<PAGE>

                                                                    Exhibit 10.1

                          FIRST AMENDED AND RESTATED

                           REVOLVING LOAN AGREEMENT

                           dated as of May 16, 2000

                                     among

                            ESSEX PORTFOLIO, L.P.,

                       a California limited partnership,

                           THE BANKS LISTED HEREIN,

                            BANK OF AMERICA, N.A.,

                           as Administrative Agent,

                        UNION BANK OF CALIFORNIA, N.A.

                                      and

                                BANK ONE, N.A.,

                           as Co-syndication Agents,

                                      and

                        BANC OF AMERICA SECURITIES LLC,

                  as Sole Lead Arranger and Sole Book Manager
<PAGE>

                               TABLE OF CONTENTS
                               -----------------

<TABLE>
<CAPTION>
                                                                        Page(s)
                                                                        -------
<S>                                                                     <C>
1. DEFINITIONS............................................................    2

   1.1   Defined Terms....................................................    2
   1.2   Other Interpretive Provisions....................................    8

2. LOAN AMOUNTS AND TERMS.................................................    9

   2.1   Line of Credit; Option to Increase Line of Credit................    9
   2.2   Availability Period; Extension of Availability Period............   11
   2.3   Interest Rate....................................................   12
   2.4   Letters of Credit................................................   12
   2.5   Swing Line.......................................................   13
   2.6   Survival.........................................................   15

3. FEES...................................................................   16

   3.1   Facility Fee.....................................................   16
   3.2   [Reserved.]......................................................   16
   3.3   Letter of Credit Fees............................................   16

4. DISBURSEMENTS, PAYMENTS AND COSTS......................................   16

   4.1   Requests for Credit..............................................   16
   4.2   Disbursements and Payments.......................................   16
   4.3   Telefax Authorization............................................   17
   4.4   Taxes............................................................   17
   4.5   Additional Costs.................................................   18

5. UNENCUMBERED ASSET POOL................................................   18

   5.1   Unencumbered Asset Pool and Unencumbered Asset Pool Property
         Defined..........................................................   18
   5.2   Additions of Property to the Unencumbered Asset Pool.............   18
   5.3   Delivery of Information..........................................   21
   5.4   Unencumbered Asset Pool Value Defined............................   21
   5.5   Unencumbered Asset Pool Mortgage Value...........................   22

6. CONDITIONS TO DISBURSEMENTS............................................   22

   6.1   Authorizations...................................................   22
   6.2   Governing Documents..............................................   22
   6.3   Documents........................................................   22
   6.4   Insurance........................................................   23
   6.5   Legal Opinions...................................................   23
   6.6   Good Standing....................................................   23
   6.7   [Reserved.]......................................................   23
   6.8   Payment of Fees..................................................   23
   6.9   Solvency Certificate.............................................   23
   6.10  Other Items......................................................   23
   6.11  Conditions of Each Advance, Extension of Credit, or Issuance of
         Letter of Credit.................................................   23

7. COVENANTS OF BORROWER..................................................   24

   7.1  Covenants Relating to Unencumbered Asset Pool.....................   24
   7.2  Payment of Expenses...............................................   26
   7.3  Total Amount Outstanding; Swing Line Availability.................   27
   7.4  Financial and Other Information; Certification....................   27
   7.5  Notices...........................................................   29
   7.6  Indemnity.........................................................   30
   7.7  Negative Covenants................................................   30
</TABLE>

                                      -i-
<PAGE>

                               TABLE OF CONTENTS
                               -----------------

<TABLE>
<CAPTION>
                                                                        Page(s)
                                                                        -------
<S>                                                                     <C>
   7.8  Type of Business; Development Covenants.........................     31
   7.9  Performance of Acts.............................................     32
   7.10 Keeping Guarantor Informed......................................     32
   7.11 Maximum Total Liabilities to Gross Asset Value of 50%...........     33
   7.12 Fixed Charge Coverage Ratio.....................................     33
   7.13 Maximum Quarterly Dividends.....................................     33
   7.14 [Reserved.].....................................................     33
   7.15 Negative Pledge.................................................     33
   7.16 Borrower's Consolidated Tangible Net Worth......................     34
   7.17 Total Unencumbered Assets to Unsecured Debt.....................     34
   7.18 Change in Ownership of Borrower or Management of the
        Unencumbered Asset Pool Property................................     34
   7.19 Books and Records...............................................     34
   7.20 Audits..........................................................     34
   7.21 Cooperation.....................................................     35
   7.22 ERISA Plans.....................................................     35
   7.23 Use of Proceeds.................................................     35
   7.24 Use of Proceeds - Ineligible Securities.........................     35
   7.25 Existing Convertible "Flipper" Loans............................     35

8. REPRESENTATIONS AND WARRANTIES........................................    36

   8.1  Organization of Borrower.........................................    36
   8.2  Authorization....................................................    36
   8.3  Enforceable Agreement............................................    36
   8.4  Good Standing....................................................    36
   8.5  No Conflicts.....................................................    36
   8.6  Financial Information............................................    37
   8.7  Borrower Not a "Foreign Person"..................................    37
   8.8  Lawsuits.........................................................    37
   8.9  Year 2000 Precautions............................................    37
   8.10 Permits, Franchises..............................................    37
   8.11 Other Obligations................................................    37
   8.12 Income Tax Returns...............................................    38
   8.13 No Event of Default..............................................    38
   8.14 ERISA Plans......................................................    38
   8.15 Location of Borrower.............................................    39
   8.16 No Required Third Party/Governmental Approvals...................    39

9. DEFAULT AND REMEDIES..................................................    39

   9.1  Events of Default................................................    39
   9.2  Remedies.........................................................    40

10. REFERENCE AND ARBITRATION............................................    40

   10.1 Mandatory Arbitration...........................................     40
   10.2 Judicial Reference..............................................     41
   10.3 Provisional Remedies; Self-Help.................................     41

11. MISCELLANEOUS PROVISIONS.............................................    41

   11.1 No Waiver; Consents.............................................     41
   11.2 No Third Parties Benefited......................................     41
   11.3 Notices.........................................................     42
   11.4 Attorneys' Fees.................................................     42
   11.5 Participations and Syndications.................................     42
</TABLE>

                                     -ii-
<PAGE>

                               TABLE OF CONTENTS
                               -----------------

<TABLE>
<CAPTION>
                                                                        Page(s)
                                                                        -------
<S>                                                                     <C>
   11.6  Heirs, Successors and Assigns...................................    43
   11.7  Payments Set Aside..............................................    43
   11.8  Interpretation..................................................    44
   11.9  Miscellaneous...................................................    44
   11.10 Integration and Relation to Loan Commitment....................     44
   11.11 Actions........................................................     44
   11.12 Relationships with Other Customers.............................     45
</TABLE>


EXHIBITS
--------
Exhibit A  [Reserved]
Exhibit B  Form of Letter of Credit Agreement
Exhibit C  Borrowing Notice and Certificate
Exhibit D  Unencumbered Asset Pool
Exhibit E  Compliance

                                     -iii-
<PAGE>

              FIRST AMENDED AND RESTATED REVOLVING LOAN AGREEMENT
              ---------------------------------------------------

                $120,000,000 Unsecured Revolving Line of Credit


          THIS FIRST AMENDED AND RESTATED REVOLVING LOAN AGREEMENT, dated as of
May 16, 2000 (the "Agreement"), is between Essex Portfolio, L.P., a California
limited partnership ("Borrower"); Essex Property Trust, Inc., a Maryland
corporation operating as a real estate investment trust ("Guarantor"); Bank of
America, N.A. as administrative agent for the Lenders as that term is defined
below ("Administrative Agent" or "Bank"); Banc of America Securities LLC, a
Delaware limited liability company, as sole lead arranger and sole book manager
(the "Arranger"); and, with Union Bank of California, N.A. and Bank One, N.A.,
as co-syndication agents (the "Co-Syndication Agents"); and Bank and the several
additional financial institutions from time to time a party to this Agreement
(collectively, the "Lenders" and individually a "Lender"; and as that terms is
defined below).

                              FACTUAL BACKGROUND
                              ------------------

          A.   Bank has previously made available to Borrower a revolving line
of credit subject to the conditions set forth in that certain Revolving Loan
Agreement dated as of May 11, 1998 (the "Existing Agreement") to provide funds
for the interim financing for acquisitions of residential apartment properties,
for letters of credit, for general working capital, and for other needs (the
"Line of Credit Loan") excluding the repurchase of the common stock of
Guarantor.

          B.   The Line of Credit Loan is evidenced by a promissory note (the
"Existing Note") of even date with the Existing Agreement.

          C.   Guarantor is the general partner of Borrower. Bank was only
willing to make the Line of Credit Loan if Guarantor would guaranty repayment of
the obligations of Borrower under the terms of the Existing Agreement.

          D.   Guarantor made such a guaranty (the "Guaranty") to Bank as
provided in the Existing Agreement.

          E.   The parties hereto would like to amend the Existing Agreement to
make certain changes in terms relating to the Line of Credit Loan. Among those
changes, the parties would like to provide that Bank as Swing Line Lender (as
that term is defined in Section 1 of this Agreement) may make available to
Borrower a so-called swing line of credit so that when Borrower makes a request
for funds, Bank may, at its discretion, immediately advance such amounts as a
swing loan, and to further amend the Existing Agreement to provide that such
amounts will be repaid to Bank as Swing Line Lender at the time of the advance
under the Line of Credit Loan within three (3) Business Days

                                      -1-
<PAGE>

with the Borrower's agreement that such repayment will be made with advances
from the Line of Credit Loan.

          F.   Guarantor would like to consent to such an amendment of the
Existing Agreement and confirm its obligations under and renew the Guaranty.

          Borrower would like to execute a first amended and restated note to
replace the Existing Note ("First Amended and Restated Note").

          In conjunction with the swing line, Borrower would like to execute a
swing line note (the "Swing Line Note") to evidence any and all swing loans.

          This Agreement, the First Amended and Restated Note, the Swing Line
Note, the Guaranty and any modifications thereto, and all other documents
evidencing, securing or otherwise pertaining to the Loan are referred to herein
each as a "Loan Document," and collectively, as the "Loan Documents."

                                   AGREEMENT
                                   ---------

1.   DEFINITIONS

     1.1  Defined Terms.
          -------------

          In addition to the terms defined elsewhere in this Agreement, the
following terms have the following meanings:

          "Adjusted EBITDA" means EBITDA minus minority interests (as reported
           ---------------
in Borrower's financial statements in accordance with GAAP, consistently
applied).

          "Administrative Agent" means Bank of America, N.A., in its capacity as
           --------------------
administrative agent for the Lenders hereunder.

          "Agreement" means this First Amended and Restated Revolving Loan
           ---------
Agreement, as amended, supplemented or modified from time to time.

          "Applicable LIBOR Rate Margin means the Applicable Margin for LIBOR
           ----------------------------
Rate Loans.

          "Applicable Margin" means the amounts set forth in the following table
           -----------------
with respect to the Applicable Prime Rate Margin and with respect to the
Applicable LIBOR Rate Margin.  The Applicable LIBOR Rate Margin or Applicable
Prime Rate Margin shall be based on Borrower's current published or private
proforma senior long term debt ratings provided by two of the following rating
agencies : (1) Standard & Poors ("S&P"), (2) Moody's, and (3) Duff & Phelps
("D&P," and with S&P and Moody's, collectively, the "Rating Agencies"), as
determined by the following pricing grid:

                                      -2-
<PAGE>

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
                                            Libor     Per Annum     Prime Rate
Borrower's Credit Rating                    Margin    Facility Fee  Margin (Bps)
                                            (Bps)     (Bps)
--------------------------------------------------------------------------------
<S>                                         <C>       <C>           <C>
BBB+/Baa1 or better                          105          15            0
--------------------------------------------------------------------------------
BBB/Baa2                                     110         17.5           0
--------------------------------------------------------------------------------
BBB-/Baa3                                    115          20            0
--------------------------------------------------------------------------------
Less than BBB-/Baa3 and Leverage             130          25            0
  Ratio * 35%
--------------------------------------------------------------------------------
Less than BBB-/Baa3 and Leverage             140          25            0
  Ratio ** 35% but * 45%
        -
--------------------------------------------------------------------------------
Less than BBB-/Baa3 & Leverage               150          25            25
  Ratio **  45%
--------------------------------------------------------------------------------
</TABLE>

*  denotes less than
** denotes more than or equal to

Borrower shall provide written evidence of its investment grade rating from the
Rating Agencies on an annual basis within ninety (90) days after the calendar
year end.  Such evidence must be reasonably acceptable to the Administrative
Agent.  In the event of a difference in rating between the Rating Agencies, the
lower rating shall prevail for purposes of determining the Applicable Margin.
If the rating is BBB-/Baa3 or better, then the Applicable Margin will be
determined according to the top three lines of the grid, even if the Leverage
Ratio tests set out in the bottom three lines of the grid are not met.  The
Applicable Margin shall be effective on the first day following the date one or
both Rating Agencies change Borrower's credit rating.

          "Applicable Prime Rate Margin" means the Applicable Margin for Prime
           ----------------------------
Rate Loans.

          "Availability Period" has the meaning given to it in Section 2.2(a).
           -------------------

          "Available Amount" has the meaning given to it in Section 2.1(b).
           ----------------

          "Business Day" means any day other than a Saturday, Sunday or other
           ------------
day on which commercial banks in New York City or San Francisco are authorized
or required by law to close and, if the applicable Business Day relates to any
LIBOR Loan, means such a day on which dealings are carried on in the applicable
offshore dollar interbank market.

          "Capitalization Rate" means eight and three-fourths percent (8.75%);
           -------------------
provided, however, during the extended Availability Period (as described in
Section 2.2(b) of this Agreement), Lenders may adjust the Capitalization Rate,
in their sole discretion, by up to twenty-five one hundredth percent (0.25%).

                                      -3-
<PAGE>

          "Commitment" shall have the meaning given to it in Section 2.1(b).
           ----------

          "Consolidated Borrower" means Essex Property Trust, Inc., Essex
           ---------------------
Portfolio, L.P., and each of their affiliates, aggregated and consolidated
according to GAAP.

          "Debt Service" means the sum of (x) the aggregate interest payments,
           ------------
Letter of Credit fees and other fees paid or payable in respect of or relating
to debt on a property, plus (y) the aggregate principal installments paid and
payable (but not payments due at maturity) in respect of or relating thereto.

          "EBITDA" means, for any fiscal period, (a) net income after taxes,
           ------
adding back the sum of the aggregate amounts of the following items for the
Borrower and its subsidiaries for such period:  (i) provisions for taxes based
on income, (ii) interest expense (including capitalized interest expense); (iii)
depreciation expense, (iv) amortization expense and (v) the aggregate amount of
other expenses, other non-recurring charges and extraordinary losses, less (b)
                                                                      ----
the aggregate amount of extraordinary gains, all as determined on a consolidated
basis for the Borrower and its subsidiaries in accordance with GAAP,
consistently applied.

          "Effective Date" shall have the meaning given to it in Section 2.2(a).
           --------------

          "EMC" means Essex Management Corporation, a California corporation.
           ---

          "Expiration Date" shall have the meaning given to it in Section 2.2(a)
           ---------------

          "First Amended and Restated Note" shall have the meaning given to it
           -------------------------------
in Section 2.3.

          "Fixed Charges" means, for any fiscal quarter period, the sum of: (i)
           -------------
interest expense (whether paid or accrued), (ii) capitalized interest expense,
(iii) preferred stock dividends, (iv) scheduled principal payments excluding
balloon payments, and (v) recurring capital expenditures of Sixty-two and 50/100
Dollars ($62.50) per quarter per unit (computed on an average units owned
basis).

          "GAAP" means generally accepted accounting principles set forth from
           ----
time to time in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the date of
determination.

          "Gross Asset Value" means, without duplication, the sum of (i)
           -----------------
Consolidated Borrower's most recent one (1) quarter Adjusted EBITDA annualized
divided by the Capitalization Rate, (ii) cash and marketable securities of
Consolidated Borrower, (iii) seventy-five percent (75%) of the acquisition costs
of properties acquired

                                      -4-
<PAGE>

by Consolidated Borrower during the quarter including pro rata shares of joint
venture acquisitions, and (iv) seventy-five percent (75%) of the book value of
all development in progress as reported on Guarantor's 10K and 10Q.

          "Joint Venture Investments" means the aggregate investments, advances
           -------------------------
and loans to joint ventures, subsidiaries and other consolidated or
unconsolidated legal entities of Borrower on a GAAP basis, excluding investments
where Borrower's interest or investment is less than fifteen percent (15%) of
total value (Borrower's interest shall be based on its initial investment at
cost and adjusted only to reflect any subsequent investments at cost).

          "Lenders" means Bank and the several additional financial institutions
           -------
from time to time a party to this Agreement.

          "Leverage Ratio" means, as of any date of determination, the ratio of
           --------------
(a) Total Liabilities as of such date to (b) Gross Asset Value as of such date.

          "Letter of Credit" and "Letters of Credit" have the meanings given to
           ----------------       -----------------
them in Section 2.1(a).

          "Letter of Credit Cap" has the meaning given to it in Section 2.4(a).
           --------------------

          "LIBOR Rate" has the meaning given to it in the First Amended and
           ----------
Restated Note.

          "LIBOR Rate Loan" means a portion of the Loan earning interest at the
           ---------------
LIBOR Rate.

          "Line of Credit" has the meaning given to it in Section 2.1(a).
           --------------

          "Line of Credit Loan" means an extension of credit by Lenders to
           -------------------
Borrower under the Line of Credit.

          "Loan" means an extension of credit by Lenders to Borrower pursuant to
           ----
Article 2, and includes a Line of Credit Loan and/or a Swing Loan from the Swing
---------
Line Lender.

          "Loan Document" or "Loan Documents" have the meanings given to them in
           -------------      --------------
the Factual Background.

          "Mortgage Value" of an Unencumbered Asset Pool Property has the
           --------------
meaning given to it in Section 5.5.

          "Net Operating Income" for a property means, for the relevant period,
           --------------------
the aggregate total cash revenues actually collected, from the normal operation
of a property (excluding all security deposits until such time as the tenant or
other user making such

                                      -5-
<PAGE>

deposits is no longer entitled to return thereof), plus amounts payable to
unrelated third parties on behalf of the owner of the property, if actually
paid, plus the proceeds of any rental or business interruption insurance
actually received by the owner of the property with respect to such property,
from which there shall be deducted all costs and expenses paid or payable by the
owner and relating to such property (other than Debt Service which is paid and
payments made at maturity), including, without limitation, (a) any charges paid
in connection with the use, ownership or operation of such property, (b) any
cost of repairs and maintenance, (c) any cost associated with the management of
such property, (d) any payroll cost and other expenses for general
administration and overhead paid in connection with the use, ownership or
operation of such property, (e) current real estate taxes, (f) any sums paid or
subject to payment in the nature of a rebate, refund or other adjustment to
revenue previously collected, (g) all assessment bond indebtedness (whether
principal or interest) in respect of such property paid or payable for the
interval in question, and (h) any and all costs or expenses, of whatever nature
or kind, incurred in connection with the use, ownership or operation of the
property; provided, however, that such costs and expenses paid or payable by
Borrower and relating to such property shall not include tenant improvement
costs, leasing commissions or the costs and expenses of capital improvements and
capital repairs, other than the costs and expenses of capital improvements and
repairs that recur on an annual basis, or depreciation, amortization or other
non-cash expenses.

          "Nominated Property" has the meaning given to it in Section 5.2(a).
           ------------------

          "Per Annum Facility Fee" has the meaning given to it in the pricing
           ----------------------
grid for the defined term "Applicable Margin."

          "Permitted Liens" has the meaning given to it in Section 5.2(a)(5).
           ---------------

          "Permitted Owner" means Borrower, a partnership or a limited liability
           ---------------
company wholly owned by Borrower and/or Essex Management Corporation.

          "Prime Rate" has the meaning given to it in the First Amended and
           ----------
Restated Note.

          "Prime Rate Loan" means a portion of the Loan earning interest at the
           ---------------
Prime Rate.

          "Required Lenders" means at any time two or more Lenders then holding
           ----------------
at least sixty-six and two-thirds percent (66.67%) of the then aggregate unpaid
principal amount of the Line of Credit Loan (not including the Swing Loan) (or,
if no amounts are outstanding, having at least sixty-six and two-thirds percent
(66.67%) of the aggregate amount of the Commitment).

          "Secured Debt" means all indebtedness of Borrower on a fully
           ------------
consolidated basis, plus Borrower's pro rata share of the indebtedness of
investment affiliates which is

                                      -6-
<PAGE>

secured by a lien on any property owned or leased by Borrower, Guarantor, their
consolidated subsidiaries, or their investment affiliates.

          "Swing Line" has the meaning given to it in Section 2.5.1.
           ----------

          "Swing Line Availability" means, at any time, (a) the least of (i)
           -----------------------
Twenty-five Million Dollars ($25,000,000), (ii) the smaller of the amounts set
out in Sections 2.1(b)(x) and 2.1(b)(y) and (iii) the Commitment reduced by all
                       -             -
amounts of principal outstanding under the Line of Credit Loan, the aggregate
amount owing to Bank in connection with drawn and unreimbursed Letters of
Credit, and the aggregate amount of outstanding and undrawn Letters of Credit,
minus (b) the principal amount outstanding under the Swing Line at such time;
-----
provided, however, Bank shall not be required at any time during the term of the
Line of Credit Loan to fund an amount under the Swing Line plus the Line of
Credit Loan that would exceed its pro rata share of the Commitment.

          "Swing Line Lender" means Bank, in its capacity as the maker of Swing
           -----------------
Loans under Section 2.5.
            -----------

          "Swing Loan" and "Swing Loans" have the meaning given in Section
           ----------       -----------                            -------
2.5.1. of this Agreement.
-----

          "Tangible Net Worth" means at any time, the total consolidated
           ------------------
stockholders' equity of the Borrower, at such time, excluding the amount of
                                                    ---------
minority interests in all Permitted Owners at such time (valuing preferred stock
at face value and excluding as assets (i) any loans to tenants for tenant
improvements and (ii) goodwill and other intangible assets, and valuing all real
property at book value, as evidenced by the Borrower's most recently delivered
financial statements.

          "Total Amount Outstanding" has the meaning given to it in Section
           ------------------------
2.1(b).

          "Total Liabilities" means, without duplication, all current, long term
           -----------------
debt and contingent liabilities including, but not limited to, recourse and
nonrecourse mortgage debt, capitalized leases, letters of credit, Unsecured Debt
guaranties, purchase obligations (defined as nonrefundable deposits and non-
contingent obligations), subordinated debt and unfunded obligations of Borrower
reported in accordance with GAAP, Borrower's pro rata share of non-recourse
liabilities held in partnerships and joint ventures, and all liabilities of
uncombined affiliates which are recourse to Borrower or Guarantor in direct
proportion to the amount which is recourse, excluding non-recourse debt on
properties held by partnerships in which Borrower has a minority interest other
than down-REITs.  The term "Total Liabilities" does not include that portion of
minority interests attributable to ownership in Borrower by persons other than
Borrower.

          "Unencumbered Asset Pool" shall have the meaning given to it in
           -----------------------
Section 5.1.

                                      -7-
<PAGE>

          "Unencumbered Asset Pool Value" shall have the meaning given to it in
           -----------------------------
Section 5.4.

          "Unencumbered Asset Pool Property" shall have the meaning given to it
           --------------------------------
in Section 5.1.

          "Unsecured Debt" means all indebtedness of Borrower, Guarantor, and
           --------------
any wholly owned subsidiary that is not Secured Debt at the end of a fiscal
quarter.

          Terms capitalized in this Agreement and not defined in this Section 1
have the meanings given to them elsewhere in this Agreement.

     1.2  Other Interpretive Provisions.
          ------------------------------

          1.2.1  Use of Defined Terms. Unless otherwise specified herein or
                 --------------------
therein, all terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant to
this Agreement. The meaning of defined terms shall be equally applicable to the
singular and plural forms of the defined terms.

          1.2.2  Certain Common Terms.
                 --------------------

                 (1)  The Agreement. The words "hereof," "herein," "hereunder"
                      -------------
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement, and
section, schedule and exhibit references are to this Agreement unless otherwise
specified.

                 (2)  Documents. The term "documents" includes any and all
                      ---------
instruments, documents, agreements, certificates, indentures, notices and other
writings, however evidenced.

                 (3)  Including. The term "including" is not limiting and means
                      ---------
"including without limitation."

                 (4)  Performance. Whenever any performance obligation hereunder
                      -----------
(including a payment obligation) shall be stated to be due or required to be
satisfied on a day other than a Business Day, such performance shall be made or
satisfied on the next succeeding Business Day. In the computation of periods of
time from a specified date to a later specified date (other than with respect to
computation of interest owed or accrued under this Agreement), the word "from"
means "from and including" and the words "to" and "until" each mean "to and
including". If any provision of this Agreement refers to any action taken or to
be taken by any Person, or which such Person is prohibited from taking, such
provision shall be interpreted to encompass any and all reasonable means, direct
or indirect, of taking or not taking such action.

                                      -8-
<PAGE>

                 (5)  Contracts. Unless otherwise expressly provided in this
                      ---------
Agreement, references to agreements and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications thereto, but
only to the extent such amendments and other modifications are not prohibited by
the terms of any Loan Document.

                 (6)  Laws. References to any statute or regulation are to be
                      ----
construed as including all statutory and regulatory provisions consolidating,
amending or replacing the statute or regulation.

                 (7)  Captions. The captions and headings of this Agreement are
                      --------
for convenience of reference only, and shall not affect the construction of this
Agreement.

                 (8)  Independence of Provisions. If a conflict exists between
                      --------------------------
the terms of this Agreement and those of any other Loan Document, this Agreement
shall prevail; provided, however, that the parties acknowledge that this
Agreement and the other Loan Documents may use several different limitations,
tests or measurements to regulate the same or similar matters, and that such
limitations, tests and measurements are cumulative and must each be performed,
except as expressly stated to the contrary in this Agreement, or unless the
applicable provisions are inconsistent or cannot be simultaneously enforced or
performed.

                 (9)  Exhibits. All of the exhibits attached to this Agreement
                      --------
are incorporated herein by this reference.

          1.2.3  Accounting Principles.
                 ---------------------

                 (1)  Accounting Terms. Unless the context otherwise clearly
                      ----------------
requires, all accounting terms not otherwise expressly defined herein shall be
construed, and all financial computations required under this Agreement shall be
made, in accordance with GAAP, consistently applied.

                 (2)  Fiscal Periods. References herein to "fiscal year" and
                      --------------
"fiscal quarter" refer to such fiscal periods of Borrower.

2.   LOAN AMOUNTS AND TERMS.
     ----------------------

     2.1  Line of Credit; Option to Increase Line of Credit.
          -------------------------------------------------

          (a)    During the Availability Period, Administrative Agent, for
Lenders, will provide a revolving line of credit (the "Line of Credit") to
Borrower to (i) make advances, and (ii) issue standby letters of credit (each,,
a "Letter of Credit" for Borrower's account.

                                      -9-
<PAGE>

          (b)  The maximum amount of the Line of Credit committed by Lenders
is One Hundred Twenty Million Dollars ($120,000,000) (the "Commitment").
Administrative Agent shall disburse funds under the Line of Credit in such
amounts as Borrower may request from time to time hereunder, but in no case
shall the sum of the total principal amount outstanding under the terms of this
Agreement (including the aggregate amount owing to Lenders in connection with
drawn and unreimbursed Letters of Credit), plus the aggregate amount of
outstanding and undrawn Letters of Credit (the "Total Amount Outstanding"),
exceed an aggregate principal amount (the "Available Amount") equal to the
smallest of the following, tested at the beginning of each calendar quarter and
at the time of each draw hereunder:

     (x)  an amount equal to fifty percent (50%) of the Unencumbered Asset
      -
          Pool Value of the Unencumbered Asset Pool Property; or

     (y)  an amount equal to one hundred percent (100%) of the Mortgage Value
      -
          of the Unencumbered Asset Pool Property; or

     (z)  an amount equal to the Commitment.
      -

          (c)  If Administrative Agent at any time should determine that the
Total Amount Outstanding exceeds the Available Amount, Administrative Agent may
make written demand on Borrower at Administrative Agent's option, to post cash
or other collateral satisfactory to Administrative Agent in its sole discretion,
or to repay principal hereunder, or both, in an amount sufficient in
Administrative Agent's reasonable judgment to cause the Total Amount Outstanding
to be equal to or less than the Available Amount. Borrower shall make any such
payment of principal or post any such collateral within thirty (30) days after
Administrative Agent's demand and direction to Borrower.

          (d)  This is a revolving line of credit. During the Availability
Period, Borrower may repay and reborrow principal amounts.

          (e)  Each advance must be for at least Five Hundred Thousand Dollars
($500,000), or for the amount of the remaining Available Amount, if less.

          (f)  The issuance of a Letter of Credit pursuant to Section 2.4 hereof
shall be considered an advance for all purposes hereunder, except that, absent
an express written agreement to the contrary, any drawn Letter of Credit shall
be repaid by Borrower to Administrative Agent on demand.

          (g)  At any time during the Availability Period, including any
extension thereof by Administrative Agent, Borrower will have an option to
increase the Line of Credit by up to Thirty Million Dollars ($30,000,000) (the
"Commitment Increase"). The Commitment Increase will be made by Administrative
Agent subject to the satisfaction of the following conditions precedent: (i)
Borrower shall have given ninety (90) days prior written notice to
Administrative Agent of its exercise of such option for the Commitment

                                     -10-
<PAGE>

Increase, Borrower shall have paid Administrative Agent, for the benefit of
Lenders a fee to be determined, (ii) Administrative Agent shall have received
such additional commitments from Lenders (who may make or withhold such
commitments in their sole discretion) as is necessary to fund the Line of Credit
Increase, and (iii) no Event of Default, or event that with the passage of time
could become an Event of Default, shall have occurred and be continuing.

     2.2  Availability Period; Extension of Availability Period.
          -----------------------------------------------------

          (a)  The Line of Credit is available between the date of this
Agreement (the "Effective Date") through the end of the first Business Day two
years from the Effective Date (the "Expiration Date"). The period from the
Effective Date to the Expiration Date shall be the "Availability Period." If
there is an Event of Default (as defined in Section 9.1 below) then in addition
to Lenders' other remedies, Administrative Agent may terminate the Availability
Period and require Borrower to immediately (i) repay amounts outstanding under
the Loan, and (ii) provide cash collateral for repayment of any outstanding
Letter of Credit. If Borrower has violated any covenant or agreement hereunder
and the applicable cure period has not yet expired, then it is within
Administrative Agent's sole and absolute discretion whether to continue to
provide extensions of credit to Borrower hereunder until such time as such
violation is cured.

          (b)  Borrower may extend the Availability Period for one year upon
satisfaction of the following conditions precedent: (i) Borrower shall have
given written notice to Administrative Agent of such request no more than ninety
(90) and no less that sixty (60) days prior to the second anniversary of the
Effective Date, (ii) Borrower shall have paid Administrative Agent for the
benefit of Lenders a fee equal to twenty-five one-hundredths percent (.25%) of
the Commitment, and (iii) no Event of Default, or event that with the passage of
time could become an Event of Default, shall have occurred and be continuing.
If, upon such request by Borrower, Administrative Agent reasonably determines
that Borrower has satisfied these conditions precedent, the Expiration Date
shall then be extended by one year, the new date of expiration shall be the
      ----
"Expiration Date", and the Availability Period as so extended shall become the
"Availability Period".

          (c)  Borrower may cancel all or any portion of the Commitment by the
delivery to Administrative Agent of a notice of cancellation within the
applicable time periods and minimum amounts set forth, if any, in the Loan
Documents for the repayment of any amounts that are outstanding or, if there are
no amounts outstanding at such time, upon at least five (5) business days notice
to Administrative Agent, whereupon, in either event, such part of the Commitment
so designated by Borrower shall terminate on the date set forth in such notice
of cancellation, and, if there are any Loans then outstanding in excess of the
Commitment after giving effect to such termination, Borrower shall prepay such
Loans outstanding on such date in accordance with the requirements of the Loan
Documents.

                                     -11-
<PAGE>

     2.3  Interest Rate.
          -------------

          Borrower has executed the Existing Note in the amount of the
Commitment evidencing that portion of the Loan in the amount of the Commitment
and payable to Bank.  As of even date herewith, Borrower is executing a First
Amended and Restated Note (the "First Amended and Restated Note") replacing the
Existing Note in the amount of the Commitment and Borrower is also executing a
Revolving Note (Swing-Line) in the amount of Twenty-five Million Dollars
($25,000,000) (the "Swing Line Note" and together with the First Amended and
Restated Note, the "Notes") and payable to Bank.  The Notes set forth the
interest rates and certain other terms and conditions applicable to the Loan.

     2.4  Letters of Credit.
          -----------------

          (a)  From time to time during the Availability Period, Administrative
Agent, for Lenders, shall at the request of Borrower, issue Letters of Credit in
the Administrative Agent's standard form under the terms of a Letter of Credit
Agreement in the form of Exhibit "B", for the account of Borrower, a Permitted
                         -----------
Owner or an entity controlled by a Permitted Owner, for any purpose directly
relating to Borrower's continuing operations, upon at least five (5) Business
Days prior written notice from Borrower; provided, however, that at no time
shall any Letter of Credit have an expiration date that exceeds the earlier in
time of (i) one year from the date the Letter of Credit is issued, and (ii) a
date that is sixty (60) days prior to the Expiration Date as it may be extended;
provided, however, that at no time shall the undrawn and the drawn and
unreimbursed amount of all Letters of Credit exceed the least of (i) Twenty
Million Dollars ($20,000,000), (ii) the maximum Commitment amount, and (iii) the
Available Amount minus the Total Amount Outstanding (the "Letter of Credit
                 -----
Cap"). As provided above, a Letter of Credit may be issued for the benefit of a
Permitted Owner, or an entity controlled by a Permitted Owner, but any such
Letter of Credit shall be the responsibility of and shall create obligations of
Borrower and any guarantor, including but not limited to Guarantor.

          (b)  Each Letter of Credit issued hereunder (including any supplement,
modification, amendment, renewal or extension thereof) shall be issued pursuant
to the terms and conditions of a standard form Application and Agreement for
Letter(s) of Credit ("Letter of Credit Agreement") in a form substantially the
same as that attached hereto as Exhibit "B" executed by Borrower; and each
                                -----------
Letter of Credit shall be in form and substance and for the purposes provided in
this Agreement. Pursuant to the terms and conditions of the standard form of
Letter of Credit Agreement, any drawings under a Letter of Credit shall be
repaid by Borrower to Administrative Agent for Lenders on demand; and the Letter
of Credit Agreement will set forth all of the terms and conditions regarding the
issuance of a Letter of Credit and any draws thereunder.

                                     -12-
<PAGE>

          (c)    The Letter of Credit Agreement shall set forth the rate of
interest on any draws thereunder. Any amount drawn shall be payable by Borrower
no later than the next Business Day after the date on which the amount is drawn.

          (d)    [Reserved.]

