EXHIBIT 10.20

THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT
(MAA I)

THIS THIRD AMENDED AND RESTATED MASTER CREDIT FACILITY AGREEMENT is made as of
the 30th day of March, 2004, by and among (i) (a) MID-AMERICA APARTMENT
COMMUNITIES, INC., a Tennessee corporation (the “REIT”), (b) MID-AMERICA
APARTMENTS, L.P., a Tennessee limited partnership (“OP”); the REIT and OP being
collectively referred to as the “Borrower”), (c) MID-AMERICA APARTMENTS OF
TEXAS, L.P., a Texas limited partnership (“MAA of Texas”; MAA of Texas and
Borrower being collectively referred to as the “Borrower Parties”) and (ii)
PRUDENTIAL MULTIFAMILY MORTGAGE, INC., a Delaware corporation (“Lender”).

RECITALS

          A.          The Borrower Parties, Paddock Club Brandon, a Limited
Partnership, a Georgia limited partnership, Paddock Club Columbia, a Limited
Partnership, a Georgia limited partnership, Paddock Park Ocala II, a Limited
Partnership, a Georgia limited partnership, Paddock Club Tallahassee, a Limited
Partnership, a Georgia limited partnership, and Lender entered into that certain
Master Credit Facility Agreement dated as of November 10, 1999 (the “Original
Agreement”), pursuant to which the Lender agreed to make credit available to the
Borrower under the terms and conditions set forth in the Original Agreement.

          B.          Pursuant to various amendments to the Original Agreement,
among other things (i) MAA of Texas became a Guarantor under the Original
Agreement and (ii) various Mortgaged Properties (each capitalized term used but
not defined has the meaning ascribed to such term in Article I of this
Agreement) were added to the Collateral Pool. Pursuant to Articles of Merger
effective December 31, 1999, certain entities that were or had become Borrower
Parties under the Original Agreement merged with and into OP, with OP as the
surviving entity.

          C.          The Borrower Parties amended and restated the Original
Agreement in its entirety as set forth in that certain Amended and Restated
Master Credit Facility Agreement dated as of August 22, 2002 (the “First Amended
and Restated Agreement”).

          D.          The Borrower Parties amended and restated the First
Amended and Restated Agreement in its entirety as set forth in that certain
Second Amended and Restated Master Credit Facility Agreement dated as of
December 10, 2003 (the “Second Amended and Restated Agreement”).

          E.          The Borrower Parties have requested that various terms and
conditions of the Second Amended and Restated Agreement be modified. The
Borrower Parties and the Lender now wish to amend and restate the Second Amended
and Restated Agreement in its entirety.

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          F.          The REIT owns directly and indirectly 85% of the voting
interests in OP. The REIT owns, directly or indirectly, 100% of the ownership
interest in MAA of Texas.

          G.          The Borrower Parties own one or more Multifamily
Residential Properties as more particularly described in Exhibit A to this
Agreement.

          H.          Pursuant to the First Amended and Restated Agreement, the
Lender established a $119,367,000 credit facility, comprised of a $110,000,000
Fixed Facility Commitment and a $9,367,000 Variable Facility Commitment.

          I.          Pursuant to various amendments to the First Amended and
Restated Agreement, the Lender increased the Credit Facility to $159,507,000,
consisting of a $110,000,000 Fixed Facility Commitment and a $49,507,000
Variable Facility Commitment.

          J.          Pursuant to the Second Amended and Restated Agreement, the
Lender agreed that the Credit Facility may be increased to an amount not to
exceed $193,000,000.

          K.          The Borrower Parties and Lender wish to further increase
the amount to which the Credit Facility may be expanded subject to the rights of
Borrower to elect to increase the Fixed Facility Commitment and Variable
Facility Commitment in accordance with Article VIII hereof.

          L.          To secure the obligations of the Borrower Parties under
this Agreement and the other Loan Documents issued in connection with the Credit
Facility, the Borrower Parties have created a Collateral Pool in favor of the
Lender. The Collateral Pool is comprised of (i) Security Instruments on certain
Multifamily Residential Properties owned by the Borrower Parties and (ii) any
other Security Documents executed by any Borrower Party pursuant to this
Agreement or any other Loan Documents.

          M.          Each of the Security Documents shall be cross-defaulted
(i.e., a default under any Security Document, or under this Agreement, shall
constitute a default under each Security Document, and this Agreement) and
cross-collateralized (i.e., each Security Instrument shall secure all of the
Borrower Parties’ obligations under this Agreement and the other Loan Documents
issued in connection with the Credit Facility) and it is the intent of the
parties to this Agreement that the Lender may accelerate any Note without the
necessity to accelerate any other Note and that in the exercise of its rights
and remedies under the Loan Documents, Lender may, except as provided in this
Agreement, exercise and perfect any and all of its rights in and under the Loan
Documents with regard to any Mortgaged Property without the necessity to
exercise and perfect its rights and remedies with respect to any other Mortgaged
Property and that any such exercise shall be without regard to the Allocable
Facility Amount assigned to such Mortgaged Property and that Lender may recover
an amount equal to the full amount outstanding in respect of any of the Notes in
connection with such exercise and any such amount shall be applied as determined
by Lender in its sole and absolute discretion.

          N.          Subject to the terms, conditions and limitations of this
Agreement, the Lender has agreed to establish the Credit Facility.

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          NOW, THEREFORE, the Borrower Parties and the Lender, in consideration
of the mutual promises and agreements contained in this Agreement, hereby agree
to amend and restate, in its entirety, the First Amended and Restated Agreement
as follows:

ARTICLE I
DEFINITIONS

For all purposes of this Agreement, the following terms shall have the
respective meanings set forth below:

 

 

 

          “Acquiring Person” means a “person” or “group of persons” within the
meaning of Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended.

 

 

 

          “Additional Collateral Due Diligence Fees” shall have the meaning set
forth in Section 16.03(b).

 

 

 

          “Additional Mortgaged Properties” means each Multifamily Residential
Property owned by any Borrower Party (either in fee simple or as tenant under a
ground lease meeting all of the requirements of the DUS Guide) and added to the
Collateral Pool after the Initial Closing Date pursuant to Article VI of this
Agreement.

 

 

 

          “Advance” means a Variable Advance or a Fixed Facility Advance.

 

 

 

          “Advance Confirmation Instrument” shall have the meaning set forth in
Section 4.02.

 

 

 

          “Affiliate” means, as applied to any Person, any other Person directly
or indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, “control” (including with
correlative meanings, the terms “controlling,” “controlled by” and “under common
control with”), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management
(other than property management) and policies of that Person, whether through
the ownership of voting securities, partnership interests or by contract or
otherwise.

 

 

 

          “Aggregate Debt Service Coverage Ratio for the Trailing 12 Month
Period” means, for any specified date, the ratio (expressed as a percentage)
of--

 

 

 

(a)          the aggregate of the Net Operating Income for the Trailing 12 Month
Period for the Mortgaged Properties

 

 

to

 

(b)          the Facility Debt Service on the specified date.

 

 

 

          “Aggregate Loan to Value Ratio” means, for any specified date, the
ratio (expressed as a percentage) of--

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(a)

the Advances Outstanding on the specified date,

to

 

(b)

the aggregate of the Valuations most recently obtained prior to the specified
date for all of the Mortgaged Properties.

 

 

 

          “Agreement” means this Master Credit Facility Agreement, as it may be
amended, supplemented or otherwise modified from time to time, including all
Recitals and Exhibits to this Agreement, each of which is hereby incorporated
into this Agreement by this reference.

 

 

 

          “Allocable Facility Amount” means the portion of the Credit Facility
allocated to a particular Mortgaged Property by Lender in accordance with this
Agreement.

 

 

 

          “Amended and Restated Commitment” means the portion of the Commitment
in excess of $138,382,000. Any portion of the Commitment above $138,382,000
shall be deemed to be part of the Amended and Restated Commitment.

 

 

 

          “Amended and Restated Variable Facility Commitment” means the portion
of the Variable Facility Commitment in excess of $28,382,000.

 

 

 

          “Amortization Period” means, with respect to each Fixed Facility
Advance, the period of not less than 25 years and not more than 30 years.

 

 

 

          “Applicable Law” means (a) all applicable provisions of all
constitutions, statutes, rules, regulations and orders of all governmental
bodies, all Governmental Approvals and all orders, judgments and decrees of all
courts and arbitrators, (b) all zoning, building, environmental and other laws,
ordinances, rules, regulations and restrictions of any Governmental Authority
affecting the ownership, management, use, operation, maintenance or repair of
any Mortgaged Property, including the Americans with Disabilities Act (if
applicable), the Fair Housing Amendment Act of 1988 and Hazardous Materials
Laws, (c) any building permits or any conditions, easements, rights-of-way,
covenants, restrictions of record or any recorded or unrecorded agreement
affecting or concerning any Mortgaged Property including planned development
permits, condominium declarations, and reciprocal easement and regulatory
agreements with any Governmental Authority, (d) all laws, ordinances, rules and
regulations, whether in the form of rent control, rent stabilization or
otherwise, that limit or impose conditions on the amount of rent that may be
collected from the units of any Mortgaged Property, and (e) requirements of
insurance companies or similar organizations, affecting the operation or use of
any Mortgaged Property or the consummation of the transactions to be effected by
this Agreement or any of the other Loan Documents.

 

 

 

          “Appraisal” means an appraisal of a Multifamily Residential Property
or Multifamily Residential Properties conforming to the requirements of Chapter
5 of Part III of the DUS Guide, and accepted by the Lender.

 

 

 

          “Appraised Value” means the value set forth in an Appraisal.

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          “Borrower” means, individually and collectively, the REIT and OP.

 

 

 

          “Borrower Parties” means, individually and collectively, the Borrower
and the Guarantor.

 

 

 

          “Business Day” means a day on which Fannie Mae is open for business.

 

 

 

          “Calendar Quarter” means, with respect to any year, any of the
following three month periods: (a) January-February-March; (b) April-May-June;
(c) July-August-September; and (d) October-November-December.

 

 

 

          “Cap” means an interest rate cap provided pursuant to, and satisfying
the requirements of, Article XXI.

 

 

 

          “Cap Rate” means, for each Mortgaged Property, a capitalization rate
reasonably selected by the Lender for use in determining the Valuations, as
disclosed to the Borrower Parties from time to time.

 

 

 

          “Change of Control” means the earliest to occur of: (a) the date on
which the REIT ceases for any reason whatsoever to be the sole general partner
or managing member of any other Borrower Party or ceases to own, directly or
indirectly, 100% of the sole general partner or managing member of any other
Borrower Party, or (b) the date on which the REIT or OP shall cease for any
reason to be the holder of at least 75% of the voting interest of the other
Borrower Parties or to own at least 40% of the equity, profits or other limited
partnership interests in, or Voting Equity Capital (or any other Securities or
ownership interests) of the other Borrower Parties, or (c) the date on which an
Acquiring Person becomes (by acquisition, consolidation, merger or otherwise),
directly or indirectly, the beneficial owner of more than 25% of the total
Voting Equity Capital (or of any other Securities or ownership interest) of any
Borrower Party then outstanding, or (d) the replacement (other than solely by
reason of retirement at age sixty-five or older, death or disability) of more
than 50% (or such lesser percentage as is required for decision-making by the
board of directors or an equivalent governing body) of the members of the board
of directors or an equivalent governing body) of the REIT or OP over a one-year
period from the directors who constituted such board of directors at the
beginning of such period and such replacement shall not have been approved by a
vote of at least a majority of the board of directors of the REIT or OP then
still in office who either were members of such board of directors at the
beginning of such one-year period or whose election as members of the board of
directors was previously so approved (it being understood and agreed that in the
case of any entity governed by a trustee, board of managers, or other similar
governing body, the foregoing clause (d) shall apply thereto by substituting
such governing body and the members thereof for the board of directors and
members thereof, respectively).

 

 

 

          “Closing Date” means the Initial Closing Date, and each date
thereafter on which the funding or other transaction requested in a Request is
required to take place.

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          “Collateral” means, the Mortgaged Properties and other collateral from
time to time or at any time encumbered by the Security Instruments, or any other
property securing any of the Borrower Parties’ obligations under the Loan
Documents.

 

 

 

          “Collateral Addition Fee” means, with respect to each Additional
Mortgaged Property added to the Collateral Pool in accordance with Article VI --

 

 

 

                    (i)      65 basis points, multiplied by

 

 

 

                    (ii)    Allocable Facility Amount of the Additional
Mortgaged Property, as determined by the Lender; provided however, if a
Collateral Addition Property is added to the Collateral Pool in conjunction with
such Mortgaged Property being released from the collateral pool under the Other
Credit Agreement, the Collateral Addition Fee shall be waived for the aggregate
of the first six (6) transactions which are either Mortgaged Properties
transferred from the Collateral Pool under this Agreement to the collateral pool
under the Other Credit Agreement, or Mortgaged Properties transferred from the
collateral pool under the Other Credit Agreement to the Collateral Pool under
this Agreement.

 

 

 

          “Collateral Addition Loan Documents” means the Security Instrument
covering an Additional Mortgaged Property and any other documents, instruments
or certificates required by the Lender in connection with the addition of the
Additional Mortgaged Property to the Collateral Pool pursuant to Article VI.

 

 

 

          “Collateral Addition Request” shall have the meaning set forth in
Section 6.02(a).

 

 

 

          “Collateral Pool” means the aggregate total of the Collateral.

 

 

 

          “Collateral Release Property” shall have the meaning set forth in
Section 7.02(a).

 

 

 

          “Collateral Release Request” shall have the meaning set forth in
Section 7.02(a).

 

 

 

          “Collateral Substitution Fee” means, with respect to any substitution
effected in accordance with Section 7.04, a fee equal to 65 basis points
multiplied by the Allocable Facility Amount of the Substituted Mortgage Property
added to the Collateral Pool; provided however, if a Substituted Mortgaged
Property is added to the Collateral Pool in conjunction with such Mortgaged
Property being released from the collateral pool under the Other Credit
Agreement, the Collateral Substitution Fee shall be waived for the aggregate of
the first six (6) transactions which are either Mortgaged Properties transferred
from the Collateral Pool under this Agreement to the collateral pool under the
Other Credit Agreement, or Mortgaged Properties transferred from the collateral
pool under the Other Credit Agreement to the Collateral Pool under this
Agreement.

 

 

 

          “Commitment” means, at any time, the sum of the Fixed Facility
Commitment and the Variable Facility Commitment.

 

 

 

          “Complete Fixed Facility Termination” shall have the meaning set forth
in Section 9.02(a).

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          “Complete Variable Facility Termination” shall have the meaning set
forth in Section 9.02(a).

 

 

 

          “Compliance Certificate” means a certificate of the Borrower Parties
in the form attached as Exhibit D to this Agreement.

 

 

 

          “Conversion Documents” has the meaning specified in Section 3.07(b).

 

 

 

          “Conversion Request” has the meaning specified in Section 3.07(a).

 

 

 

          “Coupon Rate” means, with respect to a Variable Advance, the imputed
interest rate determined by the Lender pursuant to Section 2.05 for the Variable
Advance and, with respect to a Fixed Facility Advance, the interest rate
determined by the Lender pursuant to Section 3.05 for the Fixed Facility
Advance.

 

 

 

          “Coverage and LTV Tests” mean, for any specified date, each of the
following financial tests:

 

 

 

                    (a)      The Aggregate Debt Service Coverage Ratio for the
Trailing 12 Month Period is not less than 140%.

 

 

 

                     (b)     The Aggregate Loan to Value Ratio does not exceed
65%.

 

 

 

          “Credit Facility” means the Fixed Facility and the Variable Facility.

 

 

 

          “Credit Facility Expansion” means an increase in the Commitment made
in accordance with Article VIII.

 

 

 

          “Credit Facility Expansion Loan Documents” means amendments to the
Variable Facility Note or the Fixed Facility Note, as the case may be,
increasing the amount of such Note to the amount of the Commitment, as expanded
in accordance with Article VIII and amendments to the Security Instruments,
increasing the amount secured by such Security Instruments to the amount of the
Commitment.

 

 

 

          “Credit Facility Expansion Request” shall have the meaning set forth
in Section 8.02(a).

 

 

 

          “Credit Facility Termination Date” means December 1, 2013.

 

 

 

          “Credit Facility Termination Request” shall have the meaning set forth
in Section 10.02(a).

 

 

 

          “Debt Service Coverage Ratio” means, for any Mortgaged Property, for
any specified date, the ratio (expressed as a percentage) of --

 

 

 

(a)          the aggregate of the Net Operating Income for the preceding 12
month period for the subject Mortgaged Property

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to

 

(b)          the Facility Debt Service on the specified date, assuming, for the
purpose of calculating the Facility Debt Service for this definition, that
Advances Outstanding shall be the Allocable Facility Amount for the subject
Mortgaged Property.

 

 

 

          “Discount” means, with respect to any Variable Advance, an amount
equal to the excess of --

 

 

 

          (i)          the face amount of the MBS backed by the Variable
Advance, over

 

 

 

          (ii)         the Price of the MBS backed by the Variable Advance.

 

 

 

          “DUS Guide” means the Fannie Mae Multifamily Delegated Underwriting
and Servicing (DUS) Guide, as such Guide may be amended from time to time,
including exhibits to the DUS Guide and amendments in the form of Lender Memos,
Guide Updates and Guide Announcements (and, if such Guide is no longer used by
Fannie Mae, the term “DUS Guide” as used in this Agreement means the Fannie Mae
Multifamily Negotiated Transactions Guide, as such Guide may be amended from
time to time, including amendments in the form of Lender Memos, Guide Updates
and Guide Announcements). All references to specific articles and sections of,
and exhibits to, the DUS Guide shall be deemed references to such articles,
sections and exhibits as they may be amended, modified, updated, superseded,
supplemented or replaced from time to time.

 

 

 

          “DUS Underwriting Requirements” means the overall underwriting
requirements for Multifamily Residential Properties as set forth in the DUS
Guide.

 

 

 

          “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended from time to time.

 

 

 

           “Event of Default” means any event defined to be an “Event of
Default” under Article XVII.

 

 

 

          “Facility Debt Service” means, as of any specified date, the sum of:

 

 

 

 

(a)

the amount of interest and principal amortization, during the 12 month period
immediately succeeding the specified date, with respect to the Advances
Outstanding on the specified date, except that, for these purposes:

 

 

 

 

(i)

(A) with respect to Variable Advances (or portions thereof) that are not part of
the Hedge Requirement Amount, each Variable Advance (or portion thereof) shall
be deemed to require level monthly payments of principal and interest (at the
Coupon Rate for the Variable Advance (or portion thereof)) in an amount
necessary to fully amortize the original principal amount of the Variable
Advance (or portion thereof) over a 30-year period, with such

 

 

 

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amortization deemed to commence on the first day of the 12 month period; and

 

 

 

 

 

(B) with respect to Variable Advances (or portions thereof) that are part of the
Hedge Requirement Amount (x) for which Borrower has obtained a Swap, each such
Variable Advance (or portion thereof) shall be deemed to require level monthly
payments of principal and interest at the Swap Rate in an amount necessary to
fully amortize the original principal amount of the Variable Advance (or portion
thereof) over a 30-year period, with such amortization deemed to commence on the
first day of the 12 month period; or (y) for which Borrower has obtained a Cap,
each such Variable Advance (or portion thereof) shall be deemed to require level
monthly payments of principal and interest (at the lesser of the Coupon Rate and
the stated price of the relevant Cap) in an amount necessary to fully amortize
the original principal amount of the Variable Advance (or portion thereof) over
a 30-year period, with such amortization deemed to commence on the first day of
the 12 month period; and

 

 

 

 

(ii)

each Fixed Facility Advance shall require level monthly payments of principal
and interest (at the Coupon Rate for the Fixed Facility Advance) in an amount
necessary to fully amortize the original principal amount of the Fixed Facility
Advance over a 30-year period, with such amortization to commence on the first
day of the 12 month period; and

 

 

 

 

(b)

the amount of the Standby Fee and Rate Preservation Fee payable to the Lender
pursuant to Section 16.01 during such 12 month period (assuming, for these
purposes, that the Advances Outstanding throughout the 12 month period are
always equal to the amount of Advances Outstanding on the specified date).

 

 

 

Exhibit E to this Agreement contains an example of the determination of the
Facility Debt Service.

 

 

 

          “Facility Termination Fee” means, with respect to a reduction in
either the Variable Facility Commitment or the Fixed Facility Commitment
pursuant to Articles IX or X, an amount equal to the product obtained by
multiplying--

 

 

 

 

(1)

the reduction in the Variable Facility Commitment and any undrawn portion of the
Fixed Facility Commitment, by

 

 

 

 

(2)

18 basis points, by

 

 

 

 

(3)

the present value factor calculated using the following formula:

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1 - (1 + r)

-n

 

 

 

 

 

r

 

 

 

[r = Yield Rate

 

 

 

 

n =

the number of years (counting any partial year as a full year) remaining between
the Closing Date for the reduction in the Commitment and the Variable Facility
Termination Date shown on the Summary of Credit Facility Structure.

 

 

 

The “Yield Rate” means the rate, determined as of the Initial Closing Date, on
the U.S. Treasury security having a maturity closest to the Variable Facility
Termination Date.]

 

 

 

          “Fannie Mae” means the federally-chartered and stockholder-owned
corporation organized and existing under the Federal National Mortgage
Association Charter Act, 12 U.S.C. § 1716 et seq.

 

 

 

          “Financial Covenants” means the covenants set forth in Article XV.

 

 

 

          “Fixed Facility” means the agreement of the Lender to make Fixed
Facility Advances to the Borrower pursuant to Section 3.01.

 

 

 

          “Fixed Facility Advance” means a loan made by the Lender to the
Borrower under the Fixed Facility Commitment.

 

 

 

          “Fixed Facility Availability Period” means the applicable fixed
facility availability period shown on the Summary of Credit Facility Structure
attached hereto.

 

 

 

          “Fixed Facility Commitment” means $110,000,000, plus such amount as
the Borrower may elect to add to the Fixed Facility Commitment in accordance
with Articles III or VIII.

 

 

 

          “Fixed Facility Fee” means the applicable fixed facility fee shown on
the Summary of Credit Facility Structure as adjusted, if applicable, as set
forth in Section 15.03 of this Agreement.

 

 

 

          “Fixed Facility Note” means a promissory note, in the form attached as
Exhibit B to this Agreement, which will be issued by the Borrower to the Lender,
concurrently with the funding of each Fixed Facility Advance, to evidence the
Borrower’s obligation to repay the Fixed Facility Advance.

 

 

 

          “Future Advance” means an Advance made after the date hereof.

 

 

 

          “Future Advance Request” shall have the meaning set forth in Section
5.02.

 

 

 

          “GAAP” means generally accepted accounting principles in the United
States in effect from time to time, consistently applied.

 

 

 

          “General Conditions” shall have the meaning set forth in Article XI.

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          “Geographical Diversification Requirements” means a requirement that
the Collateral Pool consist of at least seven (7) Mortgaged Properties located
in at least two (2) states and five (5) SMSA’s.

 

 

 

           “Governmental Approval” means an authorization, permit, consent,
approval, license, registration or exemption from registration or filing with,
or report to, any Governmental Authority.

 

 

 

           “Governmental Authority” means any court, board, agency, commission,
office or authority of any nature whatsoever for any governmental unit (federal,
state, county, district, municipal, city or otherwise) whether now or hereafter
in existence.

 

 

 

          “Gross Revenues” means, for any specified period, with respect to any
Multifamily Residential Property, all income in respect of such Multifamily
Residential Property as reflected on the certified operating statement for such
specified period as adjusted to exclude unusual income (e.g. temporary or
nonrecurring income), income not allowed under DUS guidelines as shown in
Section 403.02 of Part III of the DUS Guide (e.g. interest income, furniture
income, etc.), and the value of any unreflected concessions.

 

 

 

          “Guarantor” means MAA of Texas.

 

 

 

          “Guaranty” means that certain Amended and Restated Guaranty executed
by the Guarantor in the form attached as Exhibit FF to this Agreement.

 

 

 

          “Hazardous Materials”, with respect to any Mortgaged Property, shall
have the meaning given that term in the Security Instrument encumbering the
Mortgaged Property.

 

 

 

          “Hazardous Materials Law”, with respect to any Mortgaged Property,
shall have the meaning given that term in the Security Instrument encumbering
the Mortgaged Property.

 

 

 

          “Hazardous Substance Activity” means any storage, holding, existence,
release, spill, leaking, pumping, pouring, injection, escaping, deposit,
disposal, dispersal, leaching, migration, use, treatment, emission, discharge,
generation, processing, abatement, removal, disposition, handling or
transportation of any Hazardous Materials from, under, into or on any Mortgaged
Property in violation of Hazardous Materials Laws, including the discharge of
any Hazardous Materials emanating from any Mortgaged Property in violation of
Hazardous Materials Laws through the air, soil, surface water, groundwater or
property and also including the abandonment or disposal of any barrels,
containers and other receptacles containing any Hazardous Materials from or on
any Mortgaged Property in violation of Hazardous Materials Laws, in each case
whether sudden or nonsudden, accidental or nonaccidental.

 

 

 

          “Hedge” means a Swap, a Cap or a combination of a Swap and a Cap, or
another interest rate protection instrument satisfying the requirements of
Article XXI.

 

 

 

          “Hedge Documents” has the meaning set forth in Section 21.02.

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          “Hedge Requirement Amount” means the amount by which the Variable
Facility Commitment exceeds, when added to the “Variable Facility Commitment”
under the Other Credit Facility, $441,756,000.

 

 

 

          “Hedge Security Agreement” means, with respect to a Hedge, the
Interest Rate Hedge Security, Pledge and Assignment Agreement between Borrower
and Lender, for the benefit of Lender, in the form attached as Exhibit GG to
this Agreement as such agreement may be amended, modified, supplemented or
restated from time to time.

 

 

 

          “Impositions” means, with respect to any Mortgaged Property, all (1)
water and sewer charges which, if not paid, may result in a lien on all or any
part of the Mortgaged Property, (2) premiums for fire and other hazard
insurance, rent loss insurance and such other insurance as Lender may require
under any Security Instrument, (3) Taxes, and (4) amounts for other charges and
expenses which Lender at any time reasonably deems necessary to protect the
Mortgaged Property, to prevent the imposition of liens on the Mortgaged
Property, or otherwise to protect Lender’s interests.

 

 

 

          “Indebtedness” means, with respect to any Person, as of any specified
date, without duplication, all:

 

 

 

                    (a) indebtedness of such Person for borrowed money or for
the deferred purchase price of property or services (other than (i) current
trade liabilities incurred in the ordinary course of business and payable in
accordance with customary practices, and (ii) for construction of improvements
to property, if such person has a non-contingent contract to purchase such
property);

 

 

 

                    (b) other indebtedness of such Person which is evidenced by
a note, bond, debenture or similar instrument;

 

 

 

                     (c) obligations of such Person under any lease of property,
real or personal, the obligations of the lessee in respect of which are required
by GAAP to be capitalized on a balance sheet of the lessee or to be otherwise
disclosed as such in a note to such balance sheet;

 

 

 

                    (d) obligations of such Person in respect of acceptances (as
defined in Article 3 of the Uniform Commercial Code of the District of Columbia)
issued or created for the account of such Person;

 

 

 

                    (e) liabilities secured by any Lien on any property owned by
such Person even though such Person has not assumed or otherwise become liable
for the payment of such liabilities; and

 

 

 

                    (f) as to any Person (“guaranteeing person”), any obligation
of (a) the guaranteeing person or (b) another Person (including any bank under
any letter of credit) to induce the creation of a primary obligation (as defined
below) with respect to which the guaranteeing person has issued a reimbursement,
counterindemnity or similar obligation, in either case guaranteeing, or in
effect guaranteeing, any indebtedness, lease,

- 12 -

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dividend or other obligation (“primary obligations”) of any third person
(“primary obligor”) in any manner, whether directly or indirectly, including any
obligation of the guaranteeing person, whether or not contingent, to (1)
purchase any such primary obligation or any property constituting direct or
indirect security therefor, (2) advance or supply funds for the purchase or
payment of any such primary obligation or to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (3) purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary
obligation, or (4) otherwise assure or hold harmless the owner of any such
primary obligation against loss in respect of the primary obligation, provided,
however, that the term “Contingent Obligation” shall not include endorsements of
instruments for deposit or collection in the ordinary course of business. The
amount of any Contingent Obligation of any guaranteeing person shall be deemed
to be the lesser of (i) an amount equal to the stated or determinable amount of
the primary obligation in respect of which such Contingent Obligation is made
and (ii) the maximum amount for which such guaranteeing person may be liable
pursuant to the terms of the instrument embodying such Contingent Obligation,
unless such primary obligation and the maximum amount for which such
guaranteeing person may be liable are not stated or determinable, in which case
the amount of such Contingent Obligation shall be such guaranteeing person’s
maximum reasonably anticipated liability in respect thereof as determined by
Owner in good faith.

 

 

 

          “Initial Advance” means, collectively, the Variable Advance
Outstanding on the date hereof in the principal amount of $49,507,000, and the
Fixed Advances Outstanding on the date hereof in the aggregate principal amount
of $110,000,000.

 

 

 

          “Initial Closing Date” means November 10, 1999.

 

 

 

          “Initial Commitment” means the portion of the Commitment equal to or
less than $119,367,000. Any portion of the Commitment equal to or less than
$119,367,000 shall be deemed to be part of the Initial Commitment.

 

 

 

          “Initial Mortgaged Properties” means the Multifamily Residential
Properties described on Exhibit A to this Agreement and which represent the
Multifamily Residential Properties which comprise the Collateral Pool on the
date hereof.

 

 

 

          “Initial Security Instruments” means the Security Instruments covering
the Initial Mortgaged Properties.

 

 

 

          “Initial Valuation” means, when used with reference to specified
Collateral, the Valuation initially performed for the Collateral as of the date
on which the Collateral was added to the Collateral Pool as set forth in Exhibit
A to this Agreement.

 

 

 

          “Insurance Policy” means, with respect to a Mortgaged Property, the
insurance coverage and insurance certificates evidencing such insurance required
to be maintained pursuant to the Security Instrument encumbering the Mortgaged
Property.

- 13 -

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          “Internal Revenue Code” means the Internal Revenue Code of 1986, as
amended. Each reference to the Internal Revenue Code shall be deemed to include
(a) any successor internal revenue law and (b) the applicable regulations
whether final, temporary or proposed.

 

 

 

          “Lease” means any lease, any sublease or subsublease, license,
concession or other agreement (whether written or oral and whether now or
hereafter in effect) pursuant to which any Person is granted a possessory
interest in, or right to use or occupy all or any portion of any space in any
Mortgaged Property, and every modification, amendment or other agreement
relating to such lease, sublease, subsublease or other agreement entered into in
connection with such lease, sublease, subsublease or other agreement, and every
guarantee of the performance and observance of the covenants, conditions and
agreements to be performed and observed by the other party thereto.

 

 

 

          “Lender” shall have the meaning set forth in the first paragraph of
this Agreement, but shall refer to any replacement Lender if the initial Lender
is replaced pursuant to the terms of Section 19.04.

 

 

 

          “Lien” means any mortgage, deed of trust, deed to secure debt,
security interest or other lien or encumbrance (including both consensual and
non-consensual liens and encumbrances).

 

 

 

          “Loan Documents” means this Agreement, the Notes, the Advance
Confirmation Instruments for the Variable Advances, the Guaranty, the Security
Documents, all documents executed by the Borrower Parties pursuant to the
General Conditions set forth in Article XI of this Agreement and any other
documents executed by a Borrower Party from time to time in connection with this
Agreement or the transactions contemplated by this Agreement.

 

 

 

          “Loan to Value Ratio “ means, for a Mortgaged Property, for any
specified date, the ratio (expressed as a percentage) of --

 

 

 

 

 

(a)     the Allocable Facility Amount of the subject Mortgaged Property on the
specified date,

 

 

to

 

 

 

(b)     the Valuation most recently obtained prior to the specified date for the
subject Mortgaged Property.

 

 

 

          “Loan Year” means the 12-month period from the first day of the first
calendar month after the Initial Closing Date to and including the last day
before the first anniversary of the Initial Closing Date, and each 12-month
period thereafter.

 

 

 

          “Material Adverse Effect” means, with respect to any circumstance,
act, condition or event of whatever nature (including any adverse determination
in any litigation, arbitration, or governmental investigation or proceeding),
whether singly or in conjunction with any other event or events, act or acts,
condition or conditions, or

- 14 -

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circumstance or circumstances, whether or not related, a material adverse change
in or a materially adverse effect upon any of (a) the business, operations,
property or condition (financial or otherwise) of any Borrower Party, (b) the
present or future ability of any Borrower Party to perform the Obligations for
which it is liable, (c) the validity, priority, perfection or enforceability of
this Agreement or any other Loan Document or the rights or remedies of the
Lender under any Loan Document, or (d) the value of, or the Lender’s ability to
have recourse against, any Mortgaged Property.

 

 

 

          “MBS” means a mortgage-backed security which is “backed” by an
interest in the Notes and the Collateral Pool securing the Notes, which interest
permits the holder of the MBS to participate in the Notes and the Collateral
Pool to the extent of such Advance.

 

 

 

          “MBS Imputed Interest Rate” shall have the meaning set forth in
Section 2.05(a).

 

 

 

          “MBS Issue Date” means the date on which a Fannie Mae MBS is issued by
Fannie Mae.

 

 

 

          “MBS Delivery Date” means the date on which a Fannie Mae MBS is
delivered by Fannie Mae.

 

 

 

          “MBS Pass-Through Rate” for a Fixed Facility Advance means the
interest rate as determined by the Lender (rounded to three places) payable in
respect of the Fannie Mae MBS issued pursuant to the MBS Commitment backed by
the Fixed Facility Advance as determined in accordance with Section 4.01.

 

 

 

          “Mortgaged Properties” means, collectively, the Substituted Mortgaged
Properties and the Initial Mortgaged Properties, but excluding each Collateral
Release Property from and after the date of the release of the Collateral
Release Property from the Collateral Pool.

 

 

 

          “Multifamily Residential Property” means a residential property,
located in the United States, containing five or more dwelling units in which
not more than twenty percent (20%) of the net rentable area is or will be rented
to non-residential tenants, and conforming to the requirements of Chapter 2 of
Part III of the DUS Guide (Property Requirements).

 

 

 

          “Net Operating Income” means, for any specified period, with respect
to any Multifamily Residential Property, the aggregate net income during such
period equal to Gross Revenues during such period less the aggregate Operating
Expenses during such period. If a Mortgaged Property is not owned by a Borrower
Party or an Affiliate of a Borrower Party for the entire specified period, the
Net Operating Income for the Mortgaged Property for the time within the
specified period during which the Mortgaged Property was owned by a Borrower
Party or an Affiliate of a Borrower Party shall be the Mortgaged Property’s pro
forma net operating income determined by the Lender in accordance with the
underwriting procedures set forth in Chapter 4 of Part III of the DUS Guide
(Determination of Loan Amount).

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          “Note” means any Fixed Facility Note or the Variable Facility Note.

 

 

 

          “Obligations” means the aggregate of the obligations of each of the
Borrower Parties under this Agreement and the other Loan Documents.

 

 

 

          “Operating Expenses” means, for any period, with respect to any
Multifamily Residential Property, all expenses in respect of the Multifamily
Residential Property, as determined by the Lender based on the certified
operating statement for such specified period as adjusted to provide for the
following: (i) all appropriate types of expenses, including a management fee and
deposits to the Replacement Reserves (whether funded or not), are included in
the total operating expense figure; (ii) upward adjustments to individual line
item expenses to reflect market norms or actual costs and correct any unusually
low expense items, which could not be replicated by a different owner or manager
(e.g., a market rate management fee will be included regardless of whether or
not a management fee is charged, market rate payroll will be included regardless
of whether shared payroll provides for economies, etc.); and (iii) downward
adjustments to individual line item expenses to reflect unique or aberrant costs
(e.g., non-recurring capital costs, non-operating borrower expenses, etc.).

 

 

 

          “Organizational Certificate” means a certificate of each of the
Borrower Parties in the form attached as Exhibit F to this Agreement.

 

 

 

          “Organizational Documents” means all certificates, instruments and
other documents pursuant to which an organization is organized or operates,
including but not limited to, (i) with respect to a corporation, its articles of
incorporation and bylaws, (ii) with respect to a limited partnership, its
limited partnership certificate and partnership agreement, (iii) with respect to
a general partnership or joint venture, its partnership or joint venture
agreement and (iv) with respect to a limited liability company, its articles of
organization and operating agreement.

 

 

 

          “Original Expansion Commitment” means the portion of the Commitment in
excess of $119,367,000 but less than $138,382,000. Any portion of the Commitment
in excess of $119,367,000 but less than $138,382,000 shall be deemed to be part
of the Original Expansion Commitment.

 

 

 

          “Other Credit Agreement” means, that certain Second Amended and
Restated Master Credit Facility Agreement dated as of even date herewith by and
between Borrower, Lender and others.

 

 

 

          “Outstanding” means, when used in connection with promissory notes,
other debt instruments or Advances, for a specified date, promissory notes or
other debt instruments which have been issued, or Advances which have been made,
but have not been repaid in full as of the specified date.

 

 

 

          “Ownership Interests” means, with respect to any entity, any ownership
interests in the entity and any economic rights (such as a right to
distributions, net cash flow or net income) to which the owner of such ownership
interests is entitled.

- 16 -

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          “PBGC” means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.

 

 

 

          “Permits” means all permits, or similar licenses or approvals issued
and/or required by an applicable Governmental Authority or any Applicable Law in
connection with the ownership, use, occupancy, leasing, management, operation,
repair, maintenance or rehabilitation of any Mortgaged Property or any Borrower
Party’s business.

 

 

 

          “Permitted Liens” means, with respect to a Mortgaged Property, (i) the
exceptions to title to the Mortgaged Property set forth in the Title Insurance
Policy for the Mortgaged Property which are approved by the Lender, (ii) the
Security Instrument encumbering the Mortgaged Property, (iii) any other Liens
approved by the Lender, and (iv) Leases.

 

 

 

          “Person” means an individual, an estate, a trust, a corporation, a
partnership, a limited liability company or any other organization or entity
(whether governmental or private).

 

 

 

          “Potential Event of Default” means any event which, with the giving of
notice or the passage of time, or both, would constitute an Event of Default.

 

 

 

          “Price” means, with respect to an Advance, the proceeds of the sale of
the MBS backed by the Advance.

 

 

 

          “Property” means any estate or interest in any kind of property or
asset, whether real, personal or mixed, and whether tangible or intangible.

 

 

 

          “Rate Confirmation Form” shall have the meaning set forth in Section
4.01(c).

 

 

 

          “Rate Preservation Fee” means, for any month following December 31,
2005, an amount equal to the product obtained by multiplying: (i) 1/12, by (ii)
15 basis points, by (iii) the Reserved Amount. The Rate Preservation Fee shall
be paid monthly in arrears.

 

 

 

          “Rate Setting Date” shall have the meaning set forth in Section
4.01(b).

 

 

 

          “Rate Setting Form” shall have the meaning set forth in Section
4.01(b).

 

 

 

          “REIT” means Mid-America Apartment Communities, Inc., a Tennessee
corporation.

 

 

 

          “Release Fee” means, with respect to each Mortgaged Property released
from the Collateral Pool pursuant to Article VII, a fee equal to $15,000.
Provided however, if a Collateral Release Property is released from the
Collateral Pool in conjunction with such Mortgaged Property being added to the
collateral pool under the Other Credit Agreement, the Release Fee shall be
waived for the aggregate of the first three (3) transactions which are either
Mortgaged Properties transferred from the Collateral Pool under this Agreement
to the collateral pool under the Other Credit Agreement, or Mortgaged

- 17 -

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Properties transferred from the collateral pool under the Other Credit Agreement
to the Collateral Pool under this Agreement.

 

 

 

          “Release Price” shall have the meaning set forth in Section 7.02(c).

 

 

 

          “Rent Roll” means, with respect to any Multifamily Residential
Property, a rent roll prepared and certified by the owner of the Multifamily
Residential Property, on Fannie Mae Form 4243, as set forth in Exhibit III-3 of
the DUS Guide, or on another form approved by the Lender and containing
substantially the same information as Form 4243 requires.

 

 

 

          “Replacement Reserve Agreement” means a Replacement Reserve and
Security Agreement, reasonably required by the Lender, and completed in
accordance with the requirements of the DUS Guide.

 

 

 

          “Request” means a Collateral Addition Request, a Collateral
Substitution Request, a Collateral Release Request, a Conversion Request, a
Credit Facility Expansion Request, a Credit Facility Termination Request, a
Future Advance Request, a Reborrowing Request or a Variable Facility Termination
Request.

 

 

 

          “Reserved Amount” means $90,493,000, unless Borrower elects in writing
a lesser amount not to exceed $250,000,000 minus the amount of the Commitment in
effect at any time, but in no event greater than $90,493,000. The Fixed Facility
Fee and the Variable Facility Fee shall not increase with respect to the
Reserved Amount in the event of an Expansion for so long as the Borrower timely
pays the Rate Preservation Fee on the Reserved Amount.

 

 

 

          “Revolving Credit Endorsement” means an endorsement to a Title
Insurance Policy which contains substantially the same coverages, and is subject
to substantially the same or fewer exceptions (or such other exceptions as the
Lender may approve), as the form attached as Exhibit H to this Agreement.

 

 

 

          “Security” means a “security” as set forth in Section 2(1) of the
Securities Act of 1933, as amended.

 

 

 

          “Security Documents” means the Security Instruments, the Hedge
Security Agreement, the Replacement Reserve Agreements and any other documents
executed by a Borrower Party from time to time to secure any of the Borrower
Parties’ obligations under the Loan Documents.

 

 

 

          “Security Instrument” means, for each Mortgaged Property, a separate
Multifamily Mortgage, Deed of Trust or Deed to Secure Debt, Assignment of Leases
and Rents and Security Agreement given by a Borrower Party to or for the benefit
of the Lender to secure the obligations of the Borrower Parties under the Loan
Documents. With respect to each Mortgaged Property owned by a Borrower Party,
the Security Instrument shall be substantially in the form published by Fannie
Mae for use in the state

- 18 -

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in which the Mortgaged Property is located. The amount secured by the Security
Instrument shall be equal to the Commitment in effect from time to time.

 

 

 

          “Senior Management” means (i) the Chief Executive Officer, Chairman of
the Board, President, Chief Financial Officer and Chief Operating Officer of the
REIT or OP and (ii) any other individuals with responsibility for any of the
functions typically performed in a corporation by the officers described in
clause (i).

 

 

 

          “Single-Purpose” means, with respect to a Person which is any form of
partnership or corporation or limited liability company, that such Person at all
times since its formation:

 

 

 

 

(i)

has been a duly formed and existing partnership, corporation or limited
liability company, as the case may be;

 

 

 

 

(ii)

has been duly qualified in each jurisdiction in which such qualification was at
such time necessary for the conduct of its business;

 

 

 

 

(iii)

has complied with the provisions of its organizational documents and the laws of
its jurisdiction of formation in all respects;

 

 

 

 

(iv)

has observed all customary formalities regarding its partnership or corporate
existence, as the case may be;

 

 

 

 

(v)

has accurately maintained its financial statements, accounting records and other
partnership or corporate documents separate from those of any other Person;

 

 

 

 

(vi)

has not commingled its assets or funds with those of any other Person;

 

 

 

 

(vii)

has accurately maintained its own bank accounts and books and accounts separate
from those of any other Person;

 

 

 

 

(viii)

has paid its own liabilities from its own separate assets;

 

 

 

 

(ix)

has identified itself in all dealings with creditors (other than trade creditors
in the ordinary course of business and creditors for the construction of
improvements to property on which such Person has a non-contingent contract to
purchase such property) under its own name and as a separate and distinct
entity;

 

 

 

 

(x)

has not identified itself as being a division or a part of any other Person;

 

 

 

 

(xi)

has not identified any other Person as being a division or a part of such
Person;

 

 

 

 

(xii)

has been adequately capitalized in light of its contemplated business
operations;

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(xiii)

has not assumed, guaranteed or become obligated for the liabilities of any other
Person (except in connection with the Credit Facility or the endorsement of
negotiable instruments in the ordinary course of business) or held out its
credit as being available to satisfy the obligations of any other Person;

 

 

 

 

(xiv)

has not acquired obligations or securities of any other Person;

 

 

 

 

(xv)

in relation to a Borrower Party, except for loans made in the ordinary course of
business to Affiliates, has not made loans or advances to any other Person;

 

 

 

 

(xvi)

has not entered into and was not a party to any transaction with any Affiliate
of such Person, except in the ordinary course of business and on terms which are
no less favorable to such Person than would be obtained in a comparable
arm’s-length transaction with an unrelated third party;

 

 

 

 

(xvii)

has conducted its own business in its own name;

 

 

 

 

(xviii)

has paid the salaries of its own employees, if any, and maintained a sufficient
number of employees in light of its contemplated business operations;

 

 

 

 

(xix)

has allocated fairly and reasonably any overhead for shared office space;

 

 

 

 

(xx)

has not pledged its assets for the benefit of any other entity or made any loans
or advances to any person or entity;

 

 

 

 

(xxi)

has not engaged in a non-exempt prohibited transaction described in Section 406
of ERISA or Section 4975 of the Internal Revenue Code;

 

 

 

 

(xxii)

has not acquired obligations or securities of its partners or Affiliates; and

 

 

 

 

(xxiii)

has corrected any known misunderstanding regarding its separate identity.

 

 

 

          “SMSA” means a “standard metropolitan statistical area,” as defined
from time to time by the United States Office of Management and Budget.

 

 

 

          “Standby Fee” means, for any month, an amount equal to the sum
obtained by adding the product of (i) 1/12, by (ii) the amount shown as the
Standby Fee on the Summary of Credit Facility Structure, by (iii) the Unused
Capacity.

 

 

 

          “Subsequent Hedge” has the meaning set forth in Section 21.01.

 

 

 

          “Subsidiary” means, when used with reference to a specified Person,
(i) any Person that, directly or indirectly, through one or more intermediaries,
is controlled by the specified Person, (ii) any Person of which the specified
Person is, directly or indirectly, the owner of more than 50% of any voting
class of Ownership Interests or (iii)

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any Person (A) which is a partnership and (B) of which the specified Person is a
general partner and owns more than 50% of the partnership interests.

 

 

 

          “Substituted Mortgaged Property” means each Multifamily Residential
Property owned by any Borrower Party (either in fee simple or as tenant under a
ground lease meeting all of the requirements of the DUS Guide) and added to the
Collateral Pool after the date hereof in connection with substitution of
Collateral as permitted by Section 7.04 of this Agreement.

 

 

 

          “Summary of Credit Facility Structure” means the summary of credit
facility structure attached to this Agreement as Schedule I.

 

 

 

          “Surveys” means the as-built surveys of the Mortgaged Properties
prepared in accordance with the requirements of Section 113 of the DUS Guide, or
otherwise approved by the Lender.

 

 

 

          “Swap” means an interest rate swap provided pursuant to and satisfying
the requirements of Article XXI of this Agreement.

 

 

 

          “Swap Rate” has the meaning set forth in Section 21.02.

 

 

 

          “Taxes” means all taxes, assessments, vault rentals and other charges,
if any, general, special or otherwise, including all assessments for schools,
public betterments and general or local improvements, which are levied, assessed
or imposed by any public authority or quasi-public authority, and which, if not
paid, will become a lien, on the Mortgaged Properties.

 

 

 

          “Term of this Agreement” shall be determined as provided in Section
23.10 to this Agreement.

 

 

 

          “Termination Date” means, at any time during which Fixed Facility
Advances are Outstanding, the latest maturity date for any Fixed Facility
Advance Outstanding, and, at any time during which Fixed Facility Advances are
not Outstanding, the Variable Facility Termination Date.

 

 

 

          “Three Month LIBOR Rate” means the London interbank offered rate for
three-month U.S. dollar deposits, as such rate is reported in The Wall Street
Journal. In the event that a rate is not published for Three-Month LIBOR, then
the nearest equivalent duration London interbank offered rate for U.S. Dollar
deposits shall be selected at Lender’s reasonable discretion. If the publication
of Three-Month LIBOR is discontinued, Lender shall determine such rate from
another equivalent source selected by Lender in its reasonable discretion.

 

 

 

          “Tie-In Endorsement” means an endorsement to a Title Insurance Policy
which contains substantially the same coverages, and is subject to substantially
the same or fewer exceptions (or such other exceptions as the Lender may
approve), as the form attached as Exhibit J to this Agreement.

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          “Title Company” means Fidelity National Title Insurance Company of New
York.

 

 

 

          “Title Insurance Policies” means the mortgagee’s policies of title
insurance issued by the Title Company from time to time relating to each of the
Security Instruments, conforming to the requirements of Section 111 of the DUS
Guide, together with such endorsements, coinsurance, reinsurance and direct
access agreements with respect to such policies as the Lender may, from time to
time, consider necessary or appropriate, whether or not required by the DUS
Guide, including Revolving Credit Endorsements, if available, and Tie-In
Endorsements, if available, and with a limit of liability under the policy
(subject to the limitations contained in Sections 6(a)(i) and 6(a)(iii) of the
Stipulations and Conditions of the policy) equal to the Commitment.

 

 

 

          “Trailing 12 Month Period” means, for any specified date, the 12 month
period ending with the last day of the most recent Calendar Quarter for which
financial statements have been delivered by the Borrower Party to the Lender
pursuant to Sections 13.04(c) and (d).

 

 

 

          “Transfer” means (i) a sale, assignment, lease, pledge, transfer or
other disposition (whether voluntary or by operation of law) of, or the granting
or creating of a lien, encumbrance or security interest in, any estate, rights,
title or interest in a Mortgaged Property, or any portion thereof, or (ii) a
sale, assignment, pledge, transfer or other disposition of any interest in a
Borrower Party other than to another Borrower Party, or (iii) the issuance or
other creation of new ownership interests in a Borrower Party other than (a)
sales of the stock of the REIT on the New York Stock Exchange or (b) private
placements of ownership interests in a Borrower Party that do not result in a
Change of Control or any other partnership, corporation, real estate investment
trust or other entity that has a direct or indirect ownership interest in a
Borrower Party, or (iv) a merger or consolidation of a Borrower Party into
another entity or of another entity into a Borrower Party other than into
another Borrower Party, or (v) the reconstitution of a Borrower Party from one
type of entity to another type of entity, or (vi) the amendment, modification or
any other change in the governing instrument or instruments of such Person which
has the effect of changing the relative powers, rights, privileges, voting
rights or economic interests of the ownership interests in such Person.
“Transfer” does not include (i) a conveyance of the Mortgaged Property at a
judicial or non-judicial foreclosure sale under any Security Instrument or (ii)
the Mortgaged Property becoming part of a bankruptcy estate by operation of law
under the United States Bankruptcy Code.

 

 

 

          “Unused Capacity” means, for any month, the sum of the daily average
during such month of (i) the undrawn amount of the Variable Facility Commitment
available under Article II of this Agreement for the making of Variable Advances
plus (ii) the undrawn amount of the Fixed Facility Commitment available under
Article III of this Agreement for the making of Fixed Facility Advances, without
regard to any unclosed Requests or to the fact that a Request must satisfy
conditions precedent.

 

 

 

          “Valuation” means, for any specified date, with respect to a
Multifamily Residential Property, (a) if an Appraisal of the Multifamily
Residential Property was more recently obtained than a Cap Rate for the
Multifamily Residential Property, the

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Appraised Value of such Multifamily Residential Property, or (b) if a Cap Rate
for the Multifamily Residential Property was more recently obtained than an
Appraisal of the Multifamily Residential Property, the value derived by
dividing--

 

 

(i)         the Net Operating Income of such Multifamily Residential Property
for the Trailing 12 Month Period, by

 

 

 

 

 

(ii)        the most recent Cap Rate determined by the Lender.

 

 

 

          Notwithstanding the foregoing, any Valuation for a Multifamily
Residential Property calculated for a date occurring before the first
anniversary of the date on which the Multifamily Residential Property becomes a
part of the Collateral Pool shall equal the Appraised Value of such Multifamily
Residential Property, unless the Lender determines that changed market or
property conditions warrant that the value be determined as set forth in the
preceding sentence.

 

 

 

          “Variable Advance” means a loan made by the Lender to the Borrower
Parties under the Variable Facility Commitment.

 

 

 

          “Variable Facility” means the agreement of the Lender to make Advances
to the Borrower Parties pursuant to Section 2.01.

 

 

 

          “Variable Facility Availability Period” means the period beginning on
the Initial Closing Date and ending on the 90th day before the Variable Facility
Termination Date.

 

 

 

          “Variable Facility Commitment” means an aggregate amount of
$49,507,000, which shall be evidenced by the Variable Facility Note in the form
attached hereto as Exhibit I, plus such amount as the Borrower may elect to add
to the Variable Facility Commitment in accordance with Article VIII, and plus
such amount as the Borrower may elect to reborrow in accordance with Section
2.08, less such amount as the Borrower may elect to convert from the Variable
Facility Commitment to the Fixed Facility Commitment in accordance with Article
III and less such amount by which the Borrower may elect to reduce the Variable
Facility Commitment in accordance with Article IX.

 

 

 

          “Variable Facility Fee” means the applicable variable facility fee
shown on the Summary of Credit Facility Structure as adjusted, if applicable, as
set forth in Section 15.03 of this Agreement.

