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**AMENDMENT TOASSOCIATED ESTATES REALTY CORPORATIONAmended and Restated Equity-Based Award Plan**

            The Associated Estates Realty CorporationAmended and Restated Equity Based-Award Plan as adopted by the Board onFebruary 23, 2005, and subsequently approved by holders of the Company’soutstanding shares, (the "Plan") is hereby further amended, effectiveJanuary 1, 2009, for the purpose of reflecting compliance with Section 409A othe Code, as follows:  

1.         Section 1(n)(iv) isamended and restated to provide as follows:

(iv)        ifCommon Shares are not publicly traded, the fair market value established by theCommittee acting in good faith and in accordance with the applicablerequirements of Code Section 409A and the regulations promulgated thereunder.

2.         New definitions inSections 1(cc), (dd), and (ee) are added to provide as follows:

(cc)      “*409AAward*” means an Award that provides for a deferral of compensation from thedate of grant, as determined under Code Section 409A and the regulationspromulgated thereunder.

(dd)      “*409AChange in Control*” has the meaning set forth in Section 11(d).

(ee)      “*SpecifiedEmployee*” has the meaning set forth in Section 10(b)(1)(D).

3.         A new sentence isadded to Section 3(c) of the Plan to provide as follows:

Notwithstanding the foregoing,no substitution or adjustment shall be made which will result in an Awardbecoming subject to the terms and conditions of Code Section 409A, unlessagreed upon by the Committee and the participant.

4.         The provisions ofSection 5(b) relating to *Exercise* and *Method of Exercise* areamended and restated to provide as follows:

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### *Exercise*.  Stock Optionsshall be exercisable at such time or times and shall be subject to such termsand conditions as shall be determined by the Committee at or after grant; but,except as provided in Section 5(b)(6) and Section 12, unless otherwise determined by the Committee at or aftergrant, no Stock Option shall be exercisable prior to six months and one dayfollowing the date of grant.  If any Stock Option is exercisable only ininstallments or only after specified exercise dates, the Committee may waive,in whole or in part, such installment exercise provisions, and may accelerateany exercise date or dates, at any time at or after grant, based on suchfactors as the Committee shall determine in its sole discretion; provided,however, the Committee may not waive, without the participant’s consent, suchinstallment exercise provisions or accelerate any exercise dates with respectto a 409A Award if doing so would result in any adverse tax consequences forthe optionee under Code Section 409A and the regulations promulgatedthereunder.

*Method of Exercise*.  Subject to any installmentexercise provisions that apply with respect to any Stock Option, Code Section409A, and the six month and one day holding period set forth in Section5(b)(3), a Stock Option may be exercised in whole or in part, at any timeduring the Option period, by the holder thereof giving to the Company writtennotice of exercise specifying the number of Shares to be purchased.

5.         A new sentence isadded to Section 5(d) to provide as follows:

Further, any such buy outshall comply with the requirements of Code Section 409A and the regulationspromulgated thereunder, unless otherwise agreed upon in writing by theCommittee and the participant.

6.         The provisions ofSection 6(a) relating to *Grant* are amended and restated to provide asfollows:

A.        *Grant*. Share Appreciation Rights may be granted in connection with all or any part ofan Option, either concurrently with the grant of the Option or, if the Optionis a Non-Qualified Stock Option, by an amendment to the Option at any timethereafter during the term of the Option.  Share Appreciation Rights may beexercised in whole or in part at such times under such conditions as may bespecified by the Committee in the participant’s Option Agreement; provided,that no Share Appreciation Right granted in connection with all or any part ofan Option shall be exercisable for less than the Fair Market Value of theunderlying Common Shares as of the date of the original grant of the Optionunless such Share Appreciation Right or Option is a 409A Award, as provided forin the applicable Award Agreement.

7.         The Section 8(b)(8)is amended and restated to provide as follows:

A participantmay elect to further defer receipt of a Deferred Share Award (or an installmentof an Award) for a specified period or until a specified event (the “ElectiveDeferral Period”), subject in each case to the Committee’s approval and theterms of this Section 8 and such other terms as are determined by theCommittee, all in its sole discretion and in compliance with Code Section 409Aand the regulations promulgated thereunder.  Subject to any exceptions approvedby the Committee, such election must be made at least 12 months prior the datethe Deferral Period is set to expire and the Elective Deferral Period must befor a period of at least five years from the date the Deferral Period is set toexpire, except to the extent the holder of a Deferred Share becomes entitled toreceive the underlying Shares due to death or Disability.