          (e)    If at any time there are Letters of Credit outstanding and the
Loan is canceled or expires by its terms and an extended term is not made
available to Borrower by Administrative Agent or in accordance with the terms of
this Agreement, or an Event of Default (as hereinafter defined) occurs and is
continuing, Borrower shall provide the Lender or Lenders issuing the Letters of
Credit with cash collateral in an amount at least equal to the aggregate amount
of all Letters of Credit outstanding, or another form of collateral acceptable
to such Lenders in their sole and absolute discretion. Borrower agrees to
execute or cause the execution of all documents reasonably required by such
Lenders at Borrower's sole cost and expense in connection with Borrower's
delivery of collateral hereunder. Lender or Lenders shall retain a security
interest in such collateral until the earlier occurrence of (a) a date fifteen
(15) days after the expiration of any outstanding Letter of Credit, provided
that no further extensions shall have been granted, or (b) the cancellation of
any outstanding Letter of Credit by the respective beneficiaries, provided that
written notice of such cancellation has been received by Lender or Lenders or
the original Letter of Credit is returned to such Lender or Lenders. In such an
event, the amount of collateral retained by Lender or Lenders shall be adjusted
as appropriate to reflect such expiration or cancellation, as the case may be.

          (f)    Borrower shall pay Administrative Agent, for the benefit of
Lenders, an annual fee for each Letter of Credit. The annual fee shall be equal
to the Applicable LIBOR Rate Margin on the date of issuance of the Letter of
Credit. The fee shall be paid in equal quarterly installments beginning on the
date of issuance of each Letter of Credit and continuing on the first day of
each quarter thereafter during which the Letter of Credit remains outstanding or
has been drawn and remains unreimbursed. Borrower shall also pay to
Administrative Agent, a fronting fee (the "Fronting Fee") at the time each
Letter of Credit is issued. The Fronting Fee shall be an amount equal to the
greater of (i) twelve and one-half (12.5) basis points of the face amount of the
Letter of Credit, or (ii) Seven Hundred and Fifty Dollars ($750).

     2.5  Swing Line.
          ----------

          2.5.1  Upon Borrower's request, and subject to the terms and
conditions of this Agreement, the Swing Line Lender may, in its sole discretion,
on and after the Effective Date but not after the Expiration Date or, if the
Availability Period of the Line of Credit Loan is extended as provided in
Section 2.2(b), then until the Expiration Date as extended (or any other date on
which the Loan is due), immediately provide to Borrower a swing line credit
facility (the "Swing Line") of up to Twenty-five Million Dollars ($25,000,000);
provided that the Swing Line Lender shall not in any event make any Swing Loan
--------
under the Swing Line (each a "Swing Loan" and collectively, the "Swing

                                     -13-
<PAGE>

Loans") if, after giving effect thereto, (i) the Total Amount Outstanding plus
the amount of the Swing Loan principal outstanding would exceed the Available
Amount at such time, or (ii) the aggregate principal amount of all then-
outstanding Swing Loans made by the Swing Line Lender would exceed the Swing
Line Availability at such time. The Swing Line Lender shall not be required to
make any Swing Loan that would, when added to the amounts it has advanced under
the Line of Credit Loan, cause it to exceed its pro rata share as a Lender of
the maximum amount of the Commitment. Within the limits of the Swing Line
Availability, Borrower may borrow under this SubSection 2.5.1 at any time until
the Expiration Date or, the extended Expiration Date (or any other date on which
the Loan is due), repay same pursuant to Subsections 2.5.3 or 2.5.4 and reborrow
pursuant to this SubSection 2.5.1 at any time until the Expiration Date or, the
extended Expiration Date (or any other date on which the Loan is due). Each
Swing Loan must be for at least Five Hundred Thousand Dollars ($500,000), or for
the remaining Swing Line Availability if less. Notwithstanding any contrary
provision of this Section 2.5, the Swing Line Lender shall make Swing Loans only
in its discretion and shall not at any time be obligated to make any Swing Loan.

          2.5.2  Each Swing Loan outstanding under the Swing Line shall accrue
interest at a rate per annum set out in the Swing Line Note, which interest
shall be equal to the Administrative Agent's Prime Rate plus the Applicable
Prime Rate Margin. The Administrative Agent's Prime Rate is the rate of interest
most recently announced by the Bank, as agent, at its principal office located
in Charlotte, North Carolina, as its "Prime Rate." The interest on each Swing
Loan outstanding under the Swing Line shall be payable in arrears as provided in
the Swing Line Note and on the due date for Swing Loans set forth in SubSection
2.5.3, and shall be payable to Administrative Agent for the account of the Swing
Line Lender; provided that, notwithstanding any other provision of this
             --------
Agreement, each Swing Loan shall bear interest for a minimum of one (1) day.
Such interest shall be calculated on the basis of a three hundred sixty (360)
day year and actual days elapsed, which results in higher interest than if a
three hundred sixty-five (365) day year were used.

          2.5.3  The principal outstanding under the Swing Line shall be due and
payable:

                 (1)  at or before 10:00 a.m., San Francisco time, by the end of
the third Business Day immediately following any date on which a Swing Loan is
made under the Swing Line; and

                 (2)  in any event, on the Expiration Date or, if the Expiration
Date is expressly extended under Section 2.2(b), the extended Expiration Date,
or on any other date that the Loan is due;

provided that, if no Event of Default has occurred and remains uncured, and
--------
Borrower is permitted to borrow under the terms of this Agreement (the Available
Amount being determined for such purpose without giving effect to any reduction
thereof occasioned by

                                     -14-
<PAGE>

such Swing Loans due and payable) at the time such Swing Loans are due, then
Borrower shall be deemed to have submitted a Borrowing Notice in an amount
necessary to repay such Swing Loans on their due date, and any provisions of
this Agreement concerning (i) the minimum principal amounts required for
borrowings and (ii) the funding of requested borrowings as Swing Loans shall not
apply to Loans made pursuant to this SubSection 2.5.3.

          2.5.4  Borrower may, from time to time on any Business Day, make a
voluntary prepayment, in whole or in part, of the outstanding principal amount
of any Swing Loans, without incurring any premium or penalty; provided that:
                                                              --------
                 (1)  each such voluntary prepayment shall require prior written
notice given to Administrative Agent and Swing Line Lender no later than 10:00
a.m., San Francisco time, on the day on which Borrower intends to make a
voluntary prepayment, and

                 (2)  each such voluntary prepayment shall be in a minimum
amount of Five Hundred Thousand Dollars ($500,000) (or, if less, the aggregate
outstanding principal amount of all Swing Loans then outstanding).

          2.5.5  At any time during the continuance of an Event of Default, the
Swing Line Lender may, without Borrower's consent, upon one (1) Business Day's
notice to Borrower, terminate the Swing Line and cause a Loan to be made in an
aggregate amount equal to the amount of principal and interest outstanding under
the Swing Line (the Available Amount being determined for such purpose without
giving effect to any reduction thereof occasioned by such Swing Loans), and the
conditions precedent set forth in this Agreement, and any requirement that a
borrowing be funded as a Swing Loan, shall not apply to such Line of Credit
Loan. The proceeds of such Line of Credit Loan shall be paid to the Swing Line
Lender to retire the outstanding principal and interest owing under the Swing
Line.

          2.5.6  The Swing Loans made by the Swing Line Lender shall be
evidenced by a Swing Line Note payable to the order of the Swing Line Lender in
the amount of Twenty-Five Million Dollars ($25,000,000).

          2.5.7  Each Lender shall, upon the request of the Swing Line Lender
purchase its pro rata share of the Swing Loans then outstanding within three
days after the advance of any such Swing Loan.

     2.6  Survival.
          --------

          The agreements and obligations of Borrower in this Article 2 shall
survive the payment and performance of all other obligations.

                                     -15-
<PAGE>

3.   FEES
     ----

     3.1  Facility Fee.
          ------------

          Borrower shall pay Administrative Agent, for the benefit of Lenders,
an annual fee (the "Facility Fee") equal to the Per Annum Facility Fee from time
to time determined by reference to the grid appearing in the definition of the
Applicable Margin multiplied by the amount of the Commitment.  Borrower shall
pay Administrative Agent, for the benefit of Lenders, such Facility Fee in
arrears quarterly in equal installments during the Availability Period.

     3.2  [Reserved.]
          ----------

     3.3  Letter of Credit Fees.
          ---------------------

          Borrower shall pay Administrative Agent for the Benefit of Lenders the
fees relating to the Letters of Credit referred to in Section 2.4(f) above.

4.   DISBURSEMENTS, PAYMENTS AND COSTS
     ---------------------------------

     4.1  Requests for Credit. Each request for an extension of credit will be
          -------------------
made in writing in the form of Exhibit "C" attached hereto (a "Borrowing
                               ----------
Notice") and made a part hereof, or by another means acceptable to
Administrative Agent. Unless Borrower's Borrowing Notice expressly requests
otherwise or is in an amount in excess of the Swing Line Availability or is for
the issuance of a Letter of a Credit, each requested borrowing shall initially
be funded as a Swing Loan, and shall be subject to the provisions of Section
2.5. Borrower hereby authorizes John D. Eudy, Keith R. Guericke, Michael J.
Schall, Mark J. Mikl or Jordan E. Ritter to sign all Borrowing Notices and other
documents in connection with the administration of the Loan. Borrower represents
and warrants to Administrative Agent that the following signatures are specimen
signatures of the persons named in the preceding sentence:


_________________________________             __________________________________
John D. Eudy                                  Mark J. Mikl


_________________________________             __________________________________
Keith R. Guericke                             Jordan E. Ritter


_________________________________
Michael J. Schall


     4.2  Disbursements and Payments.
          --------------------------

          Each disbursement by Administrative Agent and each payment by Borrower
will be:

                                     -16-
<PAGE>

          (a)  made at Administrative Agent's branch (or other location)
selected by Administrative Agent in its reasonable discretion from time to time;

          (b)  made for the account of Administrative Agent's branch selected by
Administrative Agent in its reasonable discretion from time to time;

          (c)  made in immediately available funds, or such other type of funds
selected by Administrative Agent;

          (d)  evidenced by records kept by Administrative Agent.  In addition,
Administrative Agent may, at its discretion, require Borrower to sign one
or more promissory notes.

     4.3  Telefax Authorization.
          ----------------------

          (a)  Administrative Agent may honor telefax instructions from John D.
Eudy, Keith Guericke, Michael J. Schall, Mark J. Mikl or Jordan E. Ritter for
advances or repayments or for the designation of optional interest rates
described in the Note given by any one of the individuals authorized to sign
loan agreements on behalf of Borrower, or any other individual designated by any
one of such authorized signers.

          (b)  Advances and repayments will be either (i) deposited in and
repayments will be withdrawn from Borrower's account number 14228-02371 or such
other of Borrower's accounts with Administrative Agent as designated in writing
by Borrower, or (ii) by wire transfer at Borrower's written direction, which
written direction may be telefaxed as set forth herein.

          (c)  Borrower will provide written confirmation to Administrative
Agent of any telefax instructions within five (5) days. If there is a
discrepancy and Administrative Agent has already acted on the instructions, the
telefax instructions will prevail over the written confirmation.

          (d)  Borrower indemnifies and excuses Administrative Agent (including
its officers, employees, and agents) from all liability, loss, and costs in
connection with any act resulting from telefax instructions, given under this
Section 4.3, it reasonably believes are made by any individual authorized by
Borrower to give such instructions, except to the extent such liability, loss,
or cost results directly from Administrative Agent's gross negligence or willful
misconduct. This indemnity and excuse will survive this Agreement's termination.

     4.4  Taxes. If any payments to Administrative Agent under this Agreement
          -----
are made from outside the United States, Borrower will not deduct any foreign
taxes from any payments it makes to Administrative Agent. If any such taxes are
imposed on any payments made by Borrower (including payments under this
Subsection), Borrower will pay the taxes and will also pay to Administrative
Agent, at the time interest is paid, any additional amount which Administrative
Agent specifies as necessary to preserve the

                                     -17-
<PAGE>

after-tax yield Administrative Agent or any Lender would have received if such
taxes had not been imposed. Borrower will confirm that it has paid the taxes by
giving Administrative Agent official tax receipts (or notarized copies) within
thirty (30) days after the due date.

     4.5  Additional Costs. Upon sixty (60) days' notice, Borrower will pay
          ----------------
Administrative Agent, for Administrative Agent's or any Lender's costs or losses
related to this Agreement arising from any statute or regulation, or any request
or requirement of a regulatory agency, which is applicable to all national banks
or a class of all national banks. The costs and losses will be allocated to the
loan in a manner determined by Administrative Agent, using any reasonable
method. The costs include the following:

          (a)  any reserve or deposit requirements; and

          (b)  any capital requirements relating to Administrative Agent's or
any Lender's assets and commitments for credit.

5.   UNENCUMBERED ASSET POOL.
     ------------------------

     5.1  Unencumbered Asset Pool and Unencumbered Asset Pool Property Defined.
          ---------------------------------------------------------------------

          The "Unencumbered Asset Pool" or the "UAP" shall mean the property
listed on Exhibit "D", plus any and all of the real and personal property added
          -----------
to the Unencumbered Asset Pool under the terms of Section 5.2 below, minus any
and all of the real and personal property removed from the Unencumbered Asset
Pool under the terms of Section 5.3 below. "Unencumbered Asset Pool Property"
shall mean the real and personal property that makes up the Unencumbered Asset
Pool at any time.

     5.2  Additions of Property to the Unencumbered Asset Pool.
          -----------------------------------------------------

          (a)  Borrower may from time to time request Administrative Agent to
add a new property ("the Nominated Property") to the Unencumbered Asset Pool.
Properties in the UAP must satisfy and continue to satisfy, at all times during
the term of the Line of Credit Loan, each of the following criteria:

               (1)  All properties shall be owned in fee simple interest by
Borrower, or by a Permitted Owner provided that such Permitted Owner shall
provide to Administrative Agent its formation documents and a guaranty in
substantially the same form as the Payment Guaranty (Revolving Loan) executed by
Guarantor of even date with this Agreement;

               (2)  all properties shall be operated as residential apartments,
with no more than fifteen percent (15%) of revenue generated by retail
businesses;

                                     -18-
<PAGE>

               (3)  there shall be a minimum occupancy of eighty percent (80%)
in individual properties, and an aggregate occupancy of ninety percent (90%) for
the UAP;

               (4)  a Phase I environmental site assessment prepared within one
(1) year of its delivery in form and substance reasonably acceptable to
Administrative Agent shall have been completed and shall not have disclosed the
presence of any material toxic or hazardous substances on any property, except
for cleaning, pool and other chemicals typically located on residential
properties that are otherwise consistent with all applicable laws; and

               (5)  all properties shall be free of all liens, encumbrances and
negative pledges, except for the following permitted liens ("Permitted Liens"):
(a) liens for taxes, assessments or governmental charges or levies to the extent
that the Borrower or the Permitted Owner is not yet required to pay the amount
secured thereby; and (b) liens imposed by law, such as carrier's, warehouseman's
, mechanic's, materialman's and other similar liens, arising in the ordinary
course of business in respect of obligations that are not overdue or are being
actively contested in good faith by appropriate proceedings, as long as the
Borrower or the Permitted Owner has established and maintained adequate reserves
for the payment of the same and, by reason of nonpayment, no property of the
Borrower or the Permitted Owner is in danger of being lost or forfeited; and
easements; covenants, conditions and restrictions; reciprocal easement and
access agreements and similar agreements relating to ownership and operation.

Properties that meet the UAP criteria above will automatically be included in
the UAP, provided Borrower has a BBB-/Baa3 or better credit rating from a Rating
Agency.  If Borrower's credit rating is less than BBB-/Baa3, properties will be
added to the UAP at the sole and absolute discretion of the Required Lenders.

Notwithstanding the criteria listed above, two properties shall be included as
part of the UAP even though they do not meet the criteria listed above, with the
following qualifications.  That property commonly known as Marina Cove shall be
included in the UAP even though a portion of the property has been acquired by
ground lease and not by fee simple; that property must meet all of the other
criteria listed above.  That property commonly known as Windsor Terrace shall be
included in the UAP even though one (1) unit in that property is owned by a
third party; that property must meet all of the other criteria listed above but
the Net Operating Income for the units owned by third parties shall not be used
in the calculations for determining any amounts referred to in this Agreement.

          (b)  Borrower may from time to time elect to remove an Unencumbered
Asset Pool Property from the Unencumbered Asset Pool. Borrower shall make such
an election by giving Administrative Agent notice in writing, setting forth the
identity of the Unencumbered Asset Pool Property and the requested date of
removal no less than thirty (30) days before the requested date of removal. With
such notice, Borrower shall also

                                     -19-
<PAGE>

deliver a compliance certificate of Borrower substantially similar to the form
of Exhibit "E" signed and certified by an authorized financial officer of
   -----------
Borrower (i) setting forth the information and computations (in sufficient
detail) to determine the Gross Asset Value after such removal and to establish
that Borrower will be in compliance with all financial covenants set forth in
this Agreement following such removal, (ii) stating specifically that the Total
Amount Outstanding after such removal will be less than or equal to the
Available Amount, and (iii) setting forth whether there exists or to the best of
Borrower's knowledge as of the date of such removal there will exist, any
default under this Agreement and, if any such default exists, specifying the
nature thereof and the action Borrower is taking and proposes to take with
respect thereto. At the time of any such removal, Borrower shall pay
Administrative Agent all reasonable attorneys' fees (including fees for in-house
counsel) incurred by Administrative Agent in connection with removing the
property from the Unencumbered Asset Pool and shall make any payments to
continue compliance with the terms of this Agreement, including but not limited
to those relating to the requirement that the Total Amount Outstanding not
exceed the Available Amount, necessary as a result of the requested removal.
Borrower may not remove the Unencumbered Asset Pool Property until it has
complied with the terms of this SubSection 5.2.

          (c)  Administrative Agent may, at its option, remove any property from
the Unencumbered Asset Pool if it determines in its sole discretion that the
property no longer meets the criteria of the Unencumbered Asset Pool as required
by Section 5 of this Agreement, provided that Administrative Agent first gives
Borrower written notice that the property no longer meets the criteria of the
Unencumbered Asset Pool as required by Section 5 of this Agreement, together
with the reason or reasons why it does not, and gives Borrower thirty (30) days
after receipt of such notice to cure the defect. At the time of any such
removal, Borrower shall pay Administrative Agent all reasonable attorneys' fees
(including fees for in-house counsel) incurred by Administrative Agent in
connection with removing the property from the Unencumbered Asset Pool, and
shall make any payments to continue compliance with the terms of this Agreement,
including but not limited to those relating to the requirement that the Total
Amount Outstanding not exceed the Available Amount, necessary as a result of the
requested removal. If the Unencumbered Asset Pool as a whole fails to meet any
of the criteria set out in Section 5 of this Agreement, and any one of two or
more properties might be removed to maintain compliance of the Unencumbered
Asset Pool as a whole with the criteria of the Unencumbered Asset Pool as
required by Section 5 of this Agreement, then Borrower shall select the property
or properties to be removed, provided that if it does not do so within ten (10)
days of written request to do so from Administrative Agent, then Administrative
Agent may in its sole discretion select the property or properties to remove and
so remove them.

                                     -20-
<PAGE>

     5.3  Delivery of Information.
          ------------------------

          In conjunction with each request to add a property to the UAP,
Borrower will submit to the Administrative Agent the following information and
documentation, in addition to any other information, documentation or other
items required by the Administrative Agent in its reasonable discretion:

          (a)  A current Phase I environmental site assessment addressed to
Borrower or its subsidiaries; provided, however, Borrower shall not be required
to resubmit such Phase I environmental site assessment to the Administrative
Agent for any property now in the Unencumbered Asset Pool, as listed on
Exhibit "D" attached hereto.
----------

          (b)  A title insurance policy insuring Borrower's or its subsidiaries'
fee ownership interest in the property free of any liens, except for Permitted
Liens, and a current title report with respect to such property; provided,
however, Borrower shall not be required to resubmit such title insurance policy
to the Administrative Agent for any property now in the Unencumbered Asset Pool,
as listed on Exhibit "D" attached hereto.
             ----------

          (c)  A current rent roll; and

          (d)  An operating statement, which shall include a detailed analysis
of the net operating income generated from such property, including gross rental
receipts, detailed operating expenses, capital expenditures, and other relevant
information, for at least the prior four (4) quarters.

Maximum availability under the Line of Credit will be equal to the lesser of:

          (a)  the amount of the Commitment,

          (b)  fifty percent (50%) of the Unencumbered Asset Pool Value, or

          (c)  one hundred percent (100%) of the Unencumbered Asset Pool
Mortgage Value.

     5.4  Unencumbered Asset Pool Value Defined.
          --------------------------------------

          The Unencumbered Asset Pool Value will be the sum of Unencumbered
Asset Values determined as follows:

          (a)  properties owned one (1) year or more shall be valued at their
most recent consecutive rolling four (4) quarters Net Operating Income less a
$250 per unit capital reserve, capitalized at the Capitalization Rate;

          (b)  properties owned for one (1) quarter or more but less than four
(4) quarters shall be valued by annualizing the Net Operating Income for the
most recent consecutive whole quarters that the properties have been owned by
Permitted Owners

                                     -21-
<PAGE>

(i.e., properties owned for two (2) consecutive whole quarters shall annualize
Net Operating Income by multiplying by a factor of (2) two) less $250 per unit
reserve, capitalized at the Capitalization Rate; and

          (c)  properties owned less than one (1) quarter, shall be valued at
seventy-five percent (75%) of their acquisition cost.

     5.5  Unencumbered Asset Pool Mortgage Value.
          ---------------------------------------

          The Unencumbered Asset Pool Mortgage Value (herein referred to
sometimes as, the "Mortgage Value") will be the maximum mortgage amount
supportable by the Unencumbered Asset Pool at a 1.75:1.0 Debt Service Coverage
Ratio plus thirty-seven and one-half percent (37.5%) of acquisition cost for
properties held for less than one (1) calendar quarter. Debt Service Coverage
Ratio shall be calculated using Net Operating Income for the Unencumbered Asset
Pool properties for the four (4) most recent consecutive full calendar quarters
(or on an annualized basis if the property has been held for less than four (4)
calendar quarters), less a $250 per unit capital expense reserve, divided by a
calculated debt service payment based on the greater of: (i) a nine and forty-
six one-hundredths percent (9.46%) mortgage constant (8.25%; 25 years) or (ii)
the seven year U.S. treasury rate plus one and seventy-five one-hundredths
percent (1.75%).

6.   CONDITIONS TO DISBURSEMENTS.
     ----------------------------

          Administrative Agent must receive the following items, in form and
content acceptable to Administrative Agent, before it is required to extend the
initial credit or any other credit to Borrower (including a Swing Loan) or to
make any disbursements under this Agreement:

     6.1  Authorizations.
          ---------------

          Evidence that the execution, delivery and performance by Borrower or
Guarantor, as the case may be, of this Agreement, and the other Loan Documents,
have been duly authorized.

     6.2  Governing Documents.
          --------------------

          A copy of Borrower's current partnership agreement and certificate of
limited partnership and any amendments and modifications thereto and of
Guarantor's articles of incorporation and any amendments and modifications
thereto.

     6.3  Documents.
          ----------

          The following documents, executed and acknowledged as appropriate, all
in form and substance satisfactory to Administrative Agent:  (a) this Agreement;
(b) the First Amended and Restated Note; (c) the Swing Line Note; (d) the
Guaranty; and (e) as

                                     -22-
<PAGE>

to any disbursements after the first disbursement such other documents,
information regarding the Unencumbered Asset Pool Property and other assurances
as Administrative Agent may reasonably require.

     6.4  Insurance.
          ----------

          If required by Administrative Agent, evidence of insurance coverage,
as required in Section 7.1(c) of this Agreement.

     6.5  Legal Opinions.
          ---------------

          If required by Administrative Agent, a written opinion from Borrower's
legal counsel and a written opinion from Guarantor's legal counsel, each
covering such matters as Administrative Agent may reasonably require.  The legal
counsel and the terms of the opinion must be reasonably acceptable to
Administrative Agent.

     6.6  Good Standing.
          --------------

          If required by Administrative Agent, Certificates of Good Standing for
Borrower and Guarantor from their respective states of organization and from any
other state in which Borrower or  Guarantor, as the case may be, is required to
qualify to conduct its business.

     6.7  [Reserved.]
          -----------

     6.8  Payment of Fees.
          ----------------

          Payment of the fees and expenses of preparation and modification of
this Agreement including but not limited to attorneys' fees and costs, the
review of the Phase I environmental site assessment, and any and all other fees
due from Borrower to Administrative Agent.

     6.9  Solvency Certificate.
          ---------------------

          If required by Administrative Agent, a solvency certificate from
Borrower in form and substance reasonably satisfactory to Administrative Agent.

     6.10 Other Items.
          ------------

          Any other items that Administrative Agent reasonably requires.

     6.11 Conditions of Each Advance, Extension of Credit, or Issuance of Letter
          ----------------------------------------------------------------------
          of Credit.
          ----------

          Before each extension of credit (including but not limited to the
issuance of each Letter of Credit), including the first:

                                     -23-
<PAGE>

          (a)  Administrative Agent shall have received a Borrowing Notice
requesting an extension of credit in the form of Exhibit "C";
                                                 -----------

          (b)  The requested extension of credit shall not cause the Total
Amount Outstanding to exceed the Available Amount or, if the request is for a
Swing Loan, it shall not cause the Swing Line to exceed the Swing Line
Availability;

          (c)  Administrative Agent shall have received a certificate from
Borrower in the form of Exhibit "E" and described in Section 7.4(i),
                        -----------
representing, among other things, that the requested extension of credit shall
not cause the Total Amount Outstanding to exceed the Available Amount or the
Swing Line Availability, as the case may be, and that Borrower and Guarantor,
and all their subsidiaries and affiliates, are in compliance with all other
material covenants and financial covenants that each has made in this Agreement;

          (d)  The representations and warranties of Borrower set forth in
Article 8 of this Agreement shall be true and correct in all material respects
on and as of such borrowing with the same force and effect as if made on and as
of such borrowing;

          (e)  No Event of Default or event that after notice and the passage of
time would constitute an Event of Default shall exist or result from such
borrowing; and

          (f)  Administrative Agent shall have received from Borrower, a pro
forma statement regarding the Loan borrowing base and a statement regarding the
financial covenant calculations for the proposed term of the Loan on a quarterly
basis.

7.   COVENANTS OF BORROWER.
     ----------------------

          Borrower promises to keep each of the following covenants:

     7.1  Covenants Relating to Unencumbered Asset Pool.
          ----------------------------------------------

          (a)  Compliance with Law.

          Borrower shall comply with all existing and future laws (including
Environmental Laws, as hereafter defined), regulations, orders, building
restrictions and requirements of, and all agreements with and commitments to,
all governmental, judicial or legal authorities having jurisdiction over
Borrower or Borrower's business, including those pertaining to the construction,
sale, leasing or financing of the Unencumbered Asset Pool Property, the
environmental condition of the  Unencumbered Asset Pool Property and with all
recorded covenants and restrictions affecting the Unencumbered Asset Pool
Property (all collectively, the "Requirements").  "Environmental Laws" means all
federal, state, and local laws, ordinances and regulations relating to any
Hazardous Substance (as defined in Section 7.1(b) below) applicable to the
Unencumbered Asset Pool Property, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, 42 U.S.C. (S) 9601 et seq., the

                                     -24-
<PAGE>

Hazardous Materials Transportation Act, 49 U.S.C. (S) 1802, et seq., the
Resource Conservation and Recovery Act, 42 U.S.C. (S) 6901 et seq., the Toxic
Substance Control Act of 1976, as amended, 15 U.S.C. (S) 2601 et seq., the Clean
Water Act, 33 U.S.C. (S) 466 et seq., as amended, and the Clean Air Act, 42
U.S.C. (S) 7401 et seq. Notwithstanding any provision in this SubSection to the
contrary (i) Borrower shall have a right to contest all existing and future
Requirements (other than those relating to Environmental Laws) before complying
therewith, and (ii) Borrower shall have a right to contest all existing and
future Requirements relating to Environmental Laws for one year, before
complying therewith.

          (b)  Site Visits.
               -----------

          Borrower and Guarantor shall allow Administrative Agent access to the
Unencumbered Asset Pool Property at any reasonable time upon reasonable written
notice by Administrative Agent to Borrower for the purposes of inspecting the
Unencumbered Asset Pool Property, and, upon reasonable belief by Administrative
Agent of the existence of a matter that should be investigated, taking soil or
groundwater samples, and conducting tests, among other things, to investigate
for the presence of Hazardous Substances, as defined herein.  Borrower and
Guarantor shall also allow Administrative Agent to examine, copy and audit its
and their books and records.  Administrative Agent is under no duty to visit or
observe the Unencumbered Asset Pool Property, or to examine any books or
records.  Any site visit, observation or examination by Administrative Agent
shall be solely for the purpose of protecting Administrative Agent's interests
and preserving Administrative Agent's rights under the Loan Documents.
Administrative Agent owes no duty of care to protect Borrower or any other party
against, or to inform Borrower, Guarantor, or any other party of, any adverse
condition affecting the Unencumbered Asset Pool Property, including any defects
in the design or construction of any improvements on the  Unencumbered Asset
Pool Property or the presence of any Hazardous Substances on the Unencumbered
Asset Pool Property.  For purposes of this Agreement, a "Hazardous Substance" is
defined to mean any substance, material or waste, including asbestos and
petroleum (including crude oil or any fraction thereof), which is or becomes
designated, classified or regulated as "toxic," "hazardous," a "pollutant" or
similar designation under any federal, state or local law, regulation or
ordinance.

          (c)  Insurance.
               ---------

          Borrower shall maintain the following insurance:

               (1)  Special Form property damage insurance in non-reporting form
on the Unencumbered Asset Pool Property, with a policy limit in an amount not
less than the full insurable value of each Property on a replacement cost basis,
including tenant improvements, if any. The policy shall include a business
interruption (or rent loss, if more appropriate) endorsement in the amount of
six months' principal and interest payments, taxes and insurance premiums, a
lender's loss payable endorsement (438 BFU)

                                     -25-
<PAGE>

in favor of Administrative Agent as agent for Lenders, and any other
endorsements reasonably required by Administrative Agent.


               (2)  Comprehensive General Liability coverage with such limits as
Administrative Agent may reasonably require. This policy shall name
Administrative Agent as an additional insured. Coverage shall be written on an
occurrence basis, not claims made.

          All policies of insurance required by Administrative Agent must be
issued by companies reasonably approved by Administrative Agent and otherwise be
reasonably acceptable to Administrative Agent as to amounts, forms, risk
coverages and deductibles. In addition, each policy (except workers'
compensation) must provide Administrative Agent at least thirty (30) days' prior
notice of cancellation, non-renewal or modification. If Borrower fails to keep
any such coverage in effect while the Loan is outstanding, Administrative Agent
may procure the coverage at Borrower's expense. Borrower shall reimburse
Administrative Agent, on demand, for all premiums advanced by Administrative
Agent or Lenders, which advances shall be considered to be additional loans to
Borrower hereunder at the Default Rate provided in the Note.

          (d)  Preservation of Rights.
               ----------------------

          Borrower shall obtain and preserve all rights, privileges and
franchises necessary or desirable for the operation of the Unencumbered Asset
Pool Property and the conduct of Borrower's business.  Borrower shall maintain
all of the Unencumbered Asset Pool Property in good condition.  Borrower shall,
at Borrower's sole cost and expense, follow all recommendations in any asbestos
survey conducted by an expert selected by Borrower and approved by
Administrative Agent with respect to any Unencumbered Asset Pool Property
regarding safety conditions for and maintenance of any asbestos containing
materials ("ACM"), including, without limitation, any recommendation to
institute an operations and maintenance plan (the "O&M Plan").

          (e)  Taxes.
               -----
          Borrower shall make timely payments of all local, state and federal
taxes.

     7.2  Payment of Expenses.
          --------------------

          Borrower shall pay all reasonable costs and expenses incurred by
Administrative Agent, Syndication Agent, Arranger or Lenders in connection with
the making, disbursement, administration, arranging, syndication and enforcement
of the Loan (including the cost of any documentation fees, but excluding other
costs and expenses of ordinary collection and servicing administration while the
Loan is not in default), as well as any revisions, extensions, renewals or
"workouts" of the Loan, and in the exercise of any of Administrative Agent's or
Lenders' rights or remedies under this Agreement.  Such costs and expenses
include fees for due diligence and environmental

                                     -26-
<PAGE>

services (including only those services performed by Administrative Agent or
Lender employees and the cost of those services that the Administrative Agent or
any Lender incurs because it believes that such services are required), legal
fees and expenses of counsel, counsel's travel expenses associated with any
syndication, lender meetings or other conferences and any other reasonable fees
and costs for services, regardless of whether such services are furnished by
Administrative Agent's or any Lender's employees or by independent contractors,
and regardless of whether or not the Loan has closed. Borrower acknowledges that
none of the fees described in Section 3 include amounts payable by Borrower
under this Section 7.2. All such sums incurred by Administrative Agent or any
Lender and not immediately reimbursed by Borrower within fifteen (15) days of
written notice by Administrative Agent shall be considered an additional loan to
Borrower hereunder at the Default Rate provided in the Note.

     7.3  Total Amount Outstanding; Swing Line Availability.
          --------------------------------------------------

          Borrower shall not permit the Total Amount Outstanding as defined in
Section 2.1(b) to exceed the Available Amount as defined in Section 2.1(b), and
shall not permit the amount of principal outstanding under the Swing Line to
exceed the Swing Line Availability as defined in Section 1.

     7.4  Financial and Other Information; Certification.
          -----------------------------------------------

          Consolidated Borrower shall provide to Administrative Agent the
following financial information and statements prepared on a consolidated basis:

          (a)  Within one hundred twenty (120) days after each fiscal year end,
the annual audited consolidated financial statements of Borrower and Guarantor
prepared in accordance with GAAP.

          (b)  Within forty-five (45) days after the end of each fiscal quarter,
quarterly unaudited financial statements of Borrower and Guarantor including
cash flow statements .

          (c)  Within one hundred twenty (120) days of Borrower's fiscal year
end, Borrower's annual report.

          (d)  If requested by Administrative Agent, copies of Borrower's and
Guarantor's federal income tax return (with all schedule K-1's attached), within
fifteen (15) days of filing, and, if requested by Administrative Agent, copies
of any extensions of the filing date.

          (e)  Within sixty (60) days after the end of each calendar quarter, an
operating statement and rent roll for each Unencumbered Asset Pool Property and
Permitted Owner in form and substance reasonably satisfactory to Administrative
Agent.

                                     -27-
<PAGE>

          (f)  Copies of Guarantor's Form 10-K Annual Report within ninety-five
(95) days of fiscal year end , the financial statements contained therein to be
prepared on a consolidated basis according to GAAP, to include Borrower and
Guarantor, to be certified by the chief financial officer of Borrower, and to be
audited (with an unqualified opinion) by KPMG Peat Marwick, or another Certified
Public Accountant ("CPA") acceptable to Administrative Agent.

          (g)  Copies of Guarantor's Form 10-Q Quarterly Report within sixty
(60) days after the end of each calendar quarter except fiscal year end, copies
of any and all Form 8-K filings immediately upon filing with the Securities and
Exchange Commission, and copies of all statements, reports and notices sent or
made available generally by Borrower or Guarantor to their respective security
holders at the time they are so sent or made available, any financial statements
contained therein to be certified by the chief financial officer of Borrower,
and (to the extent appropriate) to be prepared on a consolidated basis according
to GAAP and to include Borrower and Guarantor.

