exv10w2



 






Exhibit 10.2




ENDORSEMENT SPLIT DOLLAR AGREEMENTS

AND AMENDMENTS THERETO WITH

MESSRS. BLAIR, NAUGHTON, SARGEANT,

FULLER, HOREY AND MEYER



[Form of individual Endorsement Split Dollar Agreements between the Company and Bryce Blair (dated
January 16, 2003 for $2,500,000), Timothy J. Naughton (dated January 28, 2003 for $1,500,000),
Thomas J. Sargeant (dated January 21, 2003 for $1,500,000), Samuel B. Fuller (dated January 23,
2003 for $1,500,000), Leo S. Horey (dated February 19, 2003 for $750,000), and Gilbert M. Meyer
(February 5, 2003 for $2,500,000).]




ENDORSEMENT

SPLIT DOLLAR LIFE INSURANCE AGREEMENT

FOR ___________________________




     THIS AGREEMENT is made as of the ___day of ___, 2003, between AvalonBay
Communities, Inc. (the “Company”), and ___(the “Insured”).



INTRODUCTION




     _____________ (the “Insured”) is a valuable employee of the Company. The Company wishes to
continue this employment relationship and, as an inducement thereto, is willing to participate with
the Insured in the payment of premiums on certain life insurance policies as an additional form of
compensation for the Insured’s services as an employee of the Company. This Agreement is intended
to qualify as a life insurance employee benefit plan as described in Revenue Ruling 64-328.



     NOW, THEREFORE, the parties agree as follows:



ARTICLE 1. GENERAL DEFINITIONS




     The following terms shall have the meanings specified:



     1.1. “Company” means AvalonBay Communities, Inc., or any successor thereto.



          1.21. “Insured” means the Employee.


1.3. “Insurer(s)” means the insurance company or companies listed on Attachment 1 hereto.



1.4. “Policy” or “Policies” means the insurance policy or policies listed on
Attachment I, issued on the life of the Insured by the Insurer(s), together with any supplementary
contracts to such policies issued by the Insurer(s).




 









 








ARTICLE 2. PREMIUMS




     2.1. Premium Payments. During the term of this Agreement, each annual premium on each
Policy shall be paid as follows:




     2.1.1. Insured’s Portion. During the term of this Agreement the
Insured shall be obligated to pay a portion of each premium equal to the current
term rate for the Insured’s age multiplied by the Insured’s current interest in the
death benefit of such Policy. The “current term rate” shall mean the lesser of the
Insurer’s term insurance rate or the PS 58 rate, as specified in Revenue Rulings
64-328 and 66-110, or any subsequently issued applicable authority. The Insured
shall pay the Insured’s portion of the premium through payroll deduction.




     2.1.2. Company’s Portion. During the term of this Agreement the
Company shall pay any additional premium amounts not paid by the Insured that are
required to meet the Company’s premium obligations to the Insured under the Plan.



     2.2. Timing. The Insured’s portion of the premium and the Company’s portion
of the premium shall be remitted to the Insurer before expiration of the grace period.



ARTICLE 3. POLICY OWNERSHIP AND INSURED’S BENEFITS




     3.1. Company’s Interest. The Company shall be the sole and exclusive
owner of each Policy and the direct beneficiary of an amount of the death proceeds of
each Policy equal to the aggregate premiums paid by the Company under the Policy.



     3.2. Insured’s Interest. The Insured shall have the right, during the
term of this Agreement, to designate and change direct and contingent beneficiaries (and
to elect and change a payment plan for such beneficiaries) with respect to the amount of
the death proceeds of each Policy in excess of that payable to the Company pursuant to
Section 3.1.



     3.3. Payment from Insurer. Benefits may be paid under each Policy by the applicable
Insurer either by separate checks to the parties entitled thereto, or by a joint check. In the
latter instance, the Insured and the Company (and, if applicable, their respective beneficiaries)
shall divide the benefits as provided herein.



ARTICLE 4. TERMINATION OF AGREEMENT




     This Agreement shall terminate upon the earlier to occur of the Insured’s termination of
employment, the Insured’s failure to pay any amounts due under Section 2.1.1 of the Agreement, or
the date mutually agreed to by the Company and the Insured. Upon termination of this Agreement,
the Insured’s rights hereunder shall terminate.



