MASTER CREDIT FACILITY AGREEMENT

Exhibit 10.1

MASTER CREDIT FACILITY AGREEMENT

BY AND AMONG

BORROWERS SIGNATORY HERETO

AND

GRANDBRIDGE REAL ESTATE CAPITAL LLC

dated as of

May 29, 2009

Colonial/ Grandbridge — Master Credit Facility Agreement

TABLE OF CONTENTS

Colonial/ Grandbridge — Master Credit Facility Agreement

Colonial/ Grandbridge — Master Credit Facility Agreement

Colonial/ Grandbridge — Master Credit Facility Agreement

Colonial/ Grandbridge — Master Credit Facility Agreement

EXHIBITS

Colonial/ Grandbridge — Master Credit Facility Agreement

MASTER CREDIT FACILITY AGREEMENT

     THIS MASTER CREDIT FACILITY AGREEMENT (this “ Agreement ”) is made as of May 29, 2009, by and among (i) (a) CMF 7 PORTFOLIO LLC , a Delaware limited liability company, and (b) such Additional Borrowers as may from time to time become borrowers under this Agreement (individually and collectively, “ Borrower ”), (ii) COLONIAL REALTY LIMITED PARTNERSHIP , a Delaware limited partnership (“ Guarantor ”), and (iii) GRANDBRIDGE REAL ESTATE CAPITAL LLC , a North Carolina limited liability company (“ Lender ”).

RECITALS

     A. Borrower owns one (1) or more Multifamily Residential Properties (unless otherwise defined or the context clearly indicates otherwise, capitalized terms shall have the meanings ascribed to such terms in Appendix I of this Agreement) as more particularly described in Exhibit A to this Agreement.

     B. Borrower has requested that Lender establish a $156,359,000 Credit Facility in favor of Borrower.

     C. To secure the obligations of Borrower under this Agreement and the other Loan Documents issued in connection with the Credit Facility, Borrower shall create a Collateral Pool in favor of Lender. The Collateral Pool shall be comprised of (i) certain Multifamily Residential Properties owned by Borrower or any Additional Borrower and (ii) any other collateral pledged to Lender from time to time by any Borrower or Additional Borrower pursuant to this Agreement or any other Loan Documents. As of the Initial Closing Date, the Collateral Pool shall consist of the Mortgaged Properties listed on Exhibit A .

     D. Each Note and Security Document shall be cross-defaulted ( i.e. , a default under any Note, Security Document, or under this Agreement, shall constitute a default under each Note, Security Document, and this Agreement) and cross-collateralized ( i.e. , each Security Instrument shall secure all of Borrower’s obligations under this Agreement and the other Loan Documents) and it is the intent of the parties to this Agreement that Lender may accelerate any Note without the obligation, but with the right 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 obligation (but with the right) 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 to the Obligations as determined by Lender.

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

Colonial/ Grandbridge — Master Credit Facility Agreement

     NOW, THEREFORE, Borrower, Lender and Guarantor, in consideration of the mutual promises and agreements contained in this Agreement, hereby agree as follows:

ARTICLE 1
THE COMMITMENT

      Section 1.01. The Commitment.  

     Subject to the terms, conditions and limitations of this Agreement:

     (a)  Commitment Amount; No Increase . The amount of the Commitment is $156,359,000. As of the Initial Closing Date, the amount advanced under the Fixed Facility Commitment is $156,359,000, and the amount advanced under the Variable Facility Commitment is $0. Subject to the terms and conditions of this Agreement, including without limitation Section 1.10 , Borrower may obtain Future Advances in accordance with Section 1.01(b) and (c) for the remainder of the Commitment not advanced on the Initial Closing Date. Subject to the provisions of Section 2.05 , notwithstanding anything to the contrary contained in this Agreement, Borrower shall have no right to increase the amount of the Commitment (except for an increase in the Fixed Commitment pursuant to a conversion under Section 1.06 of this Agreement).

     (b)  Variable Facility Commitment . Subject to the terms and conditions of this Agreement, including without limitation Section 1.10 , Lender agrees to make SARM Variable Advances to Borrower from time to time during the Variable Facility Availability Period.  The aggregate principal balance of the Variable Advances Outstanding at any time shall not exceed the Variable Facility Commitment.  The repayment of a Variable Advance shall permanently reduce the Variable Facility Commitment by the original principal amount of such Variable Advance. Borrower may not re-borrow any part of any Variable Advance which it has previously borrowed and repaid. Unless permitted by the provisions of Section 2.05 , no Advances shall be made as a result of increases in the Debt Service Coverage Ratio or decreases in the Loan to Value Ratio of any Mortgaged Property. 

     (c)  Fixed Facility Commitment . Subject to the terms and conditions of this Agreement, including without limitation Section 1.10 , Lender agrees to make Fixed Advances to Borrower from time to time during the Fixed Facility Availability Period. Fixed Advances may be a cash execution or an MBS execution at Lender’s discretion. The aggregate original principal amount of the Fixed Advances Outstanding shall not exceed the Fixed Facility Commitment. The repayment of a Fixed Advance shall permanently reduce the Fixed Facility Commitment by the original principal amount of such Fixed Advance. Borrower may not re-borrow any part of any Fixed Advance which it has previously borrowed and repaid. Unless permitted by the provisions of Section 2.05 , no Advance shall be made as a result of increases in the Debt Service Coverage Ratio or decreases in the Loan to Value Ratio of any Mortgaged Property.

Colonial/ Grandbridge — Master Credit Facility Agreement

      Section 1.02. Requests for Advances .

     Borrower shall request an Advance by giving Lender an Advance Request in accordance with Section 2.03 . The Advance Request shall indicate whether the Request is for a Fixed Advance, a Variable Advance, or both.

      Section 1.03. Maturity Date of Advances; Amortization; Prepayment .

     (a)  Variable Advances .

          (i) Maturity Date of SARM Variable Advances . Borrower may request a SARM Variable Advance at the Initial Closing Date. The maturity date of such SARM Variable Advance made at the Initial Closing Date shall be ten (10) years.

          (ii) Interest Only; Amortization of Variable Advances . A term of ten (10) years shall not require amortization and all payments shall be interest only.

          (iii) Adjustable Rate LIBOR Options for SARM Variable Advance . At such time as Borrower elects any SARM Variable Advance, Borrower shall elect an Adjustable Rate based on either (A) One-Month LIBOR, as more specifically set forth in the applicable Variable Facility Note, the form of which is attached as Exhibit C-1 to this Agreement, or (B) Three-Month LIBOR, as more specifically set forth in the Variable Facility Note, the form of which is attached as Exhibit C-2 to this Agreement.

          (iv) Prepayment of Variable Advances . Subject to the terms and conditions of Section 3.04(d) , Borrower may prepay all or a portion of any Variable Advance pursuant to the prepayment provisions of the applicable Variable Facility Note. Any repaid Variable Advances shall automatically result in a reduction of the Variable Facility Commitment.

     (b)  Fixed Advances .

          (i) Maturity Date of Fixed Advances . Subject to the terms of Section 1.03(c) , Borrower may request a Fixed Advance at the Initial Closing Date. The maturity date of any Fixed Advance made at the Initial Closing Date shall be ten (10) years. The maturity date for any Fixed Advance made in connection with a conversion pursuant to Section 1.06 shall be specified by Borrower for such Fixed Advance, provided that such maturity date shall be no earlier than the date that is the first day of the month following the date five (5) years after the Closing Date of such Fixed Advance and not later than the first day of the month following the date ten (10) years after the Closing Date of such Fixed Advance, provided that the maturity date of any Fixed Advance shall not be later than the first day of the month following the date ten (10) years after the Initial Closing Date.

          (ii) Interest Only; Amortization of Fixed Advances . Amortization and interest only payments for Fixed Advances made at the Initial Closing Date or pursuant to a conversion in accordance with Section 1.06 shall be as follows:

Colonial/ Grandbridge — Master Credit Facility Agreement

          (A) for a term of up to seven (7) years, all payments shall include amortization;

          (B) for a term of between seven (7) years but less than ten (10) years, the first five (5) years shall be interest only payments and the remainder of the term shall include amortization; and

          (C) for a term of ten (10) years, the entire term shall be interest only payments and shall not require amortization.

All references to amortization in this Section 1.03(b)(ii) shall mean an amount necessary to fully amortize the original principal amount of the Fixed Advance over the Amortization Period.

          (iii) Prepayment of Fixed Advances . Subject to the terms and conditions of Section 3.04(d) , Borrower may prepay all or a portion of any Fixed Advance pursuant to the prepayment provisions of the Fixed Facility Note. Any repaid Fixed Advances shall automatically result in a reduction of the Fixed Facility Commitment.

