<PAGE>   1



                              CONSULTING AGREEMENT

           This Consulting Agreement (the "Agreement"), made as of the
Effective Date (as that term is defined in Section 7(a) below), by and between
AvalonBay Communities, Inc. (the "Company," a term which for purposes of this
Agreement includes its related or affiliated entities) and Gilbert M. Meyer
(the "Consultant")

                                   WITNESSETH

           WHEREAS, the Consultant and the Company have agreed that the
Consultant shall retire as Executive Chairman of the Company on the 10th day of
May 2000 (the "Date of Retirement"); and

           WHEREAS, the Company and the Consultant have agreed that the
Consultant will continue to serve the Company as a consultant for a period of
time following the Consultant's retirement as Executive Chairman of the
Company;

           NOW THEREFORE, in consideration of the mutual covenants contained in
this Agreement, the Company and the Consultant agree as follows:

           1.      Consulting Fees.

                   (a)    In consideration of the Consultant's provision of
Consulting Services, in accordance with and subject to Section 2 below, the
Company will pay the Consultant the consulting fees (the "Fees") in three
installments as follows on the following payment dates:

                          (i)        One Million Three Hundred Ninety-Five
                                     Thousand Dollars ($1,395,000) on the Date
                                     of Retirement;

                          (ii)       One Million Three Hundred Ninety-Five
                                     Thousand Dollars ($1,395,000) on the first
                                     anniversary of the Date of Retirement; and

                          (iii)      One Million Three Hundred Ninety-Five
                                     Thousand Dollars ($1,395,000) on the
                                     second anniversary of the Date of
                                     Retirement.

                   (b)    The Consultant and the Company acknowledge that, due
to transitional issues, on-going developments, and other activities during the
first year of the Consulting Period, the Consultant will provide more services
than in the second and third years. As additional consideration for the
Consultant's provision of Consulting Services during the first year of the
Consulting Period, in accordance with and subject to Section 2 below, the
Company will deliver to the Consultant 5,880 shares (which shall be adjusted
equitably to reflect stock splits, stock dividends or similar changes affecting
the common stock of the Company occurring prior to the date such shares are to
be delivered to the Consultant) of the Company's common stock on each of the
Date of Retirement (i.e., May 10, 2000), July 1, 2000, October 1, 2000 and
January 1, 2001 (the "Additional Fees"). Such common stock may bear a
restricted securities legend to the extent the Company reasonably deems such
legend necessary to comply with applicable law.

           2.      Consulting Services and Payment Therefore

                   (a)    The Consultant hereby agrees to provide non-exclusive
consulting services to the Company for a period of three (3) years following
the Date of Retirement (the "Consulting Period"). By way of clarification, the
parties agree that the Consulting Period will continue in accordance with the
terms of this Agreement regardless of Consultant's continuing role as a
Director of the Company and that the Consultant's failure or inability to
continue as a Director shall not constitute "Cause" as defined in Section 2(f)
below.

                   (b)    In his capacity as a consultant to the Company, the
Consultant, upon reasonable advance notice and at times reasonably agreeable to
the Consultant, shall (i) assist with respect to transitional matters that may
arise in connection with the Consultant's retirement as Executive Chairman of
the Company; (ii) respond to


<PAGE>   2


requests for assistance or information concerning business matters with which
the Consultant became familiar while employed; and (iii) provide business
advice and counsel to the Company with respect to business strategies and
acquisition, dispositions, development and redevelopment of multi-family rental
properties (collectively, the "Consulting Services").

                   (c)    It is intended and agreed by and between the parties
that while providing Consulting Services, the Consultant is and shall at all
times be and remain, an independent contractor. The Consultant understands and
agrees that during the Consulting Period, he is not an employee of the Company
or any of its affiliates and shall not be treated as an employee for any
purpose. The Consultant understands that he will not be entitled by reason of
providing the Consulting Services to any compensation other than the
consideration provided in this Agreement, including, without limitation, the
Fees and Additional Fees described in Section 1 above. The Company shall
promptly reimburse the Consultant for all reasonable out-of-pocket costs
incurred by him in connection with providing Consulting Services, subject to
approval and documentation in accordance with applicable policies as may be in
effect from time to time. Nothing in this Agreement or otherwise shall be
construed as identifying the Consultant as an employee, agent or legal
representative of the Company or any of its affiliates during the Consulting
Period for any purpose whatsoever. The Consultant will not be authorized to
transact business, incur obligations, sell goods, receive payments, solicit
orders or assign or create any obligation of any kind, express or implied, on
behalf of the Company, or to bind in any way whatsoever, or to make any
promise, warranty or representation on behalf of the Company with respect to
any matter, except as expressly authorized in writing by the Company. The
Consultant shall not use any of the Company's trade names, trademarks, service
names or servicemarks without the prior written approval of the Company.

