Exhibit 10.3


 


[Form of Employee Restricted Stock Agreement]


 


AVALONBAY COMMUNITIES, INC. 

STOCK GRANT AND RESTRICTED STOCK 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”) and for other good and valuable
consideration, the Company is issuing to the Employee named below
contemporaneously herewith the Shares, upon the terms and conditions set forth
herein and in the Restricted Stock 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 Plan or in the
Terms, as applicable.


 


Vesting Schedule:       Subject to the provisions of the Terms and the
discretion of the Company to accelerate the vesting schedule, the Employee’s
ownership interest in the Shares shall vest, and the status of the Shares as
Restricted Stock and all Restrictions with respect to the Shares shall
terminate, in accordance with the following schedule of events:  20% on March 1 of the year of the grant,
20% on each subsequent March 1st.


 


The Shares shall also vest upon the occurrence of the
following events:


 


	
  Termination of the
  Employee’s Employment by the Company, other than for Cause

  	
   

  	
  100% of
  the Award

  
	
   

  	
   

  	
   

  
	
  The death or Disability
  of the Employee

  	
   

  	
  100% of
  the Award

  
	
   

  	
   

  	
   

  
	
  The Employee’s
  Retirement

  	
   

  	
  100% of
  the Award

  
	
   

  	
   

  	
   

  
	
  If earlier than any of
  the above events, a Sale Event

  	
   

  	
  100% of
  the Award

  



 






*or, if fewer, all
Restricted Shares


 


The Administrator’s
determination of the reason for termination of the Employee’s employment shall
be conclusive and binding on the Employee and his or her representatives or
legatees.


 


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


 


ATTACHMENT: 
Restricted Stock Agreement Terms


 


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AVALONBAY COMMUNITIES, INC.


 


RESTRICTED STOCK 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” shall mean a vote
of the Board resolving that the Employee should be dismissed as a result of (i) any
material breach by the Employee of any agreement to which the Employee and the
Company are parties, (ii) any act (other than retirement) or omission to
act by the Employee which may have a material and adverse effect on the
business of the Company or any Subsidiary or on the Employee’s ability to
perform services for the Company or any Subsidiary, including, without
limitation, the commission of any crime (other than ordinary traffic
violations), or (iii) any material misconduct or neglect of duties by the
Employee in connection with the business or affairs of the Company or any
Subsidiary.


 


Section 1.2 — Common Stock


 


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


 


Section 1.3 — Disability


 


“Disability” shall mean
the Employee’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.


 


Section 1.4  -
Restricted Stock


 


“Restricted Stock” shall
mean the Shares issued under this Agreement for as long as such shares are
subject to the Restrictions (as hereinafter defined) imposed by this Agreement.


 


Section 1.5 - Restrictions


 


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


 


Section 1.6 - Retirement


 


“Retirement” shall mean
the termination of the Employee’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 years of the Employee’s employment and other business
relationships with the Company and any predecessor Company and (ii) the
Employee’s age on the date of termination; provided that:


 


(x)            the Employee’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 Employee is at
least 50 years old;


 


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


 


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(z)            in the case of termination of employment,
the Employee enters into a “Non-Compete and Non-Solicitation Agreement,” as
hereinafter defined, and a general release of all claims in a form that is
reasonably satisfactory to the Company.


 


As used in the foregoing
sentence, “Non-Compete and Non-Solicitation Agreement” shall mean a written
agreement between the Employee and the Company providing that, for a period of
at least 12 months following the Employee’s termination of employment with the
Company (A) the Employee 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, and (B) the Employee
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.  “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.


 


Section 1.7 - Secretary


 


“Secretary” shall mean
the secretary of the Company.


 


ARTICLE II


 


RESTRICTED STOCK


 


Section 2.1 - Restricted Stock


 


Any shares of Common
Stock granted pursuant to this Agreement which vest on a date other than the
Award Date shall be considered Restricted Stock for purposes of this Agreement
and shall be subject to the Restrictions until such time or times and except to
the extent that the Employee’s ownership interest in Shares vests in accordance
with the Vesting Schedule set forth on the first page of this Agreement.


 


Section 2.2 - Escrow


 


If the Restricted Stock
is certificated, the Secretary or such other escrow holder as the Company may
from time to time appoint shall retain physical custody of the certificates
representing Restricted Stock, until all of the Restrictions expire or shall
have been removed; provided, however, that in no event shall the Employee
retain physical custody of any certificates representing Restricted Stock
issued to him.  The Company may cause a
book entry deposit of Restricted Stock at the Company’s transfer agent in lieu
of physical custody.


 


Section 2.3 - Rights as Stockholder


 


From and after the Award
Date, the Employee shall have all the rights of a stockholder with respect to
the Shares, subject to the Restrictions herein (including the provisions of Article IV),
including the right to vote the Shares and to receive all dividends or other
distributions paid or made with respect to the Shares unless and to the extent
that the Employee’s interest in Restricted Stock shall have terminated and the
Restricted Stock reverts to the Company as provided in Section 3.1 of this
Agreement.


