SEPARATION AGREEMENT RE: BERMAN

EXHIBIT 10.6

June 2, 1999

Mr. Charles H. Berman
[address]

Dear Mr. Berman:

This letter agreement (the "Agreement") confirms the terms of the
termination of your employment with AvalonBay Communities, Inc. (the "Company,"
a term which for purposes of this Agreement includes its related or affiliated
entities).

1. TERMINATION DATE. By mutual agreement, the effective date of the
termination of your employment and offices with the Company and all of its
related and affiliated entities was March 24, 1999 (the "Date of Termination").
By entering into this Agreement, you also are acknowledging that you resigned,
as of the Date of Termination, as a director of the Company and all entities
that are related or affiliated to the Company. For purposes of the Employment
Agreement, dated as of March 9, 1998 by and between you and Bay Apartment
Communities, Inc. (a predecessor name of the Company) (the "Employment
Agreement"), the termination of your employment was a termination without Cause.

2. SEVERANCE PAY AND BENEFITS. The Company shall provide you with the
payments and benefits set forth in Sections 7(c)(i) (payment of salary, cash
incentive compensation and generally applicable employee benefits earned through
Date of Termination), 7(c)(v) (termination payments and benefits upon
termination without Cause) and 7(d) (Partial Gross-up Payment) of the Employment
Agreement in each case subject to and in accordance with the terms and
conditions of the Employment Agreement and subject, in all events, to the
provisions set forth immediately hereinbelow and in Sections 10 and 13(c) below.

(a) For purposes of Section 7(c)(i) of the Employment Agreement, you
and the Company have calculated your accrued bonus through the Date of
Termination as Fifty-six Thousand Six Hundred Fourteen Dollars ($56,614) (i.e.,
$252,000, prorated to reflect services during 1999 from January 1, 1999 through
the Date of Termination). You also shall receive through the Date of Termination
the benefits for which you are eligible under the Company's generally applicable
employee benefit plans, practices and policies (including, without limitation,
accrued vacation in the amount of $26,081), other than severance plans.




(b) For purposes of Section 7(c)(v) of the Employment Agreement, you
and the Company agree that in satisfaction of the Company's obligation to pay
you three times your Covered Average Compensation, the Company shall pay you,
not later than the eighth (8th) day following your execution of this Agreement
(the "Payment Date"), the gross sum of Five Million Five Hundred Seventy-eight
Thousand Seven Hundred and Fifty-seven Dollars ($5,578,757) (the "Lump Sum
Compromise Amount"), reduced by the gross amount paid to you by our Payroll
Department in respect of your base salary from and after the Date of
Termination, (i.e., Fifty-seven Thousand Five Hundred Sixty-five and 57/100
Dollars ($57,565.57))(the "Post-Termination Salary"). You and the Company agree
that there has not been agreement as to the individual components that
constitute three times your Covered Average Compensation, but that there is
agreement that the Lump Sum Compromise Amount is being paid in full satisfaction
of any and all claims that you have to receive three times your Covered Average
Compensation. The Company may deduct from the Lump Sum Compromise Amount such
withholding taxes as it reasonably determines to be required on the Payment Date
for tax purposes with respect to income earned by you from the company,
including, without limitation, the cash payments described under Sections 2(a)
and 2(b) hereof, the value of the restricted stock that has vested, the
forgiveness of the loan referred to in Section 2(h)(i) below, and the
compensation income that accrued in connection with your exercise of options. In
the event that the Company fails to pay the Lump Sum Compromise Amount, reduced
by the Post-Termination Salary but increased by the amount required under
Section 2(h)(i)(A), net of withholding taxes, on or before the second business
day after the date you execute this Agreement (the "Execution Date"), the
Company additionally shall pay you interest on that amount paid to you (i.e.,
the Lump Sum Compromise Amount reduced by the Post-Termination Salary, plus the
amount required under Section 2(h)(i)(A), after deduction for withholding taxes)
(i) calculated from the day next following the second business day after the
Execution Date until the fifth business day after the Execution Date (or, if
earlier, the date of payment of such amount) at the rate of six percent per
annum based on a 365 day year, and (ii) if not paid on or before the fifth
business day after the Execution Date, from the day next following such fifth
business day until the date of payment of such amount at the rate of 12 percent
per annum based on a 365 day year.