 

 

 

          “Variable Facility Note” means, the promissory note, in the form
attached as Exhibit I to this Agreement, which has been issued by the Borrower
Parties to the Lender to evidence the Borrower Parties’ obligation to repay
Variable Advances.

 

 

 

          “Variable Facility Termination Date” means the variable facility
termination date shown on the Summary of Credit Facility Structure attached
hereto.

 

 

 

           “Voting Equity Capital” means Securities or partnership interests of
any class or classes, the holders of which are ordinarily, in the absence of
contingencies, entitled to elect a majority of the board of directors (or
Persons performing similar functions).

 

 

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ARTICLE II
THE VARIABLE FACILITY COMMITMENT

SECTION 2.01 Variable Facility Commitment. Subject to the terms, conditions and
limitations of this Agreement, the Lender agrees to make Variable Advances to
the Borrower from time to time during the applicable Variable Facility
Availability Period. The aggregate unpaid principal balance of the Variable
Advances Outstanding at any time shall not exceed the Variable Facility
Commitment. Subject to the terms, conditions and limitations of this Agreement,
the Borrower may re-borrow any amounts under the Variable Facility which it has
previously borrowed and repaid under the Variable Facility.

SECTION 2.02 Requests for Variable Advances. The Borrower shall request a
Variable Advance by giving the Lender a Future Advance Request in accordance
with Section 5.02.

SECTION 2.03 Maturity Date of Variable Advances. Regardless of the date on which
a Variable Advance is made, the maturity date of each Variable Advance shall be
a date selected by the Borrower in its Request for the Variable Advance, which
date shall be the last day of a calendar month occurring:

 

 

 

          (a)          no earlier than the date which completes three full
months after the Closing Date for the Variable Advance; and

 

 

 

          (b)          no later than the date which completes nine full months
after the Closing Date for the Variable Advance.

For these purposes, a year shall be deemed to consist of 12 30-day months. For
example, the date which completes three full months after September 15 shall be
December 15; and the date which completes three full months after November 30
shall be February 28.

SECTION 2.04 Interest on Variable Facility Advances.

                    (a)          Discount. Each Variable Advance shall be a
discount loan. The original stated principal amount of a Variable Advance shall
be the sum of the Price of the Variable Advance and the Discount of the Variable
Advance. The Price and Discount of each Variable Advance shall be determined in
accordance with the procedures set out in Section 4.01. The proceeds of the
Variable Advance made available by the Lender to the Borrower will equal the
Price of the Variable Advance. The Borrower shall pay to the Lender, in advance
of the Lender making a Variable Advance requested by the Borrower, the entire
Discount for the Variable Advance.

                    (b)          Partial Month Interest. Notwithstanding
anything to the contrary in this Section, if a Variable Advance is not made on
the first day of a calendar month, and the MBS Issue Date for the MBS backed by
the Variable Advance is the first day of the month following the month in which
the Variable Advance is made, the Borrower shall pay interest on the original
stated principal amount of the Variable Advance for the partial month period
commencing on the Closing Date for the Variable Advance and ending on the last
day of the calendar month in which the Closing Date occurs, at a rate per annum
equal to the greater of (i) the Coupon Rate

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for the Variable Advance as determined in accordance with Section 2.05(b) and
(ii) a rate determined by the Lender, based on the Lender’s cost of funds and
approved in advance, in writing, by the Borrower, pursuant to the procedures
mutually agreed upon by the Borrower and the Lender.

                    (c)          Variable Facility Fee. In addition to paying
the Discount and the partial month interest, if any, the Borrower shall pay
monthly installments of the Variable Facility Fee to the Lender on account of
each Variable Advance over the whole number of calendar months the MBS backed by
the Variable Advance is to run from the MBS Issue Date to the maturity date of
the MBS. The Variable Facility Fee shall be payable in advance, in accordance
with the terms of the Variable Facility Note. The first installment shall be
payable on or prior to the Closing Date for the Variable Advance and shall apply
to the first full calendar month of the MBS backed by the Variable Advance.
Subsequent installments shall be payable on the first day of each calendar
month, commencing on the first day of the second full calendar month of such
MBS, until the maturity of such MBS. Each installment of the Variable Facility
Fee shall be in an amount equal to the product of multiplying (i) the Variable
Facility Fee, by (ii) the amount of the Variable Advance, by (iii) 1/12.

SECTION 2.05 Coupon Rates for Variable Advances. The Coupon Rate for a Variable
Advance shall be a rate, per annum, as follows:

                    (a)          The Coupon Rate for a Variable Advance shall
equal the sum of (i) an interest rate as determined by the Lender pursuant to
Section 4.01 of this Agreement (rounded to three places) payable for the Fannie
Mae MBS pursuant to the MBS Commitment backed by the Variable Advance (“MBS
Imputed Interest Rate”) and (ii) the Variable Facility Fee.

                    (b)          Notwithstanding anything to the contrary in
this Section, if a Variable Advance is not made on the first day of a calendar
month, and the MBS Issue Date for the MBS backed by the Variable Advance is the
first day of the month following the month in which the Variable Advance is
made, the Coupon Rate for such Variable Advance for such period shall be the
greater of (i) the rate for the Variable Advance determined in accordance with
subsection (a) of this Section and (ii) a rate determined by the Lender, based
on the Lender’s cost of funds, and approved in advance, in writing, by the
Borrower, pursuant to procedures mutually agreed upon by the Borrower and the
Lender.

SECTION 2.06 Variable Facility Note. The obligation of the Borrower to repay the
Variable Advances will be evidenced by the Variable Facility Note. The Variable
Facility Note shall be payable to the order of the Lender and shall be made in
the amount of the Variable Facility Commitment.

SECTION 2.07 [Intentionally Deleted.]

SECTION 2.08 Reinstatement of Variable Commitment Upon Maturity of Fixed
Facility Advances. If any Fixed Facility Advance matures prior to the end of the
Variable Facility Availability Period, Borrower may elect to reborrow any or all
of such maturing Fixed Facility Advance and to increase the Variable Commitment
by an amount equal to the amount desired to be reborrowed by the Borrower on the
following terms and conditions:

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(a)

Request. In order to reborrow all or a portion of a maturing Fixed Facility
Advance, the Borrower shall deliver a written request for such reborrowing (the
“Reborrowing Request”) to the Lender, in the form attached as Exhibit Q hereto.

 

 

 

 

(b)

Closing. If none of the limitations contained in Section 2.09 are violated, and
all conditions contained in Section 2.10 are satisfied, the Lender shall permit
the requested reborrowing, at a Closing to be held at offices designated by the
Lender on the maturity date of the Fixed Facility Advance to be reborrowed (or
on such other date to which the Borrower and the Lender may agree), by executing
and delivering, at the sole cost and expense of the Borrower, an amendment to
this Agreement, in the form attached as Exhibit R hereto, together with an
amendment to each Security Document (if required by the Lender) and other
applicable Loan Documents, in form and substance satisfactory to the Lender,
reflecting the reborrowing. The documents and instruments referred to in the
preceding sentence are referred to in this Article as the “Reborrowing
Documents.”

Section 2.09 Limitations on Right to Reborrow. The right of the Borrower to
reborrow all or a portion of a maturing Fixed Facility Advance is subject to the
following limitations:

 

 

 

 

(a)

Closing Date. The Closing Date shall occur during the Variable Facility
Availability Period.

 

 

 

 

(b)

Minimum Request. Each Request for a reborrowing shall be in the minimum amount
of $5,000,000.

 

 

 

 

(c)

Limitation on Reborrowing. In no event will a reborrowing of a Fixed Facility
Advance be permitted if the Fixed Facility Advance is prepaid prior to its
Maturity Date.

SECTION 2.10 Conditions Precedent to Reborrowing. The reborrowing of all or a
portion of a maturing Fixed Facility Advance is subject to the satisfaction of
the following conditions precedent :

 

 

 

 

(a)

After giving effect to the requested reborrowing, the Coverage and LTV Tests
will be satisfied;

 

 

 

 

(b)

Payment by the Borrower in full of the maturing Fixed Facility Advance which the
Borrower has designated for reborrowing, together with any other amounts due
with respect to the repayment of such Fixed Facility Advance;

 

 

 

 

(c)

The receipt by the Lender of an endorsement to each Title Insurance Policy,
amending the effective date of the Title Insurance Policy to the Closing Date
and showing no additional exceptions to coverage other than the exceptions shown
on the Initial Closing Date and other exceptions approved by the Lender;

 

 

 

 

(d)

Receipt by the Lender of one or more counterparts of each Reborrowing Document,
dated as of the Closing Date, signed by each of the parties (other than the
Lender) who is a party to such Reborrowing Document;

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(e)

In the event that Fannie Mae is no longer in the business of purchasing loans of
the type and size of the loans evidenced by this Agreement without requiring
interest rate protection, the Borrower shall make arrangements for such interest
rate protection. Such protection shall be a Hedge satisfying the requirements of
Article XXI with respect to any amounts reborrowed pursuant to Sections 2.08,
2.09 and 2.10 of this Agreement; and

 

 

 

 

(f)

The satisfaction of all applicable General Conditions set forth in Article XI.

ARTICLE III
THE FIXED FACILITY COMMITMENT

SECTION 3.01 Fixed Facility Commitment. Subject to the terms, conditions and
limitations set forth in this Article, the Lender agrees to make Fixed Facility
Advances to the Borrower from time to time during the Fixed Facility
Availability Period. The aggregate original principal of the Fixed Facility
Advances shall not exceed the Fixed Facility Commitment. The borrowing of a
Fixed Facility Advance shall permanently reduce the Fixed Facility Commitment by
the original principal amount of the Fixed Facility Advance. The Borrower may
not re-borrow any part of the Fixed Facility Advance which it has previously
borrowed and repaid, provided, however, that a Fixed Facility Advance that
matures prior to the end of the Variable Facility Availability Period may be
reborrowed as a Variable Advance pursuant to the terms of Section 2.08 of this
Agreement.

SECTION 3.02 Requests for Fixed Facility Advances. The Borrower shall request a
Fixed Facility Advance by giving the Lender a Future Advance Request in
accordance with Section 5.02, as applicable.

SECTION 3.03 Maturity Date of Fixed Facility Advances; Amortization. The
maturity date of each Fixed Facility Advance shall be the maturity date selected
by the Borrower, provided that such Maturity Date shall not be earlier than the
date five (5) years after the date of such Advance and shall not be later than
December 1, 2013. The principal of each Fixed Facility Advance shall, at the
election of the Borrower, which election shall be made at the time of the first
Conversion Request or Credit Facility Expansion Request relating to a Fixed
Facility Commitment (which election shall apply to all Fixed Facility Advances)
be amortized on a 30-year schedule or shall require payments of interest only.

SECTION 3.04 Interest on Fixed Facility Advances.

                    (a)          Advances. Each Fixed Facility Advance shall
bear interest at a rate, per annum, equal to the sum of (i) the MBS Pass-Through
Rate determined for such Fixed Facility Advance and (ii) the Fixed Facility Fee.

                    (b)          Partial Month Interest. Notwithstanding
anything to the contrary in this Section, if a Fixed Facility Advance is not
made on the first day of a calendar month, and the MBS Issue Date for the MBS
backed by the Fixed Facility Advance is the first day of the month following the
month in which the Fixed Facility Advance is made, the Borrower shall pay

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interest on the original stated principal amount of the Fixed Facility Advance
for the partial month period commencing on the Closing Date for the Fixed
Facility Advance and ending on the last day of the calendar month in which the
Closing Date occurs at a rate, per annum, equal to the greater of (i) the
interest rate for the Fixed Facility Advance described in the first sentence of
this Section and (ii) a rate determined by the Lender, based on the Lender’s
cost of funds, and approved in advance, in writing, by the Borrower, pursuant to
procedures mutually agreed upon by the Borrower and the Lender.

SECTION 3.05 Coupon Rates for Fixed Facility Advances. The Coupon Rate for a
Fixed Facility Advance shall be the rate of interest applicable to such Fixed
Facility Advance pursuant to Section 3.04.

SECTION 3.06 Fixed Facility Note. The obligation of the Borrower to repay a
Fixed Facility Advance will be evidenced by a Fixed Facility Note. The Fixed
Facility Notes shall be payable to the order of the Lender and shall be made in
the original principal amount of each Fixed Facility Advance.

SECTION 3.07 Conversion of Commitment from Variable Facility Commitment to Fixed
Facility Commitment. The Borrower shall have the right, from time to time during
the Fixed Facility Availability Period, to convert all or a portion of a
Variable Facility Commitment to the Fixed Facility Commitment, in which event
the Variable Facility Commitment shall be reduced by, and the Fixed Facility
Commitment shall be increased by, the amount of the conversion.

          (a)          Request. In order to convert all or a portion of the
Variable Facility Commitment to the Fixed Facility Commitment, the Borrower
shall deliver a written request for a conversion (“Conversion Request”) to the
Lender, in the form attached as Exhibit K to this Agreement. Each Conversion
Request shall be accompanied by a designation of the amount of the conversion
and a designation of any Variable Advances Outstanding which will be prepaid on
or before the Closing Date for the conversion as required by Section 3.08(c).

          (b)          Closing. If none of the limitations contained in Section
3.08 is violated, and all conditions contained in Section 3.09 are satisfied,
the Lender shall permit the requested conversion, at a closing to be held at
offices designated by the Lender on a Closing Date selected by the Lender, and
occurring within 30 Business Days after the Lender’s receipt of the Conversion
Request (or on such other date to which the Borrower and the Lender may agree),
by executing and delivering, all at the sole cost and expense of the Borrower,
an amendment to this Agreement, in the form attached as Exhibit L to this
Agreement, together with an amendment to each Security Document and other
applicable Loan Documents, in form and substance satisfactory to the Lender,
reflecting the change in the Fixed Facility Commitment and the Variable Facility
Commitment. The documents and instruments referred to in the preceding sentence
are referred to in this Article as the “Conversion Documents.”

SECTION 3.08 Limitations on Right to Convert. The right of the Borrower to
convert all or a portion of the Variable Facility Commitment to the Fixed
Facility Commitment is subject to the following limitations:

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          (a)          Closing Date. The Closing Date shall occur during the
Fixed Facility Availability Period.

          (b)          Minimum Request. Each Request for a conversion shall be
in the minimum amount of $5,000,000.

          (c)          Obligation to Prepay Variable Advances. If, after the
conversion, the aggregate unpaid principal balance of all Variable Advances
Outstanding will exceed the Variable Facility Commitment, the Borrower shall be
obligated to prepay, as a condition precedent to the conversion, an amount of
Variable Advances Outstanding which is at least equal to the amount of the
excess.

SECTION 3.09 Conditions Precedent to Conversion. The conversion of all or a
portion of the Variable Facility Commitment to the Fixed Facility Commitment is
subject to the satisfaction of the following conditions precedent on or before
the Closing Date:

                    (a)          After giving effect to the requested
conversion, the Coverage and LTV Tests will be satisfied;

                    (b)          Prepayment by the Borrower in full of any
Variable Advances Outstanding which the Borrower has designated for payment,
together with any associated prepayment premiums and other amounts due with
respect to the prepayment of such Variable Advances;

                    (c)          The receipt by the Lender of an endorsement to
each Title Insurance Policy, amending the effective date of the Title Insurance
Policy to the Closing Date and showing no additional exceptions to coverage
other than the exceptions shown on the Initial Closing Date and other exceptions
approved by the Lender;

                    (d)          Receipt by the Lender of one or more
counterparts of each Conversion Document, dated as of the Closing Date, signed
by each of the parties (other than the Lender) who is a party to such Conversion
Document; and

                    (e)          The satisfaction of all applicable General
Conditions set forth in Article XI.

ARTICLE IV
RATE SETTING FOR THE ADVANCES

SECTION 4.01 Rate Setting for an Advance. Rates for an Advance shall be set in
accordance with the following procedures:

                    (a)          Preliminary, Nonbinding Quote. At the
Borrower’s request the Lender shall quote to the Borrower an estimate of the MBS
Pass-Through Rate (for a proposed Fixed Facility Advance) or MBS Imputed
Interest Rate (for a proposed Variable Advance) for a Fannie Mae MBS backed by a
proposed Advance. The Lender’s quote shall be based on (i) a solicitation of
bids from institutional investors selected by the Lender and (ii) the proposed
terms

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and amount of the Advance selected by the Borrower. The quote shall not be
binding upon the Lender.

                    (b)          Rate Setting. If the Borrower satisfies all of
the conditions to the Lender’s obligation to make the Advance in accordance with
Article V, then the Borrower may propose a MBS Pass-Through Rate (for a Fixed
Facility Advance) or MBS Imputed Interest Rate (for a Variable Advance) by
submitting to the Lender by facsimile transmission a completed and executed
document, in the form attached as Exhibit M to this Agreement (“Rate Setting
Form”), before 1:00 p.m. Eastern Standard Time on any Business Day (“Rate
Setting Date”). The Rate Setting Form contains various factual certifications
required by the Lender and specifies:

 

 

 

                  (i) for a Variable Advance, the amount, term, MBS Issue Date,
Variable Facility Fee, the proposed maximum Coupon Rate (“Maximum Annual Coupon
Rate”) and Closing Date for the Advance; and

 

 

 

                  (ii) for a Fixed Facility Advance, the amount, term, MBS Issue
Date, Fixed Facility Fee, Maximum Annual Coupon Rate, Price (which will be in a
range between 99-1/2 and 100-1/2), Yield Maintenance Period, Amortization
Period, if applicable, interest only and Closing Date for the Advance.

                    (c)          Rate Confirmation. Within one Business Day
after receipt of the completed and executed Rate Setting Form, the Lender shall
solicit bids from institutional investors selected by the Lender based on the
information in the Rate Setting Form and, provided the actual Coupon Rate (if
the low bid were accepted) would be at or below the Maximum Annual Coupon Rate,
shall obtain a commitment (“MBS Commitment”) for the purchase of a Fannie Mae
MBS having the bid terms described in the related Rate Setting Form, and shall
immediately deliver to the Borrower by facsimile transmission a completed
document, in the form attached as Exhibit N to this Agreement (“Rate
Confirmation Form”). The Rate Confirmation Form will confirm:

 

 

 

                  (i) for a Variable Advance, the amount, term, MBS Issue Date,
MBS Delivery Date, MBS Imputed Interest Rate, Variable Facility Fee, Coupon
Rate, Discount, Price, and Closing Date for the Advance; and

 

 

 

                  (ii) for a Fixed Facility Advance, the amount, term, MBS Issue
Date, MBS Delivery Date, MBS Pass-Through Rate, Fixed Facility Fee, Coupon Rate,
Price, Yield Maintenance Period, Specified U.S. Treasury Security, Amortization
Period and Closing Date for the Advance.

SECTION 4.02 Advance Confirmation Instrument for Variable Advances. On or before
the Closing Date for a Variable Advance, the Borrower Parties execute and
deliver to the Lender an instrument (“Advance Confirmation Instrument”), in the
form attached as Exhibit O to this Agreement, confirming the amount, term, MBS
Issue Date, MBS Delivery Date, MBS Imputed Interest Rate, Variable Facility Fee,
Coupon Rate, Discount, Price and Closing Date for the Advance, and the
Borrower’s obligation to repay the Advance in accordance with the terms of the
Notes and this Agreement. Upon the funding of the Variable Advance, the Lender
shall note

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the date of funding in the appropriate space at the foot of the Advance
Confirmation Instrument and deliver a copy of the completed Advance Confirmation
Instrument to the Borrower. The Lender’s failure to do so shall not invalidate
the Advance Confirmation Instrument or otherwise affect in any way any
obligation of the Borrower to repay Variable Advances in accordance with the
Advance Confirmation Instrument, the Variable Facility Note or the other Loan
Documents, but is merely meant to facilitate evidencing the date of funding and
to confirm that the Advance Confirmation Instrument is not effective until the
date of funding.

SECTION 4.03 Breakage and other Costs. In the event that the Lender obtains an
MBS Commitment and the Lender fails to fulfill the MBS Commitment because the
Advance is not made (for a reason other than the default of the Lender to make
the Advance), the Borrower shall pay all reasonable out-of-pocket costs payable
to the potential investor and other reasonable costs, fees and damages incurred
by the Lender in connection with its failure to fulfill the MBS Commitment. The
Lender reserves the right to require that the Borrower post a deposit at the
time the MBS Commitment is obtained. The deposit referred to in the preceding
sentence shall be refundable to the Borrower upon the delivery of the related
MBS.

ARTICLE V
MAKING THE ADVANCES

SECTION 5.01 Initial Advance . The Lender has made the Initial Advance.

SECTION 5.02 Future Advances. In order to obtain a Future Advance, the Borrower
may from time to time deliver a written request for a Future Advance (“Future
Advance Request”) to the Lender, in the form attached as Exhibit P to this
Agreement. Each Future Advance Request shall be accompanied by (a) a designation
of the amount of the Future Advance requested, and (b) a designation of the
maturity date of the Advance. Each Future Advance Request shall be in the
minimum amount of $3,000,000. If all conditions contained in Section 5.03 are
satisfied, the Lender shall make the requested Future Advance, at a closing to
be held at offices designated by the Lender on a Closing Date selected by the
Lender, and occurring on a date selected by the Borrower, which date shall be
not more than three (3) Business Days, after the Borrower’s receipt of the Rate
Confirmation Form (or on such other date to which the Borrower and the Lender
may agree). The Lender reserves the right to require that the Borrower post a
deposit at the time the MBS Commitment is obtained as an additional condition to
the Lender’s obligation to make the Future Advance. The deposit referred to in
the preceding sentence shall be refundable to the Borrower upon the delivery of
the related MBS.

SECTION 5.03 Conditions Precedent to Future Advances. The obligation of the
Lender to make a requested Future Advance is subject to the following conditions
precedent:

                    (a)          The receipt by the Lender of a Future Advance
Request;

                    (b)          The Lender has delivered the Rate Setting Form
for the Future Advance to the Borrower;

                    (c)          After giving effect to the requested Future
Advance, the Coverage and LTV Tests will be satisfied;

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                    (d)          If the Advance is a Fixed Facility Advance,
delivery of a Fixed Facility Note, duly executed by the Borrower, in the amount
of the Advance, reflecting all of the terms of the Fixed Facility Advance;

                    (e)          If the Advance is a Variable Advance, delivery
of the Advance Confirmation Instrument, duly executed by the Borrower;

                    (f)          For any Title Insurance Policy not containing a
Revolving Credit Endorsement, the receipt by the Lender of an endorsement to the
Title Insurance Policy, amending the effective date of the Title Insurance
Policy to the Closing Date and showing no additional exceptions to coverage
other than the exceptions shown on the Initial Closing Date, Permitted Liens and
other exceptions approved by the Lender;

                    (g)          If the Advance is a Variable Advance, the
receipt by the Lender of the first installment of Variable Facility Fee for the
Variable Advance and the entire Discount for the Variable Advance payable by the
Borrower pursuant to Section 2.04;

                    (h)          The receipt by the Lender of all legal fees and
expenses payable by the Borrower in connection with the Future Advance pursuant
to Section 16.04(b); and

                    (i)          If the Advance is a Variable Advance requiring
a Hedge pursuant to the terms of Article XXI, receipt by Lender at least five
(5) days prior to the Closing Date for such Advance, of the confirmation of a
Hedge commitment with respect to such Advance;

                    (j)          If applicable, receipt by Lender of Hedge
Documents effective as of the Closing Date;

                    (k)          The satisfaction of all applicable General
Conditions set forth in Article XI.

SECTION 5.04 Determination of Allocable Facility Amount and Valuations. Once
each Calendar Quarter, within 20 Business Days after the Borrower has delivered
to the Lender the reports required in Section 13.04, the Lender shall determine
the Aggregate Debt Service Coverage Ratio for the Trailing 12 Month period and
the Aggregate Loan to Value Ratio. If the Lender reasonably decides that changed
market or property conditions warrant, the Lender may (i) request an Appraisal
of the relevant Mortgaged Properties and/or (ii) determine new Allocable
Facility Amounts and Valuations at any other times. The Lender shall also
redetermine Allocable Facility Amounts as necessary to take account of any
addition, release or substitution of Collateral or other event which invalidates
the outstanding determinations. The Lender shall determine Cap Rates when
determining Valuations on the basis of its internal survey and analysis of cap
rates for comparable sales in the vicinity of the Mortgaged Property, with such
adjustments as the Lender deems appropriate and shall not be obligated to use
any information provided by the Borrower. The Lender shall promptly disclose its
determinations to the Borrower. Until redetermined, the Allocable Facility
Amounts and Valuations determined by the Lender shall remain in effect. In
performing a Valuation of a Multifamily Residential Property to be added to the
Collateral Pool, the Lender shall be entitled to obtain an Appraisal. The Lender
shall also have the right to obtain an Appraisal in connection with the
redetermination of

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a Valuation of a Mortgaged Property, but only if the Lender is unable to
determine a Cap Rate for such Mortgaged Property and then only if the Lender has
not obtained an Appraisal for such Mortgaged Property within the prior year.

ARTICLE VI
ADDITIONS OF COLLATERAL

SECTION 6.01 Right to Add Collateral. Subject to the terms and conditions of
this Article, the Borrower shall have the right, from time to time during the
Term of this Agreement, to add Additional Mortgaged Properties to the Collateral
Pool in accordance with the provisions of this Article.

SECTION 6.02 Procedure for Adding Collateral. The procedure for adding
Collateral set forth in this Section 6.02 shall apply to all additions of
Collateral in connection with this Agreement, including but not limited to
additions of Collateral in connection with substitutions of Collateral and
expansion of the Credit Facility.

                    (a)          Request. The Borrower may, not more than eight
(8) times per Calendar Year, deliver a written request (the “Collateral Addition
Request”) to the Lender, in the form attached as Exhibit S to this Agreement, to
add one or more Additional Mortgaged Properties to the Collateral Pool. Each
Collateral Addition Request shall be accompanied by the following:

                                   (i)          The information relating to the
Additional Mortgaged Property required by the form attached as Exhibit CC to
this Agreement (the “Collateral Addition Description Package”), as amended from
time to time to include information required under the DUS Guide; and

                                   (ii)          The payment of all Additional
Collateral Due Diligence Fees pursuant to Section 16.03(b).

                    (b)          Additional Information. The Borrower shall
promptly deliver to the Lender any additional information concerning the
proposed Additional Mortgaged Property that the Lender may from time to time
reasonably request.

                    (c)          Underwriting. The Lender shall evaluate the
proposed Additional Mortgaged Property, and shall make underwriting
determinations as to the Aggregate Debt Service Coverage Ratio for the Trailing
12 Month Period and the Aggregate Loan to Value Ratio applicable to the
Collateral Pool, on the basis of the lesser of (i) if purchased by the Borrower
within 12 months of the related Collateral Addition Request, the acquisition
price of the proposed Additional Mortgaged Property or (ii) a Valuation made
with respect to the proposed Additional Mortgaged Property, and otherwise in
accordance with Fannie Mae’s DUS Underwriting Requirements, including applicable
underwriting floors. Within 30 days after receipt of (i) the Collateral Addition
Request for the proposed Additional Mortgaged Property and (ii) all reports,
certificates and documents set forth on Exhibit S to this Agreement, including a
zoning analysis undertaken in accordance with Section 206 of the DUS Guide, the
Lender shall notify the Borrower

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whether or not it shall consent to the addition of the proposed Additional
Mortgaged Property to the Collateral Pool and, if it shall so consent, shall set
forth the Aggregate Debt Service Coverage Ratios for the Trailing 12 Month
Period and the Aggregate Loan to Value Ratio which it estimates shall result
from the addition of the proposed Additional Mortgaged Property to the
Collateral Pool. If the Lender declines to consent to the addition of the
proposed Additional Mortgaged Property to the Collateral Pool, the Lender shall
include, in its notice, a brief statement of the reasons for doing so. Within
five Business Days after receipt of the Lender’s notice that it shall consent to
the addition of the Additional Mortgaged Property to the Collateral Pool, the
Borrower shall notify the Lender whether or not it elects to cause the proposed
Additional Mortgaged Property to be added to the Collateral Pool. If the
Borrower fails to respond within the period of five Business Days, it shall be
conclusively deemed to have elected not to cause the proposed Additional
Mortgaged Property to be added to the Collateral Pool.

                    (d)          Closing. If, pursuant to subsection (c), the
Lender consents to the addition of the proposed Additional Mortgaged Property to
the Collateral Pool, the Borrower timely elects to cause the proposed Additional
Mortgaged Property to be added to the Collateral Pool and all conditions
contained in Section 6.03 are satisfied, the Lender shall permit the proposed
Additional Mortgaged Property to be added to the Collateral Pool, at a closing
to be held at offices designated by the Lender on a Closing Date selected by the
Lender, and occurring within 30 Business Days after the Lender’s receipt of the
Borrower’s election (or on such other date to which the Borrower and the Lender
may agree).

SECTION 6.03 Conditions Precedent to Addition of an Additional Mortgaged
Property to the Collateral Pool. The addition of an Additional Mortgaged
Property to the Collateral Pool on the Closing Date applicable to the Additional
Mortgaged Property is subject to the satisfaction of the following conditions
precedent:

                    (a)          The proposed Additional Mortgaged Property has
a Debt Service Coverage Ratio for the Trailing 12 Month Period of not less than
140% and a Loan to Value Ratio of not more than 65% and immediately after giving
effect to the requested addition, the Coverage and LTV Tests will be satisfied,
and in the case of any substitution effected pursuant to Section 7.04 of this
Agreement, the Coverage and LTV Tests are not adversely affected after giving
effect to the proposed substitution;

                    (b)          The receipt by the Lender of the Collateral
Addition Fee, except as provided in Section 16.02(b), and all legal fees and
expenses payable by the Borrower in connection with the Collateral Addition
pursuant to Section 16.04(b);

                    (c)          The delivery to the Title Company, with fully
executed instructions directing the Title Company to file and/or record in all
applicable jurisdictions, all applicable Collateral Addition Loan Documents
required by the Lender, including duly executed and delivered original copies of
any Security Instruments and UCC-1 Financing Statements covering the portion of
the Additional Mortgaged Property comprised of personal property, and other
appropriate documents, in form and substance satisfactory to the Lender and in
form proper for recordation, as may be necessary in the opinion of the

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Lender to perfect the Lien created by the applicable additional Security
Instrument, and any other Collateral Addition Loan Document creating a Lien in
favor of the Lender, and the payment of all taxes, fees and other charges
payable in connection with such execution, delivery, recording and filing;

                   (d)          If required by the Lender, amendments to the
Notes and the Security Instruments, reflecting the addition of the Additional
Mortgaged Property to the Collateral Pool and, as to any Security Instrument so
amended, the receipt by the Lender of an endorsement to the Title Insurance
Policy insuring the Security Instrument, amending the effective date of the
Title Insurance Policy to the Closing Date and showing no additional exceptions
to coverage other than the exceptions shown on the Initial Closing Date,
Permitted Liens and other exceptions approved by the Lender;

                    (e)          If the Title Insurance Policy for the
Additional Mortgaged Property contains a Tie-In Endorsement, an endorsement to
each other Title Insurance Policy containing a Tie-In Endorsement, adding a
reference to the Additional Mortgaged Property; and

                    (f)          The satisfaction of all applicable General
Conditions set forth in Article XI.

ARTICLE VII
RELEASES OF COLLATERAL

SECTION 7.01 Right to Obtain Releases of Collateral. Subject to the terms and
conditions of this Article, the Borrower shall have the right to obtain a
release of Collateral from the Collateral Pool in accordance with the provisions
of this Article.

SECTION 7.02 Procedure for Obtaining Releases of Collateral.

                    (a)          Request. In order to obtain a release of
Collateral from the Collateral Pool, the Borrower may, not more than once each
calendar month, deliver a written request for the release of Collateral from the
Collateral Pool (“Collateral Release Request”) to the Lender, in the form
attached as Exhibit T to this Agreement. The Collateral Release Request shall
not result in a termination of all or any part of the Credit Facility. The
Borrower may only terminate all or any part of the Credit Facility by delivering
a Variable Facility Termination Request or Credit Facility Termination Request
pursuant to Articles IX or X. The Collateral Release Request shall be
accompanied by (and shall not be effective unless it is accompanied by) the
name, address and location of the Mortgaged Property to be released from the
Collateral Pool (“Collateral Release Property”).

                    (b)          Closing. If all conditions contained in Section
7.03 are satisfied, the Lender shall cause the Collateral Release Property to be
released from the Collateral Pool, at a closing to be held at offices designated
by the Lender on a Closing Date selected by the Lender, and occurring within 30
days after the Lender’s receipt of the Collateral Release Request (or on such
other date to which the Borrower and the Lender may agree, by executing and
delivering, and causing all applicable parties to execute and deliver, all at
the sole cost and expense of the

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Borrower, instruments, in the form customarily used by the Lender for releases
in the jurisdiction governing the perfection of the security interest being
released, releasing the applicable Security Instrument as a Lien on the
Collateral Release Property, and UCC-3 Termination Statements terminating the
UCC-1 Financing Statements perfecting a Lien on the portion of the Collateral
Release Property comprised of personal property and such other documents and
instruments as the Borrower may reasonably request evidencing the release of the
applicable Collateral from any lien securing the Obligations (including a
termination of any restriction on the use of any accounts relating to the
Collateral Release Property) and the release and return to the Borrower of any
and all escrowed amounts relating thereto. The instruments referred to in the
preceding sentence are referred to in this Article as the “Collateral Release
Documents.” The Borrower shall prepare the Collateral Release Documents and
submit them to Lender for its review.

                    (c)          Release Price. The “Release Price” for each
Mortgaged Property means (1) during the period Section 22.01(a) of this
Agreement is in effect the greater of (i) the Allocable Facility Amount for the
Mortgaged Property to be released and (ii) the amount, if any, of Advances
Outstanding which are required to be repaid by the Borrower to the Lender in
connection with the proposed release of the Mortgaged Property from the
Collateral Pool, so that, immediately after the release, the Coverage and LTV
Tests will be satisfied and neither the Aggregate Debt Service Coverage Ratios
for the Trailing 12 Month Period will be reduced nor the Aggregate Loan to Value
Ratio for the Trailing 12 Month Period will be increased as a result of such
release and (2) at all times after Section 22.01(a) of this Agreement is no
longer in effect the greater of (i) 125% of the Allocable Facility Amount for
the Mortgaged Property to be released and (ii) the amount, if any, of Advances
Outstanding which are required to be repaid by the Borrower to the Lender in
connection with the proposed release of the Mortgaged Property from the
Collateral Pool, so that, immediately after the release, the Coverage and LTV
Tests will be satisfied and neither the Aggregate Debt Service Coverage Ratios
for the Trailing 12 Month Period will be reduced nor the Aggregate Loan to Value
Ratio for the Trailing 12 Month Period will be increased as a result of such
release. In addition to the Release Price, the Borrower shall pay to the Lender
all associated prepayment premiums and other amounts due under the Notes and any
Advance Confirmation Instruments evidencing the Advances being repaid.

                    (d)          Application of Release Price. The Release Price
shall be applied against the Variable Advances Outstanding until there are no
further Variable Advances Outstanding, and thereafter shall be held by the
Lender (or its appointed collateral agent) as substituted Collateral
(“Substituted Cash Collateral”), in accordance with a security agreement and
other documents in form and substance acceptable to the Lender (or, at the
Borrower’s option, may be applied against the prepayment of Fixed Facility
Advances, so long as the prepayment is permitted under the Fixed Facility Note
for the Fixed Facility Advance). Any portion of the Release Price held as
Substituted Cash Collateral may be released if, immediately after giving effect
to the release, each of the conditions set forth in Section 7.03(a) below shall
have been satisfied. If, on the date on which the Borrower pays the Release
Price, Variable Advances are Outstanding but are not then due and payable, the
Lender shall hold the payments as additional Collateral for the Credit Facility,
until the next date on which Variable Advances are due and payable, at which
time the Lender shall apply the amounts held by it to the amounts of the
Variable Advances due and payable.

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SECTION 7.03 Conditions Precedent to Release of Collateral Release Property from
the Collateral. The obligation of the Lender to release a Collateral Release
Property from the Collateral Pool by executing and delivering the Collateral
Release Documents on the Closing Date, are subject to the satisfaction of the
following conditions precedent on or before the Closing Date:

                    (a)          Immediately after giving effect to the
requested release the Coverage and LTV Tests will be satisfied, and in the case
of any substitution effected pursuant to Section 7.04 of this Agreement, the
Coverage and LTV Tests are not adversely affected after giving effect to the
proposed substitution;

                    (b)          Receipt by the Lender of the Release Price;

                    (c)          Receipt by the Lender of the Release Fee for
the Collateral Release Property and all legal fees and expenses payable by the
Borrower in connection with the release pursuant to Section 16.04(b);

                    (d)          Receipt by the Lender on the Closing Date of
one or more counterparts of each Collateral Release Document, dated as of the
Closing Date, signed by each of the parties (other than the Lender) who is a
party to such Collateral Release Document;

                    (e)          If required by the Lender, amendments to the
Notes and the Security Instruments, reflecting the release of the Collateral
Release Property from the Collateral Pool and, as to any Security Instrument so
amended, the receipt by the Lender of an endorsement to the Title Insurance
Policy insuring the Security Instrument, amending the effective date of the
Title Insurance Policy to the Closing Date and showing no additional exceptions
to coverage other than the exceptions shown on the Initial Closing Date,
Permitted Liens and other exceptions approved by the Lender;

                    (f)          If the Lender determines the Collateral Release
Property to be one phase of a project, and one or more other phases of the
project are Mortgaged Properties which will remain in the Collateral Pool
(“Remaining Mortgaged Properties”), the Lender must determine that the Remaining
Mortgaged Properties can be operated separately from the Collateral Release
Property and any other phases of the project which are not Mortgaged Properties.
In making this determination, the Lender shall evaluate whether the Remaining
Mortgaged Properties comply with the terms of Sections 203 and 208 of the DUS
Guide, which, as of the date of this Agreement, require, among other things,
that a phase which constitutes collateral for a loan made in accordance with the
terms of the DUS Guide (i) have adequate ingress and egress to existing public
roadways, either by location of the phase on a dedicated, all-weather road or by
access to such a road by means of a satisfactory easement, (ii) have access
which is sufficiently attractive and direct from major thoroughfares to be
conducive to continued good marketing, (iii) have a location which is not (A)
inferior to other phases, (B) such that inadequate maintenance of other phases
would have a significant negative impact on the phase, and (C) such that the
phase is visible only after passing through the other phases of the project and
(iv) comply with such other issues as are dictated by prudent practice;

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                    (g)          Receipt by the Lender of endorsements to the
Tie-In Endorsements of the Title Insurance Policies, if deemed necessary by the
Lender, to reflect the release;

                    (h)          Receipt by the Lender on the Closing Date of a
writing, dated as of the Closing Date, signed by the Borrower Parties, in the
form attached as Exhibit U to this Agreement, pursuant to which the Borrower
Parties confirm that their obligations under the Loan Documents are not
adversely affected by the release of the Collateral Release Property from the
Collateral;

                    (i)          The remaining Mortgaged Properties in the
Collateral Pool shall satisfy the then-existing Geographical Diversification
Requirements;

                    (j)          The satisfaction of all applicable General
Conditions set forth in Article XI;

                    (k)          Notwithstanding the other provisions of this
Section 7.03, no release of any of the Mortgaged Properties shall be made unless
the Borrower has provided title insurance, taking into account Tie-In
Endorsements, to Lender in respect of each of the remaining Mortgaged Properties
in the Collateral Pool in an amount equal to 125% of the Initial Valuation of
each of such remaining Mortgaged Properties.

SECTION 7.04 Substitutions.

           (a)          Right to Substitute Collateral. Subject to the terms,
conditions and limitations of this Section 7.04 and Article VII, the Borrower
Parties shall have the right, from time to time during the Term of this
Agreement, to add one or more Multifamily Residential Properties to the
Collateral Pool in substitution of one or more Mortgaged Properties then in the
Collateral Pool in accordance with the provisions of this Section 7.04
(“Substituted Mortgaged Property”).

          (b)          Procedure for Substituting Collateral.

 

 

 

              (i)          Request. The Borrower Parties may deliver a written
request (“Collateral Substitution Request”) to the Lender, in the form attached
as Exhibit Z to this Agreement, to add one or more Multifamily Residential
Properties to the Collateral Pool in substitution of one or more Mortgaged
Properties then in the Collateral Pool. Each Collateral Substitution Request
shall be accompanied by the following:

 

 

 

              (A)          The information relating to the proposed Substituted
Mortgaged Property required by the form attached as Exhibit DD to this Agreement
(“Collateral Substitution Description Package”), as amended from time to time to
include information required under the DUS guide;

 

 

 

              (B)          The payment of all Additional Collateral Due
Diligence Fees pursuant to Section 16.03(b).

 

 

 

              (C)          A statement whether the addition of the proposed
Substituted Mortgaged Property will occur simultaneously with the release of the
proposed Collateral Release Property and, if not, the Borrower Parties shall
specify the proposed date on which the

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proposed Substituted Mortgaged Property will be added to the Collateral Pool
which, in no event, shall be a date which is more than 90 days after the
proposed date of the release of the proposed Collateral Release Property.

 

 

 

          (ii)          Additional Information. The Borrower Parties shall
promptly deliver to the Lender any additional information concerning the
proposed Substituted Mortgaged Property and the proposed Collateral Release
Property that the Lender may from time to time reasonably request.

 

 

 

          (iii)          Underwriting. The Lender shall evaluate the proposed
Substituted Mortgaged Property, and shall make underwriting determinations as to
(a) the Aggregate Debt Service Coverage Ratios and the Aggregate Loan to Value
Ratio immediately prior to and immediately after giving effect to the proposed
substitution, and (b) the Valuation and the Net Operating Income for the
Trailing 12 Month Period for both the proposed Substituted Mortgaged Property
and the proposed Collateral Release Property. Notwithstanding anything to the
contrary contained herein, for purposes of making such underwriting determines
with respect to the proposed Substituted Mortgaged Property, such determinations
shall be made on the basis of a Valuation made with respect to the proposed
Substituted Mortgaged Property, and otherwise in accordance with Fannie Mae’s
DUS Underwriting Requirements, including applicable underwriting floors. Within
30 days after receipt of (a) the Collateral Substitution Request for the
proposed Substituted Mortgaged Property and the proposed Collateral Release
Property and (b) all reports, certificates and documents set forth on Exhibit EE
to this Agreement, including a zoning analysis undertaken in accordance with
Section 206 of the DUS Guide, the Lender shall notify the Borrower Parties
whether or not the proposed Substituted Mortgaged Property meets the Coverage
and LTV Tests and DUS Underwriting Requirements required by this Section
7.04(b)(iii), and therefore whether or not it shall consent to the addition of
the proposed Substituted Mortgaged Property to the Collateral Pool in
substitution of the proposed Collateral Release Property and, if it shall so
consent, shall set forth the Aggregate Debt Service Coverage Ratios and the
Aggregate Loan to Value Ratio which it estimates shall result from the
substitution of the proposed Substituted Mortgaged Property into the Collateral
Pool in replacement of the proposed Collateral Release Property. If the proposed
Substituted Mortgaged Property does not meet the Coverage and LTV Tests and DUS
Underwriting Requirements required by this Section 7.04(b)(iii), and therefore
the Lender does not consent to the substitution of the proposed Substituted
Mortgaged Property into the Collateral Pool in replacement of the proposed
Collateral Release Property, the Lender shall include, in its notice, a brief
statement of the reasons for doing so. Within five Business Days after receipt
of the Lender’s notice that it shall consent to the substitution of the proposed
Substituted Mortgaged Property into the Collateral Pool in replacement of the
proposed Collateral Release Property, the Borrower Parties shall notify the
Lender whether or not they elect to cause such substitution to occur. If the
Borrower Parties fail to respond within the period of five Business Days, they
shall be conclusively deemed to have elected not to cause the proposed
substitution to occur.

 

 

 

          (iv)          Closing. If, pursuant to this Section 7.04, the Lender
consents to the substitution of the proposed Substituted Mortgaged Property into
the Collateral Pool in

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replacement of the proposed Collateral Release Property, the Borrower Parties
timely elect to cause such substitution to occur and all conditions contained in
Section 7.04(c) are satisfied, the Lender shall permit the proposed Substituted
Mortgaged Property to be substituted into the Collateral Pool in replacement of
the proposed Collateral Release Property, at a closing to be held at offices
designated by the Lender on a Closing Date selected by the Lender, and occurring
--

 

 

 

              (x)          if the substitution of the proposed Substituted
Collateral Property is to occur simultaneously with the release of the proposed
Collateral Released Property, within 30 days after the Lender’s receipt of the
Borrower Parties’ election (or on such other date to which the Borrower Parties
and the Lender may agree); or

 

 

 

              (y)          if the substitution of the proposed Substituted
Collateral Property is to occur subsequent to the release of the Collateral
Release Property, within 90 days after the release of the Collateral Release
Property in accordance with Section 7.02(c).

 

 

 

If, in the case of clause (y), the addition of the proposed Substituted
Collateral Property to the Collateral Pool does not occur within 90 days or such
longer period as approved by Lender, in its sole discretion, after the release
of the Collateral Release Property in accordance with such clause (y), then the
Borrower Parties shall have waived their right to substitute such Collateral
Release Property with the proposed Substituted Mortgaged Property, the Release
Price shall be determined pursuant to Section 7.02(c) and the Borrower Parties
shall comply with the requirement set forth in Section 7.03. Such Release Price,
or the applicable portion thereof, shall be credited under this Agreement and/or
be immediately due and payable by the Borrower Parties to the Lender to reduce
the Advances Outstanding as required by, and in the manner set forth in, Section
7.02(d).

          (c)          Conditions Precedent to Substitution of a Substituted
Mortgaged Property into the Collateral Pool. The substitution of a Substituted
Mortgaged Property into the Collateral Pool in replacement of a Collateral
Release Property on the Closing Date is subject to the satisfaction of the
following conditions precedent:

 

 

 

          (i)          The proposed Substituted Mortgaged Property has a Debt
Service Coverage Ratio for the Trailing 12 Month Period of not less than 140%
and a Loan to Value Ratio of not more than 65% and immediately after giving
effect to the requested addition, the Coverage and LTV Tests will be satisfied;

 

 

 

          (ii)          The Lender shall have made the determination, as a part
of the underwriting evaluations made in accordance with Section 7.04(b)(iii),
that (a) the Aggregate Debt Service Coverage Ratio immediately after giving
effect to the proposed substitution will be equal to or higher than the
Aggregate Debt Service Coverage Ratio immediately prior to the proposed
substitution, and (ii) the Aggregate Loan to Value Ratio immediately after
giving effect to the proposed substitution will be equal to or less than the
Aggregate Loan to Ratio immediately prior to giving effect to the proposed
substitution;

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              (iii)          With respect to the release of the proposed
Collateral Release Property, the Borrower Parties shall have complied with
Section 7.03 (other than clause (b) with respect to the requirement pertaining
to Release Price);

 

 

 

              (iv)          The receipt by the Lender of the Collateral
Substitution Fee and all legal fees and expenses payable by the Borrower Parties
in connection with the substitution pursuant to Section 16.04(b).

 

 

 

              (v)          The delivery to the Title Company, with fully
executed instructions directing the Title Company to file and/or record in all
applicable jurisdictions, all applicable Collateral Substitution Loan Documents
required by Lender, including duly executed and delivered original copies of any
Security Instruments and UCC-1 Financing Statements covering the portion of the
Substituted Mortgaged Property comprised of personal property, and other
appropriate documents, in form and substance satisfactory to the Lender and in
form proper for recordation, as may be necessary in the opinion of the Lender to
perfect the Lien created by the applicable additional Security Instrument, and
any other Collateral Substitution Loan Document creating a Lien in favor of the
Lender, and the payment of all taxes, fees and other charges payable in
connection with such execution, delivery, recording and filing;

 

 

 

              (vi)          If required by the Lender, amendments to the Notes
and the Security Instruments, reflecting the addition of the Substituted
Mortgaged Property to the Collateral Pool and, as to any Security Instrument so
amended, the receipt by the Lender of an endorsement to the Title Insurance
Policy insuring the Security Instrument, amending the effective date of the
Title Insurance Policy to the Closing Date and showing no additional exceptions
to coverage other than Permitted Liens;

 

 

 

              (vii)          If the Title Insurance Policy for the Substituted
Mortgaged Property contains a Tie-In Endorsement, and endorsement to each other
Title Insurance Policy containing a Tie-In Endorsement, adding a reference to
the Substituted Mortgaged Property;

 

 

 

              (viii)          The delivery to the Lender of additional
collateral or the repayment of Advances Outstanding to the extent required
pursuant to Section 7.04(d); and

 

 

 

              (ix)          The satisfaction of all General Conditions set forth
in Article XI.

          (d)          Restriction on Borrowings. In the case that the
substitution of the proposed Substituted Mortgaged Property is not to occur
simultaneously with the release of the proposed Collateral Release Property,
from and after the release of the proposed Collateral Release Property until the
addition of the proposed Substituted Mortgaged Property into the Collateral Pool
in accordance with this Section 7.04, the Borrower shall not be permitted to
have the aggregate unpaid principal balance of Loans Outstanding to be in excess
of an amount equal to the then-existing Commitment minus the Allocable Credit
Facility Amount attributable to the Collateral Release Property that was
released, unless the Borrower shall have delivered to the Lender additional
collateral reasonably acceptable to the Lender in an amount at least equal to
such Allocable Credit Facility Amount. In the event that the aggregate unpaid
principal balance

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of Advances Outstanding exceeds such amount (and additional collateral in an
amount at least equal to the applicable Allocable Credit Facility Amount has not
been delivered by the Borrower to the Lender), as a condition precedent to the
substitution of a Substituted Mortgaged Property into the Collateral Pool, the
Borrower shall pay such excess. Notwithstanding the foregoing, in no event shall
the value of the additional collateral exceed 15% of the principal balance of
the Loans Outstanding. Any payment received by the Lender under this Section
7.04(d) shall be applied against Loans Outstanding in the manner prescribed for
Release Prices pursuant to Section 7.02. The additional collateral shall be
released to the Borrower upon the addition of the applicable Substituted
Mortgaged Property to the Collateral Pool in accordance with this Section 7.05.

ARTICLE VIII
EXPANSION OF CREDIT FACILITY

SECTION 8.01 Right to Increase Commitment. Subject to the terms, conditions and
limitations of this Article, the Borrower shall have the right, at any time or
from time to time during the Fixed Facility Availability Period, to increase the
Fixed Facility Commitment, the Variable Facility Commitment, or both. Either
Commitment may be increased by increases in the value of the Mortgaged
Properties or as a result of additions of Mortgaged Properties to the Collateral
Pool. The Borrower’s right to increase the Commitment as a result of increases
in the value of the Mortgaged Properties is subject to the following
limitations:

                    (a)          Maximum Amount of Increase in Commitment.
Notwithstanding the terms of this Agreement and Section 8.01 of the Other Credit
Agreement, Borrower shall have the right, upon repayment in full of the loans
secured by those certain Multifamily Residential Properties identified on
Exhibit HH (the “DUS Properties”), to increase the Commitment by an additional
$90,493,000 (to a maximum Commitment of $250,000,000). Borrower Parties
acknowledge that the DUS Properties are currently subject to liens under the
Fannie Mae Delegated Underwriting and Servicing program and are serviced by
Lender. Borrower hereby agrees that the total commitment, when added to the
commitment of the Lender to the Borrower under the Other Credit Agreement, shall
not exceed $850,000,000.

                    (b)          Minimum Request. Each Request for an increase
in the Commitment shall be in the minimum amount of $3,000,000.

                     (c)          Terms and Conditions. The terms and conditions
of this Agreement shall apply to any increase in the Commitment closed not later
than December 31, 2005. The terms and conditions (including pricing, other than
in respect of an increase in the Commitment in an amount equal to or less than
the Reserved Amount on which the Rate Preservation Fee has been paid, in which
case the terms and conditions, including pricing, shall be as set forth in this
Agreement) applicable to any increase in the Commitment after December 31, 2005
shall be acceptable to Lender in its discretion.

SECTION 8.02 Procedure for Obtaining Increases in Commitment.

                    (a)          Request. In order to obtain an increase in the
Commitment, the Borrower shall deliver a written request for an increase (a
“Credit Facility Expansion Request”) to the

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Lender, in the form attached as Exhibit V to this Agreement. Each Credit
Facility Expansion Request shall be accompanied by the following:

 

                        (i)          A designation of the amount of the proposed
increase;

 

                        (ii)          A designation of the increase in the Fixed
Facility Credit Commitment and the Variable Facility Credit Commitment;

 

                        (iii)          If any Multifamily Residential Properties
are proposed to be added to the Collateral Pool, a list of such Multifamily
Residential Properties and evidence of compliance with the requirements of
Article VI in connection with such addition;

 

                        (iv)          A request that the Lender inform the
Borrower of the Fixed Facility Fee and the Variable Facility Fee to apply to
Advances drawn from such increase in the Commitment.

                    (b)          Closing. If all conditions contained in Section
8.03 are satisfied, the Lender shall permit the requested increase in the
Commitment, at a closing to be held at offices designated by the Lender on a
Closing Date selected by the Lender, and occurring within fifteen (15) Business
Days after the Lender’s receipt of the Credit Facility Expansion Request (or on
such other date to which the Borrower and the Lender may agree).

