EXHIBIT
10.1

      


      THIRD
AMENDED AND RESTATED MASTER CREDIT FACILITY AGREEMENT

      (MAA
II)

      


      among

      


      (i) MID-AMERICA APARTMENT COMMUNITIES,
INC.,

      a
Tennessee corporation

      


      and

      


      (ii)
MID-AMERICA APARTMENTS,
LP,

      a
Tennessee limited partnership

      


      and

      


      PRUDENTIAL MULTIFAMILY MORTGAGE,
INC.,

      a
Delaware corporation

      


      and

      


      FANNIE
MAE

      


      dated as
of

      


      January
4, 2010


      
        
           


        

        
           


          
            

          

        

        
           


        

      

      


      TABLE OF
CONTENTS

      


      
        
          
            
              
                	 
      	
                        Page

                      
	 
      	 
      
	
                        ARTICLE
      1 DEFINITIONS

                      	
                        3

                      
	
                        ARTICLE
      2 THE VARIABLE FACILITY COMMITMENT

                      	
                        26

                      
	
                        Section
      2.01.

                      	
                        Variable Facility
      Commitment

                      	
                        26

                      
	
                        Section
      2.02.

                      	
                        Requests for Variable
      Advances

                      	
                        26

                      
	
                        Section
      2.03.

                      	
                        Maturity Date of Variable
      Advances

                      	
                        26

                      
	
                        Section
      2.04.

                      	
                        Interest
      on Variable Advances

                      	
                        27

                      
	
                        Section
      2.05.

                      	
                        Coupon Rates for Variable
      Advances

                      	
                        27

                      
	
                        Section
      2.06.

                      	
                        Variable Facility
      Note

                      	
                        28

                      
	
                        Section
      2.07.

                      	
                        [Intentionally
      Deleted.]

                      	
                        28

                      
	
                        Section
      2.08.

                      	
                        Reinstatement of Variable
      Commitment Upon Maturity of Fixed Facility Advances

                      	
                        28

                      
	
                        Section
      2.09.

                      	
                        Limitations on Right to
      Reborrow

                      	
                        28

                      
	
                        Section
      2.10.

                      	
                        Conditions Precedent to
      Reborrowing

                      	
                        29

                      
	
                        ARTICLE
      3 THE FIXED FACILITY COMMITMENT

                      	
                        30

                      
	
                        Section
      3.01.

                      	
                        Fixed Facility
      Commitment

                      	
                        30

                      
	
                        Section
      3.02.

                      	
                        Requests for Fixed Facility
      Advances

                      	
                        30

                      
	
                        Section
      3.03.

                      	
                        Maturity Date of Fixed Facility
      Advances; Amortization

                      	
                        30

                      
	
                        Section
      3.04.

                      	
                        Interest on Fixed Facility
      Advances

                      	
                        30

                      
	
                        Section
      3.05.

                      	
                        Coupon Rates for Fixed Facility
      Advances

                      	
                        30

                      
	
                        Section
      3.06.

                      	
                        Fixed Facility
      Note

                      	
                        31

                      
	
                        Section
      3.07.

                      	
                        Conversion of Commitment from
      Variable Facility Commitment to Fixed Facility
      Commitment

                      	
                        31

                      
	
                        Section
      3.08.

                      	
                        Limitations on Right to
      Convert

                      	
                        31

                      
	
                        Section
      3.09.

                      	
                        Conditions Precedent to
      Conversion

                      	
                        31

                      
	
                        Section
      3.10.

                      	
                        [Intentionally
      Deleted.]

                      	
                        32

                      
	
                        ARTICLE
      4 RATE SETTING FOR THE ADVANCES

                      	
                        32

                      
	
                        Section
      4.01.

                      	
                        Rate Setting for an
      Advance

                      	
                        32

                      
	
                        Section
      4.02.

                      	
                        Advance Confirmation Instrument
      for Variable Advances

                      	
                        34

                      
	
                        Section
      4.03.

                      	
                        Breakage and Other
      Costs

                      	
                        34

                      
	
                        ARTICLE
      5 MAKING THE ADVANCES

                      	
                        34

                      
	
                        Section
      5.01.

                      	
                        Initial
      Advance

                      	
                        34

                      
	
                        Section
      5.02.

                      	
                        Future
      Advances

                      	
                        34

                      
	
                        Section
      5.03.

                      	
                        Conditions Precedent to Future
      Advances

                      	
                        35

                      
	
                        Section
      5.04.

                      	
                        Determination of Allocable
      Facility Amount and Valuations

                      	
                        36

                      
	
                        Section
      5.05.

                      	
                        Limitation on
      Advances

                      	
                        36

                      
	
                        ARTICLE
      6 ADDITIONS OF COLLATERAL

                      	
                        37

                      
	
                        Section
      6.01.

                      	
                        Right to Add
      Collateral

                      	
                        37

                      
	
                        Section
      6.02.

                      	
                        Procedure for Adding
      Collateral

                      	
                        37

                      
	
                        Section
      6.03.

                      	
                        Conditions Precedent to
      Addition of an Additional Mortgaged Property to the Collateral
      Pool

                      	
                        38

                      


              

            

          

        

      

       

      
        
           


        

        
          i

          
            

          

        

        
           


        

      

      


      
        
          
            
              	
                      ARTICLE
      7 RELEASES OF COLLATERAL

                    	
                      39

                    
	
                      Section
      7.01.

                    	
                      Right to Obtain Releases of
      Collateral

                    	
                      39

                    
	
                      Section
      7.02.

                    	
                      Procedure for Obtaining
      Releases of Collateral

                    	
                      39

                    
	
                      Section
      7.03.

                    	
                      Conditions Precedent to Release
      of Collateral Release Property from the Collateral

                    	
                      42

                    
	
                      Section
      7.04.

                    	
                      Substitutions

                    	
                      43

                    
	
                      Section
      7.05.

                    	
                      Conditions Precedent to Letters
      of Credit

                    	
                      49

                    
	
                      ARTICLE
      8 EXPANSION OF CREDIT FACILITY

                    	
                      51

                    
	
                      Section
      8.01.

                    	
                      Right to Increase
      Commitment

                    	
                      51

                    
	
                      Section
      8.02.

                    	
                      Procedure for Obtaining
      Increases in Commitment

                    	
                      51

                    
	
                      Section
      8.03.

                    	
                      Conditions Precedent to
      Increase in Commitment

                    	
                      52

                    
	
                      ARTICLE
      9 PARTIAL TERMINATION OF FACILITIES

                    	
                      53

                    
	
                      Section
      9.01.

                    	
                      Right to Complete or Partial
      Termination of Facilities

                    	
                      53

                    
	
                      Section
      9.02.

                    	
                      Procedure for Complete or
      Partial Termination of Facilities

                    	
                      53

                    
	
                      Section
      9.03.

                    	
                      Conditions Precedent to
      Complete or Partial Termination of Facilities

                    	
                      53

                    
	
                      ARTICLE
      10 TERMINATION OF CREDIT FACILITY

                    	
                      54

                    
	
                      Section
      10.01.

                    	
                      Right to Terminate Credit
      Facility

                    	
                      54

                    
	
                      Section
      10.02.

                    	
                      Procedure for Terminating
      Credit Facility

                    	
                      54

                    
	
                      Section
      10.03.

                    	
                      Conditions Precedent to
      Termination of Credit Facility

                    	
                      55

                    
	
                      ARTICLE
      11 GENERAL CONDITIONS PRECEDENT TO ALL REQUESTS

                    	
                      55

                    
	
                      Section
      11.01.

                    	
                      Conditions Applicable to All
      Requests

                    	
                      55

                    
	
                      Section
      11.02.

                    	
                      Delivery of Closing Documents
      Relating to Collateral Addition Request, Collateral Substitution Request,
      Credit Facility Expansion Request or Future Advance
      Request

                    	
                      57

                    
	
                      Section
      11.03.

                    	
                      Delivery of Property-Related
      Documents

                    	
                      57

                    
	
                      ARTICLE
      12 REPRESENTATIONS AND WARRANTIES

                    	
                      58

                    
	
                      Section
      12.01.

                    	
                      Representations and Warranties
      of Borrower

                    	
                      58

                    
	
                      Section
      12.02.

                    	
                      Representations and Warranties
      of Borrower

                    	
                      62

                    
	
                      Section
      12.03.

                    	
                      Representations and Warranties
      of Lender

                    	
                      65

                    
	
                      ARTICLE
      13 AFFIRMATIVE COVENANTS OF THE BORROWER

                    	
                      66

                    
	
                      Section
      13.01.

                    	
                      Compliance with
      Agreements

                    	
                      66

                    
	
                      Section
      13.02.

                    	
                      Maintenance of
      Existence

                    	
                      66

                    
	
                      Section
      13.03.

                    	
                      Maintenance of REIT
      Status

                    	
                      66

                    
	
                      Section
      13.04.

                    	
                      Financial Statements;
      Accountants’ Reports; Other Information

                    	
                      66

                    
	
                      Section
      13.05.

                    	
                      Certificate of
      Compliance

                    	
                      69

                    
	
                      Section
      13.06.

                    	
                      Maintain
      Licenses

                    	
                      69

                    
	
                      Section
      13.07.

                    	
                      Access to Records; Discussions
      With Officers and Accountants

                    	
                      69

                    
	
                      Section
      13.08.

                    	
                      Inform Lender of Material
      Events

                    	
                      70

                    
	
                      Section
      13.09.

                    	
                      Intentionally
      Omitted

                    	
                      71

                    
	
                      Section
      13.10.

                    	
                      Inspection

                    	
                      71

                    
	
                      Section
      13.11.

                    	
                      Compliance with Applicable
      Laws

                    	
                      71

                    
	
                      Section
      13.12.

                    	
                      Warranty of
      Title

                    	
                      71

                    
	
                      Section
      13.13.

                    	
                      Defense of
      Actions

                    	
                      72

                    
	
                      Section
      13.14.

                    	
                      Alterations to the Mortgaged
      Properties

                    	
                      72

                    
	
                      Section
      13.15.

                    	
                      ERISA.

                    	
                      73

                    


            

          

        

      

       

      
        
           


        

        
          -ii-

          
            

          

        

        
           


        

      

      


      
        
          
            	
                    Section
      13.16.

                  	
                    Loan Document
      Taxes

                  	
                    73

                  
	
                    Section
      13.17.

                  	
                    Further
      Assurances

                  	
                    73

                  
	
                    Section
      13.18.

                  	
                    Monitoring
      Compliance

                  	
                    73

                  
	
                    Section
      13.19.

                  	
                    Leases

                  	
                    74

                  
	
                    Section
      13.20.

                  	
                    Intentionally
      Omitted

                  	
                    74

                  
	
                    Section
      13.21.

                  	
                    Transfer of Ownership Interests
      of Borrower

                  	
                    74

                  
	
                    Section
      13.22.

                  	
                    Change in Senior
      Management

                  	
                    76

                  
	
                    Section
      13.23.

                  	
                    Date-Down
      Endorsements

                  	
                    76

                  
	
                    Section
      13.24.

                  	
                    Geographical
      Diversification

                  	
                    77

                  
	
                    Section
      13.25.

                  	
                    Ownership of Mortgaged
      Properties

                  	
                    77

                  
	
                    ARTICLE
      14 NEGATIVE COVENANTS OF THE BORROWER

                  	
                    77

                  
	
                    Section
      14.01.

                  	
                    Other
      Activities

                  	
                    77

                  
	
                    Section
      14.02.

                  	
                    Value of
      Security

                  	
                    77

                  
	
                    Section
      14.03.

                  	
                    Zoning

                  	
                    77

                  
	
                    Section
      14.04.

                  	
                    Liens

                  	
                    78

                  
	
                    Section
      14.05.

                  	
                    Sale

                  	
                    78

                  
	
                    Section
      14.06.

                  	
                    Indebtedness

                  	
                    78

                  
	
                    Section
      14.07.

                  	
                    Principal Place of
      Business

                  	
                    78

                  
	
                    Section
      14.08.

                  	
                    Frequency of
      Requests

                  	
                    78

                  
	
                    Section
      14.09.

                  	
                    Change in Property
      Management

                  	
                    79

                  
	
                    Section
      14.10.

                  	
                    Condominiums

                  	
                    79

                  
	
                    Section
      14.11.

                  	
                    Restrictions on Partnership
      Distributions

                  	
                    79

                  
	
                    Section
      14.12.

                  	
                    Lines of
      Business

                  	
                    79

                  
	
                    Section
      14.13.

                  	
                    Limitation on Unimproved Real
      Property and New Construction

                  	
                    79

                  
	
                    Section
      14.14.

                  	
                    Dividend
      Payout

                  	
                    79

                  
	
                    ARTICLE
      15 FINANCIAL COVENANTS OF THE BORROWER

                  	
                    80

                  
	
                    Section
      15.01.

                  	
                    Financial
      Definitions

                  	
                    80

                  
	
                    Section
      15.02.

                  	
                    [Intentionally
      Deleted]

                  	
                    84

                  
	
                    Section
      15.03.

                  	
                    Compliance with Loan to Value
      Ratios

                  	
                    84

                  
	
                    Section
      15.04.

                  	
                    Compliance with Concentration
      Test

                  	
                    84

                  
	
                    Section
      15.05.

                  	
                    Compliance with REIT’s Net
      Worth Test

                  	
                    84

                  
	
                    Section
      15.06.

                  	
                    Compliance with REIT’s Total
      Indebtedness to Consolidated Total Assets Ratio

                  	
                    84

                  
	
                    Section
      15.07.

                  	
                    Compliance with REIT’s
      Consolidated EBITDA to Interest Ratio

                  	
                    84

                  
	
                    Section
      15.08.

                  	
                    Compliance with REIT’s
      Consolidated EBITDA to Fixed Charge Ratio

                  	
                    84

                  
	
                    ARTICLE
      16 FEES

                  	
                    85

                  
	
                    Section
      16.01.

                  	
                    Standby Fee and Rate
      Preservation Fee

                  	
                    85

                  
	
                    Section
      16.02.

                  	
                    Origination
      Fees

                  	
                    85

                  
	
                    Section
      16.03.

                  	
                    Due Diligence
      Fees

                  	
                    85

                  
	
                    Section
      16.04.

                  	
                    Legal Fees and
      Expenses

                  	
                    86

                  
	
                    Section
      16.05.

                  	
                    MBS-Related
      Costs

                  	
                    86

                  
	
                    Section
      16.06.

                  	
                    Failure to Close any
      Request

                  	
                    86

                  
	
                    Section
      16.07.

                  	
                    Other
    Fees

                  	
                    86

                  
	
                    ARTICLE
      17 EVENTS OF DEFAULT

                  	
                    87

                  
	
                    Section
      17.01.

                  	
                    Events of
      Default

                  	
                    87

                  


          

        

      

       

      
        
           


        

        
          -iii-

          
            

          

        

        
           


        

      

      


      
        
          
            	
                    ARTICLE
      18 REMEDIES

                  	
                    89

                  
	
                    Section
      18.01.

                  	
                    Remedies;
      Waivers

                  	
                    89

                  
	
                    Section
      18.02.

                  	
                    Waivers; Rescission of
      Declaration

                  	
                    90

                  
	
                    Section
      18.03.

                  	
                    Lender’s Right to Protect
      Collateral and Perform Covenants and Other
    Obligations

                  	
                    90

                  
	
                    Section
      18.04.

                  	
                    No Remedy
      Exclusive

                  	
                    90

                  
	
                    Section
      18.05.

                  	
                    No
Waiver

                  	
                    90

                  
	
                    Section
      18.06.

                  	
                    No
Notice

                  	
                    91

                  
	
                    Section
      18.07.

                  	
                    [Intentionally
      Deleted]

                  	
                    91

                  
	
                    ARTICLE
      19 RIGHTS OF FANNIE MAE

                  	
                    91

                  
	
                    Section
      19.01.

                  	
                    Special Pool Purchase
      Contract

                  	
                    91

                  
	
                    Section
      19.02.

                  	
                    Assignment of
      Rights

                  	
                    91

                  
	
                    Section
      19.03.

                  	
                    Release of
      Collateral

                  	
                    91

                  
	
                    Section
      19.04.

                  	
                    Replacement of
      Lender

                  	
                    92

                  
	
                    Section
      19.05.

                  	
                    Fannie Mae and Lender Fees and
      Expenses

                  	
                    92

                  
	
                    Section
      19.06.

                  	
                    Third-Party
      Beneficiary

                  	
                    92

                  
	
                    ARTICLE
      20 INSURANCE, REAL ESTATE TAXES AND REPLACEMENT RESERVES

                  	
                    92

                  
	
                    Section
      20.01.

                  	
                    Insurance and Real Estate
      Taxes

                  	
                    92

                  
	
                    Section
      20.02.

                  	
                    Replacement
      Reserves

                  	
                    92

                  
	
                    ARTICLE
      21 INTEREST RATE PROTECTION

                  	
                    93

                  
	
                    Section
      21.01.

                  	
                    Interest Rate
      Protection

                  	
                    93

                  
	
                    Section
      21.02.

                  	
                    Hedge
    Terms

                  	
                    94

                  
	
                    Section
      21.03.

                  	
                    Hedge Security Agreement;
      Delivery of Hedge Payments

                  	
                    94

                  
	
                    Section
      21.04.

                  	
                    Termination

                  	
                    94

                  
	
                    Section
      21.05.

                  	
                    Performance Under Hedge
      Documents

                  	
                    94

                  
	
                    Section
      21.06.

                  	
                    Approved
      Swaps

                  	
                    94

                  
	
                    Section
      21.07.

                  	
                    Approved
      Caps

                  	
                    95

                  
	
                    ARTICLE
      22 LIMITS ON PERSONAL LIABILITY

                  	
                    96

                  
	
                    Section
      22.01.

                  	
                    Personal Liability to
      Borrower

                  	
                    96

                  
	
                    ARTICLE
      23 MISCELLANEOUS PROVISIONS

                  	
                    97

                  
	
                    Section
      23.01.

                  	
                    Counterparts

                  	
                    97

                  
	
                    Section
      23.02.

                  	
                    Amendments, Changes and
      Modifications

                  	
                    97

                  
	
                    Section
      23.03.

                  	
                    Payment of Costs, Fees and
      Expenses

                  	
                    97

                  
	
                    Section
      23.04.

                  	
                    Payment
      Procedure

                  	
                    98

                  
	
                    Section
      23.05.

                  	
                    Payments on Business
      Days

                  	
                    98

                  
	
                    Section
      23.06.