 


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ARTICLE III


 


RESTRICTIONS


 


Section 3.1 - Reversion of Restricted Stock


 


Except as provided
in Section 2.3, this Section 3.1, and the Vesting Schedule set forth
on the first page of this Agreement, the Restricted Stock shall be the
property of the Company for as long as and to the extent that the Shares are
Restricted Stock pursuant to Section 2.1. 
In the event that the Employee’s employment by the Company terminates
for any reason other than (a) death, (b) Disability or (c) termination
of the Employee’s employment by the Company other than for Cause, any interest
of the Employee in Shares that are Restricted Stock shall thereupon immediately
terminate and all rights with respect to the Restricted Stock shall immediately
revert to and unconditionally be the property of the Company; provided,
however, that the Employee shall be entitled to retain any cash dividends paid
before the date of such event on the Restricted Stock.


 


Section 3.2 - Restricted Stock Not Transferable


 


No Restricted Stock or any interest or right therein or part thereof
shall be liable for the debts, contracts or engagements of the Employee 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 the Employee may
designate one or more trusts or other similar arrangements for the benefit of
the Employee or members of his immediate family as the registered holders of
Restricted Stock if and as long as the Employee acts as trustee or in a similar
capacity with respect to such trust or arrangement.  Any Restricted Stock so registered shall for
all purposes hereunder be deemed to be held of record by the Employee and shall
be subject to all of the terms and conditions of this Agreement, including but
not limited to the Restrictions and the provisions of Article III of this
Agreement.


 


Section 3.3 - Legend


 


Certificates representing
shares of Restricted Stock or book entries for shares of Restricted Stock
issued pursuant to this Agreement shall, until all Restrictions lapse and new
certificates are issued pursuant to Section 3.4, bear the following
legend:


 


“THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN VESTING REQUIREMENTS AND
MAY BE SUBJECT TO FORFEITURE TO AVALONBAY COMMUNITIES, INC. (THE “COMPANY”)
UNDER THE TERMS OF THAT CERTAIN RESTRICTED STOCK AGREEMENT BY AND BETWEEN THE
COMPANY AND THE HOLDER OF THE SECURITIES. 
PRIOR TO VESTING OF OWNERSHIP IN THE SECURITIES, THEY MAY NOT BE,
DIRECTLY OR INDIRECTLY, OFFERED, TRANSFERRED, SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNDER ANY CIRCUMSTANCES.  COPIES OF THE ABOVE REFERENCED AGREEMENT ARE
ON FILE AT AND MAY BE OBTAINED ON REQUEST AND WITHOUT CHARGE FROM THE OFFICES
OF THE COMPANY AT 2900 EISENHOWER AVENUE, SUITE 300, ALEXANDRIA, VA 22314.”


 


Section 3.4 - Lapse of Restrictions


 


Upon the vesting
of some or all of the Restricted Stock as provided in the Vesting Schedule set
forth on the first page of this Agreement, and subject to the conditions
to issuance set forth in Article IV, if such Shares are certificated, the
Company shall cause new certificates to be issued with respect to such vested
Shares and delivered to the Employee or his legal representative, free from the
legend provided for in Section 3.3.


 


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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 for shares
of stock or enter the Employee’s name as the stockholder of record on the books
of the Company 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; and


 


(d)           The payment by the Employee of all
amounts required to be withheld under federal, state and local tax laws, with
respect to the issuance of Restricted Stock and/or the lapse or removal of any
of the Restrictions.


 


Section 4.2 - 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
Employee shall be addressed to him at his address as set forth in the Company’s
records.  By a notice given pursuant to
this Section 4.2, 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 Employee shall, if the
Employee is then deceased, be given to the Employee’s personal representative
if such representative has previously informed the Company of his status and
address by written notice under this Section 4.2.  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 4.3 - 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 4.4 - 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 4.5 - Tax Withholding


 


The Company’s
obligation (i) to issue or deliver to the Employee any certificate or
certificates for unrestricted shares of stock or (ii) to pay to the
Employee any dividends or make any distributions with respect to the Common
Stock issued under this Agreement is expressly conditioned on the Company’s
satisfaction of its obligation, if any, to withhold taxes.  The Employee shall, not later than the date
as of which the receipt of this Award becomes a taxable event for Federal
income tax purposes, pay to the Company or make arrangements satisfactory to
the Administrator for payment of any Federal, state, and local taxes required
by law to be withheld on account of such taxable event.  The Employee may elect to have the required
minimum tax withholding obligation satisfied, in whole or in part, by
authorizing the Company to withhold from shares of Stock to be issued or
released by the transfer agent a number of shares of Stock with an aggregate
Fair Market Value that would satisfy the withholding amount due.


 


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.


 


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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 Employment Rights


 


This Agreement
does not, and shall not be interpreted to, create any right on the part of the
Employee to continue in the employ 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 employment.


 


[End of Text]


 


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