Exhibit 10.7

EXECUTION

MASTER CREDIT FACILITY AGREEMENT

(TERM LOAN)

BY AND BETWEEN

BORROWERS SIGNATORY HERETO

AND

FANNIE MAE

DATED AS OF

FEBRUARY 27, 2013

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TABLE OF CONTENTS

 

          Page  

ARTICLE 1 THE LOANS

     3   

Section 1.01.

  

The Loans

     3   

Section 1.02.

  

Maturity Date of Loans; Amortization; Prepayment

     3   

Section 1.03.

  

Interest on Loans

     4   

Section 1.04.

  

Notes

     4   

Section 1.05.

  

Extension of Loans Secured by Collateral Pool 3

     5   

Section 1.06.

  

Conversion to Variable Rate; Extension of Loan Secured by Collateral Pool 4

     10   

Section 1.07.

  

Payments of Principal During Extension Period for Collateral Pool 4

     11   

Section 1.08.

  

Rate Setting for Converted Collateral Pool 4

     12   

Section 1.09.

  

Interest Rate Hedge

     13   

Section 1.10.

  

Limitations on Executions

     13   

ARTICLE 2 BREAKAGE AND ALLOCATED LOAN AMOUNTS

     14   

Section 2.01.

  

Reserved

     14   

Section 2.02.

  

Breakage and Other Costs

     14   

Section 2.03.

  

Reserved

     14   

Section 2.04.

  

Determination of Allocable Loan Amount and Valuations

     14   

ARTICLE 3 COLLATERAL CHANGES

     16   

Section 3.01.

  

Right to Obtain Releases of Collateral

     16   

Section 3.02.

  

Procedure for Obtaining Releases of Collateral

     16   

Section 3.03.

  

Substitutions

     20   

ARTICLE 4 CONDITIONS PRECEDENT TO ALL REQUESTS

     25   

Section 4.01.

  

Conditions Applicable to All Requests

     25   

Section 4.02.

  

Conditions Precedent to Initial Closing

     27   

Section 4.03.

  

Conditions Precedent to Extension

     28   

Section 4.04.

  

Conditions Precedent to Release of Property from the Collateral Pool

     29   

Section 4.05.

  

Conditions Precedent to Substitution of a Substitute Mortgaged Property to the
Collateral Pool

     30   

Section 4.06.

  

Delivery of Opinion Relating to Request for Extension or Substitution Request

     31   

Section 4.07.

  

Delivery of Property-Related Documents

     31   

Section 4.08.

  

Conditions Precedent to Letters of Credit

     32   

ARTICLE 5 REPRESENTATIONS AND WARRANTIES

     34   

Section 5.01.

  

Representations and Warranties of Borrower

     34   

Section 5.02.

  

Representations and Warranties of Fannie Mae

     34   

ARTICLE 6 AFFIRMATIVE COVENANTS OF BORROWER

     34   

Section 6.01.

  

Compliance with Agreements

     34   

Section 6.02.

  

Maintenance of Existence

     34   

Section 6.03.

  

Financial Statements; Accountants’ Reports; Other Information

     35   

Section 6.04.

  

Access to Records; Discussions With Officers and Accountants

     38   

Section 6.05.

  

Certificate of Compliance

     39   

Section 6.06.

  

Maintain Licenses, Permits, Etc.

     40   

 

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Section 6.07.

  

Inform Fannie Mae of Material Events

     40   

Section 6.08.

  

Compliance with Applicable Laws

     41   

Section 6.09.

  

Alterations to the Mortgaged Properties

     41   

Section 6.10.

  

Loan Document Taxes

     42   

Section 6.11.

  

Further Assurances

     42   

Section 6.12.

  

Ownership

     42   

Section 6.13.

  

Limitations on Transfer

     43   

Section 6.14.

  

Consent to Prohibited Transfers

     47   

Section 6.15.

  

Change in Senior Management

     48   

Section 6.16.

  

Date-Down Endorsements

     48   

Section 6.17.

  

Ownership of Mortgaged Properties

     49   

Section 6.18.

  

Change in Property Manager

     49   

Section 6.19.

  

ADA Litigation

     49   

Section 6.20.

  

Tax-Free Exchange Transfers

     49   

Section 6.21.

  

Single Purpose Entity

     52   

Section 6.22.

  

Non-Residential Leases

     52   

Section 6.23.

  

Reserved

     53   

Section 6.24.

  

Springing Member

     53   

Section 6.25.

  

Reserved

     53   

Section 6.26.

  

Reserved

     53   

Section 6.27.

  

Condemnation

     53   

Section 6.28.

  

Insurance

     55   

Section 6.29.

  

Oakwood Marina Del Rey Ground Lease

     60   

Section 6.30.

  

Certificates of Good Standing; Certified Articles

     61   

Section 6.31.

  

Veridian – Silver Spring Metro Owners Association, Inc.

     61   

Section 6.32.

  

Archstone Marina Del Rey Ground Lease

     61   

ARTICLE 7 NEGATIVE COVENANTS OF BORROWER

     63   

Section 7.01.

  

Other Activities

     63   

Section 7.02.

  

Liens

     63   

Section 7.03.

  

Indebtedness

     64   

Section 7.04.

  

Principal Place of Business; Name Change

     64   

Section 7.05.

  

Condominiums

     64   

Section 7.06.

  

Restrictions on Distributions

     65   

Section 7.07.

  

Master Leases

     65   

ARTICLE 8 FEES

     65   

Section 8.01.

  

Re-Underwriting Fee

     65   

Section 8.02.

  

[Reserved]

     65   

Section 8.03.

  

Due Diligence Fees

     65   

Section 8.04.

  

Legal Fees and Expenses

     66   

Section 8.05.

  

Failure to Close any Request

     67   

ARTICLE 9 EVENTS OF DEFAULT

     67   

Section 9.01.

  

Events of Default

     67   

ARTICLE 10 REMEDIES

     70   

Section 10.01.

  

Remedies; Waivers

     70   

Section 10.02.

  

Waivers; Rescission of Declaration

     70   

 

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Section 10.03.

  

Fannie Mae’s Right to Protect Collateral and Perform Covenants and Other
Obligations

     70   

Section 10.04.

  

No Remedy Exclusive

     71   

Section 10.05.

  

No Waiver

     71   

Section 10.06.

  

No Notice

     71   

Section 10.07.

  

Cash Management

     71   

ARTICLE 11 IMPOSITION DEPOSITS

     71   

Section 11.01.

  

Insurance and Water/Sewer Waived; Other Imposition Deposits Required

     71   

Section 11.02.

  

Imposition Deposits

     72   

Section 11.03.

  

Replacement Reserves

     73   

Section 11.04.

  

Completion/Repair Reserves

     73   

ARTICLE 12 LIMITS ON PERSONAL LIABILITY

     73   

Section 12.01.

  

Personal Liability to Borrower

     73   

Section 12.02.

  

Additional Borrowers

     75   

Section 12.03.

  

Borrower Agency Provisions

     76   

Section 12.04.

  

Waivers With Respect to Other Borrower Secured Obligation

     76   

Section 12.05.

  

Joint and Several Obligation; Cross-Guaranty

     80   

Section 12.06.

  

No Impairment

     81   

Section 12.07.

  

Election of Remedies

     81   

Section 12.08.

  

Subordination of Other Obligations

     82   

Section 12.09.

  

Insolvency and Liability of Other Borrower

     82   

Section 12.10.

  

Preferences, Fraudulent Conveyances, Etc.

     83   

Section 12.11.

  

Maximum Liability of Each Borrower

     84   

Section 12.12.

  

Liability Cumulative

     84   

ARTICLE 13 MISCELLANEOUS PROVISIONS

     84   

Section 13.01.

  

Counterparts

     84   

Section 13.02.

  

Amendments, Changes and Modifications

     84   

Section 13.03.

  

Payment of Costs, Fees and Expenses

     85   

Section 13.04.

  

Payment Procedure

     85   

Section 13.05.

  

Payments on Business Days

     86   

Section 13.06.

  

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

     86   

Section 13.07.

  

Severability

     87   

Section 13.08.

  

Notices

     87   

Section 13.09.

  

Further Assurances and Corrective Instruments

     89   

Section 13.10.

  

Term of this Agreement

     89   

Section 13.11.

  

Assignments; Third-Party Rights

     90   

Section 13.12.

  

Headings

     90   

Section 13.13.

  

General Interpretive Principles

     90   

Section 13.14.

  

Interpretation

     90   

Section 13.15.

  

Standards for Decisions, Etc.

     90   

Section 13.16.

  

Decisions in Writing

     91   

Section 13.17.

  

Supersedes Original Agreement

     91   

Section 13.18.

  

USA Patriot Act

     91   

Section 13.19.

  

All Asset Filings

     91   

Section 13.20.

  

Ratification; Conflict

     91   

Section 13.21.