(c) In accordance with Section 7(c)(v)(A) of the Employment
Agreement, the Company will continue, without cost to you, benefits comparable
to the medical and disability benefits provided to you immediately prior to the
Date of Termination under Sections 3(c) and 3(d) of the Employment Agreement for
a period of 36 months following the Date of Termination or until such earlier
date as you may obtain comparable benefits through other employment. For
purposes of Section 7(c)(v)(A) of the Employment Agreement, if, within 36 months
of the Date of Termination, you obtain medical or disability benefits through
other employment (whether self-employment or otherwise) comparable to those
provided to you pursuant to Section 7(c)(v)(A), you will promptly notify the
Company.



(d) In accordance with Section 7(c)(v)(B) of the Employment
Agreement, the Company will continue to pay, for so long as such payments are
due, all premiums then due and payable on, but only to the extent relating to
the whole-life portion of, the split dollar life insurance policy obtained
pursuant to Section 3(d) of the Employment Agreement; provided that the
Company's obligations to pay under this Section 2(d) are conditioned upon your
payment of all premiums payable on, but only to the extent relating to the
term-life portion of, said split dollar life insurance policy. You agree to
cooperate with the Company in verifying your continuing satisfaction of the
foregoing condition. The Company agrees to promptly notify you, and you agree to
promptly notify the Company, of any premium notice or other notice it or you
receive from the insurer relating to the policy. In the event that the Company
determines that its obligation to make payments under this Section 2(d) has
ceased by reason of your non-payment of premiums relating to the term-life
portion of said split dollar life insurance policy, the Company shall provide
you with thirty (30) days advance written notice of its intent to terminate
payments hereunder. Such notice shall identify specifically your non-payment of
the term life premium that is the basis on which the Company asserts its right
to cease payments and shall provide you with a reasonable opportunity to cure.

(e) In accordance with Section 7(c)(v)(C) of the Employment
Agreement, all shares of the Company's stock that you were granted as Restricted
Shares vested as of the Date of Termination (i.e., you own as of the Date of
Termination a total of 57,100 shares of common stock of the Company that were
originally granted to you as Restricted Shares, as set forth on Exhibit A
hereto). To the extent the Company has not already done so, the Company shall
(or shall cause the Company's transfer agent to) (i) promptly deliver to you
certificates representing such shares with no restrictive legends, and such
shares shall be freely transferable by you subject to applicable securities laws
and (ii) remove all restrictive legends on shares previously issued to you. You
acknowledge that the Company has advised you to consult an attorney regarding
your continuing obligations under Section 16 of the Securities Exchange Act of
1934, as amended, as well as other federal and state securities (including
insider trading) laws.

(f) In accordance with Section 7(c)(v)(C) of the Employment
Agreement, all options to purchase shares of the Company's common stock that you
were granted vested as of the Date of Termination. Exhibit B hereto lists all
such options and their respective exercise prices. You have until the expiration
of three (3) months following the Date of Termination in which to exercise the
options granted on November 11, 1993 and February 17, 1999 (the "Regular
Options"). The Board of Directors, or the Compensation Committee of the Board of
Directors, of the Company has taken such action as is necessary so that, with
respect to the options granted on October 29, 1997 you will have until October
29, 2007 in which to exercise such options and that with respect to the options
granted to you on March 8, 1998 you have until March 8, 2008 in which to
exercise such options (collectively, the "Extended Options"). The Company will
provide reasonable and customary cooperation in your



