PROXY AGREEMENT

This Proxy Agreement, dated as of March 9, 1998 (this "Agreement"), is among Bay Apartment Communities, Inc., a Maryland corporation (the "Company"), and Central States, Southeast and Southwest Areas Pension Fund (the "Stockholder") acting by and through its agent, LaSalle Advisors Capital Management, Inc. ("LaSalle"), a registered investment advisor and successor to LaSalle Advisors Limited Partnership.

RECITALS:

A. As of the date hereof, the Stockholder owns 2,308,800 shares of Series A Preferred Stock, par value$0.01 per share (the "Series A Preferred Stock"), of the Company (such shares are hereinafter referred to as the "Shares");

B. The Company and the Stockholder desire to effect certain amendments to the Company's Articles of Incorporation, as amended, relating to the liquidation and voting rights of the Series A Preferred Stock (the "Charter Amendments"), which Charter Amendments are set forth on Exhibit A hereto;

C. The Company proposes to enter into an Agreement and Plan of Merger, dated on or about the date hereof (as the same may be amended from time to time, the "Merger Agreement"), which will provide, on the terms and subject to the conditions thereof, for the merger of Avalon Properties, Inc. with and into the Company and/or any of its affiliates (the "Merger"); and

D. As a condition to the willingness of the Company to recommend that the Company's stockholders approve the Charter Amendments at an annual or special meeting, the Company has requested that the Stockholder agree, and, in order to induce the Company to recommend that the Company's stockholders approve such Charter Amendments at such a meeting, the Stockholder is willing to agree, to enter into this Agreement to grant the Company an irrevocable proxy to vote, or to otherwise cause to be voted, the Shares pursuant to the terms and conditions hereof.

NOW, THEREFORE, the parties hereto agree as follows:

I. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER

The Stockholder hereby represents and warrants to the Company as follows:

1.1 Due Authority. The Stockholder has full power and authority to execute and deliver this Agreement and to perform its obligations hereunder and consummate the transactions contemplated hereby. This Agreement has been duly executed and delivered by or on behalf of the Stockholder and, assuming its due authorization, execution and delivery by the Company, constitutes a legal, valid and binding obligation of the Stockholder, enforceable against it in accordance with its terms.

1.2 No Conflict; Consents.

(a) The execution and delivery of this Agreement by the Stockholder does not, and the performance by the Stockholder of its obligations under this Agreement and the compliance by the Stockholder with the provisions hereof do not and will not, conflict with or violate (i) the advisory agreement between LaSalle and the Stockholder (the "Advisory Agreement") or (ii) any law, statute, rule, regulation, order, writ, judgment or decree referred to in the Advisory Agreement applicable to the Stockholder or the Shares.

(b) The execution and delivery of this Agreement by the Stockholder does not, and the performance of this Agreement by the Stockholder will not, require any consent, approval, authorization or permit of, or filing with (except for applicable requirements, if any, of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or notification to, any government or regulatory authority by the Stockholder.

(c) No other person or entity has, or will have during the Proxy Term (subject to the Stockholder's right to terminate the Advisory Agreement, it being understood that no such termination shall affect any of the Company's rights or any of the Stockholder's obligations hereunder or under the Irrevocable Proxy (the "Irrevocable Proxy") given to the Company by Mellon Bank, N. A. ("Mellon"), any right, directly or indirectly, to vote or control or affect the voting of the Shares.

详细内容见附件