Exhibit 10.12                                                   Salem Ridge

                               EXCHANGE AGREEMENT

                                  by and among

                        BNP Residential Properties, Inc.,

                 BNP Residential Properties Limited Partnership,

                                       and

                            the Contributing Parties

                                  listed herein

                                   Dated as of

                                December 7, 2004


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                               EXCHANGE AGREEMENT

          This EXCHANGE AGREEMENT (the "Agreement") is made as of the 7th day of
December, 2004, by and among BNP Residential Properties, Inc., a Maryland
corporation (the "REIT"), BNP Residential Properties Limited Partnership, a
Delaware limited partnership ("BNP"), Salem Ridge/Shugart, LLC (the "Company"),
and Shugart Management, Inc. ("Contributor").

          WHEREAS, BNP is a Delaware limited partnership having the REIT as its
sole general partner, and the REIT has elected to be qualified as a real estate
investment trust under the Internal Revenue Code of 1986, as amended (the
"Code"); and

          WHEREAS, the Company owns certain real property located in
Winston-Salem, North Carolina; and

         WHEREAS, BNP desires to acquire from Contributor, and Contributor
desires to transfer to BNP, on the terms and conditions set forth herein, all
interests in the Company owned by Contributor as set forth in Schedule A and any
other direct or indirect equity interests Contributor may have, whether now
owned or hereinafter acquired, in the Company or the Property (as defined below
and described on Schedule B attached hereto) (a "Company Interest"); and

         WHEREAS, pursuant to the terms hereof, BNP and the Company desire to
combine their respective businesses subject to the terms, conditions, provisions
and limitations of this Agreement.

          NOW, THEREFORE, in consideration of the premises herein contained, and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:

                                    ARTICLE I
                                   DEFINITIONS

           The following capitalized terms shall have the following meanings for
all purposes of this Agreement and such meanings are equally applicable to the
singular and plural forms of the terms defined. The terms "hereof," "herein,"
"hereunder," and comparable terms refer to the entire agreement with respect to
which terms are used and not to any particular section, subsection, paragraph or
other subdivision thereof.

"Actual Knowledge" for the purposes of this Agreement shall mean information
which is known to an individual or, as to any entity, to the officers, general
partners or managers of such entity without the requirement of additional
inquiry unless such persons are aware of facts or circumstances which would lead
reasonable persons to make or conduct additional inquiry.

"Affiliate" means, as to any Person (as defined below), each of the Persons (i)
which directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with such Person; or (ii) which
beneficially owns or holds 10% or more of any class of the outstanding voting
stock (or in the case of a Person which is not a corporation, 10% or more of the
equity interest) of such Person; or (iii) 10% or more of any class of the
outstanding voting stock (or

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in the case of a Person which is not a corporation, 10% or more of the equity
interest) of which is beneficially owned or held by such Person. The term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether by
ownership of voting stock, by contract, by close family relationships (i.e.,
parent, spouse, child or sibling) or otherwise.

"BNP Partnership Agreement" means the Second Amended and Restated Agreement of
Limited Partnership of BNP Residential Properties Limited Partnership dated
December 1, 1997, as amended through the date hereof, including the amendment to
issue additional Units to the Contributor, as well as other amendments from the
date hereof until the Closing made by BNP in the ordinary course of business.

"Company Financial Statements" means the periodic income statement and balance
sheets provided to BNP (including the schedules attached thereto) for the
Contributing Parties, and specifically excludes any forecasts and projections.

"Contributing Parties" means collectively Contributor and the Company, without
duplication.

"Environmental Law" means any and all federal, state and local laws,
regulations, ordinances and other requirements relating to pollution or
protection of the environment, including, without limitation, laws, regulations
and requirements relating to the ownership, possession, storage and control of
the Property and to emissions, discharges, releases or threatened releases of
storm water, pollutants, contaminants, toxic or hazardous substances, or solid
or hazardous wastes into the environment (including without limitation ambient
air, surface water, groundwater or land), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, toxic or hazardous
substances, or solid or hazardous wastes. The Environmental Laws include,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.

"Improvements" means all buildings, structures, streets, furnishings, parking
lots, landscaping, walls, ponds, culverts, fixtures, utilities, fences,
driveways, loading docks, security systems and other physical features
constructed or assembled on, at, upon or beneath the Property (whether finished
or unfinished).

"Indebtedness" means, without duplication, any obligations for borrowed money
and all obligations to trade creditors, whether heretofore, now or hereafter
owing, arising, due or payable to any Person and howsoever evidenced, created,
incurred, acquired or owing, whether primary, secondary, direct, contingent,
fixed or otherwise and whether matured or unmatured. Without in any way limiting
the generality of the foregoing, Indebtedness specifically includes the
following: (a) all obligations or liabilities of any Person that are secured by
any Lien, claim, encumbrance or security interest upon property; (b) all
obligations or liabilities created or arising under any capital lease of real or
personal property, or conditional sale or other title retention agreement with
respect to property, even though the rights and remedies of the lessor, seller
or lender thereunder are limited to repossession of such property; (c) all
unfunded pension fund, employee medical or welfare obligations and liabilities;
(d) deferred taxes; and (e) all obligations under any

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indemnification agreements, guaranty agreements, letters of credit or other
documents creating such contingent liabilities.

"Lien" means any interest in property securing an obligation owed to, or a claim
by, a person other than the owner of the property, whether such interest is
based on the common law, statute or contract, and including but not limited to
the lien or security interest arising from a mortgage, encumbrance, pledge,
security agreement, conditional sale or trust receipt or a lease consignment or
bailment for security purposes. The term Lien shall include reservations,
exceptions, defects of any kind or nature, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases and other title
exceptions and encumbrances affecting property.

"Outstanding Company Debt Financing" means the Indebtedness of the Company as
described on Schedule 3.1(a)(i) attached hereto including any indemnifications
and guarantees related thereto, which maximum principal amount outstanding as of
the Closing Date shall not exceed Two Million Six Hundred Ten Thousand Dollars
($2,610,000). This stated maximum debt amount shall be comprised of principal
only, and shall not include assumption fees, if any, accrued but unpaid
interest, or any other charges or fees that may accrue in connection with the
assumption of the Outstanding Company Debt Financing, which amounts shall be
satisfied by the Company and/or the Contributor at or prior to Closing.

"Permitted Lien" means (i) liens for 2004 ad valorem taxes not yet due and
payable; (ii) restrictions, easements, covenants, reservations and rights of way
of record as do not detract from the value or interfere with the present use of
a parcel of property; (iii) zoning ordinances, restrictions and other
requirements imposed by governmental authority as do not detract from the value
or interfere with the present use of a parcel of property; and (iv) such
imperfections of title, liens and encumbrances, if any, as do not detract from
the value or interfere with the present use of a parcel of property and which do
not secure obligations for borrowed money or the deferred purchase price of
property.

"Person" means any individual, joint venture, corporation, company, voluntary
association, partnership, trust, joint stock company, unincorporated
organization, association, government, or any agency, instrumentality, or
political subdivision thereof, or any other form of entity.

"Property" shall mean the real property together with any Improvements thereon
and all tangible personal property (including, without limitation, books and
records, furniture, equipment and machinery), intangible assets (including,
without limitation, all guaranties, warranties, plans, specifications,
engineering drawings, non-proprietary software and databases, tenant lists,
marketing materials, signage (on-site and off-site), goodwill, transferable
licenses, permits, certificates of occupancy and other approvals, all
copyrights, logos, designs, trademarks and tradenames and all other intellectual
property), and rights, privileges and interests appurtenant thereto owned by the
Company as more particularly described on the Descriptive Property Exhibit
attached hereto at Schedule B.

"Unit" means a Common Partnership Unit as such term is defined in the BNP
Partnership Agreement.

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In addition, the terms set forth below shall have the meanings ascribed thereto
on the referenced pages.

Term                                             Page


Act..................................................20
Authorizations.......................................24
Blue Sky Laws........................................20
BNP Reports..........................................23
Claim................................................28
Closing...............................................6
Closing Date..........................................5
Closing Documents.....................................6
Code..................................................2
Contracts............................................16
Contribution Price....................................8
Contributor's Representative..........................9
Development Property.................................11
Environmental Assessments............................17
Existing Operating Agreements........................19
Indemnified Party....................................29
Indemnifying Party...................................29
Investigation Period.................................25
Leases...............................................15
Management and Leasing Agreements....................19
Other Properties.....................................24
Post-Closing Adjustment Period........................9
Records..............................................26
Registration Rights Agreement.........................6
Schedule of Leases...................................15
SEC..................................................12
Tax Claim............................................28



                                   ARTICLE II
                          THE TRANSACTIONS AND CLOSING

         2.1      General; Consideration. Subject to the terms, conditions,
provisions and limitations in this Agreement, on the date of the Closing (the
"Closing Date") the parties shall cause the transactions contemplated hereby to
be consummated, including, but not limited to:

                  (a) The contribution of the Contributor's Interests to BNP,
free and clear of Liens other than Permitted Liens, in exchange for that
aggregate number of Units determined by dividing the Contribution Price (as
determined under Article III herein) by 13.50 (each Unit having a value of
$13.50), with such Units being payable to Contributor on the Closing Date; and

                  (b) The termination of the operating agreement of the Company
so that the Company will be governed by the default provisions of the North
Carolina Limited Liability Company Act.

         2.2      Distribution on Units. For the first fiscal quarter of BNP
ending after the date of Closing, partnership distributions attributable to such
quarter payable by BNP to Contributor with respect to the Units issued hereby at
the Closing pursuant to Section 5.1 of the BNP Partnership Agreement shall be
prorated to take into account the period of time during such quarter that such
Units were outstanding. The distributions with respect to such Units for such
quarter shall equal that portion of a full quarterly distribution otherwise
attributable to Units outstanding for the entire quarter determined by
multiplying the amount of such full distribution by a fraction the numerator of
which is the number of days during such quarter that the Units issued hereby are
outstanding and the denominator of which is the number of days in such quarter.
In the event that the Contributor receives a full cash distribution for such
period, it shall reimburse BNP the prorated portion of such distribution within
five (5) days of receipt.