consummation of a "cashless exercise" with a broker in which the proceeds of the
sale of shares of the Company common stock are used, directly or indirectly, to
finance your remittance of the exercise price on the options. The Company will
not assert that you are in possession of information regarding the Company such
that there is a basis for the Company to not provide such cooperation. The
Company has agreed that payment of the exercise price for any such option also
may be made by you in the form of shares of Company stock which are unrestricted
and which have been held by you for at least six months, and has agreed that any
tax withholding obligations with respect to the exercise of stock options may,
if you so elect in writing, be made by the Company withholding shares of stock
which would otherwise be deliverable to you or by you transferring shares of
such stock to the Company. Such shares shall be valued for such purposes in
accordance with the stock option plans and stock option agreements under which
such options were issued.

In the event of your death, your options shall be exercisable by your legal
representative or legatee in accordance with their terms.

In the event that you willfully and materially breach the terms of Section
3, 5 (but only to the extent that Section 5 incorporates by reference Sections
6(b), 8(b) and Annex B of the Employment Agreement), 6, 7, 8(a) or 8(c) of this
Agreement (a "Material Breach") at any time after the date hereof and within
thirty-six (36) months of the Date of Termination, in addition to the Company's
rights to obtain equitable relief or damages for such breach, the Company may
suspend thirty-three percent (33%) of the original amount of each tranche of the
Extended Options (or, with respect to a tranche of Extended Options for which
less than thirty-three percent (33%) of the original amount is outstanding at
that time, all of such tranche of Extended Options) (any such suspended options,
"Suspended Options"). The Company shall suspend your right to exercise the
Suspended Options by (i) filing a request for arbitration within a reasonable
time after any Senior Manager (i.e., any individual holding the title of Senior
Vice President or higher) learns of the Material Breach, which request
specifically states that the Company is suspending your right to exercise, or
(ii) in the event the Company reasonably determines that your asserted Material
Breach is curable, by sending you a written notice describing the Material
Breach and the steps you must take to cure such Material Breach. In the event
that the Company asks you to cure a Material Breach and you fail to cure such
breach to the Company's satisfaction within five (5) business days following
delivery to you of written notice from the Company, the Company then may
commence an arbitration proceeding, in which case your right to exercise the
Suspended Options will remain suspended. In the event that an arbitrator
determines that you have not committed a Material Breach, the arbitrator may
award you damages directly caused by the suspension of your right to exercise
the Suspended Options. In the event that an arbitrator determines that you have
committed a Material Breach, the exercise period of the Suspended Options shall
terminate immediately without further action or decision by the arbitrator,
without prejudice to the Company's right to obtain equitable relief or damages
for such Material Breach; provided that an award of additional damages (if any)
shall take into account



termination of the Suspended Options. Nothing contained herein otherwise shall
be deemed to limit the Company's right to obtain equitable relief or damages for
a Material Breach that occurs before or after thirty-six (36) months after the
date you execute this Agreement.

(g) The Company has determined in good faith after consultation with
Arthur Anderson LLP that none of the payments provided hereunder is subject to
an excise tax under Section 4999 of the Internal Revenue Code of 1986, as
amended. The provisions of Section 7(d) of the Employment Agreement shall
survive the Date of Termination. Notwithstanding the provisions of the
Employment Agreement, however, for purposes of application of said Section 7(d)
and Exhibit 2 to the Employment Agreement and for purposes of this Agreement,
the term "Accounting Firm" shall be deemed to refer to Arthur Anderson LLP.

(h) In addition to the payments and benefits set forth pursuant to
Section 7 of the Employment Agreement, the Company further has agreed to provide
you with the following:

(i) (A) The Company will pay to you on the Payment Date a
supplemental payment in an amount equal to Seventy-six Thousand Dollars
($76,000), less applicable withholding and (B) the Company will forgive
the amount you currently owe the Company in consideration of loans the
Company made to you in connection with the grant of restricted stock
(i.e., approximately $84,000), which indebtedness will be forgiven on the
Payment Date. On or promptly following the Payment Date, the promissory
notes representing the approximately $84,000 of indebtedness and
referenced in subsection (i)(B) shall be returned to you marked "Paid in
Full."

