaning of
Section 409A of the Code and the regulations promulgated thereunder, such
distribution shall be made upon the earlier of the Non-Employee Director’s
death, or six months and a day after his Separation from Service, all Accounts
under this deferred compensation arrangement shall become immediately payable in
a lump sum.  Notwithstanding the foregoing, in the event of a change in the
ownership or effective control of the Company, or in the ownership of a
substantial portion of the assets of the Company, within the meaning of Section
409A of the Internal Revenue Code of 1986, as amended, and the regulations
promulgated thereunder, all Accounts under this deferred compensation
arrangement shall become immediately payable in a lump sum.”