8.         A new Section8(b)(10) is added to provide as follows:

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To theextent a Deferred Share Award is a 409A Award, the Committee will grant theAward in a manner as to comply with the requirements of Code Section 409A andthe regulations promulgated thereunder and in accordance with Section 10(b).

9.         The Section 9(b)(3)is amended to provide as follows:

Subject tothe Minimum Holding Period, any Other Share-Based Award and any Shares coveredby any such Award shall vest or be forfeited to the extent, at the times andsubject to the conditions, if any, provided in the Award agreement, asdetermined by the Committee in its sole discretion, subject, if applicable, tothe provisions of Code Section 409A and the regulations promulgated thereunder.

10.       The followingsentence is added to Section 9(b)(4):

Notwithstandingthe foregoing, the Committee may not waive limitations imposed with respect toany Award if such waiver results in an Award’s failure to comply with therequirements of Code Section 409A and the regulations promulgated thereunder,unless agreed upon in writing by the Committee and the participant.

11.       Section 10 isamended and restated to provide as follows:

A.        *Form and Timingof Payment*.  Subject to the terms of the Plan and any applicable AwardAgreement (as may be amended pursuant to Section 12 hereof), payments to be made by the Company, a Subsidiaryor Affiliate upon the exercise of an Option or other Award or settlement of anAward may be made in such forms as the Committee shall determine, including,without limitation, cash, Shares, other Awards or other property, and may bemade in a single payment or transfer, in installments, or on a deferred basis;provided, however that settlement in other than Shares must be authorized bythe applicable Award Agreement.  The settlement of any Award may be acceleratedand cash paid in lieu of Shares in connection with such settlement; provided,however that settlement in cash must be authorized by the applicable AwardAgreement.  The acceleration of any Award that does not result in a cashsettlement must also be authorized by the applicable Award Agreement. Installment or deferred payments may be required by the Committee or permittedat the election of the participant on terms and conditions approved by theCommittee, including without limitation the ability to defer awards pursuant toany deferred compensation plan maintained by the Company, a Subsidiary orAffiliate.  Payments may include, without limitation, provisions for thepayment or crediting of a reasonable interest rate on installment or deferredpayments or the grant or crediting of Dividend Equivalents or other amounts inrespect of installment or deferred payments denominated in Shares.

B.         *CertainLimitations on Awards to Ensure Compliance with Code Section 409A*.

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(1)        *409AAwards and Deferrals*.  Other provisions of the Plan notwithstanding, theterms of any 409A Award, including any authority of the Company or the Committeeand rights of the participant with respect to the 409A Award, shall be limitedto those terms permitted under Code Section 409A and the regulationspromulgated thereunder.  The following rules will apply to 409A Awards:

(A)       Ifa participant is permitted to elect to defer an Award or any payment under anAward, such election shall be permitted only at times in compliance with CodeSection 409A and the regulations promulgated thereunder;

(B)       TheCompany shall have no authority to accelerate or delay distributions relatingto 409A Awards in excess of the authority permitted under Code Section 409A andthe regulations promulgated thereunder;

(C)       Anydistribution of a 409A Award triggered by a Participant’s termination ofemployment shall be made only at the time that the Participant has had a“Separation from Service” within the meaning of Code Section 409A (or at suchearlier time preceding a termination of employment that there occurs anotherevent triggering a distribution under the Plan or the applicable AwardAgreement in compliance with Code Section 409A and the regulations promulgatedthereunder);

(D)       Anydistribution of a 409A Award to a “Specified Employee,” as determined underCode Section 409A, after Separation from Service, shall occur at the expirationof the six-month period following said Specified Employee’s Separation fromService.  In the case of installment payments, this six-month delay shall notaffect the timing of any installment otherwise payable after the six-monthdelay period; and In the case of any distribution of a 409A Award, the time andform of payment for such distribution will be specified in the Award Agreement;provided that, if the time and form of payment for such distribution is nototherwise specified in the Plan or an Award Agreement or other governingdocument, the distribution shall be made in one lump sum amount on March 15 inthe calendar year following the calendar year at which the settlement of theAward is specified to occur, any applicable restriction lapses, or there is nolonger a substantial risk of forfeiture applicable to such amounts.

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(2)        *Distributionupon Vesting*.  In the case of any Award providing for a distribution uponthe lapse of a substantial risk of forfeiture, the time and form of payment forsuch distribution will be specified in the Award Agreement; provided that, ifthe timing and form of payment of such distribution is not otherwise specifiedin the Plan or an Award Agreement or other governing document, the distributionshall be made in one lump sum amount on March 15 of the calendar year followingthe calendar year in which the substantial risk of forfeiture lapses.