(ii) From and after the March 24, 1999, in lieu of any rights you
would otherwise have under Exhibit 2 to the Employment Agreement with
respect to time periods from and after March 24, 1999 or any payments or
benefits accrued from and after March 24, 1999 in accordance with such
Exhibit, you will receive payments and benefits in accordance with and
subject to the provisions of Exhibit C hereto.

(iii) You have purchased the following computer items of the Company
currently in your possession: Office computer: HP Vectra VL 166 MHZ (fair
market value $350.00), Monitor 17" - Sony Multiscan 200GS (fair market
value $300.00), and HP Omnibook 800 + accessories (fair market value
$1300.00).Accordingly, subtracted from the amount paid to you in respect
of the reimbursements under subclause (iv) immediately below will be the
fair market value of such items, which it is agreed is $1,950.



(iv) The Company shall reimburse you for (A) reasonable and
customary business expenses incurred by you in the course of performing
your duties for the Company through the Date of Termination, and for the
reasonable cost of the commercial flight you took to New York City to
attend a meeting with representatives of the Company on May 3, 1999; the
total reimbursement on account of the foregoing is agreed to be
$23,120.16;and (B) the relocation benefits described on Exhibit D
[$856.25].

(v) Subject to additional interest on account of the late payment
provision in Section 2(b), interest on the net amounts paid (i.e., after
tax withholding) under Sections 2(b) and 2(h)(i)(A) calculated from April
24, 1999 through June 2, 1999 (or, if earlier, the date on which this
Agreement is executed by the Company and delivered (including by
facsimile) to you or your attorneys) at the rate of 6% per annum based on
a 365 day year.

3. RELEASE OF CLAIMS.

(a) You, on behalf of yourself and your successors, heirs, assigns,
executors, administrators and/or estate, hereby irrevocably and unconditionally
release, acquit and forever discharge the Company, its subsidiaries, divisions
and related or affiliated entities, and each of their respective predecessors,
successors or assigns, and the officers, directors, partners, shareholders,
representatives, employees and agents of each of the foregoing (the
"Releasees"), from any and all charges, complaints, claims, liabilities,
obligations, promises, agreements, controversies, damages, actions, causes of
action, suits, rights, demands, costs, losses, debts and expenses (including
attorneys' fees and costs actually incurred), known or unknown, that directly or
indirectly arise out of, relate to or concern your employment or termination of
employment with the Company ("Claims"), which you have, own or hold, or at any
time heretofore had, owned or held against the Releasees up to the date on which
you execute this Agreement, including without limitation, express or implied,
all Claims for: breach of express or implied contract; promissory estoppel;
fraud, deceit or misrepresentation; intentional, reckless or negligent
infliction of emotional distress; breach of any express or implied covenant of
employment, including the covenant of good faith and fair dealing; interference
with contractual or advantageous relations; discrimination on any basis under
federal, state or local law, including without limitation, Title VII of the
Civil Rights Act of 1964, as amended, the Americans with Disabilities Act, as
amended, The Age Discrimination in Employment Act, as amended, and the
California Fair Employment and Housing Act, Cal. Gov't. Code Sections 12940, et
seq., as amended; and all claims for defamation or damaged reputation.

(b) You acknowledge that you are familiar with Section 1542 of the
California Civil Code, which reads as follows:

A general release does not extend to claims which the creditor
does not know or suspect to exist in his favor at



the time of executing the release, which if known by him must
have materially affected his settlement with the debtor.

You acknowledge and agree that you are releasing unknown claims and waive all
rights that you may have under Civil Code Section 1542 or under any other
statute or common law principle of similar effect.