SECTION 8.03 Conditions Precedent to Increase in Commitment. The right of the
Borrower to increase the Commitment is subject to the satisfaction of the
following conditions precedent on or before the Closing Date:

                    (a)          After giving effect to the requested increase
the Coverage and LTV Tests will be satisfied;

                    (b)          Payment by the Borrower of the Expansion
Origination Fee in accordance with Section 16.02(b) and all legal fees and
expenses payable by the Borrower in connection with the expansion of the
Commitment pursuant to Section 16.04(b);

                    (c)          The receipt by the Lender of an endorsement to
each Title Insurance Policy, amending the effective date of the Title Insurance
Policy to the Closing Date, increasing the limits of liability to the
Commitment, as increased under this Article, showing no additional exceptions to
coverage other than the exceptions shown on the Initial Closing Date (or, if
applicable, the last Closing Date with respect to which the Title Insurance
Policy was endorsed), the Permitted Liens and other exceptions approved by the
Lender, together with any reinsurance agreements required by the Lender;

                    (d)          The receipt by the Lender of fully executed
original copies of all Credit Facility Expansion Loan Documents, each of which
shall be in full force and effect, and in form and substance satisfactory to the
Lender in all respects;

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               (e)          if determined necessary by the Lender, the
Borrower’s agreement to such geographical diversification requirements as the
Lender may determine; and

               (f)          The satisfaction of all applicable General
Conditions set forth in Article XI.

ARTICLE IX
PARTIAL TERMINATION OF FACILITIES

SECTION 9.01 Right to Complete or Partial Termination of Facilities. Subject to
the terms and conditions of this Article, the Borrower shall have the right to
permanently reduce the Variable Facility Commitment and the Fixed Facility
Commitment in accordance with the provisions of this Article.

SECTION 9.02 Procedure for Complete or Partial Termination of Facilities.

               (a)          Request. In order to permanently reduce the Variable
Facility Commitment or the Fixed Facility Commitment, the Borrower may deliver a
written request for the reduction (“Facility Termination Request”) to the
Lender, in the form attached as Exhibit W to this Agreement. A permanent
reduction of the Variable Facility Commitment to $0 shall be referred to as a
“Complete Variable Facility Termination.” A permanent reduction of the Fixed
Facility Commitment to $0 shall be referred to as a “Complete Fixed Facility
Termination.” The Facility Termination Request shall be accompanied by the
following:

 

 

 

 

                    (i)          A designation of the proposed amount of the
reduction in the Variable Facility Commitment or Fixed Facility Commitment, as
the case may be; and

 

 

 

 

                    (ii)          Unless there is a Complete Variable Facility
Termination, or a Complete Fixed Facility Termination, a designation by the
Borrower of any Variable Advances which will be prepaid or Fixed Advances which
will be prepaid or defeased, as the case may be.

Any release of Collateral, whether or not made in connection with a Facility
Termination Request, must comply with all conditions to a release which are set
forth in Article VII.

               (b)          Closing. If all conditions contained in Section 9.03
are satisfied, the Lender shall permit the Variable Facility Commitment or Fixed
Facility Commitment as the case may be, to be reduced to the amount designated
by the Borrower, at a closing to be held at offices designated by the Lender on
a Closing Date selected by the Lender, within fifteen (15) Business Days after
the Lender’s receipt of the Facility Termination Request (or on such other date
to which the Borrower and the Lender may agree), by executing and delivering a
counterpart of an amendment to this Agreement, in the form attached as Exhibit X
to this Agreement, evidencing the reduction in the Facility Commitment. The
document referred to in the preceding sentence is referred to in this Article as
the “Facility Termination Document.”

SECTION 9.03 Conditions Precedent to Complete or Partial Termination of
Facilities. The right of the Borrower to reduce the Facility Commitment and the
obligation of the Lender to

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execute the Facility Termination Document, are subject to the satisfaction of
the following conditions precedent on or before the Closing Date:

               (a)          Payment by the Borrower in full of all of the
Variable Advances Outstanding and Fixed Facility Advances Outstanding, as the
case may be, required to be paid in order that the aggregate unpaid principal
balance of all Variable Advances Outstanding and Fixed Facility Advances
Outstanding, as the case may be, is not greater than the Variable Facility
Commitment and Fixed Facility Commitment, as the case may be, including any
associated prepayment premiums or other amounts due under the Notes (but if the
Borrower is not required to prepay all of the Variable Advances or Fixed
Facility Advances Outstanding, as the case may be, the Borrower shall have the
right to select which of the Variable Advances or Fixed Facility Advances, as
the case may be, shall be repaid);

               (b)          Payment by the Borrower of the Facility Termination
Fee;

               (c)          Receipt by the Lender on the Closing Date of one or
more counterparts of the Facility Termination Document, dated as of the Closing
Date, signed by each of the parties (other than the Lender) who is a party to
such Facility Termination Document; and

               (d)          The satisfaction of all applicable General
Conditions set forth in Article XI.

ARTICLE X
TERMINATION OF CREDIT FACILITY

SECTION 10.01 Right to Terminate Credit Facility. Subject to the terms and
conditions of this Article, the Borrower shall have the right to terminate this
Agreement and the Credit Facility and receive a release of all of the Collateral
from the Collateral Pool in accordance with the provisions of this Article.

SECTION 10.02 Procedure for Terminating Credit Facility.

               (a)          Request. In order to terminate this Agreement and
the Credit Facility, the Borrower shall deliver a written request for the
termination (“Credit Facility Termination Request”) to the Lender, in the form
attached as Exhibit Y to this Agreement.

               (b)          Closing. If all conditions contained in Section
10.03 are satisfied, this Agreement shall terminate, and the Lender shall cause
all of the Collateral to be released from the Collateral Pool, at a closing to
be held at offices designated by the Lender on a Closing Date selected by the
Lender, within 30 Business Days after the Lender’s receipt of the Credit
Facility Termination Request (or on such other date to which the Borrower and
the Lender may agree), by executing and delivering, and causing all applicable
parties to execute and deliver, all at the sole cost and expense of the
Borrower, (i) instruments, in the form customarily used by the Lender for
releases in the jurisdictions in which the Mortgaged Properties are located,
releasing all of the Security Instruments as a Lien on the Mortgaged Properties,
(ii) UCC-3 Termination Statements terminating all of the UCC-1 Financing
Statements perfecting a Lien on the personal property located on the Mortgaged
Properties, in form customarily used in the jurisdiction

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governing the perfection of the security interest being released, (iii) such
other documents and instruments as the Borrower may reasonably request
evidencing the release of the Collateral from any lien securing the Obligations
(including a termination of any restriction on the use of any accounts relating
to the Collateral) and the release and return to the Borrower of any and all
escrowed amounts relating thereto, (iv) instruments releasing the Borrower
Parties from their obligations under this Agreement and any and all other Loan
Documents, and (v) the Notes, each marked paid and canceled. The instruments
referred to in the preceding sentence are referred to in this Article as the
“Facility Termination Documents.”

SECTION 10.03 Conditions Precedent to Termination of Credit Facility. The right
of the Borrower to terminate this Agreement and the Credit Facility and to
receive a release of all of the Collateral from the Collateral Pool and the
Lender’s obligation to execute and deliver the Facility Termination Documents on
the Closing Date are subject to the following conditions precedent:

               (a)          Payment by the Borrower in full of all of the Notes
Outstanding on the Closing Date, including any associated prepayment premiums or
other amounts due under the Notes and all other amounts owing by the Borrower to
the Lender under this Agreement;

               (b)          Payment of the Facility Termination Fee; and

               (c)          The satisfaction of all applicable General
Conditions set forth in Article XI.

ARTICLE XI
GENERAL CONDITIONS PRECEDENT TO ALL REQUESTS

          The obligation of the Lender to close the transaction requested in a
Request shall be subject to the following conditions precedent (“General
Conditions”) in addition to any other conditions precedent set forth in this
Agreement:

SECTION 11.01 Conditions Applicable to All Requests. Each of the following
conditions precedent shall apply to all Requests:

               (a)          Payment of Expenses. The payment by the Borrower of
the Lender’s reasonable fees and expenses payable in accordance with this
Agreement.

               (b)          No Material Adverse Change. Except in connection
with a Credit Facility Termination Request, there has been no material adverse
change in the financial condition, business or prospects of the Borrower Parties
or in the physical condition, operating performance or value of any of the
Mortgaged Properties since the Initial Closing Date.

               (c)          No Default. Except in connection with a Credit
Facility Termination Request, there shall exist no Event of Default or Potential
Event of Default on the Closing Date for the Request and, after giving effect to
the transaction requested in the Request, no Event of Default or Potential Event
of Default shall have occurred.

               (d)          No Insolvency. Except in connection with a Credit
Facility Termination Request, receipt by the Lender on the Closing Date for the
Request of evidence satisfactory to

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the Lender that no Borrower Party is insolvent (within the meaning of any
applicable federal or state laws relating to bankruptcy or fraudulent transfers)
or will be rendered insolvent by the transactions contemplated by the Loan
Documents, including the making of a Future Advance, or, after giving effect to
such transactions, will be left with an unreasonably small capital with which to
engage in its business or undertakings, or will have intended to incur, or
believe that it has incurred, debts beyond its ability to pay such debts as they
mature or will have intended to hinder, delay or defraud any existing or future
creditor.

               (e)          No Untrue Statements. The Loan Documents shall not
contain any untrue or misleading statement of a material fact and shall not fail
to state a material fact necessary in order to make the information contained
therein not misleading.

               (f)          Representations and Warranties. Except in connection
with a Credit Facility Termination Request, all representations and warranties
made by any Borrower Party in the Loan Documents shall be true and correct in
all material respects on the Closing Date for the Request with the same force
and effect as if such representations and warranties had been made on and as of
the Closing Date for the Request.

               (g)          No Condemnation or Casualty. Except in connection
with a Credit Facility Termination Request, there shall not be pending or
threatened any condemnation or other taking, whether direct or indirect, against
any Mortgaged Property and there shall not have occurred any casualty to any
improvements located on any Mortgaged Property, which casualty would have a
material adverse effect on the continued operations of such Mortgaged Property.

               (h)          Delivery of Closing Documents. The receipt by the
Lender of the following, each dated as of the Closing Date for the Request, in
form and substance satisfactory to the Lender in all respects:

 

 

 

                   (i)          A Compliance Certificate;

 

 

 

                   (ii)         An Organizational Certificate; and

 

 

 

                   (iii)        Such other documents, instruments, approvals
(and, if requested by the Lender, certified duplicates of executed copies
thereof) and opinions as the Lender may reasonably request.

               (i)          Covenants. Except in connection with a Credit
Facility Termination Request, the Borrower Parties are in full compliance with
each of the covenants set forth in Articles XIII, XIV and XV of this Agreement,
without giving effect to any notice and cure rights of the Borrower Parties.

SECTION 11.02 Delivery of Closing Documents Relating to Collateral Addition
Request, Collateral Substitution Request, Credit Facility Expansion Request or
Future Advance Request. With respect to the closing of a Collateral Addition
Request, Collateral Substitution Request, or a Credit Facility Expansion
Request, it shall be a condition precedent that the Lender receives each of the
following, each dated as of the Closing Date for the Request, in form and
substance satisfactory to the Lender in all respects:

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               (a)          Loan Documents. Fully executed original copies of
each Loan Document required to be executed in connection with the Request, duly
executed and delivered by the parties thereto (other than the Lender), each of
which shall be in full force and effect.

               (b)          Opinion. Favorable opinions of counsel to the
Borrower Parties, as to the due organization and qualification of the Borrower
Parties, the due authorization, execution, delivery and enforceability of each
Loan Document executed in connection with the Request and such other matters as
the Lender may reasonably require.

SECTION 11.03 Delivery of Property-Related Documents. With respect to each of
the Mortgaged Properties to be made part of the Collateral Pool on the Closing
Date of a Collateral Addition Request or a Collateral Substitution Request, it
shall be a condition precedent that the Lender receive each of the following,
each dated as of the Closing Date of a Collateral Addition Request or a
Collateral Substitution Request in form and substance satisfactory to the Lender
in all respects:

               (a)          A favorable opinion of local counsel to the Borrower
Parties or the Lender as to the enforceability of the Security Instrument, and
any other Loan Documents, executed in connection with the Request.

               (b)          A commitment for the Title Insurance Policy
applicable to the Mortgaged Property and a pro forma Title Insurance Policy
based on the Commitment.

               (c)          The Insurance Policy (or a certified copy of the
Insurance Policy) applicable to the Mortgaged Property.

               (d)          The Survey applicable to the Mortgaged Property.

               (e)          Evidence satisfactory to the Lender of compliance of
the Mortgaged Property with property laws as required by Sections 205 and 206 of
Part III of the DUS Guide.

               (f)          An Appraisal of the Mortgaged Property.

               (g)          A Replacement Reserve Agreement, providing for the
establishment of a replacement reserve account, to be pledged to the Lender, in
which the owner shall (unless waived by the Lender) periodically deposit amounts
for replacements for improvements at the Mortgaged Property and as additional
security for the Borrower Parties’ obligations under the Loan Documents.

               (h)          A Completion/Repair and Security Agreement, together
with required escrows, on the standard form required by the DUS Guide.

               (i)          An Assignment of Management Agreement, on the
standard form required by the DUS Guide.

               (j)          An Assignment of Leases and Rents, if the Lender
determines one to be necessary or desirable, provided that the provisions of any
such assignment shall be substantively

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identical to those in the Security Instrument covering the Collateral, with such
modifications as may be necessitated by applicable state or local law.

ARTICLE XII
REPRESENTATIONS AND WARRANTIES

SECTION 12.01 Representations and Warranties of the Borrower Parties. Each
Borrower Party hereby represents and warrants to the Lender, with respect to
itself, as follows:

               (a)          Due Organization; Qualification.

 

 

 

                   (1)          The REIT is qualified to transact business and
is in good standing in the State of Tennessee. The Borrower Parties are
qualified to transact business and is in good standing in the State in which
they are organized and in each other jurisdiction in which such qualification
and/or standing is necessary to the conduct of its business and where the
failure to be so qualified would adversely affect the validity of, the
enforceability of, or the ability of the Borrower Parties to perform the
Obligations under this Agreement and the other Loan Documents. The Borrower
Parties are qualified to transact business and are in good standing in each
State in which they own a Mortgaged Property.

 

 

 

                   (2)          The Borrower Parties’ principal place of
business, principal office and office where they keep their books and records as
to the Collateral is located at the address set out in Section 23.08.

               (b)          Power and Authority. The Borrower Parties have the
requisite power and authority (i) to own their properties and to carry on their
business as now conducted and as contemplated to be conducted in connection with
the performance of the Obligations hereunder and under the other Loan Documents
and (ii) to execute and deliver this Agreement and the other Loan Documents and
to carry out the transactions contemplated by this Agreement and the other Loan
Documents.

               (c)          Due Authorization. The execution, delivery and
performance of this Agreement and the other Loan Documents have been duly
authorized by all necessary action and proceedings by or on behalf of the
Borrower Parties, and no further approvals or filings of any kind, including any
approval of or filing with any Governmental Authority, are required by or on
behalf of the Borrower Parties as a condition to the valid execution, delivery
and performance by the Borrower Parties of this Agreement or any of the other
Loan Documents.

               (d)          Valid and Binding Obligations. This Agreement and
the other Loan Documents have been duly authorized, executed and delivered by
the Borrower Party and constitute the legal, valid and binding obligations of
the Borrower Party, enforceable against the Borrower Party in accordance with
their respective terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws or
equitable principles affecting the enforcement of creditors’ rights generally or
by equitable principles or by the exercise of discretion by any court.

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               (e)          Non-contravention; No Liens. Neither the execution
and delivery of this Agreement and the other Loan Documents, nor the fulfillment
of or compliance with the terms and conditions of this Agreement and the other
Loan Documents nor the performance of the Obligations:

 

 

 

                   (1)          does or will conflict with or result in any
breach or violation of any Applicable Law enacted or issued by any Governmental
Authority or other agency having jurisdiction over the Borrower Party, any of
the Mortgaged Properties or any other portion of the Collateral or other assets
of the Borrower Party, or any judgment or order applicable to the Borrower Party
or to which the Borrower Party, any of the Mortgaged Properties or other assets
of the Borrower Party are subject;

 

 

 

                   (2)          does or will conflict with or result in any
material breach or violation of, or constitute a default under, any of the
terms, conditions or provisions of the Borrower Party’s Organizational
Documents, any indenture, existing agreement or other instrument to which the
Borrower Party is a party or to which the Borrower Party, any of the Mortgaged
Properties or any other portion of the Collateral or other assets of the
Borrower Party are subject;

 

 

 

                   (3)          does or will result in or require the creation
of any Lien on all or any portion of the Collateral or any of the Mortgaged
Properties, except for the Permitted Liens; or

 

 

 

                   (4)          does or will require the consent or approval of
any creditor of the Borrower Party, any Governmental Authority or any other
Person except such consents or approvals which have already been obtained.

               (f)          Pending Litigation or other Proceedings. There is no
pending or, to the best knowledge of the Borrower Party, threatened action,
suit, proceeding or investigation, at law or in equity, before any court, board,
body or official of any Governmental Authority or arbitrator against or
affecting any Mortgaged Property or any other portion of the Collateral or other
assets of the Borrower Party, which, if decided adversely to the Borrower Party,
would have, or may reasonably be expected to have, a Material Adverse Effect.
The Borrower Party is not in default with respect to any order of any
Governmental Authority.

               (g)          Solvency. The Borrower Party is not insolvent and
will not be rendered insolvent by the transactions contemplated by this
Agreement or the other Loan Documents and after giving effect to such
transactions, the Borrower Party will not be left with an unreasonably small
amount of capital with which to engage in its business or undertakings, nor will
the Borrower Party have incurred, have intended to incur, or believe that it has
incurred, debts beyond its ability to pay such debts as they mature. The
Borrower Party did not receive less than a reasonably equivalent value in
exchange for incurrence of the Obligations. There (i) is no contemplated,
pending or, to the best of the Borrower Party’s knowledge, threatened
bankruptcy, reorganization, receivership, insolvency or like proceeding, whether
voluntary or involuntary, affecting the Borrower Party or any of the Mortgaged
Properties and (ii) has been no assertion or exercise of jurisdiction over the
Borrower Party or any of the Mortgaged Properties by any court empowered to
exercise bankruptcy powers.

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          (h)          No Contractual Defaults. There are no defaults by the
Borrower Party or, to the knowledge of the Borrower Party, by any other Person
under any contract to which the Borrower Party is a party relating to any
Mortgaged Property, including any management, rental, service, supply, security,
maintenance or similar contract, other than defaults which do not have, and are
not reasonably expected to have, a Material Adverse Effect. Neither the Borrower
Party nor, to the knowledge of the Borrower Party, any other Person, has
received notice or has any knowledge of any existing circumstances in respect of
which it could receive any notice of default or breach in respect of any
contracts affecting or concerning any Mortgaged Property.

          (i)          Compliance with the Loan Documents. The Borrower Party is
in compliance with all provisions of the Loan Documents to which it is a party
or by which it is bound. The representations and warranties made by the Borrower
Party in the Loan Documents are true, complete and correct as of the Closing
Date and do not contain any untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.

          (j)          ERISA.

          1.          No Borrower Party is a “employee benefit plan” as defined
in Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended (“ERISA”), and the assets of any Borrower Party do not constitute “plan
assets” of one or more such plans within the meaning of 29 Code of Federal
Regulations (“C.F.R.”) Section 2510.3-101 or the Advances from Lender to
Borrower described hereunder are exempt from the restrictions of Section
406(a)(1)(A) through (D) of ERISA as well as from the taxes imposed by Section
4975(a) and (b) of the Internal Revenue Code of 1986, as amended (“Code”), by
reason of Department of Labor Prohibited Transaction Exemption 96-23 (“INHAM
Exemption”).

          2.          No Borrower Party is a “governmental plan” within the
meaning of Section 3(32) of ERISA.

          3.          The Borrower Parties and transactions with the Borrower
Parties are not subject to state statutes regulating investments and fiduciary
obligations with respect to governmental plans.

          4.          One or more of the following circumstances is/are true:

                       (i)          Equity interests in the Borrower are
publicly offered securities within the meaning of 29 C.F.R. Section
2510.3-101(b)(2).

                       (ii)          Less than twenty-five percent (25%) of all
equity interests in the Borrower are held by “benefit plan investors” within the
meaning of 29 C.F.R. Section 2510.3-101(f)(2).

                       (iii)          The Borrower qualifies as an “operating
company” or a “real estate operating company” within the meaning of 29 C.F.R.
Section 2510.3-101(c) or (e).

                       (iv)          The Advances are exempt from the
restrictions of Section 406(a)(1)(A) through (D) of ERISA as well as from the
taxes imposed by Section 4975(a) and (b) of the Code.

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               (k)          Financial Information. The financial projections
relating to the Borrower Party and delivered to the Lender on or prior to the
date hereof, if any, were prepared on the basis of assumptions believed by the
Borrower Party, in good faith at the time of preparation, to be reasonable and
the Borrower Party is not aware of any fact or information that would lead it to
believe that such assumptions are incorrect or misleading in any material
respect; provided, however, that no representation or warranty is made that any
result set forth in such financial projections shall be achieved. The financial
statements of the Borrower Party which have been furnished to the Lender are
complete and accurate in all material respects and present fairly the financial
condition of the Borrower Party, as of its date in accordance with GAAP, applied
on a consistent basis, and since the date of the most recent of such financial
statements no event has occurred which would have, or may reasonably be expected
to have a Material Adverse Effect, and there has not been any material
transaction entered into by the Borrower Party other than transactions in the
ordinary course of business. The Borrower Party has no material contingent
obligations which are not otherwise disclosed in its most recent financial
statements.

               (l)          Accuracy of Information. No information, statement
or report furnished in writing to the Lender by the Borrower Party in connection
with this Agreement or any other Loan Document or in connection with the
consummation of the transactions contemplated hereby and thereby contains any
material misstatement of fact or omits to state a material fact necessary to
make the statements contained therein, in light of the circumstances under which
they were made, not misleading; and the representations and warranties of the
Borrower Party and the statements, information and descriptions contained in the
Borrower Party’s closing certificates, as of the Closing Date, are true, correct
and complete in all material respects, do not contain any untrue statement or
misleading statement of a material fact, and do not omit to state a material
fact required to be stated therein or necessary to make the certifications,
representations, warranties, statements, information and descriptions contained
therein, in light of the circumstances under which they were made, not
misleading; and the estimates and the assumptions contained herein and in any
certificate of the Borrower Party delivered as of the Closing Date are
reasonable and based on the best information available to the Borrower Party.

               (m)          No Conflicts of Interest. To the best knowledge of
the Borrower Party, no member, officer, agent or employee of the Lender has been
or is in any manner interested, directly or indirectly, in that Person’s own
name, or in the name of any other Person, in the Loan Documents, the Borrower
Party or any Mortgaged Property, in any contract for property or materials to be
furnished or used in connection with such Mortgaged Property or in any aspect of
the transactions contemplated by the Loan Documents.

               (n)          Governmental Approvals. No Governmental Approval not
already obtained or made is required for the execution and delivery of this
Agreement or any other Loan Document or the performance of the terms and
provisions hereof or thereof by the Borrower Party.

               (o)          Governmental Orders. The Borrower Party is not
presently under any cease or desist order or other orders of a similar nature,
temporary or permanent, of any Governmental Authority which would have the
effect of preventing or hindering performance of its duties hereunder, nor are
there any proceedings presently in progress or to its knowledge contemplated
which would, if successful, lead to the issuance of any such order.

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               (p)          No Reliance. The Borrower Party acknowledges,
represents and warrants that it understands the nature and structure of the
transactions contemplated by this Agreement and the other Loan Documents, that
it is familiar with the provisions of all of the documents and instruments
relating to such transactions; that it understands the risks inherent in such
transactions, including the risk of loss of all or any of the Mortgaged
Properties; and that it has not relied on the Lender or Fannie Mae for any
guidance or expertise in analyzing the financial or other consequences of the
transactions contemplated by this Agreement or any other Loan Document or
otherwise relied on the Lender or Fannie Mae in any manner in connection with
interpreting, entering into or otherwise in connection with this Agreement, any
other Loan Document or any of the matters contemplated hereby or thereby.

               (q)          Compliance with Applicable Law. The Borrower Party
is in compliance with Applicable Law, including all Governmental Approvals, if
any, except for such items of noncompliance that, singly or in the aggregate,
have not had and are not reasonably expected to cause, a Material Adverse
Effect.

               (r)          Contracts with Affiliates. Except as otherwise
approved in writing by the Lender, the Borrower Party has not entered into and
is not a party to any contract, lease or other agreement with any Affiliate of
the Borrower Party for the provision of any service, materials or supplies to
any Mortgaged Property (including any contract, lease or agreement for the
provision of property management services, cable television services or
equipment, gas, electric or other utilities, security services or equipment,
laundry services or equipment or telephone services or equipment). The Lender
hereby approves the property management agreements set forth on Exhibit AA to
this Agreement.

               (s)          Lines of Business. The Borrower Party is not engaged
in any businesses other than the acquisition, ownership, development,
construction, leasing, financing or management of Multifamily Residential
Properties, and the conduct of these businesses does not violate the
Organizational Documents pursuant to which it is formed.

               (t)          Status as a Real Estate Investment Trust. The REIT
is qualified, and is taxed as, a real estate investment trust under Subchapter M
of the Internal Revenue Code, and is not engaged in any activities which would
jeopardize such qualification and tax treatment.

SECTION 12.02 Representations and Warranties of the Borrower Parties. The
Borrower Parties hereby represent and warrant to the Lender as follows with
respect to each of the Mortgaged Properties:

               (a)          Title. The relevant Borrower Party has good, valid,
marketable and indefeasible title to each Mortgaged Property (either in fee
simple or as tenant under a ground lease meeting all of the requirements of the
DUS Guide), free and clear of all Liens whatsoever except the Permitted Liens.
Each Security Instrument, if and when properly recorded in the appropriate
records, together with any Uniform Commercial Code financing statements required
to be filed in connection therewith, will create a valid, perfected first lien
on the Mortgaged Property intended to be encumbered thereby (including the
Leases related to such Mortgaged Property and the rents and all rights to
collect rents under such Leases), subject only to Permitted Liens. Except for
any Permitted Liens, there are no Liens or claims for work, labor or materials

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affecting any Mortgaged Property which are or may be prior to, subordinate to,
or of equal priority with, the Liens created by the Loan Documents. The
Permitted Liens do not have, and may not reasonably be expected to have, a
Material Adverse Effect.

               (b)          Impositions. The Borrower Parties have filed all
property and similar tax returns required to have been filed by it with respect
to each Mortgaged Property and has paid and discharged, or caused to be paid and
discharged, all installments for the payment of all Taxes due to date, and all
other material Impositions imposed against, affecting or relating to each
Mortgaged Property other than those which have not become due, together with any
fine, penalty, interest or cost for nonpayment pursuant to such returns or
pursuant to any assessment received by it, provided, however, that if the
Borrower Parties contest in good faith and by appropriate proceeding the
validity or applicability of any Imposition, provides to the Lender security in
such amount and in such form as the Lender may reasonably require, then
compliance with the Imposition in question shall be suspended during the
pendency of such contest. The Borrower Parties have no knowledge of any new
proposed Tax, levy or other governmental or private assessment or charge in
respect of any Mortgaged Property which has not been disclosed in writing to the
Lender.

               (c)          Zoning. Each Mortgaged Property complies in all
material respects with all Applicable Laws affecting such Mortgaged Property.
Without limiting the foregoing, all material Permits, including certificates of
occupancy, to the extent issued by the relevant jurisdiction, have been issued
and are in full force and effect. Neither the Borrower Parties nor, to the
knowledge of the Borrower Parties, any former owner of any Mortgaged Property,
has received any written notification or threat of any actions or proceedings
regarding the noncompliance or nonconformity of any Mortgaged Property with any
Applicable Laws or Permits, nor are the Borrower Parties otherwise aware of any
such pending actions or proceedings.

               (d)          Leases. The Borrower Parties have delivered to the
Lender a true and correct copy of their form apartment lease for each Mortgaged
Property (and, with respect to leases executed prior to the date on which the
Borrower Parties first owned the Mortgaged Property, the form apartment lease
used for such leases), and each Lease with respect to such Mortgaged Property is
in the form thereof, with no material modifications thereto, except as
previously disclosed in writing to the Lender. Except as set forth in a Rent
Roll, no Lease for any unit in any Mortgaged Property (i) is for a term in
excess of one year, including any renewal or extension period unless such
renewal or extension period is subject to termination by the Borrower Parties
upon not more than 30 days’ written notice, (ii) provides for prepayment of more
than one month’s rent, or (iii) was entered into in other than the ordinary
course of business.

               (e)          Rent Roll. The Borrower Parties have executed and
delivered to the Lender a Rent Roll for each Mortgaged Property, each dated as
of and delivered within 30 days prior to the Closing Date. Each Rent Roll sets
forth each and every unit subject to a Lease which is in full force and effect
as of the date of such Rent Roll. The information set forth on each Rent Roll is
true, correct and complete in all material respects as of its date and there has
occurred no material adverse change in the information shown on any Rent Roll
from the date of each such Rent Roll to the Closing Date. Except as disclosed in
the Rent Roll with respect to each

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Mortgaged Property or otherwise previously disclosed in writing to the Lender,
no Lease is in effect as of the date of the Rent Roll with respect to such
Mortgaged Property.

               (f)          Status of Landlord under Leases. Except for any
assignment of leases and rents which is a Permitted Lien or which is to be
released in connection with the consummation of the transactions contemplated by
this Agreement, the relevant Borrower Party is the owner and holder of the
landlord’s interest under each of the Leases of units in each Mortgaged Property
and there are no prior outstanding assignments of any such Lease, or any portion
of the rents, additional rents, charges, issues or profits due and payable or to
become due and payable thereunder.

               (g)          Enforceability of Leases. Each Lease constitutes the
legal, valid and binding obligation of the Borrower Parties and, to the
knowledge of the Borrower Parties, of each of the other parties thereto,
enforceable in accordance with its terms, subject only to bankruptcy,
insolvency, reorganization or other similar laws relating to creditors’ rights
generally, and equitable principles, and except as disclosed in writing to the
Lender, no notice of any default by the Borrower Parties which remains uncured
has been sent by any tenant under any such Lease, other than defaults which do
not have, and are not reasonably expected to have, a Material Adverse Effect on
the Mortgaged Property subject to the Lease.

               (h)          No Lease Options. All premises demised to tenants
under Leases are occupied by such tenants as tenants only. No Lease contains any
option or right to purchase, right of first refusal or any other similar
provisions. No option or right to purchase, right of first refusal, purchase
contract or similar right exists with respect to any Mortgaged Property.

               (i)          Insurance. The Borrower Parties have delivered to
the Lender true and correct certified copies of all Insurance Policies currently
in effect as of the date of this Agreement with respect to the Mortgaged
Property which it owns. Each such Insurance Policy complies in all material
respects with the requirements set forth in the Loan Documents.

               (j)          Tax Parcels. Each Mortgaged Property is on one or
more separate tax parcels, and each such parcel (or parcels) is (or are)
separate and apart from any other property.

               (k)          Encroachments. Except as disclosed on the Survey
with respect to each Mortgaged Property, none of the improvements located on any
Mortgaged Property encroaches upon the property of any other Person or upon any
easement encumbering the Mortgaged Property, nor lies outside of the boundaries
and building restriction lines of such Mortgaged Property and no improvement
located on property adjoining such Mortgaged Property lies within the boundaries
of or in any way encroaches upon such Mortgaged Property.

               (l)          Independent Unit. Except for Permitted Liens and as
disclosed on Exhibit BB to this Agreement, or as disclosed in a Title Insurance
Policy or Survey for the Mortgaged Property, each Mortgaged Property is an
independent unit which does not rely on any drainage, sewer, access, parking,
structural or other facilities located on any Property not included either in
such Mortgaged Property or on public or utility easements for the
(i) fulfillment of any zoning, building code or other requirement of any
Governmental Authority that has jurisdiction over such Mortgaged Property, (ii)
structural support, or (iii) the fulfillment of the requirements of

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any Lease or other agreement affecting such Mortgaged Property. The relevant
Borrower Party, directly or indirectly, has the right to use all amenities,
easements, public or private utilities, parking, access routes or other items
necessary or currently used for the operation of each Mortgaged Property. All
public utilities are installed and operating at each Mortgaged Property and all
billed installation and connection charges have been paid in full. Each
Mortgaged Property is either (x) contiguous to or (y) benefits from an
irrevocable unsubordinated easement permitting access from such Mortgaged
Property to a physically open, dedicated public street, and has all necessary
permits for ingress and egress and is adequately serviced by public water, sewer
systems and utilities. No building or other improvement not located on a
Mortgaged Property relies on any part of the Mortgaged Property to fulfill any
zoning requirements, building code or other requirement of any Governmental
Authority that has jurisdiction over the Mortgaged Property, for structural
support or to furnish to such building or improvement any essential building
systems or utilities.

               (m)          Condition of the Mortgaged Properties. Except as
disclosed in any third party report delivered to the Lender prior to the date on
which a Borrower Party’s Mortgaged Property is added to the Collateral Pool, or
otherwise disclosed in writing by the relevant Borrower Party to the Lender
prior to such date, each Mortgaged Property is in good condition, order and
repair, there exist no structural or other material defects in such Mortgaged
Property (whether patent or, to the best knowledge of the relevant Borrower
Party, latent or otherwise) and the relevant Borrower Party has not received
notice from any insurance company or bonding company of any defects or
inadequacies in such Mortgaged Property, or any part of it, which would
adversely affect the insurability of such Mortgaged Property or cause the
imposition of extraordinary premiums or charges for insurance or of any
termination or threatened termination of any policy of insurance or bond. No
claims have been made against any contractor, architect or other party with
respect to the condition of any Mortgaged Property or the existence of any
structural or other material defect therein. No Mortgaged Property has been
materially damaged by casualty which has not been fully repaired or for which
insurance proceeds have not been received or are not expected to be received
except as previously disclosed in writing to the Lender. There are no
proceedings pending for partial or total condemnation of any Mortgaged Property
except as disclosed in writing to the Lender.

SECTION 12.03 Representations and Warranties of the Lender. The Lender hereby
represents and warrants to the Borrower Parties as follows:

               (a)          Due Organization. The Lender is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.

               (b)          Power and Authority. The Lender has the requisite
power and authority to execute and deliver this Agreement and to perform its
obligations under this Agreement.

               (c)          Due Authorization. The execution and delivery by the
Lender of this Agreement, and the consummation by it of the transactions
contemplated thereby, and the performance by it of its obligations thereunder,
have been duly and validly authorized by all necessary action and proceedings by
it or on its behalf.

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ARTICLE XIII
AFFIRMATIVE COVENANTS OF THE BORROWER PARTIES

Each Borrower Party, with respect to itself, agrees and covenants with the
Lender that, at all times during the Term of this Agreement:

SECTION 13.01 Compliance with Agreements. The Borrower Party shall comply with
all the terms and conditions of each Loan Document to which it is a party or by
which it is bound; provided, however, that the Borrower Party’s failure to
comply with such terms and conditions shall not be an Event of Default until the
expiration of the applicable notice and cure periods, if any, specified in the
applicable Loan Document.

SECTION 13.02 Maintenance of Existence. The Borrower Party shall maintain its
existence and continue to be a limited partnership or corporation, as the case
may be, organized under the laws of the state of its organization. The Borrower
Party shall continue to be duly qualified to do business in each jurisdiction in
which such qualification is necessary to the conduct of its business and where
the failure to be so qualified would adversely affect the validity of, the
enforceability of, or the ability to perform, its obligations under this
Agreement or any other Loan Document.

SECTION 13.03 Maintenance of REIT Status. During the Term of this Agreement, the
REIT shall qualify, and be taxed as, a real estate investment trust under
Subchapter M of the Internal Revenue Code, and will not be engaged in any
activities which would jeopardize such qualification and tax treatment.

SECTION 13.04 Financial Statements; Accountants’ Reports; Other Information. The
Borrower Party shall keep and maintain at all times complete and accurate books
of accounts and records in sufficient detail to correctly reflect (x) all of the
Borrower Party’s financial transactions and assets and (y) the results of the
operation of each Mortgaged Property and copies of all written contracts, Leases
and other instruments which affect each Mortgaged Property (including all bills,
invoices and contracts for electrical service, gas service, water and sewer
service, waste management service, telephone service and management services).
In addition, the Borrower Parties shall furnish, or cause to be furnished, to
the Lender:

               (a)          Annual Financial Statements. As soon as available,
and in any event within 90 days after the close of its fiscal year during the
Term of this Agreement, the audited balance sheet of the REIT and its
Subsidiaries as of the end of such fiscal year, the audited statement of income,
equity and retained earnings of the REIT and its Subsidiaries for such fiscal
year and the audited statement of cash flows of the REIT and its Subsidiaries
for such fiscal year, all in reasonable detail and stating in comparative form
the respective figures for the corresponding date and period in the prior fiscal
year, prepared in accordance with GAAP, consistently applied, and accompanied by
a certificate of the REIT’s independent certified public accountants to the
effect that such financial statements have been prepared in accordance with
GAAP, consistently applied, and that such financial statements fairly present
the results of its operations and financial condition for the periods and dates
indicated, with such certification to be free of exceptions and qualifications
as to the scope of the audit or as to the going concern nature of the business.

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               (b)          Quarterly Financial Statements. As soon as
available, and in any event within 45 days after each of the first three fiscal
quarters of each fiscal year during the Term of this Agreement, the unaudited
balance sheet of the REIT and its Subsidiaries as of the end of such fiscal
quarter, the unaudited statement of income and retained earnings of the REIT and
its Subsidiaries and the unaudited statement of cash flows of the REIT and its
Subsidiaries for the portion of the fiscal year ended with the last day of such
quarter, all in reasonable detail and stating in comparative form the respective
figures for the corresponding date and period in the previous fiscal year,
accompanied by a certificate of the Chief Financial Officer of the REIT to the
effect that such financial statements have been prepared in accordance with
GAAP, consistently applied, and that such financial statements fairly present
the results of its operations and financial condition for the periods and dates
indicated subject to year end adjustments in accordance with GAAP.

               (c)          Quarterly Property Statements. As soon as available,
and in any event within 45 days after each Calendar Quarter, a statement of
income and expenses of each Mortgaged Property accompanied by a certificate of
the Chief Financial Officer of the REIT to the effect that each such statement
of income and expenses fairly, accurately and completely presents the operations
of each such Mortgaged Property for the period indicated.

               (d)          Annual Property Statements. On an annual basis
within forty-five (45) days of the end of its fiscal year, an annual statement
of income and expenses of each Mortgaged Property accompanied by a certificate
of the Chief Financial Officer of the REIT to the effect that each such
statement of income and expenses fairly, accurately and completely presents the
operations of each such Mortgaged Property for the period indicated.

               (e)          Updated Rent Rolls. Upon the Lender’s request (but
not more frequently than quarterly), a current Rent Roll for each Mortgaged
Property, showing the name of each tenant, and for each tenant, the space
occupied, the lease expiration date, the rent payable, the rent paid and any
other information requested by the Lender and accompanied by a certificate of
the Chief Financial Officer of the REIT to the effect that each such Rent Roll
fairly, accurately and completely presents the information required therein.

               (f)          Security Deposit Information. Upon the Lender’s
request, an accounting of all security deposits held in connection with any
Lease of any part of any Mortgaged Property, including the name and
identification number of the accounts in which such security deposits are held,
the name and address of the financial institutions in which such security
deposits are held and the name and telephone number of the person to contact at
such financial institution, along with any authority or release necessary for
the Lender to access information regarding such accounts.

               (g)          Security Law Reporting Information. So long as the
REIT is a reporting company under the Securities and Exchange Act of 1934,
promptly upon becoming available, (a) copies of all financial statements,
reports and proxy statements sent or made available generally by any Borrower
Party, or any of its Affiliates, to their respective security holders, (b) all
regular and periodic reports and all registration statements (other than the
exhibits thereto and any registration statements on Form S-8 or a similar form)
and prospectuses, if any, filed by any Borrower Party, or any of its Affiliates,
with the Securities and Exchange Commission or other

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Governmental Authorities, and (c) all statements made available generally by any
Borrower Party, or any of their Affiliates, to the public concerning material
developments in the business of the REIT or other party.

               (h)          Accountants’ Reports. Promptly upon receipt thereof,
copies of any reports or management letters submitted to the Borrower Party by
its independent certified public accountants in connection with the examination
of its financial statements made by such accountants (except for reports
otherwise provided pursuant to subsection (a) above); provided, however, that
the Borrower Party shall only be required to deliver such reports and management
letters to the extent that they relate to any Borrower Party or any Mortgaged
Property.

               (i)          Annual Budgets. Promptly, and in any event within 60
days after the start of its fiscal year, an annual budget for each Mortgaged
Property for such fiscal year, setting forth an estimate of all of the costs and
expenses, including capital expenses, of maintaining and operating each
Mortgaged Property.

               (j)          REIT Plans and Projections. If prepared by the REIT,
within 90 days after the beginning of each fiscal year, copies of (1) the REIT’s
business plan for the current and the succeeding two fiscal years, (2) the
REIT’s annual budget (including capital expenditure budgets) and projections for
each Mortgaged Property; and (3) the REIT’s financial projections for the
current and the succeeding two fiscal years, as prepared by the REIT’s Chief
Financial Officer and in a format and with such detail as the Lender may
require.

               (k)          Strategic Plan. Within 90 days after the end of each
fiscal year of the REIT, the REIT shall deliver to the Lender a written
narrative discussing the REIT’s publicly disclosed short and long range plans,
including its plans for operations, mergers, acquisitions and management, and
accompanied by supporting financial projections and schedules, certified by a
member of Senior Management as true, correct and complete (“Strategic Plan”) If
the REIT’s or any other Borrower Party’s Strategic Plan materially changes, then
such person shall deliver to the Lender the Strategic Plan as so changed.

               (l)          Annual Rental and Sales Comparable Analysis. Within
30 days after the Lender’s request, a rental and sales comparable analysis of
the local real estate market in which each Mortgaged Property is located, in a
form approved by the Lender.

               (m)          Federal Tax Returns. Upon request of Lender, the
Federal Tax Returns of the REIT.

               (n)          Other Reports. Promptly upon receipt thereof, all
schedules, financial statements or other similar reports delivered by the
Borrower Party pursuant to the Loan Documents or requested by the Lender with
respect to the Borrower Party’s business affairs or condition (financial or
otherwise) or any of the Mortgaged Properties.

               (o)          Certification. All certifications required to be
delivered pursuant to this Section 13.04 shall run directly to and be for the
benefit of Lender and Fannie Mae.

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SECTION 13.05 Certificate of Compliance. The Borrower Party shall deliver to the
Lender concurrently with the delivery of the financial statements and/or reports
required to be delivered pursuant to Section 13.04 (a) and (b) above a
certificate signed by the Chief Financial Officer of the REIT stating that, to
the best knowledge of such individual following reasonable inquiry, (i) setting
forth in reasonable detail the calculations required to establish whether each
Borrower Party was in compliance with the requirements of Sections 15.02 through
15.08 on the date of such financial statements, and (ii) stating that, to the
best knowledge of such individual following reasonable inquiry, no Event of
Default or Potential Event of Default has occurred, or if an Event of Default or
Potential Event of Default has occurred, specifying the nature thereof in
reasonable detail and the action which the relevant Borrower Party is taking or
proposes to take with respect thereto. Any certificate required by this Section
13.05 shall run directly to and be for the benefit of Lender and Fannie Mae.

SECTION 13.06 Maintain Licenses. The Borrower Party shall procure and maintain
in full force and effect all licenses, Permits, charters and registrations which
are material to the conduct of its business and shall abide by and satisfy all
terms and conditions of all such licenses, Permits, charters and registrations.

SECTION 13.07 Access to Records; Discussions With Officers and Accountants. To
the extent permitted by law and in addition to the applicable requirements of
the Security Instruments, the Borrower Party shall permit the Lender:

               (a)          to inspect, make copies and abstracts of, and have
reviewed or audited, such of the Borrower Party’s books and records as may
relate to the Obligations or any Mortgaged Property;

               (b)          to discuss the Borrower Party’s affairs, finances
and accounts with any of the Borrower Party’s officers, partners and employees;

               (c)          to discuss the Mortgage Properties’ conditions,
operations or maintenance with the managers of such Mortgaged Properties and the
officers and employees of the Borrower Party;

               (d)          to discuss the Borrower Party’s affairs, finances
and accounts with its independent public accountants; and

               (e)          to receive any other information that the Lender
deems reasonably necessary or relevant in connection with any Advance, any Loan
Document or the Obligations.

Notwithstanding the foregoing, prior to an Event of Default or Potential Event
of Default and in the absence of an emergency, all inspections shall be
conducted at reasonable times during normal business hours upon reasonable
notice to the Borrower Parties.

SECTION 13.08 Inform the Lender of Material Events. The Borrower Party shall
promptly inform the Lender in writing of any of the following (and shall deliver
to the Lender copies of any related written communications, complaints, orders,
judgments and other documents relating to the following) of which the Borrower
Party has actual knowledge:

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               (a)          Defaults. The occurrence of any Event of Default or
any Potential Event of Default under this Agreement or any other Loan Document;

               (b)          Regulatory Proceedings. The commencement of any
rulemaking or disciplinary proceeding or the promulgation of any proposed or
final rule which would have, or may reasonably be expected to have, a Material
Adverse Effect;

               (c)          Legal Proceedings. The commencement or threat of, or
amendment to, any proceedings by or against the Borrower Party in any Federal,
state or local court or before any Governmental Authority, or before any
arbitrator, which, if adversely determined, would have, or at the time of
determination may reasonably be expected to have, a Material Adverse Effect;

               (d)          Bankruptcy Proceedings. The commencement of any
proceedings by or against the Borrower Party under any applicable bankruptcy,
reorganization, liquidation, insolvency or other similar law now or hereafter in
effect or of any proceeding in which a receiver, liquidator, trustee or other
similar official is sought to be appointed for it;

               (e)          Regulatory Supervision or Penalty. The receipt of
notice from any Governmental Authority having jurisdiction over the Borrower
Party that (A) the Borrower Party is being placed under regulatory supervision,
(B) any license, Permit, charter, membership or registration material to the
conduct of the Borrower Party’s business or the Mortgaged Properties is to be
suspended or revoked or (C) the Borrower Party is to cease and desist any
practice, procedure or policy employed by the Borrower Party, as the case may
be, in the conduct of its business, and such cessation would have, or may
reasonably be expected to have, a Material Adverse Effect;

               (f)          Environmental Claim. The receipt from any
Governmental Authority or other Person of any notice of violation, claim,
demand, abatement, order or other order or direction (conditional or otherwise)
for any damage, including personal injury (including sickness, disease or
death), tangible or intangible property damage, contribution, indemnity,
indirect or consequential damages, damage to the environment, pollution,
contamination or other adverse effects on the environment, removal, cleanup or
remedial action or for fines, penalties or restrictions, resulting from or based
upon (a) the existence or occurrence, or the alleged existence or occurrence, of
a Hazardous Substance Activity or (b) the violation, or alleged violation, of
any Hazardous Materials Laws in connection with any Mortgaged Property or any of
the other assets of a Borrower Party;

               (g)          Material Adverse Effects. The occurrence of any act,
omission, change or event which has a Material Adverse Effect, subsequent to the
date of the most recent audited financial statements of the Borrower Parties
delivered to the Lender pursuant to Section 13.04;

               (h)          Accounting Changes. Any material change in any
Borrower Party’s accounting policies or financial reporting practices;

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               (i)          Legal and Regulatory Status. The occurrence of any
act, omission, change or event, including any Governmental Approval, the result
of which is to change or alter in any way the legal or regulatory status of any
Borrower Party; and

               (j)          Default on Indebtedness. The occurrence of any event
that results in or could result in (i) any imminent default, default or waiver
of default in respect of any Indebtedness having an unpaid principal balance of
$1,000,000 or more, (ii) the failure of any Borrower Party to pay when due or
within any applicable grace period any Indebtedness of any Borrower Party, or
(iii) any Indebtedness of any Borrower Party becoming due and payable before its
normal maturity by reason of a default or event of default, however described,
or any other event of default shall occur and continue after the applicable
grace period, if any, specified in the agreement or instrument relating to such
Indebtedness.

SECTION 13.09 Intentionally Omitted.

SECTION 13.10 Inspection. The Borrower Party shall permit any Person designated
by the Lender: (i) to make entries upon and inspections of the Mortgaged
Properties; and (ii) to otherwise verify, examine and inspect the amount,
quantity, quality, value and/or condition of, or any other matter relating to,
any Mortgaged Property; provided, however, that prior to an Event of Default or
Potential Event of Default and in the absence of an emergency, all such entries,
examinations and inspections shall be conducted at reasonable times during
normal business hours upon reasonable notice to the Borrower Party.

SECTION 13.11 Compliance with Applicable Laws. The Borrower Party shall comply
in all material respects with all Applicable Laws now or hereafter affecting any
Mortgaged Property or any part of any Mortgaged Property or requiring any
alterations, repairs or improvements to any Mortgaged Property. The Borrower
Party shall procure and continuously maintain in full force and effect, and
shall abide by and satisfy all material terms and conditions of all Permits.

SECTION 13.12 Warranty of Title. The relevant Borrower Party shall warrant and
defend (a) the title to each Mortgaged Property and every part of each Mortgaged
Property, subject only to Permitted Liens, and (b) the validity and priority of
the lien of the applicable Loan Documents, subject only to Permitted Liens, in
each case against the claims of all Persons whatsoever. The Borrower Parties
shall reimburse the Lender for any losses, costs, damages or expenses (including
reasonable attorneys’ fees and court costs) incurred by the Lender if an
interest in any Mortgaged Property, other than with respect to a Permitted Lien,
is claimed by others.

SECTION 13.13 Defense of Actions. The Borrower Party shall appear in and defend
any action or proceeding purporting to affect the security for this Agreement or
the rights or power of the Lender hereunder, and shall pay all costs and
expenses, including the cost of evidence of title and reasonable attorneys’
fees, in any such action or proceeding in which the Lender may appear. If the
Borrower Party fails to perform any of the covenants or agreements contained in
this Agreement, or if any action or proceeding is commenced that is not
diligently defended by the Borrower Party which affects in any material respect
the Lender’s interest in any Mortgaged Property or any part thereof, including
eminent domain, code enforcement or proceedings of any nature whatsoever under
any Applicable Law, whether now existing or hereafter enacted or amended, then
the Lender may, but without obligation to do so and without notice to or demand

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upon the Borrower Party and without releasing the Borrower Party from any
Obligation, make such appearances, disburse such sums and take such action as
the Lender deems necessary or appropriate to protect the Lender’s interest,
including disbursement of attorney’s fees, entry upon such Mortgaged Property to
make repairs or take other action to protect the security of said Mortgaged
Property, and payment, purchase, contest or compromise of any encumbrance,
charge or lien which in the judgment of the Lender appears to be prior or
superior to the Loan Documents. In the event (i) that any Security Instrument is
foreclosed in whole or in part or that any Loan Document is put into the hands
of an attorney for collection, suit, action or foreclosure, or (ii) of the
foreclosure of any mortgage, deed to secure debt, deed of trust or other
security instrument prior to or subsequent to any Security Instrument or any
Loan Document in which proceeding the Lender is made a party or (iii) of the
bankruptcy of the Borrower Party or an assignment by the Borrower Party for the
benefit of their respective creditors, the Borrower Party shall be chargeable
with and agrees to pay all reasonable costs of collection and defense, including
actual attorneys’ fees in connection therewith and in connection with any
appellate proceeding or post-judgment action involved therein, which shall be
due and payable together with all required service or use taxes.

SECTION 13.14 Alterations to the Mortgaged Properties. Except as otherwise
provided in the Loan Documents, the Borrower Party shall have the right to
undertake any alteration, improvement, demolition, removal or construction
(collectively, “Alterations”) to the Mortgaged Property which it owns without
the prior consent of the Lender; provided, however,that in any case, no such
Alteration shall be made to any Mortgaged Property without the prior written
consent of the Lender if (i) such Alteration could reasonably be expected to
adversely affect the value of such Mortgaged Property or its operation as a
multifamily housing facility in substantially the same manner in which it is
being operated on the date such property became Collateral, (ii) the
construction of such Alteration could reasonably be expected to result in
interference to the occupancy of tenants of such Mortgaged Property such that
tenants in occupancy with respect to five percent (5%)or more of the Leases
would be permitted to terminate their Leases or to abate the payment of all or
any portion of their rent, or (iii) such Alteration will be completed in more
than 12 months from the date of commencement or in the last year of the Term of
this Agreement. Notwithstanding the foregoing, the Borrower Party must obtain
the Lender’s prior written consent to construct Alterations with respect to the
Mortgaged Property costing in excess of, with respect to any Mortgaged Property,
the number of units in such Mortgaged Property multiplied by $2,000, but in any
event, costs in excess of $350,000 and the Borrower Party must give prior
written notice to the Lender of its intent to construct Alterations with respect
to such Mortgaged Property costing in excess of $150,000; provided, however,
that the preceding requirements shall not be applicable to Alterations made,
conducted or undertaken by the Borrower Party as part of the Borrower Party’s
routine maintenance and repair of the Mortgaged Properties as required by the
Loan Documents.