                   (d)    The Company will indemnify and hold the Consultant
harmless with respect to any liability, cost, claims, damage (including
reasonable attorney's fees) arising from his provision of Consulting Services
except to the extent arising from the Consultant's reckless or willful
misconduct and provided in any such case, that the Consultant promptly notify
the Company, in writing, of any claim for indemnification made hereunder and
allow the Company to assume the defense of any claim with counsel reasonably
acceptable to the Consultant.

                   (e)    During the Consulting Period, the Consultant shall be
free to pursue other business opportunities or employment, except to the extent
that such other business opportunities or employment might violate the terms of
this Agreement, any other agreement between the Consultant and the Company, or
the Consultant's fiduciary duties to the Company to the extent he remains a
Director of the Company. The Consultant shall not be required to provide
Consulting Services in a manner that unreasonably interferes with his ability
to pursue such other business opportunities or employment; provided, that the
Consultant shall remain available in any event to provide and shall provide, on
reasonable notice, Consulting Services to the Company.

                   (f)    This Agreement shall terminate prior to the end of
the Consulting Period, without further obligation on the part of the Company,
automatically upon the death of the Consultant or the Company's termination of
this Agreement for "Cause". For purposes of this Agreement, the term "Cause"
shall mean the Consultant's reckless or willful misconduct in the provision of
Consulting Services or the Consultant's willful and material breach of this
Agreement. Notwithstanding the foregoing, no termination of this Agreement by
the Company shall be treated as for Cause unless and until all the steps
described in Subparagraphs (i) to (iii) below have been complied with:

                          (i)        Notice of intention to terminate for Cause
has been given to the Consultant in writing by the Company within 120 days
after the Chief Executive Officer of the Company learns of the act, failure to
act or event (or latest in a series of acts, failures to act or events)
constituting Cause;

                          (ii)       Consultant has been given written notice
of the particular acts, failures to act or events which forms the basis for the
Company's assertion of Cause and has been afforded at least 30 days in which
(A) to present his position with respect to such basis in writing and, (B) if,
in the reasonable judgment of the Company, such act, failure to act or event is
curable, Consultant has been given a reasonable opportunity to cure the
asserted basis for Cause; and

                          (iii)      In the event the Company reasonably
determines that the Consultant's written statement of his position with respect
to the Company's assertion of Cause is not satisfactory and, if curable,


                                       2
<PAGE>   3




Consultant failed to cure to the Company's reasonable satisfaction, the Company
then may commence an arbitration proceeding to establish that it has Cause to
terminate the Agreement. In the event that an arbitrator determines that the
Company does not have a basis to terminate this Agreement for Cause, the
Company's obligation to continue paying the Fees shall continue. The
arbitration shall take place in accordance with the procedures described in
Section 5 of the Mutual Release and Separation Agreement, of even date
herewith, by and between the Consultant and the Company (the "Separation
Agreement"). In the event that the date of payment for any installment of the
Fees or date of delivery of the Additional Fees occurs while the process
described in Subsections (i) through (iii) hereof is pending, the Company shall
pay that installment of the Fees or deliver that installment of the Additional
Fees into an escrow account in accordance with and subject to the escrow
provisions of Section 5(e) of the Separation Agreement. The arbitrator shall
direct that the amount held in escrow, including accrued interest, be paid over
to the prevailing party. Nothing in this Section 2(f) shall be deemed to
preclude the Company or the Consultant from seeking equitable relief in a court
as specified in, and for the limited purposes set forth in, Section 5(f) of the
Separation Agreement.

           3.      Non-Compete.

                   (a)    During the Consulting Period, the Consultant
covenants and agrees that he shall not participate in any manner, directly or
indirectly, whether as an officer, employee, principal, partner, agent,
consultant, independent contractor or shareholder (other than through ownership
of less than 3% of the outstanding shares), in any publicly-traded real estate
investment trust or publicly-traded real estate company that, in either case,
is primarily or significantly involved in the ownership, operation, management
or rental of multi-family apartment homes. This provision in no way shall limit
the Consultant's fiduciary and common law obligations to the Company in his
role as a director of the Company.

                   (b)    In furtherance of the Consultant's obligations under
this Agreement, Consultant further agrees that he 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 the Consultant receives notice compelling
such disclosure.

                   (c)    By way of background, the Consultant acknowledges
that he presently is under the following obligations that may limit his ability
to compete with the Company: Section 3 of this Agreement, Section 10 of that
certain Retirement Agreement, of even date herewith, by and between the
Consultant and the Company (the "Retirement Agreement"); Annex B to the
Employment Agreement; and ongoing fiduciary obligations to the extent
Consultant remains a Director of the Company (collectively, the
"Restrictions"). The Company agrees that aside from the Restrictions: (i)
nothing else in this or any other agreement prohibits the Consultant from
competing with, or providing services, to an entity that competes with, the
Company; (ii) such competition or services alone would not constitute a
violation of this or any other agreement or law; and (iii) 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 the Consultant of any obligations he may have under
Sections 8(b) or 8(c) of the Employment Agreement, Annex B thereto, or common
or statutory law not to use or disclose trade secrets or confidential
information of the Company.
           4.      Adverse Actions. The Consultant agrees that for forty-eight
(48) months following the date he executes this Agreement, or, if later, until
that date on which he ceases to be a Director of the Company, without the prior
written consent of the Company the Consultant 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 with respect to option awards and
stock grants provided to the Consultant in consideration of his employment), in
the Company. The foregoing shall not apply to the Consultant's routine
participation as a Director of the Company or to routine interests in Company
equity, such as through reinvestments of Company dividends.