(c) You represent and warrant that you have not filed any complaints
or charges asserting any Claims against the Releasees with any local, state or
federal agency or court. You further represent and warrant that you have not
assigned or transferred to any person or entity any Claims or any part or
portion thereof.

(d) You agree that you will not hereafter pursue any Claim against
any Releasee (including without limitation any claim seeking reinstatement with,
or damages of any nature, severance, incentive or retention pay, attorney's
fees, or costs) by filing a lawsuit in any local, state or federal court for or
on account of anything which has occurred up to the present time as a result of
your employment or termination of employment; provided, however, that nothing in
this Section 3 shall be deemed to release the Company from any claims that you
may have (i) under this Agreement, (ii) for indemnification pursuant to and in
accordance with applicable statutes, the by-laws of the Company and Section 4(b)
of the Employment Agreement, (iii) vested pension or retirement benefits under
the terms of qualified employee pension benefit plans, (iv) accrued but unpaid
wages, or (v) for excise tax payments pursuant to Section 7(d) of the Employment
Agreement.

4. RELEASE BY THE COMPANY.

(a) The Company, on behalf of itself, its subsidiaries, divisions
and related or affiliated entities and each of their respective predecessors,
successors or assigns hereby irrevocably and unconditionally releases, acquits
and forever discharges you, your successors, heirs, assigns, executors,
administrators and/or estate (the "Berman Releasees"), from any and all charges,
complaints, claims, liabilities, obligations, promises, agreements,
controversies, damages, actions, causes of action, suits, rights, demands,
costs, losses, debts and expenses (including attorney's fees and costs actually
incurred) that directly or indirectly arise out of, relate to or concern your
employment or termination of employment with the Company (the "Company Claims")
which the Company has, owns or holds, or at any time heretofore had, owned or
held against the Berman Releasees up to the date on which it executes this
Agreement.

(b) The Company acknowledges that it is familiar with Section 1542
of the California Civil Code, which reads as follows:



A general release does not extend to claims which the creditor
does not know or suspect to exist in his favor at the time of
executing the release, which if known by him must have materially
affected his settlement with the debtor.

The Company acknowledges and agrees that it is releasing unknown claims and
waives all rights that it may have under Civil Code Section 1542 or under any
other statute or common law principle of similar effect.

(c) The Company represents and warrants that it has not filed any
complaints or charges asserting any Company Claims against the Berman Releasees
with any local, state or federal agency or court. The Company further represents
and warrants that it has not assigned or transferred to any person or entity any
Company Claims or any part or portion thereof.

(d) The Company agrees that it will not hereafter pursue any Company
Claims against any Berman Releasee by filing a lawsuit in any local, state or
federal court for or on account of anything which has occurred up to the present
time as a result of your employment or termination of employment; provided,
however, that nothing in this Section 4 shall be deemed to release you from any
claims the Company may have (i) under this Agreement, or (ii) for breaches prior
to the date hereof of the nondisclosure provisions of Section 6 of the
Employment Agreement or Annex B to the Employment Agreement.

5. EMPLOYMENT AGREEMENT. Except as set forth in the next sentence or as
expressly provided elsewhere in this Agreement, this Agreement supersedes all
provisions of the Employment Agreement and all such provisions terminated upon
the Date of Termination. Nothing contained herein, however, shall be deemed to
terminate your obligations to the Company or the Company's obligations to you
under Sections 4(b) (Indemnification), 6 (Records/Nondisclosure/Company
Policies), 7(d) (Excise Tax Payment), 8(b)-(c) (Non-Solicitation and Specific
Enforcement), and 13(a) (Resolution of Disputes) (as modified by Section 12
hereinbelow) of the Employment Agreement, Annexes A (Code of Ethics) or B
(Nondisclosure Agreement) thereto, or the Company's Stock Option Plan or the
stock option agreements entered into by you from time to time, (as modified by
Section 2(f) hereinabove). Nothing in this Agreement shall extend the
non-solicitation period set forth in Section 8(b) of the Employment Agreement.

