Exhibit 10.2

 

AVALONBAY COMMUNITIES, INC.
[INCENTIVE][NON-QUALIFIED] STOCK OPTION AGREEMENT
(2009 EQUITY INCENTIVE PLAN)

 

Pursuant to the AvalonBay Communities, Inc. Second Amended and Restated 2009
Equity Incentive Plan (the “Plan”), AvalonBay Communities, Inc. (the “Company”)
hereby grants to the Optionee named below an Option to purchase on or prior to
the tenth anniversary of the grant date of this option award as set forth below
(the “Expiration Date”) up to the number of shares of the Company’s Common
Stock, par value $.01 per share (“Common Stock”), set forth below at the
Exercise Price set forth below:

 

Optionee:

 

 

Grant Date:

 

 

Vesting Commencement Date:

 

[typically March 1 of the year after the Grant Date]

Number of Shares Underlying Option (the “Option Shares”):

 

 

 

This option is subject to all of the terms and conditions as set forth herein,
in the [Incentive][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.

 

Incentive Stock Option:

This Option [shall be construed in a manner to][does not] qualify it as an
“incentive stock option” under Section 422 of the Internal Revenue Code of 1986,
as amended (the “Code”).

 

 

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, this Option shall vest as to
exercisability to purchase the Option Shares as follows:

 

33.3% incrementally on the Vesting Commencement Date,

 

Additional 33.3% incrementally on the first anniversary of the Vesting
Commencement Date (66.6% total vested), and

 

Additional 33.4% incrementally on the second anniversary of the Vesting
Commencement Date. (100.0% total vested)

 

In any event this Option shall become fully vested and exercisable with respect
to all of the Option Shares on March 1 of the third year following the year of
grant.

 

Additional Terms/Acknowledgements: The undersigned Optionee acknowledges receipt
of, and understands and agrees to, this [Incentive][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 [Incentive][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.

 

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ATTACHMENT:  [Incentive][Non-Qualified] Stock Option Agreement Terms

 

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AVALONBAY COMMUNITIES, INC.

2009 STOCK OPTION AND INCENTIVE PLAN

 

[INCENTIVE] [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 Stock Option
only in the following manner:  from time to time on or prior to the Expiration
Date of this Option, the Optionee may give written notice to the Administrator
of his or her election to purchase some or all of the Option Shares purchasable
at the time of such notice.  This notice shall specify the number of Option
Shares to be purchased.

 

Payment of the purchase price for the Option Shares may be made by one or more
of the following methods:  (i) in cash, by certified or bank check or other
instrument acceptable to the Administrator; (ii) through the delivery (or
attestation to the ownership) of shares of Common Stock that have been purchased
by the Optionee on the open market or that are beneficially owned by the
Optionee and are not then subject to any restrictions under any Company plan and
that otherwise satisfy any holding periods as may be required by the
Administrator; (iii) 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 option purchase price, provided that in the event the
Optionee chooses to pay the option purchase price as so provided, the Optionee
and the broker shall comply with such procedures and enter into such agreements
of indemnity and other agreements as the Administrator shall prescribe as a
condition of such payment procedure; [for ISO’s::  or (iv) a combination of (i),
(ii) and (iii) above.]  [for NQSO’s:  or (iv) by a “net exercise” arrangement
pursuant to which the Company will reduce the number of shares of Common Stock
issuable upon exercise by the largest whole number of shares with a Fair Market
Value that does not exceed the aggregate exercise price; or (v) a combination of
(i), (ii) (iii) and (iv) above.]  Payment instruments will be received subject
to collection.

 

The transfer to the Optionee on the records of the Company or of the transfer
agent of the Option Shares will be contingent upon (i) the Company’s receipt
from the Optionee of the full purchase price for the Option Shares, as set forth
above, (ii) the fulfillment of any other requirements contained herein or in the
Plan or in any other agreement or provision of laws, and (iii) the receipt by
the Company of any agreement, statement or other evidence that the Company may
require to satisfy itself that the issuance of Common Stock to be purchased
pursuant to the exercise of Options under the Plan and any subsequent resale of
the shares of Common Stock will be in compliance with applicable laws and
regulations.  In the event the Optionee chooses to pay the purchase price by
previously-owned shares of Common Stock through the attestation method, the
number of shares of Common Stock transferred to the Optionee upon the exercise
of the Option shall be net of the shares attested to.

 

The shares of Common Stock purchased upon exercise of this Option shall be
transferred to the Optionee on the records of the Company or of the transfer
agent upon compliance to the satisfaction of the Administrator with all
requirements under applicable laws or regulations in connection with such
issuance and with the requirements hereof and of the Plan.  The determination of
the Administrator as to such compliance shall be final and binding on the
Optionee.  The Optionee shall not be deemed to be the holder of, or to have any
of the rights of a holder with respect to, any shares of Common Stock subject to
this Option unless and until this Option shall have been exercised pursuant to
the terms hereof, the Company or the transfer agent shall have transferred the
shares to the Optionee, and the Optionee’s name shall have been entered as the
stockholder of record on the books of the Company.  Thereupon, the Optionee
shall have full voting, dividend and other ownership rights with respect to such
shares of Common Stock.