          (h)  At the time of each advance, each extension of credit, and each
issuance of a letter of credit hereunder, a compliance certificate of Borrower
in the form of Exhibit "E" signed and certified by an authorized financial
               -----------
officer of Borrower (i) stating specifically that the Total Amount Outstanding
is less than or equal to the Available Amount, and (ii) setting forth whether
there exists as of the date of the certificate, any Event of Default by Borrower
under this Agreement and, if any such Event of Default exists, specifying the
nature thereof and the action Borrower is taking and proposes to take with
respect thereto .

          (i)  Within sixty (60) days of the end of each quarter and in addition
within one hundred twenty (120) days of the end of each year, a compliance
certificate of Borrower in the form of Exhibit "E" signed and certified by an
                                       -----------
authorized financial officer of Borrower (i) setting forth the information and
computations (in sufficient detail) to determine the Gross Asset Value and to
establish that Borrower is in compliance with all financial covenants set forth
in this Agreement at the end of the period covered by the financial statements
then being furnished, (ii) stating specifically that the Total Amount
Outstanding is less than or equal to the Available Amount, and (iii) setting
forth whether there existed as of the date of Consolidated Borrower's most
recent financial statements and whether there exists as of the date of the
certificate, any Event of Default under this Agreement and, if any such Event of
Default exists, specifying the nature thereof and the action Borrower is taking
and proposes to take with respect thereto.

          (j)  Borrower's and Guarantor's one-year calendar budget (showing
month-by-month projections) within thirty (30) days of Borrower's fiscal year
end.

          (k)  Within forty-five (45) days after the end of each fiscal quarter,
rolling four (4) quarter operating projections of Borrower and Guarantor in form
and content reasonably acceptable to Administrative Agent.

                                     -28-
<PAGE>

          (l)  General information on the status of projects under development
directly or indirectly by Borrower or by Guarantor prepared on a quarterly
basis, in the form of Exhibit E.
                      ---------

          (m)  Within thirty (30) days after the end of each fiscal year, an
annual business plan for Borrower and Guarantor in form and content reasonably
acceptable to Administrative Agent.

          (n)  Any other financial or other information concerning Borrower's
and Guarantor's affairs and properties as Administrative Agent may reasonably
request, to be furnished promptly upon such request.

     7.5  Notices.
          --------

          Borrower shall promptly notify Administrative Agent in writing of any
knowledge it has of:

          (a)  any litigation affecting Borrower, Guarantor or the Unencumbered
Asset Pool Property, and/or any subsidiary or affiliate of the Borrower or
Guarantor directly owning any development property where the aggregate amount at
risk or at issue (including litigation costs and attorneys' fees and expenses,
but excluding claims which, in Administrative Agent's reasonable judgment, are
expected to be covered by insurance) exceeds: (1) in the case of litigation
affecting Unencumbered Asset Pool Property, an aggregate amount of Five Million
Dollars ($5,000,000), and (2) in the case of litigation affecting Borrower,
Guarantor, or any other subsidiary or affiliate of Borrower or Guarantor, an
aggregate amount of Twenty-five Million Dollars ($25,000,000);

          (b)  any notice that any property or Borrower's or Guarantor's
business fails in any material respect to comply with any applicable law,
regulation or court order, where the failure to comply could have a material
adverse effect on Borrower or Guarantor;

          (c)  any material adverse change in the physical condition of the
Unencumbered Asset Pool Property or Borrower's or Guarantor's financial
condition or operations or other circumstance that materially adversely affects
Borrower's intended use of the Unencumbered Asset Pool Property or Borrower's
ability to repay the Loan;

          (d)  any failure to comply with this Agreement or any other material
agreement to which Borrower or Guarantor is a party, where such noncompliance
has a material adverse effect on the ability of the Borrower or Guarantor to
perform their respective obligations under the terms of the Loan Documents; and

          (e)  any change in Borrower's or Guarantor's name, legal structure,
place of business to a state other than the State of California, or chief
executive office to a state other than the State of California if Borrower or
Guarantor has more than one place of business.

                                     -29-
<PAGE>

     7.6  Indemnity.
          ----------

          Borrower and Guarantor agree to indemnify, defend with counsel
reasonably acceptable to Administrative Agent, and hold Administrative Agent,
Arranger, Syndication Agent and Lenders harmless from and against all losses,
liabilities, claims, actions, damages, costs and expenses relating to the Loan
(including all costs arising out of environmental indemnification of
Administrative Agent, Arranger, Syndication Agent and Lenders, all reasonable
legal fees and expenses of their counsel and all settlement costs) except to the
extent of those resulting from Administrative Agent's, Arranger's, Syndication
Agent's or Lenders' gross negligence or willful misconduct, arising out of or
resulting from the ownership, operation, or use of the Unencumbered Asset Pool
Property, whether such claims are based on theories of derivative liability,
comparative negligence or otherwise.  Notwithstanding anything to the contrary
in any other Loan Document, the provisions of this Section 7.6 shall survive the
termination of this Agreement, and repayment of the Loan.

     7.7  Negative Covenants.
          -------------------

          (a)  Without Administrative Agent's prior written consent, which
consent shall not be unreasonably withheld or delayed, neither Borrower nor
Guarantor shall:

               (1)  engage in any business activities that would result in less
than seventy percent (70%) of the Gross Asset Value being derived from
multifamily residential apartments;

               (2)  other than in the ordinary course of Borrower's or
Guarantor's business, lease all or a substantial part of Borrower's or
Guarantor's business or Borrower's or Guarantor's assets;

               (3)  enter into or invest in any consolidation, merger, pool,
syndicate or other combination unless Borrower is the surviving entity and
control of Borrower has not changed.

               (4)  change the legal structure of Borrower from a limited
partnership that is an operating partnership whose sole general partner is
Guarantor, change the legal structure of Guarantor from a publicly traded real
estate investment trust under the provisions of Internal Revenue Code Sections
856 and 857, or change the legal structure of Borrower and Guarantor as a so-
called UpREIT, or without notifying Administrative Agent thirty (30) days ahead
of time change Borrower's place of business or chief executive office if
Borrower or Guarantor has more than one place of business;

               (5)  change Borrower's general partner from Guarantor or allow
Guarantor to suffer a change in its executive management such that Keith
Guericke is no longer Chief Executive Officer, George M. Marcus is no longer
Chairman of the Board of Directors or Michael J. Schall is no longer Chief
Financial Officer, unless such executive

                                     -30-
<PAGE>

management is replaced by parties reasonably acceptable to Administrative Agent
within one hundred eighty (180) days; or

               (6)  in any rolling four quarter period, dispose of and
distribute sales proceeds to partners, in the case of Borrower, or to
shareholders, in the case of Guarantor, of more than fifteen percent (15%) of
Borrower's or Guarantor's business or Borrower's or Guarantor's assets.

          (b)  Borrower and Guarantor shall not in any case:

               (1)  form additional unconsolidated down-REITs for property
acquisition unless they comply on an on-going basis with each of the following
conditions:

                    (i)   Essex Management Corporation, a California corporation
("EMC"), or any wholly owned subsidiary of Guarantor or Borrower shall be the
sole general partner of and have the controlling interest in any such
partnership;

                    (ii)  Guarantor and/or Borrower and/or EMC shall have sole
control of each property and entity;

                    (iii) limited partners shall receive only units and/or cash
for value contributed;

                    (iv)  all assets, liabilities and income shall be fully
consolidated into the financial statements of Guarantor for purposes of the
conditions and covenants set out in this Agreement; and

                    (v)   the total of all down-REIT properties shall not exceed
fifteen percent (15%) of the Gross Asset Value.

               (2)  liquidate or dissolve Borrower's or Guarantor's business; or

               (3)  dispose of all of Borrower's or Guarantor's business or
Borrower's or Guarantor's assets.

     7.8  Type of Business; Development Covenants.
          ----------------------------------------

          Borrower shall own, manage, finance, lease and/or operate as an owner
and operator of multifamily properties and any other business activities and
investments shall be incidental thereto. Borrower shall not in any case:

          (a)  on a consolidated basis at any time, have properties under
development or entitled or unentitled land, in combination (at projected total
cost), that exceed thirty-five percent (35%) of Gross Asset Value;

                                     -31-
<PAGE>

          (b)  on a consolidated basis at any time, have any single property
under development (at projected total cost) that exceeds five percent (5%) of
Gross Asset Value;

          (c)  on a consolidated basis at any time, have entitled and unentitled
land that exceeds seven and one-half percent (7.5%) of Gross Asset Value or
unentitled land that exceeds three percent (3%) of Gross Asset Value;

For the purpose of calculating the development limits contained in subsections
(a), (b) and (c) above (the "Development Limits"), costs of projects developed
in partnership with a third party in which Borrower or the Guarantor holds a
limited partnership interest are to be included as follows:

Projects:  (i) that are to be owned 100% in fee simple by Borrower, Guarantor,
or a wholly owned subsidiary thereof, or by Essex Management Company prior to
attainment of stabilized occupancy of not less than ninety percent (90%); or
(ii) for which the Borrower or Guarantor will possess contingent or direct
liability for the completion or leasing of said project are to be included at
one hundred percent (100%) of the projected total cost of the Project; and

Projects:  (i) that are not to be owned 100% in fee simple by Borrower prior to
attainment of stabilized occupancy of not less than ninety percent (90%); and
(ii) for which Borrower or Guarantor possesses no direct or contingent liability
for the completion and leasing of said project are to be included at the amount
of  (A) nonrefundable deposits;  (B) capital contributions;  (C) loans to
partners; and  (D) any other direct obligations and indirect obligations of
Guarantor or Borrower.

          (d)  on a consolidated basis at any time, have Joint Venture
Investments in joint ventures that exceed twenty percent (20%) of Gross Asset
Value.

     7.9  Performance of Acts.
          --------------------

          Upon request by Administrative Agent, Borrower shall perform all acts
which may be necessary or advisable to carry out the intent of the Loan
Documents.

     7.10 Keeping Guarantor Informed.
          ---------------------------

          Borrower shall keep Guarantor (and any other person giving a guaranty
to Administrative Agent and Lenders with regard to the Loan), in its capacity as
guarantor, informed of Borrower's financial condition and business operations
and all other circumstances which may affect Borrower's ability to pay or
perform its obligations under the Loan Documents.  In addition, Borrower shall
deliver to Guarantor all of the financial information required to be furnished
to Administrative Agent hereunder.

                                     -32-
<PAGE>

     7.11 Maximum Total Liabilities to Gross Asset Value of 50%.
          ------------------------------------------------------

          The Total Liabilities of Guarantor and Borrower on a consolidated
basis at the end of each quarter shall not exceed fifty percent (50%) of the
Gross Asset Value of Guarantor and Borrower on a consolidated basis.

     7.12 Fixed Charge Coverage Ratio.
          ----------------------------

          EBITDA, for the most recent one (1) quarter, divided by Fixed Charges
shall not be less than 1.60:1.0.

     7.13 Maximum Quarterly Dividends.
          ----------------------------

          Guarantor shall not declare or pay any distributions or dividends
except from cash flow available for distributions or dividends and earned during
the immediately preceding fiscal year, and in any event, not in excess of
ninety-five percent (95%) of Funds From Operations (as generally defined by the
National Association of Real Estate Investment Trusts) ("FFO") on a rolling
four-quarter basis.  The total of common and preferred stock dividends in any
quarter may exceed FFO for the quarter only to the extent necessary for
Guarantor to retain its status as a real estate investment trust under the
provisions of Internal Revenue Code Sections 856 and 857.

     7.14 [Reserved.]
          -----------

     7.15 Negative Pledge.
          ----------------

          (a)  Borrower shall not create, assume, or allow any security interest
or lien (including judicial liens) on any Unencumbered Asset Pool Property,
except:

               (1)  Liens for taxes, assessments or governmental charges or
levies to the extent that the Permitted Owner is not yet required to pay the
amount secured thereby and easements, covenants, conditions and restrictions,
reciprocal easement and access agreements and similar agreements relating to
ownership and operation; and

               (2)  Liens imposed by law, such as carriers, warehouseman's,
mechanic's, materialman's and other similar liens, arising in the ordinary
course of business in respect of obligations that are not overdue or are being
actively contested in good faith by appropriate proceedings, as long as the
Permitted Owner has established and maintained adequate reserves for the payment
of the same and, by reason of nonpayment, no property of the Permitted Owner is
in danger of being lost or forfeited; and

          (b)  Borrower shall not create, assume, or allow any negative pledge
agreement in favor of any other person affecting or relating to any Unencumbered
Asset Pool Property.

                                     -33-
<PAGE>

          (c)  Borrower shall have the right to contest in good faith by
appropriate legal or administrative proceeding the validity of any prohibited
lien, encumbrance or charge affecting its properties so long as (i) no Event of
Default exists and is continuing, (ii) Borrower first deposits with
Administrative Agent a bond or other security satisfactory to Administrative
Agent in the amount reasonably required by Administrative Agent; (iii) Borrower
immediately commences its contest of such lien, encumbrance or charge, and
continuously pursues the contest in good faith and with due diligence; (iv)
foreclosure of the lien, encumbrance or charge is stayed; and (v) Borrower pays
any judgment rendered for the lien claimant or other third party, unless such
judgment has been stayed as the result of an appeal, within thirty (30) days
after the entry of the judgment. Borrower will discharge or elect to contest and
post an appropriate bond or other security within thirty (30) days of written
demand by Administrative Agent.

     7.16 Borrower's Consolidated Tangible Net Worth.
          -------------------------------------------

          Borrower shall maintain a quarterly consolidated Tangible Net Worth
which exceeds the sum of:  (1) $330,000,000 at the time of execution of this
Agreement, plus (2) seventy-five percent (75%) of the net proceeds from all
future equity issues (including common stock, preferred stock and operating
partnership units).

     7.17 Total Unencumbered Assets to Unsecured Debt.
          --------------------------------------------

          The amount of the total Unsecured Debt of Borrower and the Guarantor
on a consolidated basis shall not be more than fifty percent (50%) of the total
Unencumbered Asset Pool Value of the unencumbered real estate assets of Borrower
and the Guarantor.

     7.18 Change in Ownership of Borrower or Management of the Unencumbered
          -----------------------------------------------------------------
          Asset Pool Property.
          --------------------

          Borrower shall not cause, permit or suffer (a) any change of the
general partner of Borrower, (b) any change in the ownership or control of the
party acting as guarantor of the Loan if Essex Property Trust, Inc. is not the
surviving entity, or (c) any person or entity other than Guarantor or an
affiliate of Guarantor to manage the Unencumbered Asset Pool Property.

     7.19 Books and Records.
          ------------------

          Borrower shall maintain adequate books and records.

     7.20 Audits.
          -------

          Borrower shall allow Administrative Agent and its agents to inspect
Borrower's properties and examine, audit and make copies of books and records at
any reasonable time upon reasonable notice to Borrower.  If any of Borrower's
properties, books or records are in the possession of a third party, Borrower
authorizes that third party to permit Administrative Agent or its agents to have
access to perform inspections

                                     -34-
<PAGE>

or audits and to respond to Administrative Agent's requests for information
concerning such properties, books and records.

     7.21 Cooperation.
          ------------

          Borrower shall take any action reasonably requested by Administrative
Agent to carry out the intent of this Agreement.

     7.22 ERISA Plans.
          ------------

          Borrower shall give prompt written notice to Administrative Agent of:

          (a)  The occurrence of any reportable event under Section 4043(b) of
ERISA which requires thirty (30) days' notice.

          (b)  Any action by Borrower to terminate or withdraw from a Plan or
the filing of any notice of intent to terminate under Section 4041 of ERISA.

          (c)  Any notice of noncompliance made with respect to a Plan under
Section 4041(b) of ERISA.

          (d)  The commencement of any proceeding with respect to a Plan under
Section 4042 of ERISA.

     7.23 Use of Proceeds.
          ----------------

          Borrower shall use the proceeds of the Loan only (i) for interim
financing for acquisition of real and personal property, (ii) for letters of
credit, (iii) for working capital in Borrower's business, and (iv) other
purposes permitted by Borrower's organizational documents as they appear as of
the Effective Date, but not for the repurchase of the common stock of Guarantor.

     7.24 Use of Proceeds - Ineligible Securities.
          ----------------------------------------

          Borrower shall not use any proceeds of the Loan, directly or
indirectly, to purchase or carry, or reduce or retire any loan incurred to
purchase or carry any "Margin Stock" (within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System) or to extend credit to others
for the purpose of purchasing or carrying any Margin Stock.

     7.25 Existing Convertible "Flipper" Loans.
          -------------------------------------

          Within twenty-five (25) days prior to Borrower's conversion (each, a
"Conversion") of any portion of the existing One Hundred Twenty-seven Million
Four Hundred Eighteen Thousand Dollars ($127,418,000) of "flipper" loans from a
secured to an unsecured status, Borrower shall provide Bank with an executed
certificate of compliance (each, a "Certificate of Compliance") notifying Bank
of such Conversion and

                                     -35-
<PAGE>

containing a covenant that after the occurrence of any Conversion Borrower shall
continue to be in compliance with all covenants required under the terms of this
Agreement.

8.   REPRESENTATIONS AND WARRANTIES.
     -------------------------------

          When Borrower and Guarantor sign this Agreement, and until
Administrative Agent and Lenders are repaid in full, Borrower and Guarantor make
the following representations and warranties.  Each request for an extension of
credit constitutes a renewed representation and warranty.

     8.1  Organization of Borrower.
          -------------------------

          Borrower is a limited partnership duly formed and existing under the
laws of California.

     8.2  Authorization.
          --------------

          The execution and compliance with this Agreement and each Loan
Document to which Borrower is a party are within Borrower's powers, have been
duly authorized, and do not conflict with any of Borrower's organizational
papers.

     8.3  Enforceable Agreement.
          ----------------------

          This Agreement is a legal, valid and binding agreement of Borrower,
enforceable against Borrower in accordance with its terms, and it and any other
Loan Document to which it is a party, when executed and delivered, will be
similarly legal, valid, binding and enforceable, except as the same may be
limited by insolvency, bankruptcy, reorganization, or other laws relating to or
affecting the enforcement of creditors' rights or by general equitable
principles.

     8.4  Good Standing
          -------------

          In each state in which Borrower does business, it is properly
licensed, in good standing, and, where required, in compliance with fictitious
name statutes.

     8.5  No Conflicts.
          -------------

          Neither Borrower nor the Unencumbered Asset Pool Property are in
violation of, nor do the terms of this Agreement or any other Loan Document
conflict with, any regulation or ordinance, any order of any court or
governmental entity, any organizational documents of Borrower or Guarantor, or
any covenant or agreement affecting Borrower or the Unencumbered Asset Pool
Property, which has a material adverse effect on the Borrower or the
Unencumbered Asset Pool Property.

                                     -36-
<PAGE>

     8.6   Financial Information.
           ----------------------

           All financial information which has been and will be delivered to
Administrative Agent, including all information relating to the financial
condition of Borrower, Guarantor and the Unencumbered Asset Pool Property, did
as of its date fairly and accurately represent the financial condition being
reported on. All such information was and will be prepared in accordance with
generally accepted accounting principles consistently applied, unless otherwise
noted.  Since December 31, 1999, there has been no material adverse change in
the financial condition of Borrower, Guarantor or the Unencumbered Asset Pool
Property.

     8.7   Borrower Not a "Foreign Person".
           --------------------------------

           Borrower is not a "foreign person" within the meaning of Section
1445(f)(3) of the Internal Revenue Code of 1986, as amended from time to time.

     8.8   Lawsuits.
           ---------

           There is no lawsuit, action, tax claim, investigation, proceeding, or
other or other dispute, pending or threatened, in any court or before any
arbitrator or governmental authority that purports to affect Borrower,
Guarantor, or any subsidiaries or affiliates, or any transaction contemplated by
this Agreement that will have a material adverse effect on Borrower, Guarantor,
or any subsidiaries or affiliates, or any transaction contemplated by this
Agreement, or on the ability of Borrower, Guarantor, or any or any subsidiaries
or affiliates, to perform its obligations under the Loan Documents, unless
otherwise approved in writing by Administrative Agent.

     8.9   Year 2000 Precautions.
           ----------------------

           All of Borrower's computer applications that are material to its
business and operations are able to perform properly date-sensitive functions
for all dates before and after January 1, 2000.

     8.10  Permits, Franchises.
           --------------------

           Borrower possesses all permits, memberships, franchises, contracts
and licenses required and all trademark rights, trade name rights, patent rights
and fictitious name rights necessary to enable it to conduct the business in
which it is now engaged.

     8.11  Other Obligations.
           ------------------

           Borrower is not in material default (taking into account all
applicable cure periods, if any) on any material obligation for borrowed money,
any purchase money obligation or any other material lease, commitment, contract,
instrument or obligation.

                                     -37-
<PAGE>

     8.12  Income Tax Returns.
           -------------------

           Borrower has no knowledge of any pending assessments or adjustments
of its income tax for any year.

     8.13  No Event of Default.
           --------------------

           There is no event which is, or with notice or lapse of time or both
would be, an Event of Default under this Agreement.

     8.14  ERISA Plans.
           ------------

           (a)  Borrower has fulfilled its obligations, if any, under the
minimum funding standards of ERISA and the Code with respect to each Plan and is
in compliance in all material respects with the presently applicable provisions
of ERISA and the Code, and has not incurred any liability with respect to any
Plan under Title IV of ERISA.

           (b)  No reportable event has occurred under Section 4043(b) of ERISA
for which the applicable authorities require thirty (30) days' notice.

           (c)  No action by Borrower to terminate or withdraw from any Plan has
been taken and no notice of intent to terminate a Plan has been filed under
Section 4041 of ERISA.

          (d)   No proceeding has been commenced with respect to a Plan under
Section 4042 of ERISA, and no event has occurred or condition exists which might
constitute grounds for the commencement of such a proceeding.


          (e)   The following terms have the meanings indicated for purposes of
this Agreement:

                (1)  "Code" means the Internal Revenue Code of 1986, as amended
from time to time.

                (2)  "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended from time to time.

                (3)  "PBGC" means the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA.

                (4)  "Plan" means any employee pension benefit plan maintained
or contributed to by Borrower and insured by the Pension Benefit Guaranty
Corporation under Title IV of ERISA.

                                     -38-
<PAGE>

     8.15  Location of Borrower.
           ---------------------

           Borrower's place of business (or, if Borrower has more than one place
of business, its chief executive office) is located at the address listed under
Borrower's signature on this Agreement or at such other place as to which
Borrower has notified Administrative Agent in writing.

     8.16  No Required Third Party/Governmental Approvals.
           -----------------------------------------------

           No approval, consent, exemption, authorization, or other action by,
or notice to, or filing with any third party or any governmental agency is
necessary or required in connection with Borrower's execution, delivery or
performance of this Agreement or any other Loan Document to which Borrower is a
party, or the enforcement of any such agreements against Borrower.

9.   DEFAULT AND REMEDIES.
     --------------------

     9.1   Events of Default.
           ------------------

           Borrower will be in default under this Agreement upon the occurrence
of any one or more of the following events ("Event of Default"):

           (a)   Borrower fails to make any payment due hereunder, or fails to
make any payment demanded by Administrative Agent under any Loan Document,
within fifteen (15) days after the date due or demanded; or

           (b)   Borrower fails to comply with any covenant contained in this
Agreement other than those referred to in clause (a), and does not either cure
that failure within thirty (30) days after written notice from Administrative
Agent, or, if the default cannot be cured in thirty (30) days, within a
reasonable time; or

           (c)   Borrower or Guarantor becomes insolvent or the subject of any
bankruptcy or other voluntary proceeding, in or out of court, for the adjustment
of debtor-creditor relationships; or the subject of any involuntary proceeding,
in court, for the adjustment of debtor-creditor relationships, where such
proceeding is not dismissed within sixty (60) days of commencement; or

           (d)   Borrower or Guarantor dissolves or liquidates; or

           (e)   Any representation or warranty made or given in any of the Loan
Documents proves to be false or misleading in any material respect; or

           (f)   Guarantor breaches or fails to comply with any covenant
contained in this Agreement and does not cure that failure within thirty (30)
days after written notice from Administrative Agent, or, if the default cannot
be cured in thirty (30) days, within a reasonable time; or

                                     -39-
<PAGE>

           (g)  An Event of Default occurs under any of the Loan Documents; or

           (h)  A final non-appealable judgment or order is entered against
Borrower or Guarantor that materially adversely affects Borrower's intended use
of the Unencumbered Asset Pool Property or Borrower's or Guarantor's ability to
repay the Loan; or

           (i)  Borrower or Guarantor fails, after the expiration of applicable
cure periods, if any, to perform any obligation under any other agreement
Borrower has with Administrative Agent or any Lender or any affiliate of
Administrative Agent or any Lender. For the purposes of this section,
"affiliated with" means in control of, controlled by or under common control
with; or

           (j)  Borrower or Guarantor defaults (taking into account applicable
cure periods, if any) in connection with any credit such person has with any
lender, if (1) the default consists of the failure to make a payment in excess
of Five Million Dollars ($5,000,000) when due, or (2) any obligation has been
accelerated that is with recourse to Borrower or Guarantor, in excess of Fifteen
Million Dollars ($15,000,000) in the aggregate; or

           (k)  There is a material adverse change in Borrower's or Guarantor's
financial condition, or event or condition that materially impairs Borrower's
intended use of the Unencumbered Asset Pool Property which materially impairs
Borrower's or Guarantor's ability to repay the Loan; or

           (l)  The Guarantor shall no longer qualify as a real estate
investment trust under the provisions of Code Sections 856 and 857.

     9.2   Remedies.
           ---------

           If an Event of Default occurs under this Agreement, Administrative
Agent may exercise any right or remedy which it has under any of the Loan
Documents, or which is otherwise available at law or in equity or by statute,
and all of Administrative Agent's rights and remedies shall be cumulative. All
of Borrower's obligations under the Loan Documents shall become immediately due
and payable without notice of default, presentment or demand for payment,
protest or notice of nonpayment or dishonor, or other notices or demands of any
kind or character, all at Administrative Agent's option, exercisable in its sole
discretion.

10.  REFERENCE AND ARBITRATION.

     10.1  Mandatory Arbitration. Except as provided below, any controversy or
           ---------------------
claim between or among the parties, including those arising out of or relating
to this Agreement or the other Loan Documents and any claim based on or arising
from an alleged tort, shall at the request of any party be determined by
arbitration. The arbitration shall be conducted in accordance with the United
States Arbitration Act (Title

                                     -40-
<PAGE>

9, U.S. Code), notwithstanding any choice of law provision in this Agreement,
and under the Commercial Rules of the American Arbitration Association ("AAA").
The arbitrator(s) shall give effect to statutes of limitation in determining any
claim. Any controversy concerning whether an issue is arbitrable shall be
determined by the arbitrator(s). Judgment upon the arbitration award may be
entered into any court having jurisdiction. The institution and maintenance of
an action for judicial relief or pursuit of a provisional or ancillary remedy
shall not constitute a waiver of the right of any party, including the
plaintiff, to submit the controversy or claim to arbitration if any other party
contests such action for judicial relief.

     10.2  Judicial Reference. Subject to SubSection 10.1 above, in any judicial
           ------------------
action between or among the parties, including but not limited to any action or
cause of action arising out of or relating to this Agreement or the other Loan
Documents or based on or arising from an alleged tort, all decisions of fact and
law shall at the request of any party be referred to a referee in accordance
with California Code of Civil Procedure Sections 638 et seq. The parties shall
designate to the court a referee or referees selected under the auspices of the
AAA in the same manner as arbitrators are selected in AAA-sponsored proceedings.
The presiding referee of the panel, or the referee if there is a single referee,
shall be an active attorney or retired judge. Judgment upon the award rendered
by such referee(s) shall be entered in the court in which such proceeding was
commenced in accordance with California Code of Civil Procedure Sections 644 and
645.

     10.3  Provisional Remedies; Self-Help. No provision of this Agreement shall
           -------------------------------
limit the right of any party to this Agreement to exercise self-help remedies
such as setoff, or obtaining provisional or ancillary remedies from a court of
competent jurisdiction before, after, or during the pendency of any arbitration
or other proceeding. The exercise of a remedy does not waive the right of either
party to resort to arbitration or reference.

11.  MISCELLANEOUS PROVISIONS.
     ------------------------

     11.1  No Waiver; Consents.
           --------------------

           No alleged waiver by Administrative Agent or any Lender shall be
effective unless in writing, and no waiver shall be construed as a continuing
waiver.  No waiver shall be implied from any delay or failure by Administrative
Agent or any Lender to take action on account of any default of Borrower.
Consent by Administrative Agent or any Lender to any act or omission by Borrower
shall not be construed as a consent to any other or subsequent act or omission.

     11.2  No Third Parties Benefited.
           ----------------------------

           This Agreement is made and entered into for the sole protection and
benefit of the parties signing this Agreement and their successors and assigns.
No trust is created

                                     -41-
<PAGE>

by this Agreement and no other persons or entities shall have any right of
action under this Agreement or any right to the Loan funds.

     11.3  Notices.
           --------

           All notices given under this Agreement shall be in writing and shall
be effectively served upon delivery; or if mailed, upon the first to occur of
receipt or the expiration of forty-eight (48) hours after deposit in certified
United States mail, postage prepaid; or twenty-four (24) hours after deposit
with overnight courier, prepaid, sent to the party at its address appearing
below its signature; or upon confirmation of receipt, if sent by facsimile
transmission to the party at the number appearing below its signature and
followed by delivery of a hard copy of such notice by United States mail. Those
addresses or numbers may be changed by either party by written notice to the
other party.

     11.4  Attorneys' Fees.
           ----------------

           If any lawsuit, reference or arbitration is commenced which arises
out of, or which relates to this Agreement, the Loan Documents or the Loan,
including any alleged tort action, regardless of which party commences the
action, the prevailing party shall be entitled to recover from each other party
such sums as the court, referee or arbitrator may adjudge to be reasonable
attorneys' fees in the action or proceeding, in addition to costs and expenses
otherwise allowed by law. Any such attorneys' fees incurred by either party in
enforcing a judgment in its favor under this Agreement shall be recoverable
separately from and in addition to any other amount included in such judgment,
and such attorneys' fees obligation is intended to be severable from the other
provisions of this Agreement and to survive and not be merged into any such
judgment. In all other situations, including any bankruptcy or other voluntary
or involuntary proceeding, in or out of court, for the adjustment of debtor-
creditor relationships, Borrower agrees to pay all of Administrative Agent's
costs and expenses, including attorneys' fees, which may be incurred in any
effort to collect or enforce the Loan or any part of it or any term of any Loan
Document. Attorneys' fees shall include the allocated costs for services of in-
house counsel.

     11.5  Participations and Syndications.
           --------------------------------

           Subject to the provisions and limitations of this Section 11.5,
Arranger or any Lender may at any time syndicate the Loan or sell to one or more
persons or entities participating interests in the Loan and/or any interest of
any Lender under any of the Loan Documents and may provide financial information
about Borrower to actual or potential participants or assignees, without notice
to or consent of Borrower. These rights may include the following without
limitation: subsequent to the closing of the Loan, the Arranger may arrange a
syndicate of financial institutions (including the Agent and the Lenders) which
institutions shall be acceptable to the Borrower (such acceptance not to be
unreasonably withheld.) Each Lender will be authorized to disseminate any
information it obtains pertaining to the Loan, including, without limitation,
any credit or

                                     -42-
<PAGE>

other information on the Borrower, or any subsidiary or affiliate of the
Borrower, to any assignee or participant or prospective assignee or prospective
participant, to any of the Lenders' affiliates, any regulatory body having
jurisdiction over any Lender and to any other parties as necessary or
appropriate in any of the Lenders' reasonable judgment. Borrower agrees to
actively assist the Arranger in syndication of the Loan. To assist the Arranger
in its syndication efforts, the Borrower shall, at the request of the Arranger:
(1) provide and cause its advisors to provide the Arranger and any Lender that
becomes party to this Agreement as a successor in interest to a Lender, upon
request, with all information reasonably deemed necessary by the Arranger to
syndicate the Loan; (2) assist the Arranger upon its reasonable request in the
preparation of an offering memorandum to be used in connection with the
syndication of the Loan and; (3) otherwise assist the Arranger in its
syndication efforts, including making available officers and advisors of the
Borrower and its affiliates and subsidiaries from time to time to attend and
make presentations regarding the business and prospects of the Borrower and its
subsidiaries, as appropriate, at a meeting or meetings of prospective lenders.

     11.6  Heirs, Successors and Assigns.
           ------------------------------

           The terms of this Agreement shall bind and benefit the heirs, legal
representatives, successors and assigns of the parties; provided, however, that
Borrower may not assign this Agreement without the prior written consent of
Administrative Agent. Administrative Agent and Lenders shall have the right to
transfer the Loan to any other persons or entities without the consent of or
notice to Borrower. Without the consent of or notice to Borrower, Administrative
Agent and Lenders may disclose to any prospective purchaser of any securities
issued by Administrative Agent or Lenders, and to any prospective or actual
purchaser of any interest in the Loan or any other loans made by Lenders to
Borrower (in the case of a prospective purchase of an interest in the Loan or
any other loan, upon Lender's receiving its standard confidentiality letter from
the prospective purchaser of the interest in the Loan or any other loan), any
financial or other information relating to Borrower, the Loan or the
Unencumbered Asset Pool Property.

     11.7  Payments Set Aside.
           -------------------

           To the extent that Borrower makes a payment or payments or transfers
any assets to Administrative Agent, and such payment or payments or transfer or
any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, receiver or any
other party in connection with any insolvency proceeding, or otherwise, then:
(i) any and all obligations owed to Administrative Agent and any and all
remedies available to Administrative Agent under the terms of the Loan Documents
or in law or equity against Borrower shall be automatically revived and
reinstated to the extent (and only to the extent) of any recovery permitted
under clause (ii) below; and (ii) Administrative Agent shall be entitled to
recover (and shall be entitled to file a proof of claim to obtain such recovery
in any applicable bankruptcy, insolvency, receivership or fraudulent conveyance
or fraudulent transfer proceeding) either: (x) the amount of the payments or the
value of the transfer or

                                     -43-
<PAGE>

(y) if the transfer has been undone and the assets returned in whole or in part,
the value of the consideration paid to or received by Borrower for the initial
asset transfer, plus in each case any deferred interest from the date of the
disgorgement to the date of distribution to Administrative Agent in any
bankruptcy, insolvency, receivership or fraudulent conveyance or fraudulent
transfer proceeding, and any costs and expenses due and owing, including,
without limitation, any reasonable attorneys' fees incurred by Administrative
Agent in connection with the exercise of its rights under this Section 11.7.

     11.8  Interpretation.
           ---------------

           The language of this Agreement shall be construed as a whole
according to its fair meaning, and not strictly for or against any party. The
word "include(s)" means "include(s), without limitation," and the word
"including" means "including, but not limited to."

     11.9  Miscellaneous.
           --------------

           This Agreement may not be modified or amended except by a written
agreement signed by the parties.  The invalidity or unenforceability of any one
or more provisions of this Agreement shall in no way affect any other provision.
If Borrower consists of more than one person or entity, each shall be jointly
and severally liable for the faithful performance of this Agreement and the
other Loan Documents.  Time is of the essence in the performance of this
Agreement and the other Loan Documents.  This Agreement shall be governed by
California law.  This Agreement may be executed in one or more counterparts,
each of which shall, for all purposes be deemed an original and all such
counterparts taken together, shall constitute one and the same instrument.