  

Special Provisions Regarding Payment of Interest on Imposition Deposits

     91   

 

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EXHIBITS

 

EXHIBIT A

  

Schedule of Collateral Pool Borrowers, Mortgaged Properties, Collateral Pools,
Loans and Initial Valuations

EXHIBIT B

  

Reserved

EXHIBIT C

  

Form of Variable Rate Note

EXHIBIT D

  

Reserved

EXHIBIT E

  

Confirmation of Guaranty

EXHIBIT F

  

Compliance Certificate

EXHIBIT G-1

  

Organizational Certificate (Borrower)

EXHIBIT G-2

  

Organizational Certificate (Guarantor)

EXHIBIT H

  

Rate Form

EXHIBIT I

  

Form of Financial Statements Certificates

EXHIBIT J

  

Request (Substitution/Release)

EXHIBIT K

  

Confirmation of Obligations

EXHIBIT L

  

Reserved

EXHIBIT M

  

List of Master Leases

EXHIBIT N

  

Reserved

EXHIBIT O

  

Hedge Security Agreement

EXHIBIT P

  

Form of Letter of Credit

EXHIBIT Q

  

Reserved

EXHIBIT R

  

Baseline 2012 NOI

APPENDIX I

  

Definitions

 

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MASTER CREDIT FACILITY AGREEMENT

THIS MASTER CREDIT FACILITY AGREEMENT is made as of February 27, 2013 (the
“Effective Date”), by and among (i) (a) the Borrowers identified on Schedule I
attached hereto, (b) such Additional Borrowers as may from time to time become
Borrowers under this Agreement (the entities described in (a) and (b),
individually and collectively, “Borrower”); and (ii) FANNIE MAE, the body
corporate duly organized under the Federal National Mortgage Association Charter
Act, as amended, 12 U.S.C. §1716 et seq. and duly organized and existing under
the laws of the United States (“Fannie Mae”).

RECITALS

A. Pursuant to that certain Master Credit Facility Agreement dated October 5,
2007 (as amended, modified, restated or supplemented from time to time,
including by that certain Amended and Restated Master Credit Facility Agreement
dated as of December 2, 2010, the “Original Agreement”), Fannie Mae is the
holder of certain loans (collectively, the “Loans”) that are secured by, among
other things, the Initial Mortgaged Properties.

B. As of the effectiveness of this Agreement, and after giving effect to certain
prepayments of principal made by the Borrowers immediately prior to the
effectiveness of this Agreement, the outstanding principal balance under the
Loans is $2,722,632,709.00.

C. The Borrowers are the owners or ground lessees of the Initial Mortgaged
Properties.

D. This Agreement replaces and supersedes the Original Agreement in its entirety
as it relates to the Loans.

E As more particularly described in Exhibit A to this Agreement (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);
reference to “relevant” or “applicable” Loans, Mortgaged Properties or Loan
Documents shall refer to the Loans made to a Collateral Pool Borrower, the
Mortgaged Properties securing such Loans or the Loan Documents entered into by
such Collateral Pool Borrower in respect of such Loans, respectively. As set
forth below, each Mortgaged Property is part of a Collateral Pool and each such
Mortgaged Property in a Collateral Pool secures all Loans made with respect to
such Collateral Pool.

F. As set forth below, the Mortgaged Properties identified on Exhibit A to this
Agreement as part of “Collateral Pool 3” each secure one or more Loans made in
respect of such Mortgaged Properties, and constitute Collateral Pool 3. As set
forth below, the Mortgaged Properties identified on Exhibit A to this Agreement
as part of “Collateral Pool 4” each secure one or more Loans made in respect of
such Mortgaged Properties, and constitute Collateral Pool 4. For avoidance of
doubt, there is no Collateral Pool 1 or Collateral Pool 2 that is covered by
this Agreement.

 

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G. To secure the obligations of each Collateral Pool Borrower under this
Agreement and the other Loan Documents executed in connection with the Loan made
to such Borrower, such Collateral Pool Borrower pledged its respective
Collateral to Fannie Mae. Each Borrower’s Collateral is comprised of
(i) Multifamily Residential Properties owned by Borrower or any Additional
Borrower and (ii) any other collateral pledged to Fannie Mae from time to time
by any Borrower or any Additional Borrower pursuant to this Agreement or any
other Loan Documents.

H. The Multifamily Residential Properties comprising the Collateral are grouped
into three (3) Collateral Pools, as set forth on Exhibit A. Each Collateral Pool
Borrower is the obligor on the Note or Notes secured by the Mortgaged Properties
comprising its related Collateral Pool and each such Loan is secured by a
Security Instrument on the Mortgaged Property owned by such Collateral Pool
Borrower.

I. Each Loan, Note and Security Document related to the Mortgaged Properties
comprising each Collateral Pool is cross-defaulted (i.e. a default under any
Loan, Note, Security Instrument relating to each Mortgaged Property comprising
Collateral Pool 3 (for example) under this Agreement, shall constitute a default
under each Loan, Note and Security Document comprising Collateral Pool 3 (for
example) and under this Agreement related to the Mortgaged Properties in such
Collateral Pool) and cross-collateralized (i.e. each Security Instrument related
to the Mortgaged Properties within Collateral Pool 3 (for example) shall secure
all of Borrower’s obligations under this Agreement and the other Loan Documents
related to the Loan secured by the Mortgaged Properties within Collateral Pool 3
(for example) to the other Notes and Security Documents in the Collateral Pool
and it is the intent of the parties to this Agreement that after an Event of
Default, Fannie Mae may accelerate any Note related to such Collateral Pool
without needing to accelerate any other Note and that in the exercise of its
rights and remedies under the Loan Documents and the Guaranty, Fannie Mae may,
except as provided in this Agreement, exercise and perfect any and all of its
rights in and under the Loan Documents and the Guaranty with regard to any
Mortgaged Property in such Collateral Pool without needing to exercise and
perfect its rights and remedies with respect to any other Mortgaged Property in
such Collateral Pool and that any such exercise shall be without regard to the
Allocable Loan Amount assigned to such Mortgaged Property and that Fannie Mae
may recover an amount equal to the full amount outstanding in respect of any of
the Notes related to the Mortgaged Properties within a Collateral Pool, in
connection with such exercise and any such amount shall be applied to the
Obligations as determined by Fannie Mae in its sole and absolute discretion. For
avoidance of doubt, none of the Mortgaged Properties in a Collateral Pool shall
secure any other Collateral Pool and no Potential Event of Default or Event of
Default under a Collateral Pool shall be a Potential Event of Default or Event
of Default under any other Collateral Pool.

J. No Loan, Note or Security Document within one Collateral Pool is
cross-collateralized or cross-defaulted with any Loan, Note or Security Document
in any other Collateral Pool.

 

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NOW, THEREFORE, Borrower and Fannie Mae, in consideration of the mutual promises
and agreements contained in this Agreement, hereby agree that the foregoing
Recitals are incorporated herein and hereby agree as follows:

ARTICLE 1

THE LOANS

 

  Section 1.01. The Loans.

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

(a) Reserved.

(b) Fixed Loans. Each applicable Collateral Pool Borrower has obtained a Fixed
Loan in the original principal amounts in respect of such Collateral Pool set
forth on Exhibit A attached hereto. No Fixed Loan shall be made as a result of a
decrease in the Loan to Value Ratio or an increase in the Debt Service Coverage
Ratio of any Mortgaged Property. Except in connection with the extensions made
pursuant to Section 1.05, no additional Loans are permitted.

(c) Minimum Variable Loans Outstanding. During the Term of this Agreement, no
Variable Loans secured by a Collateral Pool shall be permitted to remain
Outstanding unless the aggregate of Variable Loans Outstanding secured by such
Collateral Pool is at least $25,000,000. If the aggregate principal amount
Outstanding of Variable Loans for a Collateral Pool is more than $0 but less
than $25,000,000, then the applicable Collateral Pool Borrower shall, within
ninety (90) days of the date on which the aggregate principal balance of
Variable Loans Outstanding falls below $25,000,000, repay in full on the last
day of the then current month all Variable Loans Outstanding under such
Collateral Pool, together with any prepayment premiums and other amounts due
under such Loan Documents.

 

  Section 1.02. Maturity Date of Loans; Amortization; Prepayment.

(a) Variable Loans.

(i) Maturity Date of Variable Loans. Subject to the terms of Section 1.06, upon
maturity the Fixed Loan secured by Collateral Pool 4 may be converted to a
Variable Loan and the maturity date of such Loan may be extended therewith. The
maturity date of the Variable Loan converted from a Fixed Loan pursuant to the
terms of Section 1.06 shall be specified by the Collateral Pool 4 Borrower in
accordance with the provisions of Section 1.06.

(ii) Amortization and Payment of Variable Loans. Any Variable Loan converted
from a Fixed Loan pursuant to the terms of Section 1.06 shall be payable
interest only, provided however that the applicable Loan may be subject to
mandatory payments of principal pursuant to Section 1.07.

(iii) Prepayment of Variable Loans. Subject to the terms and conditions of the
applicable Variable Loan Note, and Section 3.02(d) of this Agreement, Variable
Loans are prepayable (in whole or in part) at any time pursuant to the
prepayment provisions of the applicable Variable Loan Note.

 

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(b) Fixed Loans.

(i) Maturity Date of Fixed Loans. The maturity date of each Fixed Loan is set
forth in the applicable Fixed Loan Note.