 

The minimum number of shares with respect to which this Option may be exercised
at any one time shall be 100 shares, unless the number of shares with respect to
which this Option is being exercised is the total number of shares subject to
exercise under this Option at the time.

 

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

 

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3.             Non-transferability of Option.  This Option is personal to the
Optionee, is non-assignable and is not transferable in any manner, by operation
of law or otherwise, other than by will or the laws of descent and
distribution.  This Option is exercisable, during the Optionee’s lifetime, only
by the Optionee, and thereafter, only by the Optionee’s legal representative or
legatee.

 

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 (i) for a period
of twelve (12) months from the date of termination or until the fifth
anniversary of the grant date of this option award, if later, or (ii) until the
Expiration Date, if earlier.

 

(b)           Termination Due to Disability.  If the Optionee’s employment (or
other business relationship) terminates by reason of Disability (as defined
below), any Option held by the Optionee shall be automatically vested on the
date of termination, and shall be exercisable (i) for a period of twelve (12)
months from the date of termination or until the fifth anniversary of the grant
date of this option award, if later, or (ii) until the Expiration Date, if
earlier.  The death of the Optionee during the period provided in this
Section 4(b) shall extend such period (if it would otherwise expire) 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 below), any Option held by the
Optionee shall be automatically vested on the date of termination, and shall be
exercisable (i) for a period of twelve (12) months from the date of termination
or until the fifth anniversary of the grant date of this option award, if later,
or (ii) until the Expiration Date, if earlier.  The death of the Optionee during
the period provided in this Section 4(c) shall extend such period (if it would
otherwise expire) 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 below), any Option held
by the Optionee shall immediately terminate and be of no further force and
effect.

 

(e)           Termination Without Cause or for Good Reason within 24 Months of
Sale Event.  If the Optionee’s employment (or other business relationship) is
terminated by the Company without Cause or, as provided in the Plan, is
terminated by the Optionee for Good Reason within 24 months of a Sale Event, any
option held by the Optionee shall be automatically vested on the date of
termination, and shall be exercisable (i) for a period of twelve (12) months
from the date of termination or until the fifth anniversary of the grant date of
this option award, if later, or (ii) until the Expiration Date, if earlier.  The
death of the Optionee during the period provided in this Section 4(e) shall
extend such period (if it would otherwise expire) 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 other than for Good Reason within 24 months following a
Sale Event (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.

 

Nothwithstanding the foregoing, the Company may require, as a condition to
vesting of the unvested portion of the Option, that the Optionee sign and
deliver a Separation Agreement (as hereinafter defined), and such Separation
Agreement becomes effective (including through the passage without revocation of
any revocation period provided therein) within 30 days of his or her termination
of employment, provided that no Separation Agreement shall be required as a
condition to accelerated vesting for (x) a termination of employment without
cause or for Good Reason

 

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within 24 months after a Sale Event or (y) a termination of Optionee by reason
of death, or death during the thirty days following a termination of
employment).

 

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.”  The Administrator’s
determination of the reason for termination of the Optionee’s employment shall
be conclusive and binding on the Optionee and his or her representatives or
legatees except during the 24 months after a Sale Event.

 

For purposes of this Option, following terms shall have the meaning specified
below:

 

“Cause” and “Good Reason” and “Sale Event” shall have the meanings set forth for
such terms in the Plan.

 

“Disability” shall mean the Optionee’s inability to perform his normal required
services for the Company and its Subsidiaries for a period of six consecutive
months by reason of the individual’s mental or physical disability, as
determined by the Committee in good faith in its sole discretion.

 

“Retirement” shall mean the termination of the Optionee’s employment (and other
business relationships) with the Company and its Subsidiaries, other than for
Cause, following the date on which the sum of the following equals or exceeds 70
years: (i) the number of full months of the Optionee’s employment and other
business relationships with the Company and any predecessor Company and (ii) the
Optionee’s age on the date of termination (i.e., a person whose age is 55 years,
6 months and who has worked at the Company for 14 years, 6 months meets the 70
years requirement); provided that:

 

(x)                                 the Optionee’s employment by (or other
business relationships with) the Company and any predecessor company of the
Company have continued for a period of at least 120 continuous full months at
the time of termination and, on the date of termination, the Optionee is at
least 50 years old;

 

(y)                                 in the case of termination of employment,
the Optionee gives at least six months’ prior written notice to the Company of
his or her intention to retire.