     11.10 Integration and Relation to Loan Commitment.
           --------------------------------------------

           The Loan Documents fully state all of the terms and conditions of the
parties' agreement regarding the matters mentioned in or incidental to this
Agreement. The Loan Documents supersede all oral negotiations and prior writings
concerning the subject matter of the Loan Documents, including any loan
commitment issued to Borrower.

     11.11 Actions.
           --------

           Administrative Agent shall have the right, but not the obligation, to
commence, appear in, and defend any action or proceeding which might affect its
rights, duties or liabilities relating to the Loan, the Unencumbered Asset Pool
Property, or any of the Loan Documents.  Borrower shall pay promptly on demand
all of Administrative Agent's reasonable out-of-pocket costs, expenses, and
legal fees and expenses of Administrative Agent's counsel incurred in those
actions or proceedings.

                                     -44-
<PAGE>

     11.12 Relationships with Other Customers.
           -----------------------------------

           From time to time, Administrative Agent or any Lender may have
business relationships with Borrower's customers, suppliers, contractors,
tenants, partners, shareholders, officers or directors, with businesses offering
products or services similar to those of Borrower, or with persons seeking to
invest in, borrow from or lend to Borrower. Borrower agrees that in no event
shall Administrative Agent or any Lender be obligated to disclose to Borrower
any information concerning any other customer thereof. Borrower further agrees
that any Lender may extend credit to those parties and may take any action it
may deem necessary to collect any such credit, regardless of any effect the
extension or collection of such credit may have on Borrower's financial
condition or operations.

                                     -45-
<PAGE>

          IN WITNESS WHEREOF, Borrower and the other parties hereto have
executed this Agreement as of the date first above written.

ESSEX PORTFOLIO, L.P.,
a California limited partnership

By:  ESSEX PROPERTY TRUST, INC.,
     a Maryland corporation, its General Partner

     By:________________________________
     Name:______________________________
     Title:_____________________________

     925 East Meadow Drive
     Palo Alto, CA 94303
     Attn: John F. Burkart (facsimile: (650) 565-9855)
           Michael J. Schall (facsimile: (650) 858-0139)
           Jordan E. Ritter (facsimile: (650) 858-1372)

BANK OF AMERICA, N.A.,
a National Banking Association,
as Administrative Agent and as Lender

By:_____________________________________
Name:___________________________________
Title:__________________________________

600 Montgomery Street, 37th Floor
San Francisco, CA 94111
Attn.: Frank Stumpf (facsimile: (415) 913-3445)

UNION BANK OF CALIFORNIA, N.A.,
a National Banking Association,
as Co-Syndication Agent and as Lender

By:______________________________________
Name:____________________________________
Title:___________________________________

200 Pringle Avenue, Suite 200
Walnut Creek, CA 94596
Attn.: Geoffrey Horn (facsimile: (925) 947-2416)

                                     -46-
<PAGE>

BANK ONE, N.A.
a National Banking Association,
as Co-Syndication Agent and as Lender

By:______________________________________
Name:____________________________________
Title:___________________________________

1 Bank One Plaza, 14th Floor
Mail Code: IL1-0315
Chicago, IL 60670-0315
Attn.:  Dell McCoy (facsimile: (312) 732-1117)

COMERICA BANK,
a _______________________________________
as Lender

By:______________________________________
Name:____________________________________
Title:___________________________________

Comerica Tower, MC 3256
500 Woodward Avenue, 7th Floor
Detroit, MI 48226
Attn.: Casey Ostrander (facsimile: (313) 222-9295)

KEYBANK, National Association
a National Banking Association,
as Lender

By:______________________________________
Name:____________________________________
Title:___________________________________

127 Public Square, 6th Floor
Cleveland, OH 44114-1306
Attn.: Kevin Murray (facsimile: (216) 689-4997)

                                     -47-
<PAGE>

                             CONSENT OF GUARANTOR
                             --------------------

          Essex Property Trust, Inc., a Maryland corporation, consents to the
foregoing First Amended and Restated Revolving Loan Agreement and reaffirms its
obligations under the Payment Guaranty (Revolving Loan) executed as of even date
with this Agreement.

Dated as of _____________, 2000        ESSEX PROPERTY TRUST, INC.,
                                       a Maryland corporation, as Guarantor

                                       By:______________________________________
                                       Name:____________________________________
                                       Title:___________________________________
                                       925 East Meadow Drive
                                       Palo Alto, CA 94303
                                       Attn.:___________________________________

                                     -48-
<PAGE>

                                   EXHIBIT A
                                   ---------

                                  [RESERVED]
                                  ----------

                                      A-1
<PAGE>

                                   EXHIBIT B
                                   ---------

                           FORM OF LETTER OF CREDIT

                                [See Attached]

                                      B-1
<PAGE>

                                   Exhibit C
                                   ---------

                       BORROWING NOTICE AND CERTIFICATE

                            ________________, 2000

Bank of America, N.A.
50 California Street, 11/th/ Floor
San Francisco, California 94111
Attention: ___________________

     Re:  First Amended and Restated Revolving Loan Agreement dated as of May
          __, 2000 (the "Agreement") between BANK OF AMERICA, N.A. ("Bank") and
          Essex Portfolio L.P., a California limited partnership ("Borrower")

Dear ___________________:

          Reference is made to the Agreement.  Capitalized terms used in this
Borrowing Notice and Certificate without definition have the meanings specified
in the Agreement.

          Pursuant to the Agreement, notice is hereby given that the Borrower
hereby makes one or more of the following requests or submissions:

          ___   Borrower hereby requests an extension of credit in the form of
an advance ("Advance") in accordance with the terms stated on Exhibit 1 attached
hereto; or

          ___   Borrower hereby requests an extension of credit in the form of a
Swing Loan ("Swing") as set forth under Section 2.5 of the Agreement in
accordance with the terms stated on Exhibit 1 attached hereto; or

          ___   Borrower hereby requests the issuance of a Letter of Credit as
set forth under Section 2.4 of the Agreement in accordance with the terms stated
on Exhibit B attached to the Agreement and with the terms stated on Exhibit 2
attached hereto; or

          ___   Borrower hereby requests Removal of Property from the
Unencumbered Asset Pool ("UAP") as set forth under Section 5.2(b) of the
Agreement in accordance with the terms stated on Exhibit 3 attached hereto; or

          ___   Borrower hereby submits this Borrowing Notice and Certificate in
accordance with Section 7.4 of the Agreement; and

                                      C-1
<PAGE>

          The Borrower and the undersigned Officer of the Borrower hereby
certify that:

               (1)  Commitment. The outstanding amount of the Loan shall not,
                    ----------
after giving effect to the making of the Advance, the Swing or the issuance of
the Letter of Credit, exceed the Available Amount as defined in Section 2.1(b)
of the Agreement;

               (2)  Representations and Warranties. All representations and
                    ------------------------------
warranties of the Borrower contained in the Agreement and the other Loan
Documents are true and correct as of the date hereof and shall be true and
correct on the date of the Advance, the Swing, the issuance date of the Letter
of Credit, the release of any UAP Property and/or with the submission of the
financial statements required by Section 7.4 of Agreement, both before and after
giving effect to the Advance, the Swing, the issuance of a Letter of Credit, or
the Release of UAP Property; provided, however, that the representations and
warranties of the Borrower set forth in the Agreement regarding financial
statements shall be deemed to be made with respect to the financial statements
most recently delivered to the Bank pursuant to the Agreement;

               (3)  Event of Default. No Event of Default exists as of the date
                    ----------------
hereof or that would result after notice or passage of time or will result from
the making of the Advance, the Swing, the issuance of the Letter of Credit or
the Release of UAP Property; or

               (4)  Use. The proceeds of the Advance, the Swing, the purpose of
                    ---
the Letter of Credit or the Release of UAP Property are only as permitted by the
Agreement;

               (5)  No Material Adverse Effect.  No act, omission, change or
                    --------------------------
event which would have a material adverse effect on the Borrower has occurred
since the Date of the Agreement.

                                      C-2
<PAGE>

               (6)  Other Conditions. Enclosed are the documents and information
                    ----------------
requested by Bank as a condition to the Advance, the Swing, the issuance of the
Letter of Credit or the Release of UAP Property.

Dated as of _____________, 2000        ESSEX PORTFOLIO, L.P.,
                                       a California limited partnership

                                       By: Essex Property Trust, Inc.,
                                           a Maryland corporation,
                                           its General Partner


                                           By:__________________________________

                                           Name:________________________________

                                           Title:_______________________________

                                      C-3
<PAGE>

                                   EXHIBIT 1
                                   ---------


                        REQUEST FOR EXTENSION OF CREDIT
                        -------------------------------

                             ESSEX PORTFOLIO, L.P.
                                  LIN #GJ1602
                                 REVOLVING LOAN


                                ADVANCE / SWING

                      Swingline Loan  _____ Yes  _____ No

1.  Amount of Requested Advance or Swing
    (must be at least $500,000.00):         $  _________________________________

2.  Date Advance/Swing Requested:           ____________________________________

3.  Term:                                   Days/Months:             ___________

    a.  of Advance:                         Remain at reference for: ___________
                                            Days/Months:             ___________

    b.  of Swing:                           Convert to LIBOR
                                            Alternative for :        ___________

4.  Purpose of Advance/Swing:               ____________________________________

5.  Type of Advance:                        Reference Rate:          ___________

                                            LIBOR:                   ___________

6.  Swing:                                  Reference Rate Only:     ___________

7.  Source of Repayment:                    ____________________________________
                                            ____________________________________


 .    Use Exhibit 4 attached hereto if requesting continuation or conversion of
     LIBOR Alternative.

                                   Exhibit-1
<PAGE>

                                   EXHIBIT 2
                                   ---------

                        REQUEST FOR EXTENSION OF CREDIT
                        -------------------------------

                             ESSEX PORTFOLIO, L.P.
                                  LIN #GJ1602
                                REVOLVING LOAN


                           LETTER OF CREDIT REQUEST
                           ------------------------


1.  Letter of Credit Amount:                $  ______________________________

2.  Date Letter of Credit Requested:        _________________________________

3.  Expiration Date of Letter of Credit:    _________________________________

4.  Beneficiary of Letter of Credit:        _________________________________
                                            _________________________________

5.  Purpose of Letter of Credit:            _________________________________

                                   Exhibit-2
<PAGE>

                                   EXHIBIT 3
                                   ---------

                                  LIN #GJ1602
                                REVOLVING LOAN

                        REQUEST TO RELEASE UAP PROPERTY
                        -------------------------------


1.  UAP Property Name:                       _________________________________

2.  Date Release Requested:                  _________________________________

3.  Borrowers New Available Amount Under
    Agreement:                               $  ______________________________

                                   Exhibit-3
<PAGE>

                                   EXHIBIT 4
                                   ---------

                     REQUEST FOR CONVERSION / CONTINUATION
                     -------------------------------------

                             ESSEX PORTFOLIO, L.P.
                                  LIN #GJ1602
                                REVOLVING LOAN


1.  Conversion / Continuation Date:         __________________________________

2.  Aggregate Amount to be Converted/
    Continued to/at LIBOR Alternative
    Minimum Amount of $1,000,000            $  _______________________________


3.  New Rate Period:                        __________________________________


                                            ESSEX PORTFOLIO, L.P.,
                                            a California limited partnership

                                            By:  Essex Property Trust, Inc.,
                                                 a Maryland corporation


                                                 By:____________________________

                                                 Name:__________________________

                                                 Title:_________________________

                                   Exhibit-4
<PAGE>

                                   EXHIBIT D
                                   ---------

                            UNENCUMBERED ASSET POOL

                                AS OF 12/31/99
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
                                     # of         Current            Available
Property Name                        Units       Location                Value         Amount
---------------------------------------------------------------------------------------------
<S>                                  <C>    <C>                    <C>             <C>
1   Bristol Commons                    188  Sunnyvale, CA           27,963,424     13,981,712
2   Laurels at Mill Creek              164  Mill Creek, WA           9,742,392      4,871,196
3   Marina Cove                        292  Santa Clara, CA         39,282,810     19,641,405
4   Plumtree                           140  Santa Clara, CA         18,350,230      9,175,115
5   Foothill/Twin Creeks               176  San Ramon, CA           22,245,380     11,122,690
6   Tara Village                       168  Tarzana, CA             13,121,516      6,560,758
7   Kings road                         194  Los Angeles, CA         15,435,868      7,717,934
8   Park Place/Windsor Court           234  Los Angeles, CA        16,.444,178      8,222,089
9   Monterra del Mar                   117  Pasadena, CA             8,787,306      4,393,653
10  The Village                        122  Oxnard, CA               9,706,492      4,853,246
11  Villa Scandia                      118  Ventura, CA              7,502,504      3,751,252
12  Trabuco Villas                     132  Lake Forest, CA         12,236,112      6,118,056
13  Meadows at Cascade Park            198  Vancouver, WA            9,891,360      4,945,680
14  Village at Cascade Park            192  Vancouver, WA            9,776,424      4,888,212
15  Wimbledon Woods                    560  Hayward, CA             50,770,212     25,385,106
16  Castle Creek                       216  Newcastle, WA           18,223,486      9,111,743
17  Avondale at Warner Center          446  Woodland Hills, CA      28,934,768     14,467,384
---------------------------------------------------------------------------------------------
                            Total:   3,657                         318,414,462    159,207,231
=============================================================================================
</TABLE>

                                      D-1
<PAGE>

                                   Exhibit E
                                   ---------

                            COMPLIANCE CERTIFICATE

                              ____________, 2000

Mr. Frank H. Stumpf
Bank of America, N.A.
600 Montgomery Street, 37/th/ Floor
San Francisco, CA 94111

     Re:  First Amended and Restated Revolving Loan Agreement dated as of May
          __, 2000 (the "Agreement") between Bank of America, N.A. (the
          "Administrative Agent") and Essex Portfolio L.P., a California limited
          partnership ("Borrower").

Dear Frank:

To the best of my knowledge, no Event of Default has occurred and is continuing
or would result after notice or passage of time and the Borrower is in
compliance with all of the financial covenants of the Agreement under the
applicable sections as of ______________, as follows:

(1)   Minimum Tangible Net Worth (Section ____)     Required:          $330 MM
                                                    Actual:            $
                                                    Margin:            $

Minimum                                             $330 MM
Plus 75% of post 5/1/00 offerings                   $
                                                    --------------
Total                                               $

(2)   Total Liabilities to Adjusted Gross Asset     Not to Exceed:     0.50:1.00
      Value (Section ____)
                                                    Actual:
                                                    Margin:            $
Total Liabilities (Schedule 1)                      $
Gross Asset Value:                                  $

Net income before minority interest, gain on        $
sale of real estate and extraordinary items
Plus: Interest                                      $
      Depreciation                                  $
      Amortization                                  $
                                                    --------------

                                      E-1
<PAGE>

<TABLE>
<CAPTION>
<S>                                                                 <C>                 <C>
EBITDA                                                              $

Less: NOI from assets held for *3 months (Schedule 3)               $
      Minority interest for the quarter (Schedule 4)                $
      Properties sold in the quarter (Schedule 5)                   $
                                                                    ----------

Quarterly Adjusted EBITDA                                           $
Annualized                                                          $
Capitalization Rate                                                 8.75%
Preliminary GAV                                                     $

Plus: Cash and Marketable Securities (Financial                     $
      Statement/ Unrestricted/ 90 days liquid)
      75% acquisitions during the quarter (Schedule 3)              $
      75% of book value of development in progress                  $
      (Schedule 6)
                                                                    ----------

Adjusted Gross Asset Value                                          $

(3)   Fixed Charge Coverage (Section ___)                           Not less than:      1.60:1.00
                                                                    Actual:
                                                                    Margin:             $

Quarterly EBITDA                                                    $

Fixed Charges:
      Interest                                                      $
      Capitalized interest                                          $
      Perpetual preferred stock dividend                            $
      Convertible preferred stock dividend                          $
      Scheduled principal amortization                              $
      Capital Expense Reserve ($250/unit/yr)                        $
                                                                    ----------
Total Fixed Charges                                                 $

(4)   Unsecured Debt to Unencumbered Asset                          Not to exceed:      0.50:1.00
      Value (Section ___)
(see Schedule 1 for detail calculation)                             Actual:
                                                                    Margin:             $
Unsecured Debt                                                      $
Unencumbered Asset Pool Value                                       $
Mortgageability Value                                               $

* Less Than
</TABLE>

                                      E-2
<PAGE>

<TABLE>
<S>                                                                  <C>                           <C>
(5)  Distributions year to date (Section ___)                        Not to exceed:                95% of
                                                                                                   FFO
                                                                     Actual:

Actual FFO  (trailing 4 Qtrs - specify dates)                        $
                                                                     _________
Actual distributions (trailing 4 Qtrs. - specify dates)              $

(6)  Development - Schedule 6 (percentage of
     Adjusted Gross Asset Value)  (Section ___)

a: Total Development                                                 Not to exceed:                35.0%
                                                                     Actual:
                                                                     Margin:
     Total Under Development                                         $

b: Single Asset                                                      Not to exceed:                 5.0%
                                                                     Actual:
                                                                     Margin:
     Single Assets Under Development                                 $

c: Total Land (includes unentitled land)                             Not to exceed:                 7.5%
                                                                     Actual:
                                                                     Margin:
     Land Under Development                                          $

d: Total Unentitled Land                                            Not to exceed:                  3.0%
                                                                     Actual:
                                                                     Margin:
     Unentitled Land Under Development                               $

e: Joint Venture Development                                         Not to exceed:                20.0%
                                                                     Actual:
                                                                     Margin:
     Joint Venture Development
</TABLE>

                                      E-3
<PAGE>

Each of the foregoing ratios and financial requirements were calculated as of
the last day of each fiscal quarter, but were satisfied at all times during the
period covered and are further detailed on the attached spreadsheet Schedules 1
through 6.

                                             Sincerely,



                                             Michael Schall
                                             Executive Vice-President, CFO

                                      E-4
<PAGE>

                          FIRST AMENDED AND RESTATED
                              CO-LENDER AGREEMENT

                           dated as of May 16, 2000

                                     among

                            ESSEX PORTFOLIO, L.P.,
                       a California limited partnership,

                           THE BANKS LISTED HEREIN,

                            BANK OF AMERICA, N.A.,
                           as Administrative Agent,


                        UNION BANK OF CALIFORNIA, N.A.
                                      and
                                BANK ONE, N.A.,
                           as Co-Syndication Agents,

                                      and

                        BANC OF AMERICA SECURITIES LLC,
                  as Sole Lead Arranger and Sole Book Manager

                                     -22-
<PAGE>

                               TABLE OF CONTENTS
                               -----------------

<TABLE>
<CAPTION>
                                                                  Page
                                                                  ----
<S>                                                               <C>
1.   Definitions                                                     1

2.   Appointment and Authorization                                   5

3.   Agent's Discretion; Delegation of Duties                        5

4.   Liability of Agent                                              5

5.   Reliance by Agent                                               6

6.   Cooperation; Duties                                             6

7.   Amendments and Waivers                                          7

8.   Credit Decision                                                 8

9.   Indemnification; Costs and Expenses                             9

10.  Insurance, Taxes, Protective Advances                          10

11.  Agent in Individual Capacity; Conflict of Interest             10

12.  Collateral Matters                                             10

13.  Collections of Payments by Agent                               11

14.  Withholding Tax                                                12

15.  No Set-off                                                     12

16.  Notice of Default                                              13

17.  Borrower's Default; Enforcement.                               13

18.  Foreclosure                                                    13

19.  Workout                                                        14
</TABLE>

                                      -i-
<PAGE>

<TABLE>
<S>                                                                 <C>
20.  Bankruptcy of Borrower                                         15

21.  Acquisition of Collateral                                      15

22.  Property Manager                                               15

23.  Business Plan; Required Consent                                15

24.  Income and Expenses                                            16

25.  Disposition of the Collateral                                  16

26.  Holding Agreement                                              17

27.  Effect of Agreement and Relationship of Parties                17

28.  Arbitration and Judicial Reference                             17

29.  Counsel                                                        17

30.  Successors and Assigns                                         18

31.  Notices                                                        18

32.  Relationship to Loan Documents.                                18
</TABLE>

                                     -ii-
<PAGE>

                FIRST AMENDED AND RESTATED CO-LENDER AGREEMENT
                ----------------------------------------------


          This First Amended and Restated Co-Lender Agreement (the "Agreement")
is entered into as of May 16, 2000, among the several financial institutions
from time to time party to this Agreement (collectively, the "Banks";
                                                              -----
individually, a "Bank"), and Bank of America, N.A. ("BankAmerica"), as one of
                 ----
the Banks and as administrative agent ("Agent") for the Banks and Essex
Portfolio, L.P., a California limited partnership (the "Borrower").

          WHEREAS, the Banks have agreed to make available to Borrower an
unsecured revolving line of credit loan (the "Loan") upon the terms and
conditions set forth in the Loan Documents and specifically set forth under the
terms of that certain Revolving Loan Agreement dated May 11, 1998; and the Banks
agreed that Agent should administer and maintain records in connection with said
Loan in accordance with this Agreement and the Loan Documents, and

          WHEREAS, BankAmerica, Bank of America, N.A. as Agent, Banks, Banc of
America Securities, LLC as Sole Lead Arranger and Sole Book Manager,  Union Bank
of California, N.A. and BankOne, N.A. as Co-Syndication Agents, Essex Property
Trust, Inc. as Guarantor, and Borrower have entered into that certain First
Amended and Restated Revolving Loan Agreement dated as of even date herewith.

          NOW, THEREFORE, the parties hereto agree as follows:

     1.   Definitions.
          -----------

          (a) As used herein, the following words have the meanings indicated.
Capitalized terms not defined herein have the meanings given in the Loan
Documents.

          "Acquisition Date" has the meaning given in Section 21 below.
           ----------------

          "Advance" means any advance of Loan proceeds (other than a Swing Loan)
           -------
     made pursuant to the terms of the Loan Documents.

          "Affiliate" means, as to any Person, any other Person which directly
           ---------
     or indirectly owns, is owned by, or is under common ownership with, such
     Person.  A Person shall be deemed to own another if it owns directly or
     indirectly fifty percent (50%) or more of the other Person whether through
     the ownership of voting securities, membership interests, or otherwise.

          "Agent" means BankAmerica (as that term is defined below) in its
           -----
     capacity as administrative agent for the Banks hereunder, and any successor
     administrative agent.
<PAGE>

          "Agent-Related Persons" means BankAmerica and any successor
           ---------------------
     administrative agent hereunder, together with their respective Affiliates
     and the officers, directors, employees, and agents of such Persons.

          "Agent's Payment Office" means the address for payments set forth
           ----------------------
     herein for Agent, or such other address as Agent may specify.

          "Assignment and Assumption Agreement" means the document designated as
           -----------------------------------
     such in the Loan Documents.

          "Bank" and "Banks" have the meanings specified in the introductory
           ----       -----
     sentence of this Agreement.

          "BankAmerica" means Bank of America, N.A.
           -----------

          "Business Plan" has the meaning given in Section 23 below.
           -------------

          "Collateral" means all property and interests in property and proceeds
           ----------
     thereof now owned or hereafter acquired by Borrower in or upon which a lien
     or security interest hereafter exists in favor of the Banks or Agent on
     behalf of the Banks in connection with this Loan.

          "Collateral Documents" means (i) any deed of trust, security
           --------------------
     agreement, and other security instrument, mortgage, lease assignment, and
     other similar agreement between Borrower (or third parties) and the Banks
     or Agent for the benefit of the Banks hereafter delivered to the Banks or
     Agent in connection with the Loan, and all financing statements (or
     comparable documents) now or hereafter filed in accordance with the Uniform
     Commercial Code (or comparable law) against Borrower (or third parties) as
     debtor in favor of the Banks or Agent for the benefit of the Banks as
     secured party, and (ii) any amendments, supplements, modifications,
     renewals, replacements, consolidations, substitutions and extensions of any
     of the foregoing.

          "Commitment" means, as to any Bank, the amount of the Loan for which
           ----------
     such Bank is obligated.

          "Eligible Assignee" means (i) a commercial bank organized under the
           -----------------
     laws of the United States, or any state thereof, and having a combined
     capital and surplus of at least One Hundred Twenty Million Dollars
     ($120,000,000); (ii) a Person that is primarily engaged in the business of
     commercial banking and is an Affiliate of a Bank; or (iii) a Person
     approved by the Required Banks and Agent.

                                      -2-
<PAGE>

          "GAAP" means generally accepted accounting principles set forth in the
           ----
     opinions and pronouncements of the Accounting Principles Board and the
     American Institute of Certified Public Accountants and of the Financial
     Accounting Standards Board, which are applicable as of the date of
     determination.

          "Governmental Authority" means any government, state or other
           ----------------------
     political subdivision thereof, any central bank (or similar monetary or
     regulatory authority) thereof, any entity exercising executive,
     legislative, judicial, regulatory or administrative functions of or
     pertaining to government, and any entity owned or controlled through
     capital ownership or otherwise by any of the foregoing.

          "Holding Agreement" has the meaning given in Section 26 below.
           -----------------

          "Lending Office" means, as to any Bank, the office specified as its
           --------------
     Lending Office on Schedule 1 of the Modification Agreement or as such Bank
     may designate to Borrower and Agent.

          "Loan Agreement" means that First Amended and Restated Revolving Loan
           --------------
     Agreement between BankAmerica, Bank of America, N.A. as Agent, Banks, Banc
     of America Securities, LLC as Sole Lead Arranger and Sole Book Manager,
     Union Bank of California, N.A. and BankOne, N.A. as Co-Syndication Agents,
     Essex Property Trust, Inc. as Guarantor, and Borrower dated as of even date
     herewith relating to a One Hundred Twenty Million Dollar ($120,000,000)
     unsecured revolving line of credit loan.

          "Loan Documents" means the Note, the Swing Line Note, the Loan
           --------------
     Agreement, the Payment Guaranty, the First Amended and Restated
     Modification Agreement and any other documents identified as a "Loan
     Document" in the Loan Agreement.  This First Amended and Restated Co-Lender
     Agreement is not a Loan Document.

          "Note" means a promissory note other than a Swing Line Note executed
           ----
     by Borrower in favor of a Bank or Agent on behalf of the Banks pursuant to
     the Loan Agreement.

                                      -3-
<PAGE>

          "Notice of Borrowing" means a notice as described in the Loan
           -------------------
     Documents.

          "Obligations" means all advances, debts, liabilities, obligations and
           -----------
     covenants arising under any Loan Document owing by Borrower to any Bank,
     Agent, or any Indemnified Person, whether absolute or contingent, due or to
     become due, now existing or hereafter arising.

          "Person" means an individual, partnership, corporation, limited
           ------
     liability company, business trust, joint stock company, trust,
     unincorporated association, joint venture or Governmental Authority.

          "Property Manager" has the meaning given in Section 22 below.
           ----------------

          "Pro Rata Share" means, as to any Bank at any time, the percentage
           --------------
     equivalent (expressed as a decimal rounded to the ninth decimal place) at
     such time of:  (1) such Bank's Commitment divided by (2) the aggregated
     Commitments of all Banks.

          "Required Banks" means at any time two or more Banks then holding at
           --------------
     least sixty-six and two-thirds percent (66 2/3%) of the then aggregate
     unpaid principal amount of the Loan (not including the Swing Loan), (or, if
     no amounts are outstanding, having at least sixty-six and two-thirds
     percent (66 2/3%) of the aggregate amount of the Commitments).

          "Subsidiary" of a Person means any other Person of which fifty percent
           ----------
     (50%) or more of the voting stock, membership interests or other equity
     interests is owned or controlled directly or indirectly by the Person, or
     one or more of the Subsidiaries of the Person, or a combination thereof.

          "Swing Loan" has the meaning given to it in the Loan Agreement.
           ----------

          "Swing Line Note" has the meaning given to it in the Loan Agreement.
           ---------------

          (b) Unless the context clearly requires otherwise, all accounting
terms not expressly defined herein shall be construed, and all financial
computations required under this Agreement shall be made in accordance with,
GAAP, consistently applied.

                                      -4-
<PAGE>

     2.   Appointment and Authorization.
          -----------------------------

          (a) Each Bank hereby irrevocably (subject to the provision on
Successor Agent in the Loan Documents) appoints and authorizes Agent to take
such action on its behalf under the provisions of this Agreement and each Loan
Document and to exercise such powers and perform such duties as are expressly
delegated to Agent by the terms of this Agreement or any Loan Document, together
with such powers as are reasonably incidental thereto.

          (b) Notwithstanding any provision to the contrary in this Agreement or
any Loan Document, Agent shall not have any duties or responsibilities except
those expressly set forth herein or in the Loan Documents, nor shall Agent have
any fiduciary relationship with any Bank, and no implied covenants,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any Loan Document against Agent.

     3.   Agent's Discretion; Delegation of Duties.
          ----------------------------------------

          (a) Agent will perform its duties under this Agreement in the ordinary
course of business and in accordance with Agent's usual practices, as may be
modified from time to time as Agent deems appropriate under the circumstances.
Except as expressly set forth in this Agreement or the Loan Documents, Agent
shall be entitled to use its discretion in taking or refraining from taking any
actions in connection with the Loan, the Loan Documents, and the Collateral.
Agent may, in its sole discretion, request the Banks' consent to an action for
which their consent is not required under this Agreement or the Loan Documents,
but any such request shall not create any express or implied requirement that
the Banks' consent to any action be obtained except as expressly provided in
this Agreement or the Loan Documents.

          (b) Agent may execute any of its duties under this Agreement or any
Loan Document by or through agents, or employees and shall be entitled to advice
of counsel concerning all matters pertaining to such duties.  Agent shall not be
responsible for the negligence or misconduct of any agent or counsel that Agent
selects with reasonable care.

                                      -5-
<PAGE>

     4.   Liability of Agent.
          ------------------

          None of Agent-Related Persons shall (i) be liable for any action taken
or omitted to be taken by any of them in connection with this Agreement or any
Loan Document or the transactions contemplated hereby (except for such Person's
own gross negligence or willful misconduct), or (ii) be responsible to any of
the Banks for any statement, representation or warranty made by Borrower or any
Affiliate of Borrower contained in any Loan Document or in any certificate,
report, statement or other document provided in connection with this Agreement
or any Loan Document, or for the value of or title to any Collateral, or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any Loan Document, or for any failure of Borrower or any other
party to any Loan Document to perform its obligations hereunder or thereunder.
Except as expressly provided in this Agreement or the Loan Documents, no Agent-
Related Person shall be under any obligation to any Bank to ascertain or to
inquire as to the observance or performance of any of the agreements contained
in, or conditions of, this Agreement or any other Loan Document, or to inspect
the properties, books or records of Borrower or any of Borrower's Subsidiaries
or Affiliates.

     5.   Reliance by Agent.
          -----------------

          (a) Agent shall be entitled to rely upon any writing, notice, consent,
certificate, facsimile, telephone message, statement or other document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons, and upon advice of legal counsel
(including counsel to Borrower), independent accountants and other experts
selected by Agent. Agent shall be fully justified in failing or refusing to take
any action under this Agreement or any Loan Document unless it shall first
receive such advice or concurrence, if it so requests, of the Required Banks and
shall first be indemnified to its satisfaction by the Banks against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action.

                                      -6-
<PAGE>

          (b) For purposes of determining compliance with the conditions
specified for closing the Loan, each Bank that has executed this Agreement or an
Assignment and Assumption Agreement shall be deemed to have consented to or
approved each document or other matter for which consent or approval of such
Bank is required.

     6.   Cooperation; Duties.
          -------------------

          (a) The parties hereto agree to cooperate in good faith and in a
commercially reasonable manner in connection with the exercise by Agent of the
rights granted to it and the Banks by law, the Loan Documents and this
Agreement, including, without limitation, providing necessary information to
Agent with respect to the Obligations, and preparing and executing necessary
affidavits, certificates, notices, instruments and documents.

          (b) Each Bank shall upon written demand deliver to Agent a special
power of attorney (or similar instrument) acceptable to Agent and executed in
recordable form, as may be reasonably required by Agent to authorize Agent on
behalf of each Bank to take any and all action authorized pursuant to this
Agreement.

          (c) Only Agent may perform the duties reserved to it under the Loan
Documents and this Agreement and no Bank shall act or purport to act on behalf
of the other Banks or Agent on any such matters.

          (d) No Bank identified in this Agreement or the Loan Documents as a
"co-agent" or "lead manager" shall have any right, power, obligation or
responsibility other than those applicable to all Banks as such.

                                      -7-
<PAGE>

          (e) Each Bank acknowledges that it has not relied and will not rely on
Agent or any Bank identified as a co-agent or lead manager in deciding to enter
into this Agreement or in taking or not taking action hereunder.

     7.   Amendments and Waivers.
          ----------------------

          (a) No amendment or waiver of any provision of this Agreement or any
Loan Document, and no consent with respect to any departure by Borrower
therefrom, shall be effective unless the same shall be in writing and signed by
the Required Banks (or by Agent at the written request of the Required Banks),
and Borrower if required, and acknowledged by Agent, and then any such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.  However, no such waiver, amendment, or consent shall
do any of the following unless it is in writing and signed by all the Banks (and
Borrower if required) and acknowledged by Agent:

              (i)   Increase the aggregate Commitment or increase the Commitment
     of any Bank.

              (ii)  Postpone or delay any date fixed by this Agreement or any
     Loan Document for any payment of principal, interest, fees or other amounts
     due to the Banks (or any one of them) hereunder or under any Loan Document.

              (iii) Reduce the rate of interest or (subject to subsection (b)
     below) any fees or other amounts payable in connection with the Loan except
     as provided in the Loan Agreement.

              (iv)  Change the voting percentage of the Commitments or of the
     aggregate unpaid principal amount of the Loan which is required for the
     Banks, or any of them, to take any action hereunder.

              (v)   Amend this or any provision requiring consent of all Banks
     for action by Agent.

              (vi)  Discharge any Guarantor, or release all or substantially all
     of the Collateral except as otherwise may be provided in the Loan Documents
     or except where only the consent of the Required Banks is expressly
     required.

              (vii) Amend any Loan Document to change the definition of or
     provisions relating to an Event of Default by Borrower.

                                      -8-
<PAGE>

          (b) No amendment, waiver or consent shall affect the rights or duties
of Agent under this Agreement or any Loan Document unless it is in writing and
signed by Agent in addition to the required number of Banks.  Agent shall not
issue a set aside letter or waive a condition of disbursement without the
consent of the Required Banks.

     8.   Credit Decision.
          ---------------

          Each Bank acknowledges that none of Agent-Related Persons has made any
representation or warranty to it, and that no act by Agent hereinafter taken,
including any review of the affairs of Borrower, shall be deemed a
representation or warranty by any Agent-Related Person to any Bank.  Each Bank
represents to Agent that, independently and without reliance upon any Agent-
Related Person and based on such documents and information as it has deemed
appropriate, that Bank has made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrower, the value of and title to any and all Collateral,
and all applicable financial and regulatory laws relating to the transactions
contemplated hereby, and made its own decision to enter into this Agreement and
to extend credit to Borrower, and that it will continue to make its own credit
analysis and decisions in taking or not taking action under this Agreement and
the Loan Documents, and to make such investigations as it deems necessary to
inform itself as to the business, prospects, operations, property, financial and
other condition and creditworthiness of Borrower. Except for notices, reports
and other documents expressly required herein to be furnished to the Banks by
Agent, Agent shall not have any duty or responsibility to provide any Bank with
any credit or other information concerning Borrower or the Collateral which may
come into the possession of any Agent-Related Person.

