Exhibit 10.5


 


[Form of Director
Restricted Unit Agreement]


 


AVALONBAY COMMUNITIES, INC. 

RESTRICTED UNIT AGREEMENT




Pursuant to the terms of
the AvalonBay Communities, Inc. 2009 Stock Option and Incentive Plan (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 herewith the Units, upon the terms and
conditions set forth herein and in the Restricted Unit Agreement Terms (the “Terms”)
which are provided herewith and incorporated herein in their entirety.  Capitalized terms used but not defined herein
shall have the respective meanings ascribed thereto in the Terms or in the
Plan.


 


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 Sale Event

  	
   

  	
  100

  	
  %

  



 


Additional
Terms/Acknowledgements: The 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.


 


PROVIDED
HEREWITH AND INCORPORATED BY REFERENCE:  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, the
Nominating Committee, if any, or any other authorized committee of the Board
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
– Disability


 


“Disability” shall mean
the Director’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
Administrator in good faith in its sole discretion.


 


Section 1.5 - Restrictions


 


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


 


Section 1.6 - Secretary


 


“Secretary” shall mean the secretary of the Company.


 


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Section 1.7  - Unvested
Units


 


“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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Notwithstanding
the provisions of the preceding paragraph, in the event that any Unvested Units
are forfeited, the Director shall be entitled to payment with respect to 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 – Timing and Form of Distribution


 


To the extent not forfeited pursuant to Section 3.1,
Units shall be exchanged into shares of Common Stock on a one-for-one basis and
shall be distributed to the Director within 30 days after the date the Director
terminates his or her  services as a
director of 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


 


The Company shall
not be required to issue or deliver any certificate or certificates or enter
the Director’s name as the stockholder of record on the books of the Company
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. 

  



 


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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.


 


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.


 


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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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