EMPLOYMENT AGREEMENT

    EMPLOYMENT AGREEMENT (this "Agreement") made as of the 9th day of March,
1998 by and between Bryce Blair ("Executive") and Bay Apartment Communities,
Inc., a Maryland corporation (the "Company").

    WHEREAS, Executive and Avalon Properties, Inc. ("Avalon") have previously
entered into an Employment Agreement, dated as of April 4, 1997 (the "Prior
Agreement"); and


    WHEREAS, pursuant to the Agreement and Plan of Merger, by and between the
Company and Avalon, dated as of March 9, 1998 (the "Merger Agreement"), Avalon
will merge into the Company (the "Merger"); and


    WHEREAS, Executive and the Company desire to enter into a new employment
agreement, effective as of the consummation of the merger contemplated by the
Merger Agreement (the "Effective Date"), to replace the Prior Agreement.


    NOW, THEREFORE, the parties hereto do hereby agree as follows.

1.  Term.  Subject to the consummation of the merger contemplated by the Merger
    Agreement, the Company hereby agrees to employ Executive, and Executive
    hereby agrees to remain in the employ of the Company subject to the terms
    and conditions of this Agreement for the period commencing on the Effective
    Date and terminating on the third anniversary of the Effective Date (the
    "Original Term"), unless earlier terminated as provided in Section 7.  The
    Original Term shall be extended automatically for additional 1 year periods
    (each a "Renewal Term"), unless notice that this Agreement will not be
    extended is given by either party to the other 6 months prior to the
    expiration of the Original Term or any Renewal Term.  Notwithstanding the
    foregoing, upon a Change in Control, the Employment Period shall be
    extended automatically to 3 years from the date of such Change in Control.
    (The period of Executive's employment hereunder within the Original Term
    and any Renewal Terms is herein referred to as the "Employment Period.")

2.  Employment Duties.

    a.  During the Employment Period, Executive shall be employed in the
        business of the Company and its affiliates.  Executive shall serve as a
        corporate officer of the Company with the title of Senior Vice
        President - Development and Acquisitions.  Executive's duties and
        authority shall be commensurate with his title and position with the
        Company, and shall not be materially diminished from, or materially
        inconsistent with, his primary duties and authority with Avalon
        immediately prior to the date of this Agreement.
<PAGE>   2
    Executive agrees to his employment as described in this Section 2 and
agrees to devote substantially all of his working time and efforts to the
performance of his duties under this Agreement; provided that nothing herein
shall be interpreted to preclude Executive from (i) participating with the
prior written consent of the Board of Directors as an officer or director of,
or advisor to, any other entity or organization that is not a customer or
material service provider to the Company or a Competing Enterprise, as defined
in Section 8, so long as such participation does not interfere with the
performance of Executive's duties hereunder, whether or not such entity or
organization is engaged in religious, charitable or other community or
non-profit activities, (ii) investing in any entity or organization which is
not a customer or material service provider to the Company or a Competing
Enterprise, so long as such investment does not interfere with the performance
of Executive's duties hereunder, or (iii) delivering lectures or fulfilling
speaking engagements so long as such lectures or engagements do not interfere
with the performance of Executive's duties hereunder..  The Company consents to
Executive's status as a "former partner" with a current financial interest in
certain Midwest projects of Trammell Crow Residential ("TCR"), and such
activity shall not be treated as a Competing Enterprise.

    b.  In performing his duties hereunder, Executive shall be available for
        reasonable travel as the needs of the business require.  Executive shall
        be based in Braintree, MA, or otherwise in the greater Boston
        metropolitan area.

    c.  Breach by either party of any of its respective obligations under this
        Section 2 shall be deemed a material breach of that party's obligations
        hereunder.

3.  Compensation/Benefits.  In consideration of Executive's services hereunder,
    the Company shall provide Executive the following:

    a.  Base Salary.  During the Employment Period, the Executive shall receive
        an annual rate of base salary ("Base Salary") in an amount not less than
        $300,000.  Executive's Base Salary will be reviewed by the Company as of
        the first anniversary of the Effective Date, and may be adjusted upward
        (but not downward) at such time to reflect any inequities in
        compensation.  Commencing as of January 1, 2000, Executive's Base Salary
        shall be reviewed no less frequently than annually by the Company and
        may be adjusted upward (but not downward) by the Company.  Upon such
        annual review during the Renewal Term, if any, Executive's Base Salary
        shall be increased to the greatest of (i) an amount equal to Base Salary
        for the prior year plus 5%, (ii) a factor measured by the increase, if
        any, in the Consumer Price Index for Wage Earners and Clerical Workers
        (CPI-W) (City Average for New York-Northern New Jersey-Long
        Island-1982-84=100), as published by the Bureau of Labor Statistics, for
        the prior calendar year (the "CPI Adjustment") or (iii) such greater
        amount as may be agreed by Executive and the Company.  Base Salary shall
        be payable in accordance with the Company's normal business practices,
        but in no event less
<PAGE>   3
        frequently than monthly.

    b.  Bonuses.  Commencing at the close of each fiscal year during the
        Employment Period, the Company shall review the performance of the
        Company and of Executive during the prior fiscal year, and the Company
        may provide Executive with additional compensation as a bonus if the
        Board, or any compensation committee hereof, in its discretion,
        determines that Executive's contribution to the Company warrants such
        additional payment and the Company's anticipated financial performance
        of the present period permits such payment.  The bonuses hereunder shall
        be paid as a lump sum not later than 60 days after the end of the
        Company's preceding fiscal year.

    c.  Medical Insurance/Physical.  During the Employment Period, the Company
        shall provide to Executive and Executive's immediate family a
        comprehensive policy of health insurance.  During the Employment Period,
        Executive shall be entitled to a comprehensive annual physical
        performed, at the expense of the Company by the physician or medical
        group of Executive's choosing.

    d.  Life Insurance/Disability Insurance. During the Employment Period, the
        Company shall keep in force and pay the premiums on the split-dollar
        life insurance policy referenced in the Split Dollar Insurance Agreement
        between Avalon and Executive, subject to reimbursement by Executive as
        provided in such Split Dollar Insurance Agreement.  The Company shall
        reimburse Executive for the cost of the comprehensive disability
        insurance policy, which is in effect on January 1, 1997, and shall also
        be responsible for any increases in premiums which become effective
        during the Employment Period as may be necessary to maintain the same
        level of insurance as in effect on January 1, 1997.  Executive agrees to
        submit to such medical examinations as may be required in order to
        maintain such policies of insurance.