SECTION 13.15 ERISA. The Borrower Party shall at all times remain in compliance
in all material respects with all applicable provisions of ERISA, similar
requirements of the PBGC, and the provisions set forth in Section 12.01(j) of
this Agreement.

SECTION 13.16 Loan Document Taxes. If any tax, assessment or Imposition (other
than a franchise tax or excise tax imposed on or measured by, the net income or
capital (including branch profits tax) of the Lender (or any transferee or
assignee thereof, including a participation

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holder)) (“Loan Document Taxes”) is levied, assessed or charged by the United
States, or any State in the United States, or any political subdivision or
taxing authority thereof or therein upon any of the Loan Documents or the
obligations secured thereby, the interest of the Lender in the Mortgaged
Properties, or the Lender by reason of or as holder of the Loan Documents, the
Borrower Party shall pay all such Loan Document Taxes to, for, or on account of
the Lender (or provide funds to the Lender for such payment, as the case may be)
as they become due and payable and shall promptly furnish proof of such payment
to the Lender, as applicable. In the event of passage of any law or regulation
permitting, authorizing or requiring such Loan Document Taxes to be levied,
assessed or charged, which law or regulation in the opinion of counsel to the
Lender may prohibit the Borrower Party from paying the Loan Document Taxes to or
for the Lender, the Borrower Party shall enter into such further instruments as
may be permitted by law to obligate the Borrower Party to pay such Loan Document
Taxes.

SECTION 13.17 Further Assurances. The Borrower Party, at the request of the
Lender, shall execute and deliver and, if necessary, file or record such
statements, documents, agreements, UCC financing and continuation statements and
such other instruments and take such further action as the Lender from time to
time may request as reasonably necessary, desirable or proper to carry out more
effectively the purposes of this Agreement or any of the other Loan Documents or
to subject the Collateral to the lien and security interests of the Loan
Documents or to evidence, perfect or otherwise implement, to assure the lien and
security interests intended by the terms of the Loan Documents or in order to
exercise or enforce its rights under the Loan Documents.

SECTION 13.18 Monitoring Compliance. Upon the request of the Lender, from time
to time, the Borrower Party shall promptly provide to the Lender such documents,
certificates and other information as may reasonably be deemed necessary to
enable the Lender to perform its functions under the Servicing Agreement.

SECTION 13.19 Leases. Each unit in each Mortgaged Property will be leased
pursuant to the form lease delivered to, and acceptable to, the Lender, with no
material modifications to such approved form lease, except as disclosed in
writing to the Lender.

SECTION 13.20 Intentionally Omitted.

SECTION 13.21 Transfer of Ownership Interests of the Borrower Parties.

               (a)          Prohibition on Transfers. Subject to paragraph (b)
of this Section 13.21, the Borrower Parties shall not cause or permit a Transfer
or a Change of Control.

               (b)          Permitted Transfers. Notwithstanding the provisions
(a) of this Section 13.21, the following Transfers by the Borrower Parties are
permitted without the consent of the Lender:

 

 

 

                   (i)          A Transfer that occurs by inheritance, devise,
or bequest or by operation of law upon the death of a natural person who is an
owner of a Mortgaged Property or the owner of a direct or indirect ownership
interest in the Borrower Parties.

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                   (ii)         The grant of a leasehold interest in individual
dwelling units or commercial spaces in accordance with the Security Instrument.

 

 

 

                   (iii)        A sale or other disposition of obsolete or worn
out personal property which is contemporaneously replaced by comparable personal
property of equal or greater value which is free and clear of liens,
encumbrances and security interests other than those created by the Loan
Documents.

 

 

 

                   (iv)        The creation of a mechanic’s or materialmen’s
lien or judgment lien against a Mortgaged Property which is released of record
or otherwise remedied to Lender’s satisfaction within 30 days of the date of
creation.

 

 

 

                   (v)          The grant of an easement, if prior to the
granting of the easement the Borrower Parties cause to be submitted to Lender
all information required by Lender to evaluate the easement, and if Lender
consents to such easement based upon Lender’s determination that the easement
will not materially affect the operation of the Mortgaged Property or Lender’s
interest in the Mortgaged Property and Borrower Parties pay to Lender, on
demand, all reasonable costs and expenses incurred by Lender in connection with
reviewing Borrower Parties’ request. Lender shall not unreasonably withhold its
consent to or withhold its agreement to subordinate the lien of a Security
Instrument to (A) the grant of a utility easement serving a Mortgaged Property
to a publicly operated utility, or (B) the grant of an easement related to
expansion or widening of roadways, provided that any such easement is in form
and substance reasonably acceptable to Lender and does not materially and
adversely affect the access, use or marketability of a Mortgaged Property.

 

 

 

                   (vi)        The Transfer of shares of common stock, limited
partnership interests or other beneficial or ownership interest or other forms
of securities in the REIT or the OP, and the issuance of all varieties of
convertible debt, equity and other similar securities of the REIT or the OP, and
the subsequent Transfer of such securities; provided, however, that no Change in
Control occurs as a result of such Transfer, either upon such Transfer or upon
the subsequent conversion to equity or such convertible debt or other
securities.

 

 

 

                   (vii)        The Transfer of limited partnership interests by
the limited partners of Borrower Parties, including, without limitation, the
conversion or exchange of limited partnership interests in Borrower Parties to
shares of common stock or other beneficial or ownership interests or other forms
of securities in the REIT; provided, however, that no Change in Control occurs
as the result of such Transfer.

 

 

 

                   (viii)        The issuance by Borrower Parties of additional
limited partnership units or convertible debt, equity and other similar
securities, and the subsequent Transfer of such units or other securities;
provided, however, that no Change in Control occurs as the result of such
Transfer, either upon such Transfer or upon the subsequent conversion to equity
of such convertible debt or other securities.

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                   (ix)          A merger with or acquisition of another entity
by Borrower Parties, provided that (A) Borrower Parties are the surviving entity
after such merger or acquisition, (B) no Change in Control occurs, and (C) such
merger or acquisition does not result in an Event of Default, as such terms are
defined in this Agreement.

 

 

 

                   (x)          A Transfer in connection with any substitution
or release pursuant to the terms and conditions of Article VII of this
Agreement.

               (c)          Consent to Prohibited Transfers. Lender may, in its
sole and absolute discretion, consent to a Transfer that would otherwise violate
this Section 13.21 if, prior to the Transfer, Borrower Parties have satisfied
each of the following requirements:

 

 

 

                    (i)          the submission to Lender of all information
required by Lender to make the determination required by this Section 13.21(c);

 

 

 

                    (ii)         the absence of any Event of Default;

 

 

 

                    (iii)        the transferee meets all of the eligibility,
credit, management and other standards (including any standards with respect to
previous relationships between Lender and the transferee and the organization of
the transferee) customarily applied by Lender at the time of the proposed
Transfer to the approval of Borrower Parties in connection with the origination
or purchase of similar mortgages, deeds of trust or deeds to secure debt on
multifamily properties;

 

 

 

                    (iv)          in the case of a Transfer of direct or
indirect ownership interests in Borrower Parties, if transferor or any other
person has obligations under any Loan Documents, the execution by the transferee
of one or more individuals or entities acceptable to Lender of an assumption
agreement that is acceptable to Lender and that, among other things, requires
the transferee to perform all obligations of transferor or such person set forth
in such Loan Document, and may require that the transferee comply with any
provisions of this Instrument or any other Loan Document which previously may
have been waived by Lender;

 

 

 

                    (v)          Lender’s receipt of all of the following:

 

 

 

                            (A)          a transfer fee equal to 1 percent of
the Commitment immediately prior to the transfer.

 

 

 

                            (B)          In addition, Borrower Parties shall be
required to reimburse Lender for all of Lender’s reasonable out-of-pocket costs
(including reasonable attorneys’ fees) incurred in reviewing the Transfer
request.

SECTION 13.22 Change in Senior Management.

               (a)          The Borrower Parties shall give the Lender notice of
any change in the identity of Senior Management.

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               (b)          Within 30 Business Days after receipt of the
Borrower Parties’ notice, the Lender shall have the right to terminate this
Agreement and the Credit Facility by giving a notice of such termination to the
Borrower Parties. In such event, this Agreement and the Credit Facility shall
terminate with the same effect as if the Lender had approved a Credit Facility
Termination Request (including the Borrower Parties’ obligation, pursuant to
Section 10.03(a), to pay in full all of the Notes Outstanding on the Closing
Date, including any other charges under the Notes), except that, for these
purposes, the Closing Date shall be the 180th day after the date on which the
Borrower Parties first receive the Lender’s termination notice.

               (c)          If the Lender exercises its termination right
pursuant to subsection (b), the Borrower Parties shall have a period of 120
days, commencing with the date on which the Borrower Parties receives the
Lender’s termination notice, to request that the Lender rescind its termination
notice. The Borrower Parties may include in their request any undertakings which
they are willing to make in order to obtain such a rescission. The Lender shall
give the Borrower Parties notice of its acceptance or rejection of the Borrower
Parties’ request within 30 Business Days after the Borrower Parties make the
request. If the Lender accepts the request, the Lender shall give the Borrower
Parties a notice that the termination notice shall be deemed rescinded and of no
further force or effect, and this Agreement and the Credit Facility shall
continue in accordance with, and subject to the terms, conditions and
limitations contained in, this Agreement.

SECTION 13.23 Date-Down Endorsements. At any time and from time to time, a
Lender may obtain an endorsement to each Title Insurance Policy containing a
Revolving Credit Endorsement, amending the effective date of the Title Insurance
Policy to the date of the title search performed in connection with the
endorsement. The Borrower Parties shall pay for the cost and expenses incurred
by the Lender to the Title Company in obtaining such endorsement, provided that,
for each Title Insurance Policy, it shall not be liable to pay for more than one
such endorsement in any consecutive 12 month period.

SECTION 13.24 Geographical Diversification. The Borrower shall maintain
Mortgaged Properties in the Collateral Pool so that the Collateral Pool consists
of at least seven (7) Mortgaged Properties located in at least two (2) states
and five (5) SMSA’s, and provided, however, that, upon the occurrence of any
increase in the Commitment pursuant to Article VIII, the Borrower shall at all
times thereafter cause the Collateral Pool to satisfy such other Geographical
Diversification Requirements as the Lender may determine and notify Borrower of
at the time of the increase.

SECTION 13.25 Ownership of Mortgaged Properties. A Borrower Party shall be the
sole owner of each of the Mortgaged Properties free and clear of any Liens other
than Permitted Liens.

ARTICLE XIV
NEGATIVE COVENANTS OF THE BORROWER PARTIES

Each Borrower Party, with respect to itself, agrees and covenants with the
Lender that, at all times during the Term of this Agreement:

SECTION 14.01 Other Activities. No Borrower Party shall:

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               (a)          engage in any business or activity other than in
connection with (i) the Ownership, development, construction, management and
operation of Multifamily Residential Properties or other types of real property
in which it has expertise and (ii) activities related to the activities
permitted in (i) above;

               (b)          amend its Organizational Documents in any material
respect without the prior written consent of the Lender;

               (c)          dissolve or liquidate in whole or in part;

               (d)          except as otherwise provided in this Agreement,
without the prior written consent of Lender, merge or consolidate with any
Person; or

               (e)          use, or permit to be used, any Mortgaged Property
for any uses or purposes other than as a Multifamily Residential Property.

SECTION 14.02 Value of Security. The Borrower Party shall not take any action
which could reasonably be expected to have any Material Adverse Effect.

SECTION 14.03 Zoning. The Borrower Party shall not initiate or consent to any
zoning reclassification of any Mortgaged Property or seek any variance under any
zoning ordinance or use or permit the use of any Mortgaged Property in any
manner that could result in the use becoming a nonconforming use under any
zoning ordinance or any other applicable land use law, rule or regulation.

SECTION 14.04 Liens. The Borrower Party shall not create, incur, assume or
suffer to exist any Lien on any Mortgaged Property or any part of any Mortgaged
Property, except the Permitted Liens.

SECTION 14.05 Sale. Except in connection with a release of Collateral in
accordance with Article VII, the Borrower Party shall not Transfer any Mortgaged
Property or any part of any Mortgaged Property without the prior written consent
of the Lender (which consent may be granted or withheld in the Lender’s
discretion), or any interest in any Mortgaged Property, other than to enter into
Leases for units in a Mortgaged Property to any tenant in the ordinary course of
business. For so long as the Mortgaged Property commonly known as Paddock Park
Ocala II and located in Ocala, Florida is part of the Collateral Pool, the
Borrower Party shall not sell or otherwise transfer any Ownership Interest in
the entity owning all or any part of the property commonly known as Paddock Park
Ocala I and located in Ocala, Florida (except for any Transfer permitted under
this Agreement) and any uncured default on any indebtedness secured by such
Multifamily Residential Property shall be a default under this Agreement. For so
long as either of the Mortgaged Properties commonly known as Paddock Club
Tallahassee I or Paddock Club Tallahassee II and each located in Tallahassee,
Florida, is part of the Collateral Pool, the Borrower Party shall not sell or
otherwise transfer all or any part of either such Mortgaged Property (except for
any Transfer permitted under this Agreement).

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SECTION 14.06 Indebtedness. The Borrower Party shall not incur or be obligated
at any time with respect to any Indebtedness (other than Advances) in connection
with any of the Mortgaged Properties.

SECTION 14.07 Principal Place of Business. The Borrower Party shall not change
its principal place of business or the location of its books and records, each
as set forth in Section 12.01(a), without first giving 30 days’ prior written
notice to the Lender.

SECTION 14.08 Frequency of Requests. The Borrower shall have the right, subject
to the terms, conditions and limitations of this Agreement, to make a Future
Advance Request for a Variable Facility Advance on any day until the expiration
of the Variable Facility Availability Period and to make a Future Advance
Request for a Fixed Facility Advance on any day until the expiration of the
Fixed Facility Availability Period.

SECTION 14.09 Change in Property Management. The Borrower Parties shall not
change the management agent for any Mortgaged Property except to a management
agent which the Lender determines is qualified in accordance with the criteria
set forth in Section 701 of the DUS Guide.

SECTION 14.10 Condominiums. The Borrower Parties shall not submit any Mortgaged
Property to a condominium regime during the Term of this Agreement.

SECTION 14.11 Restrictions on Partnership Distributions. The Borrower Party
shall not make any distributions of any nature or kind whatsoever to the owners
of its Ownership Interests as such if, at the time of such distribution, a
Potential Event of Default or an Event of Default has occurred and remains
uncured.

SECTION 14.12 Lines of Business. The Borrower Party shall not be substantially
involved in any businesses other than the acquisition, ownership, development,
construction, leasing, financing or management, directly or through Affiliates,
of Multifamily Residential Properties, and the conduct of these businesses shall
not violate the Organizational Documents pursuant to which it is formed.

SECTION 14.13 Limitation on Unimproved Real Property and New Construction. The
Borrower Party shall not permit:

               (a)          the value of its real property which is not improved
(except real property on which phases of a Mortgaged Property are contemplated
to be constructed) by one or more buildings leased, or held out for lease, to
third parties (“Unimproved Real Property”) to exceed 10% of the value of all of
its “Real Estate Assets” (as that term is defined in Section 856(c)(6)(B) of the
Internal Revenue Code and the regulations thereunder); and

               (b)          the sum of (i) the value of its Unimproved Real
Property and (ii) the value of its Real Estate Assets which are under
construction or subject to substantial rehabilitation to exceed 20% of the value
of all of its Real Estate Assets.

All of the foregoing values shall be reasonably determined by the Lender.

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SECTION 14.14 Dividend Payout. The Borrower Party shall not make a dividend
payment (including both common stock dividends, unitholder distributions, and
preferred stock dividends) which is greater than ninety percent (90%) of Funds
from Operations or that would otherwise violate the United States federal tax
laws governing the qualifications of real estate investment trusts. As used
herein, “Funds from Operations” shall mean consolidated net income of the REIT,
including minority interest (computed in accordance with GAAP), excluding gains
(or losses) from debt restructuring, sales of property, impairment charges,or
charges related to the adjustment to the value of assumed debt, plus real
property depreciation and goodwill amortization, before extraordinary or unusual
items, and after adjustments for unconsolidated partnerships and joint ventures.
Adjustments for unconsolidated partnerships and joint ventures will be
calculated to reflect Funds from Operations on the same basis. Upon written
pre-approval of the Lender, exceptions may be made where the Board of Directors
of the REIT determines, in good faith, that a special dividend must be paid to
avoid taxes due to excess gains from the sale of Multifamily Residential
Properties. In determining compliance with the dividend payout ratio set forth
herein, the amount of dividends paid and Funds from Operations shall be
calculated on a trailing 12-month period.

ARTICLE XV
FINANCIAL COVENANTS OF THE BORROWER PARTIES

Each Borrower Party agrees and covenants with the Lender that, at all times
during the Term of this Agreement:

SECTION 15.01 Financial Definitions. For all purposes of this Agreement, the
following terms shall have the respective meanings set forth below:

          “Consolidated EBITDA” means, for any period, and without double
counting any item, the EBITDA for the Borrower Parties and their respective
Subsidiaries for such period on a consolidated basis.

          “Consolidated EBITDA to Fixed Charges Ratio” means, for any period of
determination, the ratio (expressed as a percentage) of--

          (a)          the excess of--

 

 

 

              (i)          the Consolidated EBITDA for the period, less

 

 

 

              (ii)         the Imputed Capital Expenditures for the period;

              to

          (b)          the Consolidated Fixed Charges for the period.

          “Consolidated EBITDA to Interest Ratio” means, for any period of
determination, the ratio (expressed as a percentage) of--

                        (a)          the excess of--

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(i)          the Consolidated EBITDA for the period, less

 

 

 

(ii)         the Imputed Capital Expenditures for the period;

          to

          (b)         the Consolidated Interest Expense for the period.

          “Consolidated Fixed Charges” means, for any period of determination,
the sum of--

 

(a)          the Consolidated Interest Expense for the period;

 

 

(b)          the Consolidated Scheduled Amortization for the period; and

 

 

(c)          Preferred Distributions for the period.

               “Consolidated Interest Expense” means, for any period of
determination, and without double counting any item, the sum of the Interest
Expense for the Borrower Parties and their respective Subsidiaries for such
period on a consolidated basis.

               “Consolidated Scheduled Amortization” means, for any period of
determination, and without double counting any item, the sum of the Scheduled
Amortization (but excluding balloon payments) for the Borrower Parties and their
respective Subsidiaries for such period on a consolidated basis.

               “Consolidated Total Assets” means, for any Person, all assets of
such Person and its Subsidiaries determined on a consolidated basis in
accordance with GAAP; provided that all assets composed of real property shall
be valued on an undepreciated cost basis and the portion of any joint venture
assets owned by such Person shall be included in Consolidated Total Assets. The
assets of a Person and its Subsidiaries shall be adjusted to reflect such
Person’s allocable share of such assets, for the relevant period or as of the
date of determination, taking into account (a) the relative proportion of each
such item derived from assets directly owned by such Person and from assets
owned by its Subsidiaries, and (b) such Person’s respective ownership interest
in its Subsidiaries.

               “Consolidated Total Indebtedness” means, as of any date, and
without double counting any item, the Total Indebtedness for each Borrower Party
and their respective Subsidiaries as of such date (including the Total
Indebtedness of the Borrower Parties as of such date and the portion of any
indebtedness of any joint venture in which any Borrower Party or any Subsidiary
thereof is a venturer attributable to such Borrower Party or its Subsidiary).

               “EBITDA” means, for any period, the sum determined in accordance
with GAAP, of the following, for any Person on a consolidated basis--

               (a)     the net income (or net loss) of such Person during such
Period, but excluding gains and losses on the sale of fixed assets;

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                    (b)     all amounts treated as expenses for depreciation,
Interest Expense and the amortization of intangibles of any kind to the extent
included in the determination of such net income (or loss); and

                    (c)     all accrued taxes on or measured by income to the
extent included in the determination of such net income (or loss);

                    provided, however, that net income (or loss) shall be
computed for these purposes without giving effect to extraordinary losses or
extraordinary gains.

                    “Imputed Capital Expenditures” means, for any four (4)
consecutive quarters, an amount equal to the average number of apartment units
owned by the Borrower Parties or their Subsidiaries during such period
multiplied by Three Hundred Dollars ($300.00) per apartment unit, and for any
period of less than four (4) consecutive quarters, an appropriate proration of
such figure.

                    “Interest Expense” means, for any period, the sum of--

                    (a)     gross interest expense for the period (including all
commissions, discounts, fees and other charges in connection with standby
letters of credit and similar instruments) for the Borrower Parties and their
respective Subsidiaries; and

                    (b)     the portion of the up-front costs and expenses for
Rate Contracts entered into by the Borrower Parties and their respective
Subsidiaries (to the extent not included in gross interest expense) fairly
allocated to such Rate Contracts as expenses for such period, as determined in
accordance with GAAP;

                    (c)     provided, that, all interest expense accrued by the
Borrower Parties and their respective Subsidiaries during such period, even if
not payable on or before the Credit Facility Termination Date, shall be included
within “Interest Expense.” Notwithstanding the foregoing, interest accrued under
any Intra-Company Debt shall not be included within “Interest Expense” for any
purposes hereof.

                    “Intra-Company Debt” means Indebtedness (whether book-entry
or evidenced by a term, demand or other note or other instrument) owed by the
Borrower Parties or any of their respective Subsidiaries to any Subsidiary, and
incurred or assumed for the purpose of capitalizing a Subsidiary of the Borrower
Parties.

                    “Management Entity” means the REIT.

                    “Net Worth” means, as of any specified date, for any Person,
the excess of the Person’s assets over the Person’s liabilities, determined in
accordance with GAAP but excluding any adjustment for the fair value of swaps or
caps, on a consolidated basis, provided that all real property shall be valued
on an undepreciated basis.

                     “Pledged Cash” shall mean the amount held on deposit in the
Pledgee Account.

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                    “Preferred Distributions” means, for any period, the amount
of any and all distributions due and payable to the holders of any form of
preferred stock (whether perpetual, convertible or otherwise) or other ownership
or beneficial interest in the REIT or any of its Subsidiaries that entitles the
holders thereof to preferential payment or distribution priority with respect to
dividends, assets or other payments over the holders of any other stock or other
ownership or beneficial interest in such Person.

                    “Rate Contracts” means interest rate and currency swap
agreements, cap, floor and collar agreements, interest rate insurance, currency
spot and forward contracts and other agreements or arrangements designed to
provide protection against fluctuations in interest or currency exchange rates.

                    “Restricted Cash” means the sum of Pledged Cash plus any
cash pledged by the Borrower Parties or any of their Subsidiaries to other
lenders, as indicated in the line item for “restricted cash” in the Borrower
Parties’ balance sheet from time to time.

                     “Scheduled Amortization” means, with respect to any Person,
the sum, as of any date of determination, of the current portion (i.e., such
portion as is scheduled to be paid by the obligor thereof within 12 months from
the date of determination) of all regularly scheduled amortization payments due
on such Person’s long-term fully amortizing mortgage Indebtedness (exclusive of
balloon payments).

                     “Stock” means all shares, options, warrants, interests,
participations or other equivalents (regardless of how designated) of or in a
corporation or equivalent entity, whether voting or nonvoting, including common
stock, preferred stock, perpetual preferred stock or any other “equity security”
(as such term is defined in Rule 3a11-1 of the General Rules and Regulations
promulgated by the Securities and Exchange Commission under the Securities and
Exchange Act of 1934, and regulations promulgated thereunder).

                     “Total Indebtedness” means, as of any date of
determination, and in respect of any Person, all outstanding Indebtedness, and
shall include, without limitation: (i) such Person’s share of the Indebtedness
of any partnership or joint venture in which such Person directly or indirectly
holds any interest; and (ii) any recourse or contingent obligations, directly or
indirectly, of such Person with respect to any Indebtedness of such partnership
or joint venture in excess of its proportionate share. Notwithstanding the
foregoing, (x) Intra-Company Debt, and (y) accounts payable to trade creditors
for goods and services and current operating liabilities (not the result of the
borrowing of money) incurred in the ordinary course of business in accordance
with customary terms and paid within the specified time, shall be excluded from
the calculation of “Total Indebtedness” but shall not otherwise be excluded as
Indebtedness for any other purpose hereof.

                     “Unconsolidated Partnership” means any partnership or joint
venture (a) in which any Borrower Party or any Subsidiary of any Borrower Party
holds an interest which is not consolidated in the financial statements of the
REIT or (b) which is not a Subsidiary.

                     “Wholly-Owned Subsidiary” means a Subsidiary of the
Borrower Parties one hundred percent (100%) of the Stock or other equity or
other beneficial interests (in the case of

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Persons other than corporations) is owned directly or indirectly by the Borrower
Parties; provided, however, that where such term is qualified with respect to a
specific Person (e.g., “Wholly-Owned Subsidiary of the REIT”) such terms means a
Subsidiary one hundred percent (100%) of the Stock or other equity or other
beneficial interests (in the case of Persons other than corporations) is owned
directly or indirectly by the specified Person.

SECTION 15.02 Compliance with Debt Service Coverage Ratios. The Borrower Parties
shall at all times maintain the Aggregate Debt Service Coverage Ratio for the
Trailing 12 Month Period so that it is not less than 1.40:1.0.

SECTION 15.03 Compliance with Loan to Value Ratios. The Borrower Parties shall
at all times maintain the Aggregate Loan to Value Ratio so that it is not
greater than 65%. Notwithstanding the foregoing, the parties hereby agree that
if, as a result of any annual Valuation performed pursuant to Section 5.04, the
Aggregate Loan to Value Ratio exceeds 65% but is not greater than 70%, such
Aggregate Loan to Value Ratio shall not be an Event of Default until the next
annual Valuation and determination of Aggregate Loan to Value Ratio is
performed, provided that Borrower shall pay an additional Variable Facility Fee
and Fixed Facility Fee of (x) if such non-compliance occurs during 2004, 9 basis
points per annum for the period beginning on the date of the determination and
ending on December 31, 2004, and (y) if such non-compliance occurs subsequent to
December 31, 2004, the number of basis points to be determined by Lender.

SECTION 15.04 Compliance with Concentration Test.

                     (a)     The Borrower Parties shall at all times maintain
the Collateral so that the aggregate Valuations of any group of Mortgaged
Properties located within a one mile radius shall not exceed 25% of the
aggregate Valuations of all Mortgaged Properties.

                     (b)     The Borrower Parties shall at all times maintain
the Collateral so that the Valuation of any one Mortgaged Property shall not
exceed 20% of the aggregate Valuations of all Mortgaged Properties.

SECTION 15.05 Compliance with REIT’s Net Worth Test. The REIT shall at all times
maintain its Net Worth so that it is not less than the highest Net Worth
covenant required by any other financial institution where the REIT maintains a
bank line (whether secured or unsecured), but in no event less than $550,000,000
plus 65% of proceeds (less all reasonable and customary expenses and costs) of
equity offerings, net of redemptions, consummated by the REIT after August 22,
2002.

SECTION 15.06 Compliance with REIT’s Total Indebtedness to Consolidated Total
Assets Ratio. The REIT shall not permit the ratio of Consolidated Total
Indebtedness to Consolidated Total Assets to exceed 60% at any time.

SECTION 15.07 Compliance with REIT’s Consolidated EBITDA to Interest Ratio. The
REIT shall not permit the Consolidated EBITDA to Interest Ratio computed for any
fiscal quarter to be less than 200% for any period of four consecutive fiscal
quarters (treated as a single accounting period).

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SECTION 15.08 Compliance with REIT’s Consolidated EBITDA to Fixed Charge Ratio.
The REIT shall not permit the Consolidated EBITDA to Fixed Charges Ratio
computed for any fiscal quarter or year to be less than 150% for any period of
four consecutive fiscal quarters (treated as a single accounting period).

ARTICLE XVI
FEES

SECTION 16.01 Standby Fee and Rate Preservation Fee. The Borrower shall pay the
Standby Fee to the Lender for the period from the date of this Agreement to the
end of the Term of this Agreement. Unless Borrower notifies Lender in writing by
December 1, 2005 that it does not elect to pay the Rate Preservation Fee,
Borrower shall pay the Rate Preservation Fee to Lender commencing on January 1,
2006.  If Borrower elects not to pay the Rate Preservation Fee, such election
shall be final.  Borrower may elect, by at least 30 days’ written notice of such
election by Borrower to Lender, to no longer pay the Rate Preservation Fee,
which election shall be irrevocable.  Each of the Standby Fee and the Rate
Preservation Fee shall be payable monthly, in arrears, on the first Business Day
following the end of the month, except that the Standby Fee and Rate
Preservation Fee for the last month during the Term of this Agreement shall be
paid on the last day of the Term of this Agreement.

SECTION 16.02 Origination Fees.

                     (a)     Initial Origination Fee. The Borrower has paid to
the Lender an origination fee (“Initial Origination Fee”) equal to the product
obtained by multiplying (i) the Commitment by (ii) .65%.

                     (b)      Expansion Origination Fee. Upon the closing of a
Credit Facility Expansion Request under Article VIII, the Borrower shall pay to
the Lender an origination fee (“Expansion Origination Fee”) equal to the product
obtained by multiplying (i) the increase in the Commitment made on the Closing
Date for the Credit Facility Expansion Request, by (ii) .65%. The Borrower shall
pay the Expansion Origination Fee on or before the Closing Date for the Credit
Facility Expansion Request. Any Expansion Origination Fee shall be reduced by
the amount of any Collateral Addition Fee paid by the Borrower in respect of any
Additional Mortgaged Properties added to the Collateral Pool in conjunction with
such expansion.

SECTION 16.03 Due Diligence Fees.

                     (a)     Initial Due Diligence Fees. The Borrower has paid
to the Lender due diligence fees (“Initial Due Diligence Fees”) with respect to
the Initial Mortgaged Properties.

                     (b)     Additional Due Diligence Fees for Additional and
Substituted Collateral. The Borrower shall pay to the Lender additional
reasonable due diligence fees (the “Additional Collateral Due Diligence Fees”)
with respect to each Additional and Substituted Mortgaged Property in an amount
not to exceed the sum of $16,000. The Borrower shall pay Additional Collateral
Due Diligence Fees for the Additional or Substituted Mortgaged Property to the
Lender on the date on which it submits the Collateral Addition or Substitution
Request for the addition of the Additional or Substituted Mortgaged Property to
the Collateral Pool.

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SECTION 16.04 Legal Fees and Expenses.

                     (a)     Initial Legal Fees. The Borrower shall pay, or
reimburse the Lender for, all out-of-pocket legal fees and expenses incurred by
the Lender and by Fannie Mae in connection with the preparation, review and
negotiation of this Agreement and any other Loan Documents executed on the date
hereof. The Borrower has paid Lender’s and Fannie Mae’s legal fees in connection
with the Initial Mortgaged Properties. On the date of this Agreement, the
Borrower shall pay all such legal fees and expenses not previously paid or for
which funds have not been previously provided.

                     (b)     Fees and Expenses Associated with Requests. The
Borrower shall pay, or reimburse the Lender for, all reasonable costs and
expenses incurred by the Lender, including the out-of-pocket legal fees and
expenses incurred by the Lender in connection with the preparation, review and
negotiation of all documents, instruments and certificates to be executed and
delivered in connection with each Request, the performance by the Lender of any
of its obligations with respect to the Request, the satisfaction of all
conditions precedent to the Borrower’s rights or the Lender’s obligations with
respect to the Request, and all transactions related to any of the foregoing,
including the cost of title insurance premiums and applicable recordation and
transfer taxes and charges and all other reasonable costs and expenses in
connection with a Request. The obligations of the Borrower under this subsection
shall be absolute and unconditional, regardless of whether the transaction
requested in the Request actually occurs. The Borrower shall pay such costs and
expenses to the Lender on the Closing Date for the Request, or, as the case may
be, after demand by the Lender when the Lender determines that such Request will
not close.

SECTION 16.05 MBS-Related Costs. The Borrower shall pay to the Lender, within 30
days after demand, all reasonable fees and expenses incurred by the Lender or
Fannie Mae in connection with the issuance of any MBS backed by an Advance,
including the fees charged by Depository Trust Company and State Street Bank or
any successor fiscal agent or custodian.

SECTION 16.06 Failure to Close any Request. If the Borrower makes a Request and
fails to close on the Request for any reason other than the default by the
Lender, then the Borrower shall pay to the Lender and Fannie Mae all damages
incurred by the Lender and Fannie Mae in connection with the failure to close.

SECTION 16.07 Other Fees. The Borrower shall pay the following additional fees
and payments, if and when required pursuant to the terms of this Agreement:

                     (a)     The Collateral Substitution Fee, pursuant to
Section 7.04, in connection with the addition of a Substituted Mortgaged
Property to the Collateral Pool pursuant to Article VII;

                     (b)     The Release Price, pursuant to Section 7.02(c), in
connection with the release of a Mortgaged Property from the Collateral Pool
pursuant to Article VII;

                     (c)     The Release Fee, pursuant to Section 7.03(c), in
connection with the release of a Mortgaged Property from the Collateral Pool
pursuant to Article VII;

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                     (d)     The Variable Facility Termination Fee, pursuant to
Section 9.03(b) in connection with a complete or partial termination of the
Variable Facility pursuant to Article IX; and

                     (e)     The Variable Facility Termination Fee, pursuant to
Section 10.03(b), in connection with the termination of the Credit Facility
pursuant to Article X.

                     (f)     The Collateral Addition Fee, pursuant to Section
6.03(b), in connection with the addition of the Additional Mortgaged Properties
to the Collateral Pool pursuant to Article VI.

ARTICLE XVII
EVENTS OF DEFAULT

SECTION 17.01 Events of Default. Each of the following events shall constitute
an “Event of Default” under this Agreement, whatever the reason for such event
and whether it shall be voluntary or involuntary, or within or without the
control of a Borrower Party, or be effected by operation of law or pursuant to
any judgment or order of any court or any order, rule or regulation of any
Governmental Authority:

                     (a)     the occurrence of a default under any Loan Document
beyond the cure period, if any, set forth therein; or

                     (b)     the failure by the Borrower Parties to pay when due
any amount payable by the Borrower Parties under any Note, any Mortgage, this
Agreement or any other Loan Document, including any fees, costs or expenses; or

                     (c)     the failure by any Borrower Party to perform or
observe any covenant set forth in Article XIII or Article XIV within thirty (30)
days after prior written notice of such failure from Lender, provided that such
period shall be extended for up to 30 additional days if the Borrower Party, in
the discretion of the Lender, is diligently pursuing a cure of such default
within 30 days after receipt of notice from the Lender; or

                     (d)     any warranty, representation or other written
statement made by or on behalf of a Borrower Party contained in this Agreement,
any other Loan Document or in any instrument furnished in compliance with or in
reference to any of the foregoing, is false or misleading in any material
respect on any date when made or deemed made; or

                     (e)     any other Indebtedness in an aggregate amount of
$1,000,000 of any Borrower Party or assumed by any Borrower Party (i) is not
paid when due nor within any applicable grace period in any agreement or
instrument relating to such Indebtedness or (ii) becomes due and payable before
its normal maturity by reason of a default or event of default, however
described, or any other event of default shall occur and continue after the
applicable grace period, if any, specified in the agreement or instrument
relating to such Indebtedness; or

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                     (f)     (i) A Borrower Party shall (A) commence a voluntary
case under the Federal bankruptcy laws (as now or hereafter in effect), (B) file
a petition seeking to take advantage of any other laws, domestic or foreign,
relating to bankruptcy, insolvency, reorganization, debt adjustment, winding up
or composition or adjustment of debts, (C) consent to or fail to contest in a
timely and appropriate manner any petition filed against it in an involuntary
case under such bankruptcy laws or other laws, (D) apply for or consent to, or
fail to contest in a timely and appropriate manner, the appointment of, or the
taking of possession by, a receiver, custodian, trustee or liquidator of itself
or of a substantial part of its property, domestic or foreign, (E) admit in
writing its inability to pay, or generally not be paying, its debts as they
become due, (F) make a general assignment for the benefit of creditors,
(G) assert that any Borrower Party has no liability or obligations under this
Agreement or any other Loan Document to which it is a party; or (H) take any
action for the purpose of effecting any of the foregoing; or (ii) a case or
other proceeding shall be commenced against a Borrower Party in any court of
competent jurisdiction seeking (A) relief under the Federal bankruptcy laws (as
now or hereafter in effect) or under any other laws, domestic or foreign,
relating to bankruptcy, insolvency, reorganization, winding upon or composition
or adjustment of debts, or (B) the appointment of a trustee, receiver,
custodian, liquidator or the like of the Borrower Party, or of all or a
substantial part of the property, domestic or foreign, of the Borrower Party and
any such case or proceeding shall continue undismissed or unstayed for a period
of 60 consecutive calendar days, or any order granting the relief requested in
any such case or proceeding against the Borrower Party (including an order for
relief under such Federal bankruptcy laws) shall be entered; or

                     (g)     if any provision of this Agreement or any other
Loan Document or the lien and security interest purported to be created
hereunder or under any Loan Document shall at any time for any reason cease to
be valid and binding in accordance with its terms on any Borrower Party, or
shall be declared to be null and void, or the validity or enforceability hereof
or thereof or the validity or priority of the lien and security interest created
hereunder or under any other Loan Document shall be contested by any Borrower
Party seeking to establish the invalidity or unenforceability hereof or thereof,
or any Borrower Party shall deny that it has any further liability or obligation
hereunder or thereunder; or

                     (h)     (i) the execution by the Borrower Parties of a
chattel mortgage or other security agreement on any materials, fixtures or
articles used in the construction or operation of the improvements located on
any Mortgaged Property or on articles of personal property located therein, or
(ii) if any such materials, fixtures or articles are purchased pursuant to any
conditional sales contract or other security agreement or otherwise so that the
Ownership thereof will not vest unconditionally in the Borrower Parties free
from encumbrances, or (iii) if the Borrower Parties do not furnish to the Lender
upon request the contracts, bills of sale, statements, receipted vouchers and
agreements, or any of them, under which the Borrower Parties claim title to such
materials, fixtures, or articles; or

                     (i)     the failure by any Borrower Party to comply with
any requirement of any Governmental Authority within 30 days after written
notice of such requirement shall have been given to the Borrower Party by such
Governmental Authority; provided that, if action is commenced and diligently
pursued by the Borrower Party within such 30 days, then the Borrower Party shall
have an additional 30 days to comply with such requirement; or

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                     (j)     a dissolution or liquidation for any reason
(whether voluntary or involuntary) of any Borrower Party; or

                     (k)     any judgment against any Borrower Party, any
attachment or other levy against any portion of any Borrower Party’s assets with
respect to a claim or claims in an amount in excess of$500,000in the aggregate
remains unpaid, unstayed on appeal undischarged, unbonded, not fully insured or
undismissed for a period of 60 days; or

                     (l)     the failure of the Borrower Parties to perform or
observe any of the Financial Covenants, which failure shall continue for a
period of 30 days after the date on which the Borrower Party receives a notice
from the Lender specifying the failure; or

                     (m)      the failure of Borrower to maintain the Hedges
required by Article XXI of this Agreement; or

                     (n)     the failure by any Borrower Party to perform or
observe any term, covenant, condition or agreement hereunder, other than as set
forth in subsections (a) through (l) above, or in any other Loan Document,
within 30 days after receipt of notice from the Lender identifying such failure.

ARTICLE XVIII
REMEDIES

SECTION 18.01 Remedies; Waivers. Upon the occurrence of an Event of Default, the
Lender may do any one or more of the following (without presentment, protest or
notice of protest, all of which are expressly waived by the Borrower Parties):

                     (a)     by written notice to the Borrower Parties, to be
effective upon dispatch, terminate the Commitment and declare the principal of,
and interest on, the Advances and all other sums owing by the Borrower Parties
to the Lender under any of the Loan Documents forthwith due and payable,
whereupon the Commitment will terminate and the principal of, and interest on,
the Advances and all other sums owing by the Borrower Parties to the Lender
under any of the Loan Documents will become forthwith due and payable.

                     (b)     The Lender shall have the right to pursue any other
remedies available to it under any of the Loan Documents.

                     (c)     The Lender shall have the right to pursue all
remedies available to it at law or in equity, including obtaining specific
performance and injunctive relief.

SECTION 18.02 Waivers; Rescission of Declaration. The Lender shall have the
right, to be exercised in its complete discretion, to waive any breach hereunder
(including the occurrence of an Event of Default), by a writing setting forth
the terms, conditions, and extent of such waiver signed by the Lender and
delivered to the Borrower Parties. Unless such writing expressly provides to the
contrary, any waiver so granted shall extend only to the specific event or
occurrence which gave rise to the waiver and not to any other similar event or
occurrence which occurs subsequent to the date of such waiver.

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SECTION 18.03 The Lender’s Right to Protect Collateral and Perform Covenants and
Other Obligations. If any Borrower Party fails to perform the covenants and
agreements contained in this Agreement or any of the other Loan Documents, then
the Lender at the Lender’s option may make such appearances, disburse such sums
and take such action as the Lender deems necessary, in its sole discretion, to
protect the Lender’s interest, including (i) disbursement of reasonable
attorneys’ fees, (ii) entry upon the Mortgaged Property to make repairs and
Replacements, (iii) procurement of satisfactory insurance as provided in
paragraph 5 of the Security Instrument encumbering the Mortgaged Property, and
(iv) if the Security Instrument is on a leasehold, exercise of any option to
renew or extend the ground lease on behalf of the Borrower Parties and the
curing of any default of the Borrower Parties in the terms and conditions of the
ground lease. Any amounts disbursed by the Lender pursuant to this Section, with
interest thereon, shall become additional indebtedness of the Borrower Parties
secured by the Loan Documents. Unless the Borrower and the Lender agree to other
terms of payment, such amounts shall be immediately due and payable and shall
bear interest from the date of disbursement at the weighted average, as
determined by Lender, of the interest rates in effect from time to time for each
Advance unless collection from the Borrower of interest at such rate would be
contrary to applicable law, in which event such amounts shall bear interest at
the highest rate which may be collected from the Borrower under applicable law.
Nothing contained in this Section shall require the Lender to incur any expense
or take any action hereunder.

SECTION 18.04 No Remedy Exclusive. Unless otherwise expressly provided, no
remedy herein conferred upon or reserved is intended to be exclusive of any
other available remedy, but each remedy shall be cumulative and shall be in
addition to other remedies given under the Loan Documents or existing at law or
in equity.

SECTION 18.05 No Waiver. No delay or omission to exercise any right or power
accruing under any Loan Document upon the happening of any Event of Default or
Potential Event of Default shall impair any such right or power or shall be
construed to be a waiver thereof, but any such right and power may be exercised
from time to time and as often as may be deemed expedient.

SECTION 18.06 No Notice. In order to entitle the Lender to exercise any remedy
reserved to the Lender in this Article, it shall not be necessary to give any
notice, other than such notice as may be required under the applicable
provisions of this Agreement or any of the other Loan Documents.

SECTION 18.07 Application of Payments. Except as otherwise expressly provided in
the Loan Documents, and unless applicable law provides otherwise, (i) all
payments received by the Lender from any of the Borrower Parties under the Loan
Documents shall be applied by the Lender against any amounts then due and
payable under the Loan Documents by any of the Borrower Parties, in any order of
priority that the Lender may determine and (ii) the Borrower Parties shall have
no right to determine the order of priority or the allocation of any payment it
makes to the Lender.

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ARTICLE XIX
RIGHTS OF FANNIE MAE

SECTION 19.01 Special Pool Purchase Contract. The Borrower Parties acknowledge
that Fannie Mae is entering into an agreement with the Lender (“Special Pool
Purchase Contract”), pursuant to which, inter alia, (i) the Lender shall agree
to assign all of its rights under this Agreement to Fannie Mae, (ii) Fannie Mae
shall accept the assignment of the rights, (iii) subject to the terms,
limitations and conditions set forth in the Special Pool Purchase Contract,
Fannie Mae shall agree to purchase a 100% participation interest in each Advance
issued under this Agreement by issuing to the Lender a Fannie Mae MBS, in the
amount and for a term equal to the Advance purchased and backed by an interest
in the Fixed Facility Note or the Variable Facility Note, as the case may be,
and the Collateral Pool securing the Notes, (iv) the Lender shall agree to
assign to Fannie Mae all of the Lender’s interest in the Notes and Collateral
Pool securing the Notes, and (v) the Lender shall agree to service the loans
evidenced by the Notes.

SECTION 19.02 Assignment of Rights. The Borrower Parties acknowledge and consent
to the assignment to Fannie Mae of all of the rights of the Lender under this
Agreement and all other Loan Documents, including the right and power to make
all decisions on the part of the Lender to be made under this Agreement and the
other Loan Documents, but Fannie Mae, by virtue of this assignment, shall not be
obligated to perform the obligations of the Lender under this Agreement or the
other Loan Documents.

SECTION 19.03 Release of Collateral. The Borrower Parties hereby acknowledge
that, after the assignment of Loan Documents contemplated in Section 19.02, the
Lender shall not have the right or power to effect a release of any Collateral
pursuant to Articles VII or X. The Borrower Parties acknowledge that the
Security Instruments provide for the release of the Collateral under Articles
VII and X. Accordingly, the Borrower Parties shall not look to the Lender for
performance of any obligations set forth in Articles VII and X, but shall look
solely to the party secured by the Collateral to be released for such
performance. The Lender represents and warrants to the Borrower Parties that the
party secured by the Collateral shall be subject to the release provisions
contained in Articles VII and X by virtue of the release provisions in each
Security Instrument.

SECTION 19.04 Replacement of Lender. At the request of Fannie Mae, the Borrower
Parties and the Lender shall agree to the assumption by another lender
designated by Fannie Mae (which lender shall meet Fannie Mae’s then current
standards for lenders for credit facilities of the type and size of the credit
facility evidenced by this Agreement), of all of the obligations of the Lender
under this Agreement and the other Loan Documents, and/or any related servicing
obligations, and, at Fannie Mae’s option, the concurrent release of the Lender
from its obligations under this Agreement and the other Loan Documents, and/or
any related servicing obligations, and shall execute all releases, modifications
and other documents which Fannie Mae determines are necessary or desirable to
effect such assumption.

SECTION 19.05 Fannie Mae and Lender Fees and Expenses. The Borrower Parties
agree that any provision providing for the payment of fees, costs or expenses
incurred or charged by the Lender pursuant to this Agreement shall be deemed to
provide for the Borrower’s payment of all reasonable fees, costs and expenses
incurred or charged by the Lender or Fannie Mae in connection with the matter
for which fees, costs or expenses are payable.

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SECTION 19.06 Third-Party Beneficiary. The Borrower Parties hereby acknowledge
and agree that Fannie Mae is a third party beneficiary of all of the
representations, warranties and covenants made by any Borrower Parties to, and
all rights under this Agreement conferred upon, the Lender, and, by virtue of
its status as third-party beneficiary and/or assignee of the Lender’s rights
under this Agreement, Fannie Mae shall have the right to enforce all of the
provisions of this Agreement against the Borrower Parties.

ARTICLE XX
INSURANCE, REAL ESTATE TAXES
AND REPLACEMENT RESERVES

SECTION 20.01 Insurance and Real Estate Taxes. The Borrower Parties shall
(unless waived by Lender) establish funds for taxes, insurance premiums and
certain other charges for each Mortgaged Property in accordance with Section
7(a) of the Security Instrument for each Mortgaged Property. The requirement for
any fund established pursuant to the preceding sentence may be met, at the
Lender’s reasonable discretion, by the posting of a letter of credit in form and
substance reasonably satisfactory to the Lender and meeting the requirements of
Fannie Mae.

SECTION 20.02 Replacement Reserves. The Borrower Parties shall execute a
Replacement Reserve Agreement for the Mortgaged Property which they own and
shall (unless waived by the Lender) make all deposits for replacement reserves
in accordance with the terms of the Replacement Reserve Agreement.

ARTICLE XXI
INTEREST RATE PROTECTION

SECTION 21.01  Interest Rate Protection. 

                     (a)     Hedge Requirement. To protect against fluctuations
in interest rates, the Borrower shall make arrangements for a Hedge to be in
place and maintained at all times with respect to the Hedge Requirement Amount. 
The Hedge for the Hedge Requirement Amount shall be in place for a period
beginning on the date of the first Variable Advance from the Hedge Requirement
Amount and ending not earlier than the date which is the fifth anniversary of
the Initial Closing Date (the “Initial Hedge Period”).

                     (b)     Subsequent Hedges. Subject to the terms of Article
XXI, additional Hedges (each a “Subsequent Hedge”) shall be required (i) upon
the expiration of the Hedge in place for the Initial Hedge Period and (ii) if
and at such times as a new Variable Advance is funded that is part of the Hedge
Requirement Amount, such Subsequent Hedge to be in effect for a period beginning
on the day of the expiration of the Hedge in place for the Initial Hedge Period
or on the Closing Date of the Future Advance Request, as the case may be, and
ending not earlier than the then effective Variable Facility Termination Date
with respect to such Variable Advance.  It is the intention of the parties that
the Borrower shall obtain, and shall maintain at all times during the term of
this Agreement so long as any Variable Facility Advance is Outstanding with
respect to the Hedge Requirement Amount, a Hedge or Hedges in an aggregate
notional principal amount equal to the Variable Advances Outstanding that are
part of the Hedge Requirement

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Amount and covering the entire term of the Amended and Restated Variable
Facility Commitment as set forth on the Summary of Credit Facility Structure and
meeting the conditions set forth in Section 21.02.

SECTION 21.02.  Hedge Terms.  Each Hedge shall:

                     (a)        provide for a notional principal amount equal at
all times to Variable Advances Outstanding that are part of the Hedge
Requirement Amount;

                     (b)        intentionally deleted;

                     (c)        in the case of Swaps, provide for a notional
interest rate required to achieve a 1.40 Aggregate Debt Service Coverage Ratio
for the Trailing 12 Months based upon a 30-year amortization period equal to the
Three Month Libor Rate in effect from time to time (the “Swap Rate”);

                     (d)        in the case of Caps, provide for a notional
interest rate not greater than the lowest interest rate that would result in an
Aggregate Debt Service Coverage Ratio for the Variable Advances subject to the
Cap of not less than 1.10 to 1 (the “Cap Interest Rate”), provided that the
Aggregate Debt Service Coverage Ratio shall be calculated based on an interest
rate equal to (i) the then current Three Month LIBOR Rate, plus (ii) the
Variable Facility Fee, plus (iii) 300 basis points, and including any
amortization payments in respect of such Loan;

                     (e)        in the case of Swaps, require the counterparty
to make interest payments on the notional principal amount at a rate equal to
the amount by which Coupon Rate exceeds the Swap Rate;

                     (f)        in the case of Caps, require the counterparty to
make interest payments on the notional principal amount at a rate equal to the
amount by which the then applicable Coupon Rate exceeds the Cap Interest Rate;

                     (g)        intentionally deleted; and

                     (h)        be evidenced, governed  and secured on terms and
conditions, and pursuant to documentation (the “Hedge Documents”), in form and
content reasonably acceptable to Fannie Mae, and with a counterparty (a
“Counterparty”) approved by Fannie Mae.

SECTION 21.03  Hedge Security Agreement; Delivery of Hedge Payments.  Pursuant
to a Hedge Security Agreement, the Lender shall be granted an enforceable,
perfected, first priority lien on and security interest in each Hedge and
payments due under the Hedge (including scheduled and termination payments) in
order to secure the Borrower’s obligations to the Lender under this Agreement. 
With respect to each Hedge, the Hedge Security Agreement must be delivered by
the Borrower to the Lender no later than the effective date of the Hedge.

SECTION 21.04  Termination.  The Borrower shall not terminate, transfer or
consent to any transfer of any existing Hedge without the Lender’s prior written
consent as long as the Borrower is required to maintain a Hedge pursuant to this
Agreement; provided, however, that if,

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and at such time as, there are no Variable Advances Outstanding that are part of
the Hedge Requirement Amount, the Borrower shall have the right to terminate the
existing Hedge and the proceeds of any such termination shall be paid to the
Borrower.

SECTION 21.05  Performance Under Hedge Documents.  The Borrower agrees to comply
fully with, and to otherwise perform when due, its obligations under, all
applicable Hedge Documents and all other agreements evidencing, governing and/or
securing any Hedge arrangement contemplated under this Article XXI.  The
Borrower shall not exercise, without the Lender’s prior written consent, which
consent shall not be unreasonably withheld, and shall exercise, at the Lender’s
direction, any rights or remedies under any Hedge Document, including without
limitation the right of termination.

SECTION 21.06 Approved Swaps. Notwithstanding any provisions herein to the
contrary, the parties hereby acknowledge that the Hedge Documents evidencing the
LIBOR Swaps with AmSouth and First Tennessee set forth on Exhibit II attached
hereto have been approved by Fannie Mae as acceptable Swaps under this Agreement
(the “Approved Swaps”). Borrower Parties agree to assign to Lender all right,
title and interest in all payments received (but not the obligation for any
payments due) under the Approved Swaps in a form acceptable to Lender.

ARTICLE XXII
LIMITS ON PERSONAL LIABILITY

SECTION 22.01 Personal Liability to the Borrower Parties.

                     (a)     Full Recourse. Except as provided in Section
22.01(b), the Borrower Parties are and shall remain jointly and severally
personally liable to the Lender for the payment and performance of all
Obligations throughout the term of this Agreement.