                  	
                    Choice of Law; Consent to
      Jurisdiction; Waiver of Jury Trial

                  	
                    99

                  
	
                    Section
      23.07.

                  	
                    Severability

                  	
                    100

                  
	
                    Section
      23.08.

                  	
                    Notices

                  	
                    100

                  
	
                    Section
      23.09.

                  	
                    Further Assurances and
      Corrective Instruments

                  	
                    102

                  
	
                    Section
      23.10.

                  	
                    Term of this
      Agreement

                  	
                    102

                  
	
                    Section
      23.11.

                  	
                    Assignments; Third-Party
      Rights

                  	
                    103

                  
	
                    Section
      23.12.

                  	
                    Headings

                  	
                    103

                  
	
                    Section
      23.13.

                  	
                    General Interpretive
      Principles

                  	
                    103

                  
	
                    Section
      23.14.

                  	
                    Interpretation

                  	
                    103

                  
	
                    Section
      23.15.

                  	
                    Standards for Decisions,
      Etc

                  	
                    103

                  


          

        

      

       

      
        
           


        

        
          -iv-

          
            

          

        

        
           


        

      

      


      
        
          
            	
                    Section
      23.16.

                  	
                    Decisions in
      Writing

                  	
                    104

                  
	
                    Section
      23.17.

                  	
                    Joint and Several
      Liability

                  	
                    104

                  


          

        

      


      
        
           


        

        
          -v-

          
            

          

        

        
           


        

      


      EXHIBITS

      


      
        	
                Schedule
      I

              	
                Summary
      of Credit Facility Structure

              
	
                Schedule
      II

              	
                Approved
      Swaps and Credit Enhancement Fee Schedule

              
	
                Schedule
      III

              	
                Approved
      Caps

              
	
                Exhibit
      A

              	
                Schedule
      of 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

              	
                Form
      of Future Advance and Revolving Credit Endorsement

              
	
                Exhibit
      I

              	
                Variable
      Facility Note

              
	
                Exhibit
      J

              	
                Tie-In
      Endorsement

              
	
                Exhibit
      K

              	
                Conversion
      Request

              
	
                Exhibit
      L

              	
                Conversion
      Amendment

              
	
                Exhibit
      M

              	
                Rate
      Form

              
	
                Exhibit
      N

              	
                Intentionally
      Omitted

              
	
                Exhibit
      O

              	
                Advance
      Confirmation Instrument

              
	
                Exhibit
      P

              	
                Future
      Advance Request

              
	
                Exhibit
      Q

              	
                Collateral
      Addition Request

              
	
                Exhibit
      R

              	
                Collateral
      Addition Description Package

              
	
                Exhibit
      S

              	
                Collateral
      Addition Supporting Documents

              
	
                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

              	
                Reborrowing
      Request

              
	
                Exhibit
      DD

              	
                Collateral
      Substitution Description Package

              
	
                Exhibit
      EE

              	
                Collateral
      Substitution Supporting Documents

              
	
                Exhibit
      FF

              	
                Reborrowing
      Amendment

              
	
                Exhibit
      GG

              	
                Hedge
      Security Agreement

              
	
                Exhibit
      HH

              	
                Form
      of Letter of Credit

              


      

       

      
        
           


        

        
          -vi-

          
            

          

        

        
           


        

      

      


      THIRD
AMENDED AND RESTATED MASTER CREDIT FACILITY AGREEMENT

      (MAA
II)

       

      THIS
THIRD AMENDED AND RESTATED MASTER CREDIT FACILITY AGREEMENT is made as of the
4th day of January, 2010, to be effective as of March 1, 2010 by and among (i)
(a) MID-AMERICA APARTMENT
COMMUNITIES, INC., a Tennessee corporation (the “REIT”) and (b) MID-AMERICA APARTMENTS, L.P.,
a Tennessee limited partnership (“OP”; the REIT and OP being
collectively referred to as the “Borrower”), (ii) PRUDENTIAL MULTIFAMILY MORTGAGE,
INC., a Delaware corporation (“Lender”), and (iii) FANNIE MAE, the body corporate
duly organized under the Federal National Mortgage Association Charter Act, as
amended, 12 U.S.C. §1716 et seq.

       

      RECITALS

       

      A.           Borrower
and Lender entered into that certain Master Credit Facility Agreement dated as
of August 22, 2002 (the “Original Agreement”), pursuant
to which Lender agreed to make credit available to Borrower under the terms and
conditions set forth in the Original Agreement.

       

      B.           Borrower
and Lender 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 December 10, 2003 (the “First Amended and Restated
Agreement”), which First Amended and Restated Agreement was subsequently
amended and restated in its entirety as set forth in that certain Second Amended
and Restated Master Credit Facility Agreement dated as of March 30, 2004 (the
“Second Amended and Restated
Agreement”).

       

      C.           All
of the Lender’s right, title and interest in the Original Agreement, the First
Amended and Restated Agreement and the Second Amended and Restated Agreement
have been assigned to Fannie Mae pursuant to those certain Assignments of
Collateral Agreements and Other Loan Documents, dated as of August 22, 2002,
December 10, 2003 and March 31, 2004, respectively (together, the “Assignment”).  Fannie
Mae has not assumed any of the obligations of the Lender under the First Amended
and Restated Agreement, the Second Amended and Restated Agreement or the Loan
Documents as a result of the Assignment.  Fannie Mae has designated
the Lender as the servicer of the loans made under the Original Agreement, the
First Amended and Restated Agreement and the Second Amended and Restated
Agreement.  Lender is entering into this Agreement in its capacity as
the originator of any Future Advances made hereunder and as the servicer of the
loans set forth herein.

       

      D.           Pursuant
to various amendments to the Original Agreement, the First Amended and Restated
Agreement and the Second Amended and Restated Agreement, among other things
various Mortgaged Properties (each capitalized term used but not defined has the
meaning ascribed to such term in Article 1 of this
Agreement) were added to the Collateral Pool.


      
        
           


        

        
          1

          
            

          

        

        
           


        

      

       

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

       

      F.           The
REIT owns, directly and indirectly, ninety percent (90%) of the voting interests
in OP.

       

      G.           Borrower
owns Multifamily Residential Properties as more particularly described in Exhibit A to this
Agreement.

       

      H.           Pursuant
to the Original Agreement, Lender established a $198,192,000 credit facility,
comprised of a $0 Fixed Facility Commitment and a $198,192,000 Variable Facility
Commitment.

       

      I.            
Pursuant to various amendments to the Original Agreement, the First Amended and
Restated Agreement and the Second Amended and Restated Agreement, Lender has
increased the Credit Facility to $691,785,000, comprised of a $691,785,000
Variable Facility Commitment.

       

      J.            
Borrower intends to convert $50,000,000 of the Variable Facility Commitment to
the Fixed Facility Commitment on March 1, 2010, which shall be reflected herein
below.

       

      K.           To
secure the obligations of Borrower under this Agreement and the other Loan
Documents issued in connection with the Credit Facility, Borrower has created a
Collateral Pool in favor of Lender.  The Collateral Pool also secures
Borrower’s obligations under that certain Third Amended and Restated Master
Credit Facility Agreement between Lender, Borrower and Mid-America Apartments of
Texas, L.P. dated as of March 30, 2004 (as amended, modified, restated and
supplemented from time to time, the “Other Credit
Agreement”).  The Collateral Pool is comprised of (i) Security
Instruments on certain Multifamily Residential Properties owned by Borrower and
(ii) any other Security Documents executed by Borrower pursuant to this
Agreement or any other Loan Documents.

       

      L.           Each
of the Security Documents shall be cross-defaulted (i.e., a default under any
Security Document, under this Agreement or under the Other Credit Agreement,
shall constitute a default under each Security Document, and this Agreement) and
cross-collateralized (i.e., each Security Instrument shall secure all of
Borrower’s obligations under this Agreement, the other Loan Documents issued in
connection with the Credit Facility and the Other Credit Agreement) and it is
the intent of the parties to this Agreement that 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 pursuant to the terms of this Agreement, the Other
Credit Agreement, the Notes and the other Loan Documents.


      
        
           


        

        
          2

          
            

          

        

        
           


        

      

       

      M.           The
provisions herein shall become effective as of March 1, 2010, on which date each
MBS backed by a Variable Advance Outstanding as of January 4, 2010 shall have
rolled over.  The Second Amended and Restated Agreement shall remain
in effect until March 1, 2010.

       

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

       

      ARTICLE
1

      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 Property”
means each Multifamily Residential Property owned by Borrower (either in fee
simple or as tenant under a ground lease) meeting all of Lender’s requirements
for similar loans anticipated to be sold to Fannie Mae and added to the
Collateral Pool after the Third Amended and Restated Closing Date pursuant to
Article
6.

       

      “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.


      
        
           


        

        
          3

          
            

          

        

        
           


        

      

       

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

       

      (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 Third
Amended and Restated 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.

       

       “Amortization Period” means,
with respect to each Fixed Facility Advance, the period of not less than
twenty-five (25) years and not more than thirty (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 Multifamily Residential Property conforming to the requirements of Lender for
similar loans anticipated to be sold to Fannie Mae and accepted by
Lender.

       

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

       

      “Approved Caps” shall have the
meaning set forth in Section
21.07.

       

      “Approved Cap Schedule” means
the schedule of Approved Caps attached to this Agreement as Schedule
III.


      
        
           


        

        
          4

          
            

          

        

        
           


        

      

       

      “Approved Swaps and Credit Enhancement
Fee Schedule” means the schedule of Approved Swaps and Credit Enhancement
Fees attached to this Agreement as Schedule
II.

       

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

       

      “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 (3) 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
21.

       

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

       

      “Cash Collateral Account” means
the cash collateral account established pursuant to the Cash Collateral
Agreement.

       

      “Cash Collateral Agreement”
means a cash collateral, security and custody agreement by and among Fannie Mae,
Borrower and a collateral agent for Fannie Mae.

       

      “Cash Commitment” shall have
the meaning set forth in Section
4.01(c).

       

      “Cash Interest Rate” means, on
the date of determination, a rate of interest, per annum, established by Fannie
Mae for loans purchased for cash by Fannie Mae of similar characteristics then
offered by Fannie Mae.

       

       “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 the OP or ceases
to own, directly or indirectly, one hundred percent (100%) of the sole general
partner or managing member of the OP, or (b) the date on which an Acquiring
Person becomes (by acquisition, consolidation, merger or otherwise), directly or
indirectly, the beneficial owner of more than twenty-five percent (25%) of the
total Voting Equity Capital (or of any other Securities or ownership interest)
of any Borrower then outstanding, or (c) the replacement (other than solely by
reason of retirement at age sixty-five or older, death or disability) of more
than fifty percent (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 (1) 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 (1) 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).


      
        
           


        

        
          5

          
            

          

        

        
           


        

      

       

      “Closing Date” means the
Initial Closing Date, the Third Amended and Restated Closing Date and each date
after the Initial Closing Date on which the funding or other transaction
requested in a request is required to take place.

       

      “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
Borrower’s 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 6
—

       

      (a)           65
basis points (0.65), multiplied by

       

      
        	
                 
      

              	
                (b)

              	
                Allocable
      Facility Amount of the Additional Mortgaged Property, as determined by
      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 Lender
in connection with the addition of the Additional Mortgaged Property to the
Collateral Pool pursuant to Article
6.

       

      “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 (0.65) 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..


      
        
           


        

        
          6

          
            

          

        

        
           


        

      

       

      “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).

       

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

       

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

       

      “Concentration Test” means (x)
during the period Section 22.01(a) of
this Agreement is in effect, there shall be no concentration test when the
aggregate Advances Outstanding are $100,000,000 or less and (y) during the
period Section
22.01(a) of this Agreement is no longer in effect or when the Aggregate
Advances Outstanding are greater than $100,000,000, the Concentration Test shall
be:

       

      (a)           Borrower
shall at all times maintain the Collateral so that the aggregate Valuations of
any group of Mortgaged Properties located within a one (1) mile radius shall not
exceed twenty-five percent (25%) of the aggregate Valuations of all Mortgaged
Properties.

       

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

       

      “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 Lender
pursuant to Section
2.05 for the Variable Advance and, with respect to a Fixed Facility
Advance backed by an MBS, the interest rate determined by 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 one hundred forty percent
(140%).

              


      

       

      (b)           The
Aggregate Loan to Value Ratio does not exceed sixty-five percent (65%) subject
to the provisions of Section
15.03.

       

      
        
           


        

        
          7

          
            

          

        

        
           


        

      

       

      “Credit Enhancement Fee” means
the fee due from Borrower in consideration for Fannie Mae’s providing credit
enhancement of the Credit Enhanced Hedges, as more particularly set forth on the
Approved Swaps and Credit Enhancement Fee Schedule attached to this
Agreement.

       

      “Credit Enhanced Hedge” means
any Hedge executed by Borrower and assigned to Lender which Fannie Mae has
agreed to credit enhance.

       

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

       

      “Credit Facility Expansion”
means an increase in the Commitment made in accordance with Article
8.

       

      “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 8 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
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 twelve (12) month
      period for the subject Mortgaged
Property

              


      

       

      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 —

       

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

       

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

       

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


      
        
           


        

        
          8

          
            

          

        

        
           


        

      

       

      “Event of Default” means any
event defined to be an “Event of Default” under Article
17.

       

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

       

      
        	
                 
      

              	
                (a)

              	
                the
      amount of interest and principal amortization, during the twelve (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 thirty (30)
      year period, with such amortization deemed to commence on the first day of
      the twelve (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 thirty (30) year period, with
      such amortization deemed to commence on the first day of the twelve (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 thirty (30) year period, with such amortization
      deemed to commence on the first day of the twelve (12) month
      period;

                


        

      

       

      
        	
                 
      

              	
                (ii)

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

              


      

       

      
        	
                 
      

              	
                (iii)

              	
                in
      connection with any Swap or Cap, the Swap Rate or the Cap Interest Rate
      shall be calculated in accordance with Section
      21.02(c) or Section
      21.02(d), respectively; and

              


      

       

      
        
           


        

        
          9

          
            

          

        

        
           


        

      

       

      
        	
                 
      

              	
                (b)

              	
                the
      amount of the Standby Fee and Rate Preservation Fee payable to Lender
      pursuant to Section 16.01
      during such twelve (12) month period (assuming, for these purposes, that
      the Advances Outstanding throughout the twelve (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 Article 9 or Article 10, an amount
equal to the product obtained by multiplying —

       

      
        	
                 
      

              	
                (a)

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

              


      

       

      (b)           18
basis points (0.18), by

       

      (c)           the
present value factor calculated using the following formula:

       

         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 March 1, 2010, on the U.S. Treasury security having a
maturity closest to the applicable Variable Facility Termination Date as shown
on Schedule
I.]

       

      “Fannie Mae” means the body
corporate duly organized under the Federal National Mortgage Association Charter
Act, as amended, 12 U.S.C. §1716 et seq.

       

      “Financial Covenants” means the
covenants set forth in Article
15.

       

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

       

      “Fixed Facility Advance” means
a loan made by Lender to 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.


      
        
           


        

        
          10

          
            

          

        

        
           


        

      

       

      “Fixed Facility Commitment”
means $50,000,000.00, subject to the conversion taking place described in
Recital J or $0 in the event that the conversion does not take place, plus such
amount as Borrower may elect to add to the Fixed Facility Commitment in
accordance with Article 3 or Article
8.

       

      “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 Borrower to Lender, concurrently with the
funding of each Fixed Facility Advance, to evidence Borrower’s obligation to
repay the Fixed Facility Advance.

       

      “Future Advance” means an
Advance made after the Third Amended and Restated Closing Date.

       

      “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
11.

       

      “Geographical Diversification
Requirements” means (a) (x) during the period Section 22.01(a) of
this Agreement is in effect, there shall be no Geographical
Diversification  Requirement when the aggregate Advances Outstanding
are $100,000,000 or less and (y) during the period Section 22.01(a) of
this Agreement is no longer in effect, at all times that aggregate Advances
Outstanding are $100,000,000 or less, a requirement that the Collateral Pool
consist of at least five (5) Mortgaged Properties located in at least four (4)
states, (b) at all times that aggregate Advances Outstanding are more than
$100,000,000 and equal to or less than $200,000,000, a requirement that the
Collateral Pool consist of at least seven (7) Mortgaged Properties located in at
least four (4) states, (c) at all times that aggregate Advances Outstanding are
more than $200,000,000 and equal to or less than $300,000,000, a requirement
that the Collateral Pool consist of at least twelve (12) Mortgaged Properties
located in at least six (6) states, and (d) at all times that aggregate Advances
Outstanding are more than $300,000,000, a requirement that the Collateral Pool
consist of at least twenty-five (25) Mortgaged Properties located in at least
seven (7) states.

       

      “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 and for any specified purpose, with respect to any Multifamily
Residential Property, all income in respect of such Multifamily Residential
Property determined in accordance with the Underwriting Requirements based on
the certified operating statement for such specified period.


      
        
           


        

        
          11

          
            

          

        

        
           


        

      

       

      “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
21.

       

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

       

      “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);

              


      

       

      
        
           


        

        
          12

          
            

          

        

        
           


        

      

       

      
        	
                 
      

              	
                (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 (i) the
      guaranteeing person or (ii) 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, 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.

              


      

       

      
        
           


        

        
          13

          
            

          

        

        
           


        

      

       

      “Initial Advance” means the
Variable Advance in the amount of $636,753,000, subject to the conversion taking
place described in Recital J, or $686,753,000 in the event that the conversion
does not take place, and the Fixed Advance in the amount of $50,000,000, subject
to the conversion taking place described in Recital J or $0 in the event that
the conversion does not take place, Outstanding as of the Third Amended and
Restated Closing Date.

       

      “Initial Closing Date” means
August 22, 2002.

       

        “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.

       

      “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.

       

      “Issuer” shall have the meaning
set forth in Section
7.05(a).

       

      “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.

       

      “Letter of Credit” means a
letter of credit issued by a financial institution satisfactory to Fannie Mae,
naming Fannie Mae as beneficiary in substantially the same form and substance as
attached hereto as Exhibit HH, or as
otherwise reasonably and customarily acceptable to Fannie Mae.


      
        
           


        

        
          14

          
            

          

        

        
           


        

      

       

      “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 Security Documents, all documents executed by Borrower pursuant to
the General Conditions set forth in Article 11 of this
Agreement and any other documents executed by Borrower 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 twelve
(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 twelve (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 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 Borrower, (b) the present or future
ability of Borrower 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 Lender under any Loan Document, or
(d) the value of, or Lender’s ability to have recourse against, any Mortgaged
Property.