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         2.3      Market Price Fluctuation. EACH OF THE CONTRIBUTOR AND BNP
ACKNOWLEDGES AND AGREES THAT AFTER THE EXECUTION OF THIS AGREEMENT, THE MARKET
VALUE OF THE REIT COMMON STOCK WHICH IS CURRENTLY OUTSTANDING MAY INCREASE OR
DECREASE IN VALUE AS THE RESULT OF MARKET FLUCTUATIONS, AND THAT ANY SUCH
FLUCTUATIONS MAY AFFECT THE VALUE OF THE UNITS. NOTWITHSTANDING THESE
FLUCTUATIONS, BNP WILL NOT BE REQUIRED TO INCREASE THE NUMBER OF UNITS TO BE
ISSUED TO CONTRIBUTOR IN THE EVENT OF A DECREASE IN THE MARKET VALUE OF THE REIT
COMMON STOCK PRIOR TO THE CLOSING. LIKEWISE, CONTRIBUTOR WHOSE PURCHASE PRICE IS
BEING PAID IN UNITS WILL BE ENTITLED TO THAT NUMBER OF UNITS SET FORTH IN THIS
AGREEMENT NOTWITHSTANDING ANY INCREASE IN VALUE OF THE REIT COMMON STOCK PRIOR
TO THE CLOSING.

         2.4      Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Alston & Bird LLP,
Raleigh, North Carolina or such other place as the parties may agree on or
before March 31, 2005.

         2.5      Documents to be Delivered at Closing by the Contributing
Parties.

         (a) At the Closing, Contributor shall deliver to BNP in addition to any
other documents mentioned elsewhere herein, the following (collectively, the
"Closing Documents"):

                           (i) A duly executed Assignment of Interest, which
         Assignment shall be in a form as attached at Schedule C and shall
         contain a warranty of title that Contributor owns Contributor's
         Interests free and clear of all encumbrances;

                           (ii) Any other documents reasonably necessary to
         assign, transfer and convey Contributor's Interests and effectuate the
         transactions contemplated hereby, including quit claim or limited
         warranty deeds for the Property;

                           (iii) A certified copy of all appropriate corporate,
         limited liability company or partnership actions authorizing the
         execution, delivery and performance by Contributor of this Agreement,
         the Closing Documents, and the Ancillary Documents;

                           (iv) The Registration Rights Agreement being entered
         into in connection with the transactions contemplated by this Agreement
         (the "Registration Rights Agreement") duly executed by Contributor; and

                           (v) An opinion from counsel for the Company and
         Contributor in form and content reasonably acceptable to BNP
         substantially to the effect that each of the Company and Contributor is
         duly organized, validly existing and in good standing under the laws of
         the state of its organization, has all applicable power and authority
         to enter into, deliver and perform this Agreement, the Closing
         Documents and the Ancillary Documents, the execution, delivery and
         performance of which Agreement, Closing Documents and Ancillary
         Documents, and the transactions contemplated hereby and thereby, do not
         and will not constitute a breach or a violation of the operating
         agreement or charter of the


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         Company or Contributor, as applicable; and that all applicable action
         necessary for the Company and Contributor to execute and deliver this
         Agreement, the Closing Documents and the Ancillary Documents has been
         taken and that the same have been validly executed and delivered and
         are the valid and binding obligations of the Company and Contributor
         enforceable against it, subject to creditors rights and other normal
         and customary exceptions, in accordance with their terms.

                  (b) At Closing, the Company shall deliver to BNP, in addition
to any other documents mentioned elsewhere herein, the following:

                           (i) Any affidavit required by the title company to
         remove the standard printed exceptions from the title policy and the
         loan policy other than exceptions relating to the Outstanding Company
         Debt Financing.

                           (ii) A certified copy of all appropriate limited
         liability company actions authorizing the execution, delivery and
         performance by the Company of this Agreement, the Closing Documents,
         and the Ancillary Documents.

                           (ii) Such other documents as may be reasonably
         required to close the transactions contemplated by this Agreement.

         2.6      Documents  Required to be  Delivered at Closing by BNP and the
REIT.  BNP and the REIT shall deliver to the Contributor at the Closing, the
following:

                  (i) A copy of the BNP Partnership Agreement duly certified by
         the REIT as true, complete and correct.

                  (ii) An amendment to the BNP Partnership Agreement, duly
         executed by the REIT and all other necessary parties, to evidence the
         issuance of the Units to the Contributor at the Closing pursuant to
         Section 2.1.

                  (iii) A settlement statement with respect to the Closing, duly
         executed by BNP.

                  (iv) The Registration Rights Agreement duly executed by the
         REIT.

                  (v) Such other documents and instruments as may be reasonably
         necessary to consummate the transactions with the Contributing Parties
         under this Agreement.

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                                   ARTICLE III
                       CONTRIBUTION PRICE AND ADJUSTMENTS

         3.1     Contribution Price. The contribution price ("Contribution
Price") for the Property shall be as follows:

                 (a) Closing Consideration. At the Closing, BNP shall issue the
number of Units determined pursuant to Section 2.1(a) herein having an aggregate
value of Four Million Three Hundred Sixty Thousand Dollars ($4,360,000), subject
to increase or decrease by the adjustments in Section 3.2 below, but less the
following amounts:

                          (i) the amount of the Outstanding Company Debt
                  Financing as of the Closing Date;

                          (ii) all accrued but unpaid interest under the
                  Outstanding Company Debt Financing as of the Closing Date; and

                           (iii) any charges or fees associated with property
                  transfer and documentary taxes and all other costs related to
                  the transfer of the Property (including fees, charges and
                  expenses associated with the assumption of the Outstanding
                  Company Debt Financing, all of which shall be paid by the
                  Contributing Parties and shall be a reduction in the
                  Contribution Price.

         3.2      Additional Closing Adjustments.

                  (a) Generally. All real estate taxes, charges and assessments
affecting the Property, all charges for water, sewer, electricity, gas and all
other utilities and operating expenses with respect to the Property, to the
extent not paid or payable by tenants under the Leases (as defined in Section
5.6 below), shall be apportioned on a per diem basis as of midnight on the date
immediately preceding the Closing. All such expenses for the period preceding
the Closing shall be deemed expenses of the Contributor and all such expenses
commencing as of the Closing with respect to the Property shall be deemed to be
expenses of BNP. Amounts owed under this paragraph shall be paid to the party to
whom they are owed in cash at the Closing or in the Post-Closing Adjustment
Period (as defined below) in the same manner as if the underlying real property
were being sold. If any real estate taxes, charges or assessments have not been
finally assessed as of the Closing Date for the then current calendar tax year,
they shall be adjusted at the Closing based upon the greater of (i) the most
recently issued bills therefor or (ii) the best reasonable estimate therefor
after consultations with the appropriate taxing officials.

                  (b) Rent. Except for delinquent rent, all rent under the
Company's Leases and other income attributable to the Property shall be
apportioned on a per diem basis as of midnight on the date immediately preceding
the Closing. All such rent and other income, including commissions earned, for
the period preceding the Closing shall be deemed to be property of the
Contributor, and all rent and other income for any period commencing as of the
Closing and thereafter shall be the property of BNP for the purpose of making
the adjustments set forth herein. Amounts owed under this paragraph shall be
paid to the party to whom they are owed in cash at the

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Closing or during the Post-Closing Adjustment Period. Delinquent rent shall not
be prorated, but shall be deemed the property of the Contributor. Payments
received by BNP from tenants of the Property from and after the Closing with
respect to the Property shall be applied first to rents and other amounts then
due BNP from such tenant and then to such tenant's delinquent rent as of the
time of apportionment. BNP shall use reasonable efforts to collect delinquent
rents for the benefit of the Contributor but in no event shall be obligated to
evict or sue any tenants in order to collect such rents and shall cooperate with
the Contributor in the collection of any delinquent amounts; provided, however,
that the Contributor shall not have any rights to evict such tenants for such
delinquent amounts. Any amounts received by Contributor on account of rent or
other income for the period after the Closing with respect to the Property and
the related personal property shall be turned over to BNP for application in
accordance with the terms of this paragraph. All accounts receivable, notes,
cash and bank accounts of the Company existing as of the Closing Date shall be
transferred at Closing to the Contributor, other than the remaining balance of
any escrow accounts for tenant improvements and lease commissions held by the
Company, the amount necessary to pay prorations of taxes, security deposits and
amounts which belong to BNP after making the closing adjustments for rent and
operating expenses.

                  (c) Preclosing Expenses and Liabilities. The parties
acknowledge that not all invoices for expenses incurred with respect to the
Property prior to the Closing will be received by the Closing and that a
mechanism needs to be in place so that such invoices can be paid as received.
All of the prorations referred to above will be done on an interim basis at the
Closing and will be subject to final adjustment in accordance with the
provisions hereof within 60 days or such other agreed upon period of time
following Closing (the "Post-Closing Adjustment Period"). Upon receipt by BNP
after Closing of an invoice for the Property's operating expenses which are
attributable in whole or in part to a period prior to the Closing and which were
not apportioned at Closing, BNP shall submit to Grover F. Shugart, Jr., as agent
for the Contributor ("Contributor's Representative"), a copy of such invoice
with such additional supporting information as Contributor's Representative
shall reasonably request. Within 10 days of receipt of such copy, the
Contributor shall pay to BNP an amount equal to the portion of such invoice
attributable to the period ending as of midnight on the date immediately
preceding the Closing apportioned on a per diem basis.

                  (d) Security Deposits/Tenant Inducements. With respect to the
Property to be acquired at Closing, the Company shall pay to BNP in cash at
Closing an amount equal to the sum of (i) the security and other deposits, if
any, which the Company is holding pursuant to the Leases, and (ii) any other
deposits or advances received by the Company relating to services yet to be
provided by the Company, including, without limitation, any prepaid laundry
contract fees, redecoration costs and pet fees.

                                   ARTICLE IV
                            COVENANTS AND AGREEMENTS

         4.1      Operation of Business. After making adequate provisions for
all prorations contemplated herein, the Company may make cash distributions of
all cash on hand immediately prior to the Closing and may otherwise only
distribute all claims or other evidences of money owed to them, it being
understood that, except as otherwise provided herein, no claims, accounts

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receivable, notes receivable or other rights to payment of the Company shall
remain assets of the Company, as the case may be, as of the Closing Date. BNP
and the Contributor agree to use their reasonable efforts to reconcile
prorations and other closing adjustments within the Post-Closing Adjustment
Period.