6. RETURN OF PROPERTY. In accordance with Section 4 of the Nondisclosure
Agreement, dated as of March 9, 1998, by and between you and Bay Apartment
Communities, Inc. (a predecessor name to the Company), and incorporated in the
Employment Agreement as Annex B ("Nondisclosure Agreement"), you represent and
warrant that have returned to the Company (a) all records, correspondence,
notes, financial statements, computer printouts and other documents



and recorded material of every nature (including copies thereof) that may be in
your possession or control dealing with Confidential Information (as defined in
Section 8 of the Nondisclosure Agreement) and, (b) subject to your purchase
rights under Section 2(h)(iii) above, other property, such as your laptop
computer, to the extent you have not already done so.

7. ADVERSE ACTIONS. You agree that for forty-eight (48) months following
the date you execute this Agreement without the prior written consent of the
Company you shall not, directly or indirectly or in any manner, or solicit,
request, advise, assist or encourage any other person or entity to, (a)
undertake any action that would be reasonably likely to, or is intended to,
result in a Change in Control (as that term is defined in the Employment
Agreement) of the Company, including, for these purposes, without limitation, a
valuation of the Company; (b) seek to change or control in any manner the
management or the Board of Directors of the Company, or the business, operations
or affairs of the Company; or (c) undertake an investment (other than in respect
to the equity rights described in Section 2 above) in the Company.

8. NONDISPARAGEMENT AND NONDISCLOSURE.

(a) You agree not to take any action or make any statement, written
or oral, which disparages or criticizes the Company or its officers, directors,
agents, or management and business practices, or which disrupts or impairs the
Company's normal operations. The Company and its directors and senior management
(i.e., individuals holding the title of Senior Vice President or above) shall
not take any action or make any statement, written or oral, which disparages or
criticizes you or your management and business practices. The provisions of this
Section 8 shall not apply to any truthful statement required to be made by you
or any director or executive officer of the Company, as the case may be, in any
legal proceeding, governmental or regulatory investigation, in any public filing
or disclosure legally required to be filed or made, and also shall not apply to
any confidential discussion or consultation with professional advisors. In
furtherance of your obligations under this Agreement, you agree that you shall
not make any statements or comments to the media concerning the Company or the
circumstances surrounding your termination from the Company without the
Company's prior written approval.

(b) You agree not to disclose the terms of this Agreement, except
(i) to your professional advisors, including accountants and attorneys (provided
they agree to keep such information confidential), (ii) to the extent that,
prior to your disclosure, the Company has previously disclosed such information
publicly, whether in its filings with the Securities & Exchange Commission or
otherwise, and (iii) (A) pursuant to a valid subpoena or (B) as otherwise
required by law, but in either (iii)(A) or (iii)(B) only after providing the
Company, to the attention of its Chief Executive Officer, with prior written
notice and reasonable opportunity to contest such subpoena or other requirement.
In the case of the circumstances contemplated by subsections 8(b)(iii)(A)



or (B), written notice shall be provided to the Company as soon as practicable,
but in no event less than five business days before any such disclosure is
compelled, or, if later, at least one business day after you receive notice
compelling such disclosure.

(c) In furtherance of your obligations under this Agreement, you
further agree that you shall not disclose, provide or reveal, directly or
indirectly, any confidential information concerning the Company, including
without implication of limitation, their respective operations, plans,
strategies or administration, to any other person or entity unless compelled to
do so pursuant to (i) a valid subpoena or (ii) as otherwise required by law, but
in either case only after providing the Company, to the attention of its Chief
Executive Officer, with prior written notice and opportunity to contest such
subpoena or other requirement. Written notice shall be provided to the Company
as soon as practicable, but in no event less than five (5) business days before
any such disclosure is compelled, or, if later, at least one (1) business day
after you receive notice compelling such disclosure.