       

      “MBS” means a mortgage-backed
security which is “backed” by an interest in the Variable Facility Notes and the
Fixed Facility Notes executed in connection with a mortgage-backed security
execution 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 Commitment” shall have the
meaning set forth in Section
4.01(c).

       

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

       

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

       

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


      
        
           


        

        
          15

          
            

          

        

        
           


        

      

       

      “MBS Pass-Through Rate” for a
Fixed Facility Advance means the interest rate as determined by Lender (rounded
to three places) payable in respect of the 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 Additional Mortgaged Properties, 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 Lender for similar loans anticipated to be
sold to Fannie Mae.

       

      “Net Operating Income” means,
for any specified period, with respect to any Mortgaged 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 or an Affiliate of a Borrower 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 or an Affiliate of a Borrower shall be the Mortgaged Property’s
pro forma net operating income determined by Lender in accordance with the
underwriting procedures set forth by Lender for similar loans anticipated to be
sold to Fannie Mae.

       

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

       

      “Obligations” means the
aggregate of the obligations of Borrower 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 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 Borrower in the form attached as Exhibit F to this
Agreement.


      
        
           


        

        
          16

          
            

          

        

        
           


        

      

       

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

       

       “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.

       

      “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 Borrower’s business.

       

      “Permitted Investments” means
the following (excluding the exceptions set out in under the heading,
“Exclusions from Permitted Investments” below):

       

      (a)           Government
Obligations.  Direct obligations of, and obligations on which the
full and timely payment of principal and interest is unconditionally guaranteed
by, the full faith and credit of the United States of America.  These
obligations must be rated in the Highest Rating Category.

       

      (b)           Bank Deposits. 
Interest-bearing negotiable certificates of deposit, interest-bearing time
deposits, interest-bearing savings accounts or bankers’ acceptances, issued by a
Qualified Financial Institution whose unsecured short-term obligations are rated
in the Highest Rating Category.  Interest-bearing negotiable certificates
of deposit, interest-bearing time deposits or interest-bearing savings accounts,
issued by a Qualified Financial Institution, if such deposits or accounts are
fully insured by the Federal Deposit Insurance Corporation.

       

      (c)           Money Market
Funds.  Money market mutual funds registered under the Investment
Company Act of 1940 approved in writing by Fannie Mae, which shall be invested
solely in government or treasury obligations.

       

      (d)           Any other Investment
Approved by Fannie Mae.  Any other investment approved by Fannie
Mae.


      
        
           


        

        
          17

          
            

          

        

        
           


        

      

      


      Exclusions From Permitted
Investments.

       

      Permitted
Investments may not include any of the following:

       

      (1)           Any
investment with a final maturity or any agreement with a term greater than
thirty (30) days from the date of the investment.  This exclusion does not
apply to (a) obligations that provide for the optional or mandatory tender, at
par, by the holder at least once within thirty (30) days of the date of
purchase, and (b) Government Obligations irrevocably deposited with a bond
trustee for the defeasance of Bonds pursuant to a bond trust
indenture.

       

      (2)           Any
obligation (other than obligations described in paragraphs (a) and (b)) with a
purchase price greater or less than the par value of such
obligation.

       

      (3)           Mortgage-backed
securities, real estate mortgage investment conduits or collateralized mortgage
obligations.

       

      (4)           Interest-only
or principal-only stripped securities.

       

      (5)           Obligations
bearing interest at inverse floating rates.

       

      (6)           Any
investment which may be prepaid or called at a price less than its purchase
price prior to stated maturity.

       

      (7)           Any
investment the interest rate on which is variable, and is established other than
by reference to a single interest rate index plus a single fixed spread, if any,
and which interest rate moves proportionately with that index.

       

      (8)           Any
investment to which Standard & Poor has added an “r” highlighter (denotes a
derivative, hybrid and certain other obligations Standard & Poor believes
may experience high volatility or high variability in expected returns as a
result of noncredit risks).

       

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


      
        
           


        

        
          18

          
            

          

        

        
           


        

      

       

      “Property Delivery Deadline”
shall have the meaning set forth in Section
7.04(b)(iv)(B).

       

      “Qualified Financial
Institution” means any of the following having a senior unsecured debt
rating in the Highest Rating Category and
approved by Fannie Mae:

       

      (a)           bank
or trust company organized under the laws of any state of the United States of
America,

       

      (b)           national
banking association,

       

      (c)           savings
bank, a savings and loan association, or an insurance company or association
chartered or organized under the laws of any state of the United States of
America,

       

      (d)           federal
branch or agency pursuant to the International Banking Act of 1978 or any
successor provisions of law or a domestic branch or agency of a foreign bank
which branch or agency is duly licensed or authorized to do business under the
laws of any state or territory of the United States of America,

       

      (e)           government
bond dealer reporting to, trading with, and recognized as a primary dealer by
the Federal Reserve Bank of New York, and

       

      (f)           securities
dealer approved in writing by Fannie Mae the liquidation of which is subject to
the Securities Investors Protection Corporation or other similar
corporation.

       

      For the
purposes of this definition, “Highest Rating Category” shall mean a Standard
& Poor rating category of “A-1+” for instruments having a term of one year
or less and “AAA” for instruments having a term of greater than one year, and a
Moody’s rating category of “P-1” for instruments having a term of one year or
less and “Aaa” for instruments having a term greater than one year.

       

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

       

      “Rate Preservation Fee” means,
an amount equal to the product obtained by multiplying:  (a) 1/12, by
(b) 15 basis points (0.15), by (c) 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).

       

      “Reborrowing Documents” shall
have the meaning set forth in Section
2.08(b).

       

      “Reborrowing Request” shall
have the meaning set forth in Section
2.08(a).

       

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


      
        
           


        

        
          19

          
            

          

        

        
           


        

      

       

      “Release Fee” means, with
respect to each Mortgaged Property released from the Collateral Pool pursuant to
Article 7, 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 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 a form approved by Lender
and substantially the same as what has previously been submitted by Borrower to
Lender.

       

      “Replacement Reserve Agreement”
means a Replacement Reserve and Security Agreement, reasonably required by
Lender, and completed in accordance with the requirements of Lender for similar
loans anticipated to be sold to Fannie Mae, as the same may be amended, modified
or supplemented from time to time.

       

      “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
$0.  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 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 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 Borrower from time to time to secure
Borrower’s 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
Borrower to or for the benefit of Lender to secure the obligations of Borrower
under the Loan Documents.  With respect to each Mortgaged Property
owned by Borrower, the Security Instrument shall be substantially in the form
published by Fannie Mae for use in the state 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.


      
        
           


        

        
          20

          
            

          

        

        
           


        

      

       

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

       

      “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:

       

      
        	
                 
      

              	
                (a)

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

              


      

       

      
        	
                 
      

              	
                (b)

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

              


      

       

      
        	
                 
      

              	
                (c)

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

              


      

       

      
        	
                 
      

              	
                (d)

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

              


      

       

      
        	
                 
      

              	
                (e)

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

              


      

       

      
        	
                 
      

              	
                (f)

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

              


      

       

      
        	
                 
      

              	
                (g)

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

              


      

       

      
        	
                 
      

              	
                (h)

              	
                has
      paid its own liabilities from its own separate
  assets;

              


      

       

      
        	
                 
      

              	
                (i)

              	
                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;

              


      

       

      
        	
                 
      

              	
                (j)

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

              


      

       

      
        	
                 
      

              	
                (k)

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

              


      

       

      
        	
                 
      

              	
                (l)

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

              


      

       

      
        	
                 
      

              	
                (m)

              	
                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;

              


      

       

      
        
           


        

        
          21

          
            

          

        

        
           


        

      

       

      
        	
                 
      

              	
                (n)

              	
                has
      not acquired obligations or securities of any other
  Person;

              


      

       

      
        	
                 
      

              	
                (o)

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

              


      

       

      
        	
                 
      

              	
                (p)

              	
                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;

              


      

       

      
        	
                 
      

              	
                (q)

              	
                has
      conducted its own business in its own
name;

              


      

       

      
        	
                 
      

              	
                (r)

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

              


      

       

      
        	
                 
      

              	
                (s)

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

              


      

       

      
        	
                 
      

              	
                (t)

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

              


      

       

      
        	
                 
      

              	
                (u)

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

              


      

       

      
        	
                 
      

              	
                (v)

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

              


      

       

      
        	
                 
      

              	
                (w)

              	
                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 (a) 1/12, by
(b) the amount shown as the Standby Fee on the Summary of Credit Facility
Structure, by (c) the Unused Capacity.

       

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

       

      “Subsidiary” means, when used
with reference to a specified Person, (a) any Person that, directly or
indirectly, through one (1) or more intermediaries, is controlled by the
specified Person, (b) any Person of which the specified Person is, directly or
indirectly, the owner of more than fifty percent (50%) of any voting class of
Ownership Interests or (c) any Person (A) which is a partnership and (B) of
which the specified Person is a general partner and owns more than fifty percent
(50%) of the partnership interests.

       

      “Substitute Cash Collateral”
has the meaning set forth in Section
7.02.

       

      “Substituted Mortgaged
Property” means each Multifamily Residential Property owned by Borrower
(either in fee simple or as tenant under a ground lease meeting all of the
requirements of Lender for similar loans anticipated to be sold to Fannie Mae)
and added to the Collateral Pool after the Third Amended and Restated Closing
Date in connection with a substitution of Collateral as permitted by Section 7.04 of this
Agreement.


      
        
           


        

        
          22

          
            

          

        

        
           


        

      

       

      “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 Lender’s
requirements for similar loans that are anticipated to be sold to Fannie
Mae.

       

      “Swap” means an interest rate
swap provided pursuant to and satisfying the requirements of Article 21 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, but in no event later than December 1, 2018.

       

      “Third Amended and Restated Closing
Date” means March 1, 2010.

       

      “Three-Month LIBOR Rate” means
the London interbank offered rate for three (3) 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 by Lender for similar loans that are anticipated to be sold to Fannie
Mae.  If the publication of Three-Month LIBOR is discontinued, Lender
shall determine such rate from another equivalent source selected by Lender for
similar loans that are anticipated to be sold to Fannie Mae.

       

      “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 Lender may approve), as the form attached as Exhibit J to this
Agreement.

       

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


      
        
           


        

        
          23

          
            

          

        

        
           


        

      

       

      “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
Lender’s requirements for similar loans anticipated to be sold to Fannie Mae,
together with such endorsements, coinsurance, reinsurance and direct access
agreements with respect to such policies as Lender may, from time to time,
consider necessary or appropriate, including Revolving Credit Endorsements, if
available, and with a limit of liability under the policy (subject to the
limitations contained in the Conditions of the policy relating to a
Determination and Extent of Liability) equal to the Commitment (taking into
account Tie-In Endorsements).

       

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

       

      “Transfer” means (a) 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 (b) a sale, assignment, pledge, transfer or
other disposition of any interest in Borrower, or (c) the issuance or other
creation of new ownership interests in Borrower other than (i) sales of the
stock of the REIT on the New York Stock Exchange or (ii) private placements of
ownership interests in Borrower 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 Borrower, or (d) a merger or
consolidation of Borrower into another entity or of another entity into
Borrower, or (e) the reconstitution of Borrower from one type of entity to
another type of entity, or (f) 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 (A) a conveyance of the Mortgaged Property at a judicial or
non-judicial foreclosure sale under any Security Instrument or (B) the Mortgaged
Property becoming part of a bankruptcy estate by operation of law under the
United States Bankruptcy Code.

       

      “Underwriting Requirements”
means Lender’s overall underwriting requirements for Multifamily Residential
Properties in connection with loans anticipated to be sold to Fannie Mae,
pursuant to Fannie Mae’s then current guidelines, including, without limitation,
requirements relating to Appraisals, physical needs assessments, environmental
site assessments, and exit strategies, as such requirements may be amended,
modified, updated, superseded, supplemented or replaced from time to
time.

       

      “Unused Capacity” means, for
any month, the sum of the daily average during such month of (a) the undrawn
amount of the Variable Facility Commitment available under Article 2 of this
Agreement for the making of Variable Advances plus (b) the undrawn amount of the
Fixed Facility Commitment available under Article 3 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 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—

       

      
        
           


        

        
          24

          
            

          

        

        
           


        

      

       

      
        	
                 
      

              	
                (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
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
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 Lender to Borrower under the Variable Facility Commitment.

       

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

       

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

       

      “Variable Facility Commitment”
means an aggregate amount of $641,785,000, subject to the
conversion taking place described in Recital J or $691,785,000 in the event that
the conversion does not take place, 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 8, 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 3 and less
such amount by which the Borrower may elect to reduce the Variable Facility
Commitment in accordance with Article
9.

       

      “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 Borrower to Lender to evidence Borrower’s
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).


      
        
           


        

        
          25

          
            

          

        

        
           


        

      

       

      ARTICLE
2

      THE
VARIABLE FACILITY COMMITMENT

       

      Section
2.01.    Variable
Facility Commitment.

          

      Subject
to the terms, conditions and limitations of this Agreement, Lender agrees to
make Variable Advances to 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, 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.

       

      Borrower
shall request a Variable Advance by giving 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 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 (3) full months after the Closing
Date for the Variable Advance; and

       

      (b)           no
later than the date which completes nine (9) full months after the Closing Date
for the Variable Advance; provided that Borrower may request, and Lender may in
its discretion consent, to an MBS term of one (1) or two (2) full months in
order to facilitate a release, substitution or addition of Mortgaged Properties
to the Collateral Pool (for a fee to be determined by Lender at the time of the
maturity date of the Outstanding MBS “backed” by the Variable
Advance).  The entire unpaid amount of each Variable Advance shall be
due and payable by the Borrower to the Lender on the maturity date of any
Outstanding MBS “backed” by the Variable Advance unless, not less than five (5)
Business Days prior to the maturity date of the Outstanding MBS “backed” by the
Variable Advance, the Borrower has requested in writing either (i) that the
maturing MBS “backed” by the Variable Advance be refinanced with a new MBS
“backed” by the Variable Advance using the Rate Form or (ii) that the Variable
Advance relating to the maturing MBS “backed” by the Variable Advance be
converted to a Fixed Facility Advance pursuant to Section
3.07.

       

      For these
purposes, a year shall be deemed to consist of twelve (12) thirty (30) day
months.  For example, the date which completes three (3) full months
after September 15 shall be December 15; and the date which completes three (3)
full months after November 30 shall be February 28.


      
        
           


        

        
          26

          
            

          

        

        
           


        

      

       

      Section 2.04.    Interest on Variable
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
Lender to Borrower will equal the Price of the Variable
Advance.  Borrower shall pay to Lender, in advance of Lender making a
Variable Advance requested by Borrower, the entire Discount for the Variable
Advance.

       

      (b)           Partial Month
Interest.  Notwithstanding anything to the contrary in this
Section 2.04,
if a Variable Advance is not made on the first (1st) day of a calendar month,
and the related MBS Issue Date for the MBS backed by the Variable Advance is the
first (1st) day of the month following the month in which the Variable Advance
is made, 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 for the Variable Advance as determined in accordance with Section 2.05(b) and
(ii) a rate determined by Lender, based on Lender’s cost of funds and approved
in advance, in writing, by Borrower, pursuant to the procedures mutually agreed
upon by Borrower and Lender.

       

      (c)           Variable Facility
Fee.  In addition to paying the Discount and the partial month
interest, if any, Borrower shall pay monthly installments of the Variable
Facility Fee to Lender on account of each Variable Advance over the whole number
of calendar months that 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) one-twelfth (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 Lender pursuant to Section 4.01 of this
Agreement (rounded to three places) payable for the MBS pursuant to the MBS
Commitment backed by the Variable Advance (“MBS Imputed Interest Rate”)
and (ii) the Variable Facility Fee.


      
        
           


        

        
          27

          
            

          

        

        
           


        

      

       

      (b)           Notwithstanding
anything to the contrary in this Section 2.05, 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 2.05 and (ii)
a rate determined by Lender, based on Lender’s cost of funds, and approved in
advance, in writing, by Borrower, pursuant to procedures mutually agreed upon by
Borrower and Lender.

       

      Section
2.06.    Variable
Facility Note.

       

      The
obligation of 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 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 as a Variable Advance and to increase the Variable
Commitment by an amount equal to the amount desired to be reborrowed by Borrower
on the following terms and conditions:

       

      (a)           Request.  In
order to reborrow all or a portion of a maturing Fixed Facility Advance,
Borrower shall deliver a written request for such reborrowing (the “Reborrowing Request”) to
Lender, in the form attached as Exhibit CC
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, Lender shall permit the requested reborrowing, at a Closing to be
held at offices designated by Lender on the maturity date of the Fixed Facility
Advance to be reborrowed (or on such other date to which Borrower and Lender may
agree), by executing and delivering, at the sole cost and expense of 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 Lender) and
other applicable Loan Documents, in form and substance satisfactory to Lender,
reflecting the reborrowing.  The documents and instruments referred to
in the preceding sentence are referred to in this Article 2 as the
“Reborrowing
Documents.”

       

      Section
2.09.    Limitations
on Right to Reborrow.

       

      The right
of 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.


      
        
           


        

        
          28

          
            

          

        

        
           


        

      

       

      (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; notwithstanding the foregoing, if the test set forth in this Section 2.10(a) is
not satisfied after the reborrowing, such reborrowing may be permitted by Lender
if the reborrowing improves the Collateral Pool based on factors that are
consistent with Lender’s Underwriting Requirements and results in improvement in
one or both of the following areas: the then current Aggregate Debt Service
Coverage Ratio for the Trailing 12 Month Period or the then current Aggregate
Loan to Value Ratio.  Notwithstanding the foregoing, under no
circumstances shall the Aggregate Loan to Value Ratio exceed ninety percent
(90%);

       

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

       

      (c)           If
required by Lender, the receipt by Lender of an endorsement to each Title
Insurance Policy, amending the effective date of the Title Insurance Policy to
the Closing Date of the reborrowing and showing no additional exceptions to
coverage other than the exceptions shown on the last Closing Date with respect
to which the Title Insurance Policy was endorsed, Permitted Liens and other
exceptions approved by Lender;

       

      (d)           Receipt
by Lender of one (1) or more counterparts of each Reborrowing Document, dated as
of the Closing Date, signed by each of the parties (other than Lender) who is a
party to such Reborrowing Document;

       

      (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, Borrower shall make
arrangements for such interest rate protection.  Such protection shall
be a Hedge satisfying the requirements of Article 21 with
respect to any amounts reborrowed pursuant to Section 2.08, Section 2.09 and
Section 2.10 of
this Agreement; and

       

      (f)           The
satisfaction of all applicable General Conditions set forth in Article
11.