    e.  Vacations.  Executive shall be entitled to reasonable paid vacations
        during the Employment Period in accordance with the then regular
        procedures of the Company governing executives, not to exceed 6 weeks
        per annum, in the aggregate.

    f.  Office/Secretary, etc.  During the Employment Period, Executive shall be
        entitled to secretarial services and a private office commensurate with
        his title and duties.

    g.  Avalon Stock Option.  The Company acknowledges that, notwithstanding the
        consummation of the Merger, Avalon granted to Executive on March 8,
        1998, a non-qualified employee stock option to purchase 104,126 shares
        of common stock of Avalon, par value $.01 per share (the "Avalon Stock
        Option").  The Avalon
<PAGE>   4
        Stock Option was granted at an exercise price equal to $28.8125.  Upon
        termination of Executive's employment, vesting and exercisability of the
        Avalon Stock Option shall be governed by the terms of the stock option
        agreement and this Agreement, as applicable.  During the Employment
        Period, Executive shall be eligible for future employee stock option
        grants on the same basis as other senior management of the Company.

    h.  Automobile.  The Company shall provide Executive with a monthly car
        allowance during the Employment Period of not less than $750 per month
        (adjusted annually for inflation by the CPI Adjustment); provided that,
        at Executive's election, the Company may instead purchase or lease, and
        maintain insurance for, an automobile of comparable value for use by
        Executive, who shall be responsible for maintaining such automobile, at
        his own expense, with the same standard of care Executive applies to his
        own property and as may be required under any applicable lease
        agreement.

    i.  Other Benefits.  During the Employment Period, the Company shall provide
        to Executive such other benefits, excluding severance benefits, but
        including the right to participate in such retirement or pension plans,
        as are made generally available to executives of the Company from time
        to time and shall be given credit for purposes of eligibility and
        vesting of employee benefits and benefit accrual for service with
        Avalon, its affiliates and TCR prior to the Effective Date under each
        benefit plan of the Company and its subsidiaries to the extent such
        service had been credited under employee benefit plans of Avalon and its
        subsidiaries, provided that no such crediting of service results in
        duplication of benefits.



4.  Expenses/Indemnification.

    a.  During the Employment Period, the Company shall reimburse Executive for
        the reasonable business expenses incurred by Executive in the course of
        performing his duties for the Company hereunder, upon submission of
        invoices, vouchers or other appropriate documentation, as may be
        required in accordance with the policies in effect from time to time for
        executive employees of the Company.

    b.  To the fullest extent permitted by law, the Company shall indemnify
        Executive with respect to any actions commenced against Executive in his
        capacity as an officer or director or former officer or director of the
        Company, or any affiliate thereof for which he may render service in
        such capacity, whether by or on behalf of the Company, its shareholders
        or third parties, and the Company shall advance
<PAGE>   5
        to Executive on a timely basis an amount equal to the reasonable fees
        and expenses incurred in defending such actions, after receipt of an
        itemized request for such advance, and an undertaking from Executive to
        repay the amount of such advance, with interest at a reasonable rate
        from the date of the request, as determined by the Company, if it shall
        ultimately be determined that he is not entitled to be indemnified
        against such expenses.  The Company agrees to use its best efforts to
        secure and maintain officers and directors' liability insurance with
        respect to Executive.

5.  Employer's Authority/Policies.

    a.  General.  Executive agrees to observe and comply with the rules and
        regulations of the Company as adopted by its Board respecting the
        performance of his duties and to carry out and perform orders,
        directions and policies communicated to him from time to time by the
        Board.

    b.  Ethics Policies.  Executive agrees to comply with and be bound by the
        Ethics Policies of the Company, as reflected in the attachment at Annex
        A hereto and made a part hereof.

6.  Records/Nondisclosure/Company Policies.

    a.  General.  All records, financial statements and similar documents
        obtained, reviewed or compiled by Executive in the course of the
        performance by him of services for the Company, whether or not
        confidential information or trade secrets, shall be the exclusive
        property of the Company.  Executive shall have no rights in such
        documents upon any termination of this Agreement.

    b.  Nondisclosure Agreement.  Without limitation of the Company's rights
        under Section 6(a), Executive agrees to abide by and be bound by the
        Nondisclosure Agreement of the Company executed by Executive and the
        Company as reflected in the attachment at Annex B and made a part
        hereof.

7.  Termination; Severance and Related Matters.

    a.  At-Will Employment.  Executive's employment hereunder is "at will" and,
        therefore, may be terminated at any time, with or without Cause, at the
        option of the Company, subject only to the severance obligations under
        this Section 7.  Upon any termination hereunder, the Employment Period
        shall expire.

    b.  Definitions.  For purposes of this Section 7, the following terms shall
        have the indicated definitions:
<PAGE>   6
       i.  Cause.  "Cause" shall mean:

           (1)  Executive is convicted of or enters a plea of nolo contendere
                to an act which is defined as a felony under any federal, state
                or local law, not based upon a traffic violation, which
                conviction or plea has or can be expected to have, in the good
                faith opinion of the Board of Directors, a material adverse
                impact on the business or reputation of the Company;

           (2)  any one or more acts of theft, larceny, embezzlement, fraud or
                material intentional misappropriation from or with respect to
                the Company;

           (3)  a breach by Executive of his fiduciary duties under Maryland
                law as an officer;

           (4)  Executive's commission of any one or more acts of gross
                negligence or willful misconduct which in the good faith
                opinion of the Board of Directors has resulted in material harm
                to the business or reputation of the Company; or

           (5)  default by Executive in the performance of his material duties
                under this Agreement, without correction of such action within
                15 days of written notice thereof.