         4.2      No Brokers. Each of the Contributing Parties covenants,
represents and warrants to BNP that, no broker or finder or agent has been
involved or engaged by it in connection with the transactions contemplated
hereby and, each hereby agrees to indemnify and hold harmless BNP from and
against any and all broker's or finder's fees, commissions or similar charges
incurred or alleged to have been incurred by such Contributing Party in
connection with the transactions contemplated hereby and any and all loss,
liability, cost or expense (including without limitation reasonable fees of
counsel satisfactory to BNP) arising out of any claim that the indemnifying
party incurred any such fees, commissions or charges.

         4.3      Lock-Up. The Units received hereby may not be disposed of
during the applicable Lock-up Period (as defined in the Registration Rights
Agreement), except that a Contributor:

                  (i) who is a natural person may dispose of Units to his
         spouse, siblings, parents or any natural or adopted children or other
         descendants or to any personal trust or family partnership in which
         such family members or Contributor retain the entire beneficial
         interest;

                  (ii) that is a limited liability company may dispose of Units
         to one or more other entities that are wholly owned and controlled,
         legally and beneficially, by Contributor or by a Person or Persons that
         directly or indirectly wholly owns and controls Contributor;

                  (iii) may dispose of Units on his death to Contributor's
         estate, executor, administrator or personal representative or to
         Contributor's beneficiaries pursuant to a devise or bequest or by the
         laws of descent and distribution;

                  (iv) may dispose of Units as a bona fide gift; and

                  (v) may dispose of Units pursuant to a pledge, grant of
         security interest or other encumbrance effected in a bona fide
         transaction with an unrelated and unaffiliated pledgee;

provided, however, that in the case of any transfer of Units pursuant to clauses
(i), (ii), (iv) and (v), the transferee or transferees shall each be an
"accredited investor" within the meaning of Rule 501(a) of Regulation D under
the Securities Act. In the event Contributor disposes of Units as described in
this paragraph, such Units shall remain subject to this lock-up provision and,
as a condition of the validity of such disposition, the transferee (and any
transferee who acquires Units from a pledgee upon foreclosure) shall be required
to agree in writing to similar lock-up provisions as set forth herein.

         4.4      Section 754 Elections. The Contributor and the Company agree
(i) to cause an election under Section 754 of the Code to be included in the
closing federal partnership tax returns of the Company indicating BNP as a
partner; (ii) to prepare, at their expense, and timely file

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closing partnership tax returns for the period ending on the Closing Date for
the Company; and (iii) to present such tax returns to BNP for its approval,
which shall not be unreasonably withheld, sufficiently in advance of the filing
of such returns.

         4.5      Agent of Contributing Parties. Each of the Contributing
Parties hereby irrevocably appoints Grover F. Shugart, Jr. as agent of the
Company for the purposes of consummating the transactions contemplated hereby
and otherwise carrying out the terms of this Agreement, and taking for such
entity all steps deemed necessary or advisable by Grover F. Shugart, Jr., in
such capacity, for carrying out the terms of this Agreement. The Company
acknowledges and agrees that BNP and the REIT, respectively, and their
respective partners, officers, directors, employees, agents, advisors,
accountants, and attorneys, may rely and act upon the action or omission to act
of this appointed agent in carrying out the terms of this Agreement or in
binding the Company to the terms of this Agreement in any way.

         4.6      Contributions of Assets. All personal property used by the
Contributing Parties in the operation and management of the Property including
but not limited to that listed on Schedule 4.6 will be transferred to BNP in
conjunction with the Closing and as partial consideration for the transactions
otherwise contemplated by this Agreement.

         4.7      Non-Compete Agreements. Each Contributing Party agrees not to,
and warrants that no Affiliate will, directly or indirectly, build, purchase,
acquire, own or manage any property competing with any business or property
owned or managed by BNP (or any of its Affiliates) within a three-mile radius,
without BNP's consent, for such period of time that the Contributor (assuming
the redemption of the Contributor's Units for shares of the REIT's common stock)
owns (directly or indirectly), in the aggregate, more than 5% of the REIT's
outstanding common stock.

         4.8      Future Development Rights. For so long as the Contributor
beneficially owns (directly or indirectly), in the aggregate, more than 5% of
the REIT's outstanding securities (assuming the redemption of the Contributor's
Units for shares of the REIT's common stock), BNP shall have a right of first
refusal to acquire all future multi-family properties developed directly or
indirectly by Contributor, or any Affiliate thereof (a "Development Property")
within a three-mile radius of the Property (such development being subject to
the prior approval of BNP under Section 4.7 above). The Contributor shall not
sell any Development Property without first offering BNP the option to purchase
such Development Property on the same terms as offered to a third party. BNP
shall have 30 days to decide whether or not to purchase such Development
Property on such terms. If BNP declines to exercise this option, the Development
Property may be sold within the next 180 days on terms no more favorable than
those presented to BNP. If the Development Property is not sold within such
180-day period, BNP will again have a right of first refusal prior to any sale
of the Development Property. The decision whether to exercise such option with
respect to any Development Property shall be made by the REIT's board of
directors on a case-by-case basis with any director that is a Contributor or
Affiliated with a Contributor abstaining from such decision.

         4.9      Excess Shares. If Contributor is ever deemed to hold "Excess
Shares" as defined in the Articles of Incorporation, the REIT will use
reasonable efforts to try to enable Contributor to

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keep such shares; provided that the REIT need not take any steps that would
jeopardize its status as a REIT or that would require the REIT to issue
additional securities.

         4.10      Assignment of Warranties. The Contributing Parties will use
their best efforts to cause the maker of any warranties benefiting the Property
to consent to the transfer of the Interests if necessary to preserve the
validity and enforceability of said warranties.

         4.11     Completion of Construction and Repairs. Schedule 4.11 lists
all construction, repairs, renovations and similar work in progress at the
Property as of the execution date of this Agreement. The Contributing Parties
agree to complete or have completed on or before the Closing Date all work
listed on Schedule 4.11, as well as any additional repairs jointly agreed upon
by BNP and the Contributing Parties during BNP's Investigation Period, at the
Contributing Parties' sole cost and expense. Such work shall be completed to the
reasonable satisfaction of BNP.

         4.12     Public Announcement. Except as otherwise required by law or
regulatory agencies (including, without limitation, the Securities and Exchange
Commission (the "SEC") and the American Stock Exchange), none of the parties
hereto may make public announcements with respect to the transactions
contemplated by this Agreement without the approval of the other parties, which
approval may be withheld for any reason.

         4.13     Confidentiality. Each party hereto shall ensure that all
confidential information which such party or any of its respective officers,
directors, employees, counsel, agents or accountants may now possess or may
hereafter create or obtain relating to the financial condition, results of
operations, business, properties, assets, liabilities or future prospects of the
other party, any Affiliate or subsidiary of the other party or any tenant,
customer or supplier of such other party, or any such Affiliate or subsidiary,
shall not be published, disclosed or made accessible by any of them to any other
Person at any time or used by any of them, in each case without the prior
written consent of the other party; provided, however, that the restrictions of
this sentence shall not apply: (i) to the extent that disclosure may otherwise
be required by law; (ii) to the extent such information shall have otherwise
become publicly available; or (iii) to disclosure by or on its behalf to its
lender(s) for the purpose of obtaining financing in connection with the
acquisition of the Property. In the event this Agreement is terminated, each
party promptly will deliver or certify destruction to the other party all
documents, work papers and other material (and any reproductions thereof)
obtained by each party or on its behalf from such other party or its Affiliates
or subsidiaries in connection with the subject transaction, whether so obtained
before or after the execution hereof, and will itself not use any information so
obtained and will use its good faith and diligent efforts to have any
information so obtained kept confidential and not used in any way detrimental to
such other party, subject to the limitations set forth above.

         4.14     Relationship of Parties. The parties agree that nothing
contained herein shall constitute any party the agent or legal representative of
the other (except as provided at Section 4.5 hereto) for any purpose whatsoever,
nor shall this Agreement be deemed to create any form of business organization
between the parties hereto, nor is either party granted any right or authority
to assume or create any obligations or responsibility on behalf of the other
party, nor shall either party be in any way liable for any debt of the other.

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<PAGE>

         4.15     Further Acts. Each party agrees to perform any further acts
and to execute, acknowledge and deliver any documents which may be reasonably
necessary to carry out the provisions of this Agreement.

         4.16     Consent to Transfer of Interests and Termination of the
Operating Agreement of the Company. Contributor agrees to and hereby does amend
the operating agreement for the Company to allow for the transactions
contemplated hereby. Contributor hereby irrevocably agrees to the termination
of the operating agreement of the Company effective as of the Closing.

         4.17     Certain Expenses.

                  (a) If the Closing occurs, BNP shall pay for the costs of any
owners title insurance policy or endorsements thereto and the costs of recording
any deed or similar instrument in connection with the transaction contemplated
by this Agreement. If BNP determines in its sole discretion that a new ALTA
survey is necessary, then BNP shall be responsible for ordering the ALTA survey
(at BNP's costs and in a form required by BNP); provided, however, that if a new
ALTA survey is required by the existing lender under the Outstanding Company
Debt Financing, such costs shall be borne by the Company.

                  (b) Whether or not the Closing occurs, BNP and the
Contributing Parties are each responsible for their respective legal fees and
Contributor shall be responsible for payment of his pro rata portion of legal
fees associated with this transaction.

                  (c) Notwithstanding anything to the contrary herein, the
Contributing Parties are responsible for the payment of any and all fees,
charges and expenses that arise in connection with the assumption of the
Outstanding Company Debt Financing.


                                    ARTICLE V
                        REPRESENTATIONS AND WARRANTIES OF
                              CONTRIBUTING PARTIES

         To induce BNP and the REIT to enter into this Agreement and the
transactions contemplated hereby, unless otherwise indicated, each of the
Contributing Parties jointly and severally represents and warrants that the
statements contained in Article V are true, correct and complete on the date
hereof and will be true, correct and complete on the Closing Date. It is the
express intention and agreement of each of the Contributing Parties that the
representations and warranties set forth in Article V shall survive the
consummation of the transactions contemplated in this Agreement, but only to the
extent expressly provided in Article X hereof.