(ii) Amortization and Payment of Fixed Loans. Fixed Loans are payable interest
only.

(iii) Prepayment of Fixed Loans. Fixed Loans are not prepayable without premium
prior to the date that is six (6) months prior to the maturity date of such
Fixed Loan (as more specifically described in the applicable Fixed Loan Note);
provided that, notwithstanding the foregoing, Borrower may prepay all or any
portion of any Fixed Loan pursuant to the yield maintenance provisions of the
applicable Fixed Loan Note.

(iv) Extension of Fixed Loans. The Fixed Loans secured by Pools 1 and 3 may be
extended in accordance with Section 1.05 below. The Fixed Loan to Pool 4 may be
extended in accordance with Section 1.06 below.

 

  Section 1.03. Interest on Loans.

(a) Variable Loans.

(i) Interest on Variable Loans. Interest shall accrue on the unpaid principal
balance of a Variable Loan from the date such Variable Loan is made at the
Adjustable Rate based on One-Month LIBOR (or during an Extension pursuant to
Section 1.06 below, One-Month LIBOR or Three-Month LIBOR, as determined by the
Collateral Pool 4 Borrower) as more specifically set forth in the applicable
Variable Loan Note. 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 Variable Loan Note. The Adjustable Rate shall
change on each Rate Change Date until the Loan is repaid in full in accordance
with the Variable Loan Note. Interest payments for Variable Loans shall be
calculated on an actual/360 basis.

(ii) Variable Loan Fee. The applicable Collateral Pool Borrower shall pay
monthly installments of the Variable Loan Fee to Fannie Mae for each Variable
Loan Outstanding from the date of any Variable Loan to its maturity date or
until it is repaid in full. The Variable Loan Fee shall be included in the
Adjustable Rate and payable in accordance with the terms of the related Variable
Loan Note.

(b) Fixed Loans. Each Fixed Loan bears interest at the rate set forth in the
related Fixed Loan Note. Interest payments for Fixed Loans shall be calculated
on an actual/360 basis.

 

  Section 1.04. Notes.

(a) Variable Loans. The obligation of the applicable Collateral Pool Borrower to
repay the related Variable Loan is and shall be evidenced by one or more
Variable Loan Notes executed by each applicable Collateral Pool Borrower.

(b) Fixed Loans. The obligation of the applicable Collateral Pool Borrower to
repay the related Fixed Loan is and shall be evidenced by one or more Fixed Loan
Notes executed by each applicable Collateral Pool Borrower. Each Fixed Loan Note
Outstanding as of the date hereof has been made in the original principal amount
of the applicable Fixed Loan.

 

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  Section 1.05. Extension of Loans Secured by Collateral Pool 3.

(a) Subject to the applicable terms and conditions set forth in this Agreement,
Borrower shall have the right to extend the Fixed Loan secured by Collateral
Pool 3 (and, as relates to Section 1.05(a)(iv) below only, the option to convert
such Loan to a Variable Loan) in accordance with and subject to the applicable
terms and conditions of this Agreement.

(i) the Loan secured by Collateral Pool 3 may be extended to a date that is ten
(10) years from the closing date of the Extension or, if the applicable
Collateral Pool Borrower so elects, fifteen (15) years from the closing date of
the Extension, subject to the following terms and conditions (which, solely in
connection with an Extension pursuant to this Section 1.05(a)(i), shall control
over any inconsistent provision of this Agreement applicable to an Extension of
such Loan):

(A) In order to exercise the option set forth in this Section 1.05(a)(i), the
applicable Collateral Pool Borrower shall deliver notice of its intent to do so
not later than the earlier of (1) ninety (90) days prior to the requested
closing date for the Extension, or (2) June 1, 2013.

(B) The maturity date of the applicable Loan, as extended pursuant to this
Section 1.05(a)(i), shall not be later than September 1, 2023 (in the case of a
ten (10) year Extension) or September 1, 2028 (in the case of a fifteen
(15) year Extension).

(C) Not later than September 1, 2013, the applicable Collateral Pool Borrower
and Fannie Mae shall have negotiated, finalized and executed the applicable
closing documents for the Extension, which documents: (1) subject to the
provisions of Section 1.05(c) below, shall conform in all respects to Fannie
Mae’s then-current requirements (including MBS Requirements and other
requirements regarding the form of loan documents for Loans similar to the
applicable Loan, as extended pursuant to this Section 1.05(a)(i)), and (2) shall
require that the applicable Loan, as extended pursuant to this
Section 1.05(a)(i), shall have an Aggregate Debt Service Coverage Ratio not less
than 1.25:1.0 and an Aggregate Loan to Value Ratio not in excess of seventy five
percent (75%) as of August 1, 2017, and shall require that if the Loan does not
meet the foregoing tests the applicable Collateral Pool Borrower must pay down
the outstanding principal under the Loan (including with the payment of yield
maintenance) and/or shall add additional Collateral satisfactory to Fannie Mae
and in accordance with the provisions of the applicable Loan Documents relating
to the addition of Collateral, so as to increase the Aggregate Debt Service
Coverage to not less than 1.25:1.0 and/or decrease the Aggregate Loan to Value
Ratio to no more than 75% as of November 1, 2017.

(D) The interest rate for the extended Loan shall be reset to a fixed rate of
interest that reflects Fannie Mae’s then current market rate of interest for

 

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loans similar to the applicable Loan being extended pursuant to this
Section 1.05(a)(i) and having a 10-year term or a 15-year term, as applicable,
in either case plus the additional spread as calculated by Fannie Mae required
to compensate Fannie Mae for the yield maintenance that would have been owing if
the Loan had been fully repaid on the date of the Extension.

(E) The Loan, as extended pursuant to this Section 1.05(a)(i), shall be
non-amortizing (interest only) from the effective date of the Extension through
November 1, 2017, and will then amortize based on a 30-year amortization
schedule.

(ii) The Loan secured by Collateral Pool 3 may be extended to a date that is ten
(10) years from the closing date of the Extension, subject to the following
terms and conditions (which, solely in connection with an Extension pursuant to
this Section 1.05(a)(ii), shall control over any inconsistent provision of this
Agreement applicable to an Extension of such Loan):

(A) In order to exercise the option set forth in this Section 1.05(a)(ii), the
applicable Collateral Pool Borrower shall deliver notice of its intent to do so
not later than the earlier of (1) ninety (90) days prior to the requested
closing date for the Extension, or (2) June 1, 2013.

(B) the maturity date of the applicable Loan, as extended pursuant to this
Section 1.05(a)(ii) shall not be later than September 1, 2023.

(C) Not later than September 1, 2013, the applicable Collateral Pool Borrower
and Fannie Mae shall have negotiated, finalized and executed the applicable
closing documents for the Extension, which documents: (1) subject to the
provisions of Section 1.05(c) below, shall conform in all respects to Fannie
Mae’s then-current requirements (including MBS Requirements and other
requirements regarding the form of loan documents for Loans similar to the
applicable Loan, as extended pursuant to this Section 1.05(a)(ii)), and
(2) shall require that the applicable Loan, as extended pursuant to this
Section 1.05(a)(ii), shall have an Aggregate Debt Service Coverage Ratio not
less than 1.25:1.0 and an Aggregate Loan to Value Ratio not in excess of seventy
five percent (75%) as of the date selected by Fannie Mae for the issuance of MBS
related to the Loan being extended pursuant to this Section 1.05(a)(ii), and
shall require that if the Loan does not meet the foregoing tests the applicable
Collateral Pool Borrower must pay down the outstanding principal under the Loan
(including with the payment of yield maintenance) and/or shall add additional
Collateral satisfactory to Fannie Mae and in accordance with the provisions of
the applicable Loan Documents relating to the addition of Collateral, so as to
increase the Aggregate Debt Service Coverage to not less than 1.25:1.0 and/or
decrease the Aggregate Loan to Value Ratio to no more than 75% as of the date
selected by Fannie Mae for the issuance of MBS related to the Loan being
extended pursuant to this Section 1.05(a)(ii).

(D) The interest rate for the extended Loan shall be reset to a fixed rate of
interest that reflects Fannie Mae’s then current market rate of interest for
loans similar to the applicable Loan being extended pursuant to this
Section 1.05(a)(ii)

 

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and having a 10-year term, plus the additional spread, as calculated by Fannie
Mae, required to compensate Fannie Mae for the pair-off amount (based on the
difference between (a) the existing interest rate on the Loan and (b) the
then-current market rate for a loan with the same remaining term as the Loan
(without giving effect to the Extension) on the date the Loan is extended) that
would have been owing if the Loan had been paid on the closing date of the
Extension.

(E) The Loan, as extended pursuant to this Section 1.05(a)(ii), shall be
non-amortizing (interest only) from the effective date of the Extension through
November 1, 2017, and will then amortize based on a 30-year amortization
schedule.