    Notwithstanding the foregoing, no termination of Executive's employment by
the Company shall be treated as for Cause or be effective until and unless all
of the steps described in subparagraphs (i) through (iii) below have been
complied with:

i.Notice of intention to terminate for Cause has been given by the Company
within 120 days after the Board of Directors learns of the act, failure or
event (or latest in a series of acts, failures or events) constituting "Cause";

ii.The Board of Directors has voted (at a meeting of the Board of Directors
duly called and held as to which termination of Executive is an agenda item) to
terminate Executive for Cause after Executive has been given notice of the
particular acts or circumstances which are the basis for the termination for
Cause and has been afforded at least 20 days notice after the meeting and an
opportunity to present his position in writing; and

iii.The Board of Directors has given a Notice of Termination to Executive
within 20 days of such Board meeting.
<PAGE>   7
    The Company may suspend Executive with pay at any time during the period
commencing with the giving of notice to Executive under clause (i) above until
final Notice of Termination is given under clause (iii) above. Upon the giving
of notice as provided in clause (iii) above, no further payments shall be due
Executive.

       ii.  Change in Control.  A "Change in Control" shall mean the occurrence
            of any one or more of the following events following the Effective
            Date:

            (1)  Any individual, entity or group (a "Person") within the meaning
                 of Sections 13(d) and 14(d) of the Securities Exchange Act of
                 1934 (the "Act") (other than the Company, any corporation,
                 partnership, trust or other entity controlled by the Company (a
                 "Subsidiary"), or any trustee, fiduciary or other person or
                 entity holding securities under any employee benefit plan or
                 trust of the Company or any of its Subsidiaries), together with
                 all "affiliates" and "associates" (as such terms are defined in
                 Rule 12b-2 under the Act) of such Person, shall become the
                 "beneficial owner" (as such term is defined in Rule 13d-3 under
                 the Act) of securities of the Company representing 30% or more
                 of the combined voting power of the Company's then outstanding
                 securities having the right to vote generally in an election of
                 the Company's Board of Directors ("Voting Securities"), other
                 than as a result of (A) an acquisition of securities directly
                 from the Company or any Subsidiary or (B) an acquisition by any
                 corporation pursuant to a reorganization, consolidation or
                 merger if, following such reorganization, consolidation or
                 merger the conditions described in clauses (A), (B) and (C) of
                 subparagraph (iii) of this Section 7(b)(2) are satisfied; or

            (2)  Individuals who, as of the Effective Date, constitute the
                 Company's Board of Directors (the "Incumbent Directors") cease
                 for any reason to constitute at least a majority of the Board,
                 provided, however, that any individual becoming a director of
                 the Company subsequent to the date hereof (excluding, for this
                 purpose, (A) any such individual whose initial assumption of
                 office is in connection with an actual or threatened election
                 contest relating to the election of members of the Board of
                 Directors or other actual or threatened solicitation of proxies
                 or consents by or on behalf of a Person other than the Board of
                 Directors, including by reason of agreement intended to avoid
                 or settle any such actual or threatened contest or
                 solicitation, and (B) any individual whose initial assumption
                 of office is in connection with a reorganization,
<PAGE>   8
                merger or consolidation, involving an unrelated entity and
                occurring during the Employment Period), whose election or
                nomination for election by the Company's shareholders was
                approved by a vote of at least a majority of the persons then
                comprising Incumbent Directors shall for purposes of this
                Agreement be considered an Incumbent Director; or

           (3)  Consummation of a reorganization, merger or consolidation of
                the Company, unless, following such reorganization, merger or
                consolidation, (A) more than 50% of, respectively, the then
                outstanding shares of common stock of the corporation resulting
                from such reorganization, merger or consolidation and the
                combined voting power of the then outstanding voting securities
                of such corporation entitled to vote generally in the election
                of directors is then beneficially owned, directly or
                indirectly, by all or substantially all of the individuals and
                entities who were the beneficial owners, respectively, of the
                outstanding Voting Securities immediately prior to such
                reorganization, merger or consolidation, (B) no Person
                (excluding the Company, any employee benefit plan (or related
                trust) of the Company, a Subsidiary or the corporation
                resulting from such reorganization, merger or consolidation or
                any subsidiary thereof, and any Person beneficially owning,
                immediately prior to such reorganization, merger or
                consolidation, directly or indirectly, 30% or more of the
                outstanding Voting Securities), beneficially owns, directly or
                indirectly, 30% or more of, respectively, the then outstanding
                shares of common stock of the corporation resulting from such
                reorganization, merger or consolidation or the combined voting
                power of the then outstanding voting securities of such
                corporation entitled to vote generally in the election of
                directors, and (C) at least a majority of the members of the
                board of directors of the corporation resulting from such
                reorganization, merger or consolidation were members of the
                Incumbent Board at the time of the execution of the initial
                agreement providing for such reorganization, merger or
                consolidation;

           (4)  Approval by the shareholders of the Company of a complete
                liquidation or dissolution of the Company; or

           (5)  The sale, lease, exchange or other disposition of all or
                substantially all of the assets of the Company, other than to a
                corporation, with respect to which following such sale, lease,
                exchange or other
<PAGE>   9
                disposition (A) more than 50% of, respectively, the then
                outstanding shares of common stock of such corporation and the
                combined voting power of the then outstanding voting securities
                of such corporation entitled to vote generally in the election
                of directors is then beneficially owned, directly or
                indirectly, by all or substantially all of the individuals and
                entities who were the beneficial owners of the outstanding
                Voting Securities immediately prior to such sale, lease,
                exchange or other disposition, (B) no Person (excluding the
                Company and any employee benefit plan (or related trust) of the
                Company or a Subsidiary or such corporation or a subsidiary
                thereof and any Person beneficially owning, immediately prior
                to such sale, lease, exchange or other disposition, directly or
                indirectly, 30% or more of the outstanding Voting Securities),
                beneficially owns, directly or indirectly, 30% or more of,
                respectively, the then outstanding shares of common stock of
                such corporation and the combined voting power of the then
                outstanding voting securities of such corporation entitled to
                vote generally in the election of directors and (C) at least a
                majority of the members of the board of directors of such
                corporation were members of the Incumbent Board at the time of
                the execution of the initial agreement or action of the Board
                of Directors providing for such sale, lease, exchange or other
                disposition of assets of the Company.

    Notwithstanding the foregoing, a "Change in Control" shall not be deemed to
have occurred for purposes of this Agreement solely as the result of an
acquisition of securities by the Company which, by reducing the number of
shares of Voting Securities outstanding, increases the proportionate voting
power represented by the Voting Securities beneficially owned by any Person to
30% or more of the combined voting power of all then outstanding Voting
Securities; provided, however, that if any Person referred to in this sentence
shall thereafter become the beneficial owner of any additional shares of Stock
or other Voting Securities (other than pursuant to a stock split, stock
dividend, or similar transaction), then a "Change in Control" shall be deemed
to have occurred for purposes of this Agreement.

       iii.  Complete Change in Control.  A "Complete Change in Control" shall
             mean that a Change in Control has occurred, after modifying the
             definition of "Change in Control" by deleting clause (i) from
             Section 7(b)(2) of this Agreement.