         5.1      Consents. Except as disclosed on Schedule 5.1 attached hereto,
to the Actual Knowledge of each Contributing Party, (i) no consents, approvals,
waivers, notifications, acknowledgments or permissions which have not been
obtained are required in order for any of the Contributing Parties to fully
perform its, his or her respective obligations under this Agreement or which, if
left unobtained at Closing and thereafter, would have a material adverse affect
on the value, operation, occupation, use or development of the Property, and
(ii) the execution and

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delivery of this Agreement by the Contributing Parties and the consummation of
the transactions contemplated hereby, including without limitation the execution
of any related agreements, will not require the consent of, or any prior filing
with or notice to or payment to, any governmental authority or other Person.

         5.2      Disclosure. To the Actual Knowledge of each of the
Contributing Parties, the representations and warranties contained in this
Agreement (including Schedules and Exhibits and documents or instruments
delivered in connection herewith) or in any information, statement, certificate
or agreement furnished or to be furnished to BNP by any of the Contributing
Parties in connection with the Closing pursuant to this Agreement, do not
contain any untrue statement of a material fact or omit to state any material
fact necessary to make the statements and information contained herein or
therein, in light of the circumstances in which they are made, not misleading.

         5.3      Absence of Conflicts. Except as set forth on Schedule 5.1 and
Schedule 5.3 attached hereto, to the Actual Knowledge of each Contributing
Party, the execution, delivery and performance of this Agreement by the
Contributing Parties and the consummation of the transactions contemplated
hereby, including without limitation, the execution and delivery of any
documents, instruments or agreements contemplated hereby, will not (after a
lapse of time, due notice or otherwise) (a) conflict with, violate or result in
any breach or default under (i) any provision of any operating agreement or
organizational document of any of the Contributing Parties; (ii) any law,
statute, rule or regulation of any administrative agency or governmental body,
or any judgment, order, writ, stipulation, injunction, award or decree of any
court, arbiter, administrative agency or governmental body to which the
Contributing Parties or the Property are subject; or (iii) any indenture,
agreement, instrument or other contract to which the Contributing Parties may be
bound or relating to or affecting their assets (except for the documents and
instruments evidencing and/or securing the Outstanding Company Debt Financing);
or (b) except for the remedies imposed by the documents evidencing the
Outstanding Company Debt Financing, result in the acceleration of, create in any
party the right to accelerate, terminate, modify or cancel, or require any
notice under or result in the creation or imposition of any Lien on the Property
or related assets in accordance with the terms of this Agreement under any
indenture, mortgage, contract, agreement, lease, sublease, license, sublicenses,
franchise, permit, instrument of Indebtedness, security agreement or other
undertaking or instrument to which the Contributing Parties may be bound or
affected.

         5.4      Certification of Company Financial Statements. The Company
Financial Statements are true, correct and complete in all material respects,
are prepared in accordance either with generally acceptable accounting
principles or federal income tax principles, consistently applied, and fairly
present the financial condition of the Contributing Parties.

         5.5      Power and Authority of Contributing Parties.

                  (a) Each of the Contributing Parties which is not an
individual has been duly formed and is validly existing under the laws of its
state of formation. The Company interests shown on Schedule A represent all of
the membership interests in the Company owned by Contributor and represent all
of the issued and outstanding membership interests of the Company. All
membership interests in the Company have been validly issued and fully paid.
True, correct

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and complete copies of each of the operating agreements and other organizational
documents, as applicable, of the Contributing Parties and all amendments
thereto, and the minutes of any meetings of the members of the Contributing
Parties, have been submitted to BNP prior to the date of this Agreement. Each of
the Contributing Parties has full power and authority to own and operate its
properties and to enter into and perform its obligations under this Agreement
and the documents and instruments contemplated hereby to which they are a party,
and the execution, delivery and performance of this Agreement have been duly
authorized by all requisite actions on the part of each of the Contributing
Parties. This Agreement constitutes, and the documents and instruments
contemplated hereby and other instruments and documents to be executed and
delivered by the Contributing Parties, as applicable, hereunder will, when
executed, constitute the legal, valid and binding obligations of the
Contributing Parties, respectively, enforceable against them in accordance with
their respective terms. To the Actual Knowledge of each of the Contributing
Parties, the Closing of this Agreement will effectuate the transfer of all of
the ownership interests in the Company.

         5.6      Rent Roll and Leases. To the Actual Knowledge of each
Contributing Party, the schedule of leases attached hereto as Schedule 5.6A (the
"Schedule of Leases") is a true, correct and complete schedule of all leases,
subleases and rights of occupancy in effect with respect to the Property (the
"Leases"), and there have been no material changes to the Leases. Except as set
forth on the Schedule of Leases, there are no other leases, subleases, tenancies
or other rights of occupancy in effect with respect to the Property other than
the Leases. True, correct and complete copies of the Leases, together with all
amendments and supplements thereto and all other documents and correspondence
relating thereto, have been delivered or made available to BNP and its agents.
Schedule 5.6A includes the rent roll information and is, as of the date shown
thereon, true and correct in all material respects to the Actual Knowledge of
each Contributing Party. To the Actual Knowledge of each of the Contributing
Parties, the Schedule of Leases sets forth, as of such date, (i) a list of all
tenants under the Leases, (ii) all arrearages owing from such tenants under such
Leases (listed on delinquency and default reports attached to and made a part
thereof), (iii) the expiration date of the term of such Leases, (iv) the rent
the tenant under such Lease is currently obligated to pay, (v) the amount of any
concession given in connection with any such Lease at any time, (vi) the current
outstanding balances of any security deposits held pursuant to any Leases, (vii)
any prepayments of rent by any tenant under any Lease of more than one (1) month
in advance (excluding security deposits which are delineated on the list
attached to the Schedule of Leases and made a part thereof) and (viii) each
Contributing Party represents that to his or her Actual Knowledge, there are no
rental concessions or abatements under a Lease applicable to any period
subsequent to the Closing. Except as set forth on the Schedule of Leases, to the
Actual Knowledge of the Contributing Parties, all such Leases are valid and
enforceable and presently in full force and effect, and none of the Leases have
been assigned. Except as set forth on Schedule 5.6B attached hereto, none of the
Contributing Parties, or to the Actual Knowledge of each Contributing Party, any
lessee under any Lease, is in default under such Lease, and to the Actual
Knowledge of each Contributing Party, there is no event which, but for the
passage of time or the giving of notice, or both, would constitute a default
under such Leases, except such defaults that would not have a material adverse
effect on the condition, financial or otherwise or on the earnings, business
affairs or business prospects of any of the Contributing Parties or the
Property. Except as disclosed on Schedule 5.6B attached hereto, to the Actual
Knowledge of each of the Contributing Parties, the consummation of the
transactions contemplated by this Agreement will not give rise to any breach,


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default or event of default under any of the Leases. Each of the Leases is
assignable by the Company and none of the Leases requires the consent or
approval of any party in connection with the transactions contemplated by this
Agreement. Notwithstanding anything to the contrary contained herein, the
parties acknowledge that the Property is currently being managed by BNP. The
Contributing Parties shall not be liable for a breach of this Section 5.6 based
on a failure to disclose if the fact or facts that were not disclosed is or are
within the Actual Knowledge of BNP, obtained in connection with its duties as
property manager of the Property.

         5.7      No Contracts. No agreements, undertakings or contracts (the
"Contracts") affecting the Property or the Company, written or oral, will be in
existence as of the Closing, except as set forth on Schedule 5.7, Schedule
3.1(a)(i), Schedule 5.6A and Schedule 5.19 attached hereto, all of which must
have been approved by BNP in writing.

         5.8      Liabilities; Indebtedness. Except for the Outstanding Company
Debt Financing, the Leases, the liabilities expressly assumed by BNP under the
provisions of this Agreement, including the operating agreements listed on
Schedule 5.19 which are assumed by BNP hereunder, and those liabilities
disclosed to BNP in writing on Schedule 5.8 hereto, the Company has not incurred
any Indebtedness except in each instance for trade payables and any other
customary and ordinary expenses in the ordinary course of business that will be
paid and discharged in full by the Company as of the Closing.

         5.9      Insurance. The Company currently maintains or causes to be
maintained all of the public liability, casualty and other insurance coverage
with respect to the Property and its businesses as set forth on Schedule 5.9
attached hereto. All such insurance coverage shall be maintained in full force
and effect through the Closing and all premiums due and payable thereunder have
been, and shall be, fully paid when due.

         5.10     Personal Property. All equipment, fixtures and personal
property located at or on the Property, which is owned or leased by the Company
shall remain at the Property and shall not be removed prior to the Closing,
except for equipment that becomes obsolete or unusable, which may be disposed of
or replaced in the ordinary course of business. The personal property of the
Company is not subject to any Liens except for Permitted Liens.

         5.11     Claims or Litigation. Except as set forth on Schedule 5.11
attached hereto, none of the Contributing Parties has received notice of any
claim, demand, suit or unfiled Lien against the Contributing Parties or the
Property nor to any of the Contributing Parties' Actual Knowledge has any
proceeding or litigation of any kind, pending or outstanding, been filed before
any court or administrative, governmental or regulatory authority, agency or
body, domestic or foreign, and, to the Actual Knowledge of any of the
Contributing Parties, no order, judgment, injunction or decree of any court,
tribunal or other governmental authority has been filed against the Contributing
Parties or the Property or, to the Actual Knowledge of any of the Contributing
Parties, threatened, or likely to be made or instituted, which would have a
materially adverse affect on the business or financial condition of any of the
Contributing Parties or the Property or would interfere with a Contributing
Party's ability to execute or deliver or perform its obligations under this
Agreement or in any way be binding upon BNP or affect or limit BNP's full use
and enjoyment of the Property.