                                       3

<PAGE>   4




           5.      Exclusivity.  This Agreement sets forth all the
consideration to which the Consultant is entitled by reason of providing
Consulting Services.

           6.      Tax Matters. All payments and other consideration provided
to the Consultant 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 6 affects the Consultant's independent obligation and primary
responsibility, which obligation and responsibility the Consultant hereby
affirms, to determine and make proper judgments regarding the payment of taxes
under applicable law. The Company represents that it is the Company's current
belief that withholding of income taxes on the Fees is not required and the
Company further intends to pay to the Consultant the full amount of the Fees
(subject to offsets, if any, authorized by the Consultant) and report same for
tax purposes on a Form 1099.

           7.      Notices, Acknowledgments and Other Terms

                   (a)    This Agreement shall become effective on the
Effective Date of the Separation Agreement, as defined in Section 7(d) of the
Separation Agreement (the "Effective Date").

                   (b)    By signing this Agreement, the Consultant
acknowledges that he is doing so voluntarily and knowingly, fully intending to
be bound by this Agreement. The Consultant also acknowledges that he is not
relying on any representations by any representative of the Company concerning
the meaning of any aspect of this Agreement.

                   (c)    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 the Consultant 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.
                   (d)    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 the Consultant at:

                   Mr. Gilbert M. Meyer
                   26007 Torello Lane
                   Los Altos Hills, CA 94022

                   with a copy to:

                   Ethan Lipsig, Esq.
                   Paul, Hastings, Janofsky & Walker LLP

                                       4

<PAGE>   5




                   555 South Flower Street
                   Los Angeles, CA 90071-2371

                   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:

                   AvalonBay Communities, Inc.
                   2900 Eisenhower Avenue, Third Floor
                   Alexandria, VA 22314
                   Attention: General Counsel

                   and a copy to:

                   Joseph A. Piacquad, Esq,
                   Goodwin, Procter & Hoar  LLP
                   Exchange Place
                   Boston, MA 02109-2881

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

                   (g)    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.

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

                   (i)    This Agreement, the Retirement Agreement and the
Separation Agreement and Sections 4(b), 6, 7(d), 8(a) (as amended by Section 10
of the Retirement Agreement), 8(b) (as clarified by Section 14(i) of the
Retirement Agreement), 8(c) and 13(a) (as amended by Section 5 of the
Separation Agreement), and Annex B of the Employment Agreement constitute the
entire agreement between the parties with respect to the subject matter hereof
and, except as


                                       5

<PAGE>   6



expressly provided therein, supersede all prior agreements between the parties
with respect to any related subject matter.

                   (j)    Neither the Company nor the Consultant may make any
assignment of this Agreement or any interest herein, by operation of law or
otherwise, without the prior written consent of the other party; provided that
the Company may assign its rights under this Agreement without the consent of
the Consultant in the event that the Company shall effect a reorganization,
consolidate with or merge into any other corporation, partnership, organization
or other entity, or transfer all or substantially all of its properties or
assets to any other corporation, partnership, organization or other entity.
This Agreement shall inure to the benefit of and be binding upon the Company
and the Consultant, their respective successors, executors, administrators,
heirs and permitted assigns.

                   (k)    Subject in all events to applicable laws, in the
event of the Consultant's death, any payments or other consideration then due
and payable or deliverable to the Consultant by the Company under this
Agreement will be paid or delivered to the Consultant's designated beneficiary,
or, if the Consultant is not survived by such designated beneficiary, or the
Consultant fails to effectively designate a beneficiary, to the Consultant's
estate. The Company acknowledges that you have designated The Meyer 1997
Irrevocable Trust, dated February 10, 1997, Jo Ann Conner, or her successor,
Trustee, as the beneficiary. The Consultant may designate a beneficiary or
change such designation from time-to-time in accordance with the notice
provisions of this Agreement. The Company will reasonably cooperate with you to
modify this provision to the extent reasonably necessary so as to give effect
to the purpose of this provision in a manner that complies with applicable
laws.

                   (l)    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.

           IN WITNESS WHEREOF, this Agreement has been executed as a sealed
instrument by the Company, by its duly authorized officer, and by the
Consultant.



<TABLE>
<CAPTION>

           CONSULTANT:                 AVALONBAY COMMUNITIES, INC.

<S>                                 <C>

/s/ GILBERT M. MEYER                   By:    /s/ RICHARD L. MICHAUX
--------------------------                --------------------------
Gilbert M. Meyer                                  Richard L. Michaux
                                                  Its: Chief Executive Officer

Dated:    March 24, 2000               Dated:     March 24, 2000
      --------------------                   -----------------------

</TABLE>


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