       iv.   Constructive Termination Without Cause.  "Constructive Termination
             Without Cause" shall mean a termination of Executive's employment
             initiated by Executive not later than 12 months following the
             occurrence
<PAGE>   10
            (not including any time during which an arbitration proceeding
            referenced below is pending), without Executive's prior written
            consent, of one or more of the following events (or the latest to
            occur in a series of events), and effected after giving the Company
            not less than 10 working days' written notice of the specific act
            or acts relied upon and right to cure:

            (1)  a material adverse change in the functions, duties or
                 responsibilities of Executive's position which would reduce
                 the level, importance or scope of such position; or any
                 removal of Executive from or failure to reappoint or reelect
                 Executive to any position set forth in this Agreement, except
                 in connection with the termination of Executive's employment
                 for Disability, Cause, as a result of Executive's death or by
                 Executive other than for a Constructive Termination Without
                 Cause;

            (2)  any material breach by the Company of this Agreement;

            (3)  any purported termination of Executive's employment for Cause
                 by the Company which does not comply with the terms of Section
                 7(b)(1) of this Agreement;

            (4)  the failure of the Company to obtain an agreement,
                 satisfactory to the Executive, from any successor or assign of
                 the Company, to assume and agree to perform this Agreement, as
                 contemplated in Section 10 of this Agreement;

            (5)  the failure by the Company to continue in effect any
                 compensation plan in which Executive participates immediately
                 prior to a Change in Control which is material to Executive's
                 total compensation, unless comparable alternative arrangements
                 (embodied in ongoing substitute or alternative plans) have
                 been implemented with respect to such plans, or the failure by
                 the Company to continue Executive's participation therein (or
                 in such substitute or alternative plans) on a basis not
                 materially less favorable, in terms of the amount of benefits
                 provided and the level of Executive's participation relative
                 to other participants, as existed during the last completed
                 fiscal year of the Company prior to the Change in Control;

            (6)  the relocation of the Company's Braintree offices to a new
                 location more than fifty (50) miles from Braintree or the
                 failure to locate Executive's own office at the Braintree
                 office (or at the office to
<PAGE>   11
                 which such office is relocated which is within 50 miles of
                 Braintree); or

            (7)  any termination of employment by the Executive for any reason
                 during the 12-month period immediately following a Complete
                 Change in Control of the Company.

Notwithstanding the foregoing, a Constructive Termination Without Cause shall
not be treated as having occurred unless Executive has given a final Notice of
Termination delivered after expiration of the Company's cure period. Executive
or the Company may, at any time after the expiration of the Company's cure
period and either prior to or up until three months after giving a final Notice
of Termination, commence an arbitration proceeding to determine the question of
whether, taking into account the actions complained of and any efforts made by
the Company to cure such actions, a termination by Executive of his employment
should be treated as a Constructive Termination Without Cause for purposes of
this Agreement.  If the Executive or the Company commences such a proceeding
prior to delivery by Executive of a final Notice of Termination, the
commencement of such a proceeding shall be without prejudice to either party
and Executive's and the Company's rights and obligations under this Agreement
shall continue unaffected unless and until the arbitrator has determined such
question in the affirmative, or, if earlier, the date on which Executive or the
Company has delivered a Notice of Termination in accordance with the provisions
of this Agreement.

       v.   Covered Average Compensation.  "Covered Average Compensation" shall
            mean the sum of Executive's Covered Compensation as calculated for
            the calendar year in which the Date of Termination occurs and for
            each of the two preceding calendar years, divided by three.

       vi.  Covered Compensation.  "Covered Compensation," for any calendar
            year, shall mean an amount equal to the sum of (i) Executive's Base
            Salary for the calendar year (disregarding any decreases made
            effective during the Employment Period), (ii) the cash bonus
            actually earned by Executive with respect to such calendar year,
            and (iii) the value of all stock and other equity-based
            compensation awards made to Executive during such calendar year.

       Covered Compensation shall be calculated according to the following
       rules:

               (a)  In valuing awards for purposes of clause (iii) above, all
                    such awards shall be treated as if fully vested when
                    granted, stock grants shall be valued by reference to the
                    fair market value on the date of grant of the Company's
                    common stock, par value $.01 per share (or of the common
                    stock of
<PAGE>   12
                    Avalon, as the case may be) and other equity-based
                    compensation awards shall be valued at the value
                    established by the Compensation Committee of the Board of
                    Directors on the date of grant.

               (b)  In determining the cash bonus actually paid with respect to
                    a calendar year, if no cash bonus has been paid with
                    respect to the calendar year in which the Date of
                    Termination occurs, the cash bonus paid with respect to the
                    immediately preceding calendar year shall be assumed to
                    have been paid in each of the current and immediately
                    preceding calendar years, and if no cash bonus has been
                    paid by the Date of Termination with respect to the
                    immediately preceding calendar year, the cash bonus paid
                    with respect to the second preceding calendar year shall be
                    assumed to have been paid in all three of the calendar
                    years taken into account in determining Covered Average
                    Compensation.

               (c)  If any cash bonus paid with respect to the current or
                    immediately preceding calendar year was paid within three
                    months of Executive's Date of Termination, and is lower
                    than the last cash bonus paid more than three months from
                    the Date of Termination, any such cash bonus paid within
                    three months of the Date of Termination shall be
                    disregarded and the last cash bonus paid more than three
                    months from the Date of Termination shall be substituted
                    for each cash bonus so disregarded.

               (d)  In determining the amount of stock and other equity-based
                    compensation awards made during a calendar year during the
                    averaging period, rules similar to those set forth in
                    subparagraphs (B) and (C) of this Section 7(b)(6) shall be
                    followed, except that all awards made in connection with
                    the Company's initial public offering shall be disregarded.

        vii. Disability.  "Disability" shall mean Executive has been determined
             to be disabled and to qualify for long-term disability benefits
             under the long-term disability insurance policy obtained pursuant
             to Section 3(d) of this Agreement.

    c.  Rights Upon Termination.
<PAGE>   13
       (1)  Payment of Benefits Earned Through Date of Termination.  Upon any
            termination of Executive's employment during the Employment Period,
            Executive, or his estate, shall in all events be paid all accrued
            but unpaid Base Salary and all earned but unpaid cash incentive
            compensation earned through his Date of Termination. Executive
            shall also retain all such rights with respect to vested
            equity-based awards as are provided under the circumstances under
            the applicable grant or award agreement, and shall be entitled to
            all other benefits which are provided under the circumstances in
            accordance with the provisions of the Company's generally
            applicable employee benefit plans, practices and policies, other
            than severance plans.