     (c)  Fixed Advance Executions . At such time as Borrower elects any Fixed Advance, and subject to the other terms and conditions contained in this Agreement, Borrower shall select either:

          (i) a Fixed Advance with a fixed rate term that matures not earlier than the date that is the first day of the month following the date five (5) years after the Closing Date of such Fixed Advance, and not later than the date that is the first day of the month following the date ten (10) years after the Closing Date of such Fixed Advance, provided that no final maturity date of any Fixed Advance shall be later than the date that is the first day of the month following the date ten (10) years after the Initial Closing Date (the “ Fixed Standard Yield Maintenance Maturity Option ”) as more specifically set forth in the Fixed Facility Note, the form of which is attached as Exhibit B-1 to this Agreement, or

          (ii) a Fixed Advance with an initial fixed rate term with an initial maturity date that is not earlier than the first day of the month following the date five (5) years after the Closing Date and not later than the first day of the month following the date that is nine (9) years after the Closing Date which initial maturity date is automatically followed by a 1-year adjustable rate term, such that the Fixed Advance has a final maturity date that is not earlier than the first day of the month following the date six (6) years and not later than the first day of the month following the date that is ten (10) years after the Closing Date of such Fixed Advance, provided that no final maturity date of any Fixed Advance shall be later than the date that is the first day of the month following the date ten (10) years after the Initial Closing Date (the “ Fixed+1 Maturity Option ”) as more specifically set forth in the Fixed Facility Note, the form of which is attached as Exhibit B-2 to this Agreement.

     (d)  Early Rate Lock . Borrower shall be permitted to rate lock any Fixed Advance subject to the requirements of Fannie Mae’s “Early Rate Lock” program. If Borrower elects to rate lock a Fixed Advance pursuant to the Early Rate Lock program, Borrower shall execute an

Colonial/ Grandbridge — Master Credit Facility Agreement

Early Rate Lock commitment provided by Lender and an Early Rate Lock Borrower Certification (the “ ERL Certification ”) in the form required by Fannie Mae for the DUS Early Rate Lock Product, modified as acceptable to Fannie Mae to take into account the terms of this Agreement, evidencing the terms of the Fixed Advance. At the time Borrower executes the ERL Commitment, Borrower shall select the maturity option for such Fixed Advance as set forth in Section 1.03(c) above.

      Section 1.04. Interest on Advances .

     (a)  Partial Month Interest . Notwithstanding anything to the contrary in this Section 1.04(a) , if an 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 (i) the interest rate described in the applicable Note, and (ii) a rate determined by Lender, based on Lender’s cost of funds and approved in advance, in writing, by Borrower.

     (b)  Interest Rate on SARM Variable Advances . Interest shall accrue on the unpaid balance of a SARM Variable Advance from the date such Advance is made at the Adjustable Rate. Interest accrued through the end of each month shall be payable two (2) Business Days before the first day of the following month as more particularly set forth in the applicable Variable Facility Note. The Adjustable Rate shall change on each Rate Change Date until the Advance is repaid in accordance with the applicable Variable Facility Note. Interest payments for SARM Variable Advances shall be calculated on an actual/360 basis.

     (c)  Interest Rate on Fixed Advances . Each Fixed Advance shall be a cash execution or an MBS execution and bear interest at a rate, per annum, equal to the sum of (i) the Cash Interest Rate (for a cash execution) or the MBS Interest Rate (for an MBS execution) for such Fixed Advance and (ii) the Margin. Subject to the terms of Section 1.03(b)(ii) , interest payments for Fixed Advances shall be calculated on an actual/360 basis.

      Section 1.05. Notes .

     (a)  Variable Advances . The obligation of Borrower to repay each Variable Advance shall be evidenced by a separate Variable Facility Note in the form attached to this Agreement as Exhibit C-1 or Exhibit C-2 . Each Variable Facility Note shall be payable to the order of Lender and shall be made in the original principal amount of such Variable Facility Advance.

     (b)  Fixed Advances . The obligation of Borrower to repay each Fixed Advance shall be evidenced by a separate Fixed Facility Note in the form attached to this Agreement as Exhibit B-1 or Exhibit B-2 . Each Fixed Facility Note shall be payable to the order of Lender and shall be made in the original principal amount of such Fixed Advance.

Colonial/ Grandbridge — Master Credit Facility Agreement

      Section 1.06. Conversion of SARM Variable Advances to Fixed Advances .

     (a)  Right to Convert . Subject to the terms and conditions of this Agreement, including without limitation Section 1.10 , Borrower shall have the right, from time to time during the Conversion Availability Period, to convert all or any portion of a SARM Variable Advance on the first day of a month to a Fixed Advance. The Variable Facility Commitment shall be reduced by, and the Fixed Facility Commitment shall be increased by the amount of the converted Advance.

     (b)  Request . To convert one or more SARM Variable Advances, or a portion thereof, to one or more Fixed Advances, Borrower shall deliver a Conversion Request to Lender which shall designate the amount of the Variable Advance to be converted.

     (c)  Closing . Subject to Section 1.07 and provided that all conditions contained in Section 1.08 are satisfied, Lender shall permit the requested conversion to close at offices designated by Lender on a Closing Date selected by Lender, on a date that is not earlier than thirty (30) Business Days after Lender’s receipt of the Conversion Request (or on such other date as Borrower and Lender may agree). At the closing, Lender and Borrower shall execute and deliver, at the sole cost and expense of Borrower, in form and substance reasonably satisfactory to Lender, the Conversion Documents.

      Section 1.07. Limitations on Right to Convert to Fixed Advances .

     Borrower’s right to convert one (1) or more Variable Advances to one (1) or more Fixed Advances is subject to the terms and conditions of this Agreement, including without limitation, Section 1.10 and the following limitations:

     (a)  Closing Date . With respect to SARM Variable Advances, the Closing Date shall occur during the Conversion Availability Period on the first day of a month.

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

     (c)  Failure to Underwrite . In the event all or a portion of the amount of the SARM Variable Advance set forth in the Conversion Request cannot be converted because the increased debt service on the Fixed Advance does not result in the Collateral Pool satisfying the Coverage and LTV Tests, Borrower shall prepay the amount of the SARM Variable Advance that cannot be converted to a Fixed Advance and shall pay all prepayment premiums and other fees associated with such prepayment.

     (d) Notwithstanding the foregoing, if either of the tests set forth above in subsections (b) and (c) are 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 results in improvement in one or both of the following areas: the then current Aggregate Debt Service Coverage Ratio 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%).

Colonial/ Grandbridge — Master Credit Facility Agreement

      Section 1.08. Conditions to Conversion .

     The conversion of all or any portion of the SARM Variable Advances to one (1) or more Fixed Advances is subject to the satisfaction on or before the Closing Date, of all applicable conditions contained in Section 5.01 and Section 5.07 . The interest rate for any converted Advance shall be determined pursuant to the terms of Section 2.01 of this Agreement. The Margin applicable to the converted Advance shall be determined by Lender prior to such conversion.

      Section 1.09. Interest Rate Protection .

     (a) To protect against fluctuations in interest rates during the term, pursuant to the terms of the Cap Security Agreement, Borrower shall make arrangements for a LIBOR-based hedge instrument (“ Interest Rate Cap ”) to be in place at the Strike Rate set forth in the Cap Security Agreement and maintained at all times with respect to any portion of the Variable Facility Commitment which has been funded and remains Outstanding.  The seller of the Interest Rate Cap (seller and its transferees and assigns, the “ Counterparty ”) shall be a financial institution meeting the minimum requirements for hedge counterparties reasonably and customarily acceptable to Lender.  An Interest Rate Cap shall be documented on a form acceptable to Lender. As set forth in the applicable Cap Security Agreement, Borrower agrees to pledge its right, title and interest in the Interest Rate Cap to Lender as additional collateral for the Indebtedness. The Interest Rate Cap shall have a minimum initial term of five (5) years.

     (b) In the event that an Interest Rate Cap is no longer deemed “approved” by Lender, for reasons including but not limited to, (i) a termination, transfer or consent to transfer of an Interest Rate Cap, (ii) the occurrence of a “Termination Event” as that term is defined in each Interest Rate Cap, or (iii) Lender’s determination that the Counterparty on such Interest Rate Cap no longer meets its minimum requirements for hedge counterparties, such Interest Rate Cap shall no longer be deemed approved and shall no longer serve to satisfy the requirements of this Section 1.09 .  If an Interest Rate Cap is determined by Lender not to satisfy the requirements of this Section 1.09 , or if an Interest Rate Cap unexpectedly and unavoidably terminates on a date other than its scheduled expiration date, the Borrower shall, within ten (10) days of such termination, obtain a new Interest Rate Cap satisfying the requirements of this Agreement.

      Section 1.10. Limitation on All Advances .

     Notwithstanding anything in this Agreement or any other Loan Document to the contrary, any Future Advance, whether a Variable Advance or a Fixed Advance, and any conversion of an Advance or any refinance of an Advance shall be subject to the precondition that 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, Lender 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

Colonial/ Grandbridge — Master Credit Facility Agreement

would be subject to mutually agreeable documentation necessary to implement the terms and conditions of such alternative execution.

ARTICLE 2
THE ADVANCES

      Section 2.01. 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 interest rate (for such proposed 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 Fixed Advance with an MBS execution, or the rate quoted by Fannie Mae in the case of a proposed SARM Variable Advance or Fixed 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.

     (b)  Rate Setting . If Borrower satisfies all of the conditions to Lender’s obligation to make an Advance, then Borrower may request that Lender submit to Borrower a completed draft Rate Form in the form attached to this Agreement as Exhibit I . 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 draft Rate Form to Lender before 1:00 p.m. Eastern Standard Time or Eastern Daylight Savings Time, as applicable, on any Business Day (“ Rate Setting Date ”).

     (c)  Rate Confirmation .