     9.   Indemnification; Costs and Expenses.
          -----------------------------------

          (a) Whether or not the transactions contemplated hereby are
consummated, the Banks according to their respective Pro Rata Shares shall
indemnify upon demand Agent-Related Persons from and against any and all
Indemnified Liabilities (as defined in the Loan Documents) to the extent not
reimbursed by or on behalf of Borrower and without limiting the obligation of
Borrower to do so.  However, no Bank shall be liable for the payment to Agent-
Related Persons of any portion of such Indemnified Liabilities resulting solely
from such Agent-Related Person's gross negligence or willful misconduct.

          (b) Each Bank shall reimburse Agent upon demand for its Pro Rata Share
of any costs or expenses (including legal fees) incurred by Agent in connection
with the preparation, administration, modification, or enforcement of, or legal
advice

                                      -9-
<PAGE>

in connection with, this Agreement or any Loan Document, to the extent that
Agent is not reimbursed for such expenses by or on behalf of Borrower.

          (c) Each Bank shall upon demand reimburse Agent for such Bank's Pro
Rata Share of any and all costs, expenses and disbursements which may be
incurred or paid by Agent in its role as Agent in connection with any action
taken by Agent to enforce or protect any Collateral, for which Agent has not
previously been reimbursed by Borrower, including reasonable fees of attorneys,
appraisers and inspectors (which includes reasonable charges for services
rendered by attorneys, appraisers or inspectors who are employees of Agent).  If
Agent subsequently recovers any such expense from Borrower or any third party,
Agent shall reimburse each Bank according to that Bank's Pro Rata Share of the
recovery.

          (d) Each Bank is severally but not jointly liable according to its Pro
Rata Share to Borrower under the Loan Documents.  Each Bank agrees to indemnify
the other Banks and Agent with respect to claims, liabilities, damages or losses
arising out of the failure of said indemnifying Bank to meet its obligations
under the Loan Documents and this Agreement.

          (e) The undertakings in this Section shall survive the payment of all
obligations hereunder and the resignation or replacement of Agent.

     10.  Insurance, Taxes, Protective Advances.
          -------------------------------------

          If Agent fails to receive satisfactory evidence that all premiums for
the insurance policies required by the Loan Documents, if any, or all taxes or
assessments on the Collateral have been paid within thirty (30) days of when
due, Agent in its sole discretion shall have the right but not the obligation to
obtain current coverage or to pay such taxes or assessments, as appropriate, and
to require the Banks to advance funds to pay the premiums or costs for it in
accordance with their respective Pro Rata Shares.

     11.  Agent in Individual Capacity; Conflict of Interest.
          --------------------------------------------------

                                     -10-
<PAGE>

          The Banks acknowledge that Agent and its Affiliates now or in the
future may have banking or other financial relationships, including being an
agent on other loans, with Borrower and its Affiliates, as though BankAmerica
were not Agent hereunder and without notice to or consent of the Banks.  Each
Bank hereby expressly waives any objection to such actual or potential conflict
of interest, (subject however to the right of the Banks to replace Agent as
provided herein or in the Loan Documents).  The Banks acknowledge that in the
course of such activities BankAmerica or its Affiliates may receive information
regarding Borrower or its Affiliates and acknowledge that Agent shall be under
no obligation to provide such information to them, whether or not confidential.
With respect to the Loan, BankAmerica shall have the same rights and powers
under this Agreement and the Loan Documents as any other Bank and may exercise
the same as though it were not Agent, and the terms "Bank" and "Banks" include
BankAmerica in its individual capacity.

     12.  Collateral Matters.  The Loan is initially unsecured.  In certain
          ------------------
cases provided for in the Loan Documents, all or a portion of any amounts
outstanding under the Loan may be secured.  In that event, the following
provisions and any other provisions of this Agreement relating to Collateral
shall apply.

          (a) Agent is authorized on behalf of all the Banks to take any action
with respect to any Collateral or the Collateral Documents which may be
necessary to perfect and maintain the security interest in and liens upon the
Collateral.

          (b) The Banks irrevocably authorize Agent to release, at its option
and in its discretion, any lien granted to or held by Agent upon any Collateral
(i) upon termination of or payment in full of the Loan and all other Obligations
under the Loan Documents; (ii) constituting Collateral sold or to be sold or
disposed of as part of or in connection with any disposition permitted under the
Loan Documents; or (iii) upon authorization in writing by the Required Banks.
Upon request by Agent, the Banks will confirm in writing Agent's authority to
release particular types or items of Collateral.

          (c) Each Bank agrees with the other Banks that Borrower's obligation
to such Bank under the Loan Documents is not and shall not be secured by any
real property collateral now or hereafter acquired by such Bank other than the
real property described in the Collateral Documents.  This provision is not
intended for the benefit of Borrower.

     13.  Collections of Payments by Agent.
          --------------------------------

                                     -11-
<PAGE>

          (a) Agent shall have the exclusive right to collect from Borrower or
any guarantors, or third parties, on account of the Loan, including principal,
interest, fees, protective advances and prepayment premiums (if any), whether
such sums are received directly from Borrower, any guarantors, or any other
persons, or obtained by right of offset by Agent of any kind, by sale of any
Collateral, or by enforcement of the Loan Documents.  Agent will receive and
hold all collections with respect to the Loan (other than the Swing Loan) for
the benefit of the Banks in accordance with their Pro Rata Shares.

          (b) If any Bank shall receive any payments or property in connection
with the Loan (whether or not voluntary), except from Agent, that Bank shall
transfer to Agent all such funds or property within one Banking Day of receipt.

          (c) No Bank shall independently initiate any judicial action or other
similar proceeding or action against Borrower with respect to the Loan.

          (d) If Agent declares that an Event of Default (as defined in any Loan
Document) has occurred and that Agent is treating the Loan as "in workout", then
all collections thereafter shall be applied first to Agent's fees and costs of
collection, then to the payment of interest pursuant to the Loan Documents and
then to the balance of unpaid principal.  All losses shall be borne by each Bank
to the extent of each Bank's Pro Rata Share.

          (e) Except as otherwise provided in the Loan Documents or this
Agreement, when Agent receives a payment of principal, interest or other amount
of funds in connection with the Loan, Agent will pay over to each Bank (or
retain, if appropriate), such Bank's portion of that payment determined as set
forth in the Loan Documents and any Assignment and Assumption Agreements.

     14.  Withholding Tax.
          ---------------

          All taxes due and payable on any payments to be made to a Bank under
this Agreement shall be such Bank's sole responsibility, except to the extent
such taxes are actually reimbursed by Borrower under the Loan Documents.  All
payments to be made to each Bank under this Agreement shall be made after
deduction for any taxes, charges, levies or withholdings which are imposed by
the country of incorporation of Borrower, the United States of America or any
other applicable taxing authority.  Each Bank agrees to provide to Agent
completed and signed copies of any forms that may be required by the United
States Internal Revenue Service (and any applicable state authority) in order to
certify such Bank's exemption from or reduction of United States (or applicable
state) withholding taxes with respect to payments to be made to such Bank under
this Agreement or the Loan Documents.
<PAGE>

          Each Bank agrees to promptly notify Agent of any change which would
modify or render invalid any claimed exemption or reduction, or of any sale,
assignment, participation, or other transfer by such Bank of all or part of its
interest in the Loan.  If any Governmental Authority of the United States or
other jurisdiction asserts a claim that Agent did not properly withhold tax from
amounts paid to or for the account of any Bank, such Bank shall indemnify Agent
fully for all amounts paid by Agent as tax or otherwise, including penalties and
interest, and including any taxes imposed by any jurisdiction on the amounts
payable to Agent under this Section, together with all costs and expenses
(including legal expenses).  The obligation of the Banks under this subsection
shall survive the payment of all Obligations and the resignation or replacement
of Agent.

     15.  No Set-off.
          ----------

          Each Bank hereby acknowledges that the exercise by any Bank of offset,
set-off, banker's lien, or similar rights against any deposit account or other
property or asset of Borrower whether or not located in California, could result
under certain laws in significant impairment of the ability of all Banks to
recover any further amounts in respect of the Loan.  Therefore, each Bank agrees
not to charge or offset any amount owed to it by Borrower relating to or arising
from the Loan or the Loan Documents against any of the accounts, property or
assets of Borrower or any of its Affiliates held by such Bank, without the prior
written approval of Agent and the Required Banks.

     16.  Notice of Default.
          -----------------

          Except for defaults in the payment of principal, interest and fees
payable to Agent for the account of the Banks and such other Obligations for
which Agent is expressly responsible for determining Borrower's compliance,
Agent shall not be deemed to have knowledge or notice of the occurrence of any
Default or Event of Default, unless Agent shall have received written notice
from a Bank or Borrower referring to the Loan, describing such Default or Event
of Default and stating that such notice is a "notice of default".  Agent will
notify the Banks of its receipt of any such notice.  Agent shall take such
action with respect to such Default or Event of Default in accordance with the
provisions of this Agreement and the Loan Documents.

     17.  Borrower's Default; Enforcement.
          -------------------------------

          Upon the occurrence of an Event of Default under any Loan Document,
the Required Banks shall have the right, upon written notice to Agent, to
require that Agent exercise the rights of the Banks as directed by the Required
Banks; provided, however, that the Banks shall indemnify, exonerate and hold
Agent harmless from and

                                     -13-
<PAGE>

against any and all claims, losses, liabilities, damages and costs (including
reasonable legal fees) incurred by Agent as a result of any such exercise of
rights at the direction of the Banks.

     18.  Foreclosure.
          -----------

          (a) Upon the occurrence of any Event of Default, if the Borrower has
secured its obligations under the Loan Documents with any Collateral, any Bank
may request that Agent take any action described in subsection (b) below.  After
receiving any such request, Agent shall promptly send or deliver to each Bank a
written request for consent to the proposed action.  Each Bank shall respond to
Agent in writing, expressly agreeing or disagreeing with the proposed action,
within twenty days (or such shorter period as may be required by Agent) after
receiving the request for consent.  Any failure of any Bank to deliver timely
notice of its agreement or disagreement shall be deemed for all purposes to be
consent to the proposed action.  Upon receipt of the Banks' responses, Agent
shall take the proposed action if the action has received consent by the
Required Banks.

          (b) Subject to the procedures in subsection (a) above and the
provisions of Section 19 below on Workout, Agent, to the extent permitted by law
and the Loan Documents, shall:

              (i)   Record a notice of default initiating a nonjudicial
     foreclosure of any deed of trust; or

              (ii)  Postpone any duly scheduled foreclosure sale for more than
     thirty (30) days except as otherwise required by law; or

              (iii) Commence any judicial foreclosure proceeding; or

               (iv) Make a motion for appointment of a receiver.

     19.  Workout.
          -------

          If Borrower is in material default under the Loan Documents
(including, but not limited to, non-payment by Borrower of amounts due and/or
bankruptcy by Borrower) and has not cured the default within any applicable cure
period, Agent may declare by written notice to the Banks that the Loan is "in
workout" (the "Notice of Workout").  The Banks acknowledge that workouts of
defaulted loans usually are resolved by either a borrower cure of the default;
or a restructure of or other modification to the loan; or by exercising banks'
remedies, including, but not limited to, foreclosure on any collateral; and that
it is in the interest of the Banks to attain a

                                     -14-
<PAGE>

resolution within a reasonable period of time. Therefore the Banks agree that
if, after one hundred eighty (180) days from the date of Agent's Notice of
Workout, there has been neither a cure of the default(s), nor a restructure nor
other modification executed, nor exercise of the Banks' remedies under Sections
17 or 18 above, then (a) if the Loan is then unsecured, Agent on behalf of the
Banks shall sue Borrower and any guarantors for collection of amounts owing to
the Banks, subject to and in accordance with advice of Agent's counsel; and (b)
if the Loan is then secured, Agent on behalf of the Banks shall foreclose on the
Collateral and pursue related remedies, subject to and in accordance with advice
of Agent's counsel (and provided there are no environmental, legal or similar
problems with the Collateral to cause Agent to reasonably believe it undesirable
to foreclose on said Collateral). Notwithstanding any action by Agent under
subsections (a) or (b) herein, Agent shall follow the direction of the Required
Banks under Sections 17 or 18 above at any time.

          Notwithstanding the foregoing, at any time from the inception of the
Loan until the repayment thereof in full, unless and until the Required Banks
shall direct Agent to the contrary, Agent shall have the right but not the
obligation to take such action as it may deem appropriate to preserve the
Collateral, protect the security interest of the Banks therein and preserve the
rights of the Banks to recover any amounts owing under the Loan Documents,
without the consent of the Required Banks.

     20.  Bankruptcy of Borrower.
          ----------------------

          In the event of a bankruptcy by Borrower, the Banks shall act through
Agent to petition the court, make any motion for relief from the automatic stay,
participate in any appropriate creditors' committee, vote on a plan of
reorganization or pursue other remedies or actions in accordance with the
approval of the Required Banks.

     21.  Acquisition of Collateral.
          -------------------------

          If all or any portion of any Collateral is acquired by foreclosure or
by deed in lieu of foreclosure, Agent shall take title to the Collateral in its
name or by an affiliate of Agent, but for the benefit of all Banks in their Pro
Rata Shares on the date of the foreclosure sale or recordation of the deed in
lieu of foreclosure (the "Acquisition Date").  Agent and all Banks hereby
expressly waive and relinquish any right of partition with respect to any
Collateral so acquired.

     22.  Property Manager.
          ----------------

                                     -15-
<PAGE>

          After any Collateral is acquired as provided in Section 21 above,
Agent in its sole discretion shall appoint and retain as manager of the
Collateral (the "Property Manager") a person or company experienced in the
management of similar properties.  Agent shall have no liability for any
wrongful act or omission on the part of the Property Manager.

     23.  Business Plan; Required Consent.
          -------------------------------

          After consulting with the Property Manager, Agent shall prepare a
written plan for sale, leasing, management, completion of construction (if
required), maintenance, repair or improvement of any Collateral and a budget for
the aforesaid which may include a reasonable management fee payable to Agent
(the "Business Plan").  The Business Plan shall include a proposed price at
which the Collateral shall be listed for sale and a minimum sales price at which
the Collateral shall be sold and any requirements for a qualified bidder.  Agent
will deliver a draft Business Plan not later than the sixtieth (60th) day after
the Acquisition Date to each Bank with a written request for consent to the
Business Plan.  Each Bank shall respond to Agent in writing, expressly approving
or disapproving the Business Plan within twenty (20) days after receiving the
request for consent.  Any failure of any Bank to deliver timely notice of its
approval or disapproval of the Business Plan shall be deemed for all purposes to
be approval of the Business Plan.  If the Business Plan receives approval by the
Required Banks, Agent and the Property Manager shall adhere to the Business Plan
until a different Business Plan is approved by the Required Banks.  Agent may
propose an amendment to the Business Plan as it deems appropriate, which shall
also be subject to Required Bank approval.  If the Business Plan (as may be
amended) proposed by Agent and the Property Manager is not approved by the
Required Banks, (or if six (6) months  have elapsed following the Acquisition
Date without a Business Plan being proposed by Agent), any Bank may propose an
alternative Business Plan, which Agent shall submit to all Banks for their
approval or disapproval following the procedures provided in this Section.

          Notwithstanding any other provision of this Agreement, Agent shall
have the right but not the obligation to take any action in connection with the
Collateral, upon written notice to Banks but without their actual or deemed
approval, if Agent reasonably believes that (i) such action is necessary to
preserve the value of the Collateral and (ii) the value of the Collateral is
likely to deteriorate during the time period otherwise required to obtain
approval hereunder.

                                     -16-
<PAGE>

     24.  Income and Expenses.
          -------------------

          (a) During the period the Collateral is held by Agent for the benefit
of the Banks, all income, expense (including attorney's fees) and liabilities
arising out of the management and possession of the Collateral shall be shared
by the Banks in accordance with their Pro Rata Shares.

          (b) Agent will keep or cause to be kept books of account of receipts
and disbursements and other financial activities with respect to the Collateral.
The books will be kept on a calendar year ending on December 31, with a tax year
for income tax purposes ending December 31, and in a manner and form consistent
with Agent's methods and procedures of reporting such transactions.

     25.  Disposition of the Collateral.
          -----------------------------

          Upon approval of the Business Plan, Agent shall cause the Collateral
to be listed with a licensed real estate broker experienced in the sale of
similar properties at the listing price provided in the Business Plan.  If Agent
receives any all cash offer equal to or greater than the minimum sales price and
meets the other requirements in the Business Plan, Agent shall accept that offer
prior to its expiration.  Upon closing of the sale of the Collateral, the net
proceeds shall be distributed to the Banks in accordance with their Pro Rata
Shares.

     26.  Holding Agreement.
          -----------------

          Agent may, and at request of the Required Banks shall, propose a more
detailed agreement among the Banks and Agent concerning holding of any
Collateral after the Acquisition Date (a "Holding Agreement") to supplement or
supplant this Agreement.  Such Holding Agreement shall be binding on all Banks
if it is approved by Agent and the Required Banks.

     27.  Effect of Agreement and Relationship of Parties.
          -----------------------------------------------

                                     -17-
<PAGE>

          This Agreement is not intended to establish a partnership or joint
venture between Agent and the Banks.  The provisions of the Loan Documents
regarding the relationships among Agent and the Banks and this Agreement are
intended solely to facilitate co-lending relationships among the Banks for the
Loan.  No security or investment contract under any federal or state law is
intended to be created among the Banks or between Agent and the Banks.  The
execution of this Agreement, the performance of the terms hereof, and the Banks'
purchase of and ownership interest in the Loan and the Loan Documents shall not
constitute any Bank as owner, purchaser or seller of any security (as that term
is defined in the Securities Act of 1933 or the Securities Exchange Act of 1934)
issued, owned, purchased or sold by BankAmerica or any of its subsidiaries or
affiliates, either as principal or as agent for Borrower.  Each Bank is
purchasing and acquiring legal and equitable ownership of its Pro Rata Share and
is not making a loan to BankAmerica, and no debtor-creditor relationship exists
between them as a result of this Agreement.  This Agreement and the Loan
Documents constitute the entire agreement among the parties, and no
representation, promise, inducement or statement of intent has been made by
Agent to the Banks which is not embodied in this Agreement or the Loan
Documents.

     28.  Arbitration and Judicial Reference.
          ----------------------------------

          The provisions of the Loan Agreement regarding arbitration and
judicial reference shall apply to any controversies or claims (a) between
Borrower on one hand and Agent and the Banks on the other and (b) between or
among Agent and the Banks.

     29.  Counsel.
          -------

          The Banks acknowledge that Agent's counsel has represented and shall
represent only Agent in connection with the Loan Documents and this Agreement.
Each other Bank shall retain independent legal counsel regarding all such
matters, documents and agreements.  After an Event of Default, the Banks shall
enter into a joint privilege agreement regarding the exchange of information
that is or may be subject to attorney-client privilege or related privileges.
Agent's counsel shall prepare such joint privilege agreement, subject to the
approval of the Required Banks which approval shall not be unreasonably withheld
by any Bank.

     30.  Successors and Assigns.
          ----------------------

          The terms and provisions of this Agreement shall be binding upon and
inure to the benefit of Agent and the Banks and their respective successors and
assigns.  Each Bank becoming a party to the Loan Documents shall automatically
be considered a party hereto and shall be entitled to the rights and subject to
the obligations of a Bank hereunder.  This Agreement is solely for the benefit
of the

                                     -18-
<PAGE>

parties hereto and their successors and assigns and no third party (including
Borrower or any guarantor) shall have any rights or benefits hereunder.

     31.  Notices.
          -------

          All notices, requests and other communications shall be in writing and
mailed, faxed or delivered to the address or facsimile number specified for
notices in the Loan Documents or an Assignment and Assumption Agreement; or, to
such other address as shall be designated by such party in a written notice to
the other parties.  Any agreement of Agent to receive certain notices from the
Banks by telephone or facsimile is solely for the convenience and at the request
of the Banks.  Agent shall be entitled to rely on the authority of any Person
purporting to be an authorized Person, and Agent shall not have any liability to
the Banks or any other Person on account of any action taken or not taken by
Agent in reliance upon such telephonic or facsimile notice.

     32.  Relationship to Loan Documents.
          ------------------------------

          (a) The parties hereto acknowledge that this Agreement is meant to
supplement and not to abrogate the terms of the Loan Documents.  All provisions
of this Agreement shall be read so as to be compatible with the provisions of
the Loan Documents; provided, however, that with respect to matters concerning
the relationship among the Banks and Agent, in the event of any conflict or
inconsistency between a term or provision contained herein and a term or
provision contained in the Loan Documents, the term or provision contained
herein shall govern.

          (b) In case of an inconsistency between this Co-Lender Agreement and
the Loan Documents, the provisions of the Loan Documents shall govern, except as
otherwise provided in subsection (a) above.

          The parties hereto have executed this Agreement as of the date first
indicated above.

                                     -19-
<PAGE>

ESSEX PORTFOLIO, L.P.,
a California limited partnership

By:  Essex Property Trust, Inc.,
     a Maryland corporation,
     its General Partner

     By:    ________________________
     Name:  ________________________
     Title: ________________________


BANK OF AMERICA, N.A.,
as Agent and as Bank


By:    _____________________________
Name:  _____________________________
Title: _____________________________


UNION BANK OF CALIFORNIA, N.A.,
as Bank


By:    _____________________________
Name:  _____________________________
Title: _____________________________


BANKONE, N.A.,
as Bank


By:    _____________________________
Name:  _____________________________
Title: _____________________________

                                     -20-
<PAGE>

COMERICA BANK,
as Bank


By:    __________________________
Name:  __________________________
Title: __________________________


KEYBANK, NATIONAL ASSOCIATION,
as Bank


By:    __________________________
Name:  __________________________
Title: __________________________

                                     -21-
<PAGE>

               FIRST AMENDED AND RESTATED MODIFICATION AGREEMENT

                   TO SYNDICATE $120,000,000 REVOLVING LOAN

                           dated as of May 16, 2000

                                     among

                            ESSEX PORTFOLIO, L.P.,
                       a California limited partnership,

                           THE BANKS LISTED HEREIN,

                            BANK OF AMERICA, N.A.,
                           as Administrative Agent,

                        UNION BANK OF CALIFORNIA, N.A.
                                      and
                                BANK ONE, N.A.,
                           as Co-Syndication Agents,

                                      and

                        BANC OF AMERICA SECURITIES LLC,
                  as Sole Lead Arranger and Sole Book Manager

                                 Schedule 1-ii
<PAGE>

                               TABLE OF CONTENTS
                               -----------------

<TABLE>
<CAPTION>
                                                              Page
                                                              ----
<S>                                                           <C>
1.  Recitals.                                                    2

2.  Definitions.                                                 2

3.  Modification of Loan Documents.                              5

4.  The Credit.                                                  5

5.  Appointment and Authorization of Agent.                      7

6.  Loan Accounts.                                               8

7.  Procedure for Borrowing.                                     9

8.  LIBOR Contract Rate Elections                               10

9.  Facility Fee and Letter of Credit Fee                       10

10. Payments by Borrower                                        10

11. Prepayments, Termination or Reduction of Loan.              11

12. Usury                                                       11

13. Increased Costs and Reduction of Return                     11

14. Costs and Expenses                                          12

15. Indemnification by Borrower.                                12

16. Assignments, Participations, etc.                           13

17. Confidentiality                                             14

18. Publicity                                                   14

19. Conditions Precedent                                        15

20. Conditions to All Borrowings                                15
</TABLE>

                                       i
<PAGE>

<TABLE>
<S>                                                             <C>
21. Borrower's Representations and Warranties                   15

22. Authorization and Enforceability Representations            16

23. Consent to Jurisdiction                                     16

24. Incorporation                                               16

25. No Impairment                                               16

26. Integration                                                 17

27. Electronic Notices                                          17

28. Notices                                                     17

29. Miscellaneous                                               19
</TABLE>

                                      ii
<PAGE>

                          FIRST AMENDED AND RESTATED
                            MODIFICATION AGREEMENT
                   TO SYNDICATE $120,000,000 REVOLVING LOAN
                           TO ESSEX PORTFOLIO, L.P.


          This First Amended and Restated Modification Agreement ("Agreement")
is made as of May 16, 2000, by the several financial institutions from time to
time party to this Agreement (collectively, the "Banks," and individually a
"Bank"), Bank of America, N.A. ("BankAmerica") as one of the Banks and as
administrative agent ("Agent") for the Banks, and Essex Portfolio, L.P., a
California limited partnership ("Borrower").


                               Factual Background
                               ------------------

     A.   Banks agreed to make an unsecured revolving line of credit loan (the
"Loan") to Borrower in accordance with that certain Revolving Loan Agreement
dated May 11, 1998 (the "Existing Agreement").  The Loan was evidenced by a Note
(the "Existing Note") dated May 11, 1998, in the stated principal amount of One
Hundred  Million Dollars ($100,000,000).  Each of the Banks, including
BankAmerica, have a direct lender relationship with Borrower in accordance with
the Loan Documents, as hereby amended.  The Banks designated BankAmerica as
Agent to act as their Administrative agent in the syndicated Loan.  Because
BankAmerica was both an individual Bank in the syndicate and Agent for all of
the Banks in the syndicate, the parties wished to modify certain defined terms
in the Loan Documents.

     B.   Other documents executed in connection with the Loan  include a
Payment Guaranty executed by Essex Property Trust, Inc.

     C.   The Existing Agreement provided for funding of a disbursement of the
Loan within three (3) Business Days of Borrower's request.  Borrower desires
same-day funding of disbursements.  To accommodate Borrower, BankAmerica has
agreed that at its discretion it will fund disbursements on the day Borrower
makes a request under the terms of a so-called swing line and that the swing
line will be repaid from the syndicated Loan when the syndicated Loan is funded
at the end of the two (2) Business Days called for in the Existing Agreement.
To document the swing line, Borrower and Bank would like to amend and restate
the Existing Agreement.

                                      -1-
<PAGE>

     D.   BankAmerica,  Bank of America, N.A. as Agent, Banks, Banc of America
Securities, LLC as Sole Lead Arranger and Sole Book Manager, Union Bank of
California, N.A. and Bank One, N.A. as Co-Syndication Agents, Essex Property
Trust, Inc. as Guarantor, and Borrower have entered into that certain First
Amended and Restated Revolving Loan Agreement (the "Loan Agreement") dated as of
even date herewith.

     E.   Borrower, BankAmerica and the other Banks wish to modify the Loan
Agreement and the other Loan Documents as set forth herein.  Capitalized terms
used herein without definition have the meanings given in the Loan Agreement.


                                   Agreement
                                   ---------

     Therefore, Borrower and Banks agree as follows:

     1.   Recitals.
          --------

          The recitals set forth above in the Factual Background are correct.

     2.   Definitions.
          -----------

          As used herein, the following words have the meanings indicated.

          "Advance" means any advance of Loan proceeds (other than a Swing Loan)
           -------
made pursuant to the terms of the Loan Documents.

          "Affiliate" means, as to any Person, any other Person which directly
           ---------
or indirectly owns, is owned by, or is under common ownership with, such Person.
A Person shall be deemed to own another if it owns directly or indirectly fifty
percent (50%) or more of the other Person whether through the ownership of
voting securities, membership interests, or otherwise.

          "Agent" means BankAmerica as Agent in its capacity as administrative
           -----
agent for the Banks hereunder, and any successor administrative agent.  Where
the term "Agent" is used and a decision by Agent is required under the terms of
this Agreement, that decision shall require the affirmative vote of BankAmerica
as Agent, or the successor administrative agent, as the case may be.

                                      -2-
<PAGE>

          "Agent-Related Persons" means BankAmerica and any successor
           ---------------------
administrative agent hereunder, together with their respective Affiliates and
the officers, directors, employees, and agents of such Persons.

          "Agent's Payment Office" means the address for payments set forth
           ----------------------
herein for Agent, or such other address as Agent may specify.

          "Bank" and "Banks" have the meanings specified in the introductory
           ----       -----
sentence of this Agreement; BankAmerica in its capacity as a lender hereunder is
one of the Banks.

          "BankAmerica" means Bank of America N.A.
           -----------

          "Capital Adequacy Regulation" means any guideline or directive of any
           ---------------------------
central bank or other Governmental Authority, or any other law, rule or
regulation regarding capital adequacy of a Bank or of any corporation
controlling a Bank.

          "Commitment" means, as to any Bank, the amount of the Line of Credit
           ----------
Loan for which such Bank is obligated.

          "Eligible Assignee" means (i) a commercial bank organized under the
           -----------------
laws of the United States, or any state thereof, and having a combined capital
and surplus of at least One Hundred Twenty Million Dollars ($120,000,000); (ii)
a Person that is primarily engaged in the business of commercial banking and is
an Affiliate of a Bank, or (iii) any Person approved by Required Banks and
Agent.

          "Federal Funds Rate" means, for any day, the rate published by the
           ------------------
Federal Reserve Bank of New York for the preceding Banking Day as "Federal Funds
(Effective)"; (or, if not published, the arithmetic mean of the rates for
overnight Federal funds arranged prior to 9:00 a.m. (New York City time) on that
day quoted by three (3) brokers of Federal Funds in New York City as determined
by Agent).

          "GAAP" means generally accepted accounting principles set forth in the
           ----
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and of the Financial Accounting
Standards Board which are applicable as of the date of determination.  Unless
the context otherwise clearly requires, all accounting terms not expressly

                                      -3-
<PAGE>

defined herein shall be construed, and all financial computations required under
this Agreement shall be made in accordance with GAAP, consistently applied.

          "Governmental Authority" means any government, state or other
           ----------------------
political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and any entity owned or controlled through capital ownership or otherwise by any
of the foregoing.

          "Indemnified Liabilities" has the meaning given in Section 15 entitled
           -----------------------
"Indemnification by Borrower."

          "Indemnified Person" has the meaning given in Section 15 entitled
           ------------------
"Indemnification by Borrower."

          "Lending Office" means, as to any Bank, the office specified as its
           --------------
Lending Office on Schedule 1 attached hereto or as such Bank may designate to
Borrower and Agent.

          "Loan Agreement" means that First Amended and Restated Revolving Loan
           --------------
Agreement between BankAmerica, Bank of America, N.A. as Agent, Banks, Banc of
America Securities, LLC as Sole Lead Arranger and Sole Book Manager, Union Bank
of California, N.A. and Bank One, N.A. as Co-Syndication Agents, Essex Property
Trust, Inc. as Guarantor, and Borrower dated as of even date herewith relating
to a One Hundred Twenty Million Dollar ($120,000,000) unsecured revolving line
of credit loan.

          "Loan Documents" means the Loan Agreement, the Swing Line Note, the
           --------------
Note, the Payment Guaranty and any other documents designated as a "Loan
Document" in the Loan Documents.  This Modification Agreement is a Loan
Document.

          "Note" means a promissory note (other than a Swing Line Note) in the
           ----
amount of One Hundred Twenty Million Dollars ($120,000,000) executed by Borrower
in favor of a Bank or Agent on behalf of the Banks in connection with the Line
of Credit Loan.

          "Notice of Borrowing" means a draw request or other request for an
           -------------------
Advance (but not including an advance of the Swing Loan) as described in the
Loan Agreement.

                                      -4-
<PAGE>

          "Obligations" means all advances, debts, liabilities, obligations and
           -----------
covenants arising under any Loan Document owing by Borrower to any Bank, Agent,
or any Indemnified Person, whether absolute or contingent, due or to become due,
now existing or hereafter arising.

          "Person" means an individual, partnership, corporation, limited
           ------
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture or Governmental Authority.

          "Pro Rata Share" means, as to any Bank at any time, the percentage
           --------------
equivalent (expressed as a decimal rounded to the ninth decimal place) at such
time of:  (1) such Bank's Commitment divided by (2) the aggregated Commitments
of all Banks.

          "Required Banks" means at any time two or more Banks then holding at
           --------------
least sixty-six and two-thirds percent (66 2/3%) of the then aggregate unpaid
principal amount of the Loan (not including the Swing Loan), (or, if no amounts
are outstanding, having at least sixty-six and two-thirds percent (66 2/3%) of
the aggregate amount of the Commitments).

          "Subsidiary" of a Person means any other Person of which fifty percent
           ----------
(50%) or more of the voting stock, membership interests or other equity
interests is owned or controlled directly or indirectly by the Person, or one or
more of the Subsidiaries of the Person, or a combination thereof.

          "Swing Loan" has the meaning given to it in the Loan Agreement.
           ----------

          "Swing Line Note" has the meaning given to it in the Loan Agreement.
           ---------------

     3.   Modification of Loan Documents.
          ------------------------------

          The Loan Documents are hereby amended as follows:

          (a) The Note is modified so that "Bank" means Agent acting as agent
for the Banks, except that the reference to "Bank" in Section 20 of the Note
refers to successors and assigns and Section 4 of Exhibit B to the Note refers
to the fact that the prepayment premium is the reasonable estimate of Banks'
prepayment costs, so that the reference to Bank in those two sections is
modified to mean

                                      -5-
<PAGE>

"Banks."

          (b) The Loan Agreement is modified so that "Bank" means BankAmerica as
Agent acting as administrative agent for the Banks; except that any and all
references to "Swing Line Lender" means BankAmerica acting individually, and not
acting as a Bank or as Agent.

          (c) The Guaranty is modified so that "Bank" means Agent acting as
administrative agent for the Banks.

     4.   The Credit.
          ----------

          (a) Subject to the terms and conditions hereof, each Bank agrees to
fund its Pro Rata Share of each Advance of the Line of Credit Loan proceeds from
time to time (other than an advance of the Swing Loan) until the maturity date
of the Loan.  Such Line of Credit Loan proceeds shall be delivered to Borrower
in accordance with the provisions of the Loan Documents.

          (b) Borrower and each Bank acknowledge that as of the date of this
Agreement, the Line of Credit Loan and the amount outstanding thereunder, and
each Bank's Pro Rata Share of the Loan (not including the Swing Loan), are as
follows:

              (i)  The Line of Credit Loan:    $120,000,000
              (ii) On the Effective Date of this Agreement, each Bank's Pro
     Rata Share of the Line of Credit Loan shall be as follows:

                   BankAmerica:             29.17%    $ 35,000,000
                   Union Bank:              20.83%    $ 25,000,000
                   Bank One:                20.83%    $ 25,000,000
                   Comerica Bank:           16.67%    $ 20,000,000
                   KeyBank:                 12.50%    $ 15,000,000
                                           ------     ------------
                                           100.00%    $120,000,000

          (c) Each Bank shall become vested with its Pro Rata Share of the Line
of Credit Loan (not including the Swing Loan) upon execution and delivery of the
required documents and upon payment of its Pro Rata Share of the principal
balance of the Line of Credit Loan outstanding and any other fees, costs or
expenses due hereunder or pursuant to another agreement.  Upon such payment, the
respective interests of each Bank in the Loan Documents and the other rights

                                      -6-
<PAGE>

and claims with respect to the Line of Credit Loan (not including the Swing
Loan) shall be of equal priority with one another, except as otherwise expressly
provided.

          (d) Each Bank shall be deemed to have unconditionally and irrevocably
purchased a pro rata risk participation from the Swing Line Lender in the Swing
Loans, without recourse or warranty, in an amount equal to such Bank's Pro Rata
Share of such Swing Loans.  In addition, from and after the date that any Bank
funds such participation, such Bank shall, to the extent of its Pro Rata Share,
be entitled to receive a ratable portion of any payment of principal and/or
interest received by the Swing Line Lender on account of such Swing Loans,
payable to such Bank promptly upon such receipt.