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ARTICLE 5. INSURER(S)




     Each Insurer shall be bound only by the provisions of and endorsements on its Policy, and any
payments made or actions taken by it in accordance therewith shall fully discharge it from all
claims, suits and demands of all persons. The Insurer shall in no way be bound by or be deemed to
have notice of the provisions of this Agreement.



ARTICLE 6. MISCELLANEOUS




     6.1. Termination/Amendment. The Company and the Insured may amend or terminate this
Agreement by mutual consent. Any amendment to the Agreement shall be in writing and shall be filed
with the Agreement.



     6.2. Transferability. The Insured shall have the right to assign any part or all of
the Insured’s interests in each Policy and this Agreement to any person, entity or trust by
execution of a written assignment delivered to the Company and the Insurer. The Company may also
assign its rights in each Policy and in this Agreement.



     6.3. Binding Effect. This Agreement shall bind the Insured and the Insured, their
heirs, executors, administrators and transferees, and the Company and its successors and any Policy
beneficiary.



     IN WITNESS WHEREOF, the parties have signed this Agreement as of the day and year first
written above.


	 	 	 	 	 
	 	AvalonBay Communities, Inc.:

 	 
	 	By:  	 	 




Its ______________________, and



INSURED:



 



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ATTACHMENT I




ENDORSEMENT

SPLIT DOLLAR LIFE INSURANCE AGREEMENT

FOR _______________




SCHEDULE OF LIFE INSURANCE POLICIES ON










	 	 	 
	Policy No.	 	Insurer
	 
	 	 





Dated: _______________________



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ATTACHMENT II




ERISA COMPLIANCE




       The following provisions are part of the AvalonBay Communities, Inc. Endorsement Split Dollar
Life Insurance Agreement for ___and are intended to meet the requirements of the
Employee Retirement Income Security Act of 1974:




Plan Name and Company Identification Number. The name of the plan under which this
benefit is offered is the AvalonBay Communities, Inc. Endorsement Split Dollar Life Insurance
Agreement for ___. The Identification Number assigned to the Employer by the
Internal Revenue Service is




Type of Plan. The Agreement provides a life insurance benefit.




Named Fiduciary, Plan Sponsor, Plan Administrator and Agent for Service of Legal Process. The Company is the named fiduciary, sponsor, Plan
Administrator and agent for service of legal process for the Agreement. If you have
any questions about the Agreement, you may contact:




 




Funding Policy. The funding policy under the Agreement is that all premiums
on the Policy be remitted to the Insurer when due.




Basis of Benefit Payment. Direct payment by the Insurer is the basis of
payment of benefits under the Agreement, with those benefits in turn being based on
the payment of premiums as provided in the Agreement.




Plan Interpretation. The Company has the exclusive discretion to interpret
the terms of the Agreement and to determine the eligibility and benefits of the
participant and beneficiaries. The Company’s determinations are final and binding,
subject only to the claims procedure described below.




Claims Procedure. You or your beneficiary may file a written claim with the Company
requesting benefits under the Agreement or objecting to the determination of your benefits.



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The Company will notify you in writing with 90 days after your written application for benefits
of your eligibility or non-eligibility for benefits under the Agreement. If the Company
determines that you are not eligible for benefits or full benefits, the notice will tell you:



•     the specific reasons for the denial,



•     a specific reference to the provision of the Agreement on which denial is based,



•     a description of any additional information or material necessary for you to perfect
your claim (and an explanation of why such information or material is necessary), and



•     an explanation of the Agreement’s claims review procedure.



If the Company determines that you are not eligible for benefits, or if you believe that you are
entitled to greater or different benefits, you will have the opportunity to have your claim
reviewed by the Company by filing a petition for review with the Company within 60 days after you
receive the notice issued by the Company. Your petition should state the specific reasons why
you believe you are entitled to benefits, or greater or different benefits.



Within 60 days after the Company receives the petition, the Company will give you a written
decision of its review. However, if the Company determines that there are special
circumstances requiring additional time to make a decision, the Company will notify you of the
special circumstances and the date by which a decision is expected to be made, and may extend
the time for the written decision for up to an additional 60-day period. The Company may hold
a hearing for the review of your claim if you request and the Company decides such a hearing is
necessary. The Company’s written decision will state the decision and the specific reasons for
the decision and specific provisions of the Agreement on which the decision is based.



Rights Under ERISA. As a participant in the Agreement, you are entitled to certain
rights and protections under the Employee Retirement Income Security Act of 1974 (ERISA).
ERISA provisions require that all participants have the following information.