          (i) SARM Variable Advances or Fixed Advances with Cash Execution . In the case of SARM Variable Advances or Fixed 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, Lender shall seek to obtain a commitment from Fannie Mae (the “ Fannie Mae Commitment ”) for the purchase of the proposed SARM Variable Advance or Fixed Advance having the terms described in the related draft Rate Form.  If Lender obtains a Fannie Mae 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.

          (ii) Fixed Advances with MBS Execution . In the case of 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 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 a commitment (“ MBS Commitment ”) on terms equivalent (or better than) the terms in the draft Rate Form, Lender shall then complete and countersign the

Colonial/ Grandbridge — Master Credit Facility Agreement

Rate Form thereby confirming the terms set forth therein, and shall immediately deliver the Rate Form to Borrower.

      Section 2.02. Breakage and Other Costs .

     If Lender obtains, and then fails to fulfill, the MBS Commitment or Fannie Mae Commitment because the Advance is not made (or the conversion does not occur, as applicable) (for a reason other than Lender’s default), 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 Fannie Mae Commitment. Lender reserves the right to require Borrower to post a deposit at the time the MBS Commitment or Fannie Mae Commitment is obtained. Such deposit shall be refunded to Borrower upon the MBS or purchase of the Note by Fannie Mae, as applicable.

      Section 2.03. Advances .

     Borrower may deliver an Advance Request to Lender.

     (a)  Initial Advance . If the Advance Request is to obtain the Initial Advance and all conditions precedent contained in Section 5.02 and the General Conditions contained in Section 5.01 are satisfied on or before the Initial Closing Date for the Initial Advance, Lender shall make the Initial Advance on the Initial Closing Date or on such other date as Borrower and Lender may agree.

     (b)  Future Advance . If the Advance Request is to obtain a Future Advance, such Advance Request shall be in the minimum amount of $5,000,000. If all conditions precedent contained in Section 5.03 and the General Conditions contained in Section 5.01 are satisfied, Lender shall make the requested Future Advance, at a closing to be held at offices reasonably designated by Lender on a Closing Date reasonably selected by Lender, which date shall be not more than three (3) Business Days after Borrower’s receipt from Lender of the confirmed Rate Form (or on such other date as Borrower and Lender may agree). The Commitment will be fully drawn on the Initial Closing Date and accordingly no Future Advances are anticipated hereunder.

      Section 2.04. Determination of Allocable Facility Amount and Valuations .

     (a)  Initial Determinations . On the Initial Closing Date, Lender shall determine (i) the Allocable Facility Amount and Valuation for each Initial Mortgaged Property, (ii) the Aggregate Debt Service Coverage Ratio and the Aggregate Loan to Value Ratio, and (iii) the Advance Amount. The determinations made as of the Initial Closing Date shall remain unchanged until the First Anniversary. Changes in the Allocable Facility Amount, Valuations, the Aggregate Debt Service Coverage Ratio and the Aggregate Loan to Value Ratio shall be made pursuant to Section 2.04(b) .

     (b)  Monitoring Determinations . Once each Calendar Quarter, or, if the Commitment consists only of a Fixed Facility Commitment that has an Aggregate Debt Service Coverage Ratio equal to or greater than 1.25:1.0, once each Calendar Year, within twenty (20) Business Days after Borrower has delivered to Lender the reports required in Section 7.04 , Lender shall

Colonial/ Grandbridge — Master Credit Facility Agreement

determine the Aggregate Debt Service Coverage Ratio and the Aggregate Loan to Value Ratio, the Valuations and the Allocable Facility Amounts and whether Borrower is in compliance with the other covenants set forth in the Loan Documents. After the First Anniversary, Lender shall redetermine Allocable Facility Amounts and Valuations (i) quarterly, or (ii) if the Commitment consists only of a Fixed Facility Commitment that has an Aggregate Debt Service Coverage Ratio equal to or greater than 1.25:1.0, annually, or (iii) at such other time if Lender reasonably determines that changed market or property conditions warrant, Lender shall also redetermine Allocable Facility Amounts to take account of any addition, release or substitution of Collateral or other event that invalidates the outstanding determinations. In determining Valuations, Lender shall use Capitalization Rates in its sole and absolute discretion based on its internal survey and analysis of Capitalization Rates for comparable sales in the vicinity of the Mortgaged Property, with such adjustments as Lender deems appropriate and without any obligation to use any information provided by Borrower. If Lender is unable to determine a Capitalization Rate for a Mortgaged Property, Lender shall have the right, not more than once annually, to obtain, at Borrower’s expense, a market study in order to establish a Capitalization Rate. Lender shall promptly disclose its determinations to Borrower. Until redetermined, the outstanding Allocable Facility Amounts and Valuations determined by Lender shall remain in effect. Notwithstanding anything in this Agreement to the contrary, no change in Allocable Facility Amounts, Valuations, the Aggregate Loan to Value Ratio or the Aggregate Debt Service Coverage Ratio shall, (A) result in a Potential Event of Default or Event of Default, or (B) require the prepayment of any Advances.

      Section 2.05. Supplemental Loan .

     After the First Anniversary, Borrower may participate in the Fannie Mae Supplemental Loan product if the Supplemental Loan product is offered by Fannie Mae at the time. Any such Supplemental Loan is subject to Lender’s determination that, as a result of its annual valuation of the Collateral Pool, a Supplemental Loan may be made pursuant to Lender’s Underwriting Requirements for loans which meet the Coverage and LTV Tests. The Supplemental Loan will be documented with loan documents similar to the Loan Documents (“ Supplemental Loan Documents ”). Supplemental Loans will not be Advances advanced under this Agreement. Any Supplemental Loan will be priced at market at the time of the loan and will be cross-defaulted with the Advances made hereunder. To secure the obligations of Borrower under the Supplemental Loan Documents, Borrower shall grant, convey and assign to Lender a second Lien on each Mortgaged Property in the Collateral Pool and on any other collateral pledged to Lender from time to time pursuant to the Supplemental Loan Documents. On the closing date of the Supplemental Loan, Lender shall determine the portion of the Supplemental Loan allocated to a particular Mortgaged Property (the “ Supplemental Allocable Loan Amount ”), which Supplemental Allocable Loan Amounts shall be set forth in a separate exhibit to this Agreement. Lender shall redetermine the Supplemental Allocable Loan Amounts in the same manner and at the same time as the redetermination of the Allocable Facility Amounts pursuant to Section 2.04(b) . Notwithstanding the foregoing, the Supplemental Loan shall be monitored pursuant to Section 2.04 of this Agreement and Lender shall include the Supplemental Loan upon calculating the Coverage and LTV Tests, Aggregate Debt Service Coverage Ratio and Aggregate Loan to Value Ratio, in connection with any Request. Borrower agrees to pay any fees (including legal fees) that may be charged in connection with a Supplemental Loans.

Colonial/ Grandbridge — Master Credit Facility Agreement

      Section 2.06. Increase in Commitment .

     Borrower shall have no right under this Agreement to increase the Commitment.

ARTICLE 3
COLLATERAL CHANGES

      Section 3.01. Right to Add Collateral .

     Subject to the terms and conditions of this Article 3 , Borrower shall have the right, from time to time during the Term of this Agreement, to add Multifamily Residential Properties to the Collateral Pool.

      Section 3.02. Procedure for Adding Collateral .

     The procedure for adding Multifamily Residential Properties to the Collateral Pool contained in this Section 3.02 shall apply to all additions of Mortgaged Property including, but not limited to, additions of Mortgaged Property in connection with substitutions of Mortgaged Property.

     (a)  Request . From time to time Borrower may deliver to Lender an Addition Request to add one (1) or more Multifamily Residential Properties to the Collateral Pool (the “ Addition ”). Each Addition Request shall be accompanied by the following: (i) the property-related information required by Lender, and (ii) the payment of all Additional Collateral Due Diligence Fees.

     (b)  Underwriting .

          (i) Borrower may add an Additional Mortgaged Property provided that:

          (A) the Additional Mortgaged Property itself meets the Individual Property Coverage and LTV Tests,

          (B) after such Addition, the Coverage and LTV Tests are satisfied,

          (C) after the Addition, the Geographical Diversification Requirements shall be satisfied, and

          (D) all other terms and conditions set forth in this Agreement are satisfied.

Notwithstanding the foregoing, if the Individual Property Coverage and LTV Tests, the Coverage and LTV Tests, or the Geographic Diversification Requirements 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 result in improvement in one or both of the following areas: the then current Aggregate Debt Service Coverage Ratio or the then current Aggregate

Colonial/ Grandbridge — Master Credit Facility Agreement

Loan to Value Ratio. Notwithstanding the foregoing, under no circumstances shall the Aggregate Loan to Value Ratio exceed ninety percent (90%).