(d) The Company agrees that nothing in this or any other agreement
prohibits you from competing with, or providing services to an entity that
competes with, the Company; that such competition or services alone would not
constitute a violation of this or any other agreement or law; and that the
Company will not assert that such competition or services alone constitutes a
violation of this or any agreement or law on the theory that it inevitably would
result in the disclosure of confidential information or trade secrets. This
provision, however, shall not relieve you of any obligation you may have under
Section 8 of The Employment Agreement, Annex B thereto, or common or statutory
law not to actually disclose trade secrets or confidential information. Nor does
this provision relieve you of your obligations under section 7 of this
Agreement.

9. EXCLUSIVITY. This Agreement sets forth all the consideration to which
you are entitled by reason of the termination of your employment, and you agree
that you shall not be entitled to or eligible for any payments or benefits under
any other Company severance, bonus, retention or incentive policy, arrangement
or plan.

10. TAX MATTERS. All payments and other consideration provided to you
pursuant to this Agreement shall be subject to any deductions, withholding or
tax reporting that the Company reasonably determines to be required for tax
purposes; provided, that nothing contained in this Section 10 affects your
independent obligation and primary responsibility, which obligation and
responsibility you hereby affirm, to determine and make proper judgments
regarding the payment of taxes under applicable law.

11. SALE OF EQUITY INTERESTS. Contemporaneously with execution of this
Agreement, you will sell to Gilbert M. Meyer all of your interests in AvalonBay




Services I, Inc. and AvalonBay Services II, Inc. pursuant to the documents
attached hereto at Exhibit E.

12. ARBITRATION.

(a) Any controversy or claim arising out of or relating to this Agreement
or the breach hereof shall be resolved in the manner set forth in Section 13(a)
(Resolution of Disputes) of the Employment Agreement, as modified by this
Section 12.

(b) In the event any legal action or proceeding, including arbitration or
declaratory relief, is commenced by the Company with respect to any controversy
or claim arising out of or relating to this Agreement or the breach hereof, or
otherwise to enforce any rights or obligations under this Agreement, the
arbitrator or, in the case of a claim for equitable relief, the judge in such
proceeding (i) shall have discretion to award to you if you are the prevailing
party reasonable attorney's fees and costs, if any, in said action or
proceeding, but (ii) regardless of the outcome in said action or proceeding,
shall not award to the Company any of its attorney's fees or costs.

(c) In the event any legal action or proceeding, including arbitration or
declaratory relief, is commenced by you with respect to any controversy or claim
arising out of or relating to this Agreement or the breach hereof, or otherwise
to enforce any rights or obligations under this Agreement, the arbitrator or, in
the case of a claim for equitable relief, the judge in such proceeding shall
have discretion to award the prevailing party reasonable attorney's fees and
costs, if any, in said action or proceeding.

(d) An award of attorney's fees and costs pursuant to subsections (b) or
(c) above shall take into account the amount or degree of relief awarded to the
prevailing party relative to that party's demands. An award of reasonable
attorney's fees and costs also shall take into account any offer of settlement
or judgment by the non-prevailing party. Attorney's fees and costs incurred by
the prevailing party from and after the date of such an offer of settlement or
judgment may be limited or eliminated to the extent that the value of the final
judgment in favor of the prevailing party does not materially exceed the value
of the offer of settlement or judgment.

13. NOTICES, ACKNOWLEDGMENTS AND OTHER TERMS

(a) You are advised to consult with an attorney and tax advisor before
signing this Agreement. You acknowledge that you have consulted with an attorney
of your choice.

(b) You acknowledge and agree that the Company's promises in this
Agreement include consideration in addition to anything of value to which you
are otherwise entitled by reason of the termination of your employment.