       (2)  Death.  In the event of Executive's death during the Employment
            Period, the Company shall, in addition to paying the amounts set
            forth in Section 7(c)(i), take whatever action is necessary to
            cause all of Executive's unvested equity-based awards to become
            fully vested as of the date of death and, in the case of
            equity-based awards which have an exercise schedule, to become
            fully exercisable and continue to be exercisable for such period as
            is provided in the case of vested and exercisable awards in the
            event of death under the terms of the applicable award agreements.

       (3)  Disability.  In the event the Company elects to terminate
            Executive's employment during the Employment Period on account of
            Disability, the Company shall, in addition to paying the amounts
            set forth in Section 7(c)(i), pay to Executive, in one lump sum, no
            later than 31 days following the Date of Termination, an amount
            equal to two times Covered Average Compensation.  The Company shall
            also, commencing upon the Date of Termination:

            (a)  Continue, without cost to Executive, benefits comparable to
                 the medical and disability benefits provided to Executive
                 immediately prior to the Date of Termination under Section
                 3(c) and Section 3(d) for a period of 24 months following the
                 Date of Termination or until such earlier date as Executive
                 obtains comparable benefits through other employment;

            (b)  Continue to pay, or reimburse Executive, for all premiums then
                 due or thereafter payable on the whole-life portion of the
                 split-dollar insurance policy referenced under Section
<PAGE>   14
                 3(d) for so long as such payments are due; and

            (c)  Take whatever action is necessary to cause Executive to become
                 vested as of the Date of Termination in all stock options,
                 restricted stock grants, and all other equity-based awards and
                 be entitled to exercise and continue to exercise all stock
                 options and all other equity-based awards having an exercise
                 schedule and to retain such grants and awards to the same
                 extent as if they were vested upon termination of employment
                 in accordance with their terms.

       (4)  Non-Renewal.  In the event the Company gives Executive a notice of
            non-renewal pursuant to Section 1 above, the Company shall, in
            addition to paying the amounts set forth in Section 7(c)(i),
            commencing upon the Date of Termination:

            (a)  Pay to Executive, for 12 consecutive months, commencing with
                 the first day of the month immediately following the Date of
                 Termination, a monthly amount equal to the result obtained by
                 dividing Covered Average Compensation by twelve;

            (b)  Continue, without cost to Executive, benefits comparable to
                 the medical and disability benefits provided to Executive
                 immediately prior to the Date of Termination under Section
                 3(c) and Section 3(d) for a period of 24 months following the
                 Date of Termination or until such earlier date as Executive
                 obtains comparable benefits through other employment; and

            (c)  Take whatever action is necessary to cause Executive to become
                 vested as of the Date of Termination in all stock options,
                 restricted stock grants, and all other equity-based awards and
                 be entitled to exercise and continue to exercise all stock
                 options and all other equity-based awards having an exercise
                 schedule and to retain such grants and awards to the same
                 extent as if they were vested upon termination of employment
                 in accordance with their terms; and

            (d)  Continue to pay, or reimburse Executive for, all premiums then
                 due or thereafter payable on the whole-life portion of the
                 split-dollar insurance policy referenced under Section
<PAGE>   15
                 3(d) for so long as such payments are due.

       (5)  Termination Without Cause; Constructive Termination Without Cause.
            In the event the Company or any successor to the Company terminates
            Executive's employment without Cause, or if Executive terminates
            his employment in a Constructive Termination without Cause, the
            Company shall, in addition to paying the amounts provided under
            Section 7(c)(i), pay to Executive, in one lump sum no later than 31
            days following the Date of Termination, an amount equal to three
            times Covered Average Compensation.  The Company shall also,
            commencing upon the Date of Termination:

            (a)  Continue, without cost to Executive, benefits comparable to
                 the medical and disability benefits provided to Executive
                 immediately prior to the Date of Termination under Section
                 3(c) and Section 3(d) for a period of 36 months following the
                 Date of Termination or until such earlier date as Executive
                 obtains comparable benefits through other employment;

            (b)  Continue to pay, or reimburse Executive, for so long as such
                 payments are due, all premiums then due or payable on the
                 whole-life portion of the split-dollar insurance policy
                 referenced under Section 3(d); and

            (c)  Take whatever action is necessary to cause Executive to become
                 vested as of the Date of Termination in all stock options,
                 restricted stock grants, and all other equity-based awards and
                 be entitled to exercise and continue to exercise all stock
                 options and all other equity-based awards having an exercise
                 schedule and to retain such grants and awards to the same
                 extent as if they were vested upon termination of employment
                 in accordance with their terms.

       (6)  Termination for Cause; Voluntary Resignation.  In the event
            Executive's employment terminates during the Employment Period
            other than in connection with a termination meeting the conditions
            of subparagraphs (ii), (iii), (iv), or (v) of this Section 7(c),
            Executive shall receive the amounts set forth in Section 7(c)(i) in
            full satisfaction of all of his entitlements from the Company.  All
            equity-based awards not vested as of the Date of Termination shall
            terminate (unless otherwise provided in the applicable award
<PAGE>   16
              agreement) and Executive shall have no further entitlements with
              respect thereto.

    d. Additional Benefits.

         (1)  Anything in this Agreement to the contrary notwithstanding, in
              the event it shall be determined that any payment or distribution
              by the Company to or for the benefit of Executive, whether paid
              or payable or distributed or distributable (1) pursuant to the
              terms of Section 7 of this Agreement, (2) pursuant to or in
              connection with any compensatory or employee benefit plan,
              agreement or arrangement, including but not limited to any stock
              options, restricted or unrestricted stock grants issued to or for
              the benefit of Executive and forgiveness of any loans by the
              Company to Executive or (3) otherwise (collectively, "Severance
              Payments"), would be subject to the excise tax imposed by Section
              4999 of the Internal Revenue Code of 1986, as amended (the
              "Code"), and any interest or penalties are incurred by Executive
              with respect to such excise tax (such excise tax, together with
              any such interest and penalties, are hereinafter collectively
              referred to as the "Excise Tax"), then Executive shall be
              entitled to receive an additional payment (a "Partial Gross-Up
              Payment"), such that the net amount retained by Executive, before
              accrual or payment of any Federal, state or local income tax or
              employment tax, but after accrual or payment of the Excise Tax
              attributable to the Partial Gross-Up Payment, is equal to the
              Excise Tax on the Severance Payments.