          (e) A complete set of Loan Documents shall be held by Agent.

          (f) A Bank which is not Agent shall have no interest in any (i)
property taken as security for any other loan or financial accommodation made or
furnished to Borrower by Agent (in which such Bank has not acquired an
interest); (ii) property now or hereafter in Agent's possession or under Agent's
control other than by reason of the Loan Documents; or (iii) deposits which may
be or might become security for Borrower's Obligations by reason of the general
description contained in any instrument not a Loan Document held by Agent or by
reason of any right of setoff, counterclaim, banker's lien or otherwise.  If,
however, such property shall actually be applied to the payment of amounts owing
by Borrower in connection with the Loan, then each Bank shall be entitled to its
Pro Rata Share, if any, of such application to the Loan.

          (g) All the parties agree that, except as may be otherwise expressly
provided, all of the interest rates for the Line of Credit Loan are those of and
are calculated in accordance with the requirements and any applicable
assessments of Agent, regardless of which Bank is making an Advance or receiving
a payment thereon.

          (h) Notwithstanding each Bank's Pro Rata Share, a Bank may agree in
writing for Agent (or another Bank) to retain, as additional compensation, a
percentage of certain payments of interest and fees payable to said Bank, which
Agent, if payable to it, may deduct from amounts paid by it to said Bank.  If
said additional compensation is payable to another Bank and if Agent is
requested and agrees to withhold and pay out as appropriate said percentage of
said payments, Agent shall be entitled to charge a service fee to be deducted
from each such payment.  Nothing in this Subsection 4(h) shall require Borrower
to pay any fees

                                      -7-
<PAGE>

not expressly required by other terms of the Loan Documents.

     5.   Appointment and Authorization of Agent.
          --------------------------------------

          (a) Each Bank hereby irrevocably appoints, designates and authorizes
Agent to take such action on its behalf under the provisions of this Agreement
and each other Loan Document and to exercise such powers and perform such duties
as are expressly delegated to it by the terms of this Agreement or any other
Loan Document, together with such powers as are reasonably incidental thereto
and as further provided in any Co-Lender Agreement, as amended, described below.

          (b) Subject to the limitations set forth in the Loan Documents and any
Co-Lender Agreement, as amended, Agent's powers include but are not limited to
the power:  (i) to administer, manage and service the Line of Credit Loan; (ii)
to enforce the Loan Documents; (iii) to make all decisions under the Loan
Documents in connection with the day-to-day administration of the Line of Credit
Loan, any inspections required by the Loan Documents, and other routine
administration and servicing matters; (iv) to collect and receive from Borrower
or any third persons all payments of amounts due under the terms of the Loan
Documents and to distribute the amounts thereof to the Banks; (v) to collect and
distribute or disburse all other amounts due under the Loan Documents; (vi) to
grant or withhold consents, approvals or waivers, and make any other
determinations in connection with the Loan Documents; and (vii) to exercise all
such powers as are incidental to any of the foregoing matters.  Agent shall
furnish to the Banks copies of material documents, including confidential ones,
received from Borrower regarding the Loan (including the Swing Loan), the Loan
Documents and the transactions contemplated thereby.  Agent shall have no
responsibility with respect to the authenticity, validity, accuracy or
completeness of the information provided.

          (c) Notwithstanding any provision to the contrary contained in any
Loan Document, Agent shall not have any duties or responsibilities, except those
expressly set forth in the Loan Documents or any Co-Lender Agreement, as
amended, nor shall Agent have any fiduciary relationship with any Bank, and no
implied covenants, responsibilities, duties, obligations or liabilities shall be
read into this Agreement or any other Loan Document against Agent.

          (d) Borrower acknowledges that the Banks have executed and

                                      -8-
<PAGE>

amended, or may execute and amend, a Co-Lender Agreement to supplement the Loan
Documents with respect to the relationship of the Banks and Agent among
themselves in connection with the Loan. The Co-Lender Agreement, as amended, is
not a Loan Document, and shall not increase, decrease or otherwise modify any of
the rights or obligations of Borrower under the terms of the Loan Documents.

          (e) An Agent (the "Resigning Agent") may, and at the request of the
Required Banks shall, resign as Agent upon thirty (30) days' notice to the
Banks.  If Resigning Agent resigns under this Agreement, the Required Banks
shall appoint from among the Banks a successor administrative agent to act in
the place of the Resigning Agent.  If no successor administrative agent is
appointed prior to the effective date of the resignation of Resigning Agent,
Resigning Agent may appoint, after consulting with the Banks, a successor
administrative agent from among the Banks which would qualify as an Eligible
Assignee.  Upon the acceptance of appointment as successor agent hereunder, such
successor agent shall succeed to all the rights, powers and duties of the
Resigning Agent and the term "Agent" as it originally applied to the Resigning
Agent shall mean such successor administrative agent, and the Resigning Agent's
appointment, powers and duties as Agent shall terminate.  After any Resigning
Agent's resignation hereunder as Agent, the provisions regarding payment of
costs and expenses and indemnification of Agent shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was Agent under this
Agreement.  If no successor administrative agent has accepted appointment as
Agent by the date which is thirty (30) days following a Resigning Agent's notice
of resignation, the Resigning Agent's resignation shall nevertheless thereupon
become effective, and the Banks shall perform all of the duties of Agent
hereunder until such time, if any, as the Required Banks appoint a successor
administrative agent.

          Upon replacement of a Resigning Agent as provided in this Agreement,
the  Resigning Agent shall promptly deliver to the new Agent copies of any
books, records, and documents related to the Loan then in the Resigning Agent's
possession to which the Banks are entitled.

     6.   Loan Accounts.
          -------------

                                      -9-
<PAGE>

          The Advances made by each Bank shall be evidenced by one or more loan
accounts or records maintained by such Bank and Agent in the ordinary course of
business.  The loan accounts or records maintained by Agent and each Bank shall
be conclusive absent manifest error of the amount of the Loan made by the Banks
to Borrower and the interest and payments thereon.  Any failure so to record or
any error in doing so shall not, however, limit or otherwise affect the
obligation of Borrower hereunder to pay any amount owing with respect to the
Loan.

     7.   Procedure for Borrowing.
          -----------------------

          (a) Each Advance shall be made upon Borrower's irrevocable written
Notice of Borrowing delivered to Agent in accordance with the Loan Agreement.

          (b) Agent will promptly notify each Bank of any Notice of Borrowing
and of the amount of such Bank's Pro Rata Share of the Advance to be made.
Swing Line Lender may at its discretion make a Swing Loan in the amount set
forth in the Notice of Borrowing.  Each Bank shall be deemed to have
unconditionally and irrevocably purchased a portion of the Swing Loan so
advanced as provided in Section 4(d) above. The Banks acting through Agent shall
disburse the Loan as provided in the Loan Agreement.

          (c) Each Bank will make the amount of its Pro Rata Share of each
Advance available to Agent for the account of Borrower at Agent's Payment Office
by 11:00 a.m. (San Francisco time) on the borrowing date requested by Borrower
in funds immediately available to Agent. The proceeds of all such Advances will
then be made available to Borrower by Agent by wire transfer in accordance with
written instructions provided to Agent by Borrower.

          (d) Unless Agent receives notice from a Bank at least one (1) Banking
Day prior to the date of an Advance that such Bank will not make available to
Agent  when required the amount of that Bank's Pro Rata Share of the Advance,
Agent may assume that each Bank has made such amount available to Agent in
immediately available funds on the borrowing date.

          (e) The failure of any Bank to make any Advance on any borrowing date
shall not relieve any other Bank of any obligation hereunder to make an Advance
on such borrowing date, but no Bank shall be responsible for the failure of any
other Bank to make its Advance on the borrowing date.

                                     -10-
<PAGE>

     8.   LIBOR Contract Rate Elections.
          -----------------------------

          (a) Borrower may elect applicable interest rates in accordance with
the requirements, terms and conditions set forth in the Note(s) upon irrevocable
written notice to Agent to be received by Agent on the appropriate day not later
than 9:00 a.m. San Francisco time.

          (b) Agent will promptly notify each Bank of receipt of a LIBOR Rate
Election or, if no timely notice is provided by Borrower, Agent will promptly
notify each Bank of any automatic conversion to a Prime-based Rate.  All rate
elections and conversions shall be made ratably according to the respective Pro
Rata Shares of the outstanding principal amounts of the Loan held by each Bank
with respect to which the notice was given.

     9.   Facility Fee and Letter of Credit Fee.  Borrower shall pay a facility
          -------------------------------------
fee and a per annum fee relating to the letters of credit issued under the terms
of the Loan Agreement all as provided in the Loan Agreement.

     10.  Payments by Borrower.
          --------------------

          (a) All payments to be made by Borrower shall be made without set-off,
recoupment or counterclaim.  Except as otherwise provided, all payments by
Borrower (other than payments on account of the Swing Loan) shall be made to
Agent for the account of the Banks at Agent's Payment Office, and shall be made
in U.S. dollars and in immediately available funds, in accordance with the Loan
Documents.  Agent will promptly distribute to each Bank its Pro Rata Share (or
other applicable share as may be agreed by a Bank) of such payment in like funds
as received.  Any payment received by Agent later than 11:00 a.m. (San Francisco
time) shall be deemed to have been received on the following Business Day and
any applicable interest or fee shall continue to accrue.

          (b) To the extent that Borrower makes a payment to Agent or the Banks,
or Agent or the Banks exercise the right of set-off, and such payment or the
proceeds of such set-off or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required (including by
any settlement) to be repaid to a trustee, receiver, Borrower or any other
party, in connection with any Insolvency Proceeding or otherwise, then (i) to
the extent of such recovery the obligation or part thereof originally intended
to be satisfied shall be revived and continued in full force and effect as if
such payment had not been made or such

                                     -11-
<PAGE>

set-off had not occurred, and (ii) each Bank severally agrees to pay to Agent
upon demand its Pro Rata Share of any amount so recovered from or repaid by
Agent.

          (c) Agent shall have the exclusive right to collect on the Line of
Credit Loan from Borrower or any guarantors, third parties, or otherwise
including principal, interest, fees, protective advances, or any prepayment
premiums, whether such amounts are received directly from Borrower, any
guarantors, or other persons, or are collected by offset by Agent against the
money or other property of Borrower or any guarantors deposited at or held by
Agent, or other enforcement of the Loan Documents.  No Bank shall independently
initiate any judicial action or equivalent action or other proceeding against
Borrower with respect to the Loan.

     11.  Prepayments, Termination or Reduction of Loan.
          ---------------------------------------------

          (a) In the event Borrower elects to pay down the Line of Credit (as
that term is defined in the Loan Agreement) or to otherwise prepay the Loan in
whole or in part in accordance with the Loan Documents, Agent will promptly
notify each Bank of such notice and of each Bank's Pro Rata Share of such
prepayment.  Any reduction or termination of the Loan (other than Swing Loans)
shall be applied to each Bank according to its Pro Rata Share.  All accrued
commitment fees up to but not including the effective date of any reduction or
termination of the Loan shall be payable on the effective date of such reduction
or termination.

     12.  Usury.
          -----

          If a court ultimately determines that the Loan (or an Advance)
violates applicable usury law, then (a) Borrower shall not be required to pay to
a Bank interest on the Line of Credit Loan (or the Advance) at a rate in excess
of the maximum rate that may be lawfully charged under applicable law; and (b)
in the event that any Bank shall collect interest or other monies which are
deemed to constitute interest which would increase the effective interest rate
on the Line of Credit Loan (or an Advance) to a rate in excess of that permitted
by applicable law, such excess interest shall, at the option of said Bank, be
returned to Borrower or credited against the principal balance of the Line of
Credit Loan (or Advance) then outstanding; (c) provided, however, that if a
usury law applies to one or more but not all Banks, then the Banks not affected
by the usury law shall be entitled to the full amount of interest from Borrower
under the Loan Documents even though other Banks may receive or retain less due
to the usury law.

                                     -12-
<PAGE>

     13.  Increased Costs and Reduction of Return.
          ---------------------------------------

          (a) If any Bank shall have determined that a change in or compliance
with any Capital Adequacy Regulation affects the amount of capital required to
be maintained by the Bank or any Person controlling the Bank, and such Bank
determines that the amount of such required capital is or will be increased as a
consequence of the Loan or other obligations under the Loan Documents taking
into consideration such Bank's or such Person's policies with respect to capital
adequacy and desired return on capital, then, upon sixty (60) days notice from
such Bank to Borrower through Agent, Borrower shall pay to the Bank an
additional amount sufficient to compensate the Bank for such increase.

          (b) Upon the receipt by Borrower from any Bank (an "Affected Bank") of
a claim for reimbursement or compensation hereunder, Borrower may:  (i) request
the Affected Bank to use its best efforts to obtain a replacement bank or
financial institution satisfactory to Borrower and Agent to acquire and assume
all or part of such Affected Bank's Commitment (a "Replacement Bank"); or (ii)
request one or more of the other Banks to acquire and assume all or part of such
Affected Bank's Commitment.

     14.  Costs and Expenses.
          ------------------

          (a) Borrower shall pay or reimburse Agent for the benefit of each Bank
within five (5) Banking Days after demand for all costs and expenses, including
all legal, audit, review, fees and expenses (including the allocated cost of
such services by Agent's employees) incurred by Agent in connection with the
preparation, administration (including the cost of any documentation fees, but
excluding other costs and expenses of ordinary collection and servicing
administration while the Loan is not in default), and execution of any Loan
Document and any amendment, supplement, waiver or modification and any other
documents prepared in connection herewith or therewith, (whether or not the
particular Loan, transaction or document is consummated).

          (b) Borrower shall pay or reimburse Agent for the benefit of each Bank
within five (5) Banking Days after demand for all costs and expenses, including
all legal, audit, review, fees and expenses (including the allocated cost of
such services by Agent's employees) incurred by Agent in connection with the
enforcement or preservation of any rights or remedies under any Loan Document
with respect to an Event of Default (including any "workout" or restructuring of

                                     -13-
<PAGE>

the Loan, and any Insolvency Proceeding, judicial proceeding or arbitration).

     15.  Indemnification by Borrower.
          ---------------------------

          Borrower shall indemnify, defend and hold Agent-Related Persons, and
each Bank and each of its respective officers, directors, employees, and agents
(each, an "Indemnified Person") harmless from and against any and all
liabilities, obligations, losses, damages, actions, judgments, costs, and
expenses (including legal fees) which may be incurred by or asserted against any
such Person arising out of or relating to the Loan or the Loan Documents or any
document or transaction or action taken or not by any such Person in connection
with any of the foregoing, including any investigation, arbitration, litigation,
Insolvency Proceeding or other proceeding whether or not any Indemnified Person
is a party thereto (all the foregoing, collectively, the "Indemnified
Liabilities"); provided, that Borrower shall have no obligation hereunder to any
Indemnified Person with respect to Indemnified Liabilities except to the extent
resulting from the gross negligence or willful misconduct of such Indemnified
Person. The agreements in this Section shall survive payment of all other
Obligations.

     16.  Assignments, Participations, etc.
          ---------------------------------

          (a) A Bank may at any time assign to one or more Eligible Assignees
(each an "Assignee") with the written consent of Agent (at all times), which
consent shall not be unreasonably withheld (provided that no written consent
shall be required for an Eligible Assignee that is an Affiliate of such assignor
Bank) all or part of its Pro Rata Share of the Line of Credit Loan and the other
rights and obligations of such assignor Bank hereunder, in a minimum amount of
Ten Million Dollars ($10,000,000) and in additional increments of One Million
Dollars ($1,000,000); provided, however, that no such assignment shall be
permitted if the effect thereof is to cause the remaining Commitment of the
assignor Bank to be less than Ten Million Dollars ($10,000,000), provided
further that, these restrictions on dollar amounts notwithstanding, a Bank may,
subject to the other requirements of this Section and this Agreement, at any
time, assign one hundred percent (100%) of its Pro Rata Share of the Line of
Credit Loan.  However, such assignment shall be conditioned on, and Borrower and
Agent may continue to deal solely and directly with such assignor Bank until,
(i) written notice of such assignment, substantially in the form of the attached
Exhibit A shall have been given to Borrower and Agent by such Bank and the
Assignee; (ii) such Bank and its Assignee shall have delivered to Agent and
Borrower an Assignment and Assumption Agreement substantially in the form of the
attached Exhibit B

                                     -14-
<PAGE>

("Assignment and Assumption Agreement") (together with any Note(s) subject to
such assignment) and (iii) the Assignor has paid or caused to be paid to Agent a
processing fee in the amount of Three Thousand Dollars ($3,000).

          (b) From the date that Agent notifies the assignor Bank that all
conditions and requirements of the assignment have been met, then to the extent
that rights and obligations hereunder have been assigned (i) the Assignee
thereunder shall be a party hereto and shall have the rights and obligations of
a Bank under the Loan Documents and any Co-Lender Agreement, as amended, (ii)
the assignor Bank shall relinquish such assigned rights and be released from
such assigned obligations under the Loan Documents, (iii) this Agreement shall
be deemed to be amended to the extent necessary to reflect the addition of the
Assignee and the resulting adjustment of the Pro Rata Shares of the Line of
Credit Loan arising therefrom, and (iv) the Pro Rata Share allocated to an
Assignee shall reduce the Pro Rata Share of the assigning Bank.

          (c) A Bank (the "originating Bank") may sell to one or more Persons
not Affiliates of Borrower (a "Participant") participating interests in the Line
of Credit Loan; provided that (i) the originating Bank's obligations under the
Loan Documents and any Co-Lender Agreement, as amended,  shall remain unchanged,
(ii) the originating Bank shall remain solely responsible for the performance of
such obligations, (iii) Borrower and Agent shall continue to deal solely and
directly with the originating Bank in connection with the Line of Credit Loan
and Loan Documents, (iv) no Bank shall transfer or grant any participating
interest under which the Participant has rights to approve any amendment,
consent or waiver with respect to any Loan Document, and (v) each participating
interest shall be in a minimum amount of Ten Million Dollars ($10,000,000), and
no such participation shall be permitted if the non-participated interest of the
originating Bank would thereafter be less than Ten Million Dollars
($10,000,000).  A Participant shall not have any rights under the Loan Documents
or any Co-Lender Agreement, as amended, and all amounts payable by Borrower
hereunder shall be determined as if the originating Bank had not sold such
participation.

          (d) Notwithstanding any other provision, a Bank may pledge its
interest in the Loan in favor of any Federal Reserve Bank in accordance with
Federal law.

          (e) If Agent assigns or sells all of its remaining interest in the
Line of Credit Loan, the Agent shall give each other Bank written notice of such
assignment or sale at the time of the closing of such assignment or sale.

                                     -15-
<PAGE>

     17.  Confidentiality.
          ---------------

          Each Bank agrees to exercise due care to maintain the confidentiality
of information provided by Borrower and identified by it as "confidential" in
connection with the Loan except (a) to the extent such information was or
becomes generally available to the public (other than by disclosure by the Bank
in violation of this confidentiality agreement), or  becomes available on a
non-confidential basis from a source other than Borrower (if such source is not
bound by a confidentiality agreement with Borrower known to the Bank); and (b)
any Bank may disclose such information at the request of or pursuant to any
requirement of any Governmental Authority to which the Bank is subject; or
pursuant to subpoena or other court process or when otherwise required by Law;
or to the extent reasonably required in connection with any litigation,
arbitration or other proceeding to which Agent, any Bank or their respective
Affiliates may be party; or to the extent reasonably required in connection with
the exercise of any remedy under any Loan Document; or to such Bank's auditors,
counsel and other professional advisors; or to any Participant or Assignee,
actual or potential, provided that such Person agrees in writing to keep such
information confidential to the same extent required of the Banks hereunder.

     18.  Publicity.
          ---------

          Each Bank may refer to the Line of Credit Loan in its own promotional
and advertising materials.  Borrower shall not otherwise identify a Bank as a
lender, except with such Bank's prior written consent, which consent shall not
be unreasonably withheld or delayed, provided through Agent in each instance.

     19.  Conditions Precedent.
          --------------------

          The obligation of each Bank under the Loan Documents is subject to the
condition that Agent has received all of the following in form and substance
satisfactory to Agent:

          (a) Fully executed originals of this Agreement, a consent signed by
Guarantor and any other documents which a Bank may reasonably require or request
in accordance with the Loan Documents.

          (b) Fees required by the Loan Documents in immediately

                                     -16-
<PAGE>

available funds.

          (c) Reimbursement of all costs and expenses incurred by Agent in
connection with this Agreement, including legal fees and expenses of Agent's
counsel, and the costs for services of Agent's in-house counsel.  The fees
payable in connection with this transaction are in addition to the amounts
payable by Borrower under this subsection.

     20.  Conditions to All Borrowings.
          ----------------------------

          The obligation of each Bank to make an Advance (including its initial
disbursement) is subject to the satisfaction on the relevant borrowing date of
the conditions set forth in the Loan Documents.

     21.  Borrower's Representations and Warranties.  At the time of execution
          -----------------------------------------
of this Agreement and unless the Banks are otherwise notified at the time that
any Bank executes a counterpart of this Agreement, if such execution is not as
of the date of this Agreement, Borrower represents and warrants to the Banks as
follows:

          (a) Loan Documents.  All representations and warranties made and given
              --------------
by Borrower in the Loan Documents are true, accurate and correct in all
respects.

          (b) No Default.  No Event of Default has occurred and is continuing
              ----------
and no event has occurred and is continuing which with notice or the passage of
time or both would be an Event of Default.

          (c)  Borrowing Entity.
               ----------------

               (i)  Borrower.  Borrower is a limited partnership which is duly
                    --------
     organized and validly existing under the laws of the State of California.
     Except as disclosed to Agent by Borrower in writing, there have been no
     changes in the organization, ownership or formation documents of Borrower
     since the inception of the Loan.

               (ii) General Partner.  Essex Property Trust, Inc., a Maryland
                    ---------------
     corporation ("General Partner"), is the sole general partner of Borrower
     and owns all of the general partnership interests in Borrower.  General
     Partner is a corporation which is duly organized and validly

                                     -17-
<PAGE>

     existing under the laws of the State of Maryland. Except as disclosed to
     Agent by Borrower in writing, there have been no changes in the
     organization, ownership or formation documents of General Partner since the
     inception of the Loan.

     22.  Authorization and Enforceability Representations.
          ------------------------------------------------

          Each Bank, Agent and Borrower hereby represents to the other parties
hereto that all necessary action has been taken to authorize it to execute and
to perform its obligations under the Loan Documents, and that the Loan Documents
are binding and enforceable against it, except as the same may be limited by
insolvency, bankruptcy, reorganization, or other laws relating to or affecting
the enforcement of creditors' rights or by general equitable principles.

     23.  Consent to Jurisdiction.
          -----------------------

          ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO ANY LOAN DOCUMENT MAY
BE BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA, OR OF THE UNITED STATES FOR
THE NORTHERN OR CENTRAL DISTRICTS OF CALIFORNIA, AND BY EXECUTION AND DELIVERY
OF THIS AGREEMENT, EACH BORROWER, AGENT AND BANK CONSENTS, FOR ITSELF AND ITS
PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS.  EACH BORROWER,
AGENT AND BANK IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING OBJECTIONS BASED ON
VENUE OR FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
         --------------------
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN CONNECTION WITH THE
LOAN.  EACH BORROWER, AGENT AND BANK WAIVES PERSONAL SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER PROCESS WHICH MAY BE MADE BY OTHER MEANS UNDER APPLICABLE
LAW.

     24.  Incorporation.
          -------------

          This Agreement shall form a part of each Loan Document, and all
references to a given Loan Document shall mean that document as hereby modified.

                                     -18-
<PAGE>

     25.  No Impairment.
          -------------

          As specifically hereby amended, the Loan Documents shall remain in
full force and effect. This Agreement shall not prejudice any rights or remedies
of the Banks under the Loan Documents.  The Banks reserve, without limitation,
all rights which they have against any guarantor, including Guarantor.

     26.  Integration.
          -----------

          The Loan Documents, including this Agreement: (a) integrate all the
terms and conditions incidental to the Loan Documents; (b) supersede all oral
negotiations and prior and other writings with respect to their subject matter;
and (c) are intended by the parties as the final expression of their agreement
with respect to the terms and conditions set forth in those documents and as the
complete and exclusive statement of the terms agreed to by the parties.  If
there is any conflict between the terms, conditions and provisions of this
Agreement and those of any other agreement or instrument, including any of the
other Loan Documents, the terms, conditions and provisions of this Agreement
shall prevail.  Any Co-Lender Agreement, as amended, addresses matters among the
Banks and Agent and is intended by the Banks and Agent to supplement and be
compatible with and not abrogate the Loan Documents, and Borrower's rights,
obligations and liabilities shall not be diminished or increased by any Co-
Lender Agreement, as amended.

     27.  Electronic Notices.
          ------------------

          Any agreement of Agent to receive certain notices from Borrower or the
Banks by telephone or facsimile is solely for their convenience and at their
request.  Agent shall be entitled to rely on the authority of any Person giving
such notice and Agent shall not have any liability to Borrower, any Bank or
other Persons on account of any action taken or not taken by Agent in reliance
upon such telephonic or facsimile notice, unless such liability arises from the
gross negligence or wilful misconduct of Bank.

     28.  Notices.
          -------

          Notices shall be sent to the following addresses or to such other
address of which the parties hereto may be notified in writing by the party to
which such notice is to be delivered:

                                     -19-
<PAGE>

          To Borrower:

          Essex Portfolio, L.P.
          925 East Meadow Drive
          Palo Alto, CA 94303
          Attn: John F. Burkart, Michael J. Schall and Jordan E. Ritter
          Phone: (650) 494-3700
          Fax: (650) 858-1372 and (650) 858-0139

          To Bank of America, N.A. as Agent:

          Bank of America, N.A.
          California Structured Debt Group
          600 Montgomery Street, 37th Floor
          San Francisco, CA 94111
          Attn: Frank H. Stumpf
          Phone: (415) 913-6368
          Fax: (415) 913-3445

          To Bank of America, N.A. as Bank:

          Bank of America, N.A.
          California Structured Debt Group
          600 Montgomery Street, 37th Floor
          San Francisco, CA 94111
          Attn: Frank H. Stumpf
          Phone: (415) 913-6368
          Fax: (415) 913-3445

          To Union Bank of California, N.A. as Bank:

          Union Bank of California, N.A.
          200 Pringle Avenue, Suite 200
          Walnut Creek, CA  94596
          Attn: Geoffrey Horn
          Phone: (925) 947-2464
          Fax: (925) 947-2416

                                     -20-
<PAGE>

          To Bank One as Bank:

          Bank One, N.A.
          1 Bank One Plaza, 14th Floor
          Mail Code: IL1-0315
          Chicago, IL 60670-0315
          Attn: Dell McCoy
          Phone: (312) 732-4128
          Fax: (312) 732-1117

          To Comerica Bank as Bank:

          Comerica Bank
          Comerica Tower, MC 3256
          500 Woodward Avenue, 7th Floor
          Detroit, MI 48226
          Attn: Casey Ostrander
          Phone: (313) 222-5286
          Fax: (313) 222-9295

          To KeyBank, National Association as Bank:

          KeyBank, National Association
          127 Public Square, 6th Floor
          Cleveland, OH 44114-1306
          Attn: Kevin Murray
          Phone: (216) 689-4660
          Fax: (216) 689-4997

     29.  Miscellaneous.
          -------------

          This Agreement shall be governed by the laws of the State of
California without regard to the choice of law rules of that State.  This
Agreement and any attached consents or exhibits requiring signatures may be
executed in counterparts, and all counterparts shall constitute but one and the
same document.  If any court of competent jurisdiction determines any provision
of this Agreement or any of the other Loan Documents to be illegal or
unenforceable, that portion shall be deemed severed from the rest which shall
remain in full force and effect.  As used herein, the word "include(s)" means
"includes(s), without limitation," and the word "including" means "including,
but not limited to."  Schedule 1 and

                                     -21-
<PAGE>

Exhibits A and B are attached to this Agreement and are incorporated in this
Agreement by this reference.

                           [SIGNATURES ON NEXT PAGE]

                                     -22-
<PAGE>

          IN WITNESS WHEREOF, THE PARTIES HAVE EXECUTED THIS AGREEMENT.

                                   ESSEX PORTFOLIO, L.P.,
                                   a California limited partnership

                                   By:  Essex Property Trust, Inc.,
                                        a Maryland corporation,
                                        its General Partner


                                        By:    ____________________

                                        Name:  ____________________

                                        Title: ____________________

BANK OF AMERICA, N.A., as Agent and as Bank

By:     ____________________

Name:   ____________________

Title:  ____________________

UNION BANK OF CALIFORNIA, N.A., as Bank

By:     ____________________

Name:   ____________________

Title:  ____________________

                                     -23-
<PAGE>

BANK ONE, N.A., as Bank


By:    ____________________

Name:  ____________________

Title: ____________________


COMERICA BANK, as Bank


By:    ____________________

Name:  ____________________

Title: ____________________


KEYBANK, NATIONAL ASSOCIATION, as Bank


By:    ____________________

Name:  ____________________

Title: ____________________

                                     -24-
<PAGE>

                                   EXHIBIT A
                                   ---------

     [Form of Written Notice of Assignment, pursuant to Section 16(a)(i)]

     NOTICE OF ASSIGNMENT AND ACCEPTANCE
     -----------------------------------


                                                      ____________________, 2000



Bank of America, N.A., as Agent
San Francisco CRESG c/o Unit 9105
50 California Street, 11th Floor
San Francisco, CA 94111

Essex Portfolio, L.P.
925 East Meadow Drive
Palo Alto, CA 94303


Ladies and Gentlemen:

     We refer to the Amended and Restated Revolving Loan Agreement dated May __,
2000 (as amended or modified thereafter, the "Loan Agreement") among ESSEX
PORTFOLIO, L.P., a California limited partnership (the "Borrower"), the Banks
referred to therein and Bank of America, N.A. ("BankAmerica"), as Agent for the
Banks.  Terms not defined herein have the meanings given in the Loan Documents
and Co-Lender Agreement.

     1.   We hereby (give you notice of and request your consent to the
assignment by ___________________________________________ (the "Assignor") to
______________________ (the "Assignee") of part of the right, title and interest
of the Assignor in and to the Loan (including all outstanding Advances made by
the Assignor) pursuant to the Assignment and Assumption Agreement (the
"Assignment and Assumption Agreement").  Before giving effect to such
assignment, the Assignor's Pro Rata Share of the Loan was ______%, its
Commitment was $______________ and the amount of its outstanding Advances was
$______________.  After giving effect to this Assignment, the Assignee's Pro
Rata Share of the Loan is ______%, its Commitment is $______________, and its

                                      A-1
<PAGE>

share of outstanding Advances is $_______________; the Assignor's remaining Pro
Rata Share of the Loan is ______%, its remaining Commitment is $_______________
and its remaining share of the outstanding Advances is $_______________.

     2.   The Assignee agrees that upon receiving the consent of BankAmerica, as
Agent, and, if required, the Borrower to such assignment, the Assignee will be
bound by the terms of the Loan Documents and Co-Lender Agreement as fully and to
the same extent as if the Assignee were a Bank originally holding such interest
in the Loan Documents and Co-Lender Agreement.

     3.   The following administrative details apply to the Assignee:

          (a)  Notice Address:

               Assignee name:       ___________________________
               Address:             ___________________________
                                    ___________________________
                                    ___________________________
               Attention:           ___________________________
               Telephone:           (   )____________________
               Telecopier:          (   )____________________
               Telex (Answerback):  ___________________________

          (b)  Payment Instructions:

               Account No.:         ___________________________
               At:                  ___________________________
                                    ___________________________
                                    ___________________________
               Reference:           ___________________________
               Attention:           ___________________________

     4.   You are entitled to rely upon the provisions contained in the
Assignment and Assumption Agreement executed by the Assignor and Assignee.

                                      -2-
<PAGE>

     IN WITNESS WHEREOF, the Assignor and the Assignee have executed this Notice
of Assignment and Acceptance as of the date first above mentioned.

                                         Very truly yours,

                                         [ASSIGNOR]


                                         By: _______________________
                                         Name: _____________________
                                         Title: ____________________



                                         [ASSIGNEE]


                                         By: _______________________
                                         Name: _____________________
                                         Title: ____________________

                                      -3-
<PAGE>

ACKNOWLEDGED AND
ASSIGNMENT
CONSENTED TO:

BANK OF AMERICA, N.A.,
as Agent


By: _____________________
Name:____________________
Its: ____________________

ESSEX PORTFOLIO, L.P.,
a California limited partnership,
as Borrower


By: _____________________
Name:____________________
Its: ____________________

                                      -4-
<PAGE>

                                   EXHIBIT B
                                   ---------

 [Form of Assignment and Assumption Agreement, pursuant to Section 16(a)(ii)]

     ASSIGNMENT AND ASSUMPTION AGREEMENT
     -----------------------------------



          This ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement") dated as
of _____________, 2000 is made between BANK OF AMERICA, N.A. (the "Assignor")
and  _____________________________ (the "Assignee").


                                    RECITALS
                                    --------


          WHEREAS, the Assignor is party to that certain Amended and Restated
Revolving Loan Agreement (the "Loan Agreement") dated as of May __, 2000,
between Assignor and ESSEX PORTFOLIO, L.P., a California limited partnership
(the "Borrower"), an Amended and Restated Revolving Promissory Note (the
"Promissory Note"), a Revolving Note (Swing Line) (the "Swing Line Note"), an
Amended and Restated Modification Agreement (the "Modification Agreement"),
among Borrower and the lenders named therein including the Assignor (the
"Banks"), a Payment Guaranty (the "Payment Guaranty"), and an Amended and
Restated Co-Lender Agreement (the "Co-Lender Agreement"), among Borrower and the
Banks.  The term "Loan Documents" refers to the Loan Agreement, the Promissory
Note, the Swing Line Note, the Modification Agreement, the Payment Guaranty, and
any amendments or modifications thereto, and any other documents relating
thereto, other than the Co-Lender Agreement, this Agreement, and any other
document that states in its terms that it is not a Loan Document.  Terms not
defined herein have the meanings given in the Loan Documents and Co-Lender
Agreement;

          WHEREAS, the Loan Documents provide for a revolving loan (the "Loan")
to the Borrower in an amount not to exceed One Hundred Twenty Million Dollars
($120,000,000); and the Assignor's Commitment as of the date of this

                                      -5-
<PAGE>

Agreement (but before this Assignment) is $_____________.

          WHEREAS, the Assignor has made Advances under the Loan Documents in
the aggregate outstanding principal amount of $__________________ to the
Borrower; and

          WHEREAS, the Assignor wishes to assign to the Assignee all or part of
the rights and obligations of the Assignor under the Loan Documents in an amount
equal to $____________ (the "Assigned Amount") on the terms listed on Schedule I
hereto and subject to the conditions set forth herein, and the Assignee wishes
to accept assignment of such rights and to assume such obligations from the
Assignor on such terms and conditions;

          NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:

     1.   Assignment and Assumption.
          -------------------------

          As of the Effective Date (defined below), the Assignor hereby sells
and assigns to the Assignee, and the Assignee hereby purchases and assumes from
the Assignor, the Assigned Amount, which includes the Assignor's interest in the
Loan and any outstanding Advances and which shall be equal to ___________
percent (___%) (the "Assignee's Pro Rata Share") of the Loan.  The assignment
set forth in this Section 1 shall be without recourse to or representation or
warranty by the Assignor (except as expressly provided in this Agreement).