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<PAGE>

         5.12     Hazardous Substances. Each of the Contributing Parties
represents, to its Actual Knowledge, that (x) as of the date hereof and (y)
except as set forth in the environmental audit reports provided to BNP by the
Contributing Parties and in the environmental assessments of the Property
conducted on behalf of BNP (the "Environmental Assessments"), as of the Closing
Date, the Contributing Parties have not generated, stored, released, discharged
or disposed of hazardous substances or hazardous wastes at, upon or from the
Property in violation of any Environmental Law, order, judgment or decree or
permit, or in connection with which remedial action would be required under any
Environmental Law, order, judgment, decree or permit. To the Actual Knowledge of
each of the Contributing Parties, (x) as of the date hereof and (y) except as
set forth in the environmental audit reports provided to BNP by the Contributing
Parties or in the Environmental Assessments, as of the Closing Date, no
hazardous substances or hazardous wastes have otherwise been generated, stored,
released, discharged or disposed of from, at or upon the Property in violation
of any Environmental Law. To the Actual Knowledge of each of the Contributing
Parties, (x) as of the date hereof and (y) except as set forth in the
environmental audit reports provided to BNP by the Contributing Parties or in
the Environmental Assessments, as of the Closing Date, no underground storage
tanks are located on the Property. As used in this Agreement, the terms
"hazardous substances" and "hazardous wastes" shall have the meanings set forth
in the Comprehensive Environmental Response, Compensation and Liability Act, as
amended, and the regulations thereunder, the Resource Conservation and Recovery
Act, as amended, and the regulations thereunder, and the Federal Clean Water
Act, as amended, and the regulations thereunder, and such terms shall also
include asbestos, petroleum products, radioactive materials and any regulated
substances under any Environmental Law, regulation or ordinance.

         5.13     Compliance with Laws. The Contributing Parties possess such
certificates, authorities or permits issued by the appropriate state or federal
regulatory agencies or bodies necessary to conduct the business to be conducted
by them (other than any environmental certification, authorities or permits
required by state or federal agencies to be obtained by tenants of the Property)
and none of the Contributing Parties has received any written notice of
proceedings relating to the revocation or modification of any such certificate,
authority or permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would materially and adversely affect
the condition, financial or otherwise, or the earnings, business affairs or
business prospects of any of the Contributing Parties or the Property, as
applicable. To the Actual Knowledge of each of the Contributing Parties, there
is no existing violation of any federal, state, county or municipal law,
ordinance, order, code, regulation or requirement affecting any of the
Contributing Parties or the Property that would have a material, adverse effect
on the financial condition, business or prospects of any of the Contributing
Parties or the Property. Except as otherwise disclosed to BNP in writing, to the
Actual Knowledge of each of the Contributing Parties, there has been no material
misstatement of a fact or misrepresentation of a fact herein or in any other
written document submitted by any of the Contributing Parties to BNP. Except as
otherwise disclosed to BNP in writing, to the Actual Knowledge of each of the
Contributing Parties, there are no zoning, environmental or other land use
regulation proceedings instituted against the Property that would materially,
adversely affect the use, occupancy or operation of the Property. To the Actual
Knowledge of each of the Contributing Parties, the Company has obtained all
material licenses, permits, certificates and authorization necessary to conduct
its business.

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         5.14     Employees. The Company does not presently have any employees
nor has the Company ever had any employees.

         5.15     Condemnation and Moratoria. Except as set forth at Schedule
5.15, to the Actual Knowledge of each of the Contributing Parties, there are
(i) no pending or threatened condemnation or eminent domain proceedings, or
negotiations for purchase in lieu of condemnation, which affect or would affect
any portion of the Property; (ii) no pending or threatened moratoria on utility
or public sewer hook-ups or the issuance of permits, licenses or other
inspections or approvals necessary in connection with the construction or
reconstruction of Improvements, including without limitation tenant
Improvements, which affect or would affect any portion of the Property; and
(iii) no pending or threatened proceeding to change adversely the existing
zoning classification as to any portion of the Property. No portion of the
Property is a designated historic property or located within a designated
historic area or district, and to the Actual Knowledge of each of the
Contributing Parties, there are no graveyards or burial grounds located within
the Property. BNP shall be entitled to all compensation received from any
governmental authority relating to the proceedings or negotiations described at
Schedule 5.15.

         5.16     Condition of Improvements. To the Actual Knowledge of each of
the Contributing Parties after reasonable inquiry, (x) as of the date hereof and
(y) except as otherwise disclosed to BNP during the due diligence process
related to the Property by its independent engineers or others conducting such
due diligence, as of the Closing Date, there is no material defect in the
condition of (i) the Property, (ii) the Improvements thereon, (iii) the roof,
foundation, load-bearing walls or other structural elements thereof, (iv) any
drainage or soil condition of any nature, or (v) the mechanical, electrical,
plumbing and safety systems therein, nor any material damage from casualty or
other cause, nor any soil condition of any nature that will not support all of
the Improvements currently thereon without the need for unusual or new
subsurface excavations, fill, footings, caissons or other installations. All
vacant apartments within the Improvements shall be in rentable condition as of
the Closing Date.

         5.17     Taxes. Except as set forth on Schedule 5.17 attached hereto
and the ad valorem taxes assessed on the Property, (i) all tax or information
returns required to be filed on or before the date hereof by or on behalf of the
Contributing Parties or the Property have been filed and all such tax or
information returns required to be filed hereafter will be filed on or before
the date due in accordance with all applicable laws prior to the incurrence of
any penalties or interest thereon and all taxes shown to be due on any returns
have been paid or will be paid when due; and (ii) to the Actual Knowledge of
each of the Contributing Parties, there is no action, suit or proceeding pending
against or threatened with respect to any of the Contributing Parties or the
Property in respect of any tax, nor is any claim for additional tax asserted by
any taxing authority. True, correct and complete copies of all federal, state
and local income and other tax returns filed by the Company have been provided
to BNP by the Contributor. None of the Contributing Parties nor any of their
respective federal, state and local income or franchise tax returns are the
subject of any audit or examination by any taxing authority. None of the
Contributing Parties has executed or filed with the Internal Revenue Service or
any other taxing authority any agreement now in effect extending the period for
assessment or collection of any income or other taxes.

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<PAGE>

         5.18     Management Agreements. All management, leasing, development or
service and similar agreements in effect entered into by any of the Contributing
Parties or any Affiliates of the Contributing Parties relating to the Property
are described on Schedule 5.18 attached hereto (collectively, the "Management
and Leasing Agreements"), and other than those approved by BNP in writing, all
such Management and Leasing Agreements relating to the Property shall be
terminated as of the Closing Date and thereafter shall be void and of no further
force and effect.

         5.19     Operating Agreements. True, complete and correct copies of all
agreements pertaining to the operation of the Property as of the date hereof
(collectively, the "Existing Operating Agreements") have been provided or made
available to BNP. The Existing Operating Agreements are, to the Actual Knowledge
of each of the Contributing Parties, in full force and effect, the Company is
not in default of any of its material obligations under any of such Existing
Operating Agreements, and except for those set forth on Schedule 5.19 attached
hereto, all Existing Operating Agreements are terminable on not more than thirty
(30) days prior written notice and without payment of any penalty. At the
Closing with respect to the Property, true, complete and correct copies of such
Existing Operating Agreements shall have been provided or made available to BNP
and, to the Actual Knowledge of each of the Contributing Parties, the Existing
Operating Agreements shall be, unless otherwise described in writing to BNP or
except as otherwise provided herein, (i) in full force and effect and (ii) free
from any default by the Company of any of its material obligations under any of
them. The Contributing Parties shall advise BNP immediately of any default by
any party to an Existing Operating Agreement. BNP does not assume any obligation
under any Existing Operating Agreement for acts or omissions which occur prior
to Closing.

         5.20     Absence of Certain Changes. Since December 31, 2003, except as
otherwise set forth in this Agreement, to the Actual Knowledge of each of the
Contributing Parties, there has not been with respect to the Company:

                  (i) any material adverse change in the financial condition of
         the Company;

                  (ii) any adverse change in the condition of the property,
         business or liabilities of the Company except normal and usual changes
         in the ordinary course of business which have not been materially
         adverse;

                  (iii) any damage, destruction or loss, whether or not covered
         by insurance, materially and adversely affecting the properties or
         business of the Company;

                  (iv) any sale, abandonment or other disposition by the Company
         of any interest in the Property, or of any personal property owned by
         the Company, other than in the ordinary course of the Company's
         business;

                  (v) any change in the accounting methods or practices by the
         Company or in depreciation or amortization policies theretofore used or
         adopted;

                  (vi) any material contractual liability incurred by the
         Company, contingent or otherwise, other than for operating expenses,
         obligations under executory contracts incurred

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<PAGE>

         for fair consideration and taxes accrued with respect to operations
         during such period, all incurred in the ordinary course of business; or

                  (vii) any other material adverse change in the business of the
         Company or the Property.

         5.21     Tradename. There have never been any Liens or pending or
threatened third-party claims for infringement or unlawful use of the tradename
used by the Company, and to the Actual Knowledge of each of the Contributing
Parties the Company has the right to sell, transfer, assign and convey such
tradename to BNP, provided, however, no party has filed for any protection under
federal or state trademark laws and no Contributing Party has taken any steps
other than use to secure any common law proprietary interest in such tradename.

         5.22     Title. The Company has good and marketable fee simple title to
the Property, and as of Closing there will be no Liens or other defects of title
except Permitted Liens.

         5.23     Certain Liens. All labor and services performed and materials
furnished to the Property have been paid for in full and to the best of the
Contributing Parties' knowledge, there exists no basis for which a mechanic's,
materialman's or similar Lien can properly be claimed against the Property or
any part thereof.

         5.24     Physical Condition of Property. The Improvements and the
rights of way and easements on, over and across the Property remain as shown on
the survey prepared by Foster-Bullard Associates, dated April 23, 2003.