(F) The Collateral Pool 3 Borrower may make a Request for an Extension pursuant
to this Section 1.05(a)(ii) with respect to less than the full amount
outstanding under the Loan secured by Collateral Pool 3, but no Extension may be
granted for less than fifty percent (50%) of the amount outstanding in respect
of the Loan secured by Collateral Pool 3. If the Collateral Pool 3 Borrower
makes a Request to extend a portion, but not all, of the Loan secured by
Collateral Pool 3 pursuant to this Section 1.05(a)(ii), the Loan secured by
Collateral Pool 3 shall be divided into two Loans and Collateral Pool 3 shall be
divided into two Collateral Pools, one such Collateral Pool (which will include
the Mortgaged Properties from Collateral Pool 3 that continue to secure the
portion of the Loan that is not extended) being referred to herein as the “A
Pool,” and the other Collateral Pool (which will include the balance of the
Mortgaged Properties from Collateral Pool 3) being referred to herein as the “B
Pool.”

(iii) The Loan secured by Collateral Pool 3 may be extended to November 1, 2018
or, if the applicable Collateral Pool Borrower so elects, to November 1, 2019,
subject to the following terms and conditions (which, solely in connection with
an Extension pursuant to this Section 1.05(a)(iii), shall control over any
inconsistent provision of this Agreement applicable to an Extension of such
Loan):

(A) In order to exercise the option set forth in this Section 1.05(a)(iii), the
applicable Collateral Pool Borrower shall deliver notice of its intent to do so
not later than the earlier of (1) ninety (90) days prior to the requested
closing date for the Extension, or (2) June 1, 2013.

(B) Any Extension of the applicable Collateral Pool Loan pursuant to this
Section 1.05(a)(iii) shall be conditioned upon payment by the applicable
Collateral Pool Borrower to Fannie Mae of an extension fee equal to: (i) in the
case of an Extension to November 1, 2018, 1.45% multiplied by the amount to be
extended, or (ii) in the case of an extension to November 1, 2019, 3% multiplied
by the amount to be extended.

(C) Not later than September 1, 2013, the applicable Collateral Pool Borrower
and Fannie Mae shall have negotiated, finalized and executed the applicable
closing documents for the Extension, which documents, subject to the provisions
of Section 1.05(c) below, shall conform in all respects to Fannie Mae’s
then-current requirements (including MBS Requirements and other requirements
regarding the form of loan documents for Loans similar to the applicable Loan,
as extended pursuant to this Section 1.05(a)(iii)).

 

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(D) The interest rate for the extended Loan shall not be reset, and shall equal
the interest rate set forth in the Note evidencing the Loan secured by
Collateral Pool 3 on the Effective Date.

(E) Borrower may make a Request for an Extension pursuant to this
Section 1.05(a)(iii) with respect to all or any portion of the Loan secured by
Collateral Pool 3. If the Collateral Pool 3 Borrower makes a Request to extend a
portion, but not all, of the Loan secured by Collateral Pool 3 pursuant to this
Section 1.05(a)(iii), the Loan secured by such Collateral Pool shall be divided
into two Loans and Collateral Pool 3 (as applicable) shall be divided into two
Collateral Pools, one such Collateral Pool (which will include the Mortgaged
Properties from Collateral Pool 3 that continue to secure the portion of the
Loan that is not extended) being referred to herein as the “A Pool,” and the
other Collateral Pool (which will include the balance of the Mortgaged
Properties from Collateral Pool 3) being referred to herein as the “B Pool.”

(iv) The Loan secured by Collateral Pool 3 may be extended to November 1, 2018
or, if the applicable Collateral Pool Borrower so elects, to November 1, 2019,
subject to the following terms and conditions (which, solely in connection with
an Extension pursuant to this Section 1.05(a)(iv), shall control over any
inconsistent provision of this Agreement applicable to an Extension of such
Loan):

(A) In order to exercise the option set forth in this Section 1.05(a)(iv), the
applicable Collateral Pool Borrower shall deliver notice of its intent to do so
not later than the earlier of (1) ninety (90) days prior to the requested
closing date for the Extension, or (2) February 1, 2017.

(B) Not later than May 1, 2017, the applicable Collateral Pool Borrower and
Fannie Mae shall have negotiated, finalized and executed the applicable closing
documents for the Extension, which documents: (1) subject to the provisions of
Section 1.05(c) below, shall conform in all respects to Fannie Mae’s
then-current requirements (including MBS Requirements and other requirements
regarding the form of loan documents for Loans similar to the applicable Loan,
as extended pursuant to this Section 1.05(a)(iv)); and (2) shall require that
the applicable Loan, as extended pursuant to this Section 1.05(a)(iv), shall
have an Aggregate Debt Service Coverage Ratio not less than 1.25:1.0 and an
Aggregate Loan to Value Ratio not in excess of seventy five percent (75%) as of
August 1, 2017, and shall require that if the Loan does not meet the foregoing
tests, then prior to November 1, 2017 the applicable Collateral Pool Borrower
must pay down the outstanding principal under the Loan (including with the
payment of yield maintenance) and/or shall add additional Collateral
satisfactory to Fannie Mae and in accordance with the provisions of the
applicable Loan Documents relating to the addition of Collateral, so as to
increase the Aggregate Debt Service Coverage to not less than 1.25:1.0 and/or
decrease the Aggregate Loan to Value Ratio to no more than 75%.

(C) The Loan that is extended pursuant to this Section 1.05(a)(iv) shall be
converted to a Variable Loan with an interest rate determined based on the
Extension period (one year or two years) and based on market conditions at the
time of the Extension.

 

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(b) Except as expressly provided above in Section 1.05(a)(ii)(F) and in
Section 1.05(a)(iii)(E), an Extension pursuant to this Section 1.05 must be made
with respect to the full amount outstanding in respect of the Loan secured by
the applicable Collateral Pool. As a condition to any Extension of a portion of
a Loan pursuant to Section 1.05(a)(ii) or Section 1.05(a)(iii), such that the
applicable Collateral Pool is split into an A Pool and a B Pool as set forth
above in Section 1.05(a)(ii)(F) or Section 1.05(a)(iii)(E), then Fannie Mae
shall determine the Aggregate Debt Service Coverage Ratio and the Aggregate Loan
to Value Ratio as of the date of the closing of the Extension, both (i) in the
aggregate (i.e., without giving effect to the proposed splitting of the Loan and
the applicable Collateral Pool) and (ii) solely with respect to the A Pool and
the portion of the Loan that will be secured by the A Pool after giving effect
to the Extension. As a condition to such Extension, Fannie Mae must determine
that the Extension will not adversely affect the Aggregate Loan to Value Ratio
or the Aggregate Debt Service Ratio of the portion of the Loan secured by the A
Pool, as compared to the Loan and the applicable Collateral Pool in the
aggregate, prior to the Extension.

(c) Any Loan extended pursuant to this Section 1.05 will be converted to an MBS.
The applicable loan documentation for any Extension referred to in this
Section 1.05 shall be on Fannie Mae’s then-current standard form MBS loan
documentation for loans of the same type as the Loan that is extended; provided,
however, that (i) the provisions of such loan documentation will be modified to
be substantially consistent with the terms and conditions of this Agreement
pertaining to such matters as insurance, transfers, reporting requirements,
permitted alterations, permitted non-residential leases, permitted indebtedness
and thresholds for lender control over insurance disputes and condemnation
proceedings; (ii) the provisions of such loan documentation relating to
substitution, release and addition of collateral will be modified to be
substantially consistent with the analogous terms and provisions in this
Agreement; (iii) any guaranty of such extended loan shall guaranty only the same
type of obligations as are guaranteed under the guaranty currently in effect for
the Loans; (iv) Fannie Mae and Borrower will attempt in good faith to reach an
agreement regarding any modifications requested by the applicable Collateral
Pool Borrower relating to other matters; and (v) except as related to the
modifications described in clause (i) of this sentence, notwithstanding anything
to the contrary, all provisions of such amended and restated loan documentation
shall be consistent with Fannie Mae’s requirements relating to mortgaged-backed
securities issuance, disclosure and tax matters.

(d) In addition to the requirements and conditions set forth in this
Section 1.05, an Extension pursuant to this Section 1.05 shall be subject to the
conditions set forth below in Sections 4.01(a), 4.01(b), 4.01(c), 4.01(d),
4.01(e), 4.01(f), 4.01(g), 4.01(i), 4.03(e), 4.03(f), 4.03(g), 4.03(h), 4.04(b),
4.04(g), 4.04(h), 4.04(i), 4.04(j), 4.04(k), 4.06. Notwithstanding anything to
the contrary, (i) except as expressly set forth in the preceding sentence the
conditions set forth in Article 4 of this Agreement shall not apply to an
Extension pursuant to this Section 1.05; and (ii) none of the conditions set
forth in this Section 1.05 shall apply to an Extension of the Loan secured by
Collateral Pool 4 pursuant to Section 1.06.

 

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  Section 1.06. Conversion to Variable Rate; Extension of Loan Secured by
Collateral Pool 4.