     Plan Documents



     ERISA provides that all plan participants shall be entitled to:



•     Examine, without charge, at the Plan Administrator’s office and at other specified
locations, such as worksites, all plan documents, including insurance contracts and copies of
all documents filed by the plan with the U.S. Department of Labor, such as detailed annual
reports and plan descriptions, if any.



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•     Obtain copies of all plan documents and other plan information upon written request of the Plan
Administrator. The Plan Administrator may make a reasonable charge for the copies.



     Fiduciary Obligations



     In addition to creating rights for plan participants, ERISA imposes duties upon the people
who are responsible for the operation of the employee benefit plan. The people who operate
your plan, called “fiduciaries” of the plan, have a duty to do so prudently and in the interest
of you and your beneficiaries.


No one, including your employer or any other person, may fire you or otherwise discriminate
against you in any way to prevent you from obtaining a benefit under the plan or exercising
your rights under ERISA. If your claim for a benefit is denied in whole or in part, you must
receive a written explanation of the reason for the denial. You have the right to have the
plan review and reconsider your claim. Under ERISA, there are steps you can take to enforce
the above rights. For instance, if you request materials which you are entitled to receive
from the plan and do not receive them within 30 days, you may file suit in a federal court. In
such a case, the court may require the Plan Administrator to provide the materials and pay up
to $110 a day until you receive the materials, unless the materials were not sent because of
reasons beyond the control of the Plan Administrator. If you have a claim for benefits which
is denied or ignored, in whole or in part, you may file suit in a state or federal court. If it
should happen that plan fiduciaries misuse the plan’s money, or if you are discriminated
against for asserting your rights, you may seek assistance from the U.S. Department of Labor,
or you may file suit in a federal court. The court will decide who should pay court costs and
legal fees. If you are successful, the court may order the person you have sued to pay these
costs and fees. If you lose, the court may order you to pay these costs and fees; for example,
if it finds your claim is frivolous.




     If you have any questions about your plan, you should contact the Plan Administrator. If
you have any questions about this statement or about your rights under ERISA, you should
contact the nearest Area Office of the U.S. Labor-Management Service Administration, Department
of Labor.



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ENDORSEMENT

SPLIT DOLLAR LIFE INSURANCE AGREEMENT

FOR _______________

ENDORSEMENT FORM




Contract No.,

or Policy No. ________________________________ (the “Policy”)



Insured ___________________


Supplementing and amending the application of this date to Sun Life Financial (the “Insurer”) the
applicant requests and directs that:





	1.  	The Owner of the Policy will be AvalonBay Communities, Inc., a VA corporation. The Owner
alone may exercise all Policy rights, except that the Owner will not have the rights specified
in paragraph 4, below.
	 
	2.  	The Owner designates itself or its successors as direct beneficiary of a portion of the death
proceeds of the Policy equal to the greater of the Policy’s cash value as of the date to which
the Policy premiums have been paid, or the aggregate Policy premiums paid by the Owner.
	 
	3.  	The Insurer will have the right to rely on any statement signed by the Owner setting forth
the amount referred to in paragraph 2.
	 
	4.  	The Insured will have the right to designate and change the beneficiaries of the Policy death
proceeds in excess of those described in paragraph 2.
	 
	5.  	Any indebtedness on the Policy will first be deducted from the proceeds described in
paragraph 2.
	 
	6.  	All prior designations of beneficiaries of the Policy death proceeds are hereby revoked.




	 	 	 	 	 	 
	 	APPLICANT

 	 
	 	 	By:  	 	 
	 	 	 	Its:	 






	 	 	 	 	 	 
	 	INSURED	 



 


Date: __________________________



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FIRST AMENDMENT

TO

ENDORSEMENT SPLIT DOLLAR LIFE INSURANCE AGREEMENT



The Endorsement Split Dollar Life Insurance Agreement entered into as of the 5th day of February,
2003
by and between AvalonBay Communities, Inc., a Maryland
corporation (the “Company”),

 and
Gilbert M. Meyer (the “Insured”) is hereby amended as follows:




Article 1 of the Agreement is hereby amended by adding the following at the end thereof:






     “1.5 ‘Retirement Agreement’ means the Retirement Agreement made as of March 24, 2000
between the Company and the Insured, as amended from time to time.”



Section 2.1.1 of the Agreement is hereby amended by adding the following at the end thereof:





“After the Insured ceases to be employed by the Company, if this Agreement remains in
effect, the Insured shall pay the Insured’s portion of the premium by personal check or
cash.”