          (ii) Lender shall evaluate the proposed Additional Mortgaged Property in accordance with the Underwriting Requirements, including an exit analysis performed by Lender and acceptable to Fannie Mae. Lender shall make underwriting determinations as to the Debt Service Coverage Ratio and the Loan to Value Ratio of the proposed Additional Mortgaged Property and the Aggregate Debt Service Coverage Ratio and the Aggregate Loan to Value Ratio applicable to the Collateral Pool on the basis of the lesser of (A) the acquisition price of the proposed Additional Mortgaged Property if purchased by Borrower within twelve (12) months of the related Addition Request, and (B) a Valuation made with respect to the proposed Additional Mortgaged Property. Notwithstanding the provisions of Section 2.04 regarding the recalculation of Valuations and the calculation of Debt Service Coverage Ratios, for purposes of reviewing proposed Additional Mortgaged Properties, if Lender reasonably determines market conditions have changed in a manner adversely affecting any of the Mortgaged Properties since the determination of the then effective Aggregate Loan to Value Ratio and Aggregate Debt Service Coverage Ratio, Lender may make new determinations of Aggregate Debt Service Coverage Ratio and Aggregate Loan to Value Ratio for purposes of determining whether to permit the addition of the proposed Additional Mortgaged Property to the Collateral Pool. Borrower shall promptly provide any information reasonably required by Lender to make the determination required by the preceding sentence.

          (iii) After receipt of (A) the Addition Request and (B) all reports, certificates and documents required by the Underwriting Requirements, Lender shall notify Borrower whether the proposed Additional Mortgaged Property meets the conditions for an Addition. If Lender determines that the proposed Additional Mortgaged Property meets the conditions set forth in this Agreement, Lender shall set forth the Aggregate Debt Service Coverage Ratio, the Aggregate Loan to Value Ratio that Lender estimates shall result from the Addition of the proposed Additional Mortgaged Property to the Collateral Pool and the Advance Amount. After receipt of Lender’s written consent to the Addition Request, Borrower shall notify Lender in writing whether it elects to add the proposed Additional Mortgaged Property to the Collateral Pool.

     (c)  Closing . If Lender determines that the proposed Additional Mortgaged Property meets the conditions of Lender’s Underwriting Requirements and as set forth in this Agreement, Borrower timely elects to add the proposed Additional Mortgaged Property to the Collateral Pool, and all conditions precedent contained in Section 5.04 and all General Conditions contained in Section 5.01 are satisfied, the proposed Additional Mortgaged Property shall be added to the Collateral Pool, at a closing to be held at offices designated by Lender on a Closing Date selected by Lender, occurring within sixty (60) Business Days after Lender’s receipt of Borrower’s election (or on such other date as Borrower and Lender may agree).

      Section 3.03. Right to Obtain Releases of Collateral .

     Subject to the terms and conditions of this Article 3 , Borrower shall have the right from time to time to obtain a release of a Mortgaged Property from the Collateral Pool.

Colonial/ Grandbridge — Master Credit Facility Agreement

      Section 3.04. Procedure for Obtaining Releases of Collateral .

     (a)  Request . To obtain a release of a Mortgaged Property from the Collateral Pool (a “ Release ”), Borrower shall deliver a Release Request to Lender. The delivery of the Release Request itself shall not result in a termination of all or any part of the Credit Facility; however, any prepayments associated with such Release shall automatically result in a permanent reduction of the Fixed Facility Commitment, which repaid amount shall not be available to be re-borrowed, or, as applicable, a permanent reduction of the Variable Facility Commitment, which repaid amount shall not be available to be re-borrowed.

     (b)  Closing . As a condition precedent to the release of the Release Mortgaged Property, the (i) Aggregate Loan to Value Ratio for the proposed Collateral Pool (after giving effect to such release) shall be less than or equal to the Aggregate Loan to Value Ratio of the Collateral Pool immediately prior to the release (and without giving effect to such release), and (ii) the Aggregate Debt Service Coverage Ratio of the proposed Collateral Pool (after giving effect to such release) shall be equal to or greater than the Aggregate Debt Service Coverage Ratio of the Collateral Pool immediately prior to the release of the Release Mortgaged Property (and without giving effect to such release), and (iii) the Coverage and LTV Tests shall be satisfied. Notwithstanding the foregoing, if the tests identified in the immediately preceding sentence or the Geographic Diversification Requirements are not satisfied after the Release of the 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 result in improvement in one or both of the following areas: the then current Aggregate Debt Service Coverage Ratio or the then current Aggregate Loan to Value Ratio. If Lender determines that all conditions precedent are satisfied, including without limitation those in Section 5.01 and Section 5.05 , Lender shall cause the Release Mortgaged Property to be released, 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 Release Request (or on such other date as 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, the Release Documents. At Lender’s option, Borrower shall prepare the Release Documents and submit them to Lender for its review.

     (c)  Release Price . Subject to the terms of this Section 3.04(c) , the “ Release Price ” for each Release Mortgaged Property means the greater of:

          (i) one hundred percent (100%) of the Allocable Facility Amount for the Release Mortgaged Property plus one hundred percent (100%) of the Supplemental Allocable Loan Amount for the Release Mortgaged Property, or

          (ii) one hundred percent (100%) of the amount of Advances Outstanding that are required to be repaid by Borrower to Lender in connection with the proposed release of the Release Mortgaged Property from the Collateral Pool so that, immediately after the release the conditions precedent set forth in the first sentence of Section 3.04(b) is satisfied.

Colonial/ Grandbridge — Master Credit Facility Agreement

     In addition to the Release Price, Borrower shall pay to Lender all associated prepayment premiums, accrued interest and other amounts due under the Notes evidencing the Advances being repaid to and including the date such Advance may be repaid.

     (d)  Application of Release Price .

          (i) The Release Price for the Release Mortgaged Property shall be applied in the order selected by Borrower, provided that (A) any amount of the Supplemental Loan Outstanding which Borrower elects to prepay must be prepaid in full, or if the Release Price is not sufficient to do so, the Supplemental Loan shall be only partially prepaid; (B) 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; (C) any prepayment is permitted under the applicable Note; (D) any prepayment premium due and owing is paid; and (E) interest must be paid through the end of the month. If Borrower is unable to meet the conditions set forth in (A) through (E), then the Release Price shall be applied first against any variable rate Supplemental Loan Outstanding so long as the prepayment is permitted under the applicable note, until any variable rate Supplemental Loan is no longer Outstanding, then against any Variable Advance Outstanding so long as the prepayment is permitted under the Variable Note, until any Variable Loan is no longer Outstanding, then against any fixed rate Supplemental Loan Outstanding so long as the prepayment is permitted under the applicable note, until any fixed rate Supplemental Loan is not longer Outstanding, then against any Fixed Advance Outstanding so long as the prepayment is permitted under the applicable Fixed Note.

          (ii) In the event Borrower desires to release a Release Mortgaged Property on a date other than the last Business Day of the month, the Release Price or the remainder of the Release Price, if any, shall be held by Lender (or its appointed collateral agent) 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 Substitute Cash Collateral shall first be used to prepay the applicable Supplemental Loan and then the applicable Advance on the last Business Day of the month.

     (e)  Release of Borrower and Guarantor . Upon the Release of a Mortgaged Property, Borrower that owns such Release Mortgaged Property shall automatically without further action be released from its obligations under this Agreement and the other Loan Documents with respect to the Release Mortgaged Property, except for (i) any liabilities or obligations of such Borrower which arose prior to the Closing Date of such Release, and (ii) any Obligations that survive release as specifically set forth in Section 18 (Environmental Hazards) of the Security Instrument. In addition, each Borrower and Guarantor shall be released of all obligations related to the Release Mortgaged Property under this Agreement and the other Loan Documents except for any provisions of this Agreement and the other Loan Documents that are expressly stated to survive any release or termination or for any liabilities or obligations of such Borrower or Guarantor which arose prior to the Closing Date of such release.

     (f)  Title Insurance . Notwithstanding the other provisions of this Section 3.04 , no Release of any of the Mortgaged Properties shall be made unless the title insurance, taking into

Colonial/ Grandbridge — Master Credit Facility Agreement

account tie-in endorsements, insuring Lender in respect of each of the remaining Mortgaged Properties in the Collateral Pool is in an amount equal to one hundred fifteen percent (115%) of the Valuation of each of such remaining Mortgaged Properties (or such lesser amount that is the maximum allowed by law or regulation).

      Section 3.05. Substitutions .

     (a)  Right to Substitute Collateral . Subject to the terms, conditions and limitations of Article 3 and Article 5 , Borrower shall have the right prior to the date twelve (12) months before the Termination Date to obtain the Release of one or more Release Mortgaged Properties from the Collateral Pool by replacing such Release Mortgaged Property with one (1) or more Additional Mortgaged Properties that meet the requirements of this Agreement (the “ Substitute Mortgaged Property ”) thereby effecting a “ Substitution ” of Collateral.

     (b)  Request . Borrower shall simultaneously deliver to Lender both a completed and executed Addition Request (unless such Substitute Mortgaged Property has not been identified by Borrower, in which case Borrower shall submit the Addition Request not less than thirty (30) Calendar Days prior to the date on which Borrower desires to add such Substitute Mortgaged Property, but not later than thirty (30) Calendar Days prior to the Property Delivery Deadline (defined hereinafter)) and Release Request (together, the “ Substitution Request ”). Each Substitution Request shall be accompanied by the following: (i) the information required by the Underwriting Requirements with respect to the proposed Substitute Mortgaged Property and any additional information Lender reasonably requests; and (ii) the payment of all Additional Collateral Due Diligence Fees.