Subject to the last paragraph of this Section 1.06, upon the maturity of the
Fixed Loan securing Collateral Pool 4 the Collateral Pool 4 Borrower shall have
the right to convert its Loan to a Variable Loan and extend the respective
maturity date of the Loan for either (i) one (1) period of two (2) years (the
“Two-Year Extension”) or (ii) two (2) periods of one (1) year each comprised of
(A) one (1) period of one (1)-year (the “First One-Year Extension”) that may be
followed by (B) a second period of one (1) year (the “Second One-Year
Extension”) upon the satisfaction of the applicable conditions precedent set
forth in Article 4 and of each of the following conditions:

(a) The Collateral Pool 4 Borrower delivers an Extension Notice to Fannie Mae
not less than forty-five (45) days prior to the then effective Loan maturity
date.

(b) There has been no monetary or material non-monetary Event of Default (as
determined in Fannie Mae’s sole and absolute discretion) under the Loan
Documents relating to Collateral Pool 4 which has not been cured to the
satisfaction of Fannie Mae, provided however, that nothing contained in this
section shall be construed to require Fannie Mae to accept any cure, or grant
any cure period not otherwise provided for in the Loan Documents under which
such Event of Default may arise, and no Event of Default or Potential Event of
Default relating to Collateral Pool 4 exists on the date the Extension Notice is
delivered and on the then effective Loan maturity date.

(c) With respect to the First One-Year Extension, the Aggregate Debt Service
Coverage of the Collateral Pool 4 shall be equal to or greater than 0.95:1.0
(taking into account any reduction in the principal amount of the relevant Fixed
Loan made on or before the then effective Fixed Loan maturity date) on the then
effective Fixed Loan maturity date. With respect to the Two-Year Extension or
the Second One-Year Extension, the Aggregate Debt Service Coverage Ratio of
Collateral Pool 4 shall be equal to or greater than 1.0:1.0 (taking into account
any reduction in the principal amount of the relevant Loan made on or before the
then effective Loan maturity date) on the then effective Loan maturity date.

(d) All of the representations and warranties of the Collateral Pool 4 Borrower
and the Guarantor contained in Exhibit L to this Agreement and the other Loan
Documents and the Guaranty are true and correct in all material respects (i) on
the date the Extension Notice is delivered and (ii) on the then effective Loan
maturity date.

(e) The Collateral Pool 4 Borrower is in compliance with all of the covenants
contained in Article 6 and Article 7 (i) on the date the Extension Notice is
delivered and (ii) on the then effective Loan maturity date.

(f) The Collateral Pool 4 Borrower pays to Fannie Mae a Re-Underwriting Fee.

(g) The Collateral Pool 4 Borrower shall execute a Variable Loan Note in favor
of Fannie Mae to evidence its obligation to repay the related Variable Loan
during the

 

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period of the applicable Extension. The Variable Loan Note shall be subject to
prepayment in accordance with Fannie Mae’s then-effective fee maintenance
formula and shall contain an open period for prepayment selected by Borrower.
The Variable Loan Fee shall be as determined by Fannie Mae, in its reasonable
discretion, for the Extension, taking into consideration the length of the
prepayment open period, at the time of such Extension. Upon the closing of an
Extension completed pursuant to the terms of this Section 1.06 the applicable
Loan shall thereinafter be deemed a Variable Loan hereunder.

(h) The Collateral Pool 4 Borrower shall deliver to Fannie Mae at least five
(5) days prior to the then effective Loan maturity date the confirmation of an
Interest Rate Hedge commitment in accordance with Section 1.09 and the Hedge
Security Agreement, effective as of the then effective Loan maturity date.

(i) Interest shall accrue on the unpaid principal balance of such Loan from the
then effective Loan maturity date to the end of the then effective extension
period at the Adjustable Rate based on One-Month LIBOR or Three-Month LIBOR as
elected by the Collateral Pool 4 Borrower prior to the then effective Loan
maturity date (provided such One-Month or Three-Month LIBOR election shall
remain in place for the term of the extension period).

Upon receipt of the Extension Notice and upon compliance with conditions set
forth above, the Loan maturity date for the Loan Note shall be extended for a
one-year or two-year period, as applicable, on the terms and conditions
contained in this Agreement and the other Loan Documents. The Variable Loan Fee
for any extension pursuant to this Section 1.06 shall be determined by Fannie
Mae in its reasonable discretion at the time of the extension.

 

  Section 1.07. Payments of Principal During Extension Period for Collateral
Pool 4.

In addition to regular payments made under the applicable Variable Loan Note
during the period of any Extension exercised pursuant to the terms of
Section 1.06, the Collateral Pool 4 Borrower shall be required to make the
following mandatory prepayments of principal (without any fee maintenance or
prepayment penalty):

(a) If, on the maturity date of the applicable Loan, the aggregate Net Operating
Income for the Trailing 12 Month Period (based on the most recent monitoring
reports submitted to Fannie Mae) for all Mortgaged Properties in the Collateral
Pool 4 is less than one hundred three percent (103%) of the Baseline 2012 NOI
(defined below), the Collateral Pool 4 Borrower shall be obligated to pay to
Fannie Mae fifty percent (50%) of aggregate Excess Cash Flow derived from
Collateral Pool 4 during the term of the Extension (the “Cash Flow Sweep”).
Collateral Pool 4 Borrower shall remit to Fannie Mae within forty-five (45) days
following the end of the Calendar Quarter all information reasonably required by
Fannie Mae to determine the amount of Excess Cash Flow to be paid by Collateral
Pool 4 Borrower. Upon receipt of all such information and review of the same,
Fannie Mae shall promptly let Collateral Pool 4 Borrower know the amount of Cash
Flow Sweep to be paid together with reasonable documentation supporting such
calculation. Collateral Pool 4 Borrower shall pay to Fannie Mae the portion of
Excess Cash Flow then due at the end of the then current Calendar Quarter. As
used herein,

 

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“Baseline 2012 NOI” means the aggregate sum of the 2012 Net Operating Income for
each Mortgaged Property that is included in Collateral Pool 4 on the Effective
Date and that is included in Collateral Pool 4 as of the date on which the
Baseline 2012 NOI is determined (provided that a Mortgaged Property included in
Collateral Pool 4 on the Effective Date is subsequently released from Collateral
Pool 4, the NOI for such Mortgaged Property shall nonetheless be included in
Baseline 2012 NOI if a Mortgaged Property has been added to Collateral Pool 4 in
Substitution for such released Mortgaged Property). For purposes of calculating
Baseline 2012 NOI, Exhibit R sets forth the 2012 Net Operating Income of each
Mortgaged Property that is included in Collateral Pool 4 as of the Effective
Date.

(b) If the Cash Flow Sweep has been implemented pursuant to Section 1.07(a) for
the term of the applicable Extension, and if the Net Operating Income for the
Trailing 12 Month Period (based on the most recent monitoring reports submitted
to Fannie Mae) results in an Aggregate Debt Service Coverage Ratio of 1.10:1.0
or greater (taking into account any reduction in principal amount of the
relevant Loan), the reference to fifty percent (50%) in paragraph (a) above
shall be reduced to twenty-five percent (25%) for the purpose of calculating the
portion of Excess Cash Flow payments then due to Fannie Mae.

(c) If the Cash Flow Sweep has been implemented pursuant to Section 1.07(a) for
the term of the applicable Extension, and if the Net Operating Income for the
Trailing 12 Month Period (based on the most recent monitoring reports submitted
to Fannie Mae) results in an Aggregate Debt Service Coverage Ratio of 1.15:1.0
or greater (taking into account any reduction in principal amount of the
relevant Loan), no further Cash Flow Sweep shall be required and all amounts
then held by Fannie Mae shall be returned to Borrower. Notwithstanding the
foregoing, the Cash Flow Sweep shall be reinstated at such time, if any, as the
Net Operating Income for the Trailing 12 Month Period (based on the most recent
monitoring reports submitted to Fannie Mae) results in an Aggregate Debt Service
Coverage Ratio lower than 1.15:1.0.

 

  Section 1.08. Rate Setting for Converted Collateral Pool 4.

(a) Converted Variable Loans. The following shall apply to the rate setting for
a Loan that is extended and converted to a Variable Loan pursuant to
Section 1.06.

(i) Preliminary, Nonbinding Quote. At the Collateral Pool 4 Borrower’s request
the Servicer shall quote an estimate of the Adjustable Rate. The Servicer’s
quote shall be based on (x) the rate quoted by Fannie Mae and (y) the proposed
terms and amount of the Loan selected by Collateral Pool 4 Borrower. The quote
shall not be binding upon the Servicer.

(ii) Rate Setting. If the Collateral Pool Borrower 4 satisfies all of the
conditions to Fannie Mae’s obligation to permit the Extension and the conversion
of the Loan, then Collateral Pool 4 Borrower may request that Servicer submit to
Collateral Pool 4 Borrower by facsimile transmission (or via electronic mail in
PDF format) a completed draft Rate Form. The Rate Form shall specify the Loan
Amount, term, Variable Loan Fee, any breakage fee deposit amount, Adjustable
Rate, and Closing Date for the conversion/Extension. If the draft Rate Form is
approved by the Collateral Pool 4 Borrower, such Borrower shall initial and
return

 

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the approved Rate Form to Servicer by facsimile transmission (or via electronic
mail in PDF format) before 1:00 p.m. Eastern Standard Time or Eastern Daylight
Time, as applicable, on any Business Day (“Rate Setting Date”).