(c) You acknowledge that you have been given the opportunity, if you
so desired, to consider this Agreement for twenty-one (21) days before executing
it. If you breach any of the conditions of the Agreement within the twenty-one
(21) day period, the offer of this Agreement will be withdrawn and your
execution of the Agreement will not be valid. In the event that you execute and
return this Agreement within twenty-one (21) days or less of the date of its
delivery to you, you acknowledge that such decision was entirely voluntary and
that you had the opportunity to consider this letter agreement for the entire
twenty-one (21) day period.

(d) By signing this Agreement, you acknowledge that you are doing so
voluntarily and knowingly, fully intending to be bound by this Agreement. You
also acknowledge that you are not relying on any representations by any
representative of the Company concerning the meaning of any aspect of this
Agreement. You understand that this Agreement shall not in any way be construed
as an admission by the Company of any liability or any act of wrongdoing
whatsoever by the Company against you and that the Company specifically
disclaims any liability or wrongdoing whatsoever against you on the part of
itself and its officers, directors, shareholders, employees and agents. You
understand that if you do not to enter into this Agreement and bring any claims
against the Company, the Company will dispute the merits of those claims and
contend that it acted lawfully and for good business reasons with respect to
you.

(e) In the event of any dispute, this Agreement will be construed as a
whole, will be interpreted in accordance with its fair meaning, and will not be
construed strictly for or against either you or the Company. Section headings
and parenthetical explanations of section references are for convenience only
and shall not be used to interpret the meaning of any provision or term of this
Agreement.

(f) Any notices required to be given under this Agreement shall be
provided in writing and delivered by hand or certified mail, and shall be deemed
to have been duly given when received at the following addresses, unless and to
the extent that notice of change of address has been duly given hereunder

If to you at:

Mr. Charles H. Berman
[address]

with a copy to:

Herbert W. Krueger, Esq.
Mayer Brown & Platt
190 South LaSalle Street
Chicago, IL 60603-3441




If to the Company, to it at:

AvalonBay Communities, Inc.
2900 Eisenhower Avenue, Third Floor
Alexandria, VA 22314
Attention: Chief Executive Officer

with a copy to:
Joseph A. Piacquad, Esq,
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, MA 02109-2881

(g) The law of the State of Maryland will govern any dispute about
this Agreement, including any interpretation or enforcement of this Agreement.

(h) In the event that any provision or portion of a provision of
this Agreement shall be determined to be illegal, invalid or unenforceable, the
remainder of this Agreement shall be enforced to the fullest extent possible and
the illegal, invalid or unenforceable provision or portion of a provision will
be amended by a court of competent jurisdiction, or otherwise thereafter shall
be interpreted, to reflect as nearly as possible without being illegal, invalid
or unenforceable the parties' intent if possible. If such amendment or
interpretation is not possible, the illegal, invalid or unenforceable provision
or portion of a provision will be severed from the remainder of this Agreement
and the remainder of this Agreement shall be enforced to the fullest extent
possible as if such illegal, invalid or unenforceable provision or portion of a
provision was not included.

(i) This Agreement may be modified only by a written agreement
signed by you and an authorized representative of the Company.

(j) This Agreement constitutes the entire agreement between the
parties with respect to the subject matter hereof and, except as expressly
provided herein, supersedes all prior agreements between the parties with
respect to any related subject matter.

(k) This Agreement shall be binding upon each of the parties and
upon their respective heirs, administrators, representatives, executors,
successors and assigns, and shall inure to the benefit of each party and to
their heirs, administrators, representatives, executors, successors, and
assigns.

If you agree to these terms, please sign and date below and return this
Agreement to the Company's Chief Executive Officer by June 2, 1999. This
Agreement may be executed in counterparts and/or by facsimile transmission, 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.

Sincerely,

AvalonBay Communities, Inc.

By: /s/ Richard L. Michaux

Its: Chief Executive Officer


Accepted and Agreed to:

/s/ Charles H. Berman
Charles H. Berman

Dated: June 7, 1999



EXHIBIT A
---------

Restricted Stock