exv10w4



 





Exhibit 10.4




[Form of Director Restricted Unit Agreement]




AVALONBAY COMMUNITIES, INC.

RESTRICTED UNIT 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”), in order to advance the
interests of the Company and its
stockholders and effect the intended
purposes of the Plan, and for other good
and valuable consideration, which the
Company has determined to be equal to the
fair market value of the Units, as defined
below, the Company is awarding to the
Director named below contemporaneously
herewith the Units, upon the terms and
conditions set forth herein and in the
Restricted Unit 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



	 	 	 	 
	Director:

	 	 	 
	Award Date:

	 	 	 
	Number of Shares of Deferred Stock
(“Units”) Awarded:

	 	 	 
	Conversion Date or Event for Units

(previously elected by Director)

	 	[Specify date or 30 days after ceasing to be a
director 
of the Company for any reason]	 
	 	 	 	 







	 	 	 	 	 	 	 
	Vesting Schedule:	 	Subject to the provisions of the Terms, the Director’s
ownership interest in the Units shall vest, and the status of the Units as
Unvested Units and all Restrictions with respect to the Units shall
terminate, in accordance with the following schedule of events:
	 
	 	 	 	 	 	 
	

	 	Vesting Event
	 	Shares Vested

	 
	 	 	 	 	 	 
	

	 	Award Date
	 	 	20	%
	

	 	First Anniversary of Award Date
	 	 	40	%
	

	 	Second Anniversary of Award Date
	 	 	60	%
	

	 	Third Anniversary of Award Date
	 	 	80	%
	

	 	Fourth Anniversary of Award Date
	 	 	100	%
	 
	 	 	 	 	 	 
	

	 	Termination of the Director’s service as a
director by vote of the Company’s stockholders
for any reason other than Cause
	 	 	100	%
	 
	 	 	 	 	 	 
	

	 	Failure by the Board of Directors or any authorized
committee thereof to nominate the Director for
re-election for any reason other than for Cause
	 	 	100	%
	 
	 	 	 	 	 	 
	

	 	Failure of the Company’s stockholders to re-elect
the Director
	 	 	100	%
	 
	 	 	 	 	 	 
	

	 	Death or Disability of the Director
	 	 	100	%
	 
	 	 	 	 	 	 
	

	 	If earlier than any of the above events,
a Change of Control
	 	 	100	%







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




	 	 	 
	AVALONBAY COMMUNITIES, INC.

	 	DIRECTOR:
	 
	 	 
	By:                                                                               

	 	                                                                                                  
	Signature

	 	Signature
	
Title:                                                                            

	 	
Name (Print):                                                                            
	
Date:                                                                            

	 	
Date:                                                                                         







ATTACHMENT: Restricted Unit Agreement Terms




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AVALONBAY COMMUNITIES, INC.




RESTRICTED UNIT 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) an affirmative vote of the
holders of at least 75 percent of the shares entitled to vote at a meeting of
stockholders called for the purpose, resolving that the Director should be
removed from office or (b) a vote of the Board of Directors, the Nominating
Committee, if any, or any other authorized committee of the Board of Directors
resolving that the Director should not be nominated for re-election as a
director, in either case, as a result of (i) conviction of a felony, (ii)
declaration of unsound mind by order of a court, (iii) gross dereliction of
duty, (iv) commission of any act involving moral turpitude or (v) commission of
an act that constitutes intentional misconduct or a knowing violation of law if
such action in either event results in both an improper substantial personal
benefit to such Director and a material injury to the Company.



Section 1.2 - Common Stock




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



Section 1.3 – Deferred Stock




     “Deferred Stock” shall mean phantom stock of the Company. Each share of
Deferred Stock shall have the same value as each share of Common Stock and
shall be ultimately distributed to the Director in the form of Common Stock.



Section 1.4 - Restrictions




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



Section 1.5 - Secretary




     “Secretary” shall mean the secretary of the Company.



Section 1.6  - Unvested Units




     “Unvested Units” shall mean the Units (as defined in the Restricted Unit
Agreement)



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issued under this Agreement for as long as such Units are subject to the
Restrictions (as hereinafter defined) imposed by this Agreement.



ARTICLE II

RESTRICTED UNITS




Section 2.1 - Unvested Units




     Any Units granted on the Award Date pursuant to this Agreement shall be
considered Unvested Units for purposes of this Agreement and shall be subject
to the Restrictions until such time or times and except to the extent that the
Director’s ownership interest in Units vests in accordance with the Vesting
Schedule set forth on the first page of this Agreement.



Section 2.2 - Rights as Stockholder




     From and after the Award Date, the Director shall not have any of the
rights of a stockholder with respect to the Units until the Units are
distributed to the Director in the form of Common Stock, except with respect to
Dividend Equivalent Rights as set forth on Section 2.3.