(iii) Rate Confirmation. Within one (1) Business Day after receipt of the Rate
Form, Servicer shall obtain a commitment from Fannie Mae’s trading desk (“Fannie
Mae Commitment”) for the extended and converted Loan having the terms described
in the related Rate Form. Servicer shall then complete and sign the Rate Form
thereby confirming the amount, term, Adjustable Rate, Variable Loan Fee and
Closing Date for the conversion/Extension and shall immediately deliver by
facsimile transmission (or via electronic mail in PDF format) the Rate Form to
the applicable Collateral Pool Borrower to be countersigned.

 

  Section 1.09. Interest Rate Hedge.

(a) To protect against fluctuations in interest rates during the term, pursuant
to the terms of the Hedge Security Agreement, the applicable Collateral Pool
Borrower shall make arrangements for a LIBOR-based instrument (“Interest Rate
Hedge”) to be in place and maintained at all times from and after March 29,
2013, with respect to any Variable Loan which has been funded and remains
Outstanding. As set forth in the Hedge Security Agreement, the applicable
Collateral Pool Borrower agrees to pledge its right, title and interest in the
Interest Rate Hedge to Fannie Mae as additional collateral for the Indebtedness.
Borrower shall provide an Interest Rate Hedge that is co-terminus with each
Extension elected by Borrower. In order to calculate the Strike Rate for the
required Interest Rate Hedge, Fannie Mae shall calculate the Net Operating
Income, as determined by Fannie Mae in its reasonable discretion, based on the
Gross Revenues actually collected for the Trailing 3 Month Period and based on
the Operating Expenses, as determined by Fannie Mae in its reasonable
discretion, for the Trailing 12 Month Period.

 

  Section 1.10. Limitations on Executions.

For so long as Fannie Mae (or any successor thereto by merger, reorganization,
combination or other corporate or organizational restructuring or otherwise
created by legislation or applicable regulation (“FNMA Successor”)) owns and
holds an interest in the Loans, notwithstanding anything in this Agreement or
any other Loan Document to the contrary, any extension or conversion of a Loan
pursuant to Section 1.05 or Section 1.06 shall be subject to the precondition
that Fannie Mae (or FNMA Successor) is generally offering to purchase in the
marketplace loans of the execution type requested by Borrower at the time of the
Request for such extension or conversion and on the closing date of such
extension or conversion. In the event Fannie Mae (or FNMA Successor) is not
purchasing loans of the execution type requested by Borrower at the time of the
Request for such extension or conversion and on the closing date of such
extension or conversion, Fannie Mae (or FNMA Successor) agrees to offer
alternative loan executions based on the types of executions Fannie Mae (or FNMA
Successor) is generally offering to purchase, with respect to loans secured by
similar property type, in the marketplace at that time, and such executions
shall not require (i) an Aggregate Debt Service Coverage Ratio greater than the
Aggregate Debt Service Coverage Ratio set forth in Section 1.06(c), (ii) an
increase in the Re-Underwriting Fee payable under Section 1.06(f), or any
increase in the

 

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payments of principal pursuant to Section 1.07. Any alternative execution
offered would be subject to mutually agreeable documentation necessary to
implement the terms and conditions of such alternative execution.

ARTICLE 2

BREAKAGE AND ALLOCATED LOAN AMOUNTS

 

  Section 2.01. Reserved.

 

  Section 2.02. Breakage and Other Costs.

If Servicer obtains, and then fails to fulfill, a Fannie Mae Commitment because
the Loan is not made (for a reason other than Servicer’s or Fannie Mae’s
default), the applicable Collateral Pool Borrower shall pay all reasonable
out-of-pocket costs (including attorneys’ fees and costs), fees and damages
incurred by Servicer or Fannie Mae in connection with its failure to fulfill the
Fannie Mae Commitment. Fannie Mae reserves the right to require the applicable
Collateral Pool Borrower to post a deposit at the time the Fannie Mae Commitment
is obtained. Such deposit shall be refunded to the applicable Collateral Pool
Borrower upon the closing of the applicable Request.

 

  Section 2.03. Reserved.

 

  Section 2.04. Determination of Allocable Loan Amount and Valuations.

(a) Initial Determinations. On the Effective Date, Fannie Mae has determined
(i) the Allocable Loan Amount and Valuation for each Initial Mortgaged Property,
(ii) the Aggregate Debt Service Coverage Ratio and the Aggregate Loan to Value
Ratio for each Collateral Pool, and (iii) the Loan Amount supported by such
Collateral Pool. The determinations made in clause (a) as of the Effective Date
shall remain unchanged until a Collateral Event occurs under such Collateral
Pool. Changes in Allocable Loan 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 a Collateral
Pool consists only of Fixed Loans that have 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 Fannie Mae the reports
required in Section 6.03, Fannie Mae shall determine the Aggregate Debt Service
Coverage Ratio and the Aggregate Loan to Value Ratio for such Collateral Pool,
and whether Borrower is in compliance with the other covenants set forth in the
Loan Documents. After a Collateral Event with respect to the relevant Collateral
Pool, Fannie Mae shall redetermine Allocable Loan Amounts and Valuations for
such Collateral Pool. Fannie Mae shall determine Cap Rates when determining
Valuations in its sole and absolute discretion on the basis of its internal
survey and analysis of Cap Rates for comparable sales in the vicinity of the
Mortgaged Property, with such adjustments as Fannie Mae deems appropriate and
shall not be obligated to use any information provided by Borrower. Fannie Mae
shall promptly disclose its determinations to the applicable Collateral Pool
Borrower. Until redetermined, the Allocable Loan Amounts and Valuations
determined by Fannie Mae shall remain in effect. In performing a Valuation of a
Multifamily Residential

 

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Property to be added to any Collateral Pool as part of a Substitution, Fannie
Mae shall be entitled to obtain an Appraisal, and the Valuation will be based on
such Appraisal. Fannie Mae shall also have the right to obtain an Appraisal or a
Cap Rate study conducted by an appraiser in connection with the redetermination
of a Valuation of a Mortgaged Property if Fannie Mae is unable to determine a
Cap Rate for such Mortgaged Property.

(c) If a Collateral Pool Borrower disagrees with Fannie Mae’s Valuation of any
Mortgaged Property that is part of such Collateral Pool, such Borrower shall
have the right to substitute for the Cap Rate determined by Fannie Mae or
Appraisal obtained by Fannie Mae, as applicable, a new Cap Rate based on a
capitalization rate study conducted by an appraiser or a new Appraisal, as
applicable, provided such Borrower gives notice to Fannie Mae of its desire to
substitute a new Cap Rate or a new Appraisal, as applicable, for Fannie Mae’s
Cap Rate or Appraisal, as applicable, within fifteen (15) Business Days after
such Borrower receives Fannie Mae’s determinations.

(i) In the event the applicable Collateral Pool Borrower has requested a new Cap
Rate, the applicable Collateral Pool Borrower and Fannie Mae shall determine the
Cap Rate in accordance with the following procedure:

(A) Fannie Mae shall give such Collateral Pool Borrower a list of approved
appraisers for the local market in which the Multifamily Residential Property is
located within ten (10) Business Days after the date on which such Borrower
gives Fannie Mae its notice;

(B) The relevant Collateral Pool Borrower shall select an appraiser within ten
(10) Business Days after the date on which Fannie Mae gives such Collateral Pool
Borrower the list of Fannie Mae-approved appraisers;

(C) Fannie Mae shall engage the appraiser selected by Collateral Pool Borrower
pursuant to clause (i)(B) to perform the Cap Rate study within ten (10) Business
Days after the date on which such Borrower makes its selection; and

(D) Such Collateral Pool Borrower shall pay all reasonable out-of-pocket fees
and expenses of obtaining the Cap Rate study, whether incurred by such
Collateral Pool Borrower or Fannie Mae.

(ii) In the event the applicable Collateral Pool Borrower has requested a new
Appraisal, the applicable Collateral Pool Borrower and Fannie Mae shall obtain
the new Appraisal in accordance with the following procedure:

(A) Fannie Mae shall give such Collateral Pool Borrower a list of approved
appraisers for the local market in which the relevant Multifamily Residential
Property is located within ten (10) Business Days after the date on which such
Collateral Pool Borrower gives Fannie Mae its notice;

(B) The relevant Collateral Pool Borrower shall select an appraiser from the
list of approved Appraisers delivered by Fannie Mae to Borrower within ten
(10) Business Days after the date on which Fannie Mae gives such Collateral Pool
Borrower the list of Fannie Mae-approved appraisers;

 

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(C) Fannie Mae shall engage the appraiser selected by Collateral Pool Borrower
pursuant to clause (ii)(B) above to perform the Appraisal study within ten
(10) Business Days after the date on which such Collateral Pool Borrower makes
its selection; and

(D) Such Collateral Pool Borrower shall pay all reasonable out-of-pocket fees
and expenses of obtaining the Appraisal, whether incurred by such Collateral
Pool Borrower or Fannie Mae.