     (c)  Underwriting . Borrower may add a Substitute Mortgaged Property to the Collateral Pool provided that:

          (i) the Substitute Mortgaged Property itself meets the Individual Property Coverage and LTV Tests,

          (ii) the Substitute Mortgaged Property will be evaluated by the Lender in accordance with the Underwriting Requirements,

          (iii) after such Substitution, the Geographical Diversification Requirements shall be satisfied, and

          (iv) the following tests are satisfied: (A) Aggregate Loan to Value Ratio of the proposed Collateral Pool shall be less than or equal to the Aggregate Loan to Value Ratio of the Collateral Pool immediately prior to the Substitution, and (B) Aggregate Debt Service Coverage Ratio of the proposed Collateral Pool must be equal to or greater than the Aggregate Debt Service Coverage Ratio of the Collateral Pool immediately prior to the Substitution (and without giving effect to such Substitution), and (C) the Coverage and LTV Tests shall be satisfied.

Lender shall determine whether the proposed Substitute Mortgaged Property satisfies the requirements for an Additional Mortgaged Property set forth in Section 3.02(b)(ii) and Section 3.02(b)(iii) . Within ten (10) days after receipt of Lender’s written consent to the proposed

Colonial/ Grandbridge — Master Credit Facility Agreement

Substitution, Borrower shall notify Lender in writing whether it elects to add the proposed Substitute Mortgaged Property to the Collateral Pool and release the identified Mortgaged Property. If Borrower fails to notify Lender of its election within the timeframe stated, then the Request will be deemed withdrawn.

Notwithstanding the foregoing, if any of the tests identified in Section 3.05(c)(i) - (iv) are not satisfied after the Substitution of a proposed Substitute 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 result 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.

     (d)  Closing . If, pursuant to this Section 3.05 , Lender determines that the conditions set forth herein for the Substitution of the proposed Substitute Mortgaged Property into the Collateral Pool in replacement of the proposed Release Mortgaged Property, and Borrower timely elects to cause such Substitution to occur and all conditions contained in this Section 3.05 and Article 5 are satisfied, then the proposed Substitute Mortgaged Property shall be substituted into the Collateral Pool in replacement of the proposed Release Mortgaged Property, at a closing to be held at offices designated by Lender on a Closing Date selected by Lender, and occurring —

          (i) if the Substitution of the proposed Substitute Mortgaged Property is to occur simultaneously with the release of the proposed Release Mortgaged 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

          (ii) if the Substitution of the proposed Substitute Mortgaged Property is to occur subsequent to the Release of the Release Mortgaged Property, within ninety (90) days after the effective date of the release of such Release Mortgaged Property (provided such date does not exceed one hundred eighty (180) days after Lender’s receipt of Borrower’s Release Request, unless otherwise agreed to by Lender) (the “ Property Delivery Deadline ”); in accordance with the terms of this Section 3.05(d) ; provided that on a case by case basis if Borrower provides evidence that it is diligently pursuing a suitable property for Substitution (e.g., evidence of a 1031 exchange), Lender may extend the Property Delivery Deadline by one (1) additional ninety (90) day period.

     (e)  Substitution Deposit .

          (i) The Deposit . If the Addition of the proposed Substitute Mortgaged Property is to occur subsequent to the Release of the Release Mortgaged Property pursuant to Section 3.05(d) , at the Closing Date of the Release of the Release Mortgaged Property, Borrower shall deposit with Lender the “ Substitution Deposit ” described in Section 3.05(e)(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 5.11 of this Agreement, having a face amount equal to the Substitution Deposit (or such lesser amount that has been deposited in cash).

Colonial/ Grandbridge — Master Credit Facility Agreement

          (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 such proposed Release Mortgaged Property, plus

          (B) any and all of the yield maintenance, fee maintenance or the prepayment premium, as applicable, through the end of the month in which the Property Delivery Deadline occurs as if the Fixed Advance or SARM Variable Advance were to be prepaid in such month, plus

          (C) interest on such Advance through the end of the month in which the Property Delivery Deadline occurs, plus

          (D) costs, expenses and fees of Lender pertaining to the substitution (the “ Substitution Cost Deposit ”). Borrower shall also be obligated to make any regularly scheduled payments of principal and interest due under the applicable Note during any period between the closing of the Release Mortgaged Property and the earlier of the closing of the Substitute Mortgaged Property and the date of prepayment of the Note or MBS, as applicable. If a Substitution of the last remaining asset is taking place, 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) any fee maintenance that would be due to the extent that the Variable Facility Note must be prepaid to effect a release at that time. 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 legal fees and expenses incurred by Fannie Mae and Lender in connection with such substitution whether such substitution actually closes.

          (iii) Failure to Close Substitution . If the Addition of the proposed Substitute Mortgaged Property does not occur by the Property Delivery Deadline in accordance with Section 3.05(d)(ii) , then such Borrower shall have irrevocably waived its right to substitute such Release Mortgaged Property with the proposed Substitute Mortgaged Property, and the release of the Release Mortgaged Property shall be deemed to be a Release pursuant to Section 3.04 and shall trigger a prepayment of the Note and the MBS, if applicable, together with all yield maintenance, fee maintenance or prepayment premium then due in connection with such payment. The Property Delivery Deadline shall be no later than the date ninety (90) days (or one hundred eighty (180) days, if applicable) after the effective date Lender’s lien on such Release Mortgaged Property is released. Any Advance or MBS (as applicable) being prepaid shall be deemed to be prepaid as of the end of the month in which the Property Delivery Deadline falls. Lender shall follow standard Fannie Mae procedures for the prepayment of the Note or any applicable MBS, including delivery of the Substitution Deposit, together with all yield maintenance, fee maintenance, or prepayment premium, if any, then due, to Fannie Mae in accordance with such procedures.

Colonial/ Grandbridge — Master Credit Facility Agreement

Borrower shall comply with the requirements set forth in Section 3.04(c) and Section 3.04(d) not previously satisfied with respect to the Release Mortgaged Property, including payment of the Release Price. Such Release Price, or the applicable portion thereof, shall be applied in the manner set forth in Section 3.04(d) and the Substitution Deposit delivered by Borrower pursuant to Section 3.05(e) of this Agreement shall be returned to Borrower. However, if Borrower fails to timely pay the Release Price, Lender may draw upon the Substitution Deposit delivered by Borrower in satisfaction of such obligation. Any portion of the Substitution Deposit not needed to prepay the Note, or any applicable MBS, all interest, and any prepayment fees (including any portion of the Substitution Cost Deposit not used by Lender to cover all reasonable out-of-pocket costs and expenses incurred by Lender and Fannie Mae, including any out-of-pocket legal fees and expenses incurred by Fannie Mae and Lender in connection with such Substitution) shall be promptly refunded to the applicable Borrower after the Property Delivery Deadline.

          (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 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 an Additional 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 to close the Substitution, the Substitution Deposit shall be reduced by the Allocable 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 3.05(e)(iii) shall apply with respect to the remaining Substitution Deposit.

     (f)  Conditions Precedent to Substitutions . The obligation of Lender to make a requested Substitution is also subject to Lender’s determination that each of the conditions precedent for Additions of Additional Mortgaged Properties and Releases of Release Mortgaged Properties set forth in Section 5.01 and Section 5.06 of this Agreement have been satisfied.

     (g)  Restriction on Borrowings . If the Addition of the Substitute Mortgaged Property to the Collateral Pool and the release of the Release Mortgaged Property from the Collateral Pool do not occur simultaneously (i.e., within thirty (30) days pursuant to Section 3.05(d) above) then, until the Addition of the Substitute Mortgaged Property to the Collateral Pool, the aggregate principal balance of Advances Outstanding shall not exceed the amount of the (i) Advances Outstanding immediately prior to the release of such Release Mortgaged Property minus (ii) the Allocable Facility Amount of the Release Mortgaged Property. If the aggregate unpaid principal balance of Advances Outstanding exceeds the amount resulting from subtracting (i) minus (ii) in the preceding sentence, Borrower shall pay such excess amount as a condition precedent to any Future Advances made under this Agreement and the Addition of a Substitute Mortgaged

Colonial/ Grandbridge — Master Credit Facility Agreement

Property. Any payment received by Lender under this Section 3.05 shall be applied against Advances Outstanding in the manner prescribed for Release Prices pursuant to Section 3.04(c) .

ARTICLE 4
TERMINATION OF FACILITIES

      Section 4.01. Right to Terminate Credit Facility .

     Subject to the terms and conditions of this Article 4 , Borrower shall have the right to terminate this Agreement and the Credit Facility and receive a Release of all of the Collateral.

      Section 4.02. Procedure for Terminating Credit Facility .

     (a)  Request . To terminate this Agreement and the Credit Facility, Borrower shall deliver a Credit Facility Termination Request to Lender.

     (b)  Closing . If Lender determines that all conditions precedent contained in Section 5.08 are satisfied, this Agreement shall terminate, and Lender shall cause all of the Collateral to be released, 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 as 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, the Credit Facility Termination Documents.

ARTICLE 5
CONDITIONS PRECEDENT TO ALL REQUESTS

      Section 5.01. Conditions Applicable to All Requests .

     The obligation of Lender to close the transaction requested in a Request (other than a Credit Facility Termination Request made pursuant to Section 4.02 ) shall be subject to Lender’s determination that all of the following general conditions precedent (“ General Conditions ”) have been satisfied in addition to any other conditions precedent contained in this Agreement:

     (a)  Payment of Expenses . The payment by Borrower of Lender’s and Fannie Mae’s reasonable third party out-of-pocket fees and expenses payable in accordance with this Agreement, including, but not limited to, the legal fees and expenses described in Section 10.03 .