                     (b)     Termination of Personal Liability. The provisions
of Section 22.01(a) shall be null and void upon the written notice of Borrower
to Lender of its election to render such provisions null and void if (i) the
Aggregate Loan to Value Ratio is 60% or less, (ii) the Aggregate Debt Service
Ratio for the Trailing 12 Month Period is 145% or more, (iii) there has been a
complete termination of the Variable Facility, and (iv) the Mortgaged Properties
are owned in fee simple by a Borrower Party that is a Single Purpose Entity.
Upon the termination of the effectiveness of Section 22.01(a) the following
additional provisions of this Agreement shall be null and void and no longer
applicable:

 

 

 

          (1)     The second, third and fourth sentences of Section 8.01; and

 

 

 

          (2)     Sections 15.02 and 15.03 to the extent that a Default would
result from the failure of the Borrower to be in compliance with such Sections;

                     (c)     Exceptions to Limits on Personal Liability. Upon
termination of personal liability of the Borrower Parties pursuant to paragraph
(b) of this Section 22.01, the Borrower Parties shall remain personally liable
to the Lender on a joint and several basis for the repayment of a portion of the
Advances and other amounts due under the Loan Documents equal to any loss or
damage suffered by the Lender as a result of (1) failure of the Borrower Parties
to pay to the

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Lender upon written demand after an Event of Default all Rents to which the
Lender is entitled under Section 3(a) of the Security Instrument encumbering the
Mortgaged Property and the amount of all security deposits collected by the
Borrower Parties from tenants then in residence; (2) failure of the Borrower
Parties to apply all insurance proceeds and condemnation proceeds as required by
the Security Instrument encumbering the Mortgaged Property; (3) failure of the
Borrower Parties to comply in all material respects with Section 13.04 relating
to the delivery of books and records, statements, schedules and reports; (4)
fraud or written material misrepresentation by any Borrower Party or any
officer, director, partner, member or employee of any Borrower Party in
connection with the application for or creation of the Obligations or any
request for any action or consent by the Lender; (5) failure to apply Rents,
first, to the payment of reasonable operating expenses and then to amounts
(“Debt Service Amounts”) payable under the Loan Documents (except that the
Borrower Party will not be personally liable (i) to the extent that the Borrower
Party lacks the legal right to direct the disbursement of such sums because of a
bankruptcy, receivership or similar judicial proceeding or otherwise under the
Loan Documents, or (ii) with respect to Rents of a Mortgaged Property that are
distributed in any Calendar Quarter if the Borrower Party has paid all operating
expenses and Debt Service Amounts for that Calendar Quarter); or (6) failure of
the Borrower to pay any and all documentary stamp taxes, intangible taxes and
other taxes, impositions, fees and charges due on or with respect to the Note,
the Indebtedness, this Instrument and/or any of the other Loan Documents.

                     (d)     Full Recourse After Termination of Personal
Liability. Upon termination of personal liability of the Borrower Parties
pursuant to paragraph (b) of this Section 22.01, the Borrower Parties shall
become personally liable to the Lender for the payment and performance of all
Obligations upon the occurrence of any of the following Events of Default: (1)
the Borrower Parties’ acquisition of any property or operation of any business
not permitted by Section 33 of the Security Instrument; or (2) a Transfer that
is an Event of Default under Section 21 of the Security Instrument.

                     (e)     Permitted Transfer Not Release. No Transfer by the
REIT of its Ownership Interests in the Borrower Parties shall release the
Borrower Parties from liability under this Article, this Agreement or any other
Loan Document, unless the Lender shall have approved the Transfer and shall have
expressly released the Borrower Parties in connection with the Transfer.

                     (f)     Miscellaneous. To the extent that a Borrower Party
has personal liability under this Section, the Lender may exercise its rights
against the Borrower Party personally without regard to whether the Lender has
exercised any rights against the Mortgaged Property or any other security, or
pursued any rights against any guarantor, or pursued any other rights available
to the Lender under the Loan Documents or applicable law. For purposes of this
Article, the term “Mortgaged Property” shall not include any funds that (1) have
been applied by any Borrower Party as required or permitted by the Loan
Documents prior to the occurrence of an Event of Default, or (2) are owned by a
Borrower Party and which the Borrower Party was unable to apply as required or
permitted by the Loan Documents because of a bankruptcy, receivership, or
similar judicial proceeding.

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ARTICLE XXIII

MISCELLANEOUS PROVISIONS

SECTION 23.01 Counterparts. To facilitate execution, this Agreement may be
executed in any number of counterparts. It shall not be necessary that the
signatures of, or on behalf of, each party, or that the signatures of all
persons required to bind any party, appear on each counterpart, but it shall be
sufficient that the signature of, or on behalf of, each party, appear on one or
more counterparts. All counterparts shall collectively constitute a single
agreement. It shall not be necessary in making proof of this Agreement to
produce or account for more than the number of counterparts containing the
respective signatures of, or on behalf of, all of the parties hereto.

SECTION 23.02 Amendments, Changes and Modifications. This Agreement may be
amended, changed, modified, altered or terminated only by written instrument or
written instruments signed by all of the parties hereto.

SECTION 23.03 Payment of Costs, Fees and Expenses. The Borrower shall pay, on
demand, all reasonable fees, costs, charges or expenses (including the fees and
expenses of attorneys, accountants and other experts) incurred by the Lender in
connection with:

                     (a)     Any amendment, consent or waiver to this Agreement
or any of the Loan Documents (whether or not any such amendments, consents or
waivers are entered into).

                     (b)     Defending or participating in any litigation
arising from actions by third parties and brought against or involving the
Lender with respect to (i) any Mortgaged Property, (ii) any event, act,
condition or circumstance in connection with any Mortgaged Property or (iii) the
relationship between the Lender and the Borrower Parties in connection with this
Agreement or any of the transactions contemplated by this Agreement.

                     (c)     The administration or enforcement of, or
preservation of rights or remedies under, this Agreement or any other Loan
Documents or in connection with the foreclosure upon, sale of or other
disposition of any Collateral granted pursuant to the Loan Documents.

                     (d)     The REIT’s Registration Statement, or similar
disclosure documents, including fees payable to any rating agencies, including
the reasonable fees and expenses of the Lender’s attorneys and accountants.

The Borrower shall also pay, on demand, any transfer taxes, documentary taxes,
assessments or charges made by any governmental authority by reason of the
execution, delivery, filing, recordation, performance or enforcement of any of
the Loan Documents or the Advances. However, the Borrower will not be obligated
to pay any franchise, excise, estate, inheritance, income, excess profits or
similar tax on the Lender. Any attorneys’ fees and expenses payable by the
Borrower pursuant to this Section shall be recoverable separately from and in
addition to any other amount included in such judgment, and such obligation is
intended to be severable from the other provisions of this Agreement and to
survive and not be merged into any such judgment. Any amounts payable by the
Borrower pursuant to this Section, with interest thereon if not paid when due,
shall become additional indebtedness of the Borrower secured by the Loan
Documents. Such amounts shall bear interest from the date such amounts are due
until paid in

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full at the weighted average, as determined by Lender, of the interest rates in
effect from time to time for each Advance unless collection from the Borrower of
interest at such rate would be contrary to applicable law, in which event such
amounts shall bear interest at the highest rate which may be collected from the
Borrower under applicable law. The provisions of this Section are cumulative
with, and do not exclude the application and benefit to the Lender of, any
provision of any other Loan Document relating to any of the matters covered by
this Section.

SECTION 23.04 Payment Procedure. All payments to be made to the Lender pursuant
to this Agreement or any of the Loan Documents shall be made in lawful currency
of the United States of America and in immediately available funds by wire
transfer to an account designated by the Lender before 1:00 p.m. (Eastern
Standard Time) on the date when due.

SECTION 23.05 Payments on Business Days. In any case in which the date of
payment to the Lender or the expiration of any time period hereunder occurs on a
day which is not a Business Day, then such payment or expiration of such time
period need not occur on such date but may be made on the next succeeding
Business Day with the same force and effect as if made on the day of maturity or
expiration of such period, except that interest shall continue to accrue for the
period after such date to the next Business Day.

SECTION 23.06 Choice of Law; Consent to Jurisdiction; Waiver of Jury Trial.
NOTWITHSTANDING ANYTHING IN THE NOTES, THE SECURITY DOCUMENTS OR ANY OF THE
OTHER LOAN DOCUMENTS TO THE CONTRARY, EACH OF THE TERMS AND PROVISIONS, AND
RIGHTS AND OBLIGATIONS OF EACH BORROWER PARTY UNDER THE NOTES, AND EACH BORROWER
PARTY UNDER THE OTHER LOAN DOCUMENTS, SHALL BE GOVERNED BY, INTERPRETED,
CONSTRUED AND ENFORCED PURSUANT TO AND IN ACCORDANCE WITH THE LAWS OF THE
DISTRICT OF COLUMBIA (EXCLUDING THE LAW APPLICABLE TO CONFLICTS OR CHOICE OF
LAW) EXCEPT TO THE EXTENT OF PROCEDURAL AND SUBSTANTIVE MATTERS RELATING ONLY TO
(1) THE CREATION, PERFECTION AND FORECLOSURE OF LIENS AND SECURITY INTERESTS,
AND ENFORCEMENT OF THE RIGHTS AND REMEDIES, AGAINST THE MORTGAGED PROPERTIES,
WHICH MATTERS SHALL BE GOVERNED BY THE LAWS OF THE JURISDICTION IN WHICH THE
MORTGAGED PROPERTY IS LOCATED, (2) THE PERFECTION, THE EFFECT OF PERFECTION AND
NON-PERFECTION AND FORECLOSURE OF SECURITY INTERESTS ON PERSONAL PROPERTY (OTHER
THAN DEPOSIT ACCOUNTS), WHICH MATTERS SHALL BE GOVERNED BY THE LAWS OF THE
JURISDICTION DETERMINED BY THE CHOICE OF LAW PROVISIONS OF THE DISTRICT OF
COLUMBIA UNIFORM COMMERCIAL CODE AND (3) THE PERFECTION, THE EFFECT OF
PERFECTION AND NON-PERFECTION AND FORECLOSURE OF DEPOSIT ACCOUNTS, WHICH MATTERS
SHALL BE GOVERNED BY THE LAWS OF THE JURISDICTION IN WHICH THE DEPOSIT ACCOUNT
IS LOCATED. THE BORROWER PARTIES AGREE THAT ANY CONTROVERSY ARISING UNDER OR IN
RELATION TO THE NOTES, THE SECURITY DOCUMENTS OR ANY OTHER LOAN DOCUMENT SHALL
BE, EXCEPT AS OTHERWISE PROVIDED HEREIN, LITIGATED IN DISTRICT OF COLUMBIA. THE
LOCAL AND FEDERAL COURTS AND AUTHORITIES WITH JURISDICTION IN DISTRICT OF
COLUMBIA SHALL, EXCEPT AS OTHERWISE PROVIDED HEREIN, HAVE JURISDICTION OVER ALL
CONTROVERSIES WHICH

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MAY ARISE UNDER OR IN RELATION TO THE LOAN DOCUMENTS, INCLUDING THOSE
CONTROVERSIES RELATING TO THE EXECUTION, JURISDICTION, BREACH, ENFORCEMENT OR
COMPLIANCE WITH THE NOTES, THE SECURITY DOCUMENTS OR ANY OTHER ISSUE ARISING
UNDER, RELATING TO, OR IN CONNECTION WITH ANY OF THE LOAN DOCUMENTS. EACH
BORROWER PARTY IRREVOCABLY CONSENTS TO SERVICE, JURISDICTION, AND VENUE OF SUCH
COURTS FOR ANY LITIGATION ARISING FROM THE NOTES, THE SECURITY DOCUMENTS OR ANY
OF THE OTHER LOAN DOCUMENTS, AND WAIVES ANY OTHER VENUE TO WHICH IT MIGHT BE
ENTITLED BY VIRTUE OF DOMICILE, HABITUAL RESIDENCE OR OTHERWISE. NOTHING
CONTAINED HEREIN, HOWEVER, SHALL PREVENT THE LENDER FROM BRINGING ANY SUIT,
ACTION OR PROCEEDING OR EXERCISING ANY RIGHTS AGAINST THE BORROWER PARTIES, AND
AGAINST THE COLLATERAL IN ANY OTHER JURISDICTION. INITIATING SUCH SUIT, ACTION
OR PROCEEDING OR TAKING SUCH ACTION IN ANY OTHER JURISDICTION SHALL IN NO EVENT
CONSTITUTE A WAIVER OF THE AGREEMENT CONTAINED HEREIN THAT THE LAWS OF DISTRICT
OF COLUMBIA SHALL GOVERN THE RIGHTS AND OBLIGATIONS OF THE BORROWER PARTIES AND
THE LENDER AS PROVIDED HEREIN OR THE SUBMISSION HEREIN BY THE BORROWER PARTIES
TO PERSONAL JURISDICTION WITHIN DISTRICT OF COLUMBIA EACH BORROWER PARTY (I)
COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE
ARISING UNDER ANY OF THE LOAN DOCUMENTS TRIABLE BY A JURY AND (II) WAIVES ANY
RIGHT TO TRIAL BY JURY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER
EXIST. THIS WAIVER IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH
ISSUE AS TO WHICH THE RIGHT TO A JURY TRIAL WOULD OTHERWISE ACCRUE. FURTHER,
EACH BORROWER PARTY HEREBY CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF LENDER
(INCLUDING, BUT NOT LIMITED TO, LENDER’S COUNSEL) HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, TO EACH BORROWER PARTY THAT LENDER WILL NOT SEEK TO ENFORCE THE
PROVISIONS OF THIS SECTION. THE FOREGOING PROVISIONS WERE KNOWINGLY, WILLINGLY
AND VOLUNTARILY AGREED TO BY THE BORROWER PARTIES UPON CONSULTATION WITH
INDEPENDENT LEGAL COUNSEL SELECTED BY THE BORROWER PARTIES’ FREE WILL.

SECTION 23.07 Severability. In the event any provision of this Agreement or in
any other Loan Document shall be held invalid, illegal or unenforceable in any
jurisdiction, such provision will be severable from the remainder hereof as to
such jurisdiction and the validity, legality and enforceability of the remaining
provisions will not in any way be affected or impaired in any jurisdiction.

SECTION 23.08 Notices.

                     (a)     Manner of Giving Notice. Each notice, direction,
certificate or other communication hereunder (in this Section referred to
collectively as “notices” and singly as a “notice”) which any party is required
or permitted to give to the other party pursuant to this Agreement shall be in
writing and shall be deemed to have been duly and sufficiently given if:

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                    (1)     personally delivered with proof of delivery thereof
(any notice so delivered shall be deemed to have been received at the time so
delivered);

 

 

 

                    (2)     sent by Federal Express (or other similar overnight
courier) designating morning delivery (any notice so delivered shall be deemed
to have been received on the Business Day it is delivered by the courier);

 

 

 

                    (3)     sent by telecopier or facsimile machine which
automatically generates a transmission report that states the date and time of
the transmission, the length of the document transmitted, and the telephone
number of the recipient’s telecopier or facsimile machine (to be confirmed with
a copy thereof sent in accordance with paragraphs (1) or (2) above within two
Business Days) (any notice so delivered shall be deemed to have been received
(i) on the date of transmission, if so transmitted before 5:00 p.m. (local time
of the recipient) on a Business Day, or (ii) on the next Business Day, if so
transmitted on or after 5:00 p.m. (local time of the recipient) on a Business
Day or if transmitted on a day other than a Business Day);

addressed to the parties as follows:

          As to any Borrower Party:

 

 

 

 

c/o Mid-America Apartment Communities, Inc.

 

6584 Polar Avenue

 

Suite 300

 

 

Memphis, Tennessee 38138

 

Attention:

Simon R.C. Wadsworth

 

 

Chief Financial Officer

 

Telecopy No.:  

(901) 682-6667

          with a copy to:

 

 

 

 

Bass, Berry & Sims PLC

 

The Tower at Peabody Place

 

100 Peabody Place

 

Suite 900

 

 

Memphis, Tennessee 38103-3672

 

Attention:

John A. Stemmler, Esq.

 

Telecopy No.:  

(901) 543-5999

          As to the Lender:

 

 

 

Prudential Multifamily Mortgage, Inc.

 

c/o Prudential Asset Resources

 

2200 Ross Avenue

 

Suite 4900 E

 

Dallas, Texas 75201

 

Attention:    Asset Management Department

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Telecopy No.:    (214) 777-4556

with a copy to:

 

 

 

Prudential Multifamily Mortgage, Inc.

 

8401 Greensboro Drive

 

Suite 200

 

McLean, Virginia 22102

 

Attention: Laura Eckhardt

 

Telecopy No.: (703) 610-1422

 

 

 

and

 

 

 

Prudential Multifamily Mortgage, Inc.

 

Four Embarcadero Center

 

Suite 2700

 

San Francisco, California 94111

 

Attention: Harry N. Mixon, Esq.

 

Telecopy No.: (415) 956-2197

As to Fannie Mae:

 

 

 

Fannie Mae

 

 

3939 Wisconsin Avenue, N.W.

 

Washington, D.C. 20016-2899

 

Attention:        Vice President for

 

                         Multifamily Asset Management

 

Telecopy No.: (202) 752-5016

with a copy to:

 

 

 

Venable LLP

 

 

575 7th Street, N.W.

 

Washington, D.C. 20004

 

Attention:        Lawrence H. Gesner, Esq.

 

Telecopy No.: (202) 344-8300

                    (b) Change of Notice Address. Any party may, by notice given
pursuant to this Section, change the person or persons and/or address or
addresses, or designate an additional person or persons or an additional address
or addresses, for its notices, but notice of a change of address shall only be
effective upon receipt. Each party agrees that it shall not refuse or reject
delivery of any notice given hereunder, that it shall acknowledge, in writing,
receipt of the same upon request by the other party and that any notice rejected
or refused by it shall be deemed for all purposes of this Agreement to have been
received by the rejecting party on the date so refused or rejected, as
conclusively established by the records of the U.S. Postal Service, the courier
service or facsimile.

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SECTION 23.09 Further Assurances and Corrective Instruments.

                     (a)     Further Assurances. To the extent permitted by law,
the parties hereto agree that they shall, from time to time, execute,
acknowledge and deliver, or cause to be executed, acknowledged and delivered,
such supplements hereto and such further instruments as the Lender or the
Borrower Parties may request and as may be required in the opinion of the Lender
or its counsel to effectuate the intention of or facilitate the performance of
this Agreement or any Loan Document.

                     (b)     Further Documentation. Without limiting the
generality of subsection (a), in the event any further documentation or
information is required by the Lender to correct patent mistakes in the Loan
Documents, materials relating to the Title Insurance Policies or the funding of
the Advances, the Borrower Parties shall provide, or cause to be provided to the
Lender, at their cost and expense, such documentation or information. The
Borrower Parties shall execute and deliver to the Lender such documentation,
including any amendments, corrections, deletions or additions to the Notes, the
Security Instruments or the other Loan Documents as is reasonably required by
the Lender.

                     (c)     Compliance with Investor Requirements. Without
limiting the generality of subsection (a), the Borrower Parties shall do
anything necessary to comply with the reasonable requirements of the Lender in
order to enable the Lender to sell the MBS backed by an Advance.

SECTION 23.10 Term of this Agreement. This Agreement shall continue in effect
until the Credit Facility Termination Date.

SECTION 23.11 Assignments; Third-Party Rights. No Borrower Party shall assign
this Agreement, or delegate any of its obligations hereunder, without the prior
written consent of the Lender. The Lender may assign its rights and obligations
under this Agreement separately or together, without the Borrower Parties’
consent, only to Fannie Mae, but may not delegate its obligations under this
Agreement unless required to do so pursuant to Section 19.04.

SECTION 23.12 Headings. Article and Section headings used herein are for
convenience of reference only, are not part of this Agreement and are not to
affect the construction of, or to be taken into consideration in interpreting,
this Agreement.

SECTION 23.13 General Interpretive Principles. For purposes of this Agreement,
except as otherwise expressly provided or unless the context otherwise requires,
(i) the terms defined in Article I, Section 15.01, Section 16.01 and elsewhere
in this Agreement have the meanings assigned to them in this Agreement and
include the plural as well as the singular, and the use of any gender herein
shall be deemed to include the other genders; (ii) accounting terms not
otherwise defined herein have the meanings assigned to them in accordance with
GAAP; (iii) references herein to “Articles,” “Sections,” “subsections,”
“paragraphs” and other subdivisions without reference to a document are to
designated Articles, Sections, subsections, paragraphs and other subdivisions of
this Agreement; (iv) a reference to a subsection without further reference to a
Section is a reference to such subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to paragraphs and
other subdivisions; (v) a

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reference to an Exhibit or a Schedule without a further reference to the
document to which the Exhibit or Schedule is attached is a reference to an
Exhibit or Schedule to this Agreement; (vi) the words “herein,” “hereof,”
“hereunder” and other words of similar import refer to this Agreement as a whole
and not to any particular provision; and (vii) the word “including” means
“including, but not limited to.”

SECTION 23.14 Interpretation. The parties hereto acknowledge that each party and
their respective counsel have participated in the drafting and revision of this
Agreement and the Loan Documents. Accordingly, the parties agree that any rule
of construction which disfavors the drafting party shall not apply in the
interpretation of this Agreement and the Loan Documents or any amendment or
supplement or exhibit hereto or thereto.

SECTION 23.15 Standards for Decisions, Etc. Unless otherwise provided herein, if
the Lender’s approval is required for any matter hereunder, such approval may be
granted or withheld in the Lender’s sole and absolute discretion. Unless
otherwise provided herein, if the Lender’s designation, determination,
selection, estimate, action or decision is required, permitted or contemplated
hereunder, such designation, determination, selection, estimate, action or
decision shall be made in the Lender’s sole and absolute discretion.

SECTION 23.16 Decisions in Writing. Any approval, designation, determination,
selection, action or decision of the Lender or the Borrower Parties must be in
writing to be effective.

SECTION 23.17 Joint and Several Liability. Each Borrower Party shall be jointly
and severally liable for the payment and performance of each obligation of any
Borrower Party arising under any of the Loan Documents.

[THE REMAINDER OF THIS PAGE IS LEFT INTENTIONALLY BLANK]

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          IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.

 

 

 

 

 

Borrower Parties

 

 

 

MID-AMERICA APARTMENT COMMUNITIES,
INC., a Tennessee corporation

 

 

 

 

 

By:

 

 

 

 

 

 

     Simon R.C. Wadsworth

 

 

     Executive Vice President

 

 

 

 

MID-AMERICA APARTMENTS, L.P.,
a Tennessee limited partnership

 

 

 

 

 

By:

Mid-America Apartment Communities, Inc.,
a Tennessee corporation, its general partner

 

 

 

 

 

By:

 

 

 

 

 

 

 

 

     Simon R.C. Wadsworth

 

 

 

     Executive Vice President

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MID-AMERICA APARTMENTS OF TEXAS, L.P.,
a Texas limited partnership

 

 

 

 

 

By:

MAC of Delaware, Inc., a Delaware corporation,
its general partner

 

 

 

 

 

 

By:

 

 

 

Name:  

John A. Good

 

 

Its:

Assistant Secretary

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Lender

 

 

 

 

 

PRUDENTIAL MULTIFAMILY MORTGAGE, INC., a
Delaware corporation

 

 

 

 

By:

 

 

 

 

 

Name:  

Sharon D. Singleton

 

Title:

Vice President

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THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT
(MAA I)

among

(i) MID-AMERICA APARTMENT COMMUNITIES, INC.,
a Tennessee corporation,

(ii) MID- AMERICA APARTMENTS, LP,
a Tennessee limited partnership, and

(iii) MID-AMERICA APARTMENTS OF TEXAS, L.P.,
a Texas limited partnership,

and

PRUDENTIAL MULTIFAMILY MORTGAGE, INC.,
a Delaware corporation

dated as of

March 30, 2004

--------------------------------------------------------------------------------

TABLE OF CONTENTS

 

 

 

 

 

Page

RECITALS

 

1

 

 

 

ARTICLE I

 

3

 

 

 

ARTICLE II

 

24

 

 

 

SECTION 2.01

VARIABLE FACILITY COMMITMENT

24

SECTION 2.02

REQUESTS FOR VARIABLE ADVANCES

24

SECTION 2.03

MATURITY DATE OF VARIABLE ADVANCES

24

SECTION 2.04

INTEREST ON VARIABLE FACILITY ADVANCES

24

SECTION 2.05

COUPON RATES FOR VARIABLE ADVANCES

25

SECTION 2.06

VARIABLE FACILITY NOTE

25

SECTION 2.07

[INTENTIONALLY DELETED.]

25

SECTION 2.08

REINSTATEMENT OF VARIABLE COMMITMENT UPON MATURITY OF FIXED FACILITY ADVANCES

25

SECTION 2.09

LIMITATIONS ON RIGHT TO REBORROW

26

SECTION 2.10

CONDITIONS PRECEDENT TO REBORROWING

26

 

 

 

ARTICLE III

 

27

 

 

 

SECTION 3.01

FIXED FACILITY COMMITMENT

27

SECTION 3.02

REQUESTS FOR FIXED FACILITY ADVANCES

27

SECTION 3.03

MATURITY DATE OF FIXED FACILITY ADVANCES; AMORTIZATION

27

SECTION 3.04

INTEREST ON FIXED FACILITY ADVANCES

27

SECTION 3.05

COUPON RATES FOR FIXED FACILITY ADVANCES

28

SECTION 3.06

FIXED FACILITY NOTE

28

SECTION 3.07

CONVERSION OF COMMITMENT FROM VARIABLE FACILITY COMMITMENT TO FIXED FACILITY
COMMITMENT

28

SECTION 3.08

LIMITATIONS ON RIGHT TO CONVERT

28

SECTION 3.09

CONDITIONS PRECEDENT TO CONVERSION

29

 

 

 

ARTICLE IV

 

29

 

 

 

SECTION 4.01

RATE SETTING FOR AN ADVANCE

29

SECTION 4.02

ADVANCE CONFIRMATION INSTRUMENT FOR VARIABLE ADVANCES

30

SECTION 4.03

BREAKAGE AND OTHER COSTS

31

 

 

 

ARTICLE V

31

 

 

 

SECTION 5.01

INITIAL ADVANCE

31

SECTION 5.02

FUTURE ADVANCES

31

SECTION 5.03

CONDITIONS PRECEDENT TO FUTURE ADVANCES

31

SECTION 5.04

DETERMINATION OF ALLOCABLE FACILITY AMOUNT AND VALUATIONS

32

 

 

 

ARTICLE VI

 

33

 

 

 

SECTION 6.01

RIGHT TO ADD COLLATERAL

33

SECTION 6.02

PROCEDURE FOR ADDING COLLATERAL

33

SECTION 6.03

CONDITIONS PRECEDENT TO ADDITION OF THE ADDITIONAL MORTGAGED PROPERTIES TO THE
COLLATERAL POOL

34

 

 

 

ARTICLE VII

 

35

 

 

 

SECTION 7.01

RIGHT TO OBTAIN RELEASES OF COLLATERAL

35

SECTION 7.02

PROCEDURE FOR OBTAINING RELEASES OF COLLATERAL

35

i

--------------------------------------------------------------------------------

 

 

 

SECTION 7.03

CONDITIONS PRECEDENT TO RELEASE OF COLLATERAL RELEASE PROPERTY FROM THE
COLLATERAL

37

SECTION 7.04

SUBSTITUTIONS

38

 

 

 

ARTICLE VIII

 

42

 

 

 

SECTION 8.01

RIGHT TO INCREASE COMMITMENT

42

SECTION 8.02

PROCEDURE FOR OBTAINING INCREASES IN COMMITMENT

42

SECTION 8.03

CONDITIONS PRECEDENT TO INCREASE IN COMMITMENT

43

 

 

 

ARTICLE IX

 

44

 

 

 

SECTION 9.01

RIGHT TO COMPLETE OR PARTIAL TERMINATION OF FACILITIES

44

SECTION 9.02

PROCEDURE FOR COMPLETE OR PARTIAL TERMINATION OF FACILITIES

44

SECTION 9.03

CONDITIONS PRECEDENT TO COMPLETE OR PARTIAL TERMINATION OF FACILITIES

44

 

 

 

ARTICLE X

 

45

 

 

 

SECTION 10.01

RIGHT TO TERMINATE CREDIT FACILITY

45

SECTION 10.02

PROCEDURE FOR TERMINATING CREDIT FACILITY

45

SECTION 10.03

CONDITIONS PRECEDENT TO TERMINATION OF CREDIT FACILITY

46

 

 

 

ARTICLE XI

 

46

 

 

 

SECTION 11.01

CONDITIONS APPLICABLE TO ALL REQUESTS

46

SECTION 11.02

DELIVERY OF CLOSING DOCUMENTS RELATING TO COLLATERAL SUBSTITUTION REQUEST,
CREDIT FACILITY EXPANSION REQUEST OR FUTURE ADVANCE REQUEST

47

SECTION 11.03

DELIVERY OF PROPERTY-RELATED DOCUMENTS

48

 

 

 

ARTICLE XII

 

49

 

 

 

SECTION 12.01

REPRESENTATIONS AND WARRANTIES OF THE BORROWER PARTIES

49

SECTION 12.02

REPRESENTATIONS AND WARRANTIES OF THE BORROWER PARTIES

53

SECTION 12.03

REPRESENTATIONS AND WARRANTIES OF THE LENDER

56

 

 

 

ARTICLE XIII

 

56

 

 

 

SECTION 13.01

COMPLIANCE WITH AGREEMENTS

57

SECTION 13.02

MAINTENANCE OF EXISTENCE

57

SECTION 13.03

MAINTENANCE OF REIT STATUS

57

SECTION 13.04

FINANCIAL STATEMENTS; ACCOUNTANTS’ REPORTS; OTHER INFORMATION

57

SECTION 13.05

CERTIFICATE OF COMPLIANCE

60

SECTION 13.06

MAINTAIN LICENSES

60

SECTION 13.07

ACCESS TO RECORDS; DISCUSSIONS WITH OFFICERS AND ACCOUNTANTS

60

SECTION 13.08

INFORM THE LENDER OF MATERIAL EVENTS

60

SECTION 13.09

INTENTIONALLY OMITTED

62

SECTION 13.10

INSPECTION

62

SECTION 13.11

COMPLIANCE WITH APPLICABLE LAWS

62

SECTION 13.12

WARRANTY OF TITLE

62

SECTION 13.13

DEFENSE OF ACTIONS

62

SECTION 13.14

ALTERATIONS TO THE MORTGAGED PROPERTIES

63

SECTION 13.15

ERISA

63

SECTION 13.16

LOAN DOCUMENT TAXES

63

SECTION 13.17

FURTHER ASSURANCES

64

SECTION 13.18

MONITORING COMPLIANCE

64

SECTION 13.19

LEASES

64

SECTION 13.20

INTENTIONALLY OMITTED

64

SECTION 13.21

TRANSFER OF OWNERSHIP INTERESTS OF THE BORROWER PARTIES

64

SECTION 13.22

CHANGE IN SENIOR MANAGEMENT

66

SECTION 13.23

DATE-DOWN ENDORSEMENTS

67

SECTION 13.24

GEOGRAPHICAL DIVERSIFICATION

67

SECTION 13.25

OWNERSHIP OF MORTGAGED PROPERTIES

67

ii

--------------------------------------------------------------------------------

 

 

 

ARTICLE XIV

 

67

 

 

 

SECTION 14.01

OTHER ACTIVITIES

67

SECTION 14.02

VALUE OF SECURITY

68

SECTION 14.03

ZONING

68

SECTION 14.04

LIENS

68

SECTION 14.05

SALE

68

SECTION 14.06

INDEBTEDNESS

69

SECTION 14.07

PRINCIPAL PLACE OF BUSINESS

69

SECTION 14.08

FREQUENCY OF REQUESTS

69

SECTION 14.09

CHANGE IN PROPERTY MANAGEMENT

69

SECTION 14.10

CONDOMINIUMS

69

SECTION 14.11

RESTRICTIONS ON PARTNERSHIP DISTRIBUTIONS

69

SECTION 14.12

LINES OF BUSINESS

69

SECTION 14.13

LIMITATION ON UNIMPROVED REAL PROPERTY AND NEW CONSTRUCTION

69

SECTION 14.14

DIVIDEND PAYOUT

70

 

 

 

ARTICLE XV

 

70

 

 

 

SECTION 15.01

FINANCIAL DEFINITIONS

70

SECTION 15.02

COMPLIANCE WITH DEBT SERVICE COVERAGE RATIOS

74

SECTION 15.03

COMPLIANCE WITH LOAN TO VALUE RATIOS

74

SECTION 15.04

COMPLIANCE WITH CONCENTRATION TEST

74

SECTION 15.05

COMPLIANCE WITH REIT’S NET WORTH TEST

74

SECTION 15.06

COMPLIANCE WITH REIT’S TOTAL INDEBTEDNESS TO CONSOLIDATED TOTAL ASSETS RATIO

74

SECTION 15.07

COMPLIANCE WITH REIT’S CONSOLIDATED EBITDA TO INTEREST RATIO

74

SECTION 15.08

COMPLIANCE WITH REIT’S CONSOLIDATED EBITDA TO FIXED CHARGE RATIO

75

 

 

 

ARTICLE XVI

 

75

 

 

 

SECTION 16.01

STANDBY FEE AND RATE PRESERVATION FEE

75

SECTION 16.02

ORIGINATION FEES

75

SECTION 16.03

DUE DILIGENCE FEES

75

SECTION 16.04

LEGAL FEES AND EXPENSES

76

SECTION 16.05

MBS-RELATED COSTS

76

SECTION 16.06

FAILURE TO CLOSE ANY REQUEST

76

SECTION 16.07

OTHER FEES

76

 

 

 

ARTICLE XVII

 

77

 

 

 

SECTION 17.01

EVENTS OF DEFAULT

77

 

 

 

ARTICLE XVIII

 

79

 

 

 

SECTION 18.01

REMEDIES; WAIVERS

79

SECTION 18.02

WAIVERS; RESCISSION OF DECLARATION

79

SECTION 18.03

THE LENDER’S RIGHT TO PROTECT COLLATERAL AND PERFORM COVENANTS AND OTHER
OBLIGATIONS

80

SECTION 18.04

NO REMEDY EXCLUSIVE

80

SECTION 18.05

NO WAIVER

80

SECTION 18.06

NO NOTICE

80

SECTION 18.07

APPLICATION OF PAYMENTS

80

 

 

 

ARTICLE XIX

 

80

 

 

 

SECTION 19.01

SPECIAL POOL PURCHASE CONTRACT

81

SECTION 19.02

ASSIGNMENT OF RIGHTS

81

SECTION 19.03

RELEASE OF COLLATERAL

81

SECTION 19.04

REPLACEMENT OF LENDER

81

SECTION 19.05

FANNIE MAE AND LENDER FEES AND EXPENSES

81

SECTION 19.06

THIRD-PARTY BENEFICIARY

82

iii

--------------------------------------------------------------------------------

 

 

 

ARTICLE XX

 

82

 

 

 

SECTION 20.01

INSURANCE AND REAL ESTATE TAXES

82

SECTION 20.02

REPLACEMENT RESERVES

82

 

 

 

ARTICLE XXI

 

82

 

 

 

SECTION 21.01 

SWAP

82

SECTION 21.02

SWAP TERMS

83

SECTION 21.03 

SWAP SECURITY AGREEMENT; DELIVERY OF SWAP PAYMENTS

83

SECTION 21.04 

TERMINATION

83

SECTION 21.05

PERFORMANCE UNDER SWAP DOCUMENTS

84

SECTION 21.06

APPROVED SWAPS

84

 

 

 

ARTICLE XXII

 

84

 

 

 

SECTION 22.01

PERSONAL LIABILITY TO THE BORROWER PARTIES

84

 

 

 

ARTICLE XXIII

 

85

 

 

 

SECTION 23.01

COUNTERPARTS

86

SECTION 23.02

AMENDMENTS, CHANGES AND MODIFICATIONS

86

SECTION 23.03

PAYMENT OF COSTS, FEES AND EXPENSES

86

SECTION 23.04

PAYMENT PROCEDURE

87

SECTION 23.05

PAYMENTS ON BUSINESS DAYS

87

SECTION 23.06

CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL

87

SECTION 23.07

SEVERABILITY

88

SECTION 23.08

NOTICES

88

SECTION 23.09

FURTHER ASSURANCES AND CORRECTIVE INSTRUMENTS

91

SECTION 23.10

TERM OF THIS AGREEMENT

91

SECTION 23.11

ASSIGNMENTS; THIRD-PARTY RIGHTS

91

SECTION 23.12

HEADINGS

91

SECTION 23.13

GENERAL INTERPRETIVE PRINCIPLES

91

SECTION 23.14

INTERPRETATION

92

SECTION 23.15

STANDARDS FOR DECISIONS, ETC

92

SECTION 23.16

DECISIONS IN WRITING

92

SECTION 23.17

JOINT AND SEVERAL LIABILITY

92

iv

--------------------------------------------------------------------------------

 

 

 

SCHEDULE I

-

Summary of Credit Facility Structure

EXHIBIT A

-

Schedule of Initial Mortgaged Properties and Initial Valuations

EXHIBIT B

-

Fixed Facility Note

EXHIBIT C

-

Intentionally Omitted

EXHIBIT D

-

Compliance Certificate

EXHIBIT E

-

Sample Facility Debt Service

EXHIBIT F

-

Organizational Certificate

EXHIBIT G

-

Intentionally Omitted

EXHIBIT H

-

Revolving Credit Endorsement

EXHIBIT I

-

Variable Facility Note

EXHIBIT J

-

Tie-In Endorsement

EXHIBIT K

-

Conversion Request

EXHIBIT L

-

Conversion Amendment

EXHIBIT M

-

Rate Setting Form

EXHIBIT N

-

Rate Confirmation Form

EXHIBIT O

-

Advance Confirmation Instrument

EXHIBIT P

-

Future Advance Request

EXHIBIT Q

-

Reborrowing Request

EXHIBIT R

-

Reborrowing Amendment

EXHIBIT S

-

Collateral Addition Request

EXHIBIT T

-

Collateral Release Request

EXHIBIT U

-

Confirmation of Obligations

EXHIBIT V

-

Credit Facility Expansion Request

EXHIBIT W

-

Variable Facility Termination Request

EXHIBIT X

-

Variable Facility Termination Document

EXHIBIT Y

-

Credit Facility Termination Request

EXHIBIT Z

-

Collateral Substitution Request

EXHIBIT AA

-

Schedule of Approved Property Management Agreements

EXHIBIT BB

-

Independent Unit Encumbrances

EXHIBIT CC

-

Collateral Addition Description Package

EXHIBIT DD

-

Collateral Substitution Description Package

EXHIBIT EE

-

Collateral Substitution Supporting Documents

EXHIBIT FF

-

Amended and Restated Guaranty

EXHIBIT GG

-

Swap Security Agreement

EXHIBIT HH

-

DUS Properties

EXHIBIT II

-

Approved Swaps

v

--------------------------------------------------------------------------------

SCHEDULE I
(MAA I)

          SUMMARY OF CREDIT FACILITY STRUCTURE – PRIOR TO NOVEMBER 1, 2004

 

 

 

 

 

 

 

 

 

 

 

Facility Fees

 

Standby Fee

 

Facility Termination Fee

Initial Commitment

 

 

 

 

 

 

 

Fixed

$        110,000,000

 

57 bps (1)

 

 

 

 

Variable

$            9,367,000

 

67 bps

 

15 bps

 

18 bps

Total

$        119,367,000

 

 

 

 

 

through Variable Facility Termination Date as calculated in Agreement

 

 

 

 

 

 

 

 

Original Expanded Commitment

Amounts above

 

 

 

 

 

 

Fixed

$        110,000,000

 

 

 

 

 

 

Variable

$            9,367,000

 

 

 

 

 

 

Total

$        119,367,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Up to

 

 

 

 

 

 

Fixed

$        110,000,000

 

 

 

 

 

 

Variable

$          28,382,000

 

 

 

 

 

 

Total

$        138,382,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Amount Equal to

 

 

 

 

 

Fixed

-

 

65 bps (1) (2)

 

 

 

Variable

$          19,015,000

 

72 bps

 

15 bps

 

18 bps

Total

$          19,015,000

 

 

 

 

 

through Variable Facility Termination Date as calculated in Agreement

 

 

 

 

 

 

 

 

Amended and Restated

 

 

 

 

 

 

 

Commitment (4)

Amounts above

 

 

 

 

 

 

Fixed

$        110,000,000

 

 

 

 

 

 

Variable

$          28,382,000

 

 

 

 

 

 

Total

$        138,382,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Up to

 

 

 

 

 

 

Fixed

$        110,000,000

 

 

 

 

 

 

Variable

$          50,000,000

 

 

 

 

 

 

Total

$        160,000,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Amount Equal to

 

 

 

 

Fixed

-

 

50 bps (1) (3)

 

 

 

Variable

$          21,618,000

 

60 bps

 

15 bps

 

18 bps

Total

$          21,618,000

 

 

 

 

 

through Variable Facility Termination Date as calculated in Agreement

NOTES:

(1) All Fixed Facility Fees reflect interest only option.

(2) The Fixed Facility Fee for this tranche with the amortizing option is 57
bps.

(3) The Fixed Facility Fee for this tranche with the amortizing option is 43.5
bps.

(4) Although not shown here, the Amended and Restated Commitment includes those
amounts by which the Commitment is expanded beyond the amounts shown here to
reflect additional capacity as result of the payoff of the Blackstone JV
properties up to a total maximum commitment of $250 million.

I-1

--------------------------------------------------------------------------------

          SUMMARY OF CREDIT FACILITY STRUCTURE – ON AND AFTER NOVEMBER 1, 2004

 

 

 

 

 

 

 

 

 

Facility Fees

 

Standby Fee

 

Facility Termination Fee

FIXED

 

 

 

 

 

18 bps - through Variable Facility Termination Date as calculated in Agreement

Existing Fixed Advances

$110,000,000

57 bps (1)

 

 

 

 

 

Future Fixed Advances drawn (i) after 10/31/2004 and prior to 1/1/2006 or (ii)
from the Reserved Amount at any time (3)

 

52 bps (1) (2)

 

15 bps

 

 

 

Future Fixed Advances drawn after 1/1/2006 and not from the Reserved Amount

 

(3) The number of basis points determined at the time of such increase or
conversion by Lender as the Fixed Facility Fee for such Fixed Advances

 

(3) The number of basis points determined by Lender as the Standby Fee at the
time of the increase of the Commitment

 

 

 

 

 

 

 

 

 

 

VARIABLE

 

 

 

 

 

18 bps - through Variable Facility Termination Date as calculated in Agreement

 

Variable Advances (i) Rolling or drawn after 10/31/2004 and prior to 1/1/2006
(ii) drawn from the Reserved Amount Reserved Amount at any time (3)

 

62 bps

 

15 bps

 

 

 

Variable Advances Rolling after 1/1/2006

 

62 bps

 

 

 

 

 

Variable Advances drawn after 1/1/2006 and not from the Reserved Amount

 

(3) The number of basis points determined at the time of such increase or
conversion by Lender as the Variable Facility Fee for such Variable Advances

 

(3) The number of basis points determined by Lender as the Standby Fee at the
time of the increase of the Commitment

 

 

NOTES:

(1) All Fixed Facility Fees reflect interest only option.

(2) The Fixed Facility Fee after 10/31/2004 with the amortizing option is 45.5
bps.

(3)All Fees for the Commitment are subject to change after January 1, 2006
unless the Borrower pays the Rate Preservation Fee in which case the pricing
shall not change for so long as the Rate Preservation Fee is paid, provided that
in no event shall the Fixed Facility Fee exceed 72 basis points.

I-2

--------------------------------------------------------------------------------

(MAA I)

MID-AMERICA APARTMENT COMMUNITIES LP
SUMMARY OF CREDIT FACILITY STRUCTURE

MAA I Maturity Dates and Availability Period

 

 

 

 

 

 

 

Variable Facility
Termination Date
(Variable Advance
Maturity Date)

 

Fixed Facility
Availability Period

Aggregate Commitment equal to or less than $80,000,000 (1)

 

December 1, 2011

 

December 1, 2006

 

Aggregate Commitment greater than $80,000,000 but less than $160,000,000 (1)

 

December 1, 2012

 

December 1, 2007

 

Aggregate Commitment greater than $160,000,000 (1)

 

December 1, 2013

 

December 1, 2008

(1) If the Borrower has both Fixed and Variable Commitments, the Variable
Commitment shall be designated as the first advance for the purposes of
determining maturity.

MAA I Existing Fixed Note Maturity Dates

 

 

 

 

 

Note Amount

Date of Note

Maturity Date

     

$65,000,000

August 23, 2000

November 1, 2009

$25,000,000

May 23, 2001

July 1, 2008

$20,000,000

November 28, 2001

December 1, 2006

--------------------------------------------------------------------------------

(MAA I)

MAA II Maturity Dates and Availability Period

 

 

 

 

 

 

Variable Facility
Termination Date
(on Variable
Advance Maturity
Date)

Fixed Facility
Availability Period

Aggregate Commitment equal to or less than $120,000,000 (1)

December 1, 2010

December 1, 2005

 

Aggregate Commitment greater than $120,000,000 but less than $160,000,000 (1)

December 1, 2011

December 1, 2006

 

Aggregate Commitment greater than $160,000,000 but less than $200,000,000 (1)

December 1, 2012

December 1, 2007

 

Aggregate Commitment greater than $200,000,000 but less than $320,000,000 (1)

December 1, 2013

December 1, 2008

 

Aggregate Commitment greater than $320,000,000 (1)

December 1, 2014

December 1, 2009

(1) If the Borrower has both Fixed and Variable Commitments, the Variable
Commitment shall be designated as the first advance for the purposes of
determining maturity.

A-2

--------------------------------------------------------------------------------

(MAA I)

 

 

 

 

 

 

 

 

 

MAA #1

 

MAA #2

 

Total

 

 

 

 

 

 

 

Initial Commitment

 

$ 119,367,000

 

$ 183,372,000

 

$ 302,739,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Original Expanded Commitment

 

Amounts above
$ 119,367,000
Up to
$ 138,382,000

Net Amount Equal to
$ 19,015,000

 

Amounts above
$ 183,372,000
Up to
$ 413,374,000

Net Amount Equal to
$ 230,002,000

 

Amounts above
$ 302,739,000
Up to
$ 551,756,000

Net Amount Equal to
$ 249,017,000

 

 

 

 

 

 

 

Amended and Restated Commitment Count

 

Amounts above
$ 138,382,000
Up to
$ 250,000,000

Net Amount Equal to
$ 21,618,000

 

Amounts above
$ 413,374,000
Up to
$ 600,000,000

Net Amount Equal to
$ 37,626,000

 

Amounts above
$ 551,756,000
Up to
$ 850,000,000

Net Amount Equal to
$ 159,244,000

At 4-01-04:

 

 

 

 

 

 

Available

 

$ 183,769,000

 

$ 457,526,000

 

$ 641,295,000

Collateralized incl new additions

 

$ 183,769,000

 

$ 457,526,000

 

$ 641,295,000

Net available but uncollateralized

 

$ 0

 

$ 0

 

$ 0

Expansion capacity

 

$ 250,000,000

 

$ 600,000,000

 

$ 850,000,000

Expansion less collateralized $

 

$ 66,231,000

 

$ 142,474,000

 

 

Increase in availability

 

$ 66,231,000

 

$ 142,474,000

 

 

4/1/04 Additions

 

$ 24,262,000

 

$ 20,918,000

 

 

A-3

--------------------------------------------------------------------------------

(MAA I)

EXHIBIT A TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

SCHEDULE OF INITIAL MORTGAGED PROPERTIES
AND INITIAL VALUATIONS

 

 

 

 

 

 

 

Property Name

 

County

 

Property Address

 

Initial Valuation

Paddock Club Brandon I & II

 

Hillsborough

 

Brandon, FL

 

$29,120,000

Paddock Club Mandarin

 

Duval

 

Jacksonville, FL

 

$17,830,000

Woodbridge at the Lake

 

Duval

 

Jacksonville, FL

 

$7,620,000

Paddock Park Ocala II

 

Marion

 

Ocala, FL

 

$15,530,000

Paddock Club Tallahassee I

 

Leon

 

Tallahassee, FL

 

$11,840,000

Courtyards at Campbell Apartments

 

Dallas

 

Dallas, TX

 

$10,910,000

Deer Run Apartments

 

Dallas

 

Dallas, TX

 

$12,930,000

Paddock Club Gainesville

 

Alachua

 

Gainesville, FL

 

$17,100,000

Kenwood Club

 

Harris

 

Katy, TX

 

$18,000,000

Balcones Woods

 

Travis

 

Austin, TX

 

$22,000,000

Paddock Club Panama City
Apartments

 

Bay

 

Panama City, FL

 

$13,000,000

Paddock Club Tallahassee II
Apartments

 

Leon

 

Tallahassee, FL

 

$6,675,000

The Corners

 

Forsyth

 

Winston-Salem, NC

 

$8,170,000

Jefferson Pines

 

Harris

 

Houston, TX

 

$21,100,000

Los Rios

 

Collin

 

Plano, TX

 

$32,500,000

A-4

--------------------------------------------------------------------------------

EXHIBIT B TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

FIXED FACILITY NOTE

 

 

US $____________

________________________

          FOR VALUE RECEIVED, the undersigned (collectively, the “Borrower”)
promise to pay to the order of PRUDENTIAL MULTIFAMILY MORTGAGE, INC., a Delaware
corporation (“Lender”) the principal sum of ___________________________ AND
NO/100 DOLLARS (US $____________), with interest accruing on the unpaid
principal balance from the date of disbursement until fully paid at the annual
rate of percent (____%).

          This Note is executed and delivered by Borrower pursuant to that
certain Third Amended and Restated Master Credit Facility Agreement, dated as of
March 30, 2004 by and among Borrower, Mid-America Apartments of Texas, L.P., a
Texas limited partnership, and Lender (as amended from time to time, the “Master
Agreement”), to evidence the obligation of Borrower to repay a Fixed Facility
Advance made by Lender to Borrower in accordance with the terms of the Master
Agreement. This Note is entitled to the benefit and security of the Loan
Documents provided for in the Master Agreement, to which reference is hereby
made for a statement of all of the terms and conditions under which the Fixed
Facility Advance evidenced hereby is made.

          1.          Defined Terms. As used in this Note, (i) the term “Lender”
means the holder of this Note, (ii) the term “Indebtedness” means the principal
of, interest on, or any other amounts due at any time under, this Note, the
Security Instruments or any other Loan Document, including prepayment premiums,
late charges, default interest, and advances to protect the security of the
Security Instruments under Section 12 of the Security Instruments and (iii) a
“Business Day” means any day other than a Saturday, Sunday or any day on which
Lender is not open for business. Event of Default and other capitalized terms
used but not defined in this Note shall have the meanings given to such terms in
the Master Agreement (or, if not defined in the Master Agreement, as defined in
the Security Instruments (as defined in Paragraph 5).

          2.          Address for Payment. All payments due under this Note
shall be payable at 2200 Ross Avenue, Suite 4900E, Dallas, Texas 75201, or such
other place as may be designated by written notice to Borrower from or on behalf
of Lender.

          3.          Payment of Principal and Interest. Principal and interest
shall be paid as follows:

          (a)          Unless disbursement of principal is made by Lender to
Borrower on the first day of the month, interest for the period beginning on the
date of disbursement and ending on

B-1

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and including the last day of the month in which such disbursement is made shall
be payable simultaneously with the execution of this Note. Interest under this
Note shall be computed on the basis of a 360-day year consisting of twelve
30-day months.

          (b)           Consecutive monthly installments of interest, each in
the amount of Dollars (US $______), shall be payable on the first day of each
month beginning on _________________, until the entire unpaid principal balance
evidenced by this Note is fully paid. Any accrued interest remaining past due
for 30 days or more shall be added to and become part of the unpaid principal
balance and shall bear interest at the rate or rates specified in this Note, and
any reference below to “accrued interest” shall refer to accrued interest which
has not become part of the unpaid principal balance. Any remaining principal and
interest shall be due and payable on _______________, 200_or on any earlier date
on which the unpaid principal balance of this Note becomes due and payable, by
acceleration or otherwise (the “Maturity Date”). The unpaid principal balance
shall continue to bear interest after the Maturity Date at the Default Rate set
forth in this Note until and including the date on which it is paid in full.

          (c)          Any regularly scheduled monthly installment of interest
that is received by Lender before the date it is due shall be deemed to have
been received on the due date solely for the purpose of calculating interest
due.

          4.          Application of Payments. If at any time Lender receives,
from Borrower or otherwise, any amount applicable to the Indebtedness that is
less than all amounts due and payable at such time, Lender may apply that
payment to amounts then due and payable in any manner and in any order
determined by Lender, in Lender’s discretion. Borrower agrees that neither
Lender’s acceptance of a payment from Borrower in an amount that is less than
all amounts then due and payable nor Lender’s application of such payment shall
constitute or be deemed to constitute either a waiver of the unpaid amounts or
an accord and satisfaction.

          5.          Security. The Indebtedness is secured, among other things,
by multifamily mortgages, deeds to secure debt or deeds of trust dated as of the
date of this Note (the “Security Instruments”), and reference is made to the
Security Instruments for other rights of Lender concerning the collateral for
the Indebtedness.