(iii) If the applicable Collateral Pool Borrower elects to substitute a new Cap
Rate for Fannie Mae’s Rate or a new Appraisal, the new Cap Rate or appraised
value, as applicable, shall be used to determine the Valuation for the Mortgaged
Property and, until the earlier of (1) the thirtieth (30th) day after the date
on which the appraiser is engaged by Fannie Mae or (2) the date on which the new
Cap Rate is determined, the Valuation of the Mortgaged Property in effect
immediately prior to Fannie Mae’s Valuation shall continue to be in effect. In
the event the new Cap Rate or Appraisal is not determined or delivered on or
before the thirtieth (30th) day after which the appraiser is engaged by Fannie
Mae, then commencing on such thirtieth (30th) day and continuing until the new
Cap Rate is determined or the new Appraisal is delivered, the Valuation based on
Fannie Mae’s determination of the Cap Rate or Appraisal, as applicable, shall be
in effect.

(iv) Notwithstanding anything in this Agreement to the contrary, no change in
Allocable Loan Amounts, Valuations, the Aggregate Loan to Value Ratio or the
Aggregate Debt Service Coverage Ratio shall (i) result in a Potential Event of
Default or Event of Default under such Collateral Pool, (ii) require the
prepayment of any Loans under such Collateral Pool, or (iii) require the
addition of Collateral to such Collateral Pool.

ARTICLE 3

COLLATERAL CHANGES

 

  Section 3.01. Right to Obtain Releases of Collateral.

Subject to the terms and conditions of this Article 3, Collateral Pool Borrower
shall have the right from time to time to obtain a release of Collateral (a
“Release”) from the respective Collateral Pool.

 

  Section 3.02. Procedure for Obtaining Releases of Collateral.

(a) Request. To obtain a release of Collateral from a Collateral Pool, the
applicable Collateral Pool Borrower shall deliver a Release Request to Fannie
Mae.

(b) Closing. If all conditions precedent contained in Section 4.04 and all
General Conditions contained in Section 4.01 are satisfied, Fannie Mae shall
cause the Release Mortgaged Property to be released, at a closing to be held at
offices designated by Fannie Mae and reasonably acceptable to the applicable
Collateral Pool Borrower on a Closing Date

 

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proposed by such Borrower and approved by Fannie Mae, and occurring (A) in the
case of a Collateral Pool with ten (10) or less Mortgaged Properties, within
thirty (30) days after Fannie Mae’s receipt of the Release Request and any other
information required by Fannie Mae (or on such other date as such Borrower and
Fannie Mae may agree), and (B) in the case of a Collateral Pool with more than
ten (10) Mortgaged Properties, within sixty (60) days after Fannie Mae’s receipt
of the Release Request and any other information required by Fannie Mae (or on
such other date as such Borrower and Fannie Mae 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. Unless otherwise
instructed by Fannie Mae, the applicable Collateral Pool Borrower, shall prepare
the documents pertaining to the release of the Security Instrument and submit
them to Fannie Mae for its review.

(c) Release Price.

(i) The “Release Price” for each Release Mortgaged Property means the greater of
(A) the Allocable Loan Amount for such Release Mortgaged Property and (B) one
hundred percent (100%) of the amount, if any, of the Loans Outstanding that are
required to be repaid by the applicable Collateral Pool Borrower to Fannie Mae
in connection with the proposed release of the Release Mortgaged Property from
such Collateral Pool so that, immediately after the Release, the Coverage and
LTV Tests for the Collateral Pool will be satisfied.

(ii) In the event the proposed Release is of a Mortgaged Property that is in a
Collateral Pool that secures a Fixed Loan and the Coverage and LTV Tests for the
applicable Collateral Pool are not satisfied after the Release of the Release
Mortgaged Property, but the Aggregate Debt Service Coverage Ratio of such
Collateral Pool is not less than the required Aggregate Debt Service Coverage
Ratio set forth in clause (2)(a) of the definition of Coverage and LTV Tests for
such Collateral Pool in effect on the Closing Date of the proposed Release minus
0.05 (for example, if the required Aggregate Debt Service Coverage set forth in
clause (2)(a) of the definition of Coverage and LTV Tests for the relevant
Collateral Pool on the Closing Date of the proposed Release is 1.1:1.0, the
Aggregate Debt Service Coverage Ratio of such Collateral Pool on the Closing
Date of the proposed Release may not be less than 1.05:1.0), the applicable
Collateral Pool Borrower may deposit with Fannie Mae cash or a Letter of Credit
(in accordance with the terms of Section 4.08 of this Agreement) in an amount
equal to the sum of the amount determined pursuant to clause (c)(i)(B) in this
subsection above minus the amount determined pursuant to clause (c)(i)(A) in
this subsection above subject to the provisions of Section 3.02(c)(iii) below
(the “Shortfall Deposit”). The preceding sentence shall not apply to Mortgaged
Properties that are in a Collateral Pool that secures a Variable Loan. In no
event shall Borrower pay down less than the Allocable Loan Amount for such
Release Mortgaged Property on the Closing Date of such Release. In addition to
the Release Price, the applicable Collateral Pool Borrower shall pay to Fannie
Mae all associated prepayment premiums, accrued interest and other amounts due
under the Notes evidencing the Loans being repaid.

The Shortfall Deposit shall be subject to the following terms and conditions:

(A) Such Collateral Pool Borrower shall deposit either (1) cash and/or Permitted
Investments or (2) a Letter of Credit, not both.

 

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(B) In the event such Collateral Pool Borrower deposits cash and/or Permitted
Investments with Fannie Mae as the Shortfall Deposit, the amount of the
Shortfall Deposit shall not exceed fifteen percent (15%) of the principal
balance of the Loans Outstanding under such Collateral Pool calculated after the
release of the Release Mortgaged Property. If the Shortfall Deposit would
otherwise exceed fifteen percent (15%) of the balance of the Loans Outstanding
under such Collateral Pool calculated after the release of the Release Mortgaged
Property, then as a condition to making the Shortfall Deposit in the form of
cash and/or Permitted Investments, the applicable Collateral Pool Borrower shall
make a payment to Fannie Mae such that, after giving effect to such payment,
Section 3.02(c)(ii) shall not require a Shortfall Deposit in excess of fifteen
percent (15%) of the principal balance of the Loans Outstanding under such
Collateral Pool calculated after the release of the Release Mortgaged Property.
Permitted Investments deposited to satisfy the Shortfall Deposit requirements
shall, in the case of cash or other Permitted Investments in which Fannie Mae’s
security interest is perfected by possession, be deposited by Fannie Mae into an
account maintained by Fannie Mae in accordance with Fannie Mae’s requirements
for similar accounts (the “Shortfall Deposit Account”) and, in the case of other
Permitted Investments, pledged to Fannie Mae pursuant to a pledge agreement, in
form and substance acceptable to Fannie Mae. All interest and other earnings
accruing on any cash or Permitted Investments shall remain in the Shortfall
Deposit Account and shall be subject to this Agreement, provided that all such
interest and other earnings shall be credited to the applicable Collateral Pool
Borrower. Cash shall be held in an institution (which may be Fannie Mae, if
Fannie Mae is such an institution) whose deposits or accounts are insured or
guaranteed by a federal agency. The Fannie Mae shall not be obligated to open
additional accounts or deposit Imposition Deposits in additional institutions
when the amount of the Imposition Deposits exceeds the maximum amount of the
federal deposit insurance or guaranty. Fannie Mae shall not guaranty the rate of
return or rate of interest on any cash held as part of the Shortfall Deposit.

(C) In the event such Collateral Pool Borrower posts a Letter of Credit pursuant
to the terms of Section 4.08 of this Agreement as the Shortfall Deposit, the
value of the Shortfall Deposit shall not exceed ten percent (10%) of the
principal balance of the Loans Outstanding under such Collateral Pool calculated
after the release of the Release Mortgaged Property. If the Shortfall Deposit
would otherwise exceed ten percent (10%) of the balance of the Loans Outstanding
under such Collateral Pool calculated after the release of the Release Mortgaged
Property, then as a condition to making the Shortfall Deposit in the form of a
Letter of Credit, the applicable Collateral Pool Borrower shall make a payment
to Fannie Mae such that, after giving effect to such payment,
Section 3.02(c)(ii) shall not require a Shortfall Deposit in excess of ten
percent (10%) of the principal balance of the Loans Outstanding under such
Collateral Pool calculated after the release of the Release Mortgaged Property.

(D) The Shortfall Deposit (including any interest and other earnings accruing on
any Permitted Investments in the Shortfall Deposit Account) shall be disbursed
to the applicable Collateral Pool Borrower upon the earliest of (1) payment of
all Obligations of such Collateral Pool Borrower under the Loan Documents,
(2) the date the applicable Collateral Pool satisfies the Coverage and LTV Tests
for such

 

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Collateral Pool, and (3) upon compliance with the next sentence, the date one
hundred eighty (180) days after the Closing Date of the Release Request. If on
the date one hundred eighty (180) days after the Closing Date of the Release
Request the Coverage and LTV Tests for such Collateral Pool in effect as of the
Closing Date of the Release Request are not satisfied, the applicable Collateral
Pool Borrower shall pay down the Loans Outstanding under such Collateral
Pool such that the Coverage and LTV Tests are satisfied.