     (b)  No Material Adverse Effect . Except in connection with a Credit Facility Termination Request, there has been no Material Adverse Effect on the financial condition or business or prospects of Borrower or Guarantor or in the physical condition, operating performance or value of any of the Mortgaged Properties since the date of the most recent Compliance Certificate (or, with respect to the conditions precedent to the Initial Advance, from the condition, business or prospects reflected in the financial statements, reports and other information obtained by Lender during its review of Borrower and Guarantor and the Initial Mortgaged Properties).

Colonial/ Grandbridge — Master Credit Facility Agreement

     (c)  No Default . Except in connection with a Credit Facility Termination Request, (i) there shall exist no Event of Default or Potential Event of Default in each case under Section 11.01 (b)-(k), or, material respect, under Section 11.01 (a), (l) or (m) (it being understood and agreed that any default comparable to the Events of Default listed in Section 11.01 (b)-(k) in the other Loan Documents or Supplemental Loan Documents will be treated to be material) on the Closing Date for the Request and (ii) the closing of such Request shall not result in an Event of Default or Potential Event of Default.

     (d)  No Insolvency . Receipt by Lender on the Closing Date for the Request of evidence satisfactory to Lender that neither Borrower nor Guarantor is insolvent (within the meaning of any applicable federal or state laws relating to bankruptcy or fraudulent transfers) or will be rendered insolvent by the transactions contemplated by the Loan Documents, including the making of a Future Advance, or, after giving effect to such transactions, will be left with an unreasonably small capital with which to engage in its business or undertakings, or will have intended to incur, or believe that it has incurred, debts beyond its ability to pay such debts as they mature or will have intended to hinder, delay or defraud any existing or future creditor.

     (e)  No Untrue Statements . The Loan Documents shall not contain any untrue or misleading statement of a material fact and shall not fail to state a material fact necessary 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 and Guarantor 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. On the Closing Date of any Request, the representations and warranties as referred to in this Section 5.01(f) shall be deemed remade by Borrower and Guarantor.

     (g)  No Condemnation or Casualty . Except in connection with a Credit Facility Termination Request or a Release Request, there shall not be pending any condemnation or other taking, whether direct or indirect, against any Mortgaged Property (other than a Release Mortgaged Property subject to a Release Request or Substitution Request) and there shall not have occurred any casualty to any improvements located on any Mortgaged Property (other than a Release Mortgaged Property subject to a Release Request or Substitution Request), which condemnation or casualty would have a Material Adverse Effect.

     (h)  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) The Loan Documents required to be delivered in connection with the Request;

          (ii) A Compliance Certificate;

Colonial/ Grandbridge — Master Credit Facility Agreement

          (iii) An Organizational Certificate; and

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

     (i)  Covenants . Except in connection with a Credit Facility Termination Request, Borrower is in full compliance with each of the covenants contained in the Loan Documents, without giving effect to any notice and cure rights of Borrower.

      Section 5.02. Conditions Precedent to Initial Advance .

     The obligation of Lender to make the Initial Advance is subject to Lender’s determination that each of the following conditions precedent has been satisfied:

     (a) Receipt by Lender of the fully executed Advance Request;

     (b) The Coverage and LTV Tests are satisfied;

     (c) If the Initial Advance includes a Variable Advance, receipt by Lender at least five (5) days prior to the Initial Closing Date, of the confirmation of an Interest Rate Cap commitment, in accordance with the Cap Security Agreement, effective as of the Initial Closing Date;

     (d) If the Initial Advance includes a Variable Advance, receipt by Lender of Interest Rate Cap Documents in accordance with the Cap Security Agreement, effective as of the Initial Closing Date;

     (e) Delivery to the Title Company, for filing and/or recording in all applicable jurisdictions, of all applicable Loan Documents required by Lender to be filed or recorded, including (as required by Lender) duly executed and delivered original copies of the Variable Facility Note (if applicable), a Fixed Facility Note (if applicable), the Guaranty, the Initial Security Instruments covering the Initial Mortgaged Properties and UCC-1 Financing Statements covering the portion of the Collateral comprised of personal property, and other appropriate instruments, in form and substance reasonably satisfactory to Lender and in form proper for recordation, as may be necessary in the opinion of Lender to perfect the Liens created by the applicable Security Instruments and any other Loan Documents 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;

     (f) Receipt by Lender of any Lender required subordination, non-disturbance and attornment agreements and/or estoppel certificates with respect to any commercial leases and/or ground leases affecting the Initial Mortgaged Property;

     (g) Receipt by Lender of the Initial Origination Fee pursuant to Section 10.01(a) and the Initial Due Diligence Fee pursuant to Section 10.02(a) ; and

Colonial/ Grandbridge — Master Credit Facility Agreement

     (h) Delivery by Lender to Borrower of the confirmed Rate Form for the Initial Advance pursuant to Section 2.01(c) .

      Section 5.03. Conditions Precedent to Future Advances .

     The obligation of Lender to make a requested Future Advance is subject to Lender’s determination that each of the following conditions precedent has been satisfied:

     (a) Receipt by Lender of the fully executed Advance Request;

     (b) Delivery by Lender to Borrower of the confirmed Rate Form for the Future Advance pursuant to Section 2.01(c) ;

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

     (d) If the Future Advance is being made pursuant to Section 2.03(b) , receipt by Lender of the Additional Collateral Due Diligence Fees.

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

     (f) If the Future Advance is a Variable Advance, delivery of a Variable Facility Note, duly executed by Borrower, in the amount and reflecting all of the terms of the Variable Advance;

     (g) Receipt by Lender of the Additional Origination Fee, if any such fee is due, pursuant to Section 2.03(b) or Section 2.05 ;

     (h) For any Title Insurance Policy not containing a revolving credit endorsement or future advance 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 Permitted Liens;

     (i) If the Future Advance is a Variable Advance, receipt by Lender at least five (5) days prior to the Closing Date, of the confirmation of an Interest Rate Cap commitment, in accordance with the Cap Security Agreement, effective as of the Closing Date;

     (j) If the Future Advance is a Variable Advance, receipt by Lender of Interest Rate Cap Documents in accordance with the Cap Security Agreement, effective as of the Closing Date;

     (k) No Governmental Approval not already obtained or made is required for the execution and delivery of the documents to be delivered in connection with the Future Advance;

     (l) Borrower or Guarantor is not under any cease or desist order or other orders of a similar nature, temporary or permanent of any Governmental Authority which would have the

Colonial/ Grandbridge — Master Credit Facility Agreement

effect of preventing or hindering performance of the terms and provisions of the Agreement or any other Loan Documents, nor are there any proceedings presently in progress or, to its knowledge, contemplated which, if successful, would lead to the issuance of any such order; and

     (m) Receipt by Lender of a Confirmation of Guaranty for each Guaranty then in effect.

      Section 5.04. Conditions Precedent to Addition of an Additional Mortgaged Property to the Collateral Pool .

     The Addition of an Additional Mortgaged Property to the Collateral Pool (but not the Substitution of a Substitute Mortgaged Property into the Collateral Pool, which is governed exclusively by Section 5.06 ) on the applicable Closing Date is subject to Lender’s determination that each of the following conditions precedent has been satisfied:

     (a) Receipt by Lender of the fully executed Addition Request;

     (b) The Underwriting Requirements will be satisfied;

     (c) The requirements of Section 3.02(b) will be satisfied;

     (d) Receipt by Lender of the Addition Fee or Additional Origination Fee pursuant to Section 10.01(b);

     (e) Receipt by Lender of the Additional Collateral Due Diligence Fee pursuant to Section 10.02(b) ;

     (f) Receipt by Lender of all legal fees and expenses payable by Borrower in connection with the Addition Request pursuant to Section 10.03 ;

     (g) Receipt by Lender of any required subordination, non-disturbance and attornment agreements and/or estoppel certificates with respect to any commercial leases and/or ground leases affecting the Additional Mortgaged Property;

     (h) Delivery to the Title Company, with fully executed instructions directing the Title Company to file and/or record in all applicable jurisdictions, all applicable 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 reasonably 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 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;

     (i) If reasonably required by Lender, amendments to the Notes and the Security Instruments, reflecting the Addition of any Additional Borrower and/or the Additional

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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;

     (j) 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

     (k) Receipt by Lender of evidence that any code violations have been resolved to Lender’s satisfaction.

      Section 5.05. Conditions Precedent to Release of Property from the Collateral Pool .