         (2)  Subject to the provisions of Section 7(d)(iii), all
              determinations required to be made under this Section 7,
              including whether a Partial Gross-Up Payment is required and the
              amount of such Partial Gross-Up Payment, shall be made by Coopers
              & Lybrand LLP or such other nationally recognized accounting firm
              as may at that time be the Company's independent public
              accountants immediately prior to the Change in Control (the
              "Accounting Firm"), which shall provide detailed supporting
              calculations both to the Company and Executive within 15 business
              days of the Date of Termination, if applicable, or at such
              earlier time as is reasonably requested by the Company or
              Executive.  The initial Partial Gross-Up Payment, if any, as
              determined pursuant to this Section 7(d)(ii), shall be paid to
              Executive within five days of the receipt of the Accounting
              Firm's determination.  If the Accounting Firm determines that no
              Excise Tax is payable by Executive, the
<PAGE>   17
              Company shall furnish Executive with an opinion of counsel that
              failure to report the Excise Tax on Executive's applicable
              federal income tax return would not result in the imposition of a
              negligence or similar penalty.  Any determination by the
              Accounting Firm shall be binding upon the Company and Executive.
              As a result of the uncertainty in the application of Section 4999
              of the Code at the time of the initial determination by the
              Accounting Firm hereunder, it is possible that Partial Gross-Up
              Payments which will not have been made by the Company should have
              been made (an "Underpayment").  In the event that the Company
              exhausts its remedies pursuant to Section 7(d)(iii) and Executive
              thereafter is required to make a payment of any Excise Tax, the
              Accounting Firm shall determine the amount of the Underpayment
              that has occurred, consistent with the calculations required to
              be made hereunder, and any such Underpayment, and any interest
              and penalties imposed on the Underpayment and required to be paid
              by Executive in connection with the proceedings described in
              Section 7(d)(iii), and any related legal and accounting expenses,
              shall be promptly paid by the Company to or for the benefit of
              Executive.

         (3)  Executive shall notify the Company in writing of any claim by the
              Internal Revenue Service that, if successful, would require the
              payment by the Company of the Partial Gross-Up Payment.  Such
              notification shall be given as soon as practicable but no later
              than 10 business days after Executive knows of such claim and
              shall apprise the Company of the nature of such claim and the
              date on which such claim is requested to be paid.  Executive
              shall not pay such claim prior to the expiration of the 30-day
              period following the date on which he gives such notice to the
              Company (or such shorter period ending on the date that any
              payment of taxes with respect to such claim is due).  If the
              Company notifies Executive in writing prior to the expiration of
              such period that it desires to contest such claim, Executive
              shall:

              (a)  give the company any information reasonably requested by the
                   Company relating to such claim,

              (b)  take such action in connection with contesting such claim as
                   the Company shall reasonably request in writing from time to
                   time, including, without limitation, accepting legal
                   representation with respect to such claim by an attorney
<PAGE>   18
                   selected by the Company,

              (c)  cooperate with the Company in good faith in order effectively
                   to contest such claim, and

              (d)  permit the Company to participate in any proceedings relating
                   to such claim; provided, however that the Company shall bear
                   and pay directly all costs and expenses attributable to the
                   failure to pay the Excise Tax (including related additional
                   interest and penalties) incurred in connection with such
                   contest and shall indemnify and hold Executive harmless, for
                   any Excise Tax up to an amount not exceeding the Partial
                   Gross-Up Payment, including interest and penalties with
                   respect thereto, imposed as a result of such representation,
                   and payment of related legal and accounting costs and
                   expenses (the "Indemnification Limit"). Without limitation on
                   the foregoing provisions of this Section 7(d)(iii), the
                   Company shall control all proceedings taken in connection
                   with such contest and, at its sole option may pursue or
                   forego any and all administrative appeals, proceedings,
                   hearings and conferences with the taxing authority in respect
                   of such claim and may, at its sole option, either direct
                   Executive to pay the tax claimed and sue for a refund or
                   contest the claim in any permissible manner, and Executive
                   agrees to prosecute such contest to a determination before
                   any administrative tribunal, in a court of initial
                   jurisdiction and in one or more appellate courts, as the
                   Company shall determine; provided, however, that if the
                   Company directs Executive to pay such claim and sue for a
                   refund, the Company shall advance so much of the amount of
                   such payment as does not exceed the Excise Tax, and related
                   interest and penalties, to Executive on an interest-free
                   basis and shall indemnify and hold Executive harmless, from
                   any related legal and accounting costs and expenses, and from
                   any Excise Tax, including related interest or penalties
                   imposed with respect to such advance or with respect to any
                   imputed income with respect to such advance up to an amount
                   not exceeding the Indemnification Limit; and further provided
                   that any extension of the statute of limitations relating to
                   payment of taxes for the taxable year of Executive with
                   respect to which such contested amount
<PAGE>   19
                       is claimed to be due is limited solely to such contested
                       amount. Furthermore, the Company's control of the contest
                       shall be limited to issues with respect to which a
                       Partial Gross-Up Payment would be payable hereunder and
                       Executive shall be entitled to settle or contest, as
                       the case may be, any other issues raised by the
                       Internal Revenue Service or any other taxing authority.

              (4)  If, after the receipt by Executive of an amount advanced by
                   the Company pursuant to Section 7(d)(iii), Executive becomes
                   entitled to receive any refund with respect to such claim,
                   Executive shall (subject to the Company's complying with the
                   requirements of Section 7(d)(iii)) promptly pay to the
                   Company so much of such refund (together with any interest
                   paid or credited thereon after taxes applicable thereto) (the
                   "Refund") as is equal to (A) if the Company advanced or paid
                   the entire amount required to be so advanced or paid pursuant
                   to Section 7(d)(iii) hereof (the "Required Section 7(d)
                   Advance"), the aggregate amount advanced or paid by the
                   Company pursuant to this Section 7(d) less the portion of
                   such amount advanced to Executive to reimburse him for
                   related legal and accounting costs, or (B) if the Company
                   advanced or paid less than the Required Section 7(d) Advance,
                   so much of the aggregate amount so advanced or paid by the
                   Company pursuant to this Section 7(d) as is equal to the
                   difference, if any, between (C) the amount refunded to
                   Executive with respect to such claim and (D) the sum of the
                   portion of the Required Section 7(d) Advance that was paid by
                   Executive and not paid or advanced by the Company plus
                   Executive's related legal and accounting fees, as applicable.
                   If, after the receipt by Executive of an amount advanced by
                   the Company pursuant to Section 7(d)(iii), a determination is
                   made that Executive shall not be entitled to any refund with
                   respect to such claim and the Company does not notify
                   Executive in writing of its intent to contest such denial of
                   refund prior to the expiration of 30 days after such
                   determination, then such advance shall be forgiven and shall
                   not be required to be repaid and the amount of such advance
                   shall offset, to the extent thereof, the amount of Partial
                   Gross-Up Payment required to be paid.