      
        
           


        

        
          29

          
            

          

        

        
           


        

      

       

      ARTICLE
3

      THE
FIXED FACILITY COMMITMENT

       

      Section
3.01.    Fixed
Facility Commitment.

       

      Subject
to the terms, conditions and limitations set forth in this Article 3, Lender
agrees to make Fixed Facility Advances to Borrower from time to time during the
Fixed Facility Availability Period.  Subject to the provisions of
Section 5.05,
Fixed Facility Advances may be a cash execution or an MBS execution as available
and offered to Borrower by Lender.  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.  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.

          

      Borrower
shall request a Fixed Facility Advance by giving 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 Borrower, provided that subject to the Fixed Facility Availability Period set
forth on Schedule I 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, 2018.  The principal of each Fixed
Facility Advance shall, at the election of 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 thirty (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 be a cash execution or an MBS execution and shall
bear interest at a rate, per annum, equal to the sum of (i) the Cash Interest
Rate (for a cash execution) or the MBS Pass-Through Rate (for an MBS execution)
for such Fixed Facility Advance and (ii) the Fixed Facility Fee.

       

      (b)           Partial Month
Interest.  Notwithstanding anything to the contrary in this
Section 3.04,
if a Fixed Facility Advance is not made on the first day of a calendar month,
Borrower shall pay interest on the original stated principal amount of such
Advance for the partial month period commencing on the Closing Date for such
Advance and ending on the last day of the calendar month in which the Closing
Date occurs.  Borrower shall pay interest for such partial month on
any such Advance at a rate per annum equal to the greater of (A) the interest
rate described in the applicable Note, and (B) a rate determined by Lender,
based on Lender’s cost of funds and approved in advance, in writing, by
Borrower.

       

      Section
3.05.    Coupon
Rates for Fixed Facility Advances.

       

      The
Coupon Rate for a Fixed Facility Advance backed by an MBS shall be the rate of
interest applicable to such Fixed Facility Advance pursuant to Section
3.04.


      
        
           


        

        
          30

          
            

          

        

        
           


        

      

       

      Section
3.06.    Fixed
Facility Note.

       

      The
obligation of 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 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.

       

      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, Borrower shall deliver a written request for a
conversion (“Conversion
Request”) to 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, Lender shall permit the requested conversion, at a closing to be held
at offices designated by Lender on a Closing Date selected by Lender, and
occurring within thirty (30) Business Days after Lender’s receipt of the
Conversion Request (or on such other date to which Borrower and Lender may
agree), by executing and delivering, all at the sole cost and expense of
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 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 3 as the
“Conversion
Documents.”

       

      Section
3.08.    Limitations
on Right to Convert.

       

      The right
of Borrower to convert all or a portion of the Variable Facility Commitment to
the Fixed Facility Commitment is subject to the following
limitations:

       

      (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, 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.


      
        
           


        

        
          31

          
            

          

        

        
           


        

      

       

      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; notwithstanding the foregoing, if the test set forth in this Section 3.09(a) is
not satisfied after the conversion, such conversion may be permitted by Lender
if the conversion improves the Collateral Pool based on factors that are
consistent with Lender’s Underwriting Requirements and result in improvement in
one or both of the following areas:  the then current Aggregate Debt
Service Coverage Ratio for the Trailing 12 Month Period or the then current
Aggregate Loan to Value Ratio.  Notwithstanding the foregoing, under
no circumstances shall the Aggregate Loan to Value Ratio exceed ninety percent
(90%);

       

      (b)           Prepayment
by Borrower in full of any Variable Advances Outstanding which 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)           If
required by Lender, the receipt by 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 last Closing Date with respect to which the Title
Insurance Policy was endorsed, Permitted Liens and other exceptions approved by
Lender;

       

      (d)           Receipt
by Lender of one (1) or more counterparts of each Conversion Document, dated as
of the Closing Date, signed by each of the parties (other than Lender) who is a
party to such Conversion Document; and

       

      (e)           The
satisfaction of all applicable General Conditions set forth in Article
11.

       

      Section
3.10.    [Intentionally Deleted.]

       

      ARTICLE
4

      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 Borrower’s request Lender shall quote an estimate of
the MBS Pass Through Rate (for a proposed Fixed Facility Advance with an MBS
execution), the Cash Interest Rate (for a proposed Fixed Facility Advance with a
cash execution), or MBS Imputed Interest Rate (for a proposed Variable
Advance).  Lender’s quote shall be based on (i) a solicitation of bids
from institutional investors selected by Lender, in the case of a proposed
Variable Advance or a Fixed Facility Advance with an MBS execution, or the rate
quoted by Fannie Mae, in the case of a proposed Fixed Facility Advance with a
cash execution, and (ii) the proposed terms and amount of the Advance selected
by Borrower.  The quote shall not be binding upon
Lender.


      
        
           


        

        
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      (b)           Rate
Setting.  If Borrower satisfies all of the conditions to
Lender’s obligation to make the Advance in accordance with Article 5, then
Borrower may request that Lender submit to Borrower a completed draft Rate Form
in the form attached as Exhibit M to this
Agreement (“Rate Form”).
The draft Rate Form shall specify the proposed maximum interest rate for such
Advance (“Maximum
Annual Interest Rate”) and other terms set forth therein.  If
the draft Rate Form is approved by Borrower, Borrower shall execute and return
the approved Rate Form to Lender before 4:00 p.m. Eastern Standard Time or
Eastern Daylight Savings Time, as applicable, on any Business Day (“Rate
Setting Date”).

       

      (c)           Rate
Confirmation.

       

      (i)           Variable
Advances.  In the case of Variable Advances, within one (1)
Business Day after receipt of the Rate Form approved and executed by Borrower
and upon satisfaction of all of the conditions to Lender’s obligation to make
the Variable Advance, Lender shall solicit bids from institutional investors
selected by Lender, based on the information in the Rate Form and, provided the
actual Coupon Rate would be at or below the Maximum Annual Interest Rate, shall
obtain a commitment (“MBS
Commitment”) for the purchase of an MBS  having the bid terms
described in the related Rate Form.  Lender shall then complete and
sign the Rate Form thereby confirming the terms set forth therein and shall
immediately deliver the Rate Form to Borrower to be countersigned.

       

      (ii)           Fixed Facility Advances with
Cash Execution.  In the case of Fixed Facility Advances with a
cash execution, within one (1) Business Day after receipt of the draft Rate Form
executed by Borrower and upon satisfaction of all of the conditions to Lender’s
obligation to make such Advance (or for conversion, as applicable), Lender shall
seek to obtain a commitment from Fannie Mae (“Cash
Commitment”) for the purchase of the proposed Fixed Facility Advance
having the terms described in the related draft Rate Form.  If Lender
obtains a Cash Commitment on terms equivalent (or better than) the terms in the
draft Rate Form, Lender shall then complete and sign the Rate Form thereby
confirming the terms set forth therein and shall immediately deliver the
confirmed Rate Form to Borrower to be countersigned.

       

      (iii)           Fixed Facility Advances with
MBS Execution.  In the case of Fixed Facility Advances with an
MBS execution, within one (1) Business Day after receipt of the Rate Form and
upon satisfaction of all of the conditions to Lender’s obligation to make such
Fixed Facility Advance (or for conversion, as applicable), Lender shall solicit
bids from institutional investors selected by Lender based on the information in
the Rate Form.  If Lender obtains an MBS Commitment on terms
equivalent (or better than) the terms in the draft Rate Form, Lender shall then
complete and countersign the Rate Form thereby confirming the terms set forth
therein, and shall immediately deliver by facsimile transmission the Rate Form
to Borrower to be countersigned.

       


      
        
           


        

        
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      Section
4.02.    Advance
Confirmation Instrument for Variable Advances.

       

      On or
before the Closing Date for a Variable Advance, Borrower executes and delivers
to 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 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, Lender shall note 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
Borrower.  Lender’s failure to do so shall not invalidate the Advance
Confirmation Instrument or otherwise affect in any way any obligation of
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 Lender obtains an MBS Commitment or Cash Commitment and Lender fails
to fulfill the MBS Commitment or Cash Commitment because the Advance is not made
(or the conversion does not occur, as applicable) for a reason other than the
default of Lender to make the Advance, Borrower shall pay all reasonable
out-of-pocket costs payable to the potential investor and other reasonable
costs, fees and damages incurred by Lender in connection with its failure to
fulfill the MBS Commitment or Cash Commitment.  Lender reserves the
right to require that Borrower post a deposit at the time the MBS Commitment or
Cash Commitment is obtained.  The deposit referred to in the preceding
sentence shall be refundable to Borrower upon the delivery of the related MBS or
purchase of the Note by Fannie Mae, as applicable.

       

      ARTICLE
5

      MAKING
THE ADVANCES

       

      Section
5.01.    Initial
Advance.

       

      Lender
has made the Initial Advance.

       

      Section
5.02.    Future
Advances.

       

      In order
to obtain a Future Advance, Borrower may from time to time deliver a written
request for a Future Advance (“Future Advance Request”) to
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, Lender shall make the requested Future Advance, at a
closing to be held at offices designated by Lender on a Closing Date selected by
Lender, and occurring on a date selected by Borrower, which date shall be not
more than three (3) Business Days, after Borrower’s receipt of the Rate Form (or
on such other date to which Borrower and Lender may agree).  Lender
reserves the right to require that Borrower post a deposit at the time the MBS
Commitment or Cash Commitment is obtained as an additional condition to Lender’s
obligation to make the Future Advance.  The deposit referred to in the
preceding sentence shall be refundable to Borrower upon the delivery of the
related MBS or purchase of the Note by Fannie Mae, as
applicable.


      
        
           


        

        
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      Section
5.03.    Conditions
Precedent to Future Advances.

       

      The
obligation of Lender to make a requested Future Advance is subject to the
following conditions precedent:

       

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

       

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

       

      (c)           After
giving effect to the requested Future Advance, the Coverage and LTV Tests will
be satisfied; notwithstanding the foregoing, if the test set forth in this Section 5.03(c) is
not satisfied after the Future Advance, such Future Advance may be permitted by
Lender if the Future Advance improves the Collateral Pool based on factors that
are consistent with Lender’s Underwriting Requirements and results in
improvement in one or both of the following areas: the then current Aggregate
Debt Service Coverage Ratio for the Trailing 12 Month Period or the then current
Aggregate Loan to Value Ratio.  Notwithstanding the foregoing, under
no circumstances shall the Aggregate Loan to Value Ratio exceed ninety percent
(90%);

       

      (d)           If
the Advance is a Fixed Facility Advance, delivery of a Fixed Facility Note, duly
executed by 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 Borrower;

       

      (f)           If
required by Lender, for any Title Insurance Policy not containing a Revolving
Credit Endorsement, the receipt by 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 last Closing Date with respect to which the Title
Insurance Policy was endorsed, Permitted Liens, and other exceptions approved by
Lender;

       

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

       

      (h)           Receipt
by Lender of a Cash Commitment or MBS Commitment, as applicable;

       

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


      
        
           


        

        
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      (j)           If
the Advance is a Variable Advance requiring a Hedge pursuant to the terms of
Article 21,
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;

       

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

       

      (l)           The
satisfaction of all applicable General Conditions set forth in Article
11.

       

      Section
5.04.    Determination
of Allocable Facility Amount and Valuations.

       

      Lender
has determined the initial Allocable Facility Amount and initial Valuation for
each Initial Mortgaged Property on the Closing Date such Mortgaged Property was
added to the Collateral Pool.  Once each Calendar Quarter, within
twenty (20) Business Days after Borrower has delivered to Lender the reports
required in Section
13.04, Lender shall determine the Aggregate Debt Service Coverage Ratio
for the Trailing 12 Month Period and the Aggregate Loan to Value
Ratio.  If Lender reasonably decides that changed market or property
conditions warrant, Lender may (a) request an Appraisal of the relevant
Mortgaged Properties and/or (b) determine new Allocable Facility Amounts and
Valuations at any other times.  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.  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 Lender deems appropriate and shall not be obligated to use any
information provided by Borrower.  Lender shall promptly disclose its
determinations to Borrower.  Until redetermined, the Allocable
Facility Amounts and Valuations determined by Lender shall remain in
effect.  In performing a Valuation of a Multifamily Residential
Property to be added to the Collateral Pool, Lender shall be entitled to obtain
an Appraisal.  Lender shall also have the right to obtain an Appraisal
in connection with the redetermination of a Valuation of a Mortgaged Property,
but only if Lender is unable to determine a Cap Rate for such Mortgaged Property
and then only if Lender has not obtained an Appraisal for  such
Mortgaged Property within the prior year.

       

      Section
5.05.    Limitation
on Advances.

       

      Notwithstanding
anything in this Agreement or any other Loan Document to the contrary, any
Future Advance (other than a rollover of an MBS backed by a Variable Advance),
whether a Variable Advance or a Fixed Facility Advance, and any conversion of an
Advance or any refinance of an Advance shall be subject to the precondition that
the Lender must confirm with Fannie Mae that Fannie Mae is generally offering to
purchase in the marketplace Advances of the execution type requested by Borrower
at the time of the Request and at the time of the Rate Setting Date for the
requested Advance.  In the event Fannie Mae is not purchasing Advances
of the type requested by Borrower, Fannie Mae agrees to offer, to the extent
available from Fannie Mae, alternative Advance executions based on the types of
executions Fannie Mae is generally offering to purchase in the marketplace at
that time.  Any alternative execution offered would be subject to
mutually agreeable documentation necessary to implement the terms and conditions
of such alternative execution.


      
        
           


        

        
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      ARTICLE
6

      ADDITIONS
OF COLLATERAL

       

      Section
6.01.    Right to
Add Collateral.

       

      Subject
to the terms and conditions of this Article 6, Borrower
shall have the right, from time to time during the Term of this Agreement, to
add Multifamily Residential Properties to the Collateral Pool in accordance with
the provisions of this Article
6.

       

      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.  Borrower
may, not more than eight (8) times per Calendar Year, deliver a written request
(“Collateral Addition
Request”) to Lender, in the form attached as Exhibit Q to this
Agreement, to add one (1) 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 proposed Additional Mortgaged Property required by
the form attached as Exhibit R to this
Agreement (“Collateral Addition
Description Package”), as amended from time to time to comply with
Lender’s Underwriting Requirements; and

       

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

       

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

       

      (c)           Underwriting.  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 Borrower
within twelve (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 the Underwriting Requirements, including applicable
underwriting floors.  Within thirty (30) days after receipt of (A) the
Collateral Addition Request for the proposed Additional Mortgaged Property and
(B) all reports, certificates and documents set forth on Exhibit S to this
Agreement, including a zoning analysis undertaken in accordance with the
Underwriting Requirements, Lender shall notify Borrower 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 Lender
declines to consent to the addition of the proposed Additional Mortgaged
Property to the Collateral Pool, Lender shall include, in its notice, a brief
statement of the reasons for doing so. Within five (5) Business Days after
receipt of Lender’s notice that it shall consent to the addition of the proposed
Additional Mortgaged Property to the Collateral Pool, Borrower shall notify
Lender whether or not it elects to cause the proposed Additional Mortgaged
Property to be added to the Collateral Pool.  If Borrower fails to
respond within the period of five (5) 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.


      
        
           


        

        
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      (d)           Closing.  If,
pursuant to subsection (c), Lender consents
to the addition of the proposed Additional Mortgaged Property to the Collateral
Pool, 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, 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
Lender on a Closing Date selected by Lender, and occurring within thirty (30)
Business Days after Lender’s receipt of Borrower’s election (or on such other
date to which Borrower and 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 one hundred forty percent (140%) and a
Loan to Value Ratio of not more than sixty-five percent (65%) and immediately
after giving effect to the requested addition, the Coverage and LTV Tests will
be satisfied.  Notwithstanding the foregoing, if any of the tests set
forth above in Section
6.03(a) or the Geographical Diversification Requirements or Concentration
Test are not satisfied after the addition of a proposed Additional Mortgaged
Property, such addition may be permitted by Lender if the addition improves the
Collateral Pool based on factors that are consistent with Lender’s Underwriting
Requirements and results in improvement in one or both of the following
areas:  the then current Aggregate Debt Service Coverage Ratio for the
Trailing 12 Month Period or the then current Aggregate Loan to Value
Ratio.  Notwithstanding the foregoing, under no circumstances shall
the Aggregate Loan to Value Ratio exceed ninety percent (90%).

       

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


      
        
           


        

        
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      (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 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 Lender and in form proper for recordation, as may be
necessary in the opinion of 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 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 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 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 last Closing Date with respect to which the Title Insurance Policy was
endorsed, Permitted Liens and other exceptions approved by 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
11.

       

      ARTICLE
7

      RELEASES
OF COLLATERAL

       

      Section
7.01.    Right to
Obtain Releases of Collateral.

       

      Subject
to the terms and conditions of this Article 7, Borrower
shall have the right to obtain a release of Collateral from the Collateral Pool
in accordance with the provisions of this Article
7.

       

      Section
7.02.    Procedure
for Obtaining Releases of Collateral.

       

      (a)           Request.  In
order to obtain a release of Collateral from the Collateral Pool, 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 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.  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
Article 9 or
Article
10.  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”).