                                   ARTICLE VI
                        REPRESENTATION OF THE CONTRIBUTOR

Contributor hereby represents and warrants to BNP and the REIT as follows:

                  (i) Contributor will be acquiring the Units to be received by
         him or her for his or her own account and not with the view to the sale
         or distribution of the same or any part thereof in violation of the
         Securities Act of 1933, as amended (the "Act");

                  (ii) Contributor understands that the Units to be issued to
         Contributor will not be registered under the Act, or the securities
         laws of any state ("Blue Sky Laws") by reason of a specific exemption
         or exemptions from registration under the Act and applicable Blue Sky
         Laws and that the REIT's and that BNP's reliance on such exemptions is
         predicated in part on the accuracy and completeness of the
         representations and warranties of Contributor;

                  (iii) Subject to the rights and obligations of the
         Registration Rights Agreement, Contributor understands that, for the
         reasons set forth in subparagraph (ii) above, the Units may not be
         offered, sold, transferred, pledged, or otherwise disposed of by
         Contributor except (i) pursuant to an effective registration statement
         under the Act and any applicable Blue Sky Laws, (ii) pursuant to a
         no-action letter issued by the SEC to the effect that a proposed
         transfer of the Units (or shares of Common Stock issued upon exchange
         of the


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<PAGE>

         Units) may be made without registration under the Act, together with
         either registration or an exemption under applicable Blue Sky Laws, or
         (iii) upon BNP or the REIT, as the case may be, receiving an opinion of
         counsel knowledgeable in securities law matters and reasonably
         acceptable to BNP or the REIT, as the case may be, to the effect that
         the proposed transfer is exempt from the registration requirements of
         the Act and any applicable Blue Sky Laws, and that, accordingly,
         Contributor must bear the economic risk of an investment in the Units
         (and the shares of Common Stock issued upon exchange of the Units) for
         an indefinite period of time;

                  (iv) Contributor is an "accredited investor" within the
         meaning of Rule 501(a) promulgated under the Act;

                  (v) Contributor understands that an investment in BNP and the
         REIT involves substantial risks; and Contributor has had the
         opportunity to review all documents and information which it has
         requested concerning its investment in BNP and the REIT and has had the
         opportunity to ask questions of the management of BNP and the REIT,
         which questions, if any, were answered to its satisfaction;

                  (vi) Contributor understands that any document that evidences
         the Units (and any unregistered shares of Common Stock issued upon
         exchange of the Units) will bear a legend substantially to the effect
         of the following:

                      The securities represented by this document have not been
                      registered under the Securities Act of 1933, as amended
                      (the "Act"), or the securities laws of any state. The
                      securities may not be offered, sold, transferred, pledged
                      or otherwise disposed of without an effective registration
                      statement under the Act and under any applicable state
                      securities laws, receipt of a no-action letter issued by
                      the Securities and Exchange Commission (together with
                      either registration or an exemption under applicable state
                      securities laws) or an opinion of counsel acceptable to
                      BNP Residential Properties Limited Partnership that the
                      proposed transaction will be exempt from registration
                      under the Act and applicable state securities laws.

         and that BNP or the REIT, as the case may be, reserves the right to
         place a stop order against the transfer of the Units (and any
         unregistered shares of Common Stock issued upon exchange of the Units),
         and to refuse to effect any transfers thereof, in the absence of
         satisfying the conditions contained in the foregoing legend; and

                  (vii) The address set forth under Contributor's name in
         Schedule 11.1 is the address of the Contributor's principal residence
         or principal place of business.

                                   ARTICLE VII
                         REPRESENTATIONS AND WARRANTIES
                               OF BNP AND THE REIT

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<PAGE>

         To induce the Contributing Parties to enter into this Agreement and the
transactions contemplated hereby, BNP and the REIT hereby represents and
warrants to the Contributing Parties that the statements contained in this
Article VII are true, correct and complete as of the date hereof and will be
true, correct and complete on the Closing Date. It is the express intention and
agreement of BNP that the foregoing representations and warranties shall survive
the consummation of the transactions contemplated in this Agreement, but only to
the extent expressly provided in Article X hereof.

         7.1      Organization and Authority.

                  (a) BNP has been duly formed and is validly existing as a
Delaware limited partnership and is duly qualified or licensed to transact
business as a foreign partnership in good standing in the states of the United
States where the nature or conduct of its business requires it to be so
qualified or licensed, except for such jurisdictions in which the failure to be
so qualified or licensed is not reasonably likely to have, individually or in
the aggregate, a material adverse effect on BNP. BNP has all power and authority
under its Partnership Agreement and its certificate of limited partnership to
enter into this Agreement and to enter into and deliver all of the documents and
instruments required to be executed and delivered by BNP and to perform its
obligations hereunder and thereunder.

(b) The REIT has been duly formed and is validly existing as a Maryland
corporation and has elected under the Code to be treated as a real estate
investment trust, and is duly qualified or licensed to transact business as a
foreign corporation in good standing in the states of the United States where
the nature or conduct of its business requires it to be so qualified or
licensed, except for such jurisdictions in which the failure to be so qualified
or licensed is not reasonably likely to have, individually or in the aggregate,
a material adverse effect on the REIT. The REIT has all power and authority
under its organizational documents to enter into this Agreement and such other
documents as are required hereby to be executed by it.

         7.2      Binding Obligation. The execution and delivery of this
Agreement and the documents required to be executed by BNP or the REIT hereunder
and thereof, and the performance of its obligations under this Agreement have
been duly authorized by all requisite partnership action, and this Agreement
have been, and such documents will on the Closing Date have been, duly executed
and delivered by BNP or the REIT. This Agreement and the related documents
executed by BNP or the REIT will constitute the valid and binding obligation of
BNP or the REIT enforceable in accordance with their terms, subject to
bankruptcy and similar laws affecting the remedies or recourse of creditors
generally.

         7.3      Partnership Agreement. The BNP Partnership Agreement as in
effect on the Closing Date shall be substantially in the form as shown at
Exhibit 7.3; provided, however, that BNP shall be able to amend the BNP
Partnership Agreement in the ordinary course of business from the date hereof
to the Closing Date.

         7.4      Disclosure. To the Actual Knowledge of BNP or the REIT, the
representations and warranties contained in this Agreement (including Schedules
and Exhibits and documents or instruments delivered in connection herewith) or
in any information, statement, certificate or

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<PAGE>

agreement furnished or to be furnished to any of the Contributing Parties by BNP
or the REIT in connection with the Closing pursuant to this Agreement, do not
contain any untrue statement of a material fact or omit to state any material
fact necessary to make the statements and information contained herein or
therein, in light of the circumstances in which they are made, not misleading.

         7.5      SEC Reports. The REIT's annual report on Form 10-K for the
year ended December 31, 2003, and each subsequently filed report under Section
13(a) of the Securities Exchange Act of 1934, as amended (the "BNP Reports")
were filed with the SEC in a timely manner, constitute all forms, reports and
documents required to be filed by BNP under either the Act or Section 13(a) of
the Securities Exchange Act of 1934, as amended, complied as to form in all
material respects with the applicable requirements of such securities laws and
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they were made, not
misleading. No material adverse change in the financial condition, business
operations or properties of BNP has occurred that would render any material
statement made in any of the BNP Reports materially untrue or misleading.

         7.6      REIT Status. The REIT is organized and operates and will
continue to operate in a manner so as to qualify as a "real estate investment
trust" under Section 856 thorough 860 of the Code. The REIT has elected, and
will continue to elect, to be taxed as a "real estate investment trust" under
the Code.

                                  ARTICLE VIII
                            CONDITIONS TO CLOSING AND
                           DUE DILIGENCE INVESTIGATION

         8.1      Conditions to Obligations of BNP and the REIT. The obligations
of BNP and the REIT to consummate the Closing and the other transactions
contemplated hereby are subject to the satisfaction of the following conditions,
unless waived by BNP and the REIT pursuant to Section 11.9:

                  (a) Representations and Warranties of the Contributing
Parties. All of the representations and warranties of the Contributing Parties
shall be true and correct in all material respects as of the Closing Date.

                  (b) Performance of Covenants. Each and all of the covenants of
the Contributing Parties to be performed pursuant to this Agreement and the
other agreements contemplated hereby prior to the Closing Date shall have been
duly performed and complied with in all material respects.


                  (c) Termination of Management Contracts. BNP shall have the
unconditional right to manage the Property.

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<PAGE>

                  (d) No Material Adverse Change to Property. There shall have
been no material adverse change in the condition, financial or otherwise, of the
Property, or the business prospects of the Property from the date hereof.

                  (e) Due Diligence. BNP shall have determined in its sole
discretion following its due diligence investigation provided for at Section 8.3
that the Property is satisfactory for purchase or operation.

                  (f) Performance of Obligations. The Company shall have
performed all of its obligations under the Contracts, the Leases, the Permitted
Liens and any mortgages relating to the Property.

                  (g) Payment of Charges and Assessments. All charges and
assessments (other than ad valorem property taxes for the year of Closing) for
sewer, water, streets, sidewalks, and similar Improvements by any governmental
authority affecting the Property, to the extent due and payable prior to
Closing, shall have been paid.

                  (h) Authorizations. BNP shall have no obligation to close the
transactions contemplated hereby if BNP shall not have received by the Closing
all necessary and appropriate licenses, permits, approvals and authorizations
(collectively, the "Authorizations") from all governmental agencies,
authorities, boards, commissions, departments and bodies having or claiming to
have jurisdiction over the Property; provided that BNP has used its best efforts
to obtain the Authorizations.

                  (i) Zoning. There shall be no actual or threatened easement,
zoning ordinance or use regulation, statute, ordinance, law, juridical decision,
official or unofficial policy, restriction or reservation which may prohibit or
impair (and there shall be no pending or threatened litigation which may
prohibit or impair) BNP's use and operation of the Property.

                  (j) Outstanding Company Debt Financing. The Outstanding
Company Debt Financing shall not exceed Two Million Six Hundred Ten Thousand
Dollars ($2,610,000). BNP shall have no obligation to close the transactions
contemplated herein if BNP determines that it is unable to assume the
Outstanding Company Debt Financing upon terms acceptable to BNP.

                  (k) Closing of Other Properties. Simultaneously with the
Closing, BNP and the REIT shall close the acquisition of the Other Properties
(defined below) pursuant to the terms of the exchange agreements between BNP and
the REIT and the Contributor of the Other Properties each executed as of the
date hereof. For purposes of this Agreement, the term "Other Properties" shall
mean those apartment communities (other than the Property) described on Schedule
8.1 attached hereto and made a part hereof.


         8.2      Conditions to Obligations of the Contributing Parties. The
obligations of the Contributing Parties to consummate the Closing and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by the Contributing Parties pursuant to
Section 11.9.