     The obligation of Lender to Release a Mortgaged Property from the Collateral Pool by executing and delivering the Release Documents on the Closing Date is subject to Lender’s determination that each of the following conditions precedent has been satisfied:

     (a) Receipt by Lender of the fully executed Release Request;

     (b) The requirements of Section 3.04 are satisfied;

     (c) Receipt by Lender of the Release Price;

     (d) Receipt by Lender of the Release Fee;

     (e) Receipt by Lender of all legal fees and expenses payable by Borrower in connection with the Release Request;

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

     (g) If required by Lender, amendments to this Agreement, the Notes and the Security Instruments, reflecting the release of the Release Mortgaged 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 Permitted Liens;

     (h) If Lender determines the Release Mortgaged 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 reasonably determine that the Remaining Mortgaged Properties can be operated separately from the Release Mortgaged Property and any other phases of the project which are not Mortgaged Properties and whether any cross use agreements or easements are necessary. In making this determination,

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Lender shall evaluate access, utilities, marketability, community services, ownership and operation of the Release Mortgaged Properties and any other issues identified by Lender in connection with similar loans anticipated to be sold to Fannie Mae;

     (i) Receipt by Lender on the Closing Date of a Confirmation of Obligations, dated as of the Closing Date, signed by Borrower and Guarantor, pursuant to which Borrower and Guarantor confirm their remaining obligations under the Loan Documents; and

     (j) Receipt by Lender of endorsements to the tie-in endorsements of the Title Insurance Policies, if deemed necessary by Lender, to reflect the release.  Notwithstanding anything to the contrary herein, no release of any Mortgaged Property in the Collateral Pool shall be made unless Borrower has provided title insurance to Lender in respect of each of the remaining Mortgaged Properties in the Collateral Pool in an amount equal to one hundred fifteen percent (115%) of the Initial Valuation of such Mortgaged Properties (taking into account the title insurance coverage provided by “tie-in” endorsements, if available).

      Section 5.06. Conditions Precedent to Substitution of a Substitute Mortgaged Property into the Collateral Pool .

     The Substitution of a Substitute Mortgaged Property into the Collateral Pool is subject to Lender’s determination that each of the following conditions precedent has been satisfied:

     (a) Receipt by Lender of the fully executed Substitution Request;

     (b) The provisions of Section 3.05(c) shall be satisfied;

     (c) Receipt by Lender of the Substitution Deposit, if applicable;

     (d) Receipt by Lender of all legal fees and expenses payable by Borrower in connection with the Substitution pursuant to Section 10.03 ;

     (e) Receipt by Lender of any required subordination, non-disturbance and attornment agreements and/or estoppel certificates with respect to any commercial leases and/or ground lease (if any) affecting the Substitute Mortgaged Property;

     (f) Delivery to the Title Company, with fully executed instructions directing the Title Company to file and/or record in all applicable jurisdictions, all applicable Substitution Loan Documents required by Lender to be filed or recorded, including duly executed and delivered original copies of any Security Instruments and UCC-1 Financing Statements covering the portion of the Substitute 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 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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     (g) Any proposed Additional Borrower meets and satisfies all of the requirements and conditions of Section 14.02 ;

     (h) Receipt by Lender on the Closing Date of a Confirmation of Obligations and Confirmation of Guaranty;

     (i) If required by Lender, amendments to the Notes and the Security Instruments, reflecting the addition of the Substitute 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; and

     (j) If the Title Insurance Policy for the Substitute 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 Substitute Mortgaged Property.

      Section 5.07. Conditions Precedent to Conversion .

     The conversion of all or a portion of a SARM Variable Advance to a Fixed Advance is subject to Lender’s determination that each of the following conditions precedent has been satisfied:

     (a) Receipt by Lender of the fully executed Conversion Request;

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

     (c) The provisions of Section 1.06 , Section 1.07 and Section 1.08 shall be satisfied;

     (d) Prepayment by Borrower of any Variable Advances Outstanding that Borrower has designated for payment, together with any other amounts due with respect to the prepayment of such Variable Advances; provided that, subject to the terms of Section 1.07(c), there shall be no associated prepayment premiums due in connection with a conversion pursuant to the terms of Section 1.06 , Section 1.07 and Section 1.08 of this Agreement;

     (e) 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 Initial Closing Date and other exceptions approved by Lender; and

     (f) Receipt by Lender of one (1) or more executed, original counterparts of each Conversion Document, dated as of the Closing Date, each of which shall be in full force and effect and in form and substance reasonably satisfactory to Lender in all respects, signed by each of the parties (other than Lender) to such Conversion Document.

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      Section 5.08. 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 Credit Facility Termination Documents on the Closing Date are subject to Lender’s determination Borrower has paid in full all of the Notes Outstanding on the Closing Date, including any associated prepayment premiums or other amounts due under the Notes, any Release Fees, and all other amounts owing by Borrower to Lender under this Agreement.

      Section 5.09. Opinion Relating to Advance Request, Addition Request, Conversion Request, or Substitution Request .

     With respect to the closing of an Advance Request, an Addition Request, a Conversion Request, or a Substitution Request, it shall be a condition precedent that Lender receives favorable opinions of counsel (including local counsel, as applicable) to Borrower and Guarantor, as to the due organization and qualification of Borrower and Guarantor, 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, each dated as of the Closing Date for the Request, in form and substance reasonably satisfactory to Lender in all respects.

      Section 5.10. Delivery of Property-Related Documents .

     With respect to each of the Initial Mortgaged Properties or an Additional Mortgaged Property, it shall be a condition precedent that Lender receive from Borrower each of the documents and reports required by Lender pursuant to the Underwriting Requirements in connection with the pledge of such Mortgaged Property and each of the following, each dated as of the Closing Date for the Initial Mortgaged Property or an Additional Mortgaged Property, as the case may be, in form and substance satisfactory to Lender in all respects:

     (a) A commitment for the Title Insurance Policy applicable to the Mortgaged Property and a pro forma Title Insurance Policy based on the title commitment in the amount of title insurance afforded by the Title Insurance Policy for each Mortgaged Property in the Collateral Pool equal to one hundred fifteen percent (115%) of the Initial Valuation of such Mortgaged Property (taking into account the title insurance coverage provided by “tie-in” endorsements, if available) Commitment and approved by Lender;

     (b) The Insurance Policy (or a certified copy of the Insurance Policy) applicable to the Mortgaged Property;

     (c) Unless waived by Lender, the Survey applicable to the Mortgaged Property and approved by Lender (which shall be last revised no less than forty-five (45) days prior to the Closing Date);

     (d) Evidence satisfactory to Lender of compliance of the Mortgaged Property with Applicable Laws;

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     (e) An Appraisal of the Mortgaged Property;

     (f) A Replacement Reserve Agreement or an amendment thereto, 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;

     (g) A Completion/Repair and Security Agreement or an amendment thereto, if required by Lender, together with required escrows, on the standard form required by Lender;

     (h) If no management agreement is in effect for a Mortgaged Property, an Agreement Regarding Management Agreement or, if a management agreement is in effect for a Mortgaged Property, an Assignment of Management Agreement or an amendment thereto, on the standard form required by Lender;

     (i) 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;

     (j) In relation to each Initial Mortgaged Property, a Security Instrument to effectuate the addition of such Initial Mortgaged Property to the Collateral Pool, and in relation to each Additional Mortgaged Property, a Security Instrument to effectuate the addition of such Additional Mortgaged Property to the Collateral Pool, and a Note relating to the Mortgaged Properties. The amount secured by each Security Instrument shall be equal to the Commitment;

     (k) A Certificate of Borrower Parties; and

     (l) Any other document that Lender may reasonably determine is required in connection with a Mortgaged Property.

      Section 5.11. 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).

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     (b)  Draws Under Letter of Credit . Lender shall have the right in its sole discretion 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 two (2) Business 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

          (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 five (5) Business Days after 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 5.11(b)(ii) or Section 5.11(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 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 5.11(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.

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     (d)  Default Draws . If Lender draws under the Letter of Credit pursuant to Section 5.11(b)(i) above, Lender has 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 such 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;

          (iii) to make improvements or repairs to any Mortgaged Property; or

          (iv) deposit monies into the Cash Collateral Account.

     (e)  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), such Borrower shall cause the Issuer’s counsel to deliver a legal opinion satisfactory in form and substance as approved by Lender.

ARTICLE 6
REPRESENTATIONS AND WARRANTIES

      Section 6.01. Representations and Warranties of Borrower .

     The representations and warranties of Borrower Parties are contained in the Certificate of Borrower Parties, the form of which is attached to this Agreement as Exhibit J .

      Section 6.02. Representations and Warranties of Lender .

     Lender hereby represents and warrants to Borrower and Guarantor as follows:

     (a)  Due Organization . Lender is a limited liability company duly organized, validly existing and in good standing under the laws of North Carolina.

     (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.

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

Colonial/ Grandbridge — Master Credit Facility Agreement

ARTICLE 7
AFFIRMATIVE COVENANTS OF BORROWER

     Borrower Parties agree and covenant with Lender that, at all times during the Term of this Agreement:

      Section 7.01. Compliance with Agreements .

     Each of Borrower and Guarantor 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 or Guarantor’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 7.02. Maintenance of Existence .

     Each Borrower Party shall maintain its existence and continue to be duly organized under the laws of the state of its organization. Borrower and Guarantor 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 7.03. Maintenance of REIT Status .

     During the Term of this Agreement, the General Partner 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 7.04. Financial Statements; Accountants’ Reports; Other Information .

     Each Borrower Party shall keep and maintain at all times complete and accurate books of accounts and records in sufficient detail to correctly reflect (i) all of Borrower’s and Guarantor’s financial transactions and assets and (ii) 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 or Guarantor, as applicable, 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 balance sheet of Borrower, Guarantor and its Subsidiaries on a consolidated basis as of the end of such fiscal year, the statement of income, Borrower’s and Guarantor’s equity and retained earnings of Borrower, Guarantor and its Subsidiaries on a consolidated basis for such fiscal year and the statement of cash flows of Borrower, Guarantor and its Subsidiaries on a consolidated basis 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,

Colonial/ Grandbridge — Master Credit Facility Agreement

consistently applied, and with respect to the audited statements (as required below) accompanied by a certificate of 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. All financial statements required by this subsection (a) with respect to Guarantor shall be audited and all financial statements required by this subsection (a) with respect to Borrower may be unaudited.