      
        
           


        

        
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      (b)           Closing.  If
all conditions contained in Section 7.03 are
satisfied, Lender shall cause the Collateral Release Property to be released
from the Collateral Pool, at a closing to be held at offices designated by
Lender on a Closing Date selected by Lender, and occurring within thirty (30)
days after Lender’s receipt of the Collateral Release Request (or on such other
date to which Borrower and Lender may agree, by executing and delivering, and
causing all applicable parties to execute and deliver, all at the sole cost and
expense of Borrower, instruments, in the form customarily used by 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 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 Borrower of any and
all escrowed amounts relating thereto.  The instruments referred to in
the preceding sentence are referred to in this Article 7 as the
“Collateral Release
Documents.”  At Lender’s option, 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 (i) during the period Section 22.01(a) of
this Agreement is in effect the greater of (A) the Allocable Facility Amount for
the Mortgaged Property to be released and (B) the amount, if any, of Advances
Outstanding which are required to be repaid by Borrower to Lender in connection
with the proposed release of the Mortgaged Property from the Collateral Pool, so
that, immediately after the release, subject to the provisions of Section 7.03(a), 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 (ii) at all times after Section 22.01(a) of
this Agreement is no longer in effect the greater of (A) one hundred twenty-five
percent (125%) of the Allocable Facility Amount for the Mortgaged Property to be
released and (B) the amount, if any, of Advances Outstanding which are required
to be repaid by Borrower to Lender in connection with the proposed release of
the Mortgaged Property from the Collateral Pool, so that, immediately after the
release, subject to the provisions of Section 7.03(a), 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,
Borrower shall pay to 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.    Notwithstanding the terms in any Note, the
application of any amount received from Borrower that is  less than
all amounts due and payable shall be applied as follows:

       

      (i)           The
Release Price for the Collateral Release Property shall be applied in the order
selected by Borrower, provided that (A) any amount of the Outstanding Advances
which Borrower elects to prepay must be prepaid in full, or if the Release Price
is not sufficient to do so, the amount of the Outstanding Advances shall be only
partially prepaid; (B) any prepayment is permitted under the applicable Note;
(C) any prepayment premium due and owing is paid; and (D) interest must be paid
through the end of the month for a Fixed Facility Advance Outstanding and
further, with respect to a Variable Advance Outstanding, for the entire term of
the Variable Advance Outstanding.


      
        
           


        

        
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      (ii)           If
Borrower does not give Lender direction with respect to
the  application of the Release Price or if such direction does not
comply with the provisions of 7.02(d)(i) above, then the Release Price shall be
applied:

       

      (A)           First,  against
any Variable Advance Outstanding so long as the prepayment is permitted under
the Variable Facility Note and this Agreement (and any prepayment premium due
and owing is paid), until any Variable Advance is no longer Outstanding
(provided that, in the event there are multiple Variable Advances Outstanding,
Lender shall determine the order of application of the Release Price taking into
account factors including the unpaid principal balance of the Variable Advance,
and which Variable Advance Outstanding has the lowest prepayment costs or
highest interest rate); and

       

      (B)           then
against any Fixed Facility Advance Outstanding so long as the prepayment is
permitted under the applicable Fixed Note (and any prepayment premium due and
owing is paid) (provided that, in the event there are multiple Fixed Facility
Advances Outstanding, Lender shall determine the order of application of the
Release Price taking into account factors including the unpaid principal
balances of the Fixed Notes, and which Fixed Note Outstanding has the lowest
prepayment costs or the highest interest rate).

       

      (iii)          In
the event Borrower desires to release a Collateral Release Property on a date
other than the last Business Day of the month and apply the Release Price to a
Fixed Facility Advance Outstanding, or on a date other than a rollover date for
the Variable Advance Outstanding and apply the Release Price to the Variable
Advance Outstanding, the Release Price or the remainder of the Release Price, if
any, shall be held by Lender (or its appointed collateral agent) in an interest
bearing account in the name of Lender in Permitted Investments as substitute
Collateral (“Substitute Cash
Collateral”), in accordance with a security agreement (if required by
Lender) and other documents in form and substance acceptable to
Lender.  Any portion of the Release Price held as Substitute 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.  Any Substitute Cash Collateral shall be
applied, as applicable, on the last Business Day of the month or the rollover
date as described above, in the order provided in Section 7.02(d) above.


      
        
           


        

        
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      Section
7.03.    Conditions
Precedent to Release of Collateral Release Property from the
Collateral.

       

      The
obligation of 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.  Notwithstanding the foregoing, if any of the tests set
forth above in this (a) or the
Geographical Diversification Requirements or Concentration Test are not
satisfied after the release of a Mortgaged Property, such release may be
permitted by Lender if the release improves the Collateral Pool based on factors
that are consistent with Lender’s Underwriting Requirements and results in
improvement in one or both of the following areas: the then current Aggregate
Debt Service Coverage Ratio for the Trailing 12 Month Period or the then current
Aggregate Loan to Value Ratio.

       

      (b)           Receipt
by Lender of the Release Price;

       

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

       

      (d)           Receipt
by Lender on the Closing Date of one (1) or more counterparts of each Collateral
Release Document, dated as of the Closing Date, signed by each of the parties
(other than Lender) who is a party to such Collateral Release
Document;

       

      (e)           If
required by 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 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 last Closing Date with respect to which the Title Insurance Policy was
endorsed, Permitted Liens, and other exceptions approved by Lender;

       

      (f)           If
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”), 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, Lender shall evaluate
whether the Remaining Mortgaged Properties comply with the Lender’s Underwriting
Requirements, 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 Underwriting Requirements (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 Lender of endorsements to the Tie-In Endorsements of the Title Insurance
Policies, if deemed necessary by Lender, to reflect the release;

       

      (h)           Receipt
by Lender on the Closing Date of a writing, dated as of the Closing Date, signed
by Borrower, in the form attached as Exhibit U to this
Agreement, pursuant to which Borrower confirms that its 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
11;

       

      (k)           Notwithstanding
the other provisions of this Section 7.03, no
release of any of the Mortgaged Properties shall be made unless 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 one hundred twenty-five percent (125%) of the Initial
Valuation of each of such remaining Mortgaged Properties;

       

      (l)           Notwithstanding
the other provisions of this Section 7.03, at no
time shall the Collateral Pool consist solely of the Mortgaged Property commonly
known as Brier Creek Phase I.

       

      Section
7.04.    Substitutions.

       

      (a)           Right to Substitute
Collateral.  Subject to the terms, conditions and limitations
of this Section
7.04 and Article 7, Borrower
shall have the right, from time to time during the Term of this Agreement, to
add one (1) or more Multifamily Residential Properties to the Collateral Pool in
substitution of one (1) 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.  Borrower
may deliver a written request (“Collateral Substitution
Request”) to Lender, in the form attached as Exhibit Z to this
Agreement, to add one (1) or more Multifamily Residential Properties to the
Collateral Pool in substitution of one (1) 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
comply with Lender’s Underwriting Requirements;


      
        
           


        

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

       

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

       

      (iii)         Underwriting.

       

      (A)           Lender
shall evaluate the proposed Substituted Mortgaged Property, and shall make
underwriting determinations as to (1) 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 (2) 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 determinations 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 Lender’s Underwriting Requirements,
including applicable underwriting floors.

       

      (B)           Within
thirty (30) days after receipt of (1) the Collateral Substitution Request for
the proposed Substituted Mortgaged Property and the proposed Collateral Release
Property and (2) all reports, certificates and documents set forth on Exhibit EE to this
Agreement, including a zoning analysis undertaken in accordance with the
Underwriting Requirements, Lender shall notify Borrower whether or not the
proposed Substituted Mortgaged Property meets the Coverage and LTV Tests and
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.


      
        
           


        

        
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      (C)           If
the proposed Substituted Mortgaged Property does not meet the Coverage and LTV
Tests and Underwriting Requirements required by this Section 7.04(b)(iii),
and therefore 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, Lender shall include, in its notice, a
brief statement of the reasons for doing so.  Within five (5) Business
Days after receipt of 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, Borrower shall notify
Lender whether or not they elect to cause such substitution to
occur.  If Borrower fails to respond within the period of five (5)
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, Lender
consents to the substitution of the proposed Substituted Mortgaged Property into
the Collateral Pool in replacement of the proposed Collateral Release Property,
Borrower timely elects to cause such substitution to occur and all conditions
contained in Section
7.04(c) are satisfied, 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 Lender on a Closing Date selected by Lender, and occurring
—

       

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

       

      (B)           if
the substitution of the proposed Substituted Collateral Property is to occur
subsequent to the release of the Collateral Release Property, within ninety (90)
days after the release of the Collateral Release Property (the “Property Delivery Deadline”)
(provided such date may be extended an additional ninety (90) days if Borrower
provides evidence satisfactory to Lender of Borrower’s diligent efforts in
finding a suitable proposed Substituted Mortgaged Property)  in
accordance with Section
7.02(c).

       

      If, in
the case of clause (B), the addition of
the proposed Substituted Mortgaged Property to the Collateral Pool does not
occur within ninety (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 (B), then Borrower
shall have waived its 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
Borrower 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
Borrower to Lender to reduce the Advances Outstanding as required by, and in the
manner set forth in, Section
7.02(d).


      
        
           


        

        
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      (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)           (A)
The proposed Substituted Mortgaged Property has a Debt Service Coverage Ratio
for the Trailing 12 Month Period of not less than one hundred forty percent
(140%) and a Loan to Value Ratio of not more than sixty-five percent (65%) and
(B) immediately after giving effect to the requested substitution, the Coverage
and LTV Tests will be satisfied.  Notwithstanding the foregoing, if
any of the tests set forth above in this Section 7.04(c)(i) or
the Geographical Diversification Requirements or Concentration Test are not
satisfied after the substitution of a proposed Substituted Mortgaged Property,
such substitution may be permitted by Lender if the substitution improves the
Collateral Pool based on factors that are consistent with Lender’s Underwriting
Requirements and results in improvement in one or more of the following areas:
the then current Valuation of the Mortgaged Properties, the then current
Aggregate Debt Service Coverage Ratio, or the then current Aggregate Loan to
Value Ratio.

       

      (ii)          Lender
shall have made the determination, as a part of the underwriting evaluations
made in accordance with Section 7.04(b)(iii),
that provided that the Aggregate Debt Service Coverage Ratio for the Trailing 12
Month Period immediately prior to and after the substitution is less than one
hundred sixty-five percent (165%), (A)  the Aggregate Debt Service
Coverage Ratio for the Trailing 12 Month Period immediately after giving effect
to the proposed substitution will be equal to or higher than the Aggregate Debt
Service Coverage Ratio for the Trailing 12 Month Period immediately prior to the
proposed substitution, and (B) 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;

       

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

       

      (iv)         The
receipt by Lender of the Collateral Substitution Fee and all legal fees and
expenses payable by Borrower 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 Lender and in form proper for recordation, as
may be necessary in the opinion of 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 Lender, and the payment of all taxes,
fees and other charges payable in connection with such execution, delivery,
recording and filing;


      
        
           


        

        
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      (vi)           If
required by 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 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 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
11.

       

      (d)          Substitution
Deposit.

       

      (i)           The
Deposit.         If the
Addition of the proposed Substituted Mortgaged Property is to occur subsequent
to the release of the Collateral Release Property pursuant to Section 7.04(b), at
the Closing Date of the release of the Collateral Release Property, Borrower
shall deposit with Lender the “Substitution
Deposit” described in Section 7.04(d)(ii)
in the form of cash or, in lieu of (and/or in addition to) depositing cash for
the Substitution Deposit, Borrower may post a Letter of Credit in accordance
with the terms of Section 7.05 of this
Agreement, having a face amount equal to the Substitution Deposit (or such
lesser amount that has been deposited in cash).  Funds deposited in
cash shall be invested and reinvested by it in the name of Lender in Permitted
Investments.

       

      (ii)          Substitution Deposit
Amount. The “Substitution
Deposit” for each proposed Substitution shall be an amount equal to the
sum of:

       

      (A)           the
Release Price relating to the Collateral Release Property, plus

       

      (B)           any
and all of the yield maintenance, fee maintenance or the prepayment premium, as
applicable, through (1) for Fixed Facility Advances, the end of the month in
which the Property Delivery Deadline occurs as if the Release Price relating to
the Collateral Release Property were to be prepaid in such month and (2) for
Variable Advances, the next rollover date for such Variable Advance (provided
that a Variable Facility Note for a Variable Advance shall be deemed paid or
partially paid, as applicable, as of the next maturity date of the MBS backed by
a Variable Advance after the Property Delivery Deadline) as if the Release Price
relating to the Collateral Release Property were to be prepaid at the next
rollover date, plus


      
        
           


        

        
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      (C)           for
any Fixed Facility Advance, interest on all or a portion of the applicable
Advance relating to the Release Price through the end of the month in which the
Property Delivery Deadline occurs.  Borrower shall also be obligated
to make any regularly scheduled payments of principal and interest due under all
Notes Outstanding  during any period between the closing of the
Collateral Release Property and the earlier of the closing of the Substituted
Mortgaged Property and the date of prepayment of all or a portion of the Note
relating to the Release Price, plus

       

      (D)           costs,
expenses and fees of Lender pertaining to the substitution (the “Substitution
Cost Deposit”).  The Substitution Cost Deposit shall be used by
Lender to cover all reasonable out-of-pocket costs and expenses incurred by
Lender and Fannie Mae, including any out-of-pocket reasonable legal fees and
expenses incurred by Fannie Mae and Lender in connection with such substitution
whether or not such substitution actually closes.

       

      If a
substitution of the last remaining asset is taking place and the amounts in
(A), (B) and (C) above are not
sufficient to pay off the full amount owing under the Notes Outstanding, then
the cash collateral or Letter of Credit must include (1) any yield maintenance
that would be due to the extent that the Fixed Facility Notes must be prepaid to
effect a release at that time, and (2) the Facility Termination Fee that would
be due to the extent that the Variable Facility Note must be prepaid to effect a
release at that time, and (3) the full amount of the principal and interest
owing under all Notes Outstanding;

       

      With
respect to the Substitution Deposit, in determining which Notes shall be
prepaid, the order of application shall be governed by Section
7.02(d).

       

      (iii)           Failure to Close
Substitution.  If the Addition of the proposed Substituted
Mortgaged Property does not occur by the Property Delivery Deadline in
accordance with Section 7.04(b), then
such Borrower shall have irrevocably waived its right to substitute such
Collateral Release Property with the proposed Substituted Mortgaged Property,
and the release of the Collateral Release Property shall be deemed to be a
release pursuant to Section 7.02 and shall trigger a
prepayment of the Notes, together with all yield maintenance, fee maintenance or
prepayment premium then due in connection with such payment.  Any
Advances being prepaid shall be deemed to be prepaid (A) as of the end of the
month in which the Property Delivery Deadline falls with respect to a Fixed
Facility Advance, and (B) as of the next rollover date with respect to a
Variable Advance.  In such event, Borrower shall pay Lender all
amounts that would be payable under Section 7.02 upon
such a release and prepayment, and such payment shall be applied in the manner
prescribed for Release Prices pursuant to Section
7.02(c).  The Substitution Deposit shall be retained by Lender
and applied against such payment.  Any portion of the Substitution
Deposit not needed to make such payment shall be promptly refunded to the
applicable Borrower after the Property Delivery Deadline.


      
        
           


        

        
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      (iv)           Substitution Deposit
Disbursement.  At closing of the substitution, Lender shall
disburse or return the Substitution Deposit, as applicable (less any portion of
the Substitution Cost Deposit used by Lender to cover all reasonable
out-of-pocket costs and expenses incurred by Lender and Fannie Mae, including
any out-of-pocket reasonable legal fees and expenses incurred by Fannie Mae and
Lender in connection with such substitution), directly to Borrower at such time
as the conditions precedent for the Substitution have been satisfied, which must
occur no later than the Property Delivery Deadline.  Notwithstanding
the foregoing, in the event that Borrower adds a Substituted Mortgaged Property
to the Collateral Pool prior to the Property Delivery Deadline but the Addition
of such Additional Mortgaged Property has not in and of itself satisfied the
requirements of Section 7.04(b), the
Substitution Deposit shall be reduced by the Allocable Credit Facility Amount of
such Additional Mortgaged Property as determined by Lender, and such reduction
in the Substitution Deposit shall be returned to Borrower, or in the case of a
Letter of Credit, such Letter of Credit shall be reduced by such reduction in
the Substitution Deposit.  If Borrower has not completely satisfied
the requirements to close the substitution by the Property Delivery Deadline,
the terms of Section
7.04(d)(iii) shall apply with respect to the remaining Substitution
Deposit.

       

      (e)           Restriction on
Borrowings.  If the Addition of the Substituted Mortgaged
Property to the Collateral Pool and the release of the Collateral Release
Property from the Collateral Pool do not occur simultaneously (i.e., within
thirty (30) days), then, until the Addition of the Substituted Mortgaged
Property to the Collateral Pool, no Future Advance will be permitted except and
unless after the release of the Collateral Release Property all conditions of
Section 7.03
have been satisfied.  

       

      Section 7.05.    Conditions
Precedent to Letters of Credit.

       

      The right
or requirement of Borrower to provide a Letter of Credit in connection with this
Agreement is subject to Lender’s determination that each of the following
conditions precedent has been satisfied:

       

      (a)           Letter of Credit
Requirements.  Any Letter of Credit shall be issued by a
financial institution satisfactory to Fannie Mae (the “Issuer”).  If
Borrower provides Lender with a Letter of Credit pursuant to this Agreement, the
Letter of Credit shall be in form and substance satisfactory to Lender and
Lender shall be entitled, upon occurrence of circumstances in (b), to draw under
such Letter of Credit solely upon presentation of a sight draft to the
Issuer.  Any Letter of Credit shall be for a term of at least three
hundred sixty-four (364) days (provided that in connection with a substitution,
the term of any Letter of Credit shall be until the date five (5) days after the
Property Delivery Deadline).  

       

      (b)           Draws Under Letter of
Credit.  Lender shall have the right to draw monies under the
Letter of Credit:

       

      (i)           upon
the occurrence of (A) an Event of Default, or (B) a Potential Event of Default
of which Borrower has knowledge has occurred and continued for ten (10)
days;

       

      (ii)           if
thirty (30) days prior to the expiration of the Letter of Credit, either the
Letter of Credit has not been extended for a term of at least three hundred
sixty four (364) days (provided that in connection with a substitution, the term
of any Letter of Credit shall be at least until the date five (5) days after the
Property Delivery Deadline) or Borrower has not replaced the Letter of Credit
with substitute cash collateral in the amount required by Lender;
or

       

      
        
           


        

        
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      (iii)         upon
the downgrading of the ratings of the long-term or short-term debt obligations
of the Issuer below a level satisfactory to Fannie Mae; provided that Borrower
shall have fifteen (15) days after written notice of such downgrading to deliver
to Lender either (A) an acceptable replacement Letter of Credit or (B)
Substitute Cash Collateral in the amount required by Lender.

       

      (c)           Deposit to Cash Collateral
Account.  If Lender draws under the Letter of Credit pursuant
to Section
7.05(b)(ii) or Section 7.05(b)(iii)
above, Lender shall deposit such draw monies into a Cash Collateral Account
established pursuant to a Cash Collateral Agreement entered into the first time
Lender draws any such monies.  Lender shall hold the Letter of Credit
drawn monies in the Cash Collateral Account until the earliest of the following
events occurs:

       

      (i)         
 Borrower presents an acceptable replacement Letter of Credit and Lender
agrees, in its sole discretion, to accept such Letter of Credit (provided that
any agreement by Lender to accept a replacement Letter of Credit will be
conditioned upon Borrower’s payment of all administrative and legal costs
incurred by Lender and Fannie Mae in connection with the replacement of the
Letter of Credit.)

