ASSOCIATED ESTATES REALTY CORPORATION SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN (Restated)

ASSOCIATED ESTATES REALTY CORPORATION

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

(Restated)

Associated Estates Realty Corporation established, effective as of January 1, 1997, this Supplemental Executive Retirement Plan, for the purpose of providing retirement benefits on an unfunded basis for a select group of management or highly compensated employees eligible to participate in accordance with the terms hereof, as contemplated by Section 201(2) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).  This Supplemental Executive Retirement Plan has subsequently been amended on several occasions, including to close participation and to discontinue accruals with respect to Participants who were not vested in their interests under the Supplemental Executive Retirement Plan on December 31, 2006.  It is now desired to amend and restate the Supplemental Executive Retirement Plan, effective as of January 1, 2005 and such other dates as are expressly set forth herein, to reflect compliance with the American Jobs Creation Act of 2004 and Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).  The amended provisions of the restatement shall not be applicable to the portion of a Participant’s account balance that was earned and vested under the Supplemental Executive Retirement Plan as of December 31, 2004, which shall continue to be governed by the provisions in effect on October 3, 2004, and no material modification shall be made to those provisions.  Moreover, for the period prior to January 1, 2009, the Supplemental Executive Retirement Plan shall operate based upon IRS Notice 2005-1, additional notices published by the Treasury Department and the Internal Revenue Service providing transition guidance, and a good faith, reasonable interpretation of Section 409A of the Code.

DEFINITIONS

For purposes hereof, the following words and phrases shall have the meanings indicated, unless a different meaning is plainly required by the context:

1.1              “Beneficiary” shall mean the person or persons designated by or with respect to a Participant in accordance with Section 2.10 to receive any payment under the Plan in the event of the Participant’s death.

1.2              “Committee” shall mean the Executive Compensation Committee of the Board of Directors of the Company.

1.3              “Company” shall mean Associated Estates Realty Corporation, an Ohio corporation, its corporate successors, and the surviving corporation resulting from any merger of Associated Estates Realty Corporation with any other corporation or corporations.

1.4              “Compensation” shall mean with respect to a Participant for a Plan Year the amount of his annual base pay for such Plan Year from his Employer and any amounts paid or payable to him for such Plan Year under the Company’s Annual Executive Income Plan (including any discretionary portion).

1.5              “Employer” shall mean the Company and any entity which has adopted the Plan as provided in Section 5.5.

1.6              “Grandfathered Benefit” shall mean that portion of a Participant’s SERP Account that was earned and vested under the Plan as of December 31, 2004, based on the terms of the Plan as in effect on October 3, 2004, including earnings attributable to such portion.

2

1.7              “Interest Rate” shall mean the rate to be used for crediting interest to each SERP Account, as provided for under paragraph (c) of Section 2.2, which rate for any period year shall be the rate which is determined by the Committee for such period to reasonably approximate the Company’s average cost of capital for such period (but not to exceed a reasonable rate of interest determined in accordance with Treasury Reg. §31.3121(v)(2)-1(d)(2)(i)(C)), which determination shall be final and conclusive.

1.8              “Participant” shall mean an employee of an Employer who is one of a select group of management or highly compensated employees who becomes eligible to participate in accordance with Section 2.1.  No employee shall become a Participant after December 31, 2006.

1.9              “Plan” shall mean the Supplemental Executive Retirement Plan set forth herein, together with all amendments thereto, which shall be called the Associated Estates Realty Corporation Supplemental Executive Retirement Plan.

1.10          “Plan Year” shall mean the calendar year.

1.11          “Related Company” shall mean any corporation or business which would be aggregated with Company under Section 414 of the Code.

1.12          "Separation from Service" shall mean a termination of employment with the Company and all Related Companies in such a manner as to constitute a "separation from service" as defined under Section 409A of the Code.  For this purpose, the employment relationship is treated as continuing intact while a Participant is on military leave, sick leave, or other bona fide leave of absence if the period of such leave does not exceed six months, or if longer, so long as the individual retains a right to reemployment with the Company or a Related Company under an applicable statute or by contract.  For purposes of this definition, a leave of absence

3

constitutes a bona fide leave of absence only if there is a reasonable expectation that the Participant will return to perform services for the Company or a Related Company.  If the period of leave exceeds six months and the Participant does not retain a right to reemployment under an applicable statute or by contract, the employment relationship is deemed to terminate on the first date immediately following such six-month period.  Notwithstanding the foregoing, where a leave of absence is due to any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than six months, where such impairment causes the Participant to be unable to perform the duties of his or her position of employment or any substantially similar position of employment, a 29-month period of absence may be substituted for such six-month period.

1.13          “SERP Account” shall mean a separate account maintained for a Participant as provided in Section 2.2.

1.14          “Specified Employee” shall mean a key employee (as defined in Section 416(i) of the Code without regard to Section 416(i)(5) of the Code) of the Company (or any entity which would be considered to be a single employer with the Company under Section 414(b) or Section 414(c) of the Code) at any time during the 12 month period ending on December 31.  Notwithstanding the foregoing, a Participant who is a key employee determined under the preceding sentence will be deemed a Specified Employee solely for the period of April 1 through March 31 following such December 31.  Such term shall be interpreted in a manner consistent with Section 409A of the Code.