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<PAGE>

                  (a) Representations and Warranties of BNP and the REIT. All of
the representations and warranties of BNP and the REIT shall be true and correct
in all material respects as of the Closing Date.

                  (b) Performance of Covenants. Each and all of the covenants of
BNP and the REIT to be performed pursuant to this Agreement and the other
agreements contemplated hereby prior to the Closing Date shall have been duly
performed and complied with in all material respects.

                  (c) No Material Adverse Change to the REIT. The Contributing
Parties shall have no obligation to close the transactions contemplated hereby
if there has been a material adverse change in the financial condition of the
REIT from the date hereof; provided that a decrease in the market price of the
REIT's Common Stock shall not be deemed a "material adverse change."

         8.3      BNP Investigation Period. For a period of sixty (60) calendar
days after the execution date of this Agreement (the "Investigation Period")
BNP, at its own expense, shall have the right, but not the obligation, to
perform due diligence on the Property and of the Contributing Parties, including
but not limited to the following procedures:

                  (a) Physical. Inspect all physical aspects of the Property,
including inspections of all apartment units at the Property and including all
systems, components and service contracts. Contributor agrees to supply BNP with
"as-built" plans, specifications and surveys with respect to the Property.

                  (b) Regulatory. Investigate all zoning, code and governmental
requirements, including the review of certificates of occupancy and licenses,
all of which shall be provided by the Contributing Parties.

                  (c) Environmental. Review and perform Phase I and Phase II
audits and other environmental studies. If, in BNP's sole discretion, a Phase II
investigation is warranted with respect to the Property, the Investigation
Period will automatically extend by thirty (30) days (it being understood that
the due diligence review with respect to the non-Phase II properties shall be
deemed completed at the end of the initial 30-day Investigation Period).

                  (d) Title. Review preliminary title reports and surveys.

                  (e) Lease and Tenant Information. Review copies of leases,
rental agreements and contracts, together with any modifications or amendments
therein pertaining to the operation of the Property.

                  (f) Books and Records. Obtain the Company Financial
Statements; verify financial information from all accounting books and records
since the inception of the Contributing Parties' ownership; review any other
information and documents in the Contributing Parties'

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<PAGE>

possession or control and pertaining to the Contributing Parties' ownership and
operation of the Property including all tax records (collectively, the
"Records").

                  Without limitation of the foregoing, within ten (10) days
after the execution of this Agreement, the Contributing Parties agree to deliver
to BNP true and correct copies of the following documents, to the extent not
delivered prior to the date of this Agreement: (i) Leases, (ii) architectural,
structural, mechanical and electrical "as built" plans and specifications for
the Improvements, (iii) building permits and certificates of occupancy, (iv)
existing surveys, title policy, (v) appraisals, soil and engineering studies and
other reports relating to the Property, (vi) debt documents representing the
Outstanding Company Debt Financing and any other Indebtedness affecting the
Property, (vii) all Contracts affecting the Property, the Company, (viii)
organizational documents of each Contributing Party that is not an individual,
(ix) documentation regarding security and other deposits and accounts
receivable; (x) all warranties and guaranties reasonably available from any
contractors, subcontractors, vendors and suppliers relating to their
performance, quality of workmanship and quality of materials supplied in
connection with the construction, development, installation and operation of any
and all fixtures, equipment, items of personal property and Improvements located
in or used in connection with the Property, and (xi) any other documents or
materials related to the Property, the Company reasonably requested by BNP.

                  The Contributing Parties covenant and agree that it shall
provide BNP with access to all Records in the Contributing Parties' possession
and control. BNP shall conduct all of its property inspections in a manner not
disruptive to the tenants or to the operation of the Property.

                  The Contributing Parties will cooperate with BNP before and
after Closing in providing such information as BNP may reasonably require to
prepare Form 8-K filings and such other reports and filings as may be required
by any governmental authority, or securities exchange; provided that the
Contributing Parties shall have no obligation to obtain at their expense audited
financial statements of the Company.



                                   ARTICLE IX
                                   TERMINATION

         9.1      Termination.

                  (a) BNP may terminate this Agreement without liability and
without waiving any of its rights at law or in equity by giving notice to the
Contributor at any time prior to the Closing:

                           (i) If any one of the Contributing Parties is in
         breach of any representation, warranty, or covenant contained in this
         Agreement in any material respect;

                           (ii) If any of the exchange agreements for the Other
         Properties is terminated by BNP pursuant to Section 9.1 of the
         applicable exchange agreement;

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<PAGE>

                           (iii) If the Closing under this Agreement or the
         closing of any of the Other Properties under such Other Property's
         applicable exchange agreement shall not have occurred on or before
         March 31, 2005 by reason of any condition precedent in Section 8.1 of
         this Agreement or the applicable exchange agreement not being fulfilled
         (unless the failure results from BNP itself breaching any
         representation, warranty or covenant contained in this Agreement or
         other applicable exchange agreement); or

                           (iv) If BNP has not been satisfied in its reasonable
         discretion, exercised in good faith at any time prior to expiration of
         the Investigation Period, with the results of its due diligence review
         of information concerning the Property and the Company.

                  (b) Contributor may terminate this Agreement without liability
and without waiving any of its rights at law or in equity by giving notice to
BNP at any time prior to the Closing:

                           (i) If BNP is in breach of any representation,
         warranty, or covenant contained in this Agreement in any material
         respect; or

                           (ii) If the Closing shall not have occurred on or
         before March 31, 2005 by reason of any condition precedent in Section
         8.2 not being fulfilled (unless the failure results from any of the
         Contributing Parties breaching any representation, warranty, or
         covenant contained in this Agreement).

                  (c) Either BNP or the Contributing Parties may terminate this
Agreement if the Closing shall not have occurred by March 31, 2005 if the
failure to close on or before such date is not caused by a breach of this
Agreement by the party electing to terminate pursuant to this Section 9.1(c);
provided, however, that BNP may in its sole discretion at its option extend this
date by three (3) month intervals if the Closing has not occurred by such date
because of the failure to obtain lenders' consents to the assumption of the
Outstanding Company Debt Financing by such date or the failure of other
conditions precedent that are being diligently pursued by the parties.

         9.2.     Intentionally omitted.

         9.3      Expenses.

                  (a) In the event the Contributor elect not to proceed with the
Closing for any reason other than as provided in Section 9.1(b) and (c) hereof
and BNP either (i) elects not to seek specific performance or (ii) seeks but is
unable to obtain specific performance, the Contributor agree to pay to BNP a sum
equal to BNP's and the REIT's actual out-of-pocket expenses incurred in
connection with the transactions contemplated hereby up to a maximum amount of
$150,000 plus liquidated damages equal to $50,000 as its sole and exclusive
remedy.

                  (b) In the event BNP elects not to proceed with the Closing
for any reason other than as provided in Section 9.1(a) or (c) hereof, BNP
agrees to pay to the Contributor, as its sole and exclusive remedy hereunder,
actual out-of-pocket expenses not to exceed $25,000.

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<PAGE>

                  (c) The payment of sums due under this Section 9.3 shall be
made within two (2) business days of such election not to proceed with the
Closing. Each party acknowledges to the other that each has incurred and will
incur, substantial expenses in performing their respective preliminary
underwriting and investigations concerning the transactions contemplated hereby
and that adequate consideration exists for the foregoing agreements.

         9.4      Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 9.1, this Agreement shall
become void and have no effect, except that (i) the provisions of this Section
9.3, Section 4.13, Article X and Article XI shall survive any such termination
and abandonment, and (ii) no such termination shall relieve the breaching party
from liability from any breach by that party of this Agreement.

                                    ARTICLE X
                                    INDEMNITY

         10.1      Representations and Warranties of the Contributor. The
Contributor hereby agrees, for itself and its successors and assigns, to
indemnify, defend and hold both BNP and the REIT harmless from and against any
and all damage, cause of action, action, proceeding, expense, loss, cost, claim
or liability (each a "Claim") suffered or incurred by either BNP or the REIT as
a result of any of the following: any untruth, inaccuracy or breach of any of
the representations, warranties or covenants made by a Contributing Party
herein. It is the express intention and agreement of the parties that the
foregoing indemnity shall survive the consummation of the transactions
contemplated in this Agreement. Notwithstanding any other provision herein and
except for Claims made regarding a breach of the covenants and warranties set
forth at Sections 4.7 and 4.8, no Contributor shall have any liability for any
Claim that is asserted more than twelve (12) calendar months after the Closing
Date (except with respect to any Claim asserted because of the untruth,
inaccuracy or breach of Section 5.17 (a "Tax Claim"), the time limitation for
such a claim shall be 90 days following the expiration of the statute of
limitations for the assertion by third parties (including regulatory
authorities) applicable to the Tax Claim).

         10.2     Intentionally omitted.

         10.3     Arbitration. Any dispute, claim or controversy between BNP and
Contributor as to liability of Contributor shall be settled by arbitration in
accordance with this Section 10.3. Each of BNP and the Contributor (by a vote of
majority thereof) shall appoint an arbitrator, and the two arbitrators so
appointed shall promptly select a third arbitrator. Within thirty (30) days of
the completion of such appointments, the parties shall submit to arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association. The place of arbitration shall be Charlotte, North Carolina.
Notwithstanding anything to the contrary herein, the arbitrators are not
empowered to award damages in excess of compensatory damages and each party
hereby irrevocably waives any right to recover such damages with respect to any
dispute or controversy resolved by arbitration under this Section 10.3. Judgment
on the award rendered by the arbitrators may be entered in any court of
competent jurisdiction and shall be binding upon the parties.

         Except in the case of Tax Claims, any Claim of which notice is
delivered to Contributor by BNP shall be submitted to arbitration within
eighteen (18) months of the date hereof unless such

                                      233
<PAGE>

Claim involves the liquidation of a claim held by or asserted by a third party
in which case arbitration proceedings may be instituted at any time up to six
months following the final determination or liquidation of such Claim by such
third party.