 

“Separation Agreement” means a written agreement between the Optionee and the
Company, in such form as the Company may reasonably require, providing as
follows:

 

·                  the Optionee provides a full release of any actual or
potential claim against the Company and its current and former directors,
officers, associates, agents and affiliates, under any applicable law and theory
of claim, to the maximum extent permitted by law;

 

·                  the Optionee agrees to provide reasonable cooperation with
respect to investigation and litigation matters;

 

·                  the Optionee acknowledges and agrees to return all Company
property and not use any Company property or proprietary information;

 

·                  the Optionee agrees not to disparage the Company or its
officer, directors, agents or management, subject to reasonable exceptions set
forth in the agreement; and

 

·                  for a period of at least 12 months following the Optionee’s
termination of employment with the Company the Optionee shall not, without the
prior written consent of the Company, solicit or attempt to solicit for
employment with or on behalf of any Competing Enterprise 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.

 

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In addition, in connection with a termination of employment due to Retirement a
Separation Agreement shall provide that, for a period of at least 12 months
following the Optionee’s termination of employment with the Company the Optionee
shall not, without the prior written consent of the Company, become associated
with, or engage in any “Restricted Activities” with respect to any “Competing
Enterprise,” as such terms are hereinafter defined, whether as an officer,
employee, principal, partner, agent, consultant, independent contractor or
shareholder.  “Competing Enterprise,” for purposes of this section, shall mean
any person, corporation, partnership, venture or other entity which is engaged
in the business of managing, owning, leasing, or joint-venturing multifamily
rental real estate within 30 miles of multifamily rental real estate owned or
under management by the Company or its affiliates.  “Restricted Activities,” for
purposes of this section, shall mean executive, managerial, directorial,
administrative, strategic, business development or supervisory responsibilities
and activities relating to any aspects of multifamily rental real estate
ownership, management, multifamily rental real estate franchising, and
multifamily rental real estate joint-venturing.

 

It should be noted that no provision in any required Separation Agreement shall
(i) preclude an Optionee from communicating with federal, state or local
governmental or regulatory agencies, (ii) require an Optionee to inform the
Company about any such communication, or (iii) preclude an Optionee from
collecting a government program bounty to which the Optionee may be entitled.

 

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.             Acknowledgment and Acceptance of Grant.  Optionee agrees that he
or she may be required to evidence his or her acknowledgement of this award and
agreement to the terms hereof by accepting this award in the Company’s stock
plan administrator’s system, which acceptance may be required within a certain
number of days from the grant date hereof in accordance with instructions and/or
announcements provided by the Company to the Optionee and, failing to accept
this award within the Company’s stock plan administrator’s system within such
number of days may constitute grounds for forfeiture of this award in the
Company’s sole and absolute discretion.

 

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.             [For ISO’s:  Qualification under Section 422.  It is understood
and intended that the Option granted hereunder shall qualify as an “incentive
stock option” as defined in Section 422 of the Code, but the Company does not
represent or warrant that this Stock Option qualifies as such.  The Optionee
should consult with his or her own tax advisors regarding the tax effects of
this Option and the requirements necessary to obtain favorable income tax
treatment under Section 422 of the Code, including, but not limited to, holding
period requirements.  To the extent any portion of this Option does not so
qualify as an “incentive stock option,” such portion shall be deemed to be a
non-qualified stock option.  If the Optionee intends to dispose or does dispose
(whether by sale, gift, transfer or otherwise) of any Option Shares within the
one-year period beginning on the date after the transfer of such shares to him
or her, or within the two-year period beginning on the day after the grant of
this Option, he or she will so notify the Company within 30 days after such
disposition.][For NQSO’s:  Omitted.]

 

10.          Incorporation of Plan.  Notwithstanding anything herein to the
contrary, this Stock Option shall be subject to and governed by all the terms
and conditions of the Plan, including the powers of the Administrator set forth
in  Section 2(b) of 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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11.          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 may elect to have the
minimum required tax withholding obligation satisfied, in whole or in part, by
authorizing the Company to withhold from shares of Stock to be issued a number
of shares of Stock with an aggregate Fair Market Value that would satisfy the
withholding amount due.

 

12.          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.

 

13.          Recoupment Policy.  To the extent Optionee is a “Covered Officer”,
as defined in the Policy for Recoupment of Incentive Compensation adopted by the
Company’s Board of Directors, as amended from time to time (the “Recoupment
Policy”), the Option, and shares of common Stock received pursuant to exercise
of the Option, and any proceeds received in connection with any sale of shares
of Common Stock shall be subject to the Recoupment Policy.

 

14.          Miscellaneous.  Notices hereunder shall be mailed or delivered to
the Company at its principal place of business, 671 North Glebe Road, Suite 800,
Arlington, Virginia 22203, 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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