Exhibit 10.6


 


FORM OF
AVALONBAY COMMUNITIES, INC. 
 DIRECTOR 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%]

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

  	
   

  	
  [100%]

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

  	
   

  	
  [100%]

  
	
   

  	
   

  	
   

  
	
  [General Vesting Schedule provided above]

  	
   

  	
   

  



 


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.


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  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


 


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


 


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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 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


 


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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.


 


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.


 


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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.


 


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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