          6.          Acceleration. If an Event of Default has occurred and is
continuing, the entire unpaid principal balance, any accrued interest, the
prepayment premium payable under Paragraph 10, if any, and all other amounts
payable under this Note and any other Loan Document shall at once become due and
payable, at the option of Lender, without any prior notice to Borrower. Lender
may exercise this option to accelerate regardless of any prior forbearance.

B-2

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          7.          Late Charge. If any monthly installment due hereunder is
not received by Lender on or before the 10th day of each month or if any other
amount payable under this Note or under the Security Instruments or any other
Loan Document is not received by Lender within 10 days after the date such
amount is due, counting from and including the date such amount is due, Borrower
shall pay to Lender, immediately and without demand by Lender, a late charge
equal to 5 percent of such monthly installment or other amount due. Borrower
acknowledges that its failure to make timely payments will cause Lender to incur
additional expenses in servicing and processing the loan evidenced by this Note
(the “Loan”), and that it is extremely difficult and impractical to determine
those additional expenses. Borrower agrees that the late charge payable pursuant
to this Paragraph represents a fair and reasonable estimate, taking into account
all circumstances existing on the date of this Note, of the additional expenses
Lender will incur by reason of such late payment. The late charge is payable in
addition to, and not in lieu of, any interest payable at the Default Rate
pursuant to Paragraph 8.

          8.          Default Rate. So long as any monthly installment or any
other payment due under this Note remains past due for 30 days or more, interest
under this Note shall accrue on the unpaid principal balance from the earlier of
the due date of the first unpaid monthly installment or other payment due, as
applicable, at a rate (the “Default Rate”) equal to the lesser of 4 percentage
points above the rate stated in the first paragraph of this Note or the maximum
interest rate which may be collected from Borrower under applicable law. If the
unpaid principal balance and all accrued interest are not paid in full on the
Maturity Date, the unpaid principal balance and all accrued interest shall bear
interest from the Maturity Date at the Default Rate. Borrower also acknowledges
that its failure to make timely payments will cause Lender to incur additional
expenses in servicing and processing the Loan, that, during the time that any
monthly installment or payment under this Note is delinquent for more than 30
days, Lender will incur additional costs and expenses arising from its loss of
the use of the money due and from the adverse impact on Lender’s ability to meet
its other obligations and to take advantage of other investment opportunities,
and that it is extremely difficult and impractical to determine those additional
costs and expenses. Borrower also acknowledges that, during the time that any
monthly installment or other payment due under this Note is delinquent for more
than 30 days, Lender’s risk of nonpayment of this Note will be materially
increased and Lender is entitled to be compensated for such increased risk.
Borrower agrees that the increase in the rate of interest payable under this
Note to the Default Rate represents a fair and reasonable estimate, taking into
account all circumstances existing on the date of this Note, of the additional
costs and expenses Lender will incur by reason of Borrower’s delinquent payment
and the additional compensation Lender is entitled to receive for the increased
risks of nonpayment associated with a delinquent loan.

          9.          Limits on Personal Liability.

B-3

--------------------------------------------------------------------------------

          The provisions of Article 22.01 of the Master Agreement (entitled
“Limits on Personal Liability”) are hereby incorporated into this Note by this
reference to the fullest extent as if the text of such Article were set forth in
its entirety herein.

          10.          Voluntary and Involuntary Prepayments.

          (a)          A prepayment premium shall be payable in connection with
any prepayment made under this Note as provided below:

 

 

 

 

 

 

          (1)          Borrower may voluntarily prepay all (but not less than
all) of the unpaid principal balance of this Note only on the last calendar day
of a calendar month and only if Borrower has complied with all of the following:

 

 

 

 

 

(i)

Borrower must give Lender at least 30 days, but not more than 60 days, prior
written notice of its intention to make such prepayment (the “Prepayment
Notice”).

 

 

 

 

 

 

 

 

(ii)

The Prepayment Notice shall be addressed to Lender and shall include, at a
minimum, the date upon which Borrower intends to make the prepayment (the
“Intended Prepayment Date”). Borrower acknowledges that the Lender is not
required to accept any voluntary prepayment of this Note on any day other than
the last calendar day of a calendar month. If the last calendar day of a
calendar month is not a Business Day, then the Borrower must make the payment on
the Business Day immediately preceding the last calendar day of a calendar
month. For all purposes, including the accrual of interest and the calculation
of the prepayment premium, any prepayment received by Lender on any day other
than the last calendar day of a calendar month shall be deemed to have been
received on the last calendar day of the month in which such prepayment occurs.

 

 

 

 

 

 

 

 

(iii)

Any prepayment shall be made by paying (A) the amount of principal being
prepaid, (B) all accrued interest, (C) all other sums due Lender at the time of
such prepayment, and (D) the prepayment premium calculated pursuant to
Schedule A.

 

 

 

 

 

 

 

 

(iv)

If, for any reason, Borrower fails to prepay this Note (i) within five (5)
Business Days after the Intended Prepayment Date or (ii) if the prepayment
occurs in a month other than the month stated in the original Prepayment Notice,
then Lender shall have the right, but

B-4

--------------------------------------------------------------------------------

 

 

 

 

 

 

 

 

 

not the obligation, to recalculate the prepayment premium based upon the date
that Borrower actually prepays this Note and to make such calculation as
described in Schedule A attached hereto. For purposes of such recalculation,
such new prepayment date shall be deemed the “Intended Prepayment Date.”

 

 

          (2)           Upon Lender’s exercise of any right of acceleration
under this Note, Borrower shall pay to Lender, in addition to the entire unpaid
principal balance of this Note outstanding at the time of the acceleration, (A)
all accrued interest and all other sums due Lender under this Note and the other
Loan Documents, and (B) the prepayment premium calculated pursuant to Schedule
A.

 

 

 

 

          (3)           Any application by Lender of any collateral or other
security to the repayment of any portion of the unpaid principal balance of this
Note prior to the Maturity Date and in the absence of acceleration shall be
deemed to be a partial prepayment by Borrower, requiring the payment to Lender
by Borrower of a prepayment premium.

          (b)          Notwithstanding the provisions of Paragraph 10(a), no
prepayment premium shall be payable with respect to any prepayment occurring as
a result of the application of any insurance proceeds or condemnation award
under any Security Instrument or as provided in subparagraph (c) of Schedule A.

          (c)          Schedule A is hereby incorporated by reference into this
Note.

          (d)          Any required prepayment of less than the entire unpaid
principal balance of this Note shall not extend or postpone the due date of any
subsequent monthly installments or change the amount of such installments,
unless Lender agrees otherwise in writing.

          (e)          Borrower recognizes that any prepayment of the unpaid
principal balance of this Note, whether voluntary or involuntary or resulting
from a default by Borrower, will result in Lender’s incurring loss, including
reinvestment loss, additional expense and frustration or impairment of Lender’s
ability to meet its commitments to third parties. Borrower agrees to pay to
Lender upon demand damages for the detriment caused by any prepayment, and
agrees that it is extremely difficult and impractical to ascertain the extent of
such damages. Borrower therefore acknowledges and agrees that the formula for
calculating prepayment premiums set forth on Schedule A represents a reasonable
estimate of the damages Lender will incur because of a prepayment.

          (f)          Borrower further acknowledges that the prepayment premium
provisions of this Note are a material part of the consideration for the loan
evidenced by this Note, and

B-5

--------------------------------------------------------------------------------

acknowledges that the terms of this Note are in other respects more favorable to
Borrower as a result of Borrower’s voluntary agreement to the prepayment premium
provisions.

          11.     Costs and Expenses. Borrower shall pay on demand all expenses
and costs, including fees and out-of-pocket expenses of attorneys and expert
witnesses and costs of investigation, incurred by Lender as a result of any
default under this Note or in connection with efforts to collect any amount due
under this Note, or to enforce the provisions of any of the other Loan
Documents, including those incurred in post-judgment collection efforts and in
any bankruptcy proceeding (including any action for relief from the automatic
stay of any bankruptcy proceeding) or judicial or non-judicial foreclosure
proceeding.

          12.      Forbearance. Any forbearance by Lender in exercising any
right or remedy under this Note, the Security Instruments, or any other Loan
Document or otherwise afforded by applicable law, shall not be a waiver of or
preclude the exercise of that or any other right or remedy. The acceptance by
Lender of any payment after the due date of such payment, or in an amount which
is less than the required payment, shall not be a waiver of Lender’s right to
require prompt payment when due of all other payments or to exercise any right
or remedy with respect to any failure to make prompt payment. Enforcement by
Lender of any security for Borrower’s obligations under this Note shall not
constitute an election by Lender of remedies so as to preclude the exercise of
any other right or remedy available to Lender.

          13.     Waivers. Except as expressly provided in the Master Agreement,
presentment, demand, notice of dishonor, protest, notice of acceleration, notice
of intent to demand or accelerate payment or maturity, presentment for payment,
notice of nonpayment, grace, and diligence in collecting the Indebtedness are
waived by Borrower and all endorsers and guarantors of this Note and all other
third party obligors.

          14.     Loan Charges. Borrower agrees to pay an effective rate of
interest equal to the sum of the interest rate provided for in this Note and any
additional rate of interest resulting from any other charges of interest or in
the nature of interest paid or to be paid in connection with the loan evidenced
by this Note and any other fees or amounts to be paid by Borrower pursuant to
any of the other Loan Documents. Neither this Note nor any of the other Loan
Documents shall be construed to create a contract for the use, forbearance or
detention of money requiring payment of interest at a rate greater than the
maximum interest rate permitted to be charged under applicable law. If any
applicable law limiting the amount of interest or other charges permitted to be
collected from Borrower in connection with the Loan is interpreted so that any
interest or other charge provided for in any Loan Document, whether considered
separately or together with other charges provided for in any other Loan
Document, violates that law, and Borrower is entitled to the benefit of that
law, that interest or charge is hereby reduced to the extent necessary to
eliminate that violation. The amounts, if any, previously paid to Lender in
excess of the permitted amounts shall be applied by Lender to reduce the unpaid
principal balance of this Note. For the purpose of determining whether any
applicable law limiting the

B-6

--------------------------------------------------------------------------------

amount of interest or other charges permitted to be collected from Borrower has
been violated, all Indebtedness that constitutes interest, as well as all other
charges made in connection with the Indebtedness that constitute interest, shall
be deemed to be allocated and spread ratably over the stated term of the Note.
Unless otherwise required by applicable law, such allocation and spreading shall
be effected in such a manner that the rate of interest so computed is uniform
throughout the stated term of the Note.

          15.     Commercial Purpose. Borrower represents that the Indebtedness
is being incurred by Borrower solely for the purpose of carrying on a business
or commercial enterprise, and not for personal, family or household purposes.

          16.     Counting of Days. Except where otherwise specifically
provided, any reference in this Note to a period of “days” means calendar days,
not Business Days.

          17.     Governing Law; Consent to Jurisdiction and Venue; WAIVER OF
TRIAL BY JURY. The provisions of Section 23.06 of the Master Agreement (entitled
“Choice of Law; Consent to Jurisdiction; Waiver of Jury Trial”) are hereby
incorporated into this Note by this reference to the fullest extent as if the
text of such Section were set forth in its entirety herein.

          18.     Captions. The captions of the paragraphs of this Note are for
convenience only and shall be disregarded in construing this Note.

          19.     Notices. All notices, demands and other communications
required or permitted to be given by Lender to Borrower pursuant to this Note
shall be given in accordance with Section 23.08 of the Master Agreement.

          20.     Security for this Note. The indebtedness evidenced by this
Note is secured by other Security Documents executed by Borrower or its
Affiliates. Reference is made hereby to the Master Agreement and the Security
Documents for additional rights and remedies of Lender relating to the
indebtedness evidenced by this Note. Each Security Document shall be released in
accordance with the provisions of the Master Agreement and the Security
Documents.

          21.     Fixed Facility. This Note is issued as part of the Fixed
Facility established in accordance with the terms of the Master Agreement.
Borrower may not re-borrow any amounts under this Note which it has previously
borrowed and repaid under this Note.

          22.     Cross-Default with Master Agreement. The occurrence of an
Event of Default under the Master Agreement shall constitute an “Event of
Default” under this Note, and, accordingly, upon the occurrence of an Event of
Default under the Master Agreement, the entire principal amount outstanding
hereunder and accrued interest thereon shall at once become due and payable, at
the option of the holder hereof.

B-7

--------------------------------------------------------------------------------

          IN WITNESS WHEREOF, Borrower has signed and delivered this Note under
seal or has caused this Note to be signed and delivered under seal by its duly
authorized representative. Borrower intends that this Note shall be deemed to be
signed and delivered as a sealed instrument.

 

 

 

 

 

 

MID-AMERICA APARTMENTS, L.P., a Tennessee
limited partnership

 

 

 

 

By:

Mid-America Apartment Communities, Inc., a Tennessee corporation, its general
partner

 

 

 

SEAL

 

By:

 

 

 

 

 

 

 

Name:

 

 

 

 

 

 

 

Title:

 

 

 

 

 

 

 

 

 

MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation

 

 

SEAL

By:

 

 

 

 

 

Name:

 

 

 

 

 

Title:

 

 

 

 

 

 

 

B-8

--------------------------------------------------------------------------------

          Pay to the order of _________________, without recourse.

 

 

 

 

 

PRUDENTIAL MULTIFAMILY MORTGAGE,
INC., a Delaware corporation

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

Name:

 

 

 

 

 

 

 

Title:

 

 

 

 

 

 

B-9

--------------------------------------------------------------------------------

ATTACHED SCHEDULES. The following Schedules are attached to this Note:

 

 

 

 

 

x

 

Schedule A Prepayment Premium (required)

 

 

 

o

 

Schedule B Modifications to Multifamily Note

B-10

--------------------------------------------------------------------------------

SCHEDULE A

PREPAYMENT PREMIUM

Any prepayment premium payable under Paragraph 10 of this Note shall be computed
as follows:

 

 

 

 

(a)

If the prepayment is made at any time after the date of this Note and before the
last calendar day of ____________, ____ (“Yield Maintenance Period End Date”)
[insert the appropriate month and year, six months prior to the Maturity Date],
the prepayment premium shall be the greater of:

 

 

 

 

 

 

 

(i)

1% of the amount of principal being prepaid; or

 

 

 

 

 

 

 

(ii)

The product obtained by multiplying:

 

 

 

 

 

(A)

the amount of principal being prepaid,

 

 

 

 

 

 

 

 

by

 

 

 

 

 

 

 

 

 

 

 

(B)

the difference obtained by subtracting from the interest rate on this Note the
yield rate (the “Yield Rate”) on the __________% U.S. Treasury Security due
_____________________ (the “Specified U.S. Treasury Security”), as the Yield
Rate is reported in The Wall Street Journal on the twenty-fifth Business Day
preceding (x) the Intended Prepayment Date, or (y) the date Lender accelerates
the Loan or otherwise accepts a prepayment pursuant to Paragraph 10(a)(3) of
this Note,

 

 

 

 

 

 

 

 

 

by

 

 

 

 

 

 

 

 

 

 

(C)

the present value factor calculated using the following formula:

 

 

 

 

 

 

 

 

1 - (1 + r)-n/12

 

 

 

 

 

 

 

 

 

r

 

 

 

 

 

 

 

 

 

[r = Yield Rate

B-11

--------------------------------------------------------------------------------

 

 

 

 

 

 

 

 

n =

the number of months remaining between (1) either of the following: (x) in the
case of a voluntary prepayment, the last calendar day of the calendar month
during which the prepayment is made, or (y) in any other case, the date on which
Lender accelerates the unpaid principal balance of this Note and (2) the Yield
Maintenance Period End Date]

 

 

 

 

 

 

 

In the event that no Yield Rate is published for the Specified U.S. Treasury
Security, then the nearest equivalent U.S. Treasury Security shall be selected
at Lender’s discretion. If the publication of such Yield Rates in The Wall
Street Journal is discontinued, Lender shall determine such Yield Rates from
another source selected by Lender.

 

 

 

 

 

 

 

 

(b)

If the prepayment is made on or after the Yield Maintenance Period End Date but
before the last calendar day of the 4th month prior to the month in which the
Maturity Date occurs, the prepayment premium shall be 1% of the amount of
principal being prepaid.

 

 

 

 

(c)

Notwithstanding the provisions of Paragraph 10(a) of this Note, no prepayment
premium shall be payable with respect to any prepayment made on or after the
last calendar day of the 4th month prior to the month in which the Maturity Date
occurs.

 

 

 

 

 

 

 

 

 

INITIAL(S)

 

 

 

 

 

 

 

 

 

 

 

INITIAL(S)

 

 

B-12

--------------------------------------------------------------------------------

EXHIBIT C TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

INTENTIONALLY OMITTED

--------------------------------------------------------------------------------

EXHIBIT D TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

COMPLIANCE CERTIFICATE

     The undersigned (individually and collectively, the “Borrower Parties”)
hereby certify to Prudential Multifamily Mortgage, Inc., a Delaware corporation
(the “Lender”) and Fannie Mae as follows:

          Section 1.     Master Agreement. The Borrower Parties are parties to
that certain Third Amended and Restated Master Credit Facility Agreement, dated
as of March 30, 2004 by and among the Borrower Parties and the Lender (as
amended from time to time, the “Master Agreement”). The rights of the Lender
under the Master Agreement have been assigned to Fannie Mae. This Certificate is
issued pursuant to the terms of the Master Agreement.

          Section 2.     Satisfaction of Conditions. The Borrower Parties each
hereby represents, warrants and covenants to the Lender that all conditions to
the Request with respect to which this Certificate is issued have been
satisfied.

          Section 3.     Capitalized Terms. All capitalized terms used but not
defined in this Certificate shall have the meanings ascribed to such terms in
the Master Agreement.

 

 

 

Dated:

________________________

 

 

 

 

 

 

THE BORROWER PARTIES:

 

 

 

 

MID-AMERICA APARTMENT COMMUNITIES,
INC., a Tennessee corporation

 

 

 

 

 

By:

 

 

 

 

 

 

 

 

          Simon R.C. Wadsworth

 

 

 

          Executive Vice President

 

 

 

 

 

 

MID-AMERICA APARTMENTS, L.P.,
a Tennessee limited partnership

 

 

 

 

 

By:

Mid-America Apartment Communities, Inc.,
a Tennessee corporation, its general partner

D-1

--------------------------------------------------------------------------------

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

 

 

 

          Simon R.C. Wadsworth

 

 

 

 

          Executive Vice President

 

 

 

 

 

 

 

MID-AMERICA APARTMENTS OF TEXAS, L.P.,
a Texas limited partnership

 

 

 

 

 

 

By:

MAC of Delaware, Inc., a Delaware corporation,
its general partner

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

 

 

 

Name:

 

 

 

 

 

 

 

 

 

 

Its:

 

 

 

 

 

 

 

 

D-2

--------------------------------------------------------------------------------

EXHIBIT E TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

SAMPLE FACILITY DEBT SERVICE

 

 

 

 

 

For this example:

 

 

 

 

 

 

 

 

 

- Total Credit Facility Commitment amount is

 

$

120,000,000

 

- Variable Facility Commitment amount is

 

$

10,000,000

 

- Fixed Facility Commitment amount is

 

$

110,000,000

 

- Total Variable Facility Advances outstanding is

 

$

10,000,000

 

- Total Fixed Facility Advances outstanding is

 

$

110,000,000

 

- Unused Capacity is

 

 

0

 

 

- Variable Facility Coupon Rate is

 

 

3.0

%

- Fixed Facility Coupon Rate is

 

 

6.0

%

- Fixed Facility Amortization Period is

 

 

30 years

 

- Standby Fee is

 

 

15 bp/yr.

 

 

 

 

 

 

Then:

 

 

 

 

 

 

 

 

 

Facility Debt Service allocable to Variable Facility Advances:

 

 

 

 

$110,000,000 @ 3.0%, 30 year amortization =

 

$

TBD

 

 

 

 

 

 

Facility Debt Service allocable to Fixed Facility Advances:

 

 

 

 

$10,000,000 @ 6% 30 year amortization =

 

$

TBD

 

 

 

 

 

 

Standby Fee: $0 X 15 bp =

 

$

0

 

 

 

 

 

 

Facility Debt Service =

 

$

TBD per month

 

E-1

--------------------------------------------------------------------------------

EXHIBIT F-1 TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

ORGANIZATIONAL CERTIFICATE
(REIT AND OP)

          I, the undersigned, Simon R.C. Wadsworth, hereby certify as follows:

          Section 1.     Position. I am the Executive Vice President of
Mid-America Apartment Communities, Inc., a Tennessee corporation (the “REIT”),
and I am authorized to deliver this Certificate on behalf of the REIT for itself
and as the sole general partner of Mid-America Apartments, L.P., a Tennessee
limited partnership (the “OP”).

          Section 2.     Master Agreement. The REIT, OP and others (the
“Borrower Parties”) entered into that certain Third Amended and Restated Master
Credit Facility Agreement, dated as of March 30, 2004, by and among the Borrower
Parties and Prudential Multifamily Mortgage, Inc., a Delaware corporation (the
“Lender”) (as amended from time to time, the “Master Agreement”). The rights of
the Lender under the Master Agreement have been assigned to Fannie Mae. This
Certificate is issued pursuant to the terms of the Master Agreement.

          Section 3.     Due Authorization of Request. I hereby certify that no
action by the shareholders of the REIT and no action of the partners of the OP
is necessary to duly authorize the execution and delivery of, and the
consummation of the transaction contemplated by, the Request with respect to
which this Certificate is delivered, or, if necessary, that attached as Exhibit
A to this Certificate is a true copy of resolutions duly adopted at a meeting of
the board of directors, partners or members, as the case may be, that authorize
the action. Any such resolutions are in full force and effect and are unmodified
as of the date of this Certificate.

          Section 4.     No Changes. Since the date of the most recent
Organizational Certificate delivered to the Lender, or, if there are none, since
the date of the Master Agreement, there have been no changes in any of the
Organizational Documents of the REIT or the OP, except as set forth in Exhibit B
to this Certificate, and the REIT and the OP remain in good standing or are duly
qualified in the jurisdictions in which it is required to be in good standing or
duly qualified under the terms of the Master Agreement.

          Section 5.     Incumbency Certificate. One or more of the persons
authorized to execute and deliver any documents required to be delivered in
connection with the Request are set forth on the attached Schedule.

          Section 6.     Capitalized Terms. All capitalized terms used but not
defined in this Certificate shall have the meanings ascribed to such terms in
the Master Agreement.

Dated: __________________, ______

[The rest of this page has been intentionally left blank.]

F-1-1

--------------------------------------------------------------------------------

 

 

 

 

 

 

MID-AMERICA APARTMENT COMMUNITIES,
INC., a Tennessee corporation

 

 

 

 

 

By:

 

 

 

 

 

 

 

 

Simon R.C. Wadsworth

 

 

 

Executive Vice President

 

 

 

 

MID-AMERICA APARTMENTS, L.P.,
a Tennessee limited partnership

 

 

 

 

 

By:

Mid-America Apartment Communities, Inc.,
a Tennessee corporation, its general partner

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

 

 

 

          Simon R.C. Wadsworth

 

 

 

 

          Executive Vice President

 

F-1-2

--------------------------------------------------------------------------------

EXHIBIT A

(See Attached Resolutions, if any)

--------------------------------------------------------------------------------

EXHIBIT B

None

--------------------------------------------------------------------------------

EXHIBIT F-2 TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

ORGANIZATIONAL CERTIFICATE
(GUARANTOR)

          I, the undersigned, _____________________, hereby certify as follows:

          Section 1.      Position. I am the ____________________ of MAC of
Delaware, Inc., a Delaware corporation (the “Corporation”) the sole general
partner of MID-AMERICA APARTMENTS OF TEXAS, L.P., a Texas limited partnership
(the “Partnership”, together with the Corporation, the “Borrower Party”), and I
am authorized to deliver this Certificate on behalf of the Borrower Party.

          Section 2.      Master Agreement. The Partnership is a guarantor under
that certain Third Amended and Restated Master Credit Facility Agreement, dated
as of March 30, 2004, by and among Mid-America Apartment Communities, Inc., a
Tennessee corporation, and Mid-America Apartments, L.P., a Tennessee limited
partnership (together, the “Borrower”) and Prudential Multifamily Mortgage,
Inc., a Delaware corporation (the “Lender”) (as amended from time to time, the
“Master Agreement”). The rights of the Lender under the Master Agreement have
been assigned to Fannie Mae. This Certificate is issued pursuant to the terms of
the Master Agreement.

          Section 3.      Due Authorization of Request. I hereby certify that no
action by the shareholders of the Corporation and no action of the partners of
the Partnership is necessary to duly authorize the execution and delivery of,
and the consummation of the transaction contemplated by, the Expansion Request
dated as of even date herewith, and the Collateral Addition Request dated as of
even date herewith with respect to which this Certificate is delivered, or, if
necessary, that attached as Exhibit A to this Certificate is a true copy of
resolutions duly adopted at a meeting of the board of directors, partners or
members, as the case may be, that authorize the action. Any such resolutions are
in full force and effect and are unmodified as of the date of this Certificate.

          Section 4.      No Changes. Since the date of the most recent
Organizational Certificate delivered to the Lender, or, if there are none, since
the date of the Master Agreement, there have been no changes in any of the
Organizational Documents of the Borrower Party, except as set forth in Exhibit B
to this Certificate, and the Borrower Party remains in good standing or is duly
qualified in the jurisdictions in which it is required to be in good standing or
duly qualified under the terms of the Master Agreement.

          Section 5.      Incumbency Certificate. One or more of the persons
authorized to execute and deliver any documents required to be delivered in
connection with the Requests are set forth in the resolutions attached hereto.

          Section 6.      Capitalized Terms. All capitalized terms used but not
defined in this Certificate shall have the meanings ascribed to such terms in
the Master Agreement.

F-2-1

--------------------------------------------------------------------------------

Dated as of ____________________, ________

F-2-2

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[SIGNATURE PAGE TO ORGANIZATIONAL CERTIFICATE (GUARANTOR)]

 

 

 

 

MID-AMERICA APARTMENTS OF TEXAS, L.P.,

 

a Texas limited partnership

 

 

 

By:

MAC of Delaware, Inc.,

 

 

a Delaware corporation, its general partner

 

 

 

 

 

By:

 

 

 

 

 

 

 

Name:

 

 

 

 

 

 

 

Its:

 

 

 

 

 

 

 

 

 

 

F-2-3

--------------------------------------------------------------------------------

EXHIBIT A

(See Attached Resolutions, if any)

--------------------------------------------------------------------------------

EXHIBIT B

None

--------------------------------------------------------------------------------

EXHIBIT G TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

INTENTIONALLY OMITTED

--------------------------------------------------------------------------------

EXHIBIT H TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

FUTURE ADVANCE AND REVOLVING CREDIT ENDORSEMENT

Attached to and made a part of ____________________ Policy No.

Said policy is amended by adding the following:

 

 

 

1.

The Company acknowledges that the insured mortgage identified in Schedule A of
this Policy secures future advances of principal or a revolving credit line and
provides for changes in the rate of interest calculated pursuant to a formula
contained in the insured mortgage. By this endorsement, the Company insures
against loss or damage which the insured sustains as a result of:

 

 

a.

 

The invalidity or unenforceability of the lien of the insured mortgage resulting
from the provision in the insured mortgage providing for changes in the rate of
interest.

 

 

 

b.

 

The loss of priority of the lien of the insured mortgage as security for the
unpaid principal balance of the loan, together with interest as changed in
accordance with the provisions of the insured mortgage, which loss of priority
is caused by changes in the rate of interest as provided in the insured
mortgage.

 

 

 

c.

 

The invalidity or unenforceability of the lien of the insured mortgage as
security for future advances of principal indebtedness.

 

 

 

d.

 

The invalidity or unenforceability of the lien of the insured mortgage as a
result of fluctuations of the unpaid balance of the principal indebtedness.

 

 

 

e.

 

The priority of any lien or encumbrance over the lien of the insured mortgage as
security for the principal indebtedness and any future advances of principal
indebtedness made after the date of the policy.

 

 

 

2.

This endorsement is made a part of the Policy and the insurance affected by it
is subject to: (i) the Exclusions from Coverage except Paragraph 3(d), (ii) the
provisions of the Conditions and Stipulations except Paragraph 8(d) and (iii)
the Exceptions contained in Schedule B of the Policy. In addition, it does not
insure against loss or damage resulting from:

 

 

 

i.

Future advances of principal indebtedness made after Petition for Relief under
the Bankruptcy Code (11 U.S.C.) by or on behalf of the mortgagor.

 

 

 

 

ii.

The loss of priority of future advances of principal indebtedness as a result of
taxes, assessments, or notice of a federal tax lien filed against the mortgagor.

H-1

--------------------------------------------------------------------------------

 

 

 

 

iii.

The loss of priority of future advances of principal indebtedness made after the
vestee shown in Schedule A is divested as owner of the estate or interest
covered by this Policy.

 

 

 

 

iv.

The loss of priority of future advances of principal indebtedness made during
any period in which a declared default exists under the terms of the insured
mortgage.

 

 

 

 

v.

The loss of priority of a future advance of principal indebtedness made after
the insured has actual knowledge of the existence of liens, encumbrances or
other matters affecting the insured premises described in Schedule A intervening
between the date of the Policy and that future advance, as to such intervening
lien, encumbrance or other matters.

 

 

 

 

vi.

The fact that the outstanding balance of the indebtedness secured by the
mortgage is reduced to a zero balance at any time, unless the recorded mortgage
provides that the reduction of the indebtedness to a zero balance shall not
cause the mortgage to become extinguished by operation of law.

The total liability of the Company under said policy, binder or commitment and
under this and any prior endorsements thereto shall not exceed, in the
aggregate, the amount of liability stated on the face of said policy, binder or
commitment, as the same may be specifically amended in dollar amount by this or
any prior endorsements, and the costs which the Company is obligated to pay
under the Conditions and Stipulations of the policy.

This endorsement is made a part of said policy, binder or commitment and is
subject to all the terms and provisions thereof, except as modified by the
provisions hereof.

Nothing herein contained shall be construed as extending or changing the
effective date of the aforesaid policy, binder or commitment unless otherwise
expressly stated.

[The rest of this page has been left blank intentionally.]

H-2

--------------------------------------------------------------------------------

          IN WITNESS WHEREOF, the Company has caused this Endorsement to be
signed and sealed as of the ____ day of ____________, ______, to be valid when
countersigned by an authorized officer or agent of the Company, all in
accordance with its By-Laws.

 

 

 

 

 

Issued at  

 

 

 

 

 

 

 

 

 

 

 

 

 

COUNTERSIGNED:

 

 

, President

 

 

 

 

 

 

 

 

 

 

Attest:

 

 

 

 

 

 

, Secretary

Authorized Officer or Agent

 

 

 

H-3

--------------------------------------------------------------------------------

EXHIBIT I TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

VARIABLE FACILITY NOTE

US $

 

 

 

 

 

 

 

          FOR VALUE RECEIVED, the undersigned (collectively, the “Borrower”)
promise to pay to the order of Prudential Multifamily Mortgage, Inc., a Delaware
corporation (“Lender”), the principal sum of ______________(US $_________), with
interest accruing on each Variable Facility Advance from the date of
disbursement until fully disbursed at an annual rate as calculated in Section 3
hereof.

          This Note is executed and delivered by Borrower pursuant to that
certain Third Amended and Restated Master Credit Facility Agreement, dated as of
March 30, 2004, by and among Borrower, Lender and Mid-America Apartments of
Texas, L.P., a Texas limited partnership (as amended from time to time, the
“Master Agreement”), to evidence the obligation of Borrower to repay Variable
Advances made by Lender to Borrower in accordance with the terms of the Master
Agreement. This Note is entitled to the benefit and security of the Loan
Documents provided for in the Master Agreement, to which reference is hereby
made for a statement of all of the terms and conditions under which the Variable
Advances evidenced hereby is made. The Master Agreement requires certain of the
terms of each Variable Advance to be evidenced by an Advance Confirmation
Instrument, and reference is hereby made to each such Advance Confirmation
Instrument for such terms.

          This Note is issued as part of a Variable Facility established in
accordance with the terms of the Master Agreement. Subject to the terms,
conditions and limitations of Article II of the Master Agreement, Borrower may
re-borrow any amounts under this Note which they have previously borrowed and
repaid under this Note.

          1.      Defined Terms. As used in this Note, (i) the term “Lender”
means the holder of this Note, (ii) the term “Indebtedness” means the principal
of, interest on, or any other amounts due at any time under, this Note, the
Security Instruments or any other Loan Document, including prepayment premiums,
late charges, default interest, and advances to protect the security of the
Security Instruments under Section 12 of the Security Instruments, and (iii) a
“Business Day” means any day other than a Saturday, Sunday or any day on which
Lender is not open for business. Event of Default and other capitalized terms
used but not defined in this Note shall have the meanings given to such terms in
the Master Agreement (or, if not defined in the Master Agreement, as defined in
the Security Instruments (as defined in Paragraph 5).

          2.      Address for Payment. All payments due under this Note shall be
payable at 2200 Ross Avenue, Suite 4900E, Dallas, Texas 75201, or such other
place as may be designated by written notice to Borrower from or on behalf of
Lender.

I-1

--------------------------------------------------------------------------------

          3.      Payment of Principal and Interest. Principal and interest
shall be paid as follows:

          (a)     This Note shall evidence Variable Advances made from time to
time under the Master Agreement. Each Variable Advance shall bear interest at a
rate determined in accordance with Section 4.01 of the Master Agreement.

          (b)     Borrower shall pay imputed interest on each Variable Advance
in advance in the form of a Discount in accordance with Section 2.04(a) of the
Master Agreement (except that Borrower shall pay actual interest on the Variable
Advance for the partial month period, if any, described in Section 2.04(b) of
the Master Agreement, in accordance with the terms of such Section). If not
sooner paid, the entire principal amount of each Variable Advance shall be due
and payable on the maturity date of the applicable Variable Advance (the
“Maturity Date”) in accordance with Section 2.03 of the Master Agreement. In
addition to payment of principal and the Discount, the Borrower shall pay the
Variable Facility Fee due on each Variable Advance in accordance with Section
2.04(c) of the Master Agreement. No Variable Advance may have a Maturity Date
later than, and any then outstanding Variable Advance shall be due and payable
in full on, the related Variable Facility Termination Date.

          4.     Application of Payments. If at any time Lender receives, from
Borrower or otherwise, any amount applicable to the Indebtedness that is less
than all amounts due and payable at such time, Lender may apply that payment to
amounts then due and payable in any manner and in any order determined by
Lender, in Lender’s discretion. Borrower agrees that neither Lender’s acceptance
of a payment from Borrower in an amount that is less than all amounts then due
and payable nor Lender’s application of such payment shall constitute or be
deemed to constitute either a waiver of the unpaid amounts or an accord and
satisfaction.

          5.      Security. The Indebtedness is secured, among other things, by
the Security Instruments described in the Master Agreement and reference is made
to the Security Instruments for other rights of Lender concerning the collateral
for the Indebtedness.

          6.      Acceleration. If an Event of Default has occurred and is
continuing, the entire unpaid principal balance, any accrued interest, the
prepayment premium payable under Paragraph 10, if any, and all other amounts
payable under this Note and any other Loan Document shall at once become due and
payable, at the option of Lender, without any prior notice to Borrower. Lender
may exercise this option to accelerate regardless of any prior forbearance.

          7.      Late Charge. If any monthly installment due hereunder is not
received by Lender on or before the 10th day of each month or if any other
amount payable under this Note or under the Security Instruments or any other
Loan Document is not received by Lender within 10 days after the date such
amount is due, counting from and including the date such amount is due, Borrower
shall pay to Lender, immediately and without demand by Lender, a late charge
equal to 5 percent of such monthly installment or other amount due. Borrower
acknowledges that its failure to make timely payments will cause Lender to incur
additional expenses in servicing and processing the loan evidenced by this Note
(the “Loan”), and that it is extremely difficult and

I-2

--------------------------------------------------------------------------------

impractical to determine those additional expenses. Borrower agrees that the
late charge payable pursuant to this Paragraph represents a fair and reasonable
estimate, taking into account all circumstances existing on the date of this
Note, of the additional expenses Lender will incur by reason of such late
payment. The late charge is payable in addition to, and not in lieu of, any
interest payable at the Default Rate pursuant to Paragraph 8.

          8.      Default Rate. So long as any monthly installment or any other
payment due under this Note remains past due for 30 days or more, interest under
this Note shall accrue on the unpaid principal balance from the earlier of the
due date of the first unpaid monthly installment or other payment due, as
applicable, at a rate (the “Default Rate”) equal to the lesser of 4 percentage
points above the rate stated in the first paragraph of this Note or the maximum
interest rate which may be collected from Borrower under applicable law. If the
unpaid principal balance and all accrued interest are not paid in full on the
Maturity Date, the unpaid principal balance and all accrued interest shall bear
interest from the Maturity Date at the Default Rate. Borrower also acknowledges
that its failure to make timely payments will cause Lender to incur additional
expenses in servicing and processing the Loan, that, during the time that any
monthly installment or payment under this Note is delinquent for more than 30
days, Lender will incur additional costs and expenses arising from its loss of
the use of the money due and from the adverse impact on Lender’s ability to meet
its other obligations and to take advantage of other investment opportunities,
and that it is extremely difficult and impractical to determine those additional
costs and expenses. Borrower also acknowledges that, during the time that any
monthly installment or other payment due under this Note is delinquent for more
than 30 days, Lender’s risk of nonpayment of this Note will be materially
increased and Lender is entitled to be compensated for such increased risk.
Borrower agrees that the increase in the rate of interest payable under this
Note to the Default Rate represents a fair and reasonable estimate, taking into
account all circumstances existing on the date of this Note, of the additional
costs and expenses Lender will incur by reason of the Borrower’s delinquent
payment and the additional compensation Lender is entitled to receive for the
increased risks of nonpayment associated with a delinquent loan.

          9.      Limits on Personal Liability.

          The provisions of Article 22.01 of the Master Agreement (entitled
“Limits on Personal Liability”) are hereby incorporated into this Note by this
reference to the fullest extent as if the text of such Article were set forth in
its entirety herein.

          10.     Voluntary and Involuntary Prepayments.

                   Pursuant to the terms of the Master Agreement, the Borrower
shall pay the entire amount of the Discount on any Variable Advance in advance.
Accordingly, any Variable Advance may be prepaid in whole or in part and at any
time without penalty. Borrower shall give Lender five Business Days’ advance
notice of any prepayment.

          11.     Costs and Expenses. Borrower shall pay on demand all expenses
and costs, including fees and out-of-pocket expenses of attorneys and expert
witnesses and costs of investigation, incurred by Lender as a result of any
default under this Note or in connection with

I-3

--------------------------------------------------------------------------------

efforts to collect any amount due under this Note, or to enforce the provisions
of any of the other Loan Documents, including those incurred in post-judgment
collection efforts and in any bankruptcy proceeding (including any action for
relief from the automatic stay of any bankruptcy proceeding) or judicial or
non-judicial foreclosure proceeding.

          12.     Forbearance. Any forbearance by Lender in exercising any right
or remedy under this Note, the Security Instrument, or any other Loan Document
or otherwise afforded by applicable law, shall not be a waiver of or preclude
the exercise of that or any other right or remedy. The acceptance by Lender of
any payment after the due date of such payment, or in an amount which is less
than the required payment, shall not be a waiver of Lender’s right to require
prompt payment when due of all other payments or to exercise any right or remedy
with respect to any failure to make prompt payment. Enforcement by Lender of any
security for Borrower’s obligations under this Note shall not constitute an
election by Lender of remedies so as to preclude the exercise of any other right
or remedy available to Lender.

          13.     Waivers. Except as expressly provided in the Master Agreement,
presentment, demand, notice of dishonor, protest, notice of acceleration, notice
of intent to demand or accelerate payment or maturity, presentment for payment,
notice of nonpayment, grace, and diligence in collecting the Indebtedness are
waived by Borrower and all endorsers and guarantors of this Note and all other
third party obligors.

          14.     Loan Charges. Borrower agrees to pay an effective rate of
interest equal to the sum of the interest rate provided for in this Note and any
additional rate of interest resulting from any other charges of interest or in
the nature of interest paid or to be paid in connection with the loan evidenced
by this Note and any other fees or amounts to be paid by Borrower pursuant to
any of the other Loan Documents. Neither this Note nor any of the other Loan
Documents shall be construed to create a contract for the use, forbearance or
detention of money requiring payment of interest at a rate greater than the
maximum interest rate permitted to be charged under applicable law. If any
applicable law limiting the amount of interest or other charges permitted to be
collected from Borrower in connection with the Loan is interpreted so that any
interest or other charge provided for in any Loan Document, whether considered
separately or together with other charges provided for in any other Loan
Document, violates that law, and Borrower is entitled to the benefit of that
law, that interest or charge is hereby reduced to the extent necessary to
eliminate that violation. The amounts, if any, previously paid to Lender in
excess of the permitted amounts shall be applied by Lender to reduce the unpaid
principal balance of this Note. For the purpose of determining whether any
applicable law limiting the amount of interest or other charges permitted to be
collected from Borrower has been violated, all Indebtedness that constitutes
interest, as well as all other charges made in connection with the Indebtedness
that constitute interest, shall be deemed to be allocated and spread ratably
over the stated term of the Note. Unless otherwise required by applicable law,
such allocation and spreading shall be effected in such a manner that the rate
of interest so computed is uniform throughout the stated term of the Note.

          15.     Commercial Purpose. Borrower represents that the Indebtedness
is being incurred by Borrower solely for the purpose of carrying on a business
or commercial enterprise, and not for personal, family or household purposes.

I-4

--------------------------------------------------------------------------------

          16.     Counting of Days. Except where otherwise specifically
provided, any reference in this Note to a period of “days” means calendar days,
not Business Days.

          17.     Governing Law; Consent to Jurisdiction; Waiver of Jury Trial.
The provisions of Section 23.06 of the Master Agreement (entitled “Choice of
Law; Consent to Jurisdiction; Waiver of Jury Trial”) are hereby incorporated
into this Note by this reference to the fullest extent as if the text of such
Section were set forth in its entirety herein.

          18.     Captions. The captions of the paragraphs of this Note are for
convenience only and shall be disregarded in construing this Note.

          19.     Notices. All notices, demands and other communications
required or permitted to be given by Lender to Borrower pursuant to this Note
shall be given in accordance with Section 23.08 of the Master Agreement.

          20.     Cross-Default with Master Agreement. The occurrence of an
Event of Default under the Master Agreement shall constitute an “Event of
Default” under this Note, and, accordingly, upon the occurrence of an Event of
Default under the Master Agreement, the entire principal amount outstanding
hereunder and accrued interest thereon shall at once become due and payable, at
the option of the holder hereof.

          21.     Advance Confirmation Instruments; Accounting for Variable
Advances. The terms of the Master Agreement and this Note govern the repayment,
and all other terms relating to each Variable Advance. However, Borrower shall
execute an Advance Confirmation Instrument to create a physical instrument
evidencing the Variable Advance. The Advance Confirmation Instrument for a
Variable Advance executed by Borrower in accordance with Section 4.02 of the
Master Agreement shall set forth the amount, term, Discount, Closing Date and
certain other terms of the Variable Advance. The Advance Confirmation Instrument
shall conclusively establish each of the terms described in the preceding
sentence, absent manifest error. The Variable Advance evidenced by the Advance
Confirmation Instrument does not represent a separate indebtedness from that
evidenced by this Note. In making proof of this Note, no other documents other
than this Note shall be required. In making proof of the amount and terms of the
outstanding Variable Advances under this Note, this Note, the Advance
Confirmation Instruments for the Variable Advances, and Lender’s records
concerning payments made by Borrower under this Note, shall be conclusive
evidence of the terms and outstanding amounts of each Variable Advance, absent
manifest error.

          23.     Priority of Advances. Each Variable Advance under this Note
shall be evidenced by an Advance Confirmation Instrument, and the lien of each
Security Document executed by Borrower from time to time to secure this Note,
shall secure each separate Advance (and the lien of each Security Instrument and
other Security Document executed by the Borrower to secure its obligations under
the Loan Documents) to the same extent and with the same effect as if the
Advance had been made (and any guaranty obligation had been incurred) on the
date on which (i) with respect to each other Security Instrument, the Security
Instrument is recorded in the land records of the jurisdiction in which the real
property covered by the Security Instrument

I-5

--------------------------------------------------------------------------------

is located, or (ii) with respect to each other Security Document, the date on
which the Security Document is executed and delivered to Lender.

          ATTACHED SCHEDULES. The following Schedules are attached to this Note:

           o      Schedule A Prepayment Premium

           o      Schedule B Modifications to Multifamily Note

I-6

--------------------------------------------------------------------------------

          IN WITNESS WHEREOF, Borrower has signed and delivered this Note under
seal or has caused this Note to be signed and delivered under seal by its duly
authorized representative. Borrower intends that this Note shall be deemed to be
signed and delivered as a sealed instrument.

 

 

 

 

 

MID-AMERICA APARTMENT COMMUNITIES,
INC., a Tennessee corporation

 

 

 

By:

 

 

 

 

 

Simon R.C. Wadsworth

 

 

Executive Vice President

 

 

 

 

MID-AMERICA APARTMENTS, L.P.,
a Tennessee limited partnership

 

 

 

By:

Mid-America Apartment Communities, Inc.,
a Tennessee corporation, its general partner

 

 

 

 

 

        By:

 

 

 

 

 

 

 

Simon R.C. Wadsworth

 

 

 

Executive Vice President

I-7

--------------------------------------------------------------------------------

          Pay to the order of _________________ without recourse.

 

 

 

 

PRUDENTIAL MULTIFAMILY MORTGAGE, INC.,
a Delaware corporation

 

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

 

Title:

 

 

 

 

 

 

 

I-8

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EXHIBIT J TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

TIE-IN ENDORSEMENT

To be annexed to and form a part of Policy No. ________________.

The said policy is hereby amended in the following manner:

The Company acknowledges that the land described in Schedule A of this policy is
part of the security for an indebtedness in the amount of $____________________
which indebtedness is also secured by mortgages or deeds of trust which are
insured concurrently by the following policies:

 

 

 

 

 

 

 

 

Policy No.

 

County

 

State

 

Amount

 

 

 

 

 

 

 

 

 

K-1

--------------------------------------------------------------------------------

Anything to the contrary notwithstanding in Paragraph 6(a)(ii) of the Conditions
and Stipulations of the Policy, the insurance coverage afforded in this Policy
is aggregated with the insurance coverage in all of the other policies
identified in this endorsement so the effective insurance coverage is
$___________________. The total liability of the Company under this and all
policies identified in this endorsement shall not exceed such amount, but its
liability in this Policy for the land described in Schedule A remains limited by
the provisions of Paragraph 6(a)(i) and 6(a)(iii) of the Conditions and
Stipulations of this Policy. Any payment by the Company on this or any of the
Policies listed in this Endorsement shall reduce pro tanto the liability of the
Company under all policies, and the amount so paid shall be deemed a payment
under all policies.

The total liability of the Company under said Policy and any prior endorsements
attached thereto shall not exceed, in the aggregate, the face amount of said
Policy, as the same may be specifically amended in dollar amount by this or any
prior endorsements, and the costs which the Company is obligated under the
provisions of said Policy to pay.

Nothing herein contained shall be construed as extending or changing the
effective date of said commitment or policy unless otherwise expressly stated.

This endorsement is made a part of said Policy and is subject to the exclusions,
schedules, endorsements, conditions, stipulations and terms thereof, except as
modified by the provisions hereof.

Executed this ____ day of ____________, ______

                        _________________________________

 

 

COUNTERSIGNED:

________________________,

President

___________________

 

 

 

______________________________

Attest:___________________, Secretary

Authorized Signatory

 

K-2

--------------------------------------------------------------------------------

EXHIBIT K TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

CONVERSION REQUEST

          THE MASTER AGREEMENT PURSUANT TO WHICH THIS REQUEST IS DELIVERED
REQUIRES THERE TO OCCUR AT A CLOSING TO BE HELD AT OFFICES DESIGNATED BY YOU ON
A CLOSING DATE SELECTED BY YOU, AND OCCURRING WITHIN 30 BUSINESS DAYS AFTER YOUR
RECEIPT OF THE CONVERSION REQUEST (OR ON SUCH OTHER DATE TO WHICH WE MAY AGREE),
AS LONG AS NONE OF THE LIMITATIONS CONTAINED IN SECTION 3.08 OF THE MASTER
AGREEMENT IS VIOLATED, AND ALL CONDITIONS CONTAINED IN SECTION 3.09 OF THE
MASTER AGREEMENT ARE SATISFIED.

____________________, ______

VIA: _______________________

Prudential Multifamily Mortgage, Inc.
c/o Prudential Asset Resources
2200 Ross Avenue, Suite 4900E
Dallas, Texas 75201
[Note: Subject to change in the event Lender or its address changes]

 

 

Re:

CONVERSION REQUEST issued pursuant to the Third Amended and Restated Master
Credit Facility Agreement, dated as of March 30, 2004, by and among the
undersigned (the “Borrower”), Mid-America Apartments of Texas, L.P., a Texas
limited partnership, and the Lender (as amended from time to time, the “Master
Agreement”).

Ladies and Gentlemen:

This constitutes a Conversion Request pursuant to the terms of the
above-referenced Master Agreement.

          Section 1.          Request. The Borrower hereby requests that there
occur a conversion of all or a portion of the Variable Advance to the Fixed
Facility Commitment in accordance with the terms of the Master Agreement.
Following is the information required by the Master Agreement with respect to
this Request:

 

 

 

          (a)          Designation of Amount of Conversion. The amount of the
conversion shall be $_________________________.

 

 

 

          (b)          Prepayment of Variable Advances. (If necessary) The
Variable Advances Outstanding which will be prepaid on the Closing Date for the
conversion are as follows:

 

 

Closing Date of Variable Advance:

___________________________________________

 

 

Maturity Date of Variable Advance:  

___________________________________________

K-3

--------------------------------------------------------------------------------

 

 

Amount of Advance:

________________________________

 

 

 

(Note: Any Fixed Facility Advances made in conjunction with a conversion of all
or a portion of the Variable Advance to the Fixed Facility Commitment must be
accompanied by a Future Advance Request and shall be reviewed in accordance with
the terms of the Master Agreement.)

 

 

 

          (c)          Accompanying Documents. All documents, instruments and
certificates required to be delivered pursuant to the conditions contained in
Section 3.09 of the Master Agreement, including (i) the Conversion Documents, as
well as (ii) a Compliance Certificate and (iii) an Organizational Certificate
will be delivered on or before the Closing Date.

          Section 2.          Capitalized Terms. All capitalized terms used but
not defined in this Request shall have the meanings ascribed to such terms in
the Master Agreement.

 

 

 

 

 

Sincerely,

 

 

 

  MID-AMERICA APARTMENT COMMUNITIES,
  INC., a Tennessee corporation

 

 

 

  By:

 

 

 

 

 

 

   Simon R.C. Wadsworth

 

 

   Executive Vice President

 

 

 

 

   MID-AMERICA APARTMENTS, L.P.,

 

   a Tennessee limited partnership

 

 

 

 

  By: 

   Mid-America Apartment Communities, Inc.,

 

 

   a Tennessee corporation, its general partner

 

 

 

 

 

   By: 

 

 

 

 

 

 

 

 

   Simon R.C. Wadsworth

 

 

 

   Executive Vice President

K-4

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EXHIBIT L TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

AMENDMENT TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

          THIS ____ AMENDMENT TO THIRD AMENDED AND RESTATED MASTER CREDIT
FACILITY AGREEMENT (the “Amendment”) is made as of the ____ day of
_______________, _____, by and among (i) MID-AMERICA APARTMENT COMMUNITIES,
INC., a Tennessee corporation (the “REIT”), MID-AMERICA APARTMENTS, L.P., a
Tennessee limited partnership (“OP”) (collectively, the REIT and OP are referred
to hereafter as the “Borrower”), MID-AMERICA APARTMENTS OF TEXAS, L.P., a Texas
limited partnership (“MAC of Texas” or the “Guarantor”; the Borrower and the
Guarantor being collectively referred to herein as the “Borrower Parties”); and
(ii) PRUDENTIAL MULTIFAMILY MORTGAGE, INC., a Delaware corporation (“Lender”).

RECITALS

          A.          The Borrower Parties and the Lender are parties to that
certain Third Amended and Restated Master Credit Facility Agreement, dated as of
March 30, 2004 (as amended from time to time, the “Master Agreement”).

          B.          All of the Lender’s right, title and interest in the
Master Agreement and the Loan Documents executed in connection with the Master
Agreement or the transactions contemplated by the Master Agreement have been
assigned to Fannie Mae pursuant to that certain Assignment of Collateral
Agreements and Other Loan Documents, dated as of August 22, 2002, that certain
Assignment of Collateral Agreements and Other Loan Documents, dated as of
December 10, 2003, and that Assignment of Collateral Agreements and Other Loan
Documents dated as of March 31, 2004 (collectively, the “Assignment”). Fannie
Mae has not assumed any of the obligations of the Lender under the Master
Agreement or the Loan Documents as a result of the Assignment. Fannie Mae has
designated the Lender as the servicer of the Advances contemplated by the Master
Agreement.

          C.          The parties are executing this Amendment pursuant to the
Master Agreement to reflect a conversion of all or a portion of a Variable
Advance to the Fixed Facility Commitment.