    e.  Notice of Termination.  Notice of non-renewal of this Agreement pursuant
        to Section 1 hereof or of any termination of Executive's employment
        (other than by reason of death) shall be communicated by written notice
        (a "Notice of
<PAGE>   20
        Termination") from one party hereto to the other party hereto in
        accordance with this Section 7 and Section 9.

    f.  Date of Termination.  "Date of Termination," with respect to any
        termination of Executive's employment during the Employment Period,
        shall mean (i) if Executive's employment is terminated for Disability,
        30 days after Notice of Termination is given (provided that Executive
        shall not have returned to the full-time performance of Executive's
        duties during such 30 day period), (ii) if Executive's employment is
        terminated for Cause, the date on which a Notice of Termination is given
        which complies with the requirements of Section 7(b)(1) hereof, and
        (iii) if Executive's employment is terminated for any other reason, the
        date specified in the Notice of Termination.  In the case of a
        termination by the Company other than for Cause, the Date of Termination
        shall not be less than 30 days after the Notice of Termination is given.
        In the case of a termination by Executive, the Date of Termination shall
        not be less than 15 days from the date such Notice of Termination is
        given.  Notwithstanding the foregoing, in the event that Executive gives
        a Notice of Termination to the Company, the Company may unilaterally
        accelerate the Date of Termination and such acceleration shall not
        result in the termination being treated as a Termination without Cause.
        Upon any termination of his employment, Executive will concurrently
        resign his membership on the Board of Directors.

    g.  No Mitigation.  The Company agrees that, if Executive's employment by
        the Company is terminated during the term of this Agreement, Executive
        is not required to seek other employment, or to attempt in any way to
        reduce any amounts payable to Executive by the Company pursuant to
        Section 7(d)(i) hereof.  Further, the amount of any payment provided for
        in this Agreement shall not be reduced by any compensation earned by
        Executive as the result of employment by another employer, by retirement
        benefits, or, except for amounts then due and payable in accordance with
        the terms of any promissory notes given by Executive in favor of the
        Company, by offset against any amount claimed to be owed by Executive to
        the Company or otherwise.

    h.  Nature of Payments.  The amounts due under this Section 7 are in the
        nature of severance payments considered to be reasonable by the Company
        and are not in the nature of a penalty.  Such amounts are in full
        satisfaction of all claims Executive may have in respect of his
        employment by the Company or its affiliates and are provided as the sole
        and exclusive benefits to be provided to Executive, his estate, or his
        beneficiaries in respect of his termination of employment from the
        Company or its affiliates.

8.  Non-Competition; Non-Solicitation; Specific Enforcement.
<PAGE>   21
    a.  Non-Competition.  Because Executive's services to the Company are
        special and because Executive has access to the Company's confidential
        information, Executive covenants and agrees that, during the Employment
        Period and, for a period of one year following the Date of Termination
        by the Company for Cause or a termination by Executive (other than a
        Constructive Termination Without Cause) prior to a Change in Control,
        Executive shall not, without the prior written consent of the Board of
        Directors, 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.
        "Competing Enterprise," for purposes of this Agreement, shall mean any
        person, corporation, partnership, venture or other entity which (a) is a
        publicly traded real estate investment trust, or (b) is engaged in the
        business of managing, owning, leasing or joint venturing residential
        real estate within 30 miles of residential real estate owned or under
        management by the Company or its affiliates.  "Restricted Activities,"
        for purposes of this Agreement, shall mean executive, managerial,
        directorial, administrative, strategic, business development or
        supervisory responsibilities and activities relating to all aspects of
        residential real estate ownership, management, residential real estate
        franchising, and residential real estate joint-venturing.

    b.  Non-Solicitation.  During the Employment Period, and for a period of one
        year following the Date of Termination, Executive shall not, without the
        prior written consent of the Company, except in the course of carrying
        out his duties hereunder, solicit or attempt to solicit for employment
        with or on behalf of any corporation, partnership, venture or other
        business entity, 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.
   
    c.  Specific Enforcement.  Executive and the Company agree that the
        restrictions, prohibitions and other provisions of this Section 8 are
        reasonable, fair and equitable in scope, terms, and duration, are
        necessary to protect the legitimate business interests of the Company
        and are a material inducement to the Company to enter into this
        Agreement.  Should a decision be made by a court of competent
        jurisdiction that the character, duration or geographical scope of the
        provisions of this Section_8 is unreasonable, the parties intend and
        agree that this Agreement shall be construed by the court in such a
        manner as to impose all of those restrictions on Executive's conduct
        that are reasonable in light of the circumstances and as are necessary
        to assure to the Company the benefits of this Agreement.  The Company
        and Executive further agree that the services to be rendered under this
        Agreement by Executive are special, unique and of extraordinary
        character, and that in the event of the breach by Executive of the
<PAGE>   22
       terms and conditions of this Agreement or if Executive, without the
       prior consent of the Board of Directors, shall take any action in
       violation of this Section 8, the Company will suffer irreparable harm
       for which there is no adequate remedy at law.  Accordingly, Executive
       hereby consents to the entry of a temporary restraining order or ex
       parte injunction, in addition to any other remedies available at law or
       in equity, to enforce the provisions hereof.  Any proceeding or action
       seeking equitable relief for violation of this Section 8 must be
       commenced in the federal or state courts, in either case in
       Massachusetts.  Executive and the Company irrevocably and
       unconditionally submit to the jurisdiction of such courts and agree to
       take any and all future action necessary to submit to the jurisdiction
       of such courts.

9.  Notice.  Any notice required or permitted hereunder shall be in writing and
    shall be deemed sufficient when given by hand or by nationally recognized
    overnight courier or by Express, registered or certified mail, postage
    prepaid, return receipt requested, and addressed, if to the Company at 5904
    Richmond Avenue, Alexandria, VA 22303, and if to Executive at the address
    set forth in the Company's records (or to such other address as may be
    provided by notice).

