EXHIBIT 4.2

EXHIBIT 4.2

AMENDMENT NO. 1 TO

SHAREHOLDER RIGHTS AGREEMENT

Amendment, dated as of February 28, 2000 (the "Amendment") to the
Shareholder Rights Agreement, dated as of March 9, 1998 (the "Rights
Agreement"), by and between AvalonBay Communities, Inc., a Maryland corporation
(formerly known as Bay Apartment Communities, Inc., the "Company"), and First
Union National Bank, a national banking institution (as successor Rights Agent
to American Stock Transfer and Trust Company, a New York corporation, the
"Rights Agent").

W I T N E S S E T H

WHEREAS, Section 27 of the Rights Agreement provides that prior to the time
at which any Person becomes an Acquiring Person (as such terms are defined in
the Rights Agreement), the Company and the Rights Agent shall, if the Board of
Directors of the Company so directs, supplement or amend any provision of the
Rights Agreement as the Board of Directors of the Company may deem necessary or
desirable without the approval of any holders of certificates representing
shares of the Company's common stock, par value $.01 per share (the "Common
Stock"); and

WHEREAS, the Company desires to modify certain terms and provisions of the
Rights Agreement to make such terms and provisions consistent with certain terms
and provisions contained in the Company's Articles of Amendment and Restatement
of Articles of Incorporation.

NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:

1. Section 1(a) of the Rights Agreement is amended and restated in its
entirety as follows:

"(a) "ACQUIRING PERSON" shall mean (I) any Person (as such term is
hereinafter defined), other than any Person that is a Look-Through Entity (as
such term is hereinafter defined), who or which, together with all Affiliates
(as such term is hereinafter defined) and Associates (as such term is
hereinafter defined) of such Person, shall be the Beneficial Owner (as such term
is hereinafter defined) of 10% or more of the shares of Common Stock of the
Company then outstanding, and (II) any Person that is a Look-Through Entity who
or which, together with all Affiliates and Associates of such Person, shall be
the Beneficial Owner of 15% or more of the shares of Common Stock of the Company
then outstanding; PROVIDED, HOWEVER, that none of the following Persons shall be
an "Acquiring Person": (i) the Company;


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(ii) any Subsidiary (as such term is hereinafter defined) of the Company; (iii)
any employee benefit plan or compensation arrangement of the Company or any
Subsidiary of the Company; or (iv) any Person holding shares of Common Stock of
the Company organized, appointed or established by the Company or any Subsidiary
of the Company for or pursuant to the terms of any such employee benefit plan or
compensation arrangement (the Persons described in clauses (i) through (iv)
above are referred to herein as "Exempt Persons"); PROVIDED FURTHER, HOWEVER,
that the term "Acquiring Person" shall not include (A) any Grandfathered Person
(as such term is hereinafter defined), unless such Grandfathered Person after
the Grandfathered Time (as such term is hereinafter defined) becomes the
Beneficial Owner of more than the greater of 15% or the Grandfathered Percentage
(as such term is hereinafter defined) applicable to such Grandfathered Person,
or (B) Avalon (as such term is hereinafter defined), or any of its Affiliates or
Associates, solely by reason of its execution of the Agreement and Plan of
Merger dated as of March 9, 1998 by and between the Company and Avalon (as
amended from time to time, the "Merger Agreement").

Notwithstanding the foregoing, no Person shall become an "Acquiring Person"
as the result of an acquisition by the Company of Common Stock of the Company
which, by reducing the number of shares outstanding, increases the proportionate
number of shares beneficially owned by such Person to 10% (or in the case of (x)
a Grandfathered Person, the Grandfathered Percentage applicable to such
Grandfathered Person, and (y) a Person that is a Look-Through Entity, 15%) or
more of the shares of Common Stock of the Company then outstanding; PROVIDED,
HOWEVER, that if a Person shall become the Beneficial Owner of 10% (or in the
case of (x) a Grandfathered Person, the Grandfathered Percentage applicable to
such Grandfathered Person, and (y) a Person that is a Look-Through Entity, 15%)
or more of the shares of Common Stock of the Company then outstanding by reason
of share purchases by the Company and shall, after such share purchases by the
Company, become the Beneficial Owner of any additional shares (other than
pursuant to a stock split, stock dividend or similar transaction) of Common
Stock of the Company and immediately thereafter be the Beneficial Owner of 10%
(or in the case of (x) a Grandfathered Person, the Grandfathered Percentage
applicable to such Grandfathered Person, and (y) a Person that is a Look-Through
Entity, 15%) or more of the shares of Common Stock of the Company then
outstanding, then such Person shall be deemed to be an "Acquiring Person."

In addition, notwithstanding the foregoing, a Person shall not be an
"Acquiring Person" if the Board of Directors of the Company determines that a
Person who would otherwise be an "Acquiring Person," as defined pursuant to the
foregoing provisions of this Section 1(a), has become such inadvertently, and
such Person divests as promptly as practicable (or within such period of time as
the Board of Directors of the Company determines is reasonable) a sufficient
number of shares of Common Stock of the Company so that such Person would no
longer be an "Acquiring Person," as defined pursuant to the foregoing provisions
of this Section 1(a)."


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2. Section 1 of the Rights Agreement is amended by adding a new subsection
(w) as follows immediately after the current subsection (v) and redesignating
the current subsections (w) through (nn) as (x) through (oo):

"(w) "LOOK-THROUGH ENTITY" shall mean a Person that is either (i) a trust
described in Section 401(a) of the Internal Revenue Code of 1986, as amended
(the "Code"), and exempt from tax under Section 501(a) of the Code as modified
by Section 856(h)(3) of the Code or (ii) registered under the Investment Company
Act of 1940, as amended, and in each case shall include such Person's Associates
and Affiliates."