         10.4     Representations and Warranties of BNP. Each of BNP and the
REIT hereby agrees, for itself and its successors and assigns, to indemnify,
defend and hold Contributor harmless from and against any Claim suffered or
incurred by Contributor as a result of any of the following: any untruth,
inaccuracy or breach of any of the representations, warranties or covenants made
by BNP or the REIT herein. It is the express intention and agreement of the
parties that the foregoing indemnity shall survive the consummation of the
transactions contemplated in this Agreement; provided, however, that neither BNP
nor the REIT shall have any liability for expenses, damages, losses, costs or
liability incurred by Contributor with respect to any Claim described in this
Section 10.4 which arises or is asserted more than twelve (12) calendar months
after the Closing Date.

         10.5     Notice to Indemnitors. Any party entitled to indemnification
under this Agreement (the "Indemnified Party") shall, within ten (10) days after
the receipt of notice of the assertion or imposition of any Claim (but in no
event later than ten (10) days prior to the date any response or answer is due
in any proceeding) in respect of which indemnity may be sought from the party
against whom an indemnity obligation is asserted pursuant to this Agreement (the
"Indemnifying Party"), notify the Indemnifying Party in writing of the receipt
of existence of such claim. The omission of the Indemnified Party to notify the
Indemnifying Party of any such claim shall not relieve the Indemnifying Party
from any liability in respect of such claim which it may have to the Indemnified
Party on account of this Agreement, except, however, the Indemnifying Party
shall be relieved of liability to the extent that the failure so to notify (a)
shall have caused prejudice to the defense of such claim, or (b) shall have
increased the costs or liability of the Indemnifying Party by reason of the
inability or failure of the Indemnifying Party (because of the lack of prompt
notice from the Indemnified Party) to be involved in any investigations or
negotiations regarding any such claim, nor shall it relieve the Indemnifying
Party from any other liability which it may have to the Indemnified Party. In
case any such claim shall be asserted or commenced against an Indemnified Party
and it shall notify the Indemnifying Party thereof, the Indemnifying Party shall
be entitled to participate in the negotiation or administration thereof and, to
the extent it may wish, to assume the defense thereof with counsel reasonably
satisfactory to the Indemnified Party, and, after notice from the Indemnifying
Party to the Indemnified Party of its election so to assume the defense thereof,
which notice shall be given within thirty (30) days of its receipt of such
notice from such Indemnified Party, the Indemnifying Party will not be liable to
the Indemnified Party hereunder for any legal or other expenses subsequently
incurred by the Indemnified Party in connection with the defense thereof other
than reasonable costs of investigation. In the event that the Indemnifying Party
does not wish to assume the defense, conduct or settlement of any claim, the
Indemnified Party shall not settle such claim without the written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld or delayed.
Nothing in this Section 10.5 shall be construed to mean that either BNP or the
Contributor shall be responsible for any obligations, acts or omissions of the
other prior to Closing, except for those obligations and liabilities expressly
assumed by BNP or the Contributor pursuant to this Agreement.

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<PAGE>



                                   ARTICLE XI
                                  MISCELLANEOUS

         11.1      Notices. All notices and demands which either party is
required or desires to give to the other shall be given in writing by personal
delivery, express courier service, certified mail, return receipt requested, or
by telecopy to the address or telecopy number set forth below for the respective
parties. All notices and demands so given shall be effective upon the delivery
of the same to the party to whom notice or a demand is given, if personally
delivered, or if sent by telecopy. If notice is by deposit with an express
courier service, it shall be effective on the day following such deposit or, if
notice is sent by certified mail, return receipt requested, it shall be
effective upon receipt.

         NOTICES TO THE CONTRIBUTING PARTIES:

                  To the Contributing Parties, to the addressee indicated on
Schedule 11.1 attached hereto.

         with copies to:

                  Ronald A. Matamoros
                  Blanco Tackabery Combs & Matamoros, P.A.
                  Stratford Point Building
                  Suite 500
                  110 South Stratford Road
                  Winston-Salem, North Carolina 27104-4214
                  Telephone: (336)761-1250
                  Telefax: (336)761-1530

         NOTICES TO BNP:

                  BNP RESIDENTIAL PROPERTIES, INC.
                  301 South College Street, Suite 3850
                  Charlotte, North Carolina 28202-6032
                  Attention: Philip S. Payne
                  Telephone:  (704) 944-2020
                  Telefax:      (704) 944-2039

         with copies to:

                  BNP RESIDENTIAL PROPERTIES, INC.
                  301 South College Street, Suite 3850
                  Charlotte, North Carolina 28202-6032
                  Attention: Eric S. Rohm
                  Telephone:  (704) 944-2023
                  Telefax:      (704) 944-2039

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<PAGE>

                  ALSTON & BIRD LLP
                  3201 Beechleaf Court, Suite 600
                  Raleigh, North Carolina  27604-1062
                  Attention: Robert H. Bergdolt
                  Telephone:    (919) 862-2216
                  Telefax:      (919) 862-2260

No notice required or permitted under this Agreement need be sent to any
Contributing Party in more than one legal capacity unless such notice relates to
such Contributing Party in that legal capacity.

         11.2     Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

         11.3     Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

         11.4     Assigns. This Agreement shall be binding upon and inure to the
benefit of any and all successors, assigns, or other successors in interest of
the REIT and BNP. This Agreement shall be binding upon and inure to the benefit
of any and all respective successors, assigns, personal representatives,
executors, or other successors in interest of the Contributing Parties;
provided, however, that none of the Contributing Parties shall assign its rights
or delegate its obligations hereunder without the prior written consent of BNP,
which may be withheld for any reason. Neither BNP nor the REIT shall assign its
rights or delegate its obligations hereunder without the prior written consent
of the Contributing Parties. This Agreement shall not confer any rights or
remedies upon any Person other than BNP, the REIT, the Contributing Parties and
their respective successors and permitted assigns.

         11.5     Remedies. In the event that any party defaults or fails to
perform any of the conditions or obligations of such party under this Agreement
or any other agreement, document or instrument executed in connection with this
Agreement, or in the event that any such party's representations or warranties
contained herein or in any such other agreement, document or instrument are not
true and correct as of the date hereof and as of the Closing Date, any other
party shall be entitled to exercise any and all rights and remedies available to
it by or pursuant to this Agreement, documents or instruments contemplated
hereby or at law (statutory or common) or in equity subject to the limitation on
liability set forth herein; provided, however, that in the event of a Closing of
the transactions contemplated by this Agreement, the rights and remedies of each
party shall be limited to the rights contained in Article X of this Agreement.

         11.6     Captions. The captions and headings set forth in this
Agreement are for convenience of reference only and shall not be construed as a
part of this Agreement.

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<PAGE>


         11.7     Exhibits and Schedules. All exhibits and schedules referred to
in this Agreement and attached hereto shall be deemed and construed as part of
this Agreement and for all purposes all such exhibits and schedules are hereby
specifically incorporated herein by reference.

         11.8     Entire Agreement. This Agreement and the Registration Rights
Agreement supersede all prior agreements and representations whether written or
oral, between the parties with respect to its subject matter (including any
letter of intent and any confidentiality agreement among the Parties hereto) and
constitutes (along with the Schedules, Exhibits and other documents delivered
pursuant to this Agreement) a complete and exclusive statement of the terms of
the agreement between the parties with respect to its subject matter.

         11.9     Amendments and Waiver. No change, amendment, qualification,
cancellation or termination hereof shall be effective unless in writing and duly
executed by each of the parties hereto. No failure of any party to enforce any
provisions hereof or to resort to any remedy or to exercise any one or more of
alternate remedies and no delay in enforcing, resorting to or exercising any
remedy shall constitute a waiver by that party of its right subsequently to
enforce the same or any other provision hereof or to resort to any one or more
of such rights or remedies on account of any such ground then existing or which
may subsequently occur.

         11.10    Construction. The provisions of this Agreement shall be
construed as to their fair meaning, and not for or against any party based upon
any attribution to such party as the source of the language in question.
Headings used in this Agreement are for convenience of reference only and shall
not be used in construing this Agreement.

         11.11    Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of North Carolina.


                                      237
<PAGE>

         IN WITNESS WHEREOF, the parties have duly executed this Agreement by
their hands and under seal affixed hereto as of the date and year first above
written.


                           BNP RESIDENTIAL PROPERTIES, INC.


                               By:  /s/ D. Scott Wilkerson
                                    ------------------------------
                                    D. Scott Wilkerson
                                    President



                           BNP RESIDENTIAL PROPERTIES LIMITED PARTNERSHIP

                             By:    BNP Residential Properties, Inc.,
                                    General Partner


                                  By: /s/ D. Scott Wilkerson
                                      ----------------------------
                                        D. Scott Wilkerson
                                        President




                                      238
<PAGE>


Separate signature page to Exchange Agreement.

                             SALEM RIDGE/SHUGART, LLC a
                             North Carolina limited
                             liability company



                             By:  Shugart Management, Inc., its sole member

                                      By: /s/ Grover F. Shugart, Jr.
                                      Name:   Grover F. Shugart, Jr.
                                      Title:  President

                                      239
<PAGE>




Separate signature page to Exchange Agreement.

                             SHUGART MANAGEMENT, INC.

                             By: /s/ Grover F. Shugart, Jr.
                             Name:   Grover F. Shugart, Jr.
                             Title:  President


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<PAGE>



                         LIST OF SCHEDULES AND EXHIBITS

Schedule A                 Company Ownership Interest
Schedule B                 Descriptive Property Exhibit
Schedule C                 Form of Assignment
Schedule 3.1(a)(i)         Outstanding Company Debt Financing
Schedule 4.6               Personal Property of Contributing Parties
Schedule 4.11              Construction and Repairs
Schedule 5.1               Required Consents
Schedule 5.3               Conflicts
Schedule 5.6A              Schedule of Leases
Schedule 5.6B              Lease Defaults
Schedule 5.7               Contracts
Schedule 5.8               Assumed Liabilities
Schedule 5.9               Insurance
Schedule 5.11              Claims or Litigation
Schedule 5.15              Condemnation and Moratoria
Schedule 5.17              Taxes
Schedule 5.18              Management and Leasing Agreements
Schedule 5.19              Operating Agreements - Exceptions to Termination
Schedule 8.1               Other Properties
Schedule 11.1              Addresses of Contributing Parties


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                                    EXHIBITS
Exhibit 7.3                Partnership Agreement


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