          NOW, THEREFORE, the parties hereto, in consideration of the mutual
promises and agreements contained in this Amendment and the Master Agreement,
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, hereby agree as follows:

          Section 1.          Conversion. The Variable Advance shall be reduced
by, and the Fixed Facility Commitment shall be increased by,
$____________________, and the definitions of “Variable Facility Commitment” and
“Fixed Facility Commitment” are hereby replaced in their entirety by the
following new definitions:

L-1

--------------------------------------------------------------------------------

 

 

 

          “Fixed Facility Commitment” means $________________, plus such amount
as the Borrower may elect to add to the Fixed Facility Commitment in accordance
with Articles III or VIII.

 

 

 

          “Variable Facility Commitment” means an aggregate amount of
$_______________, which shall be evidenced by the Variable Facility Note in the
form attached hereto as Exhibit I, plus such amount as the Borrower may elect to
add to the Variable Facility Commitment in accordance with Article VIII, and
plus such amount as the Borrower may elect to reborrow in accordance with
Section 2.08, less such amount as the Borrower may elect to convert from the
Variable Facility Commitment to the Fixed Facility Commitment in accordance with
Article III and less such amount by which the Borrower may elect to reduce the
Variable Facility Commitment in accordance with Article IX.

          Section 2.          Capitalized Terms. All capitalized terms used in
this Amendment which are not specifically defined herein shall have the
respective meanings set forth in the Master Agreement.

          Section 3.          Full Force and Effect. Except as expressly
modified by this Amendment, all terms and conditions of the Master Agreement
shall continue in full force and effect.

          Section 4.          Counterparts. This Amendment may be executed in
counterparts by the parties hereto, and each such counterpart shall be
considered an original and all such counterparts shall constitute one and the
same instrument.

[The rest of this page has been intentionally left blank.]

L-2

--------------------------------------------------------------------------------

          IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
an instrument under seal as of the day and year first above written.

 

 

 

 

 

 

MID-AMERICA APARTMENT COMMUNITIES,

 

INC., a Tennessee corporation

 

 

 

 

 

By:

 

 

 

 

 

 

   Simon R.C. Wadsworth

 

 

   Executive Vice President

 

 

 

 

 

MID-AMERICA APARTMENTS, L.P.,

 

a Tennessee limited partnership

 

 

 

 

 

By:

   Mid-America Apartment Communities, Inc.,

 

 

   a Tennessee corporation, its general partner

 

 

 

 

 

 

   By:

 

 

 

 

 

 

 

 

    Simon R.C. Wadsworth

 

 

 

    Executive Vice President

 

 

 

 

 

MID-AMERICA APARTMENTS OF TEXAS, L.P.,

 

a Texas limited partnership

 

 

 

 

 

By:

   MAC of Delaware, Inc., a Delaware corporation,

 

 

   its general partner

 

 

 

 

 

   By:

 

 

 

 

 

 

 

   Name:

 

 

 

 

 

 

 

 

   Its:

 

 

 

 

 

 

L-3

--------------------------------------------------------------------------------

 

 

 

 

 

 

 

PRUDENTIAL MULTIFAMILY MORTGAGE, INC., a Delaware corporation

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

Name:

 

 

 

 

 

 

 

 

Title:

 

 

 

 

 

 

L-4

--------------------------------------------------------------------------------

EXHIBIT M TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

RATE SETTING FORM

          Pursuant to Section 4.01(b) of that certain Third Amended and Restated
Master Credit Facility Agreement, dated as of March 30, 2004 (as amended from
time to time, the “Master Agreement”) by and among Prudential Multifamily
Mortgage, Inc., a Delaware corporation (the “Lender”), the undersigned (the
“Borrower”), and Mid-America Apartments of Texas, L.P., a Texas limited
partnership, the Borrower hereby requests that the Lender issue to it an advance
[for the purposes of refinancing the existing Indebtedness under the Note
(applies to Variable Advance only)] with the following terms:

 

 

 

 

Designation of Advance

_____ Fixed Facility Advance

 

(Check One)

_____ Variable Advance

          FOR VARIABLE ADVANCE ONLY:

 

 

 

 

Proposed MBS Imputed Interest Rate

________%

 

 

 

 

Advance Amount

$______________________

 

 

 

 

Term

_______ months

 

 

 

 

MBS Issue Date

_______________, _______

 

 

 

 

Variable Advance Fee

_______________________

 

 

 

 

Maximum Annual Coupon Rate

________%

 

 

 

 

Discount

________%

 

 

 

 

Price

_______________________

 

 

 

 

Closing Date no later than

_______________, _______

M-1

--------------------------------------------------------------------------------

          FOR FIXED FACILITY ADVANCE ONLY:

 

 

 

 

Proposed Pass-Through Rate

________%

 

 

 

 

Advance Amount

$______________________

 

 

 

 

Term

_______ months

 

 

 

 

MBS Issue Date

_______________, _______

 

 

 

 

Fixed Facility Fee

_______________________

 

 

 

 

Maximum Annual Coupon Rate

________%

 

 

 

 

Amortization Period

_______________________

 

 

 

 

Closing Date no later than

_______________, _______

 

 

 

 

30/360 or Actual/360

_______________________

          The Lender will provide the Borrower with written confirmation when
and if it has obtained a commitment for the purchase of a Fannie Mae MBS having
the characteristics described above at a price between 99-½ and 100-½ or better.
In the event that the lowest available Coupon Rate is greater than that
specified above, the Lender will not proceed without the prior written
authorization of the Borrower.

          The Borrower certifies that all conditions contained in Article V of
the Master Agreement that are required to be satisfied will be satisfied on or
before the Closing Date.

          Defined terms used herein shall have the same meaning as set forth in
the Master Agreement.

[Signatures on the following page]

M-2

--------------------------------------------------------------------------------

Dated: ____________________, ____

 

 

 

 

 

 

MID-AMERICA APARTMENT COMMUNITIES,

 

INC., a Tennessee corporation

 

 

 

 

 

By:

 

 

 

 

 

 

   Simon R.C. Wadsworth

 

 

   Executive Vice President

 

 

 

 

 

MID-AMERICA APARTMENTS, L.P.,

 

a Tennessee limited partnership

 

 

 

 

 

By:

   Mid-America Apartment Communities, Inc.,

 

 

   a Tennessee corporation, its general partner

 

 

 

 

 

 

   By:

 

 

 

 

 

 

 

 

    Simon R.C. Wadsworth

 

 

 

    Executive Vice President

 

 

 

 

M-3

--------------------------------------------------------------------------------

EXHIBIT N TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

RATE CONFIRMATION FORM

          Pursuant to Section 4.01(c) of that certain Third Amended and Restated
Master Credit Facility Agreement, dated as of March 30, 2004 (as amended from
time to time, the “Master Agreement”) by and among (a) Prudential Multifamily
Mortgage, Inc., a Delaware corporation (the “Lender”), (b) Mid-America Apartment
Communities, Inc., a Tennessee corporation (the “REIT”), (c) Mid-America
Apartments, L.P., a Tennessee limited partnership (“OP”; REIT and OP,
collectively, the “Borrower”), and (d) Mid-America Apartments of Texas, L.P., a
Texas limited partnership; and the Rate Setting Form dated
                               , from the Borrower to the Lender, the Lender
hereby confirms that it has obtained a commitment [for the purchase of a Fannie
Mae MBS] / [for the purposes of refinancing the existing Indebtedness under the
Note (applies to Variable Advance only)] with the following terms:

 

 

 

 

Designation of Advance

_____ Fixed Facility Advance

 

(Check One)

_____ Variable Advance

          FOR VARIABLE ADVANCE ONLY:

 

 

 

 

Advance Amount

$______________________

 

 

 

 

Term

_______ months

 

 

 

 

MBS Issue Date

_______________, _______

 

 

 

 

MBS Imputed Interest Rate

________%

 

 

 

 

Variable Advance Fee

_______________________

 

 

 

 

Maximum Annual Coupon Rate

________%

 

 

 

 

Discount

________%

 

 

 

 

Price

_______________________

 

 

 

 

Closing Date no later than

_______________, _______

N-1

--------------------------------------------------------------------------------

          FOR FIXED FACILITY ADVANCE ONLY:

 

 

 

 

Advance Amount

$______________________

 

 

 

 

Term

_______ months

 

 

 

 

MBS Issue Date

_______________, _______

 

 

 

 

MBS Pass-Through Rate

________%

 

 

 

 

Fixed Facility Fee

_______________________

 

 

 

 

Maximum Annual Coupon Rate

________%

 

 

 

 

Price

_______________________

 

 

 

 

Yield Maintenance Period

_______________________

 

 

 

 

Yield Rate Security

_______________________

 

 

 

 

Amortization Period

_______________________

 

 

 

 

Closing Date no later than

_______________, _______

 

 

 

 

30/360 or Actual/360

_______________________

Dated: ____________________, ______

 

 

 

 

 

 

PRUDENTIAL MULTIFAMILY MORTGAGE,
INC., a Delaware corporation

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

Name: 

 

 

 

 

 

 

 

Title:

 

 

 

 

 

Rate Setting Date:       ____________________, ______,        ___:___ AM/PM
Eastern Time

N-2

--------------------------------------------------------------------------------

EXHIBIT O TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

ADVANCE CONFIRMATION INSTRUMENT

THIS ADVANCE CONFIRMATION INSTRUMENT (the “Advance Confirmation Instrument”) is
made as of the ____ day of _______________, _____, by (a) Mid-America Apartment
Communities, Inc., a Tennessee corporation (the “REIT”), (b) Mid-America
Apartments, L.P., a Tennessee limited partnership (“OP”; the REIT and OP,
collectively, the “Borrower”)for the benefit of Prudential Multifamily Mortgage,
Inc., a Delaware corporation (the “Lender”).

RECITALS

          A.           The Borrower, Mid-America Apartments of Texas, L.P., a
Texas limited partnership, and the Lender are parties to that certain Third
Amended and Restated Master Credit Facility Agreement, dated as of March 30,
2004 (as amended from time to time, the “Master Agreement”).

          B.            All of the Lender’s right, title and interest in the
Master Agreement and the Loan Documents executed in connection with the Master
Agreement or the transactions contemplated by the Master Agreement have been
assigned to Fannie Mae pursuant to that certain Assignment of Collateral
Agreements and Other Loan Documents, dated as of August 22, 2002, that certain
Assignment of Collateral Agreements and Other Loan Documents, dated as of
December 10, 2003, and that Assignment of Collateral Agreements and Other Loan
Documents dated as of March 31, 2004 (collectively, the “Assignment”). Fannie
Mae has not assumed any of the obligations of the Lender under the Master
Agreement or the Loan Documents as a result of the Assignment. Fannie Mae has
designated the Lender as the servicer of the Advances contemplated by the Master
Agreement.

          C.           In accordance with this Advance Confirmation Instrument
and the Master Agreement, the Lender is making a Variable Advance to the
Borrower.

          D.           The Borrower is executing this Advance Confirmation
Instrument pursuant to the Master Agreement to confirm certain terms of the
Master Agreement and that certain _____________ Amended and Restated Renewal
Variable Facility Note dated as of __________________ in the original principal
amount of $____________ (as amended from time to time, the “Variable Advance
Note”) relating to the Variable Advance, and the Borrower’s obligation to repay
the Advance in accordance with the terms of the Variable Advance Note and this
Advance Confirmation Instrument.

          NOW, THEREFORE, the Borrower, in consideration of the Lender’s making
of the Variable Advance, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, hereby agree as
follows:

          Section 1.          Confirmation of Advance and Terms of Advance. The
Borrower hereby confirms the following terms of the Variable Advance, and
confirms and agrees that it

O-1

--------------------------------------------------------------------------------

shall repay the Advance to the Lender in accordance with the terms of the
Variable Advance Note and the Master Agreement:

 

 

 

 

 

Advance Amount

 

$_______________________

 

 

 

 

 

Term

 

_______ months

 

 

 

 

 

MBS Issue Date

 

_________________, ______

 

 

 

 

 

MBS Imputed Interest Rate

 

_______%

 

 

 

 

 

Variable Advance Fee

 

$_______________________

 

 

 

 

 

Coupon Rate

 

_______%

 

 

 

 

 

Discount

 

_______%

 

 

 

 

 

Price

 

________________________

 

 

 

 

 

Closing Date

 

_______________, ________

          Section 2.          Beneficiaries. This Advance Confirmation
Instrument is made for the express benefit of the Lender.

          Section 3.          Purpose. The terms of the Master Agreement and the
Variable Advance Note govern the repayment, and all other terms relating to the
Variable Advance. However, this Advance Confirmation Instrument has been
executed to create a physical instrument evidencing the above-described Advance
under the Variable Advance Note. The Variable Advance evidenced by this Advance
Confirmation Instrument does not represent a separate indebtedness from that
evidenced by the Variable Advance Note.

          Section 4.          Effectiveness of Advance Confirmation Instrument.
This Advance Confirmation Instrument will not be effective until the Lender
funds the Variable Advance, at which time the Lender shall note the date of such
funding by completing the date block at the foot of this Advance Confirmation
Instrument, and executing this Advance Confirmation Instrument below such date
block, and such completion shall be binding on the Borrower, absent manifest
error.

          Section 5.          Capitalized Terms. All capitalized terms used in
this Advance Confirmation Instrument which are not specifically defined herein
shall have the respective meanings set forth in the Master Agreement.

          Section 6.          Counterparts. This Advance Confirmation Instrument
may be executed in counterparts by the parties hereto, and each such counterpart
shall be considered an original and all such counterparts shall constitute one
and the same instrument.

O-2

--------------------------------------------------------------------------------

          IN WITNESS WHEREOF, the Borrower has executed this Advance
Confirmation Instrument as an instrument under seal as of the day and year first
above written.

 

 

 

 

 

 

 

MID-AMERICA APARTMENT COMMUNITIES,

 

 

INC., a Tennessee corporation

 

 

 

 

 

By:

_____________________________________

 

 

 

Simon R.C. Wadsworth

 

 

 

Executive Vice President

 

 

 

 

 

 

MID-AMERICA APARTMENTS, L.P.,

 

 

a Tennessee limited partnership

 

 

 

 

 

 

By:

Mid-America Apartment Communities, Inc.,

 

 

 

a Tennessee corporation, its general partner

 

 

 

 

 

 

 

By:

_________________________________

 

 

 

 

Simon R.C. Wadsworth

 

 

 

 

Executive Vice President

 

 

 

 

O-3

--------------------------------------------------------------------------------

 

 

  Date of Funding:

____________________,_____________

 

 

 

 

 

 

PRUDENTIAL MULTIFAMILY MORTGAGE, INC., a

 

 

Delaware corporation

 

 

 

 

 

By:________________________________________________

 

 

Name:_____________________________________________________

 

 

Title:_______________________________________________

O-4

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EXHIBIT P TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

FUTURE ADVANCE REQUEST

THE MASTER AGREEMENT PURSUANT TO WHICH THIS REQUEST IS DELIVERED REQUIRES YOU TO
MAKE THE REQUESTED FUTURE ADVANCE, IF ALL CONDITIONS CONTAINED IN SECTION 5.03
OF THE MASTER AGREEMENT ARE SATISFIED, AT A CLOSING TO BE HELD AT OFFICES
DESIGNATED BY YOU ON A CLOSING DATE SELECTED BY YOU, AND OCCURRING ON A DATE
SELECTED BY US, WHICH DATE SHALL BE NOT MORE THAN THREE (3) BUSINESS DAYS AFTER
YOUR RECEIPT OF THE FUTURE ADVANCE REQUEST AND THE OUR RECEIPT OF THE RATE
CONFIRMATION FORM (OR ON SUCH OTHER DATE TO WHICH WE MAY AGREE). THE LENDER
RESERVES THE RIGHT TO REQUIRE THAT WE POST A DEPOSIT AT THE TIME THE MBS
COMMITMENT IS OBTAINED AS AN ADDITIONAL CONDITION TO YOUR OBLIGATION TO MAKE THE
FUTURE ADVANCE.

____________________, ________

 

 

VIA:

 

 

Prudential Multifamily Mortgage, Inc.
c/o Prudential Asset Resources
2200 Ross Avenue, Suite 4900E
Dallas, Texas 75201
[Note: Subject to change in the event Lender or its address changes]

 

 

Re:

FUTURE ADVANCE REQUEST issued pursuant to the Third Amended and Restated Master
Credit Facility Agreement, dated as of March 30, 2004, by and among the
undersigned (the “Borrower”), Mid-America Apartments of Texas, L.P., a Texas
limited partnership, and the Lender (as amended from time to time, the “Master
Agreement”)

Ladies and Gentlemen:

This constitutes a Future Advance Request pursuant to the terms of the
above-referenced Master Agreement.

          Section 1.          Request. The Borrower hereby requests that the
Lender make an Advance in accordance with the terms of the Master Agreement.
Following is the information required by the Master Agreement with respect to
this Request:

 

 

 

 

(a)

Amount. The amount of the Future Advance shall be $_______________.

 

 

 

 

(b)

Designation of Facility. The Future Advance is a: [Check one]

 

 

 

 

 

_____ Fixed Facility Advance

 

 

 

 

 

_____ Variable Advance

P-1

--------------------------------------------------------------------------------

 

 

 

 

(c)

Maturity Date. The Maturity Date of the Future Advance is as follows:

 

 

 

 

 

_________________, ______.

 

 

 

 

(d)

Amortization Period. [For Fixed Facility Advance only] The principal of this
Fixed Facility Advance shall be amortized over a period of 30 years.

 

 

 

 

(e)

Accompanying Documents. All documents, instruments and certificates required to
be delivered pursuant to the conditions contained in Section 5.03 of the Master
Agreement, including (i) a Rate Setting Form, (ii) an Advance Confirmation
Instrument (for Variable Advances only), (iii) a Fixed Facility Note (for Fixed
Facility Advances only) as well as (iv) a Compliance Certificate, and (v) an
Organizational Certificate, will be delivered on or before the Closing Date.

          Section 2.          Available Commitment. The information contained in
the following table is true, correct and complete, to the undersigned’s
knowledge. The undersigned acknowledges and agrees that the final determination
of the information shall be made by the Lender, in accordance with the terms of
the Master Agreement.

 

 

Currently Available Fixed Facility Credit Commitment

 

Currently Available Variable Advance Credit Commitment

 

Proposed Amount Drawn on Fixed Facility Credit Commitment

 

Remaining Fixed Facility Credit Commitment after Proposed Draw

 

Proposed Amount Drawn on Variable Advance Credit Commitment

 

Remaining Variable Advance Credit Commitment after the Proposed Draw

 

          For these purposes, the terms

 

 

 

 

(a)

“Available Fixed Facility Credit Commitment” means, at any time, the maximum
amount of Fixed Facility Advances which could be issued and outstanding without
causing: (i) the Aggregate Debt Service Coverage Ratio for the Trailing 12 Month
Period to be less than 1.40:1.0; (ii) the Aggregate Loan to Value Ratio for the
Trailing 12 Month Period to be greater than 65%; or (iii) a breach of any of the
Financial Covenants set forth in Article XV of the Master Agreement; and

 

 

 

 

(b)

“Available Variable Advance Credit Commitment” means, at any time, the maximum
amount of Variable Advances which could be issued and outstanding without
causing: (i) the Aggregate Debt Service Coverage Ratio for the Trailing 12 Month
Period to be less than 1.40:1.0; (ii) the Aggregate Loan to Value Ratio

P-2

--------------------------------------------------------------------------------

 

 

 

 

 

for the Trailing 12 Month Period to be greater than 65% or (iii) a breach of any
of the Financial Covenants set forth in Article XV of the Master Agreement.

          Section 3.          Capitalized Terms. All capitalized terms used but
not defined in this Request shall have the meanings ascribed to such terms in
the Master Agreement.

                                                       Sincerely,

 

 

 

 

 

 

 

 

 

MID-AMERICA APARTMENT COMMUNITIES,

 

 

INC., a Tennessee corporation

 

 

By:

 

 

 

 

 

 

 

 

     Simon R.C. Wadsworth

 

 

 

     Executive Vice President

 

 

MID-AMERICA APARTMENTS, L.P.,

 

 

a Tennessee limited partnership

 

 

 

 

 

By:

     Mid-America Apartment Communities, Inc.,

 

 

 

     a Tennessee corporation, its general partner

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

 

 

 

     Simon R.C. Wadsworth

 

 

 

 

     Executive Vice President

 

P-3

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EXHIBIT Q TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

REBORROWING REQUEST

          THE MASTER AGREEMENT PURSUANT TO WHICH THIS REQUEST IS DELIVERED
REQUIRES THERE TO OCCUR AT A CLOSING TO BE HELD AT OFFICES DESIGNATED BY YOU ON
THE MATURITY DATE OF THE FIXED FACILITY ADVANCE TO WHICH THIS REQUEST RELATES
(OR ON SUCH OTHER DATE TO WHICH WE MAY AGREE), AS LONG AS NONE OF THE
LIMITATIONS CONTAINED IN SECTION 2.09 OF THE MASTER AGREEMENT IS VIOLATED, AND
ALL CONDITIONS CONTAINED IN SECTION 2.10 OF THE MASTER AGREEMENT ARE SATISFIED.

____________________, ________

 

 

VIA:

 

 

Prudential Multifamily Mortgage, Inc.
c/o Prudential Asset Resources
2200 Ross Avenue
Suite 4900 E
Dallas, Texas 75201
[Note: Subject to change in the event Lender or its address changes]

 

 

Re:

REBORROWING REQUEST issued pursuant to the Third Amended and Restated Master
Credit Facility Agreement, dated as of March 30, 2004, by and among the
undersigned (the “Borrower”) and the Lender (as amended from time to time, the
“Master Agreement”).

Ladies and Gentlemen:

This constitutes a Reborrowing Request pursuant to the terms of the
above-referenced Master Agreement.

          Section 1.          Request. The Borrower hereby requests that there
occur a reborrowing of all or a portion of a maturing Fixed Facility Advance as
a Variable Advance in accordance with the terms of the Master Agreement.
Following is the information required by the Master Agreement with respect to
this Request:

 

 

 

 

                (a)          Designation of Amount of Reborrowing. The amount of
the reborrowing shall be $_________________________.

 

 

 

 

                (b)         Repayment of Fixed Facility Advances. The Fixed
Facility Advance Outstanding which will be repaid on the Closing Date for the
reborrowing is as follows:

 

 

 

 

Closing Date of Fixed Facility Advance:   ____________________________________

Q-1

--------------------------------------------------------------------------------

 

 

 

Maturity Date of Fixed Facility Advance:     ________________________________

 

 

 

Amount of Advance:     ________________________________

 

 

 

(Note: Any Variable Facility Advances made in conjunction with a reborrowing of
all or a portion of a maturing Fixed Facility Advance must be accompanied by a
Future Advance Request and shall be reviewed in accordance with the terms of the
Master Agreement.)

 

 

 

          (c)          Accompanying Documents. All documents, instruments and
certificates required to be delivered pursuant to the conditions contained in
Section 2.10 of the Master Agreement, including (i) the Reborrowing Documents,
as well as (ii) a Compliance Certificate and (iii) an Organizational Certificate
will be delivered on or before the Closing Date.

 

 

          Section 2.          Capitalized Terms. All capitalized terms used but
not defined in this Request shall have the meanings ascribed to such terms in
the Master Agreement.

                                                    Sincerely,

 

 

 

 

 

BORROWER:

 

 

 

 

 

MID-AMERICA APARTMENT COMMUNITIES,

 

 

INC., a Tennessee corporation

 

 

By:

 

 

 

 

 

 

 

 

     Simon R.C. Wadsworth

 

 

 

     Executive Vice President

 

 

MID-AMERICA APARTMENTS, L.P.,

 

 

a Tennessee limited partnership

 

 

 

 

 

By:

     Mid-America Apartment Communities, Inc.,

 

 

 

     a Tennessee corporation, its general partner

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

 

 

 

     Simon R.C. Wadsworth

 

 

 

 

     Executive Vice President

 

Q-2

--------------------------------------------------------------------------------

Q-3

--------------------------------------------------------------------------------

EXHIBIT R TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

AMENDMENT TO MASTER CREDIT FACILITY AGREEMENT

          THIS ____ AMENDMENT TO MASTER CREDIT FACILITY AGREEMENT (the
“Amendment”) is made as of the ____ day of _______________, _____, by and among
(i) (a) MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation (the
“REIT”), (b) MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership
(“OP”) (the REIT and OP being collectively referred to as “Borrower”); (ii)
MID-AMERICA APARTMENTS OF TEXAS, L.P., a Texas limited partnership (“MAA of
Texas”; MAA of Texas and Borrower being collectively referred to as “Borrower
Parties”); and (iii) PRUDENTIAL MULTIFAMILY MORTGAGE INC., formerly known as WMF
Washington Mortgage Corp., a Delaware corporation (“Lender”).

RECITALS

          A.          The Borrower Parties and the Lender are parties to that
certain Third Amended and Restated Master Credit Facility Agreement, dated as of
March 30, 2004 (as amended from time to time, the “Master Agreement”).

          B.          All of the Lender’s right, title and interest in the
Master Agreement and the Loan Documents executed in connection with the Master
Agreement or the transactions contemplated by the Master Agreement have been
assigned to Fannie Mae pursuant to that certain Assignment of Collateral
Agreements and Other Loan Documents, dated as of August 22, 2002, that certain
Assignment of Collateral Agreements and Other Loan Documents, dated as of
December 10, 2003, and that Assignment of Collateral Agreements and Other Loan
Documents dated as of March 31, 2004 (collectively, the “Assignment”). Fannie
Mae has not assumed any of the obligations of the Lender under the Master
Agreement or the Loan Documents as a result of the Assignment. Fannie Mae has
designated the Lender as the servicer of the Advances contemplated by the Master
Agreement.

          C.          The parties are executing this Amendment pursuant to the
Master Agreement to reflect a conversion of all or a portion of a Fixed Facility
Advance to a Variable Advance.

          NOW, THEREFORE, the parties hereto, in consideration of the mutual
promises and agreements contained in this Amendment and the Master Agreement,
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, hereby agree as follows:

          Section 1.          Reborrowing. The Variable Facility Commitment
shall be increased by $____________________, and the definition of “Variable
Facility Commitment” is hereby replaced in its entirety by the following new
definition:

R-1

--------------------------------------------------------------------------------

          “Variable Facility Commitment” means an aggregate amount of
$_______________, which shall be evidenced by the Variable Facility Note in the
form attached hereto as Exhibit I, plus such amount as the Borrower may elect to
add to the Variable Facility Commitment in accordance with Article VIII, and
plus such amount as the Borrower may elect to reborrow in accordance with
Section 2.08, less such amount as the Borrower may elect to convert from the
Variable Facility Commitment to the Fixed Facility Commitment in accordance with
Article III and less such amount by which the Borrower may elect to reduce the
Variable Facility Commitment in accordance with Article IX.

          Section 2.          Capitalized Terms. All capitalized terms used in
this Amendment which are not specifically defined herein shall have the
respective meanings set forth in the Master Agreement.

          Section 3.          Full Force and Effect. Except as expressly
modified by this Amendment, all terms and conditions of the Master Agreement
shall continue in full force and effect.

          Section 4.          Counterparts. This Amendment may be executed in
counterparts by the parties hereto, and each such counterpart shall be
considered an original and all such counterparts shall constitute one and the
same instrument.

[The rest of this page has been intentionally left blank.]

R-2

--------------------------------------------------------------------------------

          IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
an instrument under seal as of the day and year first above written.

 

 

 

 

 

BORROWER:

 

 

 

 

 

MID-AMERICA APARTMENT COMMUNITIES,

 

 

INC., a Tennessee corporation

 

 

By:

 

 

 

 

 

 

 

 

     Simon R.C. Wadsworth

 

 

 

     Executive Vice President

 

 

MID-AMERICA APARTMENTS, L.P.,

 

 

a Tennessee limited partnership

 

 

 

 

 

By:

     Mid-America Apartment Communities, Inc.,

 

 

 

     a Tennessee corporation, its general partner

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

 

 

 

     Simon R.C. Wadsworth

 

 

 

 

     Executive Vice President

 

[Signatures follow on next page]

R-3

--------------------------------------------------------------------------------

 

 

 

 

 

GUARANTOR:

 

 

 

 

 

MID-AMERICA APARTMENTS OF TEXAS, L.P.,

 

a Texas limited partnership

 

 

By:

     MAC of Delaware, Inc., a Delaware corporation,
     its general partner

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Name:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Its:

 

 

 

 

 

 

 

[Signatures follow on next page]

R-4

--------------------------------------------------------------------------------

 

 

 

 

 

LENDER:

 

 

 

 

 

PRUDENTIAL MULTIFAMILY MORTGAGE INC., a
Delaware corporation

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

 

 

 

 

 

    Name:

 

 

 

 

 

 

 

 

 

 

 

 

 

  Title:

 

 

 

 

 

 

[Signatures follow on next page]

R-5

--------------------------------------------------------------------------------

EXHIBIT S TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

COLLATERAL ADDITION REQUEST

          THE MASTER AGREEMENT PURSUANT TO WHICH THIS REQUEST IS DELIVERED
REQUIRES THAT IF (1) YOU CONSENT TO THE ADDITION OF THE PROPOSED ADDITIONAL
MORTGAGED PROPERTY TO THE COLLATERAL POOL, (2) WE ELECT TO CAUSE THE PROPOSED
ADDITIONAL MORTGAGED PROPERTY TO BE ADDED TO THE COLLATERAL POOL AND (3) ALL
CONDITIONS CONTAINED IN SECTION 6.03 OF THE MASTER AGREEMENT ARE SATISFIED, THEN
YOU SHALL PERMIT THE PROPOSED ADDITIONAL MORTGAGED PROPERTY TO BE ADDED TO THE
COLLATERAL POOL, AT A CLOSING TO BE HELD AT OFFICES DESIGNATED BY YOU ON A
CLOSING DATE SELECTED BY YOU, AND OCCURRING WITHIN THIRTY (30) BUSINESS DAYS
AFTER YOUR RECEIPT OF OUR ELECTION (OR ON SUCH OTHER DATE TO WHICH WE MAY
AGREE).

________, 20__

Prudential Multifamily Mortgage, Inc.
c/o Prudential Asset Resources
2200 Ross Avenue
Suite 4900E
Dallas, Texas 75201

 

 

Re:

COLLATERAL ADDITION REQUEST issued pursuant to the Third Amended and Restated
Master Credit Facility Agreement, dated as of March 30, 2004, by and among the
undersigned (the “Borrower”), Guarantor and Lender (as amended from time to
time, the “Master Agreement”)

Ladies and Gentlemen:

This constitutes a Collateral Addition Request pursuant to the terms of the
above-referenced Master Agreement.

          Section 1.          Request. The Borrower hereby requests that the
Multifamily Residential Properties described in this Request be added to the
Collateral Pool in accordance with the terms of the Master Agreement. Following
is the information required by the Master Agreement with respect to this
Request:

 

 

 

          (a)          Collateral Addition Description Package. Attached to this
Request is the Collateral Addition Description Package and attached thereto are
all information and documents relating to the Additional Collateral required by
the Collateral Addition Description Package;

S-1

--------------------------------------------------------------------------------

 

 

 

          (b)          Due Diligence Fees. Enclosed with this Request is a check
in payment of all Additional Collateral Due Diligence Fees required to be
submitted with this Request pursuant to Section 16.03(b) of the Master
Agreement; and

 

 

 

          (c)          Accompanying Documents. All reports, certificates and
documents required to be delivered pursuant to the conditions contained in
Section 6.03 of the Master Agreement will be delivered on or before the Closing
Date.

          Section 2.          Collateral Addition Fee. If the Lender consents to
the addition of the Additional Collateral to the Collateral Pool, and the
Borrower Parties elect to add the Additional Collateral to the Collateral Pool,
Mid-America Apartment Communities, Inc., a Tennessee corporation, and
Mid-America Apartments, L.P., a Tennessee limited partnership, shall pay the
Collateral Addition Fee for the Additional Collateral to the Lender as one of
the conditions to the closing of the addition of the Additional Collateral to
the Collateral Pool.

          Section 3.          Capitalized Terms. All capitalized terms used but
not defined in this Request shall have the meanings ascribed to such terms in
the Master Agreement.

Sincerely,

MID-AMERICA APARTMENT COMMUNITIES,
INC., a Tennessee corporation

 

 

 

By:

 

 

 

 

 

 

     Simon R.C. Wadsworth

 

 

     Executive Vice President

 

MID-AMERICA APARTMENTS, L.P.,
a Tennessee limited partnership

 

 

 

By:

Mid-America Apartment Communities, Inc.,
a Tennessee corporation, its general partner

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

 

     Simon R.C. Wadsworth

 

 

 

     Executive Vice President

 

S-2

--------------------------------------------------------------------------------

EXHIBIT T TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

COLLATERAL RELEASE REQUEST

          THE MASTER AGREEMENT PURSUANT TO WHICH THIS REQUEST IS DELIVERED
REQUIRES FOR THERE TO OCCUR AT A CLOSING WITHIN 30 BUSINESS DAYS AFTER YOUR
RECEIPT OF THIS REQUEST, SUBJECT TO SATISFACTION OF ALL CONDITIONS CONTAINED IN
SECTION 7.03 OF THE MASTER AGREEMENT. REFERENCE IS MADE TO THE MASTER AGREEMENT
FOR THE SCOPE OF THE LENDER’S OBLIGATIONS WITH RESPECT TO THIS REQUEST.

____________________, ______

VIA: _______________________

Prudential Multifamily Mortgage, Inc.
c/o Prudential Asset Resources
2200 Ross Avenue, Suite 4900E
Vienna, Virginia 22812

[Note: Subject to change in the event Lender or its address changes]

 

 

Re:

COLLATERAL RELEASE REQUEST issued pursuant to the Third Amended and Restated
Master Credit Facility Agreement, dated as of March 30, 2004, by and among the
undersigned (the “Borrower”) and others (as amended from time to time, the
“Master Agreement”)

Ladies and Gentlemen:

This constitutes a Collateral Release Request pursuant to the terms of the
above-referenced Master Agreement.

          Section 1.          Request. The Borrower hereby requests that the
Collateral Release Property described in this Request be released from the
Collateral Pool in accordance with the terms of the Master Agreement. Following
is the information required by the Master Agreement with respect to this
Request:

 

 

 

          (a)          Description of Collateral Release Property. The name,
address and location (county and state) of the Mortgaged Property, or other
designation of the Collateral, to be released from the Collateral Pool is as
follows:

 

 

 

 

 

Name:  

 

 

 

 

 

 

T-1

--------------------------------------------------------------------------------

 

Address:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Location:

 

 

 

 

 

 

 

 

 

          (b)          Accompanying Documents. All documents, instruments and
certificates required to be delivered pursuant to the conditions contained in
Section 7.03 of the Master Agreement will be delivered on or before the Closing
Date.

          Section 2.          Release Price and Release Fee. The Borrower shall
pay the Release Price and the Release Fee as two of the conditions to the
closing of the release of the Collateral Release Property from the Collateral
Pool.

          Section 3.         Capitalized Terms. All capitalized terms used but
not defined in this Request shall have the meanings ascribed to such terms in
the Master Agreement.

 

 

 

 

                                                   Sincerely,

 

 

 

 

MID-AMERICA APARTMENT COMMUNITIES,

 

 

INC., a Tennessee corporation

 

 

 

 

 

By:

 

 

 

 

 

 

 

 

     Simon R.C. Wadsworth

 

 

 

     Executive Vice President

 

 

MID-AMERICA APARTMENTS, L.P.,

 

 

a Tennessee limited partnership

 

 

 

 

 

By:

     Mid-America Apartment Communities, Inc.,

 

 

 

     a Tennessee corporation, its general partner

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

 

 

 

     Simon R.C. Wadsworth

 

 

 

 

     Executive Vice President

 

T-2

--------------------------------------------------------------------------------

EXHIBIT U TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

CONFIRMATION OF OBLIGATIONS

          THIS CONFIRMATION OF OBLIGATIONS (the “Confirmation of Obligations”)
is made as of the ____ day of __________, ____, by and among (a) MID-AMERICA
APARTMENT COMMUNITIES, INC., a Tennessee corporation, (the “REIT”), (b)
MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership (“OP”; the REIT
and OP being collectively referred to as the “Borrower”), (c) MID-AMERICA
APARTMENTS OF TEXAS, L.P., a Texas limited partnership (“MAC of Texas” or the
“Guarantor”; Borrower and the Guarantor being collectively referred to as the
“Borrower Parties”) for the benefit of Prudential Multifamily Mortgage, Inc., a
Delaware corporation (“Lender”).

RECITALS

          A.          The Borrower Parties and the Lender are parties to that
certain Third Amended and Restated Master Credit Facility Agreement, dated as of
March 30, 2004 (as amended from time to time, the “Master Agreement”).

          B.          All of the Lender’s right, title and interest in the
Master Agreement and the Loan Documents executed in connection with the Master
Agreement or the transactions contemplated by the Master Agreement have been
assigned to Fannie Mae pursuant to that certain Assignment of Collateral
Agreements and Other Loan Documents, dated as of August 22, 2002, that certain
Assignment of Collateral Agreements and Other Loan Documents, dated as of
December 10, 2003, and that Assignment of Collateral Agreements and Other Loan
Documents dated as of March 31, 2004 (collectively, the “Assignment”). Fannie
Mae has not assumed any of the obligations of the Lender under the Master
Agreement or the Loan Documents as a result of the Assignment. Fannie Mae has
designated the Lender as the servicer of the Advances contemplated by the Master
Agreement.

          C.          The Borrower has delivered to the Lender a Collateral
Release Request pursuant to the Master Agreement to release a Collateral Release
Property from the Collateral Pool.

          D.          The Lender has consented to the Collateral Release
Request.

          E.          The parties are executing this Confirmation of Obligations
pursuant to the Master Agreement to confirm that each remains liable for all of
its obligations under the Master Agreement and the other Loan Documents
notwithstanding the release of the Collateral Release Property from the
Collateral Pool.

          NOW, THEREFORE, the Borrower Parties, in consideration of the Lender’s
consent to the release of the Collateral Release Property from the Collateral
Pool and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, hereby agree as follows:

U-1

--------------------------------------------------------------------------------

          Section 1.          Confirmation of Obligations. The Borrower Parties
confirm that none of their respective obligations under the Master Agreement and
the Loan Documents is affected by the release of the Collateral Release Property
from the Collateral, and each of their respective obligations under the Master
Agreement and the Loan Documents shall remain in full force and effect, and each
shall be fully liable for the observance of all such obligations,
notwithstanding the release of the Collateral Release Property from the
Collateral Pool. The Borrower Parties confirm that, except with respect to the
Collateral Release Property, none of their respective obligations under the
Master Agreement and the Loan Documents are affected by the release of the
Collateral Release Property, and their obligations under the Master Agreement
and the Loan Documents shall remain in full force and effect, and they shall be
fully liable for the observance of all such obligations, notwithstanding the
release of the Collateral Release Property from the Collateral Pool.

          Section 2.          Beneficiaries. This Confirmation of Obligations is
made for the express benefit of both the Lender and Fannie Mae.

          Section 3.          Capitalized Terms. All capitalized terms used in
this Confirmation of Obligations which are not specifically defined herein shall
have the respective meanings set forth in the Master Agreement.

          Section 4.          Counterparts. This Confirmation of Obligations may
be executed in counterparts by the parties hereto, and each such counterpart
shall be considered an original and all such counterparts shall constitute one
and the same instrument.

          IN WITNESS WHEREOF, the parties hereto have executed this Confirmation
of Obligations as an instrument under seal as of the day and year first above
written.

[Signatures on the following pages]

U-2

--------------------------------------------------------------------------------

 

 

 

 

 

 

MID-AMERICA APARTMENT COMMUNITIES,

 

INC., a Tennessee corporation

 

 

 

By:

 

 

 

 

 

 

 

 

          Simon R.C. Wadsworth

 

 

          Executive Vice President

 

 

 

 

 

MID-AMERICA APARTMENTS, L.P.,

 

a Tennessee limited partnership

 

 

 

 

By:  

Mid-America Apartment Communities, Inc.,

 

 

a Tennessee corporation, its general partner

 

 

 

 

 

 

By:  

 

 

 

 

 

 

 

 

 

          Simon R.C. Wadsworth

 

 

 

          Executive Vice President

 

 

 

 

 

MID-AMERICA APARTMENTS OF TEXAS, L.P.,

 

a Texas limited partnership

 

 

 

 

 

By:  

MAC of Delaware, Inc., a Delaware corporation,

 

 

its general partner

 

 

 

 

 

By:

 

 

 

 

 

 

 

Name:

 

 

 

 

 

 

 

Its:

 

 

 

 

 

 

 

 

 

U-3

--------------------------------------------------------------------------------

 

 

 

 

PRUDENTIAL MULTIFAMILY MORTGAGE, INC., a

 

Delaware corporation

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

 

Title:

 

 

 

 

U-4

--------------------------------------------------------------------------------

EXHIBIT V TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

CREDIT FACILITY EXPANSION REQUEST

          THE MASTER AGREEMENT PURSUANT TO WHICH THIS REQUEST IS DELIVERED
REQUIRES YOU TO PERMIT THE REQUESTED INCREASE IN THE COMMITMENT, AT A CLOSING TO
BE HELD AT OFFICES DESIGNATED BY YOU ON A CLOSING DATE SELECTED BY YOU, AND
OCCURRING WITHIN FIFTEEN (15) BUSINESS DAYS AFTER THE YOUR RECEIPT OF THE CREDIT
FACILITY EXPANSION REQUEST (OR ON SUCH OTHER DATE TO WHICH WE), AS LONG AS ALL
CONDITIONS CONTAINED IN SECTION 8.03 OF THE MASTER AGREEMENT ARE SATISFIED.
REFERENCE IS MADE TO THE MASTER AGREEMENT FOR THE SCOPE OF THE LENDER’S
OBLIGATIONS WITH RESPECT TO THIS REQUEST.

____________________, ______

VIA: _______________________

Prudential Multifamily Mortgage, Inc.
c/o Prudential Asset Resources
2200 Ross Avenue, Suite 4900E
Dallas, Texas 75201
[Note: Subject to change in the event Lender or its address changes]

 

 

Re:

CREDIT FACILITY EXPANSION REQUEST issued pursuant to the Third Amended and
Restated Master Credit Facility Agreement, dated as of March 30, 2004, by and
among the undersigned (the “Borrower”), the Lender and Mid-America Apartments of
Texas, a Texas limited partnership (as amended from time to time, the “Master
Agreement”)

Ladies and Gentlemen:

This constitutes a Credit Facility Expansion Request pursuant to the terms of
the above-referenced Master Agreement.

          Section 1.          Request. The Borrower hereby requests an increase
in the maximum credit commitment in accordance with the terms of the Master
Agreement. Following is the information required by the Master Agreement with
respect to this Request:

 

 

 

 

          (a)          Amount of Increase. The amount of the increase in the
maximum credit commitment and the amount of the increases in the Fixed Facility
Commitment or the Variable Facility Commitment are as follows:

V-1

--------------------------------------------------------------------------------

 

 

 

 

 

 

 

NAME

 

INCREASE

RESULTING AMOUNT OF
COMMITMENT

 

 

 

 

 

 

 

 

MAXIMUM CREDIT

 

 

COMMITMENT:

 

 

 

 

 

FIXED FACILITY

 

 

COMMITMENT:

 

 

 

 

 

VARIABLE FACILITY

 

 

COMMITMENT:

 

 

[Note: Section 8.01 of the Master Agreement limits the maximum credit commitment
to $250,000,000 and the increase in the Maximum Credit Commitment must be in the
minimum amount of $3,000,000.]

 

 

 

 

           (b)          Accompanying Documents. All documents, instruments and
certificates required to be delivered pursuant to the conditions contained in
Section 8.03 of the Master Agreement will be delivered on or before the Closing
Date.

          Section 2.          Capitalized Terms. All capitalized terms used but
not defined in this Request shall have the meanings ascribed to such terms in
the Master Agreement.

Sincerely,

MID-AMERICA APARTMENT COMMUNITIES,
INC., a Tennessee corporation

 

 

 

By:

 

 

 

 

 

          Simon R.C. Wadsworth

 

          Executive Vice President

V-2

--------------------------------------------------------------------------------

MID-AMERICA APARTMENTS, L.P.,
a Tennessee limited partnership

 

 

 

By:

Mid-America Apartment Communities, Inc.,

 

a Tennessee corporation, its general partner

 

 

By:

 

 

 

 

 

          Simon R.C. Wadsworth

 

          Executive Vice President

V-3

--------------------------------------------------------------------------------

EXHIBIT W TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

VARIABLE FACILITY TERMINATION REQUEST

          THE MASTER AGREEMENT PURSUANT TO WHICH THIS REQUEST IS DELIVERED
REQUIRES YOU TO PERMIT THE VARIABLE FACILITY COMMITMENT TO BE REDUCED TO THE
AMOUNT DESIGNATED BY US, AT A CLOSING TO BE HELD AT OFFICES DESIGNATED BY YOU ON
A CLOSING DATE SELECTED BY YOU, WITHIN FIFTEEN (15) BUSINESS DAYS AFTER THE YOUR
RECEIPT OF THE VARIABLE FACILITY TERMINATION REQUEST (OR ON SUCH OTHER DATE TO
WHICH WE MAY AGREE), IF ALL CONDITIONS CONTAINED IN SECTION 9.03 ARE SATISFIED.
REFERENCE IS MADE TO THE MASTER AGREEMENT FOR THE SCOPE OF THE LENDER’S
OBLIGATIONS WITH RESPECT TO THIS REQUEST.

____________________, ______

VIA: _______________________

Prudential Multifamily Mortgage, Inc.
c/o Prudential Asset Resources
2200 Ross Avenue, Suite 4900E
Dallas, Texas 75201
[Note: Subject to change in the event Lender or its address changes]

 

 

Re:

VARIABLE FACILITY TERMINATION REQUEST issued pursuant to the Third Amended and
Restated Master Credit Facility Agreement, dated as of March 30, 2004, by and
among the undersigned (the “Borrower”), the Lender and Mid-America Apartments of
Texas, L.P., a Texas limited partnership (as amended from time to time, the
“Master Agreement”)

Ladies and Gentlemen:

This constitutes a Variable Facility Termination Request pursuant to the terms
of the above-referenced Master Agreement.

          Section 1.          Request. The Borrower hereby requests a permanent
reduction in the amount of the Variable Facility in accordance with the terms of
the Master Agreement. Following is the information required by the Master
Agreement with respect to this Request:

 

 

 

          (a)          Amount of Reduction. The amount of the permanent
reduction in the Variable Facility is as follows:

 

 

 

Amount of Reduction:          $________________________________

W-1

--------------------------------------------------------------------------------

 

 

 

 

Resulting Amount of

 

Variable Facility:               $____________________________________

 

 

 

          (b)     Required Prepayments. Following are any Variable Facilities
that shall be prepaid in connection with the permanent reduction in the Variable
Facility:

 

 

 

Closing Date of Advance:

__________________________________________

 

 

 

 

Maturity Date of Advance:

__________________________________________

 

 

 

 

Amount of Advance:

__________________________________________

 

 

 

 

          (c)          Accompanying Documents. All documents, instruments and
certificates required to be delivered pursuant to the conditions contained in
Section 9.03 of the Master Agreement will be delivered on or before the Closing
Date.

          Section 2.          Prepayments and Termination Fee. The Borrower
shall pay the required amount of the prepayment for any Variable Facility
Advances required to be prepaid, and the required amount of the Termination Fee,
pursuant to the terms of Section 9.03 of the Master Agreement, as two of the
conditions to the permanent reduction in the Variable Facility.

          Section 3.          Capitalized Terms. All capitalized terms used but
not defined in this Request shall have the meanings ascribed to such terms in
the Master Agreement.

 

 

 

 

 

 

 

Sincerely,

 

 

 

 

 

MID-AMERICA APARTMENT COMMUNITIES,

 

 

INC., a Tennessee corporation

 

 

 

 

 

By:

 

 

 

 

 

 

 

 

Simon R.C. Wadsworth

 

 

 

Executive Vice President

 

 

 

 

 

 

MID-AMERICA APARTMENTS, L.P.,

 

 

a Tennessee limited partnership

 

 

 

 

 

By:

Mid-America Apartment Communities, Inc.,

 

 

 

a Tennessee corporation, its general partner

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

 

 

 

Simon R.C. Wadsworth

W-2

--------------------------------------------------------------------------------

 

 

 

 

 

 

 

 

 

Executive Vice President

W-3

--------------------------------------------------------------------------------

EXHIBIT X TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

AMENDMENT TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

          THIS ____ AMENDMENT TO THIRD AMENDED AND RESTATED MASTER CREDIT
FACILITY AGREEMENT (the “Amendment”) is made as of the ____ day of
_______________, _____, by and among (i) (a) MID-AMERICA APARTMENT COMMUNITIES,
INC., a Tennessee corporation (the “REIT”), (b) MID-AMERICA APARTMENTS, L.P., a
Tennessee limited partnership (“OP”; the REIT and OP being collectively referred
to as the “Borrower”), (c) MID-AMERICA APARTMENTS OF TEXAS, L.P., a Texas
limited partnership (“MAA of Texas” or the “Guarantor”; Borrower and the
Guarantor being collectively referred to as the “Borrower Parties”) and (ii)
PRUDENTIAL MULTIFAMILY MORTGAGE, INC., a Delaware corporation (“Lender”).

RECITALS

          A.          The Borrower Parties and the Lender are parties to that
certain Third Amended and Restated Master Credit Facility Agreement, dated as of
March 30, 2004 (as amended from time to time, the “Master Agreement”).

          B.          All of the Lender’s right, title and interest in the
Master Agreement and the Loan Documents executed in connection with the Master
Agreement or the transactions contemplated by the Master Agreement have been
assigned to Fannie Mae pursuant to that certain Assignment of Collateral
Agreements and Other Loan Documents, dated as of August 22, 2002, that certain
Assignment of Collateral Agreements and Other Loan Documents, dated as of
December 10, 2003, and that Assignment of Collateral Agreements and Other Loan
Documents dated as of March 31, 2004 (collectively, the “Assignment”). Fannie
Mae has not assumed any of the obligations of the Lender under the Master
Agreement or the Loan Documents as a result of the Assignment. Fannie Mae has
designated the Lender as the servicer of the Advances contemplated by the Master
Agreement.

          C.          The parties are executing this Amendment pursuant to the
Master Agreement to reflect a permanent reduction of all or a portion of the
Variable Facility.

          NOW, THEREFORE, the parties hereto, in consideration of the mutual
promises and agreements contained in this Amendment and the Master Agreement,
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, hereby agree as follows:

          Section 1.     Reduction of Variable Facility Commitment. The Variable
Facility Commitment shall be reduced by $____________________, and the
definition of “Variable Facility Commitment” is hereby replaced in its entirety
by the following new definition:

X-1

--------------------------------------------------------------------------------

          “Variable Facility Commitment” means an aggregate amount of
$_______________,which shall be evidenced by the Variable Facility Note in the
form attached hereto as Exhibit I, plus such amount as the Borrower may elect to
add to the Variable Facility Commitment in accordance with Article VIII, and
plus such amount as the Borrower may elect to reborrow in accordance with
Section 2.08, less such amount as the Borrower may elect to convert from the
Variable Facility Commitment to the Fixed Facility Commitment in accordance with
Article III and less such amount by which the Borrower may elect to reduce the
Variable Facility Commitment in accordance with Article IX.

          Section 2.          Capitalized Terms. All capitalized terms used in
this Amendment which are not specifically defined herein shall have the
respective meanings set forth in the Master Agreement.

          Section 3.          Full Force and Effect. Except as expressly
modified by this Amendment, all terms and conditions of the Master Agreement
shall continue in full force and effect.

          Section 4.          Counterparts. This Amendment may be executed in
counterparts by the parties hereto, and each such counterpart shall be
considered an original and all such counterparts shall constitute one and the
same instrument.

[Signatures on the following pages]

X-2

--------------------------------------------------------------------------------

          IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
an instrument under seal as of the day and year first above written.

 

 

 

 

 

 

 

 

MID-AMERICA APARTMENT COMMUNITIES,

 

 

INC., a Tennessee corporation

 

 

 

 

 

By:

 

 

 

 

 

 

 

 

Simon R.C. Wadsworth

 

 

 

Executive Vice President

 

 

 

 

 

 

MID-AMERICA APARTMENTS, L.P.,

 

 

a Tennessee limited partnership

 

 

 

 

 

By:

Mid-America Apartment Communities, Inc.,

 

 

 

a Tennessee corporation, its general partner

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

 

 

 

Simon R.C. Wadsworth

 

 

 

 

Executive Vice President

 

 

 

 

 

 

 

MID-AMERICA APARTMENTS OF TEXAS, L.P.,

 

 

a Texas limited partnership

 

 

 

 

 

 

 

By:

MAC of Delaware, Inc., a Delaware corporation,
its general partner

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

 

Its:

 

 

 

 

 

 

 

X-3

--------------------------------------------------------------------------------

 

 

 

 

 

 

 

 

PRUDENTIAL MULTIFAMILY MORTGAGE, INC., a Delaware corporation

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

X-4

--------------------------------------------------------------------------------

EXHIBIT Y TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

CREDIT FACILITY TERMINATION REQUEST

          THE MASTER AGREEMENT PURSUANT TO WHICH THIS REQUEST IS DELIVERED
REQUIRES THAT THIS AGREEMENT SHALL TERMINATE, AND YOU SHALL CAUSE ALL OF THE
COLLATERAL TO BE RELEASED FROM THE COLLATERAL POOL, AT A CLOSING TO BE HELD AT
OFFICES DESIGNATED BY YOU ON A CLOSING DATE SELECTED BY YOU, WITHIN 30 BUSINESS
DAYS AFTER THE YOUR RECEIPT OF THE CREDIT FACILITY TERMINATION REQUEST (OR ON
SUCH OTHER DATE TO WHICH WE MAY AGREE), AS LONG AS ALL CONDITIONS CONTAINED IN
SECTION 10.03 OF THE MASTER AGREEMENT ARE SATISFIED. REFERENCE IS MADE TO THE
MASTER AGREEMENT FOR THE SCOPE OF THE LENDER’S OBLIGATIONS WITH RESPECT TO THIS
REQUEST.