          As of the Effective Date, the Assignee shall be a party to the Loan
Documents and Co-Lender Agreement and succeed to all of the rights and be
obligated to perform all of the obligations of a Bank under the Loan Documents,
with an interest in the Loan equal to the Assigned Amount.  The Assignee agrees
that it will perform all of the obligations required to be performed by it as a
Bank under the Loan Documents and the Co-Lender Agreement.  The Assignor's Pro
Rata Share of the Loan shall, as of the Effective Date, be reduced by an amount
equal to the Assigned Amount and the Assignor shall relinquish its rights and be
released from its obligations under the Loan Documents to the extent such
obligations have been assumed by the Assignee.

          After giving effect to this assignment and assumption, on the

                                      -2-
<PAGE>

Effective Date the Assignee's interest in the Loan will be $________________
with the Assignee's Pro Rata Share being ____% and the Assignor's remaining
interest in the Loan will be $________________ with a remaining Pro Rata Share
of ____%.

          This Agreement is not a Loan Document.

     2.   Payments.
          --------

          As consideration for the sale, assignment and transfer contemplated in
Section 1 hereof, the Assignee shall pay to the Assignor on the Effective Date
in immediately available funds an amount equal to $______________, representing
the Assignee's Pro Rata Share of the principal amount of the Loan outstanding on
the Effective Date.

          The Assignee agrees to pay to Bank of America, N.A., as Agent, a
processing or transfer fee in the amount of $____________________.

          The Assignee agrees to pay the Assignor, as additional compensation, a
fee in an amount equal to __________ percent (___%) of all interest and fees
paid by the Borrower to the Assignee under the Loan Documents.  Such fee shall
be payable quarterly in arrears on the last business day of _____________,
commencing on _____________, 2000.

     3.   Reallocation of Payments.
          ------------------------

          Any interest, fees and other payments accrued up to but excluding the
Effective Date with respect to the Loan shall be for the account of the
Assignor.  Any interest, fees and other payments accrued on and after the
Effective Date with respect to the Assigned Amount shall be for the account of
the Assignee.  Each of the Assignor and the Assignee agree that it will hold in
trust for the other party any interest, fees and other amounts which it may
receive to which the other party is entitled pursuant to the preceding sentence
and will promptly pay to the other party such amounts. The Assignor and the
Assignee's obligations to make the payments referred to in this Section 3 are
non-assignable.

                                      -3-
<PAGE>

     4.   Independent Credit Decision.
          ---------------------------

          The Assignee acknowledges that it has received a copy of the Loan
Documents, the Co-Lender Agreement and such other documents and information as
the Assignee has deemed appropriate and requested in order to make its own
credit and legal analysis and decision to enter into this Agreement, and will
continue to make its own credit and legal decisions in taking or not taking
action under the Loan Documents independently based on such documents and
information as the Assignee shall deem appropriate at the time and without
reliance upon the Assignor, Bank of America, N.A. as Agent, or any other Bank.

     5.   Effective Date; Notices; Notes.
          ------------------------------

          The effective date (the "Effective Date") for this Agreement shall be
the date that the following conditions precedent have been satisfied:

               (i)   this Agreement shall have been executed and delivered by
     the Assignor and the Assignee to Bank of America, N.A., as Agent;

               (ii)  the requirements for an effective assignment by a Bank set
     forth in the Loan Documents and Co-Lender Agreement shall have been
     satisfied with respect to the Assigned Amount including any required
     consents;

               (iii) the Assignee shall have paid to the Assignor all amounts
     due to the Assignor under this Agreement; and

               (iv)  the processing or transfer fee referenced above shall have
     been paid to Bank of America, N.A., as Agent.

          Promptly following the execution of this Agreement, the Assignor shall
deliver to Bank of America, N.A., as Agent, and to the Borrower, any notices,
agreements or other documents as may be required under the Loan Documents.

                                      -4-
<PAGE>

     6.   Agent.
          -----

          The Assignee hereby appoints and authorizes Bank of America, N.A., as
Agent, to take such action as agent on its behalf and to exercise such powers as
are delegated to Bank of America, N.A., as Agent, by the Banks pursuant to the
terms of the Loan Documents and Co-Lender Agreement.

          If the Assignor is the Agent, the Assignee does not assume under this
Agreement any duties or obligations held by the Assignor in its capacity as
Agent under the Loan Documents or Co-Lender Agreement.

     7.   Withholding Tax.
          ---------------

          If the Assignee is organized under the laws of any jurisdiction other
than the United States or any state or other political subdivision thereof, it
agrees that it will furnish the Agent and the Borrower, concurrently with the
execution of this Agreement, an appropriate U.S. Internal Revenue Service form
regarding exemption from or reduced rate of U.S. federal withholding tax on
interest payments under the Loan Documents, unless delivery of such form is not
authorized by law.

                                      -5-
<PAGE>

     8.   Representations and Warranties.
          ------------------------------

          (a) The Assignor represents and warrants that (i) it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any lien, security interest or other adverse
claim; (ii) it is duly organized and existing and it has the full power and
authority to take, and has taken, all action necessary to execute and deliver
this Agreement and any other documents required or permitted to be executed or
delivered by it in connection with this Agreement and to fulfill its obligations
hereunder, (iii) no notices to, or consents, authorizations or approvals of, any
Person are required (other than any already given or obtained) for its due
execution, delivery, and performance of this Agreement; and apart from any
requirements in the Loan Documents or Co-Lender Agreement, no further action by,
or notice to or filing with, any Person is required of it for such execution,
delivery or performance; and (iv) this Agreement has been fully executed and
delivered by it and constitutes the legal, valid and binding obligation of the
Assignor, enforceable against the Assignor in accordance with the terms hereof,
except as to enforcement, bankruptcy, insolvency, moratorium, and other laws of
general application relating to creditors' rights and to general equitable
principles.

          (b) The Assignor makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in connection with the Loan Documents or Co-Lender Agreement or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Loan Documents, Co-Lender Agreement or any other instrument or document
furnished pursuant thereto.  The Assignor makes no representation or warranty in
connection with, and assumes no responsibility with respect to, the solvency,
financial condition or statements of the Borrower or any guarantor or the
performance or observance by the Borrower or any guarantor of any of its
respective obligations under the Loan Documents or any other instrument or
document furnished in connection therewith.

          (c) The Assignee represents and warrants that (i) it is duly organized
and existing and has full power and authority to take, and has taken, all action
necessary to execute and deliver this Agreement and any other documents required
or permitted to be executed or delivered by it in connection with this
Agreement, and to fulfill its obligations hereunder; (ii) no notices to, or
consents,

                                      -6-
<PAGE>

authorizations or approvals of, any Person are required (other than any already
given or obtained) for its due execution, delivery and performance of this
Agreement; and apart from any requirements in the Loan Documents or Co-Lender
Agreement, no further action by or notice to or filing with, any Person is
required of it for such execution, delivery or performance; (iii) this Agreement
has been duly executed and delivered by it and constitutes the legal, valid and
binding obligation of the Assignee, enforceable against the Assignee in
accordance with the terms hereof, except as to enforcement, bankruptcy,
insolvency, moratorium, and other laws of general application relating to
creditors' rights and to general equitable principles; and (iv) it is eligible
under the Loan Documents to be an assignee of the Loan.

     9.   Further Assurances.
          ------------------

          The Assignor and the Assignee each hereby agrees to execute and
deliver such other instruments and take such other action as either party may
reasonably request in connection with the transactions contemplated by this
Agreement, including the delivery of any notices or other documents to the
Borrower, Bank of America, N.A., as Agent, or any guarantor which may be
required in connection with this assignment and assumption.

     10.  Indemnity.
          ---------

          The Assignee agrees to indemnify and hold harmless the Assignor
against any and all losses, costs, expenses (including reasonable attorneys'
fees and the cost of any services of in-house legal counsel) and liabilities
incurred by the Assignor in connection with or arising from the non-performance
by the Assignee of any obligation assumed by the Assignee under this Agreement.

     11.  Miscellaneous.
          -------------

          Any amendment or waiver of any provision of this Agreement shall be in
writing and signed by the parties hereto.  No failure or delay by either party
hereto in exercising any right, power or privilege hereunder shall operate as a
waiver thereof and any waiver of any breach of the provisions of this Agreement
shall be without prejudice with respect to any other or further breach hereof.

          (a) All payments made hereunder shall be without any set-off or

                                      -7-
<PAGE>

counterclaim.

          (b) All communications among the parties or notices in connection
herewith shall be in accordance with the Loan Documents and Co-Lender Agreement
using for the Assignor and the Assignee their respective addresses set forth on
Schedule I hereto.  The Assignee specifies as its Lending Office the office set
forth beneath its name on the signature pages hereof.

          (c) The Assignor and the Assignee each shall pay its own costs and
expenses incurred in connection with the negotiation, preparation and execution
of this Agreement.

          (d) This Agreement shall be binding upon and inure to the benefit of
the Assignor and the Assignee and their respective successors and assigns,
subject however to the provisions of the Loan Documents and the Co-Lender
Agreement.

          (e) This Agreement may be executed in counterparts, all of which taken
together shall be deemed to constitute one and the same instrument.

          (f) This Agreement shall be governed by the laws of the State of
California.

          (g) The provisions of the Loan Documents regarding arbitration and
judicial reference shall apply to any controversies or claims between Assignor
and Assignee.  The Assignor and the Assignee each irrevocably submits to the
non-exclusive jurisdiction of any California State or Federal court sitting in
the cities of San Francisco or Los Angeles over any suit, action or proceeding
arising out of this Agreement and irrevocably agrees that all claims in respect
of such action or proceeding may be heard and determined in such California
State or Federal court.  Each party to this Agreement hereby irrevocably waives
any defense of venue or inconvenient forum to the maintenance of such action or
proceeding.

          (h) This Agreement integrates all the terms and conditions hereof,
constitutes the entire agreement and understanding between the parties hereto
and supersedes any and all prior agreements and understandings related to the
subject matter hereof.  In the event of any conflict between the terms and

                                      -8-
<PAGE>

conditions of this Agreement and any other document, this Agreement shall
prevail.  In the event of any inconsistency between the provisions of this
Agreement and Schedule I hereto, this Agreement shall control.  Headings are for
reference only and are to be ignored in interpreting this Agreement.  The
illegality or unenforceability of any provision of this Agreement shall not
impair the legality or enforceability of the remaining provisions of this
Agreement.

          IN WITNESS WHEREOF, the Assignor and the Assignee have executed this
Agreement as of the date first above written.

                                                 BANK OF AMERICA, N.A., Agent


                                                 By: _______________________
                                                 Name: _____________________
                                                 Title: ____________________


                                                 [NAME], Assignor


                                                 By: _______________________
                                                 Name: _____________________
                                                 Title: ____________________


                                                 [NAME], Assignee


                                                 By: _______________________
                                                 Name: _____________________
                                                 Title: ____________________

                                      -9-
<PAGE>

                                         Assignee's Lending Office:


                                         ________________________
                                         ________________________
                                         ________________________
                                         ________________________

                                     -10-
<PAGE>

                                  SCHEDULE I
                                  ----------

                                      TO
                                      --

                      ASSIGNMENT AND ASSUMPTION AGREEMENT
                      -----------------------------------



(i)    Borrower: ESSEX PORTFOLIO, L.P.

(ii)   Date of Loan Agreement:  May ___, 2000

(iii)  Assignor: [NAME]

(iv)   Assignee: [NAME]

(v)    Date of Assignment and Assumption Agreement:

(vi)   Effective Date:

(vii)  Assignee's Pro Rata Share: ___%

(viii) Assigned Amount: $

(ix)   Fees:     Payment by Borrower                    [Part of fee payable by
                     to Assignee                                Assignee
                     -----------
                                                              to Assignor]
                                                              ------------
                 (i)Commitment
                    Fee                  $_____    $_____        [or  %]
                                                                 -------
                 [(ii) Loan Fee          $_____    $_____        [or  %]
                                                                 -------
                 [(iii) Letter of
                        Credit Fee       $_____    $_____        [or  %]
                                                                 -------
                 [(iv) Other Fees        $_____    $_____        [or  %]
                                                                 -------
                                      -1-
<PAGE>

(x)     Interest:     Payment by Borrower                     [Part of interest
                          to Assignee                        payable by Assignee
                          -----------
                                                                 to Assignor]
                                                                 ------------

                      (i) Reference
                          Rate Loan        $_____    $_____        [or   %]
                                                                   --------
                      (ii) Other Rate
                           Loan            $_____    $_____        [or   %]
                                                                   --------
(xi)    Payment Instructions:

        Assignee:  ____________________

        Assignor:  ____________________
                   ____________________
                   ____________________
                   ____________________


(xii)   All written and telephone notices to Assignor or Assignee in connection
        with the Loan shall be made as follows:

        Assignor:                                      Assignee:

        ___________________                            _____________________
        ___________________                            _____________________
        ___________________                            _____________________
        ___________________                            Attn:________________
                                                       Tel:_________________
        Attn:_______________________                   Fax:_________________
        Tel:________________________
        Fax:________________________

(xiii)  Other Information:

                                      -2-
<PAGE>

                      ASSIGNMENT AND ASSUMPTION AGREEMENT
                      -----------------------------------


                                    BETWEEN


                             BANK OF AMERICA, N.A.


                                   Assignor



                                      and


                        ______________________________
                                   Assignee



                  Entered into as of _________________, 2000

                           with respect to a loan to


                            ESSEX PORTFOLIO, L.P.,
                       a California limited partnership

                                      -3-
<PAGE>

                               TABLE OF CONTENTS
                               -----------------


<TABLE>
<CAPTION>
Section                                                   Page
-------                                                   ----
<S>                                                       <C>
1.  Assignment and Assumption                                2

2.  Payments                                                 2

3.  Reallocation of Payments                                 3

4.  Independent Credit Decision                              3

5.  Effective Date; Notices; Notes                           3

6.  Agent                                                    4

7.  Withholding Tax                                          4

8.  Representations and Warranties                           4

9.  Further Assurances                                       5

10. Indemnity                                                6

11. Miscellaneous                                            6
</TABLE>

                                     -i-
<PAGE>

                                  SCHEDULE 1
                                  ----------

                          [Lending Offices of Banks]

                                 Schedule 1-i
<PAGE>

Loan No.: GJ1062


                                 REVOLVING NOTE
                                 --------------
                                  (Swing Line)

$25,000,000                                                         May 16, 2000
                                                       San Francisco, California

Interest Rate Available (see attached Exhibit A):

     Prime Rate plus Applicable Prime Rate Margin (the "Prime-based Rate") (see
     Section 1(a) of attached Exhibit A)

Maturity Date: May 16, 2002 (see Section 5 below)


          1.   FOR VALUE RECEIVED, ESSEX PORTFOLIO, L.P., a California limited
partnership ("Borrower"), promises to pay to the order of BANK OF AMERICA, N.A.
("Bank"), at Bank's Real Estate Structured Debt Group Office in San Francisco,
California, or at such other place as Bank from time to time may designate, the
principal sum of Twenty-five Million Dollars ($25,000,000) (the "Maximum Loan
Amount"), or so much of that sum as may be advanced under this promissory note
("Note"), plus interest as specified in this Note.

          2.   This Note evidences a swing line (also referred to as the "Loan")
to Borrower from Bank under the Loan Agreement defined in Section 3 below, as it
may be amended.

          3.   This Note is one of several Loan Documents, as defined and
designated in that certain First Amended and Restated Revolving Loan Agreement,
dated as of May 16, 2000 (the "Loan Agreement"), as it may be amended
thereafter, by and between Borrower, and Bank and other related parties.
Capitalized terms not otherwise defined in this Note shall have the meanings
given to them in the Loan Agreement.  Some or all of the Loan Documents,
including the Loan Agreement, contain provisions for the acceleration of the
maturity of this Note.

          4.   The principal sum outstanding from time to time on this Note
shall bear interest in accordance with the formula set forth in attached Exhibit
A.

          5.   Accrued interest shall be payable on the first day of each month
in arrears.  In addition, all interest accrued shall be due and payable with any
payment or prepayment of the Loan.

                                      -1-
<PAGE>

          Until directed otherwise, all payments shall be made in accordance
with the Loan Agreement.

          6.   For purposes of this Note, "interest" shall include (a) any and
all interest payable as provided in this Note, including attached Exhibit A, as
well as (b) any and all sums ("Additional Interest") payable by Borrower under
any existing or future agreement between Borrower and Bank ("Interest Rate
Protection Agreement") which may provide for interest rate caps, collars or
swaps, or which may otherwise afford interest rate protection to all or part of
the Loan.  Borrower shall pay all Additional Interest at the times and in the
amounts specified in the applicable Interest Rate Protection Agreement and on
the terms and subject to the conditions of the Loan Agreement.  Borrower shall
pay all other interest monthly in arrears, on the first day of each month
following the date of this Note, and at such other times as may be specified in
attached Exhibit A.  All principal and all accrued and unpaid interest shall be
due and payable no later than May ___, 2002, unless the term of the Loan is
extended as provided in Section 2.2 of the Loan Agreement.
                                ---

          7.   Bank shall not be required to make any advance if to do so would
cause the principal outstanding under this Note to exceed the Swing Line
Availability (as that term is defined in the Loan Agreement).

          8.   Telefax Authorization
               ---------------------

               (a) Bank may honor telefax instructions from John D. Eudy, Keith
R. Guericke, Michael J. Schall, Mark J. Mikl or Jordan E. Ritter for advances or
repayments described in the Note given by any one of the individuals authorized
to sign loan agreements on behalf of Borrower, or any other individual
designated by any one of such authorized signers.

               (b) Advances and repayments will be either (i) deposited in and
repayments will be withdrawn from Borrower's account number 14228-02371, or such
other of Borrower's accounts with Bank as designated in writing by Borrower, or
(ii) wire transferred at Borrower's written direction, telefaxed as set forth in
the Loan Agreement.

          9.   Borrower may prepay some or all of the principal of this Note at
any time and may reborrow some or all of the principal, each as provided in the
Loan Agreement.

          10.  If Borrower fails to make any payment of interest within fifteen
(15) days after it becomes due and payable, Borrower agrees to pay interest on
                                                                            --
the late interest payment at an annual rate (the "Default Rate") of three
-------------------------
percent (3%) in excess of the Prime-based Rate, as defined in attached Exhibit
A, from the date the payment

                                      -2-
<PAGE>

becomes due until the date Borrower pays in full all accrued and unpaid interest
due under this Note.

          11.  If any of the following "Events of Default" occur, any obligation
of Lender to make advances under this Note shall terminate, and Bank in its sole
discretion shall notify Borrower, that all sums of principal and interest of and
on this Note shall become immediately due and payable without notice of default,
presentment or demand for payment, protest or notice of nonpayment or dishonor,
or other notices or demands of any kind or character:

               (a) Borrower fails to perform any obligation under this Note to
     pay principal and does not cure that failure within three (3) days after
     the date when due; or

               (b) Borrower fails to perform any obligation under this Note to
     pay interest and does not cure that failure within fifteen (15) days after
     the date when due; or

               (c) Borrower fails to perform any other obligation under this
     Note to pay money, and does not cure that failure within fifteen (15) days
     after written notice given by Bank; or

               (d) Under any other Loan Document, an Event of Default (as
     defined in that Loan Document) occurs.

          12.  It shall be an "Event of Default" under this Note if Borrower
becomes the subject of any bankruptcy or other voluntary or involuntary
proceeding, in or out of court, for the adjustment of debtor-creditor
relationships ("Insolvency Proceeding"), where such proceeding is not dismissed
within sixty (60) days of commencement.  If that happens, any provision relating
to the holder's obligation to make advances under this Note shall terminate, and
all sums of principal and interest under this Note shall automatically become
immediately due and payable without notice of default, presentment or demand for
payment, protest or notice of nonpayment or dishonor, or other notices or
demands of any kind or character.

          13.  All amounts payable under this Note are payable in lawful money
of the United States no later than 10:00 a.m., San Francisco time, on the
Banking Day (as defined in attached Exhibit A) when due.  Checks constitute
payment only when collected.

          14.  Borrower understands and acknowledges that Bank may incur costs
on account of legal or regulatory requirements to maintain capital against the
Loan or a class of loans to which the Loan belongs.  Such costs may arise from
present

                                      -3-
<PAGE>

or future capital adequacy requirements which may be imposed on Bank or any
corporation controlling Bank, or from compliance by Bank or the corporation with
a directive, requirement or request from a governmental or regulatory agency,
whether or not having the force of law. From time to time upon sixty (60) days
notice by Bank, Borrower shall pay Bank for Borrower's allocable share of such
costs. Such costs shall be allocated to the Loan by Bank, using any reasonable
attribution method which Bank in the exercise of its reasonable judgment may
deem appropriate. From time to time, Bank shall submit to Borrower a certificate
setting forth Bank's determination of any amounts payable under this Section,
which shall be conclusive and binding in the absence of manifest error.

          15.  If any lawsuit, reference or arbitration is commenced which
arises out of, or which relates to, this Note, the Loan Documents or the Loan,
each prevailing party shall be entitled to recover from each other party such
sums as the court, referee or arbitrator may adjudge to be reasonable attorneys'
fees in the action, reference or arbitration, in addition to costs and expenses
otherwise allowed by law.  In all other situations, including any matter arising
out of or relating to any bankruptcy or other voluntary or involuntary
proceeding, in or out of court, for the adjustment of debtor-creditor
relationships, Borrower agrees to pay all costs and expenses, including
attorneys' fees, which may be incurred in enforcing or protecting the rights or
interests of Bank.  From the time(s) incurred until paid in full to Bank, all
such sums shall bear interest at the Default Rate.

          16.  Whenever Borrower is obligated to pay or reimburse Bank for any
attorneys' fees, those fees shall include the allocated costs for services of
in-house counsel.

          17.  This Note is governed by the laws of the State of California,
without regard to the choice of law rules of that State.

          18.  If Bank delays in exercising or fails to exercise any of its
rights under this Note, that delay or failure shall not constitute a waiver of
any of Bank's rights, or any breach of this Note, or any default or failure of
condition under this Note.  No waiver by Bank of any of its rights, or any
breach of this Note, or any default or failure of condition under this Note
shall be effective, unless the waiver is expressly stated in a writing signed by
Bank.  All of Bank's remedies in connection with this Note or under applicable
law shall be cumulative, and Bank's exercise of any one or more of those
remedies shall not constitute an election of remedies.

          19.  This Note inures to and binds the heirs, legal representatives,
successors and assigns of Borrower and Bank; provided, however, that Borrower
may not assign this Note or any Loan funds, or assign or delegate any of its
rights or obligations, without the prior written consent of Bank in each
instance.  Bank in its

                                      -4-
<PAGE>

sole discretion may sell or assign participations or other interests in all or
part of the Loan on the terms and subject to the conditions of the Loan
Documents, all without notice to or the consent of Borrower. Without notice to
or the consent of Borrower, Bank may disclose any financial or other
information, data or material in Bank's possession relating to Borrower, the
Loan or the Property, including any improvements on it, to any actual or
prospective purchaser of any securities issued or to be issued by Bank, and to
any actual or prospective purchaser or assignee from Bank of any participation
or other interest in this Note or the Loan or any other loans made by Bank to
Borrower (whether evidenced by this Note or otherwise). If Bank so requests,
Borrower shall sign and deliver a new note or notes to be issued in exchange for
this Note.

          20.  As used in this Note, the word "include(s)" means "include(s),
without limitation," and the word "including" means "including, but not limited
to."  Exhibit is attached to this Note and is incorporated in this Note by this
reference.

          21.  Borrower and Borrower's general partner shall be jointly and
severally liable to Bank for Borrower's obligations under this Note.

          22.  Borrower has caused this Note to be executed by its general
partner, which has caused it to be executed by its officers, who were duly
authorized by the Board of Directors.

Borrower:

ESSEX PORTFOLIO, L.P.,
a California limited partnership

By:  ESSEX PROPERTY TRUST, INC.,
     a Maryland corporation, its General Partner


     By:  ________________________________
     Name: _______________________________
     Title:  _____________________________

                                      -5-
<PAGE>

Borrower:  Essex Portfolio, L.P., a California limited partnership


Loan No. GJ1062


                                   EXHIBIT A
                                   ---------
                                 INTEREST RATE
                                 -------------

     1.   Interest Rate
          -------------

          (a) The Loan shall bear interest at the Bank's "Prime-based Rate"
equal to the Bank's Prime Rate plus:  (A) twenty-five one-hundredth's percent
(.25%) per year if the Borrower's Credit Rating (as defined below) is not rated
by a nationally recognized Rating Agency (as defined below) approved by Bank or
if any rating or part of a split rating is lower than BBB-/Baa3 and Borrower's
Leverage Ratio (as defined below) is greater than forty-five percent (45%); or
(B) zero percent (0%) per year for all other Borrower credit ratings and
Leverage Ratios (each, an "Applicable Prime Rate Margin").

The terms used above are defined in Section 2 of this Exhibit A.

          (b) The Prime-based Rate is a variable rate.

          (c) Borrower shall provide Bank with written evidence of its
investment grade Credit Rating from the Rating Agencies on an annual basis,
which written evidence must be acceptable to Bank in its sole discretion.  In
the event that there is a difference in Borrower's Credit Rating received from
such Rating Agencies, the lower Credit Rating shall prevail for purposes of
determining the Applicable Prime Rate Margin.

          (d) The Applicable Prime Rate Margin shall be effective on the first
day following the date that one or both Rating Agencies change the Borrower's
Credit Rating.

                                      A-1
<PAGE>

     2.   Interest Rate Definitions
          -------------------------

          (a)  Prime Rate
               ----------

               "Prime Rate" means the rate of interest publicly announced from
time to time by Bank at its offices located in Charlotte, North Carolina, as its
Prime Rate. The Prime Rate is set by Bank based on various factors, including
Bank's costs and desired return, general economic conditions and other factors,
and is used as a reference point for pricing some loans. Bank may price loans to
its customers at, above, or below the Prime Rate. Any change in the Prime Rate
shall take effect at the opening of business on the day specified in the public
announcement of such change.

          (b)  Leverage Ratio
               --------------

               "Leverage Ratio" means, as of any date of determination, the
ratio of (a) Total Liabilities as of such date to (b) Gross Asset Value as of
such date, each as defined in the Loan Agreement.

          (c)  Credit Rating; Rating Agency
               ----------------------------

               "Credit Rating" means Borrower's current published or private
proforma senior long term debt ratings provided by the Rating Agencies.

               "Rating Agency" means two of the following nationally recognized
rating agencies:  (1) Standard & Poors, (2) Moody's and (3) Duff & Phelps, each
as approved by Bank.

          (d)  Minimum Rate Portion Size.  Borrower's minimum portion size shall
               -------------------------
not be in amounts less than Five Hundred Thousand Dollars ($500,000).

     3.   Calculation and Payment of Interest
          -----------------------------------

          Interest shall be calculated on the basis of a 360-day year and actual
days elapsed, which results in more interest than if a 365-day year were used.
Interest shall be payable on the first day of each month in arrears.

     4.   Additional Definitions
          ----------------------

          All capitalized terms used in this Exhibit A without definition shall
have the meanings given them in the Note.  "Banking Day" means a day other than
a Saturday or Sunday, on which banks are open for business in New York, New York
and Bank is open for business in San Francisco, California.
<PAGE>

                          FIRST AMENDED AND RESTATED
                          --------------------------
                           REVOLVING PROMISSORY NOTE
                           -------------------------


$120,000,000                                                        May 16, 2000
                                                       San Francisco, California



Interest Rates Available (see attached Exhibit A):

     (a)  Prime Rate plus Applicable Prime Rate Margin (the
          "Prime-based Rate") (see Section 1(a)(i) of attached
          Exhibit A); or
     (b)  LIBOR Rate plus Applicable LIBOR Rate Margin (the
          "LIBOR Alternative") (see Section 1(a)(ii) of attached
          Exhibit A).

Maturity Date: May 16, 2002 (see Section 5 below)


          1.   FOR VALUE RECEIVED, ESSEX PORTFOLIO, L.P., a California limited
partnership ("Borrower"), promises to pay to the order of BANK OF AMERICA, N.A.
("Bank"), at Bank's Real Estate Structured Debt Group Office in San Francisco,
California, or at such other place as Bank from time to time may designate, the
principal sum of One Hundred Twenty Million Dollars ($120,000,000) (the "Maximum
Loan Amount"), or so much of that sum as may be advanced under this promissory
note ("Note"), plus interest as specified in this Note.

          2.   This Note evidences a revolving line of credit loan (also
referred to as the "Loan") to Borrower from Bank under the Loan Agreement
defined in Section 3 below, as it may be amended.

          3.   This Note is one of several Loan Documents, as defined and
designated in that certain Revolving Loan Agreement, dated May 11, 1998, as
specifically amended and restated by that certain First Amended and Restated
Revolving Loan Agreement, dated as of May 16, 2000, and as it may be amended
thereafter (collectively, the "Loan Agreement"), by and between Borrower, Bank
and other related parties.  Capitalized terms not otherwise defined in this Note
shall have the meanings given to them in the Loan Agreement.  Some or all of the
Loan

                                      -1-
<PAGE>

Documents, including the Loan Agreement, contain provisions for the acceleration
of the maturity of this Note.

          4.   The principal sum outstanding from time to time on this Note
shall bear interest in accordance with the formula(s) set forth in attached
Exhibit A.

          5.   Accrued interest shall be payable on the first day of each month
in arrears, on any portion of the Loan bearing interest at the Prime-based Rate,
and on any Rate Portion having a Rate Period longer than one month.  (As used
here, the terms "Prime-based Rate," "Rate Portion" and "Rate Period" have the
meanings given to them in attached Exhibit A.)  In addition, all interest
accrued on any Rate Portion, regardless of its length, shall be due and payable
on the first day of each month following the end of the applicable Rate Period
or, if earlier, with any payment or prepayment of the Loan.

          Until directed otherwise, all payments shall be made in accordance
with the Loan Agreement.

          6.   For purposes of this Note, "interest" shall include (a) any and
all interest payable as provided in this Note, including attached Exhibit A, as
well as (b) any and all sums ("Additional Interest") payable by Borrower under
any existing or future agreement between Borrower and Bank ("Interest Rate
Protection Agreement") which may provide for interest rate caps, collars or
swaps, or which may otherwise afford interest rate protection to all or part of
the Loan.  Borrower shall pay all Additional Interest at the times and in the
amounts specified in the applicable Interest Rate Protection Agreement and on
the terms and subject to the conditions of the Loan Agreement.  Borrower shall
pay all other interest monthly in arrears, on the first day of each month
following the date of this Note, and at such other times as may be specified in
attached Exhibit A.  All principal and all accrued and unpaid interest shall be
due and payable no later than May 16, 2002, unless the term of the Loan is
extended as provided in Section 2.2 of the Loan Agreement, in which case all
                        -----------
principal and unpaid interest shall be paid on the extended Expiration Date.

          7.   Bank shall not be required to make any advance if to do so would
cause the Total Amount Outstanding under this Note to exceed the Available
Amount (as those terms are defined in the Loan Agreement).

          8.   Telefax Authorization
               ---------------------

               (a)  Bank may honor telefax instructions from John D. Eudy, Keith
R. Guericke, Michael J. Schall, Mark J. Mikl or Jordan E. Ritter for advances or
repayments or for designation of optional interest rates described in the Note
given by

                                      -2-
<PAGE>

any one of the individuals authorized to sign loan agreements on behalf of
Borrower, or any other individual designated by any one of such authorized
signers.

          (b)  Advances and repayments will be either (i) deposited in and
repayments will be withdrawn from Borrower's account number 14228-02371, or such
other of Borrower's accounts with Bank as designated in writing by Borrower, or
(ii) wire transferred at Borrower's written direction, telefaxed as set forth in
the Loan Agreement.

          9.   Borrower may prepay some or all of the principal of this Note at
any time, as provided in attached Exhibit B, and may reborrow some or all of the
principal as provided in the Loan Agreement.

          10.  If Borrower fails to make any payment of interest within fifteen
(15) days after it becomes due and payable, Borrower agrees to pay interest on
                                                                            --
the late interest payment at an annual rate (the "Default Rate") of three
-------------------------
percent (3%) in excess of the Prime-based Rate, as defined in attached Exhibit
A, from the date the payment becomes due until the date Borrower pays in full
all accrued and unpaid interest due under this Note.

          11.  (i) Upon any draw upon a Letter of Credit, any amount advanced
under such Letter of Credit until repaid, and (ii) from and after maturity of
this Note, whether upon scheduled maturity, by acceleration or otherwise, all
sums then due and payable under this Note, including all principal and all
accrued and unpaid interest, shall bear interest until paid in full at an annual
rate equal to the Default Rate plus the higher of (i) the Prime-based Rate or
(ii) the interest rate that would otherwise be applicable under the provisions
of attached Exhibit A; provided, however, that if at the time of maturity
different portions of the Loan are bearing interest at different rates in
accordance with attached Exhibit A, the Default Rate shall be calculated
separately as provided above with respect to each Rate Portion and with respect
to any portion of the Loan then bearing interest at the Prime-based Rate.

          12.  If any of the following "Events of Default" occur, any obligation
of Lender to make advances under this Note shall terminate, and Bank in its sole
discretion shall notify Borrower, that all sums of principal and interest of and
on this Note shall become immediately due and payable without notice of default,
presentment or demand for payment, protest or notice of nonpayment or dishonor,
or other notices or demands of any kind or character:

               (a)  Borrower fails to perform any obligation under this Note to
     pay principal or interest, and does not cure that failure within fifteen
     (15) days after the date when due; or

                                      -3-
<PAGE>

               (b)  Borrower fails to perform any other obligation under this
     Note to pay money, and does not cure that failure within fifteen (15) days
     after written notice given by Bank; or

               (c)  Under any other Loan Document, an Event of Default (as
     defined in that Loan Document) occurs.

          13.  It shall be an "Event of Default" under this Note if Borrower
becomes the subject of any bankruptcy or other voluntary or involuntary
proceeding, in or out of court, for the adjustment of debtor-creditor
relationships ("Insolvency Proceeding"), where such proceeding is not dismissed
within sixty (60) days of commencement.  If that happens, any obligation of the
holder to make advances under this Note and any right of Borrower to designate
an interest rate other than the Prime-based Rate shall terminate, and all sums
of principal and interest under this Note shall automatically become immediately
due and payable without notice of default, presentment or demand for payment,
protest or notice of nonpayment or dishonor, or other notices or demands of any
kind or character.

          14.  All amounts payable under this Note are payable in lawful money
of the United States no later than 10:00 a.m., San Francisco time, on the
Banking Day (as defined in attached Exhibit A) when due.  Checks constitute
payment only when collected.

          15.  Borrower understands and acknowledges that Bank may incur costs
on account of legal or regulatory requirements to maintain capital against the
Loan or a class of loans to which the Loan belongs.  Such costs may arise from
present or future capital adequacy requirements which may be imposed on Bank or
any corporation controlling Bank, or from compliance by Bank or the corporation
with a directive, requirement or request from a governmental or regulatory
agency, whether or not having the force of law.  From time to time upon sixty
(60) days notice by Bank, Borrower shall pay Bank for Borrower's allocable share
of such costs.  Such costs shall be allocated to the Loan by Bank, using any
reasonable attribution method which Bank in the exercise of its reasonable
judgment may deem appropriate.  From time to time, Bank shall submit to Borrower
a certificate setting forth Bank's determination of any amounts payable under
this Section, which shall be conclusive and binding in the absence of manifest
error.