10. Miscellaneous.  This Agreement, together with Annex A and Annex B and the
    Split Dollar Insurance Agreement, constitutes the entire agreement between
    the parties concerning the subjects hereof and supersedes any and all prior
    agreements or understandings, including, without limitation, any plan or
    agreement providing benefits in the nature of severance, but excluding
    benefits provided under other Company plans or agreements, except to the
    extent this Agreement provides greater rights than are provided under such
    other plans or agreements. As of the Effective Date, this Agreement
    supersedes the Prior Agreement which will have no further force or effect.
    Executive hereby waives, to the extent applicable, the effect of the
    transactions contemplated by the Merger Agreement (or shareholder approval
    of such transaction) on any change in control provisions in any Avalon
    employee benefit plan or agreement.  This Agreement shall terminate upon
    termination of the Merger Agreement and abandonment of the merger
    contemplated by the Merger Agreement. This Agreement may not be assigned by
    Executive without the prior written consent of the Company, and may be
    assigned by the Company and shall be binding upon, and inure to the benefit
    of, the Company's successors and assigns.  The Company will require any
    successor (whether direct or indirect, by purchase, merger, consolidation
    or otherwise) to all or substantially all of the business and/or assets of
    the Company to assume expressly and agree to perform this Agreement in the
    same manner and to the same extent that the Company would be required to
    perform it if no such succession had taken place.  As used in this
    Agreement, "Company" shall mean the Company as hereinbefore defined and any
    successor to its business and/or assets as aforesaid which assumes and
    agrees to perform this Agreement by operation of law, or otherwise.
    Headings herein are for convenience of reference only
<PAGE>   23
     and shall not define, limit or interpret the contents hereof.

11.  Amendment.  This Agreement may be amended, modified or supplemented by the
     mutual consent of the parties in writing, but no oral amendment,
     modification or supplement shall be effective. No waiver by either party of
     any breach by the other party of any condition or provision contained in
     this Agreement to be performed by such other party shall be deemed a waiver
     of a similar or dissimilar condition or provision at the same or any prior
     or subsequent time.  Any waiver must be in writing and signed by Executive
     or an authorized officer of the Company, as the case may be.

12.  Severability.  The provisions of this Agreement are severable. The
     invalidity of any provision shall not affect the validity of any other
     provision, and each provision of this Agreement shall be valid and
     enforceable to the fullest extent permitted by law.

13.  Resolution of Disputes.

     a.  Procedures and Scope of Arbitration.  Except for any controversy or
         claim seeking equitable relief pursuant to Section 8 of this Agreement,
         all controversies and claims arising under or in connection with this
         Agreement or relating to the interpretation, breach or enforcement
         thereof and all other disputes between the parties, shall be resolved
         by expedited, binding arbitration, to be held in Massachusetts in
         accordance with the National Rules of the American Arbitration
         Association governing employment disputes (the "National Rules").  In
         any proceeding relating to the amount owed to Executive in connection
         with his termination of employment, it is the contemplation of the
         parties that the only remedy that the arbitrator may award in such a
         proceeding is an amount equal to the termination payments, if any,
         required to be provided under the applicable provisions of Section 7(c)
         and, if applicable, Section 7(d) hereof, to the extent not previously
         paid, plus the costs of arbitration and Executive's reasonable
         attorneys fees and expenses as provided below.  Any award made by such
         arbitrator shall be final, binding and conclusive on the parties for
         all purposes, and judgment upon the award rendered by the arbitrator
         may be entered in any court having jurisdiction thereof.

    b.   Attorneys Fees.

             (1)  Reimbursement After Executive Prevails.  Except as otherwise
                  provided in this paragraph, each party shall pay the cost of
                  his or its own legal fees and expenses incurred in
                  connection with an arbitration proceeding.  Provided an
                  award is made in favor of Executive in such proceeding, all
                  of his reasonable attorneys fees and expenses incurred in
                  pursuing or defending such proceeding
<PAGE>   24
                  shall be promptly reimbursed to Executive by the Company
                  within five days of the entry of the award.

             (2)  Reimbursement in Actions to Stay, Enjoin or Collect.  In any
                  case where the Company or any other person seeks to stay or
                  enjoin the commencement or continuation of an arbitration
                  proceeding, whether before or after an award has been made,
                  or where Executive seeks recovery of amounts due after an
                  award has been made, or where the Company brings any
                  proceeding challenging or contesting the award, all of
                  Executive's reasonable attorneys fees and expenses incurred
                  in connection therewith shall be promptly reimbursed by the
                  Company to Executive, within five days of presentation of an
                  itemized request for reimbursement, regardless of whether
                  Executive prevails, regardless of the forum in which such
                  proceeding is brought, and regardless of whether a Change in
                  Control has occurred.

             (3)  Reimbursement After a Change in Control.  Without limitation
                  on the foregoing, solely in a proceeding commenced by the
                  Company or by Executive after a Change in Control has
                  occurred, the Company shall advance to Executive, within
                  five days of presentation of an itemized request for
                  reimbursement, all of Executive's legal fees and expenses
                  incurred in connection therewith, regardless of the forum in
                  which such proceeding was commenced, subject to delivery of
                  an undertaking by Executive to reimburse the Company for
                  such advance if he does not prevail in such proceeding
                  (unless such fees are to be reimbursed regardless of whether
                  Executive prevails as provided in clause (ii) above).

14.  Survivorship.  The provisions of Sections 4(b), 6, 8 and 13 of this
     Agreement shall survive Executive's termination of employment.  Other
     provisions of this Agreement shall survive any termination of Executive's
     employment to the extent necessary to the intended preservation of each
     party's respective rights and obligations.

15.  Board Action.  Where an action called for under this Agreement is required
     to be taken by the Board of Directors, such action shall be taken by the
     vote of not less than a majority of the members then in office and
     authorized to vote on the matter.
   
16.  Withholding.  All amounts required to be paid by the Company shall be
     subject to reduction in order to comply with applicable federal, state and
     local tax withholding requirements.
<PAGE>   25
17.  Counterparts.  This Agreement may be executed in two or more counterparts,
     each of which shall be deemed to be an original but all of which together
     shall constitute one and the same instrument.  The execution of this
     Agreement may be by actual or facsimile signature.

18.  Governing Law.  This Agreement shall be construed and regulated in all
     respects under the laws of the State of Maryland.
<PAGE>   26

    IN WITNESS WHEREOF, this Agreement is entered into as of the date and year
first above written.



                             Bay Apartment Communities, Inc.



                             By: /S/ GILBERT M. MEYER



                             Its: Chairman of the Board


                             /S/ BRYCE BLAIR
                             Bryce Blair

Source: OneCLE Business Contracts.