4

ARTICLE II

PARTICIPATION AND BENEFITS

2.1          Eligibility .  An executive employee of an Employer is eligible to participate in the Plan if he is nominated for participation in the Plan by the Chief Executive Officer of the Company and if his participation is approved by the Committee.  An employee who is eligible to participate shall become a Participant on the first day of the first Plan Year next following the date approval of his participation is given by the Committee.

2.2          Supplemental Executive Retirement Plan (“SERP”) Accounts .  The Company shall maintain a SERP Account on its books for each Participant, in accordance with the provisions set forth in this Section 2.2

(a)                Following the close of each Plan Year, the Committee, in its discretion, may determine to credit an amount to the SERP Account of each Participant who remains employed by the Company or a Related Company as of the last day of the Plan Year, which amount shall be a uniform percentage of each Participant’s Compensation for the Plan Year.  If the Committee takes no action with respect to Participant’s SERP Accounts with respect to a particular Plan Year, then the amount to be credited to the SERP Account of each Participant who remains employed by the Company or a Related Company as of the last day of the Plan Year shall be the same percentage of such Participant’s Compensation as was credited to the SERP Accounts of Participants for the most recent Plan Year with respect to which the Committee made a determination concerning the amount to be credited.  Notwithstanding the foregoing, no amount shall be credited to the SERP Account of a Participant under this paragraph (a) for any Plan Year beginning on or after January 1, 2007, unless the Participant had attained age 55 prior to that date.

5

                             (b)               As of the first day of the Plan Year in which a Participant first commences participation in the Plan, the Committee, in its discretion, may determine to credit an amount to the SERP Account of such Participant as an award in recognition of prior service rendered in connection with the business of the Company (hereinafter referred to as a “Past Service Credit”); provided, however, that the Committee may determine that an award of Past Service Credit is to be credited to the Participant’s SERP Account in equal annual installments, not to exceed five, beginning on the first day of the Plan Year in which he commences participation and on the first day of such subsequent Plan Year so long as he remains an employee and a Participant, until all such installments are credited.  Past Service Credits need not be a uniform percentage of Compensation with respect to all Participants.  If the Committee takes no action to award a Past Service Credit with respect to a Participant, then no amount shall be credited under this paragraph (b) to such Participant’s SERP Account as a Past Service Credit.

(c)                Until paid as a benefit or forfeited as provided under the terms of the Plan, the balance of each Participant's SERP Account shall be credited with interest at the Interest Rate, as follows:  interest shall be compounded on an annual basis for each Plan Year through the date of the Participant’s retirement or death, and thereafter for each 12-month period commencing with such retirement or death, on the average balance in the SERP Account during the period for which the interest is being computed, and shall be credited to the SERP Account as of the end of such period.

6

(d)               Each SERP Account shall be debited to reflect the forfeiture of all or any portion of the balance of the SERP Account and any benefit payment made to the Participant or his Beneficiary, in each case as of the date of such forfeiture or payment.

(e)                Separate sub-accounts may be maintained to reflect the Grandfathered Benefit with respect to each Participant.

2.3          Eligibility for Retirement Benefit .  A Participant who retires from employment (and Separates from Service, with respect to any amount other than a Grandfathered Benefit) with the Company and all Related Companies after having attained the age of 55 shall be eligible for a benefit under the Plan.

2.4          Eligibility for Benefit on Disability .  In the event a Participant retires from employment with the Company and all Related Companies on account of total disability which shall have continued for a period of at least three months, the Participant shall be eligible for a benefit under the Plan on account of such total disability.  For purposes of the Plan, “total disability” shall mean the condition of being unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, as determined by the Committee.  Notwithstanding the foregoing, the provisions of Section 2.4 of the Plan as in effect on October 3, 2004, shall continue to apply with respect to any Grandfathered Benefit in the event of total disability.

7

2.5          Eligibility for Pre-Retirement Death Benefit .  If a Participant dies while employed by the Company or a Related Company, the Participant’s Beneficiary shall be eligible for a death benefit under the Plan.

2.6          Amount of Benefit .  The amount of any benefit payable under the Plan to a Participant or his Beneficiary, as the case may be, shall be the balance then credited to the Participant’s SERP Account in accordance with the terms of the Plan.

2.7          Time of Payment .  Subject to the provisions of Section 2.9, the payment of any benefit under the Plan to a Participant or his Beneficiary, as the case may be, shall be made or commenced within 30 days following the event giving rise to eligibility for receipt of such payment.

2.8          Form of Payment .  The following provisions shall apply:

(a)                With respect to a Grandfathered Benefit, a Participant may elect, on an election form provided by the Committee, to receive payment of the benefit payable to him under the Plan either in the form of a single-sum payment or in a series of installments over a period not to exceed five years; provided, however, that no such election shall be effective unless made in writing and delivered to the Committee at least one year prior to the Participant’s retirement date.  In the event that a Participant has not made an effective election concerning the form of benefit payment with respect to such amount, the Committee shall, in its discretion, determine the form in which payment of the benefit shall be made.

(b)               With respect to amounts not described in paragraph (a) of this Section 2.8, prior to January 1, 2005, or the first day of the Plan Year in which he first becomes a Participant, if later, a Part