     (b)  Quarterly Financial Statements . As soon as available, and in any event within forty-five (45) days after each of the first three fiscal quarters of each fiscal year during the Term of this Agreement, the unaudited balance sheet of Borrower, Guarantor and its Subsidiaries on a consolidated basis as of the end of such fiscal quarter, the unaudited statement of income and retained earnings of Borrower, Guarantor and its Subsidiaries on a consolidated basis and the unaudited statement of cash flows of Borrower, Guarantor and its Subsidiaries on a consolidated basis 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 a Proper Officer to the effect that such financial statements have been prepared in accordance with GAAP, consistently applied and subject to customary exceptions, 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 a Proper Officer to the effect that each such statement of income and expenses fairly, accurately and completely presents the operations of each such Mortgaged Property in all material respects for the period indicated.

     (d)  Annual Property Statements . On an annual basis within ninety (90) days of the end of its fiscal year, an annual statement of income and expenses of each Mortgaged Property accompanied by a certificate of a Proper Officer to the effect that each such statement of income and expenses fairly, accurately and completely presents the operations of each such Mortgaged Property in all material respects for the period indicated.

     (e)  Updated Rent Rolls . As soon as available, and in any event within forty-five (45) days after each Calendar Quarter, 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 a Proper Officer to the effect that each such Rent Roll fairly, accurately and completely presents the information required therein in all material respects.

     (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

Colonial/ Grandbridge — Master Credit Facility Agreement

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.

     (g)  Security Law Reporting Information . So long as General Partner is a reporting company under the Securities Exchange Act of 1934, promptly upon becoming available, (i) copies of all financial statements, reports and proxy statements sent or made available generally by General Partner, or any of its Affiliates, to its 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 General Partner, or any of its Affiliates, with the Securities and Exchange Commission or other Governmental Authorities, and (iii) all press releases and other statements made available generally by General Partner, or any of its Affiliates, to the public concerning material developments in the business of General Partner or other party.

     (h)  Accountants’ Reports; Other Reports . Promptly upon receipt thereof: (i) copies of any reports or management letters submitted to Borrower or Guarantor 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 or Guarantor shall only be required to deliver such reports and management letters to the extent that they relate to Borrower or Guarantor or any Mortgaged Property; and (ii) all schedules, financial statements or other similar reports delivered by Borrower or Guarantor pursuant to the Loan Documents or requested by Lender with respect to Guarantor’s business affairs or condition (financial or otherwise) or any of the Mortgaged Properties.

     (i)  Annual Budgets . Prior to 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)  Plans and Projections . To the extent prepared in the ordinary course of business of Borrower and in the form prepared by Guarantor in the ordinary course of business, within thirty (30) days after its preparation, copies of (i) Guarantor’s business plan for the current and the succeeding two fiscal years, (ii) Borrower’s annual budget (including capital expenditure budgets) and projections for each Mortgaged Property; and (iii) Guarantor’s financial projections for the current and the succeeding two fiscal years.

     (k)  Strategic Plan . To the extent prepared in the ordinary course of business of Borrower and in the form prepared by Guarantor in the ordinary course of business, within thirty (30) days after its preparation, a written narrative discussing Guarantor’s 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 Proper Officer as true, correct and complete in all material respects (“ Strategic Plan ”). If Guarantor’s Strategic Plan materially changes, then Guarantor shall deliver to Lender the Strategic Plan as so changed.

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     (l)  Annual Rental and Sales Comparable Analysis . To the extent prepared in the ordinary course of business of Borrower and in the form prepared by Borrower in the ordinary course of business, within thirty (30) days after its preparation, a rental and sales comparable analysis of the local real estate market in which each Mortgaged Property is located.

     (m)  Statement of Ownership . At any time upon Lender’s request, a statement that identifies: (i) all owners of any interest in Borrower and the interest held by each and (ii) if Borrower is a corporation, all officers and directors of Borrower, and if Borrower is a limited liability company, all managers who are not members.

     (n)  Other Information . Within forty-five (45) days after Lender’s request, but not more frequently than once per Calendar Year, such other information reasonably requested by Lender.

     (o)  Federal Tax Returns . Within thirty (30) days of filing, the Federal Tax Return of Borrower and Guarantor.

      Section 7.05. Confidentiality of Certain Information .

     No Borrower Party shall disclose any terms, conditions, underwriting requirements or underwriting procedures of the Credit Facility or any of the Loan Documents; provided, however, that such confidential information may be disclosed (a) as required by law or pursuant to generally accepted accounting procedures, (b) to officers, directors, employees, agents, partners, attorneys, accountants, engineers and other consultants of Borrower who need to know such information, provided such Persons are instructed to treat such information confidentially, (c) to any regulatory authority having jurisdiction over Borrower, (d) in connection with any filings with the Securities and Exchange Commission or other Governmental Authorities, or (e) to any other Person to which such delivery or disclosure may be necessary or appropriate (i) in compliance with any law, rule, regulation or order applicable to Borrower, (ii) in response to any subpoena or other legal process or information investigative demand or (iii) in connection with any litigation to which Borrower is a party.

      Section 7.06. 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 to:

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

     (b) discuss Borrower’s affairs, finances and accounts with any Proper Officer or any other person performing the functions of the Proper Officers;

     (c) discuss Borrower’s affairs, finances and accounts with its independent public accountants, provided that a Proper Officer has been given the opportunity by Lender to be a party to such discussions;

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     (d) discuss the Mortgaged Properties’ conditions, operations or maintenance with the Property Managers and/or asset manager of such Mortgaged Properties and the officers and employees of Borrower and Guarantor; and

     (e) receive any other information that Lender deems reasonably necessary or relevant in connection with any Advance, any Loan Document or the Obligations from the officers of Borrower or Guarantor or officers and employees of Property Manager.

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 7.07. Certificate of Compliance .

     Guarantor shall deliver to Lender concurrently with the delivery of the financial statements and/or reports required by Section 7.04(a) and Section 7.04(b) a certificate signed by a Proper Officer (i) setting forth in reasonable detail the calculations required to establish whether Borrower and Guarantor were in compliance with the requirements of Article 7 of this Agreement on the date of such financial statements, and (ii) stating that, to the best knowledge of such individual following reasonable inquiry, no Event of Default or Potential Event of Default has occurred, or if an Event of Default or Potential Event of Default has occurred, specifying the nature thereof in reasonable detail and the action Borrower or Guarantor is taking or proposes to take. Any certificate required by this Section 7.07 shall run directly to and be for the benefit of Lender and Fannie Mae.

      Section 7.08. 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 7.09. 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; the receipt of written notice from any Governmental Authority having jurisdiction over Borrower or Guarantor that (i) Borrower or Guarantor is being placed under regulatory supervision, (ii) any license, Permit, charter, membership or registration material to the conduct of Borrower’s or Guarantor’s business or the Mortgaged Properties is to be suspended or revoked or (iii) Borrower or Guarantor is to cease

Colonial/ Grandbridge — Master Credit Facility Agreement

and desist any practice, procedure or policy employed by Borrower or Guarantor in the conduct of its business, and with respect to (i) or (ii) the same would have, or may reasonably be expected to have, a Material Adverse Effect;

     (c)  Bankruptcy Proceedings . The commencement of any proceedings by or against Borrower or Guarantor 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;

     (d)  Environmental Claim . The receipt from any Governmental Authority or other Person of any written 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 on any Mortgaged Property 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;

     (e)  Material Adverse Effects . The occurrence of any act, omission, change or event (including the commencement or written threat of any proceedings by or against Borrower or Guarantor in any Federal, state or local court, or before any Governmental Authority, or before any arbitrator), which has, or would have, a Material Adverse Effect, subsequent to the date of the most recent financial statements of Borrower or Guarantor delivered to Lender pursuant to Section 7.03 ;

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

     (g)  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 or Guarantor or any Mortgaged Property if such act, omission, change or event has or may reasonably be expected to have, a Material Adverse Effect.

      Section 7.10. 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, and shall comply with all written notices from Governmental Authorities.

Colonial/ Grandbridge — Master Credit Facility Agreement

      Section 7.11. 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 (i) such Alteration could reasonably be expected to materially and adversely affect the value of such Mortgaged Property or its operation as a multifamily housing facility in substantially the same manner in which it is being operated on the date such property became Collateral, (ii) the construction of such Alteration could reasonably be expected to result in interference to the occupancy of tenants of such Mortgaged Property such that tenants in occupancy with respect to five percent (5%) or more of the Leases would be permitted to terminate their Leases or to abate the payment of all or any portion of their rent, or (iii) such Alteration will be completed in more than 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 (other than scheduled repairs and maintenance to existing improvements) with respect to any Mortgaged Property costing in excess of the lesser of (A) ten percent (10%) of the Allocable Facility Amount of such Mortgaged Property or (B) $500,000, and Borrower must give prior written notice to Lender of its intent to construct Alterations (other than scheduled repairs and maintenance to existing improvements) with respect to such Mortgaged Property costing in excess of $100,000; 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 or contemplated under the Loan Documents.

      Section 7.12. 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