(3)        *Scopeand Application of this Provision*.  For purposes of the Plan, references toa term or event (including any authority or right of the Company, the Committeeor a participant) being “permitted” under Code Section 409A means that the termor event will not cause the participant to be deemed to be in constructivereceipt of compensation relating to the 409A Award prior to the distribution ofcash, shares or other property or to be liable for payment of interest or a taxpenalty under Code Section 409A.

(4)        *Interpretation. *If and to the extent that anyprovision of an Award is required or intended to comply with Code Section 409A,such provision shall be administered and interpreted in a manner consistentwith the requirements of Code Section 409A.  If and solely to the extent thatany such provision of an Award as currently written would conflict with orresult in adverse consequences to a participant under Code Section 409A, theCommittee shall have the authority, without the consent of the participant, toadminister such provision and to amend the Award with respect to such provisionto the extent the Committee deems necessary for the purposes of avoiding anyportion of the Shares or amounts to be delivered to the participant beingsubject to additional income or other taxes under Code Section 409A.

12.       Section 11 isamended and restated to provide as follows:

A.  (a)  *Impact of Event*. Notwithstanding any other provisions hereof or in any agreement to thecontrary, in the event of:  (1) a “Change in Control” as defined in Section 11(b), (2) a “409A Change inControl” as defined in Section 11(c) or (3) a “Potential Change in Control” asdefined in Section 11(d), thefollowing acceleration and valuation provisions shall apply:

AnyStock Options awarded under the Plan not previously exercisable and vestedshall become fully exercisable and vested;

AnyShare Appreciation Rights shall become immediately exercisable;

Therestrictions applicable to any Restricted Share Awards, Deferred Shares andOther Share-Based Awards shall lapse and such Shares and Awards shall be deemedfully vested; and

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Subject toSection 3(c) and unless otherwise determined by the Committee in its solediscretion at or after grant but prior to any Change in Control or PotentialChange in Control, each outstanding Award (other than a 409A Award), in eachcase to the extent vested, shall be cashed out (and such Award terminated) bypaying the participant an amount equal to the excess, if any, of the “Change inControl Price” as defined in Section 11(e) as of the date such Change inControl or such Potential Change in Control is determined to have occurred overthe exercise price or other purchase price, if any, payable by the participantwith respect to such Award, except that n the case of  Share AppreciationRights, Fair Market Value shall be used rather than the Change in Control Pricefor this purpose.  Subject to Section 3(c), upon any 409A Change in Control,each outstanding 409A Award, in each case to the extent vested, shall be cashedout (and such 409A Award terminated) by paying the participant an amount equalto the excess, if any, of the Change in Control Price as of the date such 409AChange in Control is determined to have occurred over the exercise price orother purchase price, if any, payable by the participant with respect to such409A Award.

B.         *Definition of Changein Control*.  For purposes of Section 11(a), a “Change in Control” means the occurrence of any ofthe following:  (i) the Board or shareholders of the Company approve aconsolidation or merger in which the Company is not the surviving corporation,the sale of substantially all of the assets of the Company, or the liquidationor dissolution of the Company; (ii) any person or other entity (other than theCompany or a Subsidiary or any Company employee benefit plan (including anytrustee of any such plan acting in its capacity as trustee)) purchases anyShares (or securities convertible into Shares) pursuant to a tender or exchangeoffer without the prior consent of the Board of Directors, or becomes thebeneficial owner of securities of the Company representing 20% or more of thevoting power of the Company’s outstanding securities; or (iii) during anytwo-year period, individuals who at the beginning of such period constitute theentire Board of Directors cease to constitute a majority of the Board ofDirectors, unless the election or the nomination for election of each newdirector is approved by at least two-thirds of the directors then still inoffice who were directors at the beginning of that period.