          16.  If any lawsuit, reference or arbitration is commenced which
arises out of, or which relates to, this Note, the Loan Documents or the Loan,
each prevailing party shall be entitled to recover from each other party such
sums as the court, referee or arbitrator may adjudge to be reasonable attorneys'
fees in the action, reference or arbitration, in addition to costs and expenses
otherwise allowed by law.  In all other situations, including any matter arising
out of or relating to any bankruptcy or other

                                      -4-
<PAGE>

voluntary or involuntary proceeding, in or out of court, for the adjustment of
debtor-creditor relationships, Borrower agrees to pay all costs and expenses,
including attorneys' fees, which may be incurred in enforcing or protecting the
rights or interests of Bank. From the time(s) incurred until paid in full to
Bank, all such sums shall bear interest at the Default Rate.

          17.  Whenever Borrower is obligated to pay or reimburse Bank for any
attorneys' fees, those fees shall include the allocated costs for services of
in-house counsel.

          18.  This Note is governed by the laws of the State of California,
without regard to the choice of law rules of that State.

          19.  If Bank delays in exercising or fails to exercise any of its
rights under this Note, that delay or failure shall not constitute a waiver of
any of Bank's rights, or any breach of this Note, or any default or failure of
condition under this Note.  No waiver by Bank of any of its rights, or any
breach of this Note, or any default or failure of condition under this Note
shall be effective, unless the waiver is expressly stated in a writing signed by
Bank.  All of Bank's remedies in connection with this Note or under applicable
law shall be cumulative, and Bank's exercise of any one or more of those
remedies shall not constitute an election of remedies.

          20.  This Note inures to and binds the heirs, legal representatives,
successors and assigns of Borrower and Bank; provided, however, that Borrower
may not assign this Note or any Loan funds, or assign or delegate any of its
rights or obligations, without the prior written consent of Bank in each
instance.  Bank in its sole discretion may sell or assign participations or
other interests in all or part of the Loan on the terms and subject to the
conditions of the Loan Documents, all without notice to or the consent of
Borrower.  Without notice to or the consent of Borrower, Bank may disclose any
financial or other information, data or material in Bank's possession relating
to Borrower, the Loan or the Property, including any improvements on it, to any
actual or prospective purchaser of any securities issued or to be issued by
Bank, and to any actual or prospective purchaser or assignee from Bank of any
participation or other interest in this Note or the Loan or any other loans made
by Bank to Borrower (whether evidenced by this Note or otherwise).  If Bank so
requests, Borrower shall sign and deliver a new note or notes to be issued in
exchange for this Note.

          21.  As used in this Note, the word "include(s)" means "include(s),
without limitation," and the word "including" means "including, but not limited
to."  Exhibits A and B are attached to this Note and are incorporated in this
Note by this reference.

                                      -5-
<PAGE>

          22.  Borrower and Borrower's general partner shall be jointly and
severally liable to Bank for Borrower's obligations under this Note.

          24.  Borrower has caused this Note to be executed by its general
partner, which has caused it to be executed by its officers, who were duly
authorized by the Board of Directors.


Borrower:


ESSEX PORTFOLIO, L.P.,
a California limited partnership

By:  ESSEX PROPERTY TRUST, INC.,
     a Maryland corporation, its General Partner


     By:  ____________________________
     Name: ___________________________
     Title: __________________________

                                      -6-
<PAGE>

                               PAYMENT GUARANTY
                               (Revolving Loan)

          This Payment Guaranty ("Guaranty") is dated as of May 16, 2000, by
ESSEX PROPERTY TRUST, INC., a Maryland corporation ("Guarantor"), in favor of
---------------------------
Bank of America, N.A. ("Bank").
---------------------

                              Factual Background
                              ------------------

     A.   Guarantor is executing this Guaranty to induce Bank among other things
to amend and restate a revolving loan (defined in Section 2 as the "Loan") that
has been made to Essex Portfolio, L.P., a California limited partnership
("Borrower"), in the principal amount of One Hundred Twenty Million and
No/100ths Dollars ($120,000,000.00). The Loan is being amended and restated
under that certain First Amended and Restated Revolving Loan Agreement (the
"Loan Agreement") dated as of even date herewith, between Bank and Borrower.

     B.   The Loan may be secured in part, as more fully explained in the Loan
Agreement.

     C.   This Guaranty renews that certain payment guaranty, dated as of May
11, 1998, and reconfirms all of Guarantor's obligations thereunder.

     D.   This Guaranty is one of several Loan Documents, as defined and
designated in the Loan Agreement. The Loan Documents also include the Loan
Agreement and certain other specified instruments and agreements.

                                   Guaranty
                                   --------

     1.   Guaranty of Loan. Guarantor unconditionally guaranties to Bank the
          ----------------
full payment of the Loan, and unconditionally agrees to pay Bank the full amount
of the Loan. This is a guaranty of payment, not of collection. If Borrower
defaults in the payment when due of all or any part of the Loan, Guarantor shall
in lawful money of the United States pay to Bank or order, on demand, all sums
due and owing on the Loan, including all interest, charges, fees and other sums,
costs and expenses.

     2.   Loan.  In this Guaranty, the term "Loan" is broadly defined to mean
          ----
and include all primary, secondary, direct, indirect, fixed and contingent
obligations of Borrower to pay principal, interest, prepayment charges, late
charges, loan fees and any other fees, charges, sums, costs and expenses which
may be owing at any time under the Loan Documents, as any or all of them may
from time to time be modified, amended, extended or renewed.  For purposes of
this Guaranty, the Loan includes any and all such obligations which may arise in
connection with any interest rate swaps or other transactions between Borrower
and Bank which may afford interest rate protection to all or part of the Loan.
If the amount outstanding under the Loan is determined by a court of competent
jurisdiction, that determination shall be conclusive and binding on Guarantor,
regardless of whether or not Guarantor was a party to the proceeding in which
the determination was made.

     3.   Rights of Bank.  Guarantor authorizes Bank to perform any or all of
          --------------
the following acts at any time in its sole discretion, all without notice to
Guarantor and without affecting Guarantor's obligations under this Guaranty:

                                      -1-
<PAGE>

          (a)  Bank may alter any terms of the Loan or any part of it, including
renewing, compromising, extending or accelerating, or otherwise changing the
time for payment of, or increasing or decreasing the rate of interest on, the
Loan or any part of it.

          (b)  Bank may take and hold security for the Loan or this Guaranty,
accept additional or substituted security for either, and subordinate, exchange,
enforce, waive, release, compromise, fail to perfect and sell or otherwise
dispose of any such security.

          (c)  Bank may direct the order and manner of any sale of all or any
part of any security now or later to be held for the Loan or this Guaranty, and
Bank may also bid at any such sale.

          (d)  Bank may apply any payments or recoveries from Borrower,
Guarantor or any other source, and any proceeds of any security, to Borrower's
obligations under the Loan Documents in such manner, order and priority as Bank
may elect, whether or not those obligations are guarantied by this Guaranty or
secured at the time of the application.

          (e)  Bank may release Borrower of its liability for the Loan or any
part of it.


          (f)  Bank may substitute, add or release any one or more guarantors or
endorsers.

          (g)  In addition to the Loan, Bank may extend other credit to
Borrower, and may take and hold security for the credit so extended, all without
affecting Guarantor's liability under this Guaranty.

     4.   Guaranty to be Absolute.  Guarantor expressly agrees that until the
          -----------------------
Loan is paid and performed in full and each and every term, covenant and
condition of this Guaranty is fully performed, Guarantor shall not be released
by or because of:

          (a)  Any act or event which might otherwise discharge, reduce, limit
or modify Guarantor's obligations under this Guaranty;

          (b)  Any waiver, extension, modification, forbearance, delay or other
act or omission of Bank, or its failure to proceed promptly or otherwise as
against Borrower, Guarantor or any security;

          (c)  Any action, omission or circumstance which might increase the
likelihood that Guarantor may be called upon to perform under this Guaranty or
which might affect the rights or remedies of Guarantor as against Borrower;

          (d)  Any dealings occurring at any time between Borrower and Bank,
whether relating to the Loan or otherwise; or

          (e)  Any action of Bank described in Section 3 above.

          Guarantor hereby acknowledges that absent this Section 4, Guarantor
might have a defense to the enforcement of this Guaranty as a result of one or
more of the foregoing acts, omissions, agreement, waivers or matters. Guarantor
hereby expressly waives and surrenders any defense to any liability under this
Guaranty based upon any of such acts, omissions, agreements, waivers or matters.
It is the express intent of Guarantor that Guarantor's obligations under this
Guaranty are and shall be absolute, unconditional and irrevocable.

                                      -2-
<PAGE>

     5.   Guarantor's Waivers.  Guarantor waives:
          -------------------

          (a)  All statutes of limitations as a defense to any action or
proceeding brought against Guarantor by Bank, to the fullest extent permitted by
law;

          (b)  Any right it may have to require Bank to proceed against
Borrower, proceed against or exhaust any security held from Borrower, or pursue
any other remedy in Bank's power to pursue;

          (c)  Any defense based on any claim that Guarantor's obligations
exceed or are more burdensome than those of Borrower;

          (d)  Any defense based on: (i) any legal disability of Borrower, (ii)
any release, discharge, modification, impairment or limitation of the liability
of Borrower to Bank from any cause, whether consented to by Bank or arising by
operation of law or from any bankruptcy or other voluntary or involuntary
proceeding, in or out of court, for the adjustment of debtor-creditor
relationships ("Insolvency Proceeding") and (iii) any rejection or disaffirmance
of the Loan, or any part of it, or any security held for it, in any such
Insolvency Proceeding;

          (e)  Any defense based on any action taken or omitted by Bank in any
Insolvency Proceeding involving Borrower, including any election to have Bank's
claim allowed as being secured, partially secured or unsecured, any extension of
credit by Bank to Borrower in any Insolvency Proceeding, and the taking and
holding by Bank of any security for any such extension of credit;

          (f)  All presentments, demands for performance, notices of
nonperformance, protests, notices of protest, notices of dishonor, notices of
acceptance of this Guaranty and of the existence, creation, or incurring of new
or additional indebtedness, and demands and notices of every kind except for any
demand or notice by Bank to Guarantor expressly provided for in Section 1;

          (g)  Any defense based on or arising out of any defense that Borrower
may have to the payment or performance of the Loan or any part of it; and

          (h)  Any defense based on or arising out of any action of Bank
described in Sections 3 or 4 above.

     6.   Waivers of Subrogation and Other Rights and Defenses.
          ----------------------------------------------------

          (a)  Upon a default by Borrower, Bank in its sole discretion, without
prior notice to or consent of Guarantor, may elect to: (i) foreclose either
judicially or nonjudicially against any real or personal property security it
may hold for the Loan, (ii) accept a transfer of any such security in lieu of
foreclosure, (iii) compromise or adjust the Loan or any part of it or make any
other accommodation with Borrower or Guarantor, or (iv) exercise any other
remedy against Borrower or any security. No such action by Bank shall release or
limit the liability of Guarantor, who shall remain liable under this Guaranty
after the action, even if the effect of the action is to deprive Guarantor of
any subrogation rights, rights of indemnity, or other rights to collect
reimbursement from Borrower for any sums paid to Bank, whether contractual or
arising by operation of law or otherwise. Guarantor expressly agrees that under
no circumstances shall it be deemed to have any right, title, interest or claim
in or to any real or personal property to be held by Bank or any third party
after any foreclosure or transfer in lieu of foreclosure of any security for the
Loan.

                                      -3-
<PAGE>

          (b)  Regardless of whether Guarantor may have made any payments to
Bank, Guarantor forever waives: (i) all rights of subrogation, all rights of
indemnity, and any other rights to collect reimbursement from Borrower for any
sums paid to Bank, whether contractual or arising by operation of law (including
the United States Bankruptcy Code or any successor or similar statute) or
otherwise, (ii) all rights to participate in any security now or later to be
held by Bank for the Loan, and (iii) all rights to enforce any remedy that Bank
may have against Borrower.

          (c)  Guarantor waives the Guarantor's rights of subrogation and
reimbursement and any other rights and defenses available to the Guarantor by
reason of Sections 2787 to 2855, inclusive, of the California Civil Code
including, without limitation, any defenses the Guarantor may have to the
Guaranty obligation by reason of an election of remedies by Bank.

          (d)  Guarantor waives all right and defenses arising out of an
election of remedies by Bank, even though that election of remedies has
destroyed the Guarantor's rights of subrogation and reimbursement against the
Borrower.

          (e)  No provision or waiver in this Guaranty shall be construed as
limiting the generality of any other waiver contained in this Guaranty.

     7.   Revival and Reinstatement.  If Bank is required to pay, return or
          -------------------------
restore to Borrower or any other person any amounts previously paid on the Loan
because of any Insolvency Proceeding of Borrower, any stop notice or any other
reason, the obligations of Guarantor shall be reinstated and revived and the
rights of Bank shall continue with regard to such amounts, all as though they
had never been paid.

     8.   Information Regarding Borrower and the Property.  Before signing this
          -----------------------------------------------
Guaranty, Guarantor investigated the financial condition and business operations
of Borrower, the present and former condition, uses and ownership of the
Property, and such other matters as Guarantor deemed appropriate to assure
itself of Borrower's ability to discharge its obligations under the Loan
Documents.  Guarantor assumes full responsibility for that due diligence, as
well as for keeping informed of all matters which may affect Borrower's ability
to pay and perform its obligations to Bank.  Bank has no duty to disclose to
Guarantor any information which Bank may have or receive about Borrower's
financial condition or business operations, or any other circumstances bearing
on Borrower's ability to perform.

     9.   Subordination.  Any rights of Guarantor, whether now existing or later
          -------------
arising, to receive payment on account of any indebtedness (including interest)
owed to it by Borrower, or to withdraw capital invested by it in Borrower, or to
receive distributions from Borrower, shall at all times be subordinate as to
lien and time of payment and in all other respects to the full and prior
repayment to Bank of the Loan.  Guarantor shall not be entitled to enforce or
receive payment of any sums hereby subordinated until the Loan has been paid and
performed in full and any such sums received in violation of this Guaranty shall
be received by Guarantor in trust for Bank.  The foregoing notwithstanding,
Guarantor is not prohibited from receiving (a) such reasonable management fees
or reasonable salary from Borrower as Bank may find acceptable from time to
time,  (b) distributions from Borrower in an amount equal to any income taxes
imposed on Guarantor which are attributable to Borrower's income from any
property owned by Borrower, and (c) distributions made in the ordinary course of
Guarantor's business, which distributions do not exceed ninety-five (95%) of

                                      -4-
<PAGE>

Funds From Operations during any period where there is no Event of Default
hereunder or under any Loan Document; provided, however, that if Essex
Portfolio, L.P. distributes or pays amounts in excess of ninety-five percent
(95%) of Funds From Operations during any fiscal year, it shall not be a default
under this provision if, when taken together with all distributions and payments
during the next ensuing six (6) month period, the distributions and payments for
the eighteen (18) month period then ended are less than ninety-five percent
(95%) of Funds From Operations. "Funds From Operations" has the meaning given to
it in Section 7.13 of the Loan Agreement. Notwithstanding the above, Guarantor
and/or Borrower may make any distributions which are necessary for Guarantor to
continue to qualify as a REIT as that term is defined in Section 11(b) of this
Guaranty.

     10.  Guarantor's Representations and Warranties.  Guarantor represents and
          ------------------------------------------
warrants that:

          (a)  Financial Statements True and Correct.  All financial statements
               -------------------------------------
and other financial information furnished or to be furnished to Bank are or will
be true and correct in all material respects determined according to GAAP unless
otherwise provided for herein and do or will fairly represent the financial
condition of Guarantor (including all contingent liabilities) (for purposes of
this Section 10(a), the term "material respects" means any variance in the
aggregate amount of $1,000,000.00);

          (b)  Financial Statements According to GAAP. All financial statements
               --------------------------------------
were or will be prepared in accordance with generally accepted accounting
principles, or such other accounting principles as may be acceptable to Bank at
the time of their preparation, consistently applied; and

          (c)  No Material Adverse Change.  There has been no material adverse
               --------------------------
change in Guarantor's financial condition since the dates of the statements most
recently furnished to Bank.

          (d)  Organization of Borrower.  Guarantor is a corporation duly
               ------------------------
formed and existing under the laws of Maryland.

          (e)  Authorization.  This Guaranty is within Guarantor's powers, has
               -------------
been duly authorized, and does not conflict with any of its organizational
papers.

          (f)  Enforceable Agreement. This Agreement is a legal, valid and
               ---------------------
binding agreement of Guarantor, enforceable against Guarantor in accordance with
its terms, and any other Loan Document to which Guarantor is a party, when
executed and delivered, will be similarly legal, valid, binding and enforceable,
except to the extent that the enforcement of the rights and remedies of Bank may
hereafter be subject to bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting generally the enforcement of creditors' rights and
remedies, and the availability of equitable remedies may be subject to the
discretion of the court before which any proceeding thereof is brought.

          (g)  Good Standing.  In each state in which Guarantor does business,
               -------------
it is properly licensed, in good standing, and, where required, in compliance
with fictitious name statutes.

          (h)  No Conflicts.  Guarantor, to the best of its knowledge, is not
               ------------
in violation of, nor do the terms of this Agreement or any other Loan Document
conflict with, any regulation or ordinance, any order of any court or
governmental entity, or any covenant or agreement affecting Guarantor.

                                      -5-
<PAGE>

          (i)  Lawsuits. There is no lawsuit, tax claim or other dispute
               --------
pending or threatened against Guarantor which, if lost, would materially
adversely impair Guarantor's financial condition or ability to repay the Loan.

     11.  Affirmative Covenants.   Guarantor promises to keep each of the
          ---------------------
following covenants:

          (a)  Compliance with Law.
               -------------------

          Guarantor shall comply with all existing and future laws (including
Environmental Laws, as hereafter defined), regulations, orders, building
restrictions and requirements of, and all agreements with and commitments to,
all governmental, judicial or legal authorities having jurisdiction over
Guarantor or Guarantor's business, including those pertaining to the
construction, sale, leasing or financing of the Unencumbered Asset Pool Property
(as that term is defined in the Loan Agreement), the environmental condition of
the Unencumbered Asset Pool Property and with all recorded covenants and
restrictions affecting the Unencumbered Asset Pool Property and including,
without limitation, all state and federal securities laws and regulations (all
collectively, the "Requirements"). "Environmental Laws" means all federal,
state, and local laws, ordinances and regulations relating to any Hazardous
Substance (as defined in Section 7.1(b) of the Loan Agreement) applicable to the
Unencumbered Asset Pool Property, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, 42 U.S.C. (S) 9601 et seq., the Hazardous Materials Transportation Act,
49 U.S.C. (S) 1802, et seq., the Resource Conservation and Recovery Act, 42
U.S.C. (S) 6901 et seq., the Toxic Substance Control Act of 1976, as amended, 15
U.S.C. (S) 2601 et seq., the Clean Water Act, 33 U.S.C. 466 et seq., as amended,
and the Clean Air Act, 42 U.S.C. (S) 7401 et seq. Notwithstanding any provision
in this Subsection to the contrary (i) Guarantor shall have a right to contest
all existing and future Requirements (other than those relating to Environmental
Laws) before complying therewith, and (ii) Guarantor shall have a right to
contest all existing and future Requirements relating to Environmental Laws, for
one year, before complying therewith.

          (b)  REIT Status.
               -----------

          Guarantor has elected and shall continue to elect to be taxed as, and
shall conduct its affairs in a manner so as to qualify as, a real estate
investment trust ("REIT") pursuant to sections 856 through 886 of the Internal
Revenue Code. Without limiting the foregoing, Guarantor shall maintain an
entitlement to the "dividends-paid" deduction as a qualifying REIT.

          (c)  Stock Listing.
               -------------

          Guarantor shall maintain a listing on the New York Stock Exchange.

          (d)  Financial and Other Information.
               -------------------------------

          Guarantor shall keep true and correct financial books and records,
using generally accepted accounting principles consistently applied, or such
other accounting principles as Bank in its reasonable judgment may find
acceptable from time to time. Guarantor shall provide Bank with the following:

               (i)  Within one hundred twenty (120) days of Guarantor's fiscal
     year end, Guarantor's annual report.

                                      -6-
<PAGE>

               (ii)   If requested by Bank, copies of Guarantor's federal
     income tax return (with all schedule K-1's attached), within fifteen (15)
     days of filing, and, if requested by Bank, copies of any extensions of the
     filing date.

               (iii)  Copies of Guarantor's Form 10-K Annual Report within
     ninety-five (95) days of its fiscal year end, any financial statements
     contained therein to be prepared on a consolidated basis according to GAAP,
     to include Borrower and Guarantor, to be certified by the chief financial
     officer of Borrower, and to be audited (with an unqualified opinion) by
     KPMG Peat Marwick, or another Certified Public Accountant ("CPA")
     acceptable to Bank.

               (iv)   Copies of Guarantor's Form 10-Q Quarterly Report within
     sixty (60) days after the end of each calendar quarter except for each
     fiscal year end, copies of any and all Form 8-K filings immediately upon
     filing with the Securities and Exchange Commission, and copies of all
     statements, reports and notices sent or made available generally by
     Borrower or Guarantor to their respective security holders at the time they
     are so sent or made available, any financial statements contained therein
     to be certified by the chief financial officer of Guarantor, and (to the
     extent appropriate) to be prepared on a consolidated basis according to
     GAAP and to include Borrower and Guarantor.

               (v)    Any other financial or other information concerning
     Guarantor's affairs and property as Bank may reasonably request, to be
     furnished promptly upon such request.

     12.  Negative Covenants.
          ------------------

          (a)  Without Administrative Agent's (as that term is defined in the
Loan) prior written consent, which consent shall not be unreasonably withheld or
delayed, Guarantor shall not:

               (i)    engage in any business activities that would result in
     less than seventy percent (70%) of the Gross Asset Value (as that term is
     defined in the Loan Agreement) being derived from multifamily residential
     apartments;

               (ii)   other than in the ordinary course of Guarantor's business,
     lease all or a substantial part of Guarantor's business or Guarantor's
     assets;

               (iii)  enter into or invest in any consolidation, merger, pool,
     syndicate or other combination unless Guarantor is the surviving entity and
     control of Guarantor has not changed.

               (iv)   change Guarantor's legal structure from a publicly traded
     real estate investment trust under the provisions of Internal Revenue Code
     Sections 856 and 857, or change the legal structure of Guarantor as a
     so-called UpREIT, or without notifying Administrative Agent thirty (30)
     days ahead of time change Guarantor's place of business or chief executive
     office if Guarantor has more than one place of business;

               (v)    Allow Guarantor to suffer a change in its executive
     management such that Keith Guericke is no longer Chief Executive Officer,
     George M. Marcus is no longer Chairman of the Board of Directors or Michael
     J. Schall is no longer Chief Financial Officer, unless such executive
     management is replaced by parties reasonably acceptable to Administrative
     Agent within one hundred eighty (180) days; or

                                      -7-
<PAGE>

               (vi)    In any rolling four quarter period, dispose of and
     distribute sales proceeds to shareholders of more than fifteen percent
     (15%) of Guarantor's business or Guarantor's assets.

          (b)  Guarantor shall not in any case:

               (i)     form additional unconsolidated down-REITs for property
     acquisition unless they comply on an on-going basis with each of the
     following conditions:

                       A.  Essex Management Corporation ("EMC") or any wholly
          owned subsidiary of Guarantor shall be the sole general partner of and
          have the controlling interest in any such partnership;

                       B.  Guarantor and/or EMC shall have sole control of each
          property and entity;

                       C.  limited partners shall receive only units and/or cash
          for value contributed;

                       D.  all assets, liabilities and income shall be fully
          consolidated into the financial statements of Guarantor for purposes
          of the conditions and covenants set out in this Guaranty; and

                       E.  the total of all down-REIT properties shall not
          exceed fifteen percent (15%) of the Gross Asset Value (as that term is
          defined in the Loan Agreement).

               (ii)    liquidate or dissolve Guarantor's business; or

               (iii)   dispose of all of Guarantor's business or Guarantor's
     assets.



     13.  Events of Default.  Bank may declare Guarantor to be in default
          -----------------
under this Guaranty upon the occurrence of any of the following events ("Events
of Default"):

          (a)  Guarantor fails to perform any of its obligations under this
Guaranty; or

          (b)  Guarantor revokes this Guaranty or this Guaranty becomes
ineffective for any reason; or

          (c)  Any representation or warranty made or given by Guarantor to Bank
proves to be false or misleading in any material respect; or

          (d)  Guarantor becomes insolvent or the subject of any bankruptcy or
other voluntary proceeding, in or out of court, for the adjustment of debtor-
creditor relationships; or the subject of any involuntary proceeding, in court,
for the adjustment of debtor-creditor relationships, where such proceeding is
not dismissed within sixty (60) days of commencement; or

          (e)  If and when Bank takes a lien on or security interest in any
property given as security for the Loan, the first lien position on or security
interest in any such property is held by any Person other than Bank (except as
consented to by Bank in writing); or

                                      -8-
<PAGE>

          (f)  A final non-appealable judgment or order is entered against
Guarantor that materially adversely affects Borrower's intended use of the
Unencumbered Asset Pool Property (as that term is defined in the Loan Agreement)
or Guarantor's ability to repay the Loan; or

          (g)  Guarantor defaults (taking into account applicable cure periods,
if any) in connection with any credit such person has with any lender, if (1)
the default consists of the failure to make a payment in excess of Five Million
Dollars ($5,000,000) when due, or (2) any obligation has been accelerated that
is with recourse to Guarantor in excess of Fifteen Million Dollars ($15,000,000)
in the aggregate; or

          (h)  There is a material adverse change in Guarantor's financial
condition, or event or condition that materially impairs Guarantor's ability to
repay the Loan.

     14.  Reference and Arbitration.
          -------------------------

          (a)  Judicial Reference.  In any judicial action between or among the
               ------------------
parties, including any action or cause of action arising out of or relating to
this Guaranty or the Loan Documents or based on or arising from an alleged tort,
all decisions of fact and law shall at the request of any party be referred to a
referee in accordance with California Code of Civil Procedure Sections 638 et
                                                                           --
seq. The parties shall designate to the court a referee or referees
---
selected under the auspices of the American Arbitration Association ("AAA") in
the same manner as arbitrators are selected in AAA-sponsored proceedings. The
presiding referee of the panel, or the referee if there is a single referee,
shall be an active attorney or retired judge. Judgment upon the award rendered
by such referee or referees shall be entered in the court in which such
proceeding was commenced in accordance with California Code of Civil Procedure
Sections 644 and 645.

          (b)  Mandatory Arbitration.  Any controversy or claim between or
               ---------------------
among the parties, including those arising out of or relating to this Guaranty
or the Loan Documents and any claim based on or arising from an alleged tort,
shall at the request of any party be determined by arbitration. The arbitration
shall be conducted in accordance with the United States Arbitration Act (Title
9, U.S. Code), notwithstanding any choice of law provision in this Guaranty, and
under the Commercial Rules of the AAA. The arbitrator(s) shall give effect to
statutes of limitation in determining any claim. Any controversy concerning
whether an issue is arbitrable shall be determined by the arbitrator(s).
Judgment upon the arbitration award may be entered in any court having
jurisdiction. The institution and maintenance of an action for judicial relief
or pursuit of a provisional or ancillary remedy shall not constitute a waiver of
the right of any party, including the plaintiff, to submit the controversy or
claim to arbitration if any other party contests such action for judicial
relief.

          (c)  Provisional Remedies, Self-Help and Foreclosure.  No provision
               -----------------------------------------------
of this Section 14 shall limit the right of any party to exercise self-help
remedies such as setoff, foreclosure against or sale of any real or personal
property collateral or security, if any, or to obtain provisional or ancillary
remedies from a court of competent jurisdiction before, after, or during the
pendency of any arbitration or other proceeding. The exercise of a remedy does
not waive the right of either party to resort to arbitration or reference.

     15.  Authorization; No Violation.  Guarantor is authorized to execute,
          ---------------------------
deliver and perform under this Guaranty, which is a valid and binding obligation
of Guarantor, except as the same may be limited by insolvency, bankruptcy,
reorganization, or other laws relating to or affecting the enforcement of
creditors' rights or by general equitable principles. No provision or

                                      -9-
<PAGE>

obligation of Guarantor contained in this Guaranty violates any applicable law,
regulation or ordinance, or any order or ruling of any court or governmental
agency. No such provision or obligation conflicts with, or constitutes a breach
or default under, any agreement to which Guarantor is a party. No consent,
approval or authorization of or notice to any person or entity is required in
connection with Guarantor's execution of and obligations under this Guaranty.

     16.  Additional and Independent Obligations.  Guarantor's obligations
          --------------------------------------
under this Guaranty are in addition to its obligations under any other existing
or future guaranties, each of which shall remain in full force and effect until
it is expressly modified or released in a writing signed by Bank. Guarantor's
obligations under this Guaranty are independent of those of Borrower on the
Loan. Bank may bring a separate action, or commence a separate reference or
arbitration proceeding against Guarantor without first proceeding against
Borrower, any other person or any security that Bank may hold, and without
pursuing any other remedy. Bank's rights under this Guaranty shall not be
exhausted by any action by Bank until the Loan has been paid and performed in
full.

     17.  No Waiver; Consents; Cumulative Remedies.  Each waiver by Bank must
          ----------------------------------------
be in writing, and no waiver shall be construed as a continuing waiver. No
waiver shall be implied from Bank's delay in exercising or failure to exercise
any right or remedy against Borrower, Guarantor or any security. Consent by Bank
to any act or omission by Borrower or Guarantor shall not be construed as a
consent to any other or subsequent act or omission, or as a waiver of the
requirement for Bank's consent to be obtained in any future or other instance.
All remedies of Bank against Borrower and Guarantor are cumulative.

     18.  No Release.  Guarantor shall not be released from its obligations
          ----------
under this Guaranty except by a writing signed by Bank.

     19.  Heirs, Successors and Assigns; Participations.  The terms of this
          ---------------------------------------------
Guaranty shall bind and benefit the heirs, legal representatives, successors and
assigns of Bank and Guarantor; provided, however, that Guarantor may not assign
this Guaranty, or assign or delegate any of its rights or obligations under this
Guaranty, without the prior written consent of Bank in each instance. Bank in
its sole discretion may sell, syndicate or assign participations or other
interests in the Loan and this Guaranty, in whole or in part, all without notice
to or the consent of Guarantor and without affecting Guarantor's obligations
under this Guaranty. Also without notice to or the consent of Guarantor, Bank
may disclose any and all information in its possession concerning Guarantor,
this Guaranty and any security for this Guaranty to any actual or prospective
purchaser of any securities issued or to be issued by Bank, and to any actual or
prospective purchaser or assignee of any participation or other interest in the
Loan and this Guaranty.

     20.  Notices.  All notices given under this Guaranty must be in writing and
          -------
shall be effectively served upon delivery, or if mailed, upon the first to occur
of receipt or the expiration of forty-eight hours after deposit in certified
United States mail, postage prepaid, sent to the party at its address given at
the end of this Guaranty.  Those addresses may be changed by Bank or Guarantor
by written notice to the other party.  Service of any notice on any one
Guarantor signing this Guaranty shall be effective service on Guarantor for all
purposes.

     21.  Rules of Construction.  In this Guaranty, the word "Borrower"
          ---------------------
includes both the named Borrower and any other person who at any time assumes or
otherwise becomes primarily liable for all or any part of the obligations of the
named Borrower on the Loan. The word "person" includes any individual, company,
trust or other legal entity of any kind. The word "include(s)" means
"include(s), without limitation," and the word "including" means "including,

                                     -10-
<PAGE>

but not limited to." When the context and construction so require, all words
used in the singular shall be deemed to have been used in the plural and vice
versa. No listing of specific instances, items or matters in any way limits the
scope or generality of any language of this Guaranty. All headings appearing in
this Guaranty are for convenience only and shall be disregarded in construing
this Guaranty.

     22.  Governing Law.  This Guaranty shall be governed by, and construed in
          -------------
accordance with, the laws of the State of California, without regard to any
choice of law principles.

     23.  Costs and Expenses.  If any lawsuit, reference or arbitration is
          ------------------
commenced which arises out of, or which relates to this Guaranty, the Loan
Documents or the Loan, the prevailing party shall be entitled to recover from
each other party such sums as the court, referee or arbitrator may adjudge to be
reasonable attorneys' fees (including allocated costs for services of in-house
counsel) in the action or proceeding, in addition to costs and expenses
otherwise allowed by law. In all other situations, including any Insolvency
Proceeding, Guarantor agrees to pay all of Bank's costs and expenses, including
reasonable attorneys' fees (including allocated costs for services of Bank's in-
house counsel) which may be incurred in any effort to collect or enforce the
Loan or any part of it or any term of this Guaranty. From the time(s) incurred
until paid in full to Bank, all sums shall bear interest at the Default Rate, as
defined in the Loan Agreement.

     24.  Consideration.  Guarantor acknowledges that it expects to benefit from
          -------------
Bank's extension of the Loan to Borrower because of its relationship to
Borrower, and that it is executing this Guaranty in consideration of that
anticipated benefit.

     25.  Integration; Modifications.  This Guaranty (a) integrates all the
          --------------------------
terms and conditions mentioned in or incidental to this Guaranty, (b) supersedes
all oral negotiations and prior writings with respect to its subject matter, and
(c) is intended by Guarantor and Bank as the final expression of the agreement
with respect to the terms and conditions set forth in this Guaranty and as the
complete and exclusive statement of the terms agreed to by Guarantor and Bank.
No representation, understanding, promise or condition shall be enforceable
against any party hereto unless it is contained in this Guaranty. This Guaranty
may not be modified except in a writing signed by both Bank and Guarantor. No
course of prior dealing, usage of trade, parol or extrinsic evidence of any
nature shall be used to supplement, modify or vary any of the terms hereof.

     26.  Miscellaneous.  The legal incapacity of any Guarantor shall not
          -------------
terminate the obligations of such Guarantor under this Guaranty, including its
obligations with regard to future advances under the Loan Documents. The
liability of all persons who are in any manner obligated under this Guaranty
shall be joint and several. The illegality or unenforceability of one or more
provisions of this Guaranty shall not affect any other provision. Time is of the
essence in the performance of this Guaranty by Guarantor.

                                     -11-
<PAGE>

     27.  Counsel:  Guarantor acknowledges that Guarantor has had adequate
          --------
opportunity to carefully read this Guarantee and to consult with an attorney of
Guarantor's choice prior to signing it.

ESSEX PROPERTY TRUST, INC.,
a Maryland corporation

By___________________________

Name:________________________

Title:_______________________


Address Where Notices to Guarantor are to be Sent:

925 E. Meadow Drive
Palo Alto, California 94303
Attn:  Michael Schall and Jordan E. Ritter
Facsimile: (650) 858-1372

Address Where Notices to Bank are to be Sent:

Bank of America, N.A.
San Francisco CRESG c/o Unit 8940
600 Montgomery Street, 37th Floor
San Francisco, California 94111
Facsimile: (415) 913-3445

                                     -12-