       

      (ii)          the
applicable provisions of this Agreement pursuant to which the Letter of Credit
was provided are satisfied;

       

      (iii)         Borrower
pays all amounts due and payable under the Loan Documents and Lender releases
the liens of all Security Instruments;

       

      (iv)         Lender,
in its sole discretion, consents to Borrower's request to apply the funds to the
principal balance of a Note specified by Borrower and any prepayment premium due
in connection with such application; or

       

      (v)      
   an Event of Default occurs and Lender elects to apply the
proceeds as described below in Section
7.05(e);

       

      (d)           During
any period that Lender holds the cash proceeds resulting from a draw on any
Letter of Credit, Lender will not pay interest to, or on behalf of, Borrower in
connection with such funds.

       

      (e)           Default
Draws.  If Lender draws under the Letter of Credit pursuant to
Section
7.05(b)(i) above, Lender shall have the right to use monies drawn under
the Letter of Credit for any of the following purposes:

       

      (i)           to
pay any amounts required to be paid by Borrower under the Loan Documents
(including, without limitation, any amounts required to be paid to Lender under
this Agreement);

       

      (ii)          to
(on Borrower’s behalf, or on its own behalf if Lender becomes the owner of the
Mortgaged Property) pre-pay any Note in whole or in part, including any
prepayment premium or yield maintenance;


      
        
           


        

        
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      (iii)         to
make improvements or repairs to any Mortgaged Property which Lender determines
are necessary to ensure that the Mortgaged Property meets the requirements set
forth in the Loan Documents; or

       

      (iv)         deposit
monies into the Cash Collateral Account.

       

      (f)           Legal
Opinion.  Prior to or simultaneous with the delivery of any new
Letter of Credit (but not the extension of any existing Letter of Credit),
Borrower shall cause the Issuer’s counsel to deliver a legal opinion reasonably
satisfactory in form and substance as approved by Lender.

       

      ARTICLE
8

      EXPANSION
OF CREDIT FACILITY

       

      Section
8.01.        Right to
Increase Commitment.

       

      Subject
to the terms, conditions and limitations of this Article 8, 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. As of the date hereof, the Commitment has been
fully increased.  Either Commitment may be increased by the addition
of Collateral to the Collateral Pool and/or increases in the value of the
Mortgaged Properties.  Borrower’s right to increase the Commitment 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, to
increase the Commitment by an additional $0 (to a maximum Commitment of
$691,785,000.00).  Borrower hereby agrees that the total commitment,
when added to the commitment of Lender to Borrower under the Other Credit
Agreement, shall not exceed $934,978,000.

       

      (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 (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 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, Borrower shall deliver a written
request for an increase (a “Credit Facility Expansion
Request”) to 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;


      
        
           


        

        
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      (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 6 in
connection with such addition;

       

      (iv)        [Intentionally
Deleted];

       

      (v)      
   A request that Lender inform 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, Lender shall permit the requested increase in the Commitment, at a
closing to be held at offices designated by Lender on a Closing Date selected by
Lender, and occurring within fifteen (15) Business Days after Lender’s receipt
of the Credit Facility Expansion Request (or on such other date to which
Borrower and Lender may agree).

       

      Section
8.03.        Conditions
Precedent to Increase in Commitment.

       

      The right
of 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, subject to the terms of Section 15.03 of this
Agreement, the Coverage and LTV Tests will be satisfied;

       

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

       

      (c)           The
receipt by 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 8, showing no
additional exceptions to coverage other than the exceptions shown on the last
Closing Date with respect to which the Title Insurance Policy was endorsed,
Permitted Liens, and other exceptions approved by Lender, together with any
reinsurance agreements required by Lender;

       

      (d)           The
receipt by 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 Lender in all respects;

       

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

       

      (f)           The
satisfaction of all applicable General Conditions set forth in Article
11.


      
        
           


        

        
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      ARTICLE
9

      PARTIAL
TERMINATION OF FACILITIES

       

      Section
9.01.        Right to
Complete or Partial Termination of Facilities.

       

      Subject
to the terms and conditions of this Article 9, 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
9.

       

      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, Borrower may deliver a written request for the reduction (“Facility Termination Request”)
to 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 Borrower of any Variable Advances which will be
prepaid or Fixed Facility 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
7.

       

      (b)           Closing.  If
all conditions contained in Section 9.03 are
satisfied, Lender shall permit the Variable Facility Commitment or Fixed
Facility Commitment as the case may be, to be reduced to the amount designated
by Borrower, at a closing to be held at offices designated by Lender on a
Closing Date selected by Lender, within fifteen (15) Business Days after
Lender’s receipt of the Facility Termination Request (or on such other date to
which Borrower and 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 9 as the
“Facility Termination
Document.”

       

      Section
9.03.        Conditions
Precedent to Complete or Partial Termination of Facilities.

       

      The right
of Borrower to reduce the Facility Commitment and the obligation of Lender to
execute the Facility Termination Document, are subject to the satisfaction of
the following conditions precedent on or before the Closing Date:

       

      
        
           


        

        
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      (a)           Payment
by 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 Borrower is not required to prepay all of the Variable Advances or
Fixed Facility Advances Outstanding, as the case may be, 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 Borrower of the Facility Termination Fee;

       

      (c)           Receipt
by Lender on the Closing Date of one (1) or more counterparts of the Facility
Termination Document, dated as of the Closing Date, signed by each of the
parties (other than Lender) who is a party to such Facility Termination
Document; and

       

      (d)           The
satisfaction of all applicable General Conditions set forth in Article
11.

       

      ARTICLE
10

      TERMINATION
OF CREDIT FACILITY

       

      Section
10.01.     Right to
Terminate Credit Facility.

       

      Subject
to the terms and conditions of this Article 10, 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
10.

       

      Section
10.02.     Procedure
for Terminating Credit Facility.

       

      (a)           Request.  In
order to terminate this Agreement and the Credit Facility, Borrower shall
deliver a written request for the termination (“Credit Facility Termination
Request”) to 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 Lender shall cause all of the
Collateral to be released from the Collateral Pool, at a closing to be held at
offices designated by Lender on a Closing Date selected by Lender, within thirty
(30) Business Days after Lender’s receipt of the Credit Facility Termination
Request (or on such other date to which Borrower and Lender may agree), by
executing and delivering, and causing all applicable parties to execute and
deliver, all at the sole cost and expense of Borrower, (i) instruments, in the
form customarily used by 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 governing the perfection of the security interest being released,
(iii) such other documents and instruments as 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 Borrower of any and all
escrowed amounts relating thereto, (iv) instruments releasing Borrower from its
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 10 as the
“Facility Termination
Documents.”


      
        
           


        

        
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      Section
10.03.     Conditions
Precedent to Termination of Credit Facility.

       

      The right
of Borrower to terminate this Agreement and the Credit Facility and to receive a
release of all of the Collateral from the Collateral Pool and 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 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 Borrower to Lender under this
Agreement;

       

      (b)           [Intentionally
Deleted];

       

      (c)           Payment
of the Facility Termination Fee; and

       

      (d)           The
satisfaction of all applicable General Conditions set forth in Article
11.

       

      ARTICLE
11

      GENERAL
CONDITIONS PRECEDENT TO ALL REQUESTS

       

      The
obligation of 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 Borrower of 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 Borrower since the Third Amended and
Restated 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  in each case under Section
17.01(b)-Section 17.01(k) and
Section
17.01(m) or, in any material respect, under Section 17.01(a),
Section
17.01(l) or Section 17.01(n) (it
being understood and agreed that any default comparable to the Events of Default
listed in Section
17.01(b)-Section 17.01(k) and
Section
17.01(m) in the other Loan Documents will be treated to be material) 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.


      
        
           


        

        
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      (d)           No
Insolvency.  Except in connection with a Credit Facility
Termination Request, receipt by Lender on the Closing Date for the Request of
evidence satisfactory to Lender that Borrower is not 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 Borrower 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)           Geographic and Concentration
Tests.  Except in connection with a Credit Facility Termination
Request, the Collateral Pool satisfies the Geographical Diversification
Requirement and Concentration Test.

       

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

       

      (i)           A
Compliance Certificate;

       

      (ii)          An
Organizational Certificate; and

       

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

       

      (j)           Covenants.  Except
in connection with a Credit Facility Termination Request, Borrower is in full
compliance with each of the covenants set forth in Article 13, Article 14 and Article 15 of this
Agreement, without giving effect to any notice and cure rights of
Borrower.


      
        
           


        

        
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      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, a Collateral
Substitution Request, or a Credit Facility Expansion Request, it shall be a
condition precedent that Lender receives each of the following, each dated as of
the Closing Date for the Request, in form and substance satisfactory to Lender
in all respects:

       

      (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 Lender), each of which shall be
in full force and effect.

       

      (b)           Opinion.  Favorable
opinions of counsel to Borrower, as to the due organization and qualification of
Borrower, the due authorization, execution, delivery and enforceability of each
Loan Document executed in connection with the Request and such other matters as
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 Lender receive each
of the following, each dated as of the Closing Date of a Collateral Addition
Request or a Collateral Substitution Request, as the case may be, in form and
substance satisfactory to Lender in all respects:

       

      (a)           A
favorable opinion of local counsel to Borrower or 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 Lender of compliance of the Mortgaged Property with Applicable
Laws.

       

      (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 Lender, in which the owner shall (unless
waived by Lender) periodically deposit amounts for replacements for improvements
at the Mortgaged Property and as additional security for Borrower’s obligations
under the Loan Documents.


      
        
           


        

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

       

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

       

      (j)           An
Assignment of Leases and Rents, if Lender determines one to be necessary or
desirable, provided that the provisions of any such assignment shall be
substantively identical to those in the Security Instrument covering the
Collateral, with such modifications as may be necessitated by applicable state
or local law.

       

      ARTICLE
12

      REPRESENTATIONS
AND WARRANTIES

       

      Section
12.01.      Representations
and Warranties of Borrower.

       

      Borrower
hereby represents and warrants to Lender as follows:

       

      (a)           Due
Organization; Qualification.

       

      (i)           The
REIT is qualified to transact business and is in good standing in the State of
Tennessee.  Borrower is qualified to transact business and is in good
standing in the State in which it is 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 Borrower to perform the
Obligations under this Agreement and the other Loan
Documents.  Borrower is qualified to transact business and is in good
standing in each State in which it owns a Mortgaged Property.

       

      (ii)          Borrower’s
principal place of business, principal office and office where it keeps its
books and records as to the Collateral is located at the address set out in
Section
23.08.

       

      (b)           Power and
Authority.  Borrower has the requisite power and authority (i)
to own its properties and to carry on its 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 Borrower, 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 Borrower as a condition
to the valid execution, delivery and performance by Borrower of this Agreement
or any of the other Loan Documents.


      
        
           


        

        
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      (d)           Valid and Binding
Obligations.  This Agreement and the other Loan Documents have
been duly authorized, executed and delivered by Borrower and constitute the
legal, valid and binding obligations of Borrower, enforceable against Borrower
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.

       

      (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:

       

      (i)           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 Borrower, any of the Mortgaged Properties or any other portion
of the Collateral or other assets of Borrower, or any judgment or order
applicable to Borrower or to which Borrower, any of the Mortgaged Properties or
other assets of Borrower is subject;

       

      (ii)          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
Borrower’s Organizational Documents, any indenture, existing agreement or other
instrument to which Borrower is a party or to which Borrower, any of the
Mortgaged Properties or any other portion of the Collateral or other assets of
Borrower is subject;

       

      (iii)         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

       

      (iv)        does
or will require the consent or approval of any creditor of Borrower, 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
Borrower, 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 Borrower, which, if decided adversely to
Borrower, would have, or may reasonably be expected to have, a Material Adverse
Effect.  Borrower is not in default with respect to any order of any
Governmental Authority.

       

      (g)           Solvency.  Borrower
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, Borrower will not be left with an unreasonably
small amount of capital with which to engage in its business or undertakings,
nor will Borrower has incurred, have intended to incur, or believe that it has
incurred, debts beyond its ability to pay such debts as they
mature.  Borrower 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 Borrower’s knowledge,
threatened bankruptcy, reorganization, receivership, insolvency or like
proceeding, whether voluntary or involuntary, affecting Borrower or any of the
Mortgaged Properties and (ii) has been no assertion or exercise of
jurisdiction over Borrower 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 Borrower or, to the
knowledge of Borrower, by any other Person under any contract to which Borrower
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 Borrower nor, to the knowledge of Borrower, 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.  Borrower 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 Borrower 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.

       

      (i)           Borrower
is not an “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
Borrower 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”).

       

      (ii)          Borrower
is not a “governmental plan” within the meaning of Section 3(32) of
ERISA.

       

      (iii)         Borrower
and transactions with Borrower are not subject to state statutes regulating
investments and fiduciary obligations with respect to governmental
plans.

       

      (iv)         One
or more of the following circumstances is/are true:

       

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

       

      
        
          
          

        

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

       

      (C)         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).

       

      (D)         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.

       

      (k)           Financial
Information.  The financial projections relating to Borrower
and delivered to Lender on or prior to the date hereof, if any, were prepared on
the basis of assumptions believed by Borrower, in good faith at the time of
preparation, to be reasonable and Borrower 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 Borrower which have been
furnished to Lender are complete and accurate in all material respects and
present fairly the financial condition of Borrower, 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 Borrower other than transactions in the
ordinary course of business.  Borrower 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 Lender by Borrower 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 Borrower and the
statements, information and descriptions contained in Borrower’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
Borrower delivered as of the Closing Date are reasonable and based on the best
information available to Borrower.

       

      (m)           No Conflicts of
Interest.  To the best knowledge of Borrower, no member,
officer, agent or employee of 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, Borrower 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.

       

      
        
          
          

        

        
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      (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 Borrower.

       

      (o)           Governmental
Orders.  Borrower 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.

       

      (p)           No
Reliance.  Borrower 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 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 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.  Borrower 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 Lender,
Borrower has not entered into and is not a party to any contract, lease or other
agreement with any Affiliate of Borrower 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).  Lender hereby approves the property management agreements
set forth on Exhibit
AA to this Agreement.

       

      (s)           Lines of
Business.  Borrower 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 Borrower.

       

      Borrower
hereby represents and warrants to Lender as follows with respect to each of the
Mortgaged Properties:

       

      
        
          
          

        

        
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      (a)           Title.  Borrower
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 Lender’s
Underwriting Requirements), 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 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.  Borrower
has 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
Borrower contests in good faith and by appropriate proceeding the validity or
applicability of any Imposition, provides to Lender security in such amount and
in such form as Lender may reasonably require, then compliance with the
Imposition in question shall be suspended during the pendency of such
contest.  Borrower has 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 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 Borrower nor, to the knowledge of Borrower, 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 is Borrower
otherwise aware of any such pending actions or proceedings.

       

      (d)           Leases.  Borrower
has delivered to 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 Borrower 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 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 (1) year, including any renewal or extension period unless such
renewal or extension period is subject to termination by Borrower upon not more
than thirty (30) days’ written notice, (ii) provides for prepayment of more than
one (1) month’s rent, or (iii) was entered into in other than the ordinary
course of business.

       

      
        
          
          

        

        
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      (e)           Rent
Roll.  Borrower has executed and delivered to Lender a Rent
Roll for each Mortgaged Property, each dated as of and delivered within thirty
(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 Mortgaged Property or
otherwise previously disclosed in writing to 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, Borrower 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 Borrower and, to the knowledge of Borrower, 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 Lender, no notice of any default by Borrower 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.  Borrower
has delivered to 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 (1) 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.

       

      
        
          
          

        

        
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      (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 any Lease or other agreement affecting such Mortgaged
Property.  Borrower, 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 (A) contiguous to or
(B) 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 Lender prior to the date on which Borrower’s Mortgaged Property is
added to the Collateral Pool, or otherwise disclosed in writing by Borrower to
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 Borrower, latent
or otherwise) and Borrower 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 Lender.  There are no proceedings pending for
partial or total condemnation of any Mortgaged Property except as disclosed in
writing to Lender.

       

      Section
12.03.     Representations
and Warranties of Lender.

       

      Lender
hereby represents and warrants to Borrower as follows:

       

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

       

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

       

      
        
          
          

        

        
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      (c)           Due
Authorization.  The execution and delivery by 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.

       

      ARTICLE
13

      AFFIRMATIVE
COVENANTS OF THE BORROWER

       

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

       

      Section
13.01.      Compliance
with Agreements.

       

      Borrower
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 Borrower’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.

       

      Borrower
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.  Borrower 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.

       

      Borrower
shall keep and maintain at all times complete and accurate books of accounts and
records in sufficient detail to correctly reflect (x) all of Borrower’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, Borrower shall furnish, or cause to be
furnished, to Lender:

       

      (a)           Annual Financial
Statements.  As soon as available, and in any event within
ninety (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
forty-five (45) days after each of the first three (3) 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
forty-five (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 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 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 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 Lender to access information regarding such
accounts.

       

      
        
          
          

        

        
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      (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, (i)
copies of all financial statements, reports and proxy statements sent or made
available generally by Borrower, or any of its Affiliates, to their respective
security holders, (ii) 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 Borrower, or any
of its Affiliates, with the Securities and Exchange Commission or other
Governmental Authorities, and (iii) all statements made available generally by
Borrower, 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 Borrower 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 Borrower shall only be required to deliver such
reports and management letters to the extent that they relate to Borrower or any
Mortgaged Property.

       

      (i)           Annual
Budgets.  Promptly, and in any event within sixty (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 ninety (90) days
after the beginning of each fiscal year, copies of (i) the REIT’s business plan
for the current and the succeeding two (2) fiscal years, (ii) the REIT’s annual
budget (including capital expenditure budgets) and projections for each
Mortgaged Property; and (iii) the REIT’s financial projections for the current
and the succeeding two (2) fiscal years, as prepared by the REIT’s Chief
Financial Officer and in a format and with such detail as Lender may
require.

       

      (k)           Strategic
Plan.  Within ninety (90) days after the end of each fiscal
year of the REIT, the REIT shall deliver to 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 Borrower’s Strategic Plan materially changes, then such person
shall deliver to Lender the Strategic Plan as so changed.