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C.        *Definition of 409AChange in Control*.  For purposes of Section 11(a), a “409A Change in Control”means the date on which any one of the following occurs:  (i) any one person,or more than one person acting as a group (as determined under Code Section409A and the regulations promulgated thereunder), acquires (or has acquiredduring the twelve (12) month period ending on the date of the most recentacquisition by such person or persons) ownership of stock of the Companypossessing 30% or more of the total voting power of the stock of the Company;or (ii) a majority of members of the Board of Directors is replaced during any12-month period by directors whose appointment or election is not endorsed by amajority of the members of the Board of Directors before the date of suchappointment or election; or (iii) any one person, or more than one personacting as a group (as determined under Code Section 409A and the regulationspromulgated thereunder), acquires ownership of stock of the Company that,together with stock held by such person or group, constitutes more than 50% ofthe total fair market value or total voting power of the stock of the Company;or (iv) any one person, or more than one person acting as a group (asdetermined under Code Section 409A and the regulations thereunder), acquires(or has acquired during the twelve (12) month period ending on the date of themost recent acquisition by such person or persons) assets from the Company thathave a total gross fair market value equal to or more than 40% of the totalgross fair market value of all of the assets of the Company before such acquisitionor acquisitions.  For this purpose, “gross fair market value” means the valueof the assets of the Company, or the value of the assets being disposed of,determined without regard to any liabilities associated with such assets.

D.        *Definition of PotentialChange in Control*.  For purposes of Section 11(a), a “Potential Change in Control” means the happening ofany one of the following:

### The approval by the shareholdersof the Company of an agreement by the Company, the consummation of which wouldresult in a Change in Control of the Company as defined in Section 11(b); or

Theacquisition of beneficial ownership, directly or indirectly, by any entity,person or group (other than the Company or a Subsidiary or any Company employeebenefit plan (including any trustee of any such plan acting in its capacity astrustee)) of securities of the Company representing 5% or more of the combinedvoting power of the Company’s outstanding securities and the adoption by theBoard of a resolution to the effect that a Potential Change in Control of theCompany has occurred for purposes of this Plan.

E.         *Change in ControlPrice*.  For purposes of this Section 11, “Change in Control Price” means the highest price pershare paid in any transaction reported on the New York Stock Exchange CompositeIndex (or, if the Shares are not then traded on the New York Stock Exchange,the highest price paid as reported for any national exchange on which theShares are then traded) or paid or offered in any bona fide transaction relatedto a Change in Control, 409A Change in Control or Potential Change in Controlof the Company, at any time during the 60-day period immediately preceding theoccurrence of the Change in Control or 409A Change of Control (or, whenapplicable, the occurrence of the Potential Change in Control event), in eachcase as determined by the Committee.

13.       A new Section 14 isadded to provide as follows:

XIV.    *Compliance withSection 409A of the Code*.

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A.        Awards grantedunder this Plan shall be designed and administered in such a manner that theyare either exempt from the application of, or comply with, the requirements ofSection 409A of the Code.   To the extent that the Board determines that anyaward granted under the Plan is subject to Section 409A of the Code, theagreement evidencing the Award shall incorporate the terms and conditionsnecessary to avoid the imposition of an additional tax under Section 409A ofthe Code upon a participant.  Notwithstanding any other provision of the Planor any evidence of Award (unless the evidence of Award provides otherwise withspecific reference to this Section), an Award shall not be granted, deferred,accelerated, extended, paid out, settled, substituted or modified under thisPlan in a manner that would result in the imposition of an additional tax underSection 409A of the Code upon a participant.  Although the Company intends toadminister the Plan so that awards will be exempt from, or will comply with,the requirements of Section 409A of the Code, the Company does not warrant thatany award under the Plan will qualify for favorable tax treatment under Section409A of the Code or any other provision of federal, state, local, or non-UnitedStates law.  Neither the Company, its Subsidiaries, nor their respectivedirectors, officers, employees or advisers shall be liable to any participantor any other person for any tax, interest, or penalties the participant mightowe as a result of the grant, holding, vesting, exercise, or payment of anyaward under the Plan.  Any reference in this Plan to Section 409A of the Codewill also include the applicable proposed, temporary or final regulations, orany other guidance, issued with respect to such Section by the U.S. Departmentof the Treasury or the Internal Revenue Service.

B.         The provisions ofthe Amendment made in December, 2008, are effective as of January 1, 2009,provided that such provisions shall not apply with respect to amounts earnedand vested under the Plan prior to January 1, 2005, under provisions in effecton October 3, 2004 (and not subsequently modified), and provided, further, thatfor the period prior to January 1, 2009, the Plan shall otherwise operate basedon IRS Notice 2005-1, additional notices published by the Treasury Departmentand the Internal Revenue Service providing transition, guidance, and a goodfaith, reasonable interpretation of Section 409A.

                                                                        ASSOCIATEDESTATES REALITY  CORPORATION

                                                                       By:  /s/Jeffrey I. Friedman________________________                                                                              Title:  President, Chief Executive Officer

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