3. Section 3(a) of the Rights Agreement is amended and restated in its
entirety as follows:

"(a) From the date hereof until the earlier of (i) the Close of Business on
the tenth calendar day after the Stock Acquisition Date or (ii) the Close of
Business on the tenth Business Day (or such later calendar day, if any, as the
Board of Directors of the Company may determine in its sole discretion) after
the date a tender or exchange offer by any Person, other than an Exempt Person,
is first published or sent or given within the meaning of Rule 14d-4(a) of the
Exchange Act, or any successor rule, if, upon consummation thereof, such Person
would be the Beneficial Owner of 10% (or in the case of (x) a Grandfathered
Person, the Grandfathered Percentage applicable to such Grandfathered Person,
and (y) a Person that is a Look-Through Entity, 15%) or more of the shares of
Common Stock of the Company then outstanding (including any such date which is
after the date of this Agreement and prior to the issuance of the Rights) (the
earliest of such dates being herein referred to as the "Distribution Date"), (x)
the Rights will be evidenced (subject to the provisions of Section 3(b) hereof)
by the certificates for the Common Stock of the Company registered in the names
of the holders of the Common Stock of the Company (which certificates for Common
Stock of the Company shall be deemed also to be certificates for Rights) and not
by separate certificates, and (y) the Rights will be transferable only in
connection with the transfer of the underlying shares of Common Stock of the
Company. As soon as practicable after the Distribution Date, the Rights Agent
will, at the Company's expense send, by first-class, insured, postage prepaid
mail, to each record holder of the Common Stock of the Company as of the Close
of Business on the Distribution Date, at the address of such holder shown on the
records of the Company, one or more certificates, in substantially the form of
EXHIBIT B hereto (the "Right Certificates"), evidencing one Right for each share
of Common Stock of the Company so held, subject to adjustment as provided
herein. In the event that an adjustment in the number of Rights per share of
Common Stock of the Company has been made pursuant to Section 11(o) hereof, the
Company may make the necessary and appropriate rounding adjustments (in
accordance with Section 14(a) hereof) at the time of distribution of the Right
Certificates, so that Right Certificates representing only whole numbers of
Rights are distributed and cash is paid in lieu of any fractional Rights. As of
and after the Close of Business on the Distribution Date, the Rights will be
evidenced solely by such Right Certificates."


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4. Section 24(a)(ii) of the Rights Agreement is amended and restated in its
entirety as follows:

"(ii) Notwithstanding the foregoing, the Board of Directors of the Company
may, at its option, at any time after any Person becomes an Acquiring Person,
exchange all or part of the then outstanding and exercisable Rights (which shall
not include Rights that have become void pursuant to the provisions of Section
7(e) hereof) for shares of Common Stock of the Company at an exchange ratio
specified in the following sentence, as appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date of
this Agreement. Subject to the adjustment described in the foregoing sentence,
each Right may be exchanged for that number of shares of Common Stock of the
Company obtained by dividing the Spread (as defined in Section 11(a)(iii)) by
the then Fair Market Value per one one-thousandth of a share of Preferred Stock
on the earlier of (x) the date on which any person becomes an Acquiring Person
or (y) the date on which a tender or exchange offer by any Person (other than an
Exempt Person) is first published or sent or given within the meaning of Rule
14d-4(a) of the Exchange Act or any successor rule, if upon consummation thereof
such Person would be the Beneficial Owner of 10% (or in the case of (x) a
Grandfathered Person, the Grandfathered Percentage applicable to such
Grandfathered Person, and (y) a Person that is a Look-Through Entity, 15%) or
more of the shares of Common Stock of the Company then outstanding (such
exchange ratio being referred to herein as the "Section 24(a)(ii) Exchange
Ratio"). Notwithstanding the foregoing, the Board of Directors of the Company
shall not be empowered to effect such exchange at any time after any Person
(other than an Exempt Person), together with all Affiliates and Associates of
such Person, becomes the Beneficial Owner of 50% or more of the Common Stock of
the Company."

5. The address and contact information of the Company set forth in Section
26 of the Rights Agreement is amended and restated in its entirety as follows:

"AvalonBay Communities, Inc.
2900 Eisenhower Avenue
Suite 300
Alexandria, VA 22314
Attention: Secretary"

6. The address and contact information of the Rights Agent set forth in
Section 26 of the Rights Agreement is amended and restated in its entirety as
follows:

"First Union National Bank
1525 West W.T. Harris Boulevard, 3C3
Charlotte, North Carolina 28288-1153
Attention: Shareholder Services Group"


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7. Any term used herein and not defined shall have the meaning ascribed to
such term in the Rights Agreement.

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the day and year first above written. This Amendment may be
executed in one or more counterparts all of which shall be considered one and
the same amendment and each of which shall be deemed to be an original.


ATTEST: AVALONBAY COMMUNITIES, INC.




By: /S/ DAVID J. KRAMER By: /S/ THOMAS J. SARGEANT
---------------------- --------------------------------
Name: David J. Kramer Name: Thomas J. Sargeant
Title: Senior Vice President--Chief
Financial Officer



ATTEST: FIRST UNION NATIONAL BANK,
as Rights Agent




By: /S/ TED WIENER By: /S/ KRISTIN N. KNAPP
---------------------- --------------------------------
Name: Ted Wiener Name: Kristin N. Knapp
Title: Assistant Vice President