       

      (l)           Annual Rental and Sales
Comparable Analysis.  Within thirty (30) days after 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
Lender.

       

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

       

      
        
          
          

        

        
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      (n)           Other
Reports.  Promptly upon receipt thereof, all schedules,
financial statements or other similar reports delivered by Borrower pursuant to
the Loan Documents or requested by Lender with respect to Borrower’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.

       

      Section
13.05.      Certificate
of Compliance.

       

      Borrower
shall deliver to Lender concurrently with the delivery of the financial
statements and/or reports required to be delivered pursuant to Section 13.04(a) and
Section
13.04(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, (a) setting forth in reasonable detail the calculations required to
establish whether Borrower was in compliance with the requirements of Section 15.02 through
Section 15.08
on the date of such financial statements, and (b) 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 Borrower 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.

       

      Borrower
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, Borrower shall permit Lender:

       

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

       

      (b)           to
discuss Borrower’s affairs, finances and accounts with Borrower’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
Borrower;

       

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

       

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

       

      
        
          
          

        

        
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      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
Borrower.

       

      Section
13.08.      Inform
Lender of Material Events.

       

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

       

      (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 Borrower 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
Borrower 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 Borrower that (i) Borrower is being placed under
regulatory supervision, (ii) any license, Permit, charter, membership or
registration material to the conduct of Borrower’s business or the Mortgaged
Properties is to be suspended or revoked or (iii) Borrower is to cease and
desist any practice, procedure or policy employed by Borrower, 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 (i) the existence or occurrence, or
the alleged existence or occurrence, of a Hazardous Substance Activity or (ii)
the violation, or alleged violation, of any Hazardous Materials Laws in
connection with any Mortgaged Property or any of the other assets of
Borrower;

       

      
        
          
          

        

        
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      (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 Borrower delivered to Lender pursuant to Section
13.04;

       

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

       

      (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 Borrower; 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 Borrower to pay when due or within any applicable
grace period any Indebtedness of Borrower, or (iii) any Indebtedness of Borrower
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.

       

      Borrower
shall permit any Person designated by Lender:  (a) to make entries
upon and inspections of the Mortgaged Properties; and (b) 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
Borrower.

       

      Section
13.11.     Compliance
with Applicable Laws.

       

      Borrower
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.  Borrower 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.

       

      Borrower
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.  Borrower shall reimburse Lender for any losses, costs,
damages or expenses (including reasonable attorneys’ fees and court costs)
incurred by Lender if an interest in any Mortgaged Property, other than with
respect to a Permitted Lien, is claimed by others.

       

      
        
          
          

        

        
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      Section
13.13.     Defense
of Actions.

       

      Borrower
shall appear in and defend any action or proceeding purporting to affect the
security for this Agreement or the rights or power of 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 Lender may
appear.  If Borrower 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 Borrower which affects in any
material respect 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 Lender may, but without obligation to do so and without notice
to or demand upon Borrower and without releasing Borrower from any Obligation,
make such appearances, disburse such sums and take such action as Lender deems
necessary or appropriate to protect 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 Lender appears to be prior or superior to the Loan
Documents.  In the event (a) 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 (b) 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 Lender is made a party or (c) of the
bankruptcy of Borrower or an assignment by Borrower for the benefit of their
respective creditors, Borrower 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, Borrower 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 Lender; provided, however,
that in any case, no such Alteration shall be made to any Mortgaged Property
without the prior written consent of Lender if (a) 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, (b) 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 (c) such Alteration will be completed in
more than twelve (12) months from the date of commencement or in the last year
of the Term of this Agreement.  Notwithstanding the foregoing,
Borrower must obtain 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 Borrower must give
prior written notice to 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 Borrower as part of Borrower’s routine
maintenance and repair of the Mortgaged Properties as required by the Loan
Documents.

       

      
        
          
          

        

        
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      Section
13.15.      ERISA.

       

      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
Lender (or any transferee or assignee thereof, including a participation
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 Lender in the Mortgaged Properties, or Lender by reason of or as
holder of the Loan Documents, Borrower shall pay all such Loan Document Taxes
to, for, or on account of Lender (or provide funds to Lender for such payment,
as the case may be) as they become due and payable and shall promptly furnish
proof of such payment to 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 Lender may prohibit Borrower from paying the Loan Document
Taxes to or for Lender, Borrower shall enter into such further instruments as
may be permitted by law to obligate Borrower to pay such Loan Document
Taxes.

       

      Section
13.17.      Further
Assurances.

       

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

       

      
        
          
          

        

        
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      Section
13.19.      Leases.

       

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

       

      Section
13.20.      Intentionally
Omitted.

       

      Section
13.21.      Transfer
of Ownership Interests of Borrower.

       

      (a)           Prohibition on
Transfers.  Subject to paragraph (b) of this Section 13.21,
Borrower 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 Borrower are permitted without the consent of
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 Borrower.

       

      (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 thirty (30) days of the date of creation.

       

      (v)       
  The grant of an easement, if prior to the granting of the easement
Borrower causes 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 pays to Lender, on demand, all reasonable costs and
expenses incurred by Lender in connection with reviewing Borrower’s
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.

       

      
        
          
          

        

        
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      (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,
including, without limitation, the conversion or exchange of limited partnership
interests in Borrower 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 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.

       

      (ix)         A
merger with or acquisition of another entity by Borrower, provided that (A)
Borrower is 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 7 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 has 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 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, if
transferor or any other person has obligations under any Loan Documents, the
execution by the transferee of one (1) 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;

       

      
        
          
          

        

        
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      (v)         
The Transfer will not result in a significant modification under Section 1001 of
the Internal Revenue Code of any Advance that has been securitized in a
mortgage-backed security;

       

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

       

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

       

      (B)          In
addition, Borrower 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)           Borrower
shall give Lender notice of any change in the identity of Senior
Management.

       

      (b)           Within
thirty (30) Business Days after receipt of Borrower’s notice, Lender shall have
the right to terminate this Agreement and the Credit Facility by giving a notice
of such termination to Borrower.  In such event, this Agreement and
the Credit Facility shall terminate with the same effect as if Lender had
approved a Credit Facility Termination Request (including Borrower’s 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 one hundred eightieth (180th) day after
the date on which Borrower first receives Lender’s termination
notice.

       

      (c)           If
Lender exercises its termination right pursuant to subsection (b), Borrower shall
have a period of one hundred twenty (120) days, commencing with the date on
which Borrower receives Lender’s termination notice, to request that Lender
rescind its termination notice. Borrower may include in its request any
undertakings which it is willing to make in order to obtain such a rescission.
Lender shall give Borrower notice of its acceptance or rejection of Borrower’s
request within thirty (30) Business Days after Borrower makes the
request.  If Lender accepts the request, Lender shall give Borrower 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.  Borrower shall pay for
the cost and expenses incurred by 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.

       

      
        
          
          

        

        
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      Section
13.24.      [Intentionally
Deleted].

       

      Section
13.25.      Ownership
of Mortgaged Properties.

       

      Borrower
shall be the sole owner of each of the Mortgaged Properties free and clear of
any Liens other than Permitted Liens.

       

      ARTICLE
14

      NEGATIVE
COVENANTS OF THE BORROWER

       

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

       

      Section
14.01.      Other
Activities.

       

      Borrower
shall not:

       

      (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 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.

       

      Borrower
shall not take any action which could reasonably be expected to have any
Material Adverse Effect.

       

      Section
14.03.      Zoning.

       

      Borrower
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.

       

      
        
          
          

        

        
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      Section
14.04.      Liens.

       

      Borrower
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 7, Borrower
shall not Transfer any Mortgaged Property or any part of any Mortgaged Property
without the prior written consent of Lender (which consent may be granted or
withheld in 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 Southland Station, Phase II and located in Houston
County, Georgia is part of the Collateral Pool, Borrower shall not sell or
otherwise transfer any Ownership Interest in the entity owning all or any part
of the property commonly known as Southland Station, Phase I and located in
Houston County, Georgia (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 Three Oaks I or
Three Oaks II each located in Valdosta, Georgia, is part of the Collateral Pool,
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). For so long as either of the Mortgaged Properties commonly known as
Wildwood I or Wildwood II each located in Thomasville, Georgia, is part of the
Collateral Pool, 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).

       

      Section
14.06.     Indebtedness.

       

      Borrower
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.

       

      Borrower
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 thirty (30) days’ prior written notice to
Lender.

       

      Section
14.08.     Frequency
of Requests.

       

      Borrower
shall have the right, subject to the terms, conditions and limitations of this
Agreement, to make a Future Advance Request for a Variable 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.

       

      
        
          
          

        

        
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      Section
14.09.     Change in
Property Management.

       

      Borrower
shall not change the management agent for any Mortgaged Property except to a
management agent which Lender determines is qualified in accordance with
Lender’s Underwriting Requirements.

       

      Section
14.10.     Condominiums.

       

      Borrower
shall not submit any Mortgaged Property to a condominium regime during the Term
of this Agreement.

       

      Section
14.11.     Restrictions
on Partnership Distributions.

       

      Borrower
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.

       

      Borrower
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.

       

      Borrower
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 (1) or
more buildings leased, or held out for lease, to third parties (“Unimproved Real Property”) to
exceed ten percent (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 twenty percent (20%) of the value of all of its Real
Estate Assets.

       

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

       

      Section
14.14.     Dividend
Payout.

       

      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
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 twelve (12) month period.

       

      
        
          
          

        

        
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      ARTICLE
15

      FINANCIAL
COVENANTS OF THE BORROWER

       

      Borrower
agrees and covenants with 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 Borrower
and its 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—

       

      (i)           the
Consolidated EBITDA for the period, less

       

      (ii)          the
Imputed Capital Expenditures for the period;

       

      to

       

      
        
          
          

        

        
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      (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 Borrower and its 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 Borrower and its 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 Borrower and its Subsidiaries as of such date
(including the Total Indebtedness of Borrower as of such date and the portion of
any indebtedness of any joint venture in which Borrower or any Subsidiary
thereof is a venturer attributable to Borrower 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;

       

      (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);

       

      
        
          
          

        

        
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      provided, however, that net
income (or loss) shall be computed for these purposes without giving effect to
extraordinary losses, extraordinary or unusual losses and impairment related to
storm or earthquake, 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 Borrower or its 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 Borrower and its Subsidiaries;
  and

              


      

       

      
        	
                 
      

              	
                (b)

              	
                the
      portion of the up-front costs and expenses for Rate Contracts entered into
      by Borrower and its 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 Borrower and its Subsidiaries during
      such period, even if not payable on or before the 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 Borrower or its Subsidiaries to any Subsidiary, and
incurred or assumed for the purpose of capitalizing a Subsidiary of
Borrower.

       

      “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.

       

      “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.

       

      
        
          
          

        

        
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      “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 Borrower or its Subsidiaries to other
lenders, as indicated in the line item for “restricted cash” in Borrower’s
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 twelve (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: (a) such Person’s share of
the Indebtedness of any partnership or joint venture in which such Person
directly or indirectly holds any interest; and (b) 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, (i) Intra-Company Debt, and
(ii) 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 Borrower or any Subsidiary
of Borrower 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 Borrower 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 Borrower; 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.

       

      
        
          
          

        

        
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      Section
15.02.     [Intentionally
Deleted].

       

      Section
15.03.     Compliance
with Loan to Value Ratios.

       

      Borrower
shall at all times maintain the Aggregate Loan to Value Ratio so that it is not
greater than sixty-five percent (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 sixty-five percent (65%)
but is not greater than seventy-two percent (72%), the Collateral Pool shall be
deemed in compliance with the Aggregate Loan to Value Ratio, provided that (i)
the Aggregate Debt Service Coverage Ratio for the Trailing 12 Month Period shall
be equal to or greater than one hundred fifty percent (150%) and (ii) Borrower
shall pay an additional Variable Facility Fee and Fixed Facility Fee of the
number of basis points to be determined by Lender for so long as the Collateral
Pool exceeds sixty-five percent (65%) but is not greater than seventy-two
percent (72%).

       

      Section
15.04.     [Intentionally
Deleted].

       

      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 sixty-five percent (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 sixty percent (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 two hundred percent (200%) for any period of four
(4) consecutive fiscal quarters (treated as a single accounting
period).

       

      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 one hundred fifty percent (150%) for any
period of four (4) consecutive fiscal quarters (treated as a single accounting
period).

       

      
        
          
          

        

        
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      ARTICLE
16

      FEES

       

      Section
16.01.     Standby
Fee and Rate Preservation Fee.

       

      Borrower
shall pay the Standby Fee to 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 to no longer pay the Rate Preservation Fee, which election shall be
irrevocably terminated by at least thirty (30) days’ written notice of such
termination by Borrower to Lender.  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.  Borrower has paid to Lender an origination fee (“Initial Origination Fee”)
equal to the product obtained by multiplying (i) the Commitment by (ii)
sixty-five one hundredths percent (0.65%).

       

      (b)           Expansion Origination
Fee.  Upon the closing of a Credit Facility Expansion Request
under Article
8, Borrower shall pay to 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)
sixty-five one hundredths percent (0.65%).  Any Expansion Origination
Fee shall be reduced by the amount of any Collateral Addition Fee paid by
Borrower in respect of any Additional Mortgaged Properties added to the
Collateral Pool in conjunction with such expansion. Borrower shall pay the
Expansion Origination Fee on or before the Closing Date for the Credit Facility
Expansion Request.

       

      Section
16.03.     Due
Diligence Fees.

       

      (a)           Initial Due Diligence
Fees.  Borrower has paid to 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.  Borrower shall
pay to 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.  Borrower shall pay
Additional Collateral Due Diligence Fees for the Additional or Substituted
Mortgaged Property to 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.  Borrower shall pay, or reimburse Lender for, all
out-of-pocket legal fees and expenses incurred by 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.  Borrower has
paid Lender’s and Fannie Mae’s legal fees in connection with the Initial
Mortgaged Properties. On the date of this Agreement, 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.  Borrower shall pay, or reimburse Lender for,
all reasonable costs and expenses incurred by Lender, including the
out-of-pocket legal fees and expenses incurred by 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 Lender of any of its obligations with respect to the Request, the
satisfaction of all conditions precedent to Borrower’s rights or 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 Borrower
under this subsection (b) shall be absolute
and unconditional, regardless of whether the transaction requested in the
Request actually occurs.  Borrower shall pay such costs and expenses
to Lender on the Closing Date for the Request, or, as the case may be, after
demand by Lender when Lender determines that such Request will not
close.

       

      Section
16.05.     MBS-Related
Costs.

       

      Borrower
shall pay to Lender, within thirty (30) days after demand, all reasonable fees
and expenses incurred by 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
Borrower makes a Request and fails to close on the Request for any reason other
than the default by Lender, then Borrower shall pay to Lender and Fannie Mae all
damages incurred by Lender and Fannie Mae in connection with the failure to
close.

       

      Section
16.07.     Other
Fees.

       

      Borrower
shall pay the following additional fees and payments, if and when required
pursuant to the terms of this Agreement:

       

      (a)           The
Collateral Addition Fee, pursuant to Section 6.03(b), in
connection with the addition of an Additional Mortgaged Property to the
Collateral Pool pursuant to Article
6;

       

      
        
          
          

        

        
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      (b)           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
7;

       

      (c)           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
7;

       

      (d)           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
7;

       

      (e)           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
9; and

       

      (f)           The
Variable Facility Termination Fee, pursuant to Section 10.03(b), in
connection with the termination of the Credit Facility pursuant to Article
10.

       

      (g)          With
respect to each applicable Credit Enhanced Hedge, Borrower shall pay the Credit
Enhancement Fee monthly, in arrears, on the first Business Day following each
end of the month during the Term of this Agreement until such time that Fannie
Mae no longer credit enhances such Hedge or until the Credit Enhancement Fee is
no longer due and payable, except that the Credit Enhancement Fee for the last
month during the Term of this Agreement shall be paid on the last day of the
Term of this Agreement.

       

      ARTICLE
17

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

       

      (c)           the
failure by Borrower to perform or observe any covenant set forth in Article 13 or Article 14 within
thirty (30) days after prior written notice of such failure from Lender,
provided that such period shall be extended for up to thirty (30) additional
days if Borrower, in the discretion of Lender, is diligently pursuing a cure of
such default within thirty (30) days after receipt of notice from Lender;
or

       

      
        
          
          

        

        
          87

          
            

          

        

        
          
          

        

      

       

      (d)           any
warranty, representation or other written statement made by or on behalf of
Borrower 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, including but not limited to Indebtedness related to the
Other Credit Agreement, in an aggregate amount of $1,000,000 of either Borrower
or assumed by either Borrower (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

       

      (f)           (i)
Borrower 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 Borrower
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
Borrower 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 Borrower, or of all or a
substantial part of the property, domestic or foreign, of Borrower and any such
case or proceeding shall continue undismissed or unstayed for a period of sixty
(60) consecutive calendar days, or any order granting the relief requested in
any such case or proceeding against Borrower (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 Borrower, 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 Borrower seeking to establish the invalidity or
unenforceability hereof or thereof, or Borrower shall deny that it has any
further liability or obligation hereunder or thereunder; or

       

      (h)           (i)
the execution by Borrower 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 Borrower free from encumbrances, or (iii) if Borrower does
not furnish to Lender upon request the contracts, bills of sale, statements,
receipted vouchers and agreements, or any of them, under which Borrower claims
title to such materials, fixtures, or articles; or

       

      
        
          
          

        

        
          88

          
            

          

        

        
          
          

        

      

       

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

       

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

       

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

       

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

       

      (m)           the
failure of Borrower to maintain the Hedges required by Article 21 of this
Agreement; or

       

      (n)           the
failure by Borrower 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 thirty (30) days after receipt of notice from Lender
identifying such failure.

       

      ARTICLE
18

      REMEDIES

       

      Section
18.01.     Remedies;
Waivers.

       

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

       

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

       

      
        
          
          

        

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

       

      (c)           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.

       

      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 Lender
and delivered to Borrower.  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.  This
provision shall not be construed to permit the waiver of any condition to a
Request otherwise provided for herein.

       

      Section
18.03.     Lender’s
Right to Protect Collateral and Perform Covenants and Other
Obligations.