Section 2.3 – Dividend Equivalent Rights




     All Units granted hereunder shall carry Dividend Equivalent Rights which
shall entitle the Director to receive additional Units, based on the amount of
actual dividends payable by the Company with respect to the Common Stock. The
amount of dividend equivalents credited to the Director’s Units following each
calendar quarter shall be converted to additional Units based on the Fair
Market Value of the Common Stock on the last day of such calendar quarter.
Such additional Units shall also carry Dividend Equivalent Rights. All
additional Units credited to a Director’s account pursuant to this Section 2.3
shall be fully vested at all times.



ARTICLE III

RESTRICTIONS




Section 3.1 - Reversion of Unvested Units




     Except as provided in clauses (a) through (e) of this sentence or in the
following paragraph, any interest of the Director in Units that are Unvested
Units shall immediately terminate if the Director’s service as a director of
the Company terminates for any reason, unless such termination of service
results from (a) death of the Director, (b) Disability of the Director, (c)
removal of the Director from office by vote of the Company’s stockholders for
any reason other than for Cause, (d) failure by the Board of Directors or any
authorized committee thereof to nominate the Director for re-election for any
reason other than for Cause or (e) failure of the Company’s stockholders to
re-elect the Director.



     In the event that the Director resigns or declines to accept nomination
for re-election, any Units that are Unvested Units shall continue to vest on
the dates provided in this Agreement as if



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the Director continued to serve on the Board of Directors unless the Board
of Directors or any authorized committee thereof determines in good faith that
there exist reasonable grounds on which the stockholders of the Company could
remove the Director for Cause (in which case any interest of the Director in
Units that are Unvested Units shall immediately upon such determination
terminate).



     Notwithstanding the provisions of the preceding two paragraphs, in the
event that any Unvested Units are forfeited, the Director shall be entitled to
retain any Units credited to his account pursuant to the Dividend Equivalent
Rights accrued on the Unvested Units in accordance with Section 2.3 before the
date of such event.



Section 3.2 – Units Not Transferable




     No Units, whether vested or unvested, or any interest or right therein or
part thereof shall be liable for the debts, contracts or engagements of the
Director 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 this
Section 3.2 shall not prevent transfers by will or by applicable laws of
descent and distribution until the Units are distributed to the Director in
shares of Common Stock. Until such time when the shares of Common Stock are
distributed to the Director, the Director’s rights under this Agreement shall
be similar to that of an unsecured creditor of the Company.



Section 3.3 – Adjustments; Restrictions on New Units




     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, the Committee
shall make an appropriate adjustment to the number of Units credited to the
Director. Any such additional Units attributable to Unvested Units shall be
considered to be Unvested Units and shall be subject to all of the terms and
conditions of this Agreement, including but not limited to the Restrictions.



Section 3.4 – Timing and Form of Distribution




     The Units shall be exchanged into shares of Common Stock on a one-for-one
basis and shall be distributed to the Director at such time as the Director may
have previously elected in writing to the Company. Any fractional Unit shall
be distributed in cash at the same time.



ARTICLE IV

MISCELLANEOUS




Section 4.1 - Conditions to Issuance of Stock Certificates




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     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.



Section 4.2 - Administration




     The Committee shall have the power to interpret the Plan, this Agreement
and all other documents relating to Unvested Stock and to adopt such rules for
the administration, interpretation and application of the Plan as are
consistent therewith and to interpret, amend or revoke any such rules. All
actions taken and all interpretations and determinations made by the Committee
in good faith shall be final and binding upon the Director, the Company and all
other interested person. No member of the Committee shall be personally liable
for any action, determination or interpretation made in good faith with respect
to the Plan or Unvested Stock and all members of the Committee shall be fully
protected by the Company in respect to any such action, determination or
interpretation. The Board shall have no right to exercise any of the rights or
duties of the Committee under the Plan and this Agreement.



Section 4.3 - Notices




     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 Director shall be addressed to him at the address maintained in
the Company’s records. By a notice given pursuant to this Section 4.3, 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 Director shall, if the
Director is then deceased, be given to the Director’s personal representative
if such representative has previously informed the Company of his status and
address by written notice under this Section 4.3. 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 4.4 - 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.



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Section 4.5 - 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 4.6 - 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 Rights




     This Agreement does not, and shall not be interpreted to, create any right
on the part of the Director to nomination, election or continued service as a
director 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 such service nor shall it interfere with or restrict in any
way any right or power, which is hereby expressly reserved, to remove or not to
renominate the Director at any time for any reason whatsoever, with or without
cause.



[End of Text]





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