Article 4 of the Agreement is hereby amended by deleting said Article in its entirety and
substituting the following in lieu thereof:




     “ARTICLE 4. TERMINATION OF AGREEMENT




     This Agreement shall terminate 30 days after the payment of the full premiums
due under the Policy for the Policy’s 15th year (i.e., the payment due
in 2017).




Upon termination of the Policy, the Company shall first withdraw from the cash
surrender value in the Policy an amount equal to the lesser of the aggregate
premiums paid by the Company under the Policy or the cash surrender value in the
Policy, and the Company shall then transfer the ownership of the Policy to the
Insured (subject to payment of any required withholding taxes). Upon the transfer
of the Policy to the Insured, the Company’s rights hereunder shall terminate. In
the event the Agreement is terminated under any other circumstances, the Insured’s
rights hereunder shall terminate.”



Except as amended herein, the Agreement is confirmed in all other respects.




     IN WITNESS WHEREOF, this Amendment is entered into this 31st day of March, 2005.


	 	 	 	 	 
	 	AVALONBAY COMMUNITIES, INC.

 	 
	 	By:  	/s/ Charlene Rothkopf
 	 
	 	 	Charlene Rothkopf, EVP – Human Resources 	 
	 	 	 	 
	 
	 	 	 
	 	 	                                                             /s/ Edward M. Schulman
 	 
	 	 	Edward M. Schulman, 	 
	 	 	SVP, General Counsel & Secretary 	 
	 
	 	Gilbert M. Meyer	 
	 	Insured	 
	 	 	 
	 	 	 




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[Note: Following is the form of amendment used for amendments to the agreements with Messrs.
Blair, Naughton, Sargeant, Fuller and Horey.]




FIRST AMENDMENT

TO

ENDORSEMENT SPLIT DOLLAR LIFE INSURANCE AGREEMENT



The Endorsement Split
Dollar Life Insurance Agreement entered into as of the
___day of

___, 2003 by and between AvalonBay Communities, Inc., a
Maryland corporation
(the
“Company”), and ___(the “Insured”) is hereby amended as follows:




Article 1 of the Agreement is hereby amended by adding the following at the end thereof:






     “1.5 ‘Employment Agreement’ means the Employment Agreement made as of ___
between the Company and the Insured, as amended from time to time.”



Section 2.1.1 of the Agreement is hereby amended by adding the following at the end
thereof:





“After the Insured ceases to be employed by the Company, if this Agreement remains in
effect, the Insured shall pay the Insured’s portion of the premium by personal check or
cash.”



Article 4 of the Agreement is hereby amended by deleting said Article in its entirety and
substituting the following in lieu thereof:





“ARTICLE 4. TERMINATION OF AGREEMENT




     This Agreement shall terminate 30 days after the earliest to occur of the
following: (i) Insured’s termination of employment by the Company for Cause (as
defined in the Employment Agreement), (ii) the Insured’s voluntary termination of
employment which is not due to a Constructive Termination Without Cause (as
defined in the Employment Agreement), or (iii) the payment of the full premiums
due under the Policy for the Policy’s 15th year (i.e., the payment due
in 2017).




Upon termination of the Policy, the Company shall first withdraw from the cash
surrender value in the Policy an amount equal to the lesser of the aggregate
premiums paid by the Company under the Policy or the cash surrender value in the
Policy, and the Company shall then transfer the ownership of the Policy to the
Insured (subject to payment of any required withholding taxes); provided, however,
that in the event of termination under clause (i) or (ii), transfer of the Policy
to the Insured may not occur earlier than six months after the Insured’s
termination of employment with the Company. Upon the transfer of the Policy to
the Insured, the Company’s rights hereunder shall terminate. In the event the
Agreement is terminated under any other circumstances, the Insured’s rights
hereunder shall terminate.”



Except as amended herein, the Agreement is confirmed in all other respects.





IN WITNESS WHEREOF, this Amendment is entered into this 31st day of March, 2005.


	 	 	 	 	 
	 	AVALONBAY COMMUNITIES, INC.

 	 
	 	By:  	 	 
	 	 	 	Charlene Rothkopf, EVP – Human Resources 	 
	 	 	 	 
	 
	 	 	  	 
	 	 	Edward M. Schulman,

SVP, General Counsel & Secretary

 	 
	 
	 	  	 
	 	Insured	 
	 	 	 
	 	 	 
	 





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