       

      If
Borrower fails to perform the covenants and agreements contained in this
Agreement or any of the other Loan Documents, then Lender at Lender’s option may
make such appearances, disburse such sums and take such action as Lender deems
necessary, in its sole discretion, to protect Lender’s interest, including (a)
disbursement of reasonable attorneys’ fees, (b) entry upon the Mortgaged
Property to make repairs and Replacements, (c) procurement of satisfactory
insurance as provided in paragraph 5 of the Security Instrument encumbering the
Mortgaged Property, and (d) if the Security Instrument is on a leasehold,
exercise of any option to renew or extend the ground lease on behalf of Borrower
and the curing of any default of Borrower in the terms and conditions of the
ground lease.  Any amounts disbursed by Lender pursuant to this Section 18.03, with
interest thereon, shall become additional indebtedness of Borrower secured by
the Loan Documents.  Unless Borrower and 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 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 Borrower under applicable
law.  Nothing contained in this Section 18.03 shall
require 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.

       

      
        
          
          

        

        
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      Section
18.06.     No
Notice.

       

      In order
to entitle Lender to exercise any remedy reserved to Lender in this Article 18, 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.     [Intentionally
Deleted]

       

      ARTICLE
19

      RIGHTS
OF FANNIE MAE

       

      Section
19.01.     Special
Pool Purchase Contract.

       

      Borrower
acknowledges that Fannie Mae is entering into an agreement with Lender (“Special Pool Purchase
Contract”), pursuant to which, inter alia, (a) Lender shall agree to
assign all of its rights under this Agreement to Fannie Mae, (b) Fannie Mae
shall accept the assignment of the rights, (c) subject to the terms, limitations
and conditions set forth in the Special Pool Purchase Contract, Fannie Mae shall
agree to purchase a one hundred percent (100%) participation interest in each
Advance issued under this Agreement by issuing to Lender an 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, or purchase the applicable
Note for cash, as the case may be, and the Collateral Pool securing the Notes,
(d) Lender shall agree to assign to Fannie Mae all of Lender’s interest in the
Notes and Collateral Pool securing the Notes, and (e) Lender shall agree to
service the loans evidenced by the Notes.

       

      Section
19.02.     Assignment
of Rights.

       

      Borrower
acknowledges and consents to the assignment to Fannie Mae of all of the rights
of Lender under this Agreement and all other Loan Documents, including the right
and power to make all decisions on the part of 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 Lender under
this Agreement or the other Loan Documents.

       

      Section
19.03.     Release
of Collateral.

       

      Borrower
hereby acknowledges that, after the assignment of Loan Documents contemplated in
Section 19.02,
Lender shall not have the right or power to effect a release of any Collateral
pursuant to Article
7 or Article
10.  Borrower acknowledges that the Security Instruments
provide for the release of the Collateral under Article 7 and Article
10.  Accordingly, Borrower shall not look to Lender for
performance of any obligations set forth in Article 7 and Article 10, but shall
look solely to the party secured by the Collateral to be released for such
performance.  Lender represents and warrants to Borrower that the
party secured by the Collateral shall be subject to the release provisions
contained in Article
7 and Article
10 by virtue of the release provisions in each Security
Instrument.

       

      
        
          
          

        

        
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      Section
19.04.     Replacement
of Lender.

       

      At the
request of Fannie Mae, Borrower and 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
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
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.

       

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

       

      Section
19.06.     Third-Party
Beneficiary.

       

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

       

      ARTICLE
20

      INSURANCE,
REAL ESTATE TAXES AND REPLACEMENT RESERVES

       

      Section
20.01.     Insurance
and Real Estate Taxes.

       

      Borrower
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 Lender’s reasonable discretion, by the posting of a letter of credit in
form and substance reasonably satisfactory to Lender and meeting the
requirements of Fannie Mae.

       

      Section
20.02.     Replacement
Reserves.

       

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

       

      
        
          
          

        

        
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      ARTICLE
21

      INTEREST
RATE PROTECTION

       

      Section
21.01.     Interest
Rate Protection. 

       

      (a)           Hedge
Requirement.  To protect against fluctuations in interest
rates, 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 (5th) anniversary of the
Initial Closing Date (the “Initial Hedge
Period”).

       

      (b)           Subsequent
Hedges.  Subject to the terms of Article 21,
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 on a date acceptable to the Lender.  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 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 Amount and covering the
entire term of the 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 at all times equal to or greater than the
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 Month Period
based upon a thirty (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 Trailing 12 Month Period 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 for the Trailing 12 Month Period
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;

       

      
        
          
          

        

        
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      (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, 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 Borrower’s obligations to Lender under this Agreement. 
With respect to each Hedge, the Hedge Security Agreement must be delivered by
Borrower to Lender no later than the effective date of the Hedge.

       

      Section
21.04.     Termination. 

       

      Borrower
shall not terminate, transfer or consent to any transfer of any existing Hedge
without Lender’s prior written consent as long as Borrower is required to
maintain a Hedge pursuant to this Agreement; provided, however, that if, and at
such time as, there are no Variable Advances Outstanding that are part of the
Hedge Requirement Amount, Borrower shall have the right to terminate the
existing Hedge and the proceeds of any such termination shall be paid to
Borrower.

       

      Section
21.05.     Performance
Under Hedge Documents. 

       

      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 21. 
Borrower shall not exercise, without Lender’s prior written consent, which
consent shall not be unreasonably withheld, and shall exercise, at 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 set forth on Schedule 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.   Lender’s approval of the documents evidencing an
Approved Swap shall pertain to those Hedge Documents in effect as of the date of
such Lender approval.  No amendments or modifications to the Hedge
Documents of an Approved Swap shall be permitted without Lender’s prior written
consent. An Approved Swap may no longer satisfy the Hedge requirements set forth
in this Article
21 upon the first to occur of:

       

      
        
          
          

        

        
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      (a)           any
Termination Event or any Event of Default (as each term is defined in the
documents evidencing the Approved Swap) under an Approved Swap, including any
“Cross Default” with respect to the swap provider, or

       

      (b)           [Intentionally
Deleted]

       

      (c)           any
modification or amendment to the Hedge Documents evidencing the Approved Swap
without prior written Lender consent.  Additional requirements may be
imposed by Lender upon review of the applicable Hedge Documents submitted for
review as Approved Swaps.

       

      In the
event that an Approved Swap is transferred by a Swap provider to another Swap
provider (by merger, transfer, assignment or otherwise), Borrower shall notify
Lender immediately upon receipt of knowledge of such transfer and Lender hereby
reserves the right to re-evaluate its approval of such Approved
Swap.

       

      Section
21.07.     Approved
Caps.

       

      Notwithstanding
any provisions herein to the contrary, the parties hereby acknowledge that the
Hedge Documents evidencing the LIBOR Caps set forth on Schedule III attached
hereto have been approved by Fannie Mae as acceptable Caps under this Agreement
(the “Approved
Caps”).  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 Caps in a form acceptable to
Lender.   Lender’s approval of the documents evidencing an
Approved Cap shall pertain to those Hedge Documents in effect as of the date of
such Lender approval.  No amendments or modifications to the Hedge
Documents of an Approved Cap shall be permitted without Lender’s prior written
consent. An Approved Cap may no longer satisfy the Hedge requirements set
forth in this Article
21 upon the first to occur of:

       

      (a)           any
Termination Event or any Event of Default (as each term is defined in the
documents evidencing the Approved Cap) under an Approved Cap, including any
“Cross Default” with respect to the Cap provider, or

       

      (b)           any
modification or amendment to the Hedge Documents evidencing the Approved Cap
without prior written Lender consent.  Additional requirements may be
imposed by Lender upon review of the applicable Hedge Documents submitted for
review as Approved Caps.

       

      In the
event that an Approved Cap is transferred by a Cap provider to another Cap
provider (by merger, transfer, assignment or otherwise), Borrower shall notify
Lender immediately upon receipt of knowledge of such transfer and Lender hereby
reserves the right to re-evaluate its approval of such Approved
Cap.

       

      
        
          
          

        

        
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      ARTICLE
22

      LIMITS
ON PERSONAL LIABILITY

       

      Section
22.01.     Personal
Liability to Borrower.

       

      (a)           Full
Recourse.  Except as provided in Section 22.01(b),
each Borrower is and shall remain jointly and severally personally liable to
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 sixty percent (60%) or less, (ii) the Aggregate
Debt Service Ratio for the Trailing 12 Month Period is one hundred forty-five
percent (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
Borrower 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:

       

      (A)           Section 8.01;
and

       

      (B)           Section 15.03 to the
extent that a Default would result from the failure of Borrower to be in
compliance with such Section;

       

      (c)           Exceptions to Limits on
Personal Liability.  Upon termination of personal liability of
Borrower pursuant to paragraph (b) of this Section 22.01,
Borrower shall remain personally liable to 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 Lender as a result of (i)
failure of Borrower to pay to Lender upon written demand after an Event of
Default all Rents to which Lender is entitled under Section 3(a) of the Security
Instrument encumbering the Mortgaged Property and the amount of all security
deposits collected by Borrower from tenants then in residence; (ii) failure of
Borrower to apply all insurance proceeds and condemnation proceeds as required
by the Security Instrument encumbering the Mortgaged Property; (iii) failure of
Borrower to comply in all material respects with Section 13.04
relating to the delivery of books and records, statements, schedules and
reports; (iv) fraud or written material misrepresentation by Borrower or any
officer, director, partner, member or employee of Borrower in connection with
the application for or creation of the Obligations or any request for any action
or consent by Lender; (v) 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 Borrower will not be personally liable (A)
to the extent that Borrower 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 (B) with respect to Rents of a
Mortgaged Property that are distributed in any Calendar Quarter if Borrower has
paid all operating expenses and Debt Service Amounts for that Calendar Quarter);
or (vi) failure of 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.

       

      
        
          
          

        

        
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      (d)           Full Recourse After
Termination of Personal Liability.  Upon termination of
personal liability of Borrower pursuant to paragraph (b) of this Section 22.01,
Borrower shall become personally liable to Lender for the payment and
performance of all Obligations upon the occurrence of any of the following
Events of Default: (i) Borrower’s acquisition of any property or operation of
any business not permitted by Section 33 of the Security Instrument; or (ii) 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
Borrower shall release Borrower from liability under this Article 22, this
Agreement or any other Loan Document, unless Lender shall have approved the
Transfer and shall have expressly released Borrower in connection with the
Transfer.

       

      (f)           Miscellaneous.  To
the extent that Borrower has personal liability under this Section 22.01, Lender
may exercise its rights against Borrower personally without regard to whether
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 Lender under the Loan Documents or applicable
law.  For purposes of this Article 22, the term
“Mortgaged Property”
shall not include any funds that (i) have been applied by Borrower as required
or permitted by the Loan Documents prior to the occurrence of an Event of
Default, or (ii) are owned by Borrower and which Borrower was unable to apply as
required or permitted by the Loan Documents because of a bankruptcy,
receivership, or similar judicial proceeding.

       

      ARTICLE
23

      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 (1) 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.

       

      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
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).

       

      
        
          
          

        

        
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      (b)           Defending
or participating in any litigation arising from actions by third parties and
brought against or involving 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 Lender and Borrower 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
Lender’s attorneys and accountants.

       

      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, Borrower will not be obligated to pay any
franchise, excise, estate, inheritance, income, excess profits or similar tax on
Lender.  Any attorneys’ fees and expenses payable by Borrower pursuant
to this Section
23.03 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 Borrower
pursuant to this Section 23.03, with
interest thereon if not paid when due, shall become additional indebtedness of
Borrower secured by the Loan Documents.  Such amounts shall bear
interest from the date such amounts are due until paid in 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 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 Borrower under
applicable law.  The provisions of this Section 23.03 are
cumulative with, and do not exclude the application and benefit to Lender of,
any provision of any other Loan Document relating to any of the matters covered
by this Section
23.03.

       

      Section
23.04.     Payment
Procedure.

       

      All
payments to be made to 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
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 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.

       

      
        
          
          

        

        
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      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
THE BORROWER UNDER THE NOTES, AND THE BORROWER 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 (a) 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, (b) 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
(c) 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
AGREES 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 THE DISTRICT OF COLUMBIA.  THE LOCAL AND
FEDERAL COURTS AND AUTHORITIES WITH JURISDICTION IN THE DISTRICT OF COLUMBIA
SHALL, EXCEPT AS OTHERWISE PROVIDED HEREIN, HAVE JURISDICTION OVER ALL
CONTROVERSIES WHICH 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.  THE BORROWER 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, 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 AND THE LENDER AS PROVIDED
HEREIN OR THE SUBMISSION HEREIN BY THE BORROWER TO PERSONAL JURISDICTION WITHIN
THE DISTRICT OF COLUMBIA.  THE BORROWER (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, THE BORROWER HEREBY
CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF LENDER (INCLUDING, BUT NOT LIMITED
TO, LENDER’S COUNSEL) HAS REPRESENTED, EXPRESSLY OR OTHERWISE, TO BORROWER THAT
LENDER WILL NOT SEEK TO ENFORCE THE PROVISIONS OF THIS SECTION 23.06. THE
FOREGOING PROVISIONS WERE KNOWINGLY, WILLINGLY AND VOLUNTARILY AGREED TO BY THE
BORROWER UPON CONSULTATION WITH INDEPENDENT LEGAL COUNSEL SELECTED BY THE
BORROWER’S FREE WILL.

       

      
        
          
          

        

        
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      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 23.08
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:

       

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

       

      (ii)      
   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);

       

      (iii)         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 (i)
or (ii) above
within two (2) Business Days) (any notice so delivered shall be deemed to have
been received (A) on the date of transmission, if so transmitted before 5:00
p.m. (local time of the recipient) on a Business Day, or (B) 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);

       

      
        
          
          

        

        
          100

          
            

          

        

        
          
          

        

      

       

      (iv)       
    addressed to the parties as follows:

       

      
        	 	
                As
      to Borrower:

              	
                c/o
      Mid-America Apartment Communities,
Inc.

              


      

      6584
Polar Avenue

      Suite
300

      Memphis,
Tennessee 38138

      Attention:        Al
Campbell, 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 Lender:

              	
                Prudential
      Multifamily Mortgage, Inc.

              


      

      c/o
Prudential Asset Resources

      2100 Ross
Avenue

      Suite
2500

      Dallas,
Texas  75201

      Attention:  Asset
Management Department

      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


      
        
           


        

        
          101

          
            

          

        

        
           


        

      


      
        	 	
                with
      a copy to:

              	
                Venable
      LLP

              


      

      575 7th
Street, N.W.

      Washington,
D.C.  20004

      Attention:        Stephanie
L. DeLong, Esq.

      Telecopy
No.: (202) 344-8300

      


      (b)           Change of Notice
Address.  Any party may, by notice given pursuant to this Section 23.08, 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.

       

      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 Lender or Borrower may request and as may be
required in the opinion of 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 Lender to correct
patent mistakes in the Loan Documents, materials relating to the Title Insurance
Policies or the funding of the Advances, Borrower shall provide, or cause to be
provided to Lender, at their cost and expense, such documentation or
information.  Borrower shall execute and deliver to 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 Lender.

       

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

       

      Section
23.10.     Term of
this Agreement.

       

      This
Agreement shall continue in effect until the Termination Date.

       

      
        
          
          

        

        
          102

          
            

          

        

        
          
          

        

      

       

      Section
23.11.     Assignments;
Third-Party Rights.

       

      Borrower
shall not assign this Agreement, or delegate any of its obligations hereunder,
without the prior written consent of Lender.  Lender may assign its
rights and obligations under this Agreement separately or together, without
Borrower’s consent, only to Fannie Mae, but may not delegate its obligations
under this Agreement unless required to do so pursuant to Section
19.04.  Upon assignment to Fannie Mae, Fannie Mae shall be
permitted to further assign its rights and obligations under this Agreement
without Borrower’s consent.  Fannie Mae shall be permitted to hold,
sell or securitize Advances made hereunder without Borrower’s
consent.

       

      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 1, 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 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 Lender’s approval is required for any matter
hereunder, such approval may be granted or withheld in Lender’s sole and
absolute discretion.  Unless otherwise provided herein, if 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 Lender’s sole and absolute
discretion.

       

      
        
          
          

        

        
          103

          
            

          

        

        
          
          

        

      

       

      Section
23.16.     Decisions
in Writing.

       

      Any
approval, designation, determination, selection, action or decision of Lender or
Borrower must be in writing to be effective.

       

      Section
23.17.     Joint and
Several Liability.

       

      Each
Borrower shall be jointly and severally liable for the payment and performance
of each obligation of Borrower arising under any of the Loan Documents on a
recourse basis, subject to the provisions of Section
22.01.

       

      [Remainder
of page intentionally left blank.]

       

      
        
          
          

        

        
          104

          
            

          

        

        
          
          

        

      

       

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

      


      
        
          
            	
                    BORROWER:

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

                  
	 
      	 
      
	
                    By:

                  	
                    /s/Al
      Campbell

                  
	
                    Name:  

                  	
                    Al
      Campbell

                  
	
                    Title:

                  	
                    EVP,
      CFO

                  


          

        

      

      


      
        
          	
                  MID-AMERICA APARTMENTS,
      L.P.,

                
	
                  a
      Tennessee limited partnership

                
	 
      	 
      	 
      
	
                  By:  

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

                
	 
      	 
      	 
      
	 
      	
                  By:

                	
                  /s/Al
      Campbell

                
	 
      	
                  Name:  

                	
                  Al
      Campbell

                
	 
      	
                  Title:

                	
                  EVP,
      CFO

                


        

      

       

      
        
          
          

        

        
          III-1

          
            

          

        

        
          
          

        

      

       

      
        
          
            
              	
                      LENDER:

                    
	 
      
	
                      PRUDENTIAL MULTIFAMILY
      MORTGAGE, INC., a Delaware corporation

                    
	 
      	 
      
	
                      By:

                    	
                      /s/Sharon
      D Callahan

                    
	
                      Name:  

                    	
                      Sharon
      D. Callahan

                    
	
                      Title:

                    	
                      Vice
      President

                    


            

          

        

      


      
        
           


        

        
          2

          
            

          

        

        
           


        

      

      


      
        
          
            
              
                	
                        FANNIE
    MAE:

                      
	 
      
	
                        FANNIE MAE, the body
      corporate duly organized under the Federal National Mortgage Association
      Charter Act, as amended, 12 U.S.C. §1716 et seq.

                      
	 
      	 
      
	
                        By:

                      	
                        /s/Gerald P LaHale

                      
	
                        Name:  

                      	
                        Gerald
      P. LaHale

                      
	
                        Title:

                      	
                        Vice
      President

                      


              

            

          

        

      


      
        
           


        

        
          3