____________________, _____

VIA: ______________________

Prudential Multifamily Mortgage, Inc.
c/o Prudential Asset Resources
2200 Ross Avenue, Suite 4900E
Dallas, Texas 75201
[Note: Subject to change in the event Lender or its address changes]

 

 

Re:

CREDIT FACILITY TERMINATION REQUEST issued pursuant to the Third Amended and
Restated Master Credit Facility Agreement, dated as of March 30, 2004, by and
among the undersigned (the “Borrower”), the Lender and Mid-America Apartments of
Texas, L.P., a Texas limited partnership (the “Guarantor”; collectively, the
Borrower and the Guarantor are referred to as the “Borrower Parties”) (as
amended from time to time, the “Master Agreement”)

Ladies and Gentlemen:

This constitutes a Credit Facility Termination Request pursuant to the terms of
the above-referenced Master Agreement.

          Section 1.          Request. The Borrower hereby requests a
termination of the Master Agreement and the Credit Facility in accordance with
the terms of the Master Agreement. All documents, instruments and certificates
required to be delivered pursuant to the conditions contained in Section 10.03
of the Master Agreement will be delivered on or before the Closing Date.

Y-1

--------------------------------------------------------------------------------

          Section 2.          Prepayments, Release Fees and Termination Fee. The
Borrower shall pay in full all Notes Outstanding, and the required amount of the
Release Fees and the required Credit Facility Termination Fee as a condition to
the termination of the Master Agreement and the Credit Facility.

          Section 3.          Capitalized Terms. All capitalized terms used but
not defined in this Request shall have the meanings ascribed to such terms in
the Master Agreement.

 

 

 

 

 

 

 

 

 

 

Sincerely,

 

 

 

 

 

MID-AMERICA APARTMENT COMMUNITIES,

 

 

INC., a Tennessee corporation

 

 

 

 

 

By:

 

 

 

 

 

 

 

 

Simon R.C. Wadsworth

 

 

 

Executive Vice President

 

 

 

 

 

 

MID-AMERICA APARTMENTS, L.P.,

 

 

a Tennessee limited partnership

 

 

 

 

 

By:

Mid-America Apartment Communities, Inc.,

 

 

 

a Tennessee corporation, its general partner

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

 

 

 

Simon R.C. Wadsworth

 

 

 

 

Executive Vice President

 

 

 

 

 

 

 

MID-AMERICA APARTMENTS OF TEXAS, L.P.,

 

 

a Texas limited partnership

 

 

 

 

 

 

 

By:

MAC of Delaware, Inc., a Delaware corporation,
its general partner

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

Name:

 

 

 

 

 

 

Its:

 

 

 

 

 

 

 

Y-2

--------------------------------------------------------------------------------

Y-3

--------------------------------------------------------------------------------

EXHIBIT Z TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

COLLATERAL SUBSTITUTION REQUEST

          THE MASTER AGREEMENT PURSUANT TO WHICH THIS REQUEST IS DELIVERED
REQUIRES THAT (1) IF YOU CONSENT TO THE SUBSTITUTION OF THE PROPOSED SUBSTITUTED
MORTGAGED PROPERTY FOR THE COLLATERAL RELEASE PROPERTY, (2) WE ELECT TO CAUSE
THE PROPOSED SUBSTITUTED MORTGAGED PROPERTY TO BE ADDED TO THE COLLATERAL POOL
AND THE PROPOSED COLLATERAL RELEASE PROPERTY TO BE RELEASED FROM THE COLLATERAL
POOL, AND (3) ALL CONDITIONS CONTAINED IN SECTION 7.04(c) OF THE MASTER
AGREEMENT ARE SATISFIED, THEN YOU SHALL PERMIT THE PROPOSED SUBSTITUTED
MORTGAGED PROPERTY TO BE ADDED TO THE COLLATERAL POOL AND THE PROPOSED
COLLATERAL RELEASE PROPERTY TO BE RELEASED FROM THE COLLATERAL POOL AT A CLOSING
TO BE HELD AT OFFICES DESIGNATED BY YOU ON A CLOSING DATE SELECTED BY YOU, AND
OCCURRING WITHIN 30 BUSINESS DAYS AFTER YOUR RECEIPT OF OUR ELECTION (OR ON SUCH
OTHER DATE TO WHICH WE MAY AGREE).

____________________, ______

VIA: _______________________

Prudential Multifamily Mortgage, Inc.
c/o Prudential Asset Resources
2200 Ross Avenue, Suite 4900E
Dallas, Texas 75201
[Note: Subject to change in the event Lender or its address changes]

 

 

Re:

COLLATERAL SUBSTITUTION REQUEST issued pursuant to the Third Amended and
Restated Master Credit Facility Agreement, dated as of March 30, 2004, by and
among the undersigned (collectively, the “Borrower”), Mid-America Apartments of
Texas, L.P., a Texas limited partnership, and Prudential Multifamily Mortgage,
Inc., a Delaware corporation (the “Lender”) (as amended from time to time, the
“Master Agreement”)

Ladies and Gentlemen:

This constitutes a Collateral Substitution Request pursuant to the terms of the
above-referenced Master Agreement.

          Section 1.          Request. The Borrower hereby requests that the
Multifamily Residential Property described in this Request be added to the
Collateral Pool in accordance with the terms

Z-1

--------------------------------------------------------------------------------

of the Master Agreement and that the Collateral Release Property described in
this Request be released from the Collateral Pool in accordance with the terms
of the Master Agreement. Following is the information required by the Master
Agreement with respect to this Request:

 

 

 

 

          (a)          Collateral Substitution Description Package. Attached to
this Request is the Collateral Substitution Description Package and attached
thereto are all information and documents relating to the proposed Substituted
Mortgaged Property required by the Collateral Addition Description Package.

 

 

 

 

          (b)          Description of Proposed Collateral Release Property. The
name, owner, address and location (county and state) of the Proposed Collateral
Release Property to be released from the Collateral Pool is as follows:

 

 

 

 

 

Name:          _______________________________________________

 

 

 

 

 

Record Owner:          ________________________________________

 

 

 

 

 

Beneficial Owner:         ______________________________________

 

 

 

 

 

Address:          _____________________________________________

 

 

 

 

 

                _________________________________________________

 

 

 

 

 

Location:           ____________________________________________

 

 

 

 

          (c)          Accompanying Documents. All reports, certificates and
documents required to be delivered pursuant to the conditions contained in
Section 6.03 of the Master Agreement will be delivered on or before the Closing
Date.

 

          Section 2.          Collateral Substitution Fee. If the Lender
consents to the addition of the Substitution to the Collateral Pool and the
release of the proposed Collateral Release Property from the Collateral Pool,
and the Borrower elects to add the Substituted Mortgaged Property to the
Collateral Pool and release the proposed Collateral Release Property from the
Collateral Pool, the Borrower shall pay the Collateral Substitution Fee and all
legal fees and expenses payable by the Borrower pursuant to Section 16.04 as one
of the conditions to the closing of the addition of the Substituted Mortgaged
Property to the Collateral Pool and the release of the proposed Collateral
Release Property from the Collateral Pool.

Z-2

--------------------------------------------------------------------------------

          Section 3.          Capitalized Terms. All capitalized terms used but
not defined in this Request shall have the meanings ascribed to such terms in
the Master Agreement.

 

 

 

 

 

 

 

Sincerely,

 

 

 

 

 

MID-AMERICA APARTMENT COMMUNITIES,

 

 

INC., a Tennessee corporation

 

 

 

 

 

By:

 

 

 

 

 

 

 

 

Simon R.C. Wadsworth

 

 

 

Executive Vice President

 

 

 

 

 

 

MID-AMERICA APARTMENTS, L.P.,

 

 

a Tennessee limited partnership

 

 

 

 

 

By:

Mid-America Apartment Communities, Inc.,

 

 

 

a Tennessee corporation, its general partner

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

 

 

 

Simon R.C. Wadsworth

 

 

 

 

Executive Vice President

 

 

 

 

 

Z-3

--------------------------------------------------------------------------------

 

EXHIBIT AA TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

SCHEDULE OF APPROVED
PROPERTY MANAGEMENT AGREEMENTS

 

 

 

 

 

 

 

 

Property Name

 

 

 

Manager

 

 

 

 

 

 

 

 

1.

Paddock Club Brandon Phase I & II

 

Mid-America Apartment Communities, Inc.
(Phase II: Owned and managed by MAAC.
No separate management agreement.)

2.

Paddock Park Ocala Phase II

 

Mid-America Apartment Communities, Inc.

3.

Paddock Club Tallahassee Phase I

 

Mid-America Apartment Communities, Inc.

4.

Woodbridge at the Lake

 

Mid-America Apartment Communities, Inc.

5.

Courtyards at Campbell Apartments

 

Mid-America Apartment Communities, Inc.

6.

Deer Run Apartments

 

Mid-America Apartment Communities, Inc.

7.

Paddock Club Gainesville

 

Mid-America Apartment Communities, Inc.

8.

Kenwood Club

 

Mid-America Apartment Communities, Inc.

9.

Balcones Woods

 

Mid-America Apartment Communities, Inc.

10.

Paddock Club Panama City Apartments

 

Mid-America Apartment Communities, Inc.

11.

Paddock Club Tallahassee II Apartments

 

Mid-America Apartment Communities, Inc.

12.

Paddock Club Mandarin

 

Mid-America Apartment Communities, Inc.
(Owned and managed by MAAC. No
separate management agreement.)

13.

The Corners

 

Mid-America Apartments, L.P
(Owned and managed by MAALP. No
separate management agreement.)

14.

Jefferson Pines

 

Mid-America Apartments, L.P.

15.

Los Rios

 

Mid-America Apartments, L.P.

AA-1

--------------------------------------------------------------------------------

EXHIBIT BB TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

INDEPENDENT UNIT ENCUMBRANCES

None

BB-1

--------------------------------------------------------------------------------

EXHIBIT CC TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

COLLATERAL ADDITION DESCRIPTION PACKAGE

 

 

 

 

Property Name:

__________________________________________________

 

 

Address:

__________________________________________________

 

 

City/County/State:

__________________________________________________

 

 

General Description, including number of units and amenities:

 

 

__________________________________________________

 

 

 

__________________________________________________

 

 

 

__________________________________________________

 

 

Year Built:

__________

 

 

Year Acquired:

__________

 

 

Fee Owner:

__________________________________________________

 

 

Valuation:

________________________________________________________

 

 

Existing Third Party Reports:

 

 

______________________________________________________________

 

 

 

______________________________________________________________

 

 

Property Contact:

__________________________________________________

 

 

Other Pertinent Information:

 

 

______________________________________________________________

 

 

 

______________________________________________________________

 

 

 

______________________________________________________________

 

 

 

______________________________________________________________

CC-1

--------------------------------------------------------------------------------

EXHIBIT DD TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

COLLATERAL SUBSTITUTION DESCRIPTION PACKAGE

 

 

 

 

Property Name:

__________________________________________________

 

 

Owner:

 

__________________________________________________

 

 

 

Address:

__________________________________________________

 

 

City/County/State:

__________________________________________________

 

 

General Description, including number of units and amenities:

 

 

__________________________________________________

 

 

 

__________________________________________________

 

 

 

__________________________________________________

 

 

Year Built:

__________

 

 

Year Acquired:

__________

 

 

Fee Owner:

__________________________________________________

 

 

Valuation:

__________________________________________________

 

 

Existing Third Party Reports:

 

 

__________________________________________________

 

 

 

__________________________________________________

 

 

Property Contact:

__________________________________________________

 

 

Other Pertinent Information:

 

 

__________________________________________________

 

 

 

__________________________________________________

 

 

 

__________________________________________________

 

 

 

__________________________________________________

DD-1

--------------------------------------------------------------------------------

EXHIBIT EE TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

ADDITIONS TO COLLATERAL

DUS APPLICATION CHECKLIST

 

 

 

 

 

 

 

 

 

I.

PROPERTY DATA

 

 

 

 

 

REC’D

 

OUT

 

 

 

 

 

 

 

_____

 

_____

*A.

Current month’s rent roll, dated and certified by Borrower; must include
apartment number, unit type, tenant name, monthly rent, market rent, move-in
date, lease expiration date, and whether furnished or unfurnished.

 

 

 

 

 

_____

 

_____

*B.

Certification of Current Project Rent Roll (Schedule H).

 

 

 

 

 

_____

 

_____

*C.

Borrower’s Concession Statement (Schedule H-1 and H-2).

 

 

 

 

 

_____

 

_____

*D.

Commercial leases (if applicable).

 

 

 

 

 

_____

 

_____

*E.

Current certified year-to-date operating statement and prior three years’
statements. YTD statement must end with the same month as the certified rent
roll.

 

 

 

 

 

_____

 

_____

  F.

Monthly operating statements for the last six months.

 

 

 

 

 

_____

 

_____

  G.

Vacancy/turnover information for prior 24 months; month-by-month breakdown of
collections including vacancy, bad debt and concessions (may be provided in
operating statements).

 

 

 

 

 

_____

 

_____

  H.

Delinquency information for 30, 60, 90+ days. Lender will take this information
in whatever form the Borrower has.

 

 

 

 

 

_____

 

_____

  I.

Operating Budget (Schedule I, provides instructions).

 

 

 

 

 

_____

 

_____

  J.

Copies of existing major service contracts (landscaping, trash, pool, laundry,
pest and elevator).

 

 

 

 

 

_____

 

_____

  K.

Copy of most recent and prior year tax bills and most recent assessment.

 

 

 

 

 

_____

 

_____

  L.

Copy of complete insurance policies including all endorsements, declarations,
and premiums. Required only if not on blanket policy; Certificate of Insurance
required for all additions.

EE-1

--------------------------------------------------------------------------------

 

 

 

 

 

 

_____

 

_____

  M.

Major improvements during the last two years and projected for the next twelve
months.

 

 

 

 

 

_____

 

_____

  N.

Existing title report including all easements, restrictions, judgments and
liens. (Lender requirements enclosed). Will need to be updated prior to Closing.

 

 

 

 

 

_____

 

_____

*O.

Two copies of the existing as-built survey or site plan (Lender requirements
enclosed). Will need to be updated prior to Closing.

 

 

 

 

 

_____

 

_____

*P.

Legal Description.

 

 

 

 

 

_____

 

_____

  Q.

Occupancy Certificates. If not available, please provide a letter from the City
stating that they are not available, and why.

 

 

 

 

 

_____

 

_____

*R.

Ground Lease; please advise if not applicable.

 

 

 

 

 

_____

 

_____

*S.

Reciprocal Use Agreement; please advise if not applicable.

 

 

 

 

 

_____

 

_____

  T.

Operating Licenses.

 

 

 

 

 

_____

 

_____

  U.

Termite inspection.

 

 

 

 

 

_____

 

_____

  V.

Copy of one bill from each utility for the property.

 

 

 

 

 

_____

 

_____

*W.

Existing reports, if available (e.g., appraisal, market study, engineering,
environmental).

 

 

 

 

 

_____

 

_____

  X.

Plans, specifications and soil reports (recently completed properties only).

 

 

 

 

 

_____

 

_____

  Y.

Copies of any deed or rent restrictions in place; please advise if not
applicable.

* STARRED ITEMS ARE REQUIRED AS SOON AS POSSIBLE SO THAT THIRD PARTY REPORTS CAN
BE ORDERED.

EE-2

--------------------------------------------------------------------------------

 

 

 

 

 

 

 

 

 

 

II.

Management Company

 

 

 

 

 

 

REC’D

 

OUT

 

 

 

 

 

 

 

 

 

_____

 

_____

 

A.

Copy of current or proposed Management Agreement, if applicable.

 

 

 

 

 

 

_____

 

_____

 

B.

Sample tenant lease.

 

 

 

 

 

 

_____

 

_____

 

C.

Management Resume, if other than Borrower-related management company.

 

 

 

 

 

 

_____

 

_____

 

D.

Accounts payable schedule for 30, 60 and 90+ days; list should include vendor
name, invoice date, invoice number, description of item and amount.

 

 

 

 

 

 

_____

 

_____

 

E.

Market survey done by resident manager; to be provided to Lender underwriter at
site inspection.

 

 

 

 

 

 

_____

 

_____

 

F.

Leasing brochure and floor plans.

 

 

 

 

 

 

_____

 

_____

 

G.

Property Payroll and Benefits (Schedule L).

 

 

 

 

 

 

 

 

 

 

 

Any other information deemed necessary by Lender to complete the underwriting of
the addition to collateral.

EE-3

--------------------------------------------------------------------------------

EXHIBIT FF TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

SECOND AMENDED AND RESTATED GUARANTY

          This Second Amended and Restated Guaranty (the “Guaranty”) is made and
entered into as of the ___ day of ____________, ____, by MID-AMERICA APARTMENTS
OF TEXAS, L.P., a Texas limited partnership (the “Guarantor”), for the benefit
of PRUDENTIAL MULTIFAMILY MORTGAGE, INC., a Delaware corporation (“Lender”),
whose address is 2200 Ross Avenue, Suite 4900E, Dallas, Texas 75201.

RECITALS

          A.  Lender has agreed to execute that certain Third Amended and
Restated Master Credit Facility Agreement, dated as of March 30, 2004 (as
amended from time to time, the “Master Agreement”), pursuant to which, inter
alia, Lender has agreed, subject to the terms, conditions and limitations of the
Master Agreement, to loan to Mid-America Apartment Communities, Inc., a
Tennessee corporation (the “REIT”) and Mid-America Apartments, L.P., a Tennessee
limited partnership (“OP”; the REIT and OP, individually and collectively, the
“Borrower”) from time to time Variable Facility Advances and Fixed Facility
Advances (each a “Loan” and, collectively, the “Loans”) to be evidenced by the
Variable Facility Note and the Fixed Facility Notes, respectively.

          B.  This Guaranty amends and restates in its entirety that certain
Amended and Restated Guaranty dated as of August 22, 2002 (the “Original
Guaranty”) relating to the Loans. Guarantor became a party to the Original
Guaranty pursuant to that certain Amended and Restated Master Credit Facility
Agreement dated as of August 22, 2002.

          C.  The repayment of the Variable Facility Advances and the Fixed
Facility Advances, and all of the other obligations of any Borrower Parties
under the Master Agreement or the other Loan Documents are guaranteed by this
Guaranty.

          D.  Guarantor will receive a direct and material benefit from the
Loans to Borrower.

          E.  Lender is willing to make the Loans to Borrower only if Guarantor
agrees to guaranty all obligations of Borrower Parties under the Loan Documents.

          NOW, THEREFORE, in order to induce Lender to make the Loans to
Borrower, and in consideration thereof, Guarantor hereby agrees as follows:

          Section 1.     Definitions. All capitalized terms used but not defined
in this Guaranty, including, without limitation, the term the “Loan Documents”
shall have the meanings ascribed to such terms in the Master Agreement. The term
“Notes” shall mean,

FF-1

--------------------------------------------------------------------------------

collectively, the Fixed Facility Notes and the Variable Facility Note, as
amended from time to time.

          Section 2.     Guaranty of Payment. Guarantor irrevocably, absolutely
and unconditionally guarantees to Lender all of the following (collectively, the
“Guaranteed Obligations”):

          (a)     The due and punctual payment of all principal of, interest on
and other amounts which become due and payable by Borrower under, the Fixed
Facility Notes, and all renewals, extensions, modifications, amendments and
restatements of the Fixed Facility Notes, including, without limitation, all
Fixed Facility Advances made from time to time to Borrower and the interest
accruing on such Fixed Facility Advances;

          (b)     The due and punctual payment of all principal of, interest on
and other amounts which become due and payable by Borrower under, the Variable
Facility Note (and all Advance Confirmation Instruments issued in connection
therewith) and all renewals, extensions, modifications, amendments and
restatements of the Variable Facility Note (and all Advance Confirmation
Instruments issued in connection therewith), including, without limitation, all
Variable Facility Advances made from time to time to Borrower and the imputed
interest accruing on such Variable Facility Advances;

          (c)     The due and punctual payment of all amounts which become due
and payable by the Borrower under the Master Agreement or any other Loan
Documents from time to time executed by the Borrower; and

          (d)     The due and punctual performance of all the obligations of the
Borrower under the Master Agreement, and all of the obligations of the Borrower
under any other Loan Documents from time to time executed by the Borrower.

This Guaranty shall be an unconditional guaranty of payment and performance and
not of collection, and is in no way conditioned upon any attempt by Lender to
pursue or exhaust any remedy against Borrower. This Guaranty is a continuing
guaranty which shall remain in full force and effect until all of the Guaranteed
Obligations have been paid and performed in full; and Guarantor shall not be
released from any obligations to Lender under this Guaranty as long as any
amount payable by the Borrower to Lender, or any obligation by the Borrower,
under the Loan Documents is not performed, satisfied, settled or paid in full.

          Section 3.     Form of Payment. All payments under this Guaranty shall
be made to Lender in immediately available funds, without reduction by any
recoupment, set-off, counterclaim or cross-claim against Lender.

          Section 4.     Guarantor’s Obligations are Absolute. The obligations
of Guarantor under this Guaranty shall be absolute and unconditional, shall not
be subject to any counterclaim, set-off, recoupment, deduction or defense based
upon any claim Guarantor may have against Lender or Borrower and shall remain in
full force and effect without regard to, and shall not be released, discharged
or terminated or in any other way

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affected by, any circumstance or condition (whether or not Guarantor shall have
any knowledge or notice thereof), including, without limitation:

          (a)     any amendment or modification of, or extension of time for
payment of any of the principal of, interest on or other amounts payable under,
the Loan Documents (except that liability of Guarantor hereunder shall be deemed
to apply to the Loan Documents as so amended or modified or to the payment of
all amounts so extended);

          (b)     any exercise or non-exercise by Lender of any right, power or
remedy under or in respect of the Loan Documents, or any waiver, consent,
forbearance, indulgence or other action, inaction or omission by Lender under or
in respect of the Loan Documents;

          (c)     any assignment, sale or other transfer of Borrower’s interest
in all or any part of the real or personal property which at any time
constitutes collateral for the payment of the Guaranteed Obligations, including,
without limitation, a conveyance of such property by Borrower to Lender by deed
in lieu of foreclosure;

          (d)     any bankruptcy, insolvency, reorganization, adjustment,
dissolution, liquidation or other like proceeding involving or affecting
Borrower or Lender or their respective properties or creditors, or any action
taken with respect to the Loan Documents by any trustee or receiver of Borrower
or Lender, or by any court, in any such proceeding;

          (e)     any invalidity or unenforceability, in whole or in part, of
any term or provision of the Loan Documents or Borrower’s incapacity or lack of
authority to enter into the Loan Documents;

          (f)     any release, compromise, settlement or discharge with respect
to all or any portion of Borrower’s obligations under the Loan Documents;

          (g)     any acceptance of additional or substituted collateral for
payment of the Guaranteed Obligations or any release or subordination of any
collateral held at any time by Lender as security for the payment of the
Guaranteed Obligations; or

          (h)     any resort to Guarantor for payment of all or any portion of
the Guaranteed Obligations, whether or not Lender shall have resorted to any
collateral securing the Guaranteed Obligations or shall have proceeded to pursue
or exhaust its remedies against Borrower (or any other Person) primarily or
secondarily liable for the Guaranteed Obligations.

No exercise, delay in exercise or non-exercise by Lender of any right hereby
given it, no dealing by Lender with Borrower, Guarantor or any other Person, no
change, impairment or suspension of any right or remedy of Lender, and no act or
thing which, but for this provision, could act as a release or exoneration of
the liabilities of Guarantor hereunder, shall in any way affect, decrease,
diminish or impair any of the obligations of Guarantor hereunder or give
Guarantor or any other Person any recourse or defense against Lender.

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          Section 5.     Waiver. Guarantor unconditionally waives the following:

          (a)     notice of acceptance of this Guaranty and notice of any of the
matters referred to in Section 4 hereof;

          (b)     all notices which may be required by statute, rule of law or
otherwise to preserve intact any rights which Lender may have against Guarantor
under this Guaranty, including, without limitation, any demand, proof or notice
of non-payment of any of the principal of, interest on or other amounts payable
under the Loan Documents, and notice of any failure on the part of Borrower to
perform and comply with any covenant, agreement, term or condition of the Loan
Documents;

          (c)     any right to the enforcement, assertion or exercise of any
right, power or remedy conferred upon Lender in the Loan Documents or otherwise;

          (d)     any requirement that Lender act with diligence in enforcing
its rights under the Loan Documents or this Guaranty;

          (e)     any right to require Lender to proceed against or exhaust its
recourse against Borrower or any security or collateral held by Lender at any
time for the payment of the Guaranteed Obligations or to pursue any other remedy
in its power before being entitled to payment from Guarantor under this Guaranty
or before proceeding against Guarantor;

          (f)     any failure by Lender to file or enforce a claim against the
estate (either in administration, bankruptcy or any other proceeding) of
Borrower or any other Person;

          (g)     any defense based upon an election of remedies by Lender which
destroys or otherwise impairs the subrogation rights of Guarantor or the right
of Guarantor (after payment of the Guaranteed Obligations) to proceed against
Borrower for reimbursement, or both;

          (h)     any defense based upon any taking, modification or release of
any collateral for the Guaranteed Obligations, or any failure to perfect any
security interest in, or the taking of, or failure to take any other action with
respect to, any collateral securing payment of the Guaranteed Obligations;

          (i)     any defense based upon the addition, substitution or release,
in whole or in part, of any Person(s), including, without limitation, another
guarantor, primarily or secondarily liable for or in respect of the Guaranteed
Obligations;

          (j)     any rights or defenses based upon an offset by Guarantor
against any obligation now or hereafter owed to Guarantor by Borrower;

          (k)     any defense of the statute of limitations in any action
against Guarantor under this Guaranty; and

          (l)     all other notices which may or might be lawfully waived by
Guarantor;

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it being the intention hereof that Guarantor shall remain liable as principal,
to the extent set forth in this Guaranty, until the payment and performance in
full of the Guaranteed Obligations, notwithstanding any act, omission or thing
which might otherwise operate as a legal or equitable discharge of Guarantor
other than the payment and performance in full of the Guaranteed Obligations. No
delay by Lender in exercising any rights and/or powers hereunder or in taking
any action to enforce Borrower’s obligations under the Loan Documents shall
operate as a waiver as to such rights or powers or in any manner prejudice any
and all of Lender’s rights and powers hereunder against Guarantor. The intention
of Guarantor under this Guaranty is that, so long as any of the Guaranteed
Obligations remains unsatisfied, the obligations of Guarantor hereunder shall
not be discharged except by performance and then only to the extent of such
performance. Guarantor agrees that Guarantor’s obligations hereunder shall not
be affected by any circumstances, whether or not referred to in this Guaranty,
which might constitute a legal or equitable discharge of a surety or guarantor.

          Section 6.     Election of Remedies. This Guaranty may be enforced
from time to time, as often as occasion therefor may arise, and without any
requirement that Lender must first pursue or exhaust any remedies available to
it against Borrower under the Loan Documents or against any other Person or
resort to any collateral at any time held by it for performance of the
Guaranteed Obligations or any other source or means of obtaining payment of any
of the Guaranteed Obligations.

          Section 7.     Expenses. Guarantor agrees to pay all costs and
out-of-pocket expenses, including court costs and expenses and the reasonable
fees and disbursements of legal counsel, incurred by or on behalf of Lender in
connection with the enforcement of Guarantor’s obligations under this Guaranty
or the protection of Lender’s rights under this Guaranty. The covenants
contained in this Section shall survive the payment of the Guaranteed
Obligations.

          Section 8.     Condition of Borrower. Guarantor is fully aware of the
financial condition of Borrower and is executing and delivering this Guaranty
based solely upon Guarantor’s own independent investigation of all matters
pertinent hereto and is not relying in any manner upon any representation or
statement made by Lender. Guarantor represents and warrants that Guarantor is in
a position to obtain, and Guarantor hereby assumes full responsibility for
obtaining, any additional information concerning Borrower’s financial condition
and any other matters pertinent hereto as Guarantor may desire and Guarantor is
not relying upon or expecting Lender to furnish to Guarantor any information now
or hereafter in Lender’s possession concerning the same or any other matter. By
executing this Guaranty, Guarantor knowingly accepts the full range of risks
encompassed within a contract of this type, which risks Guarantor acknowledges.

          Section 9.     Further Assurances. Guarantor agrees at any time and
from time to time upon request by Lender to take, or cause to be taken, any
action and to execute and deliver any additional documents which, in the opinion
of Lender, may be necessary in order to assure to Lender the full benefits of
this Guaranty.

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          Section 10.     Subordination. Guarantor hereby irrevocably and
unconditionally agrees that any claims, direct or indirect, Guarantor may have
by subrogation or other form of reimbursement, against Borrower or to any
security or any interest therein, by virtue of this Guaranty or as a consequence
of any payment made by Guarantor pursuant to this Guaranty, shall be fully
subordinated in time and right of payment to the payment in full of the
Guaranteed Obligations and all other obligations of Guarantor to Lender under
this Guaranty.

          Section 11.     No Subrogation. Except as expressly provided in
Section 10 above, Guarantor shall not have any right of subrogation against
Borrower (or any other Borrower Party) by reason of any payment by Guarantor
under this Guaranty until such time as all of the Obligations have been
satisfied in full. Nothing in the foregoing shall affect any claim which any
Guarantor has against Borrower under the terms of the Contribution Agreement.

          Section 12.     Insolvency and Liability of Borrower (and any other
Borrower Party). So long as any of the Guaranteed Obligations is unpaid and this
Guaranty is in effect, and to the extent not prohibited by the applicable
bankruptcy court, Guarantor agrees to file all claims against Borrower in any
bankruptcy or other proceeding in which the filing of claims is required by law
in connection with indebtedness owed by Borrower to Guarantor and to assign to
Lender all rights of Guarantor thereunder up to the lesser of (i) the amount of
such indebtedness or (ii) the amount of the Guaranteed Obligations guaranteed by
Guarantor. In all such cases the Person or Persons authorized to pay such claims
shall pay to Lender the full amount thereof to the full extent necessary to pay
the Guaranteed Obligations, and Guarantor hereby assigns to Lender all of
Guarantor’s rights to all such payments to which Guarantor would otherwise be
entitled. Notwithstanding the foregoing, and except to the extent that any sums
owed by Borrower to Lender under the Loan Documents shall have been fully
satisfied thereby, the liability of Guarantor hereunder shall in no way be
affected by

          (a)     the release or discharge of Borrower in any creditors’,
receivership, bankruptcy or other proceedings; or

          (b)     the impairment, limitation or modification of the liability of
Borrower or the estate of Borrower in bankruptcy resulting from the operation of
any present or future provisions of the Bankruptcy Code or other statute or from
the decision in any court.

          Section 13.     Preferences, Fraudulent Conveyances, Etc. If Lender is
required to refund, or voluntarily refunds, any payment received from Borrower
because such payment is or may be avoided, invalidated, declared fraudulent, set
aside or determined to be void or voidable as a preference, fraudulent
conveyance, impermissible setoff or a diversion of trust funds under the
bankruptcy laws or for any similar reason, including, without limitation, any
judgment, order or decree of any court or administrative body having
jurisdiction over Lender or any of its property, or any settlement or compromise
of any claim effected by Lender with Borrower or other claimant (a “Rescinded
Payment”), then Guarantor’s liability to Lender shall continue in full force and
effect, or Guarantor’s liability to Lender shall be reinstated, as the case may

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be, with the same effect and to the same extent as if the Rescinded Payment had
not been received by Lender, notwithstanding the cancellation or termination of
any Note or any of the other Loan Documents. In addition, Guarantor shall pay,
or reimburse Lender for, all expenses (including all reasonable attorneys’ fees,
court costs and related disbursements) incurred by Lender in the defense of any
claim that a payment received by Lender in respect of all or any part of the
Guaranteed Obligations must be refunded. The provisions of this Section shall
survive the termination of this Guaranty and any satisfaction and discharge of
Borrower by virtue of any payment, court order or any federal or state law.

          Section 14.     Waiver. Neither this Guaranty nor any term hereof may
be changed, waived, discharged or terminated except by an instrument in writing
signed by Lender and Guarantor expressly referring to this Guaranty and to the
provisions so changed or limited. No such waiver shall extend to or affect any
obligation not expressly waived or impair any right consequent thereon. No
course of dealing or delay or omission on the part of Lender in exercising any
right under this Guaranty shall operate as a waiver thereof or otherwise by
prejudice thereto.

          Section 15.     Cross-Default with Master Agreement. The occurrence of
an Event of Default under the Master Agreement shall constitute a default under
this Guaranty. Upon the occurrence of an Event of Default under the Master
Agreement, Lender, at Lender’s option, may exercise any or all of the remedies
to which it may be entitled under this Guaranty or other Loan Documents upon the
breach of any covenant or agreement by Guarantor under this Guaranty.

          Section 16.     Security for the Guaranty. Guarantor’s obligations
under this Guaranty are secured by the Security Documents, if any, executed by
Guarantor from time to time to secure the Guaranty, and reference to the Master
Agreement and such documents is made for Lender’s rights upon the occurrence of
a default under this Guaranty. Each Security Document shall be released as
security for the Guaranty and this Guaranty shall be released in accordance with
the provisions of the Master Agreement and the Security Document.

          Section 17.     Limitations on Liability. The provisions of Article
XXII of the Master Agreement (entitled “Limits on Personal Liability”) are
hereby incorporated into this Guaranty by this reference as if the text of such
Article were set forth in its entirety herein.

          Section 18.     Notices. All notices or other communications hereunder
shall be sufficiently given and shall be deemed given when sent in the manner
prescribed by the Master Agreement.

          Section 19.     Assignability by Lender. Lender may, without notice to
Guarantor, assign or transfer the Loans and the Loan Documents, in whole or in
part. In such event, each and every immediate and successive assignee,
transferee or holder of all or any part of the Loans and the Loan Documents
shall have the right to enforce this Guaranty, by legal action or otherwise, as
fully as if such assignee, transferee, or holder were by name specifically given
such right and power in this Guaranty. Lender shall

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have an unimpaired right to enforce this Guaranty for its benefit as to so much
of the Loans and the Loan Documents as Lender has not sold, assigned or
transferred.

          Section 20.     Guarantor Bound by Judgment Against Borrower.
Guarantor shall be conclusively bound, in any jurisdiction, by the judgment in
any action by Lender against Borrower in connection with the Loan Documents
(wherever instituted) as if Guarantor were a party to such action even if not so
joined as a party.

          Section 21.     Governing Law. The provisions of Section 23.06 of the
Master Agreement (entitled Choice of Law; Consent to Jurisdiction; Waiver of
Jury Trial) are hereby incorporated into this Agreement by this reference to the
fullest extent as if the text of such Section were set forth in its entirety
herein.

          Section 22.     Invalid Provisions. If any provision of this Guaranty
or the application thereof to Guarantor or any circumstance in any jurisdiction
whose laws govern this Guaranty shall, to any extent, be invalid or
unenforceable under any applicable statute, regulation or rule of law, then such
provision shall be deemed inoperative to the extent of such invalidity or
unenforceability and shall be deemed modified to conform to such statute,
regulation or rule or law. The remainder of this Guaranty and the application of
any such invalid or unenforceable provision to parties, jurisdictions or
circumstances other than those to whom or to which it is held invalid or
unenforceable, shall not be affected by such invalidity or unenforceability nor
shall such invalidity or unenforceability affect the validity or enforceability
of any other provision of this Guaranty.

          Section 23.     General Provisions. This Guaranty shall be binding
upon the respective successors and assigns of Guarantor, and shall inure to the
benefit of Lender and its successors and assigns, including, without limitation,
each successive holder of the Notes. The descriptive headings of the Sections of
the Guaranty have been inserted herein for convenience of reference only and
shall not define or limit the provisions hereof.

          Section 24.     Obligations Joint and Several. All obligations of the
Guarantors shall be joint and several.

(Remainder of this page deliberately left blank)

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          IN WITNESS WHEREOF, Guarantor has signed this Guaranty under seal as
of the day and year first above written.

 

 

 

 

 

 

MID-AMERICA APARTMENTS OF TEXAS, L.P.,
a Texas limited partnership

 

 

 

By:

 

MAC of Delaware, Inc., a Delaware corporation,
its general partner

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Its: 

 

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EXHIBIT GG TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

INTEREST RATE HEDGE SECURITY,
PLEDGE AND ASSIGNMENT AGREEMENT

          This INTEREST RATE HEDGE SECURITY, PLEDGE AND ASSIGNMENT AGREEMENT
(this “Agreement”) is made as of the ____ day of _______________, _____, by and
among (i) (a) MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee corporation
(the “REIT”), (b) MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership
(“OP”; the REIT and OP being collectively referred to as the “Borrower”), (c)
MID-AMERICA APARTMENTS OF TEXAS, L.P., a Texas limited partnership (“MAA of
Texas” or the “Guarantor”; Borrower and the Guarantor being collectively
referred to as the “Grantor”) and (ii) PRUDENTIAL MULTIFAMILY MORTGAGE, INC.
(“Lender”). [ADD SWAP PROVIDER]

RECITALS:

          A.          Grantor and the Lender are parties to that certain Third
Amended and Restated Master Credit Facility Agreement, dated as of March 30,
2004 (as amended from time to time, the “Master Agreement”), pursuant to which
Lender has agreed to provide certain advances in accordance with and subject to
the terms of the Master Agreement. As set forth in Section 1.2 of this
Agreement, all capitalized terms not otherwise defined herein shall have their
respective meanings set forth in the Master Agreement.

          B.          As required by the Master Agreement, the Grantor has made
arrangements for the acquisition of a Hedge or Hedges pursuant to certain
documents attached as Exhibit A to this Agreement (the “Hedge Documents”).

          C.          As security for the Grantor’s obligations under the Master
Agreement and the Note, the Grantor and the Lender are entering into this
Agreement.

          NOW, THEREFORE, in consideration of the mutual covenants and
undertakings set forth in this Agreement and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Grantor and the Lender agree as follows:

          1.          Incorporation of Recitals; Definitions; Interpretation;
Reference Materials.

                    1.1          Incorporation of Recitals. The recitals set
forth in this Agreement are, by this reference, incorporated into and deemed a
part of this Agreement.

                    1.2          Definitions. Capitalized terms used in this
Agreement shall have the meanings given to those terms in this Agreement.
Capitalized terms used in this Agreement and not defined in this Agreement, but
defined in the Master Agreement, shall have the meanings given to those terms in
the Master Agreement.

                    1.3          Interpretation. Words importing any gender
include all genders. The singular form of any word used in this Agreement shall
include the plural, and vice versa, unless

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the context otherwise requires. Words importing persons include natural persons,
firms, associations, partnerships and corporations. The parties hereto
acknowledge that each party and their respective counsel have participated in
the drafting and revision of this Agreement. Accordingly, the parties agree that
any rule of construction which disfavors the drafting party shall not apply in
the interpretation of this Agreement or any statement or supplement or exhibit
hereto.

                    1.4          Reference Materials. Sections mentioned by
number only are the respective sections of this Agreement so numbered. Reference
to “this section” or “this subsection” shall refer to the particular section or
subsection in which such reference appears. Any captions, titles or headings
preceding the text of any section and any table of contents or index attached to
this Agreement are solely for convenience of reference and shall not constitute
part of this Agreement or affect its meaning, construction or effect.

          2.          Collateral and Obligations; Further Assurances.

                    2.1          Security Interest in Collateral. To secure the
Grantor’s obligations under the Master Agreement, the Note and the other Loan
Documents (the “Obligations”), the Grantor hereby assigns, pledges and grants a
security interest to the Lender in and to all of the Grantor’s right, title and
interest in and to the following (collectively, the “Collateral”):

                         (i)           the Hedge and the Hedge Documents;

                         (ii)         any and all moneys (collectively,
“Payments”) payable to the Grantor, from time to time, pursuant to the Hedge
Documents by the counterparty under the Hedge Documents (the “Counterparty”);

                         (iii)         all rights of the Grantor under any of
the foregoing, including all rights of the Grantor to the Payments, contract
rights and general intangibles now existing or hereafter arising with respect to
any or all of the foregoing;

                         (iv)         all rights, liens and security interests
or guarantees now existing or hereafter granted by the Counterparty or any other
person to secure or guaranty payment of the Payments due pursuant to the Hedge
Documents;

                         (v)          all documents, writings, books, files,
records and other documents arising from or relating to any of the foregoing,
whether now existing or hereafter arising;

                         (vi)         all extensions, renewals and replacements
of the foregoing; and

                         (vii)        all cash and non-cash proceeds and
products of any of the foregoing, including, without limitation, interest,
dividends, cash, instruments and other property from time to time received,
receivable or otherwise distributed or distributable in respect of or in
exchange for any or all of the other Collateral.

                      [(viii)         ADD SWAP PAYMENTS]

          3.          Delivery of Hedge Documents.

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                    3.1          Acquisition of Hedge; Delivery of Hedge
Documents. The Grantor has, on or before the date of this Agreement, executed
and delivered the Hedge Documents to the Counterparty and has delivered to the
Lender fully executed originals of such Hedge Documents. True, complete and
correct copies of the Hedge Documents and all amendments thereto, fully executed
by all parties, are attached as Exhibit A hereto. The Grantor hereby represents
and warrants to the Lender that there is no additional security for or any other
arrangements or agreements relating to the Hedge Documents.

                    3.2          Obligations Remain Absolute. Nothing contained
herein shall relieve the Grantor of its primary obligation to pay all amounts
due in respect of its obligations under the Master Agreement, the Note or the
Other Loan Documents.

          4.          Representations and Warranties.

                    4.1          Representations and Warranties of the Grantor.
The Grantor represents and warrants to the Lender on the Closing Date that:

                         (i)          it has all requisite power and authority
to enter into this Agreement and to carry out its obligations under this
Agreement; the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated by this Agreement have been duly
authorized by all necessary action on the part of the Grantor; this Agreement
has been duly executed and delivered by it and is the valid and binding
obligation of the Grantor, enforceable against it in accordance with its terms;
and

                         (ii)          it is the legal and beneficial owner of,
and has good and marketable title to (and full right and authority to assign),
the Collateral, free and clear of all Liens.

          5.          Maintenance, Administration of Hedge.

                    5.1          Compliance with Reimbursement Agreement. The
Grantor agrees to comply with the provisions of the Master Agreement related to
obtaining and maintaining at all applicable times a Hedge which satisfies the
requirements of the Master Agreement.

                    5.2          Event of Default. Upon the occurrence and
during the continuance of any “Event of Default” under the Master Agreement, the
Lender shall have and may exercise the same rights, powers, and remedies with
respect to the Collateral that the Grantor may exercise, which rights, powers,
and remedies are incorporated herein by this reference for all purposes. In
furtherance and not in limitation of the foregoing, the Lender shall have all
rights, remedies and recourses with respect to the Collateral granted in the
Master Agreement and any other instrument executed in connection therewith, or
existing at common law or equity (including specifically those granted by the
Uniform Commercial Code as adopted in the District of Columbia, the right of
offset, the right to sell the Collateral at public or private sale, and the
right to receive distributions to Grantor, and such rights and remedies (i)
shall be cumulative and concurrent, (ii) may be pursued separately, successively
or concurrently against the Grantor and any other party obligated under the
Obligations, or against the Collateral, or any other security for the
Obligations, at the sole discretion of the Lender, (iii) may be exercised as
often as occasion therefor shall arise, it being agreed by Grantor that the
exercise or failure to exercise

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any of same shall in no event be construed as a waiver or release thereof or of
any other right, remedy or recourse, and (iv) are intended to be and shall be,
non-exclusive.

          If the proceeds of sale, collection or other realization of or upon
the Collateral are insufficient to cover the costs and expenses of such
realization and the payment in full of the Obligations, the Grantor shall remain
liable for any deficiency (subject to the applicable non-recourse provisions of
the Master Agreement).

          Upon the occurrence and continuance of an “Event of Default” under the
Master Agreement, in case of any sale by the Lender of any of the Collateral,
which may be elected at the option and in the complete discretion of the Lender,
the Collateral so sold may be retained by the Lender until the selling price is
paid by the purchaser, but the Lender shall not incur any liability in case of
failure of the purchaser to take up and pay for the Collateral so sold. In case
of any such failure, such Collateral so sold may be again similarly sold. After
deducting all costs or expenses of every kind (including, without limitation,
the reasonable attorneys’ fees and legal expenses incurred by the Lender), the
Lender shall apply the residue of the proceeds of any sale or sales in such
manner as the Lender may deem advisable.

          6.     Miscellaneous Provisions.

                  6.1     Termination. This Agreement shall terminate upon the
date which is ninety-one (91) days after the date on which all amounts due under
the Master Agreement, the Note and the other Loan Documents have been paid in
full, provided that during such ninety-one (91) day period no Act of Bankruptcy
(as defined below) shall have occurred. “Act of Bankruptcy” means the filing of
a petition in bankruptcy or other commencement of a bankruptcy or similar
proceeding by or against the Grantor under any applicable bankruptcy,
insolvency, reorganization or similar law now in effect or any such proceeding
by or against the Grantor under any applicable bankruptcy, insolvency,
reorganization or similar law in effect after the date of this Agreement. Upon
termination of this Agreement, all Collateral shall be reassigned to the Grantor
without recourse, representation or warranty.

                  6.2     Attorney-In-Fact. Without limiting any rights or
powers granted by this Agreement to the Lender, upon the occurrence and during
the continuance of any “Event of Default” under the Master Agreement, the Lender
is hereby appointed the attorney-in-fact of the Grantor for the purpose of
carrying out the provisions of this Agreement and taking any action and
executing any instruments which the Lender may deem necessary or advisable to
accomplish the purposes hereof, which appointment as attorney-in-fact is
irrevocable and coupled with an interest. Without limiting the generality of the
foregoing, the Lender shall have the right and power to receive, endorse and
collect all checks made payable to the order of the Grantor representing any
dividend, payment or other distribution in respect of the Collateral or any part
thereof and to give full discharge for the same.

                  6.3     Further Assurances. At any time and from time to time,
at the expense of the Grantor, the Grantor shall promptly execute and deliver to
Lender all further instruments and documents, and take all further action, that
may be necessary or desirable, or that Lender may request, in order to carry out
the intent and purposes of this Agreement or to enable Lender to

GG-4

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exercise and enforce its rights and remedies under this Agreement all at the
sole expense of the Grantor.

                  6.4     Expenses. The Grantor agrees to pay to Lender all
reasonable out-of-pocket expenses (including reasonable expenses for legal
services of every kind) of, or incident to, the preservation of rights under or
enforcement of any of the provisions of this Agreement or performance by Lender
of any obligations of the Grantor in respect of the Collateral which Grantor has
failed or refused to perform, or any actual or attempted sale, or any exchange,
enforcement, collection, compromise or settlement in Collateral and defending or
asserting rights and claims of Lender in respect thereof, by litigation or
otherwise, including expenses of insurance, and all such expenses shall be
Obligations hereby secured.

                  6.5     No Deemed Waiver. No failure on the part of Lender or
any of its agents to exercise, and no course of dealing with respect to, and no
delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise by Lender or any of its
agents of any right, power or remedy hereunder preclude any other or further
exercise thereof or the exercise of any other right, power or remedy. The
remedies herein are cumulative and are not exclusive of any remedies provided by
law.

                  6.6     Entire Agreement. This Agreement and the Master
Agreement constitute the entire agreement and supersede all prior agreements and
understandings, both written and oral, between the parties to this Agreement
with respect to the subject matter of this Agreement. This Agreement may not be
amended, changed, waived or modified except by a writing executed by each party
hereto.

                  6.6.     Successors and Assigns. This Agreement shall inure to
the benefit of, and be enforceable by, the Grantor and Lender and their
respective successors and permitted assigns, and nothing herein expressed or
implied shall be construed to give any other person any legal or equitable
rights under this Agreement.

                  6.7.     Notices. The provisions of Section 17.08 of the
Master Agreement (entitled “Notices”) are hereby incorporated into this
Agreement by this reference to the fullest extent as if the text of such
provisions were set forth in their entirety herein.

                  6.8.     Governing Law. The provisions of Section 17.06 of the
Master Agreement (entitled “Choice of Law; Consent to Jurisdiction; Waiver of
Jury Trial”) are hereby incorporated into this Agreement by this reference to
the fullest extent as if the text of such provisions were set forth in their
entirety herein.

                  6.9.     Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party.

                  6.10.     Multiple Counterparts. This Agreement may be
simultaneously executed in multiple counterparts, all of which shall constitute
one and the same instrument and each of which shall be, and shall be deemed to
be, an original.

GG-5

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                  6.11.     Limits on Personal Liability. The provisions of
Article 15 of the Master Agreement (entitled “Limits on Personal Liability”) are
hereby incorporated into this Agreement by this reference to the fullest extent
as if the text of such Article were set forth in its entirety herein.

          The Grantor and Lender have caused this Agreement to be signed as an
instrument under seal, on the date first written above, by their respective
officers duly authorized.

 

 

 

 

 

GRANTOR

 

 

 

 

 

MID-AMERICA APARTMENT COMMUNITIES, INC.,
a Tennessee corporation

 

 

 

By:

 

 

 

 

 

 

Simon R.C. Wadsworth

 

 

Executive Vice President

 

 

 

 

MID-AMERICA APARTMENTS, L.P.,
a Tennessee limited partnership

 

 

 

By:

Mid-America Apartment Communities, Inc.,
a Tennessee corporation, its general partner

 

 

 

 

 

By:

 

 

 

 

 

 

 

 

Simon R.C. Wadsworth

 

 

 

Executive Vice President

 

 

 

 

 

MID-AMERICA APARTMENTS OF TEXAS, L.P.,
a Texas limited partnership

 

 

 

By:

MAC of Delaware, Inc., a Delaware corporation,
its general partner

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

Name:

 

 

 

 

 

 

 

Its:

 

 

 

 

 

[Signatures continued on following page]

GG-6

--------------------------------------------------------------------------------

 

 

 

 

 

 

LENDER

 

 

 

 

 

 

PRUDENTIAL MULTIFAMILY MORTGAGE, INC.,
a Delaware corporation

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

Name:

 

 

 

 

 

 

 

Title:

 

 

 

 

 

 

 

 

 

 

 

[ADD SWAP PROVIDER]

GG-7

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EXHIBIT A

Hedge Documents

(See Attached)

--------------------------------------------------------------------------------

EXHIBIT HH TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

DUS PROPERTIES

 

 

 

 

 

 

 

Property Name

 

 

Location

 

 

 

 

 

 

 

Lane at Towne Crossing

Mesquite, Texas

Northwood Place

Arlington, Texas

The Woods

Austin, Texas

Walden Run

McDonough, Georgia

Lakeshore Landing

Jackson, Mississippi

Woodstream

Greensboro, North Carolina

Colony at South Park

Aiken, South Carolina

Hamilton Pointe

Chattanooga, Tennessee

Hidden Creek

Chattanooga, Tennessee

Cedar Mill

Memphis, Tennessee

East View

Memphis, Tennessee

HH-1

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EXHIBIT II TO THIRD AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT

APPROVED SWAPS

 

 

 

 

 

 

 

 

 

 

 

Notional Amount

 

Maturity

 

Rate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

25,000,000.00

 

9/1/2005

 

6.813

%

AmSouth

 

Fannie Accepted

$

25,000,000.00

 

9/1/2006

 

6.790

%

AmSouth

 

Fannie Accepted

$

25,000,000.00

 

12/1/2005

 

5.595

%

AmSouth

 

Fannie Accepted

$

25,000,000.00

 

6/1/2007

 

5.730

%

AmSouth

 

Fannie Accepted

$

25,000,000.00

 

4/1/2007

 

5.010

%

AmSouth

 

Fannie Accepted

$

50,000,000.00

 

6/1/2008

 

5.268

%

1st TN

 

Fannie Accepted

$

50,000,000.00

 

6/1/2010

 

4.825

%

Sun Trust

 

Fannie Enhanced

$

25,000,000.00

 

9/1/2007

 

6.220

%

AmSouth

 

Fannie Accepted

$

25,000,000.00

 

3/3/2005

 

5.430

%

1st TN

 

Fannie Accepted

$

25,000,000.00

 

3/1/2009

 

3.910

%

1st TN

 

Fannie Accepted

 

 

 

 

 

 

 

 

 

 

$

300,000,000.00

 

 

 

5.474

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fannie Accepted - Forward

$

40,000,000.00

 

3/31/2010

 

4.850

%

AmSouth

 

Swap for 4/1/04

 

 

 

 

 

 

 

 

 

 

$

340,000,000.00

 

 

 

5.400

%

 

 

 

(1) Excludes swaps and caps purchased for the MAA Tax-Exempt Bond Facility,
which requires acceptable hedges on all debt.

1

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