(iii) In the event the proposed Release of a Mortgaged Property is in connection
with the anticipated sale of such Mortgaged Property to a third party in an
arm’s length transaction, and the anticipated sale proceeds are less than the
Release Price that would be calculated pursuant to the terms of either
Section 3.02(c)(i) or Section 3.02(c)(ii) (if applicable), provided that the
Aggregate Debt Service Coverage Ratio of such Collateral Pool after the Release
is not less than the Aggregate Debt Service Coverage Ratio for such Collateral
Pool in effect immediately prior to the Release, the Release Price shall be the
sum of (A) one hundred ten percent (110%) of the Allocable Loan Amount for such
Release Mortgaged Property plus (B) seventy-five percent (75%) of the Remaining
Net Sale Proceeds. As used herein, “Remaining Net Sale Proceeds” shall mean the
sale price of the Release Mortgaged Property less one hundred ten percent
(110%) of the Allocable Loan Amount for such Release Mortgaged Property less
reasonable customary closing costs in connection with the sale as determined by
Fannie Mae, including, without limitation, tax indemnity or tax protection
payments in an amount not to exceed $1,500,000 per Release Mortgaged Property
(unless a greater amount is approved by Fannie Mae). Notwithstanding the
foregoing, in the event the Net Operating Income for the Trailing 12 Month
Period for the applicable Collateral Pool results in an Aggregate Debt Service
Coverage Ratio of 1.10:1.0 or greater, the percentage of Remaining Net Sale
Proceeds referenced in this subclause (iii) above shall be reduced to
twenty-five percent (25%). For purposes of determining Aggregate Debt Service
Coverage Ratio in connection with the calculations set forth in this
Section 3.02, Debt Service Coverage Ratio shall be calculated after taking into
account the payment of one hundred ten percent (110%) of the Allocable Loan
Amount for such Release Mortgaged Property.

(iv) Notwithstanding anything to the contrary in this Section 3.02, the
requirements set forth in Section 3.02(c)(i), Section 3.02(c)(ii) or
Section 3.02(c)(iii) may be waived temporarily by Fannie Mae in its sole
discretion, if neither the Aggregate Debt Service Coverage Ratio will be reduced
nor the Aggregate Loan to Value Ratio for such Collateral Pool will be increased
as a result of such proposed Release, with such waiver based on factors that are
not in conflict with Fannie Mae’s Underwriting Requirements, including but not
limited to the then current Valuation of the Mortgaged Properties in such
Collateral Pool, the then current Aggregate Debt Service Coverage Ratio of such
Collateral Pool, the then current Aggregate Loan to Value Ratio of such
Collateral Pool, the strength of the Guarantor, the quality of the market where
the remaining Mortgaged Properties are located, and the geographic distribution
of the Mortgaged Properties in such Collateral Pool at that time. In connection
with a release pursuant to this Section 3.02(c)(iv) only, the applicable
Collateral Pool Borrower shall otherwise comply with the terms of
Section 3.02(c)(i), Section 3.02(c)(ii), and Section 3.02(c)(iii), including
depositing any Shortfall Deposit.

 

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(d) Application of Release Price.

(i) The Release Price for the Release Mortgaged Property shall be applied
against the Outstanding Loans in the applicable Collateral Pool Borrower’s
discretion, provided that (A) any Outstanding Loan which Borrower elects to
prepay must be prepaid in full, or if the Release Price is not sufficient to do
so, must be the only Loan partially prepaid; (B) any prepayment of such Loan is
permitted (for example, not subject to a lock out period) under the applicable
Note, (C) any prepayment premium due and owing is paid, and (D) interest must be
paid through the end of the month.

(ii) In the event no Loan may be prepaid under the terms of the applicable Note,
the remainder of the Release Price, if any, shall be held by Fannie Mae (or its
appointed collateral agent) in an interest-bearing account designated by Fannie
Mae for the benefit of the applicable Collateral Pool Borrower (provided that
Fannie Mae shall not guaranty any rate of interest to such Borrower) as
substitute Collateral (collectively, with any interest thereon, “Substitute Cash
Collateral”), in accordance with a security agreement (if required by Fannie
Mae) and other documents in form and substance acceptable to Fannie Mae.
Notwithstanding the foregoing, the release of the Release Mortgaged Property may
not be approved unless the aggregate Valuation of all Mortgaged Properties
remaining in such Collateral Pool is greater than Outstanding Loans under such
Collateral Pool. Any Substitute Cash Collateral remaining will be returned to
the applicable Collateral Pool Borrower on the date all Loans made to such
Collateral Pool Borrower are repaid in full, or after an event that brings such
Collateral Pool back into compliance with the Coverage and LTV Tests for such
Collateral Pool.

 

  Section 3.03. Substitutions.

(a) Right to Substitute Collateral. Subject to the terms, conditions and
limitations of Article 3 and Article 4 from time to time, Borrower shall have
the right to obtain the release of one or more Release Mortgaged Properties from
the relevant Collateral Pool (including the Release of a Mortgaged Property that
is simultaneously added to another Collateral Pool) by replacing such Release
Mortgaged Property with one or more Multifamily Residential Properties
(including a Mortgaged Property that has simultaneously been released from
another Collateral Pool) that meet the requirements of this Agreement (the
“Substitute Mortgaged Property”) thereby effecting a “Substitution” of
Collateral. From and after February 22, 2014, no Substitutions shall be
permitted under a Collateral Pool that secures a Variable Loan.

(b) Request. Borrower shall deliver to Fannie Mae a completed and executed
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 Fannie Mae reasonably requests; and (ii) the payment of all
Additional Due Diligence Fees.

(c) Underwriting.

(i) (A) A Collateral Pool Borrower may release one or more Release Mortgaged
Properties from a Collateral Pool and request the addition of one or more
Substitute Mortgaged Properties to such Collateral Pool provided that each
Substitute Mortgaged

 

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Property is in a comparable (or better) market as and of equivalent quality (or
better) to the Release Mortgaged Property, and provided further that after such
Substitution, the applicable Coverage and LTV Tests for the relevant Collateral
Pool are satisfied, and (i) the applicable Debt Service Coverage Ratio with
respect to the relevant Collateral Pool equals or exceeds the Debt Service
Coverage Ratio of the relevant Collateral Pool immediately prior to such
proposed Substitution, and (ii) the Loan to Value Ratio with respect to the
relevant Collateral Pool is equal to or less than the Loan to Value Ratio of the
relevant Collateral Pool immediately prior to such proposed Substitution;
provided that in connection with a Collateral Pool which contains only one
(1) Mortgaged Property, in the event that more than one (1) Substitute Mortgaged
Property is added in replacement of a single Mortgaged Property, each such
Substitute Mortgaged Property shall secure the Loan and shall be
cross-collateralized and cross-defaulted.

(B) In the event that the Coverage and LTV Tests for the applicable Collateral
Pool are not satisfied after the Substitution, but the Aggregate Debt Service
Coverage Ratio of such Collateral Pool immediately after the Substitution is not
less than the higher of (i) the required Aggregate Debt Service Coverage Ratio
as set forth in clause (2)(a) of the definition of Coverage and LTV Tests for
such Collateral Pool in effect on the Closing Date of the proposed Substitution
and (ii) the Debt Service Coverage Ratio of the Collateral Pool immediately
prior to such proposed Substitution, minus 0.05 (for example, if the required
Aggregate Debt Service Coverage as set forth in clause (2)(a) of the definition
of Coverage and LTV Tests for the relevant Collateral Pool on the Closing Date
of the proposed Substitution is 1.1:1.0 and the Debt Service Coverage Ratio of
the relevant Collateral Pool immediately prior to the proposed Substitution is
1.08:1.0, the Aggregate Debt Service Coverage Ratio of such Collateral Pool on
the Closing Date of the proposed Substitution may not be less than 1.05:1.0),
the applicable Collateral Pool Borrower may deposit with Fannie Mae a Shortfall
Deposit pursuant to the terms of Section 3.02(c) of this Agreement in an amount
equal to the Loans Outstanding that are required to be repaid by the applicable
Collateral Pool Borrower so that the applicable Aggregate Debt Service Coverage
as set forth in clause (2)(a) of the definition of Coverage and LTV Tests for
the relevant Collateral Pool will be satisfied. In connection with a
Substitution completed pursuant to this Section 3.03(c)(i)(B), all provisions in
Section 3.02(c)(ii) pertaining to Shortfall Deposits shall apply.

(C) Notwithstanding the foregoing requirements in paragraphs (A) and (B) above
to the contrary, a Collateral Pool Borrower may release one or more Release
Mortgaged Properties from a Collateral Pool and request the addition of one or
more Substitute Mortgaged Properties to such Collateral Pool provided that such
Substitute Mortgaged Property is in a comparable (or better) market as and of
equivalent quality (or better) to the Release Mortgaged Property, and provided
further that in connection with any Collateral Pool with multiple Mortgaged
Properties after such Substitution, that the Aggregate Debt Service Coverage
Ratio of such Collateral Pool is greater than the Aggregate Debt Service
Coverage Ratio of such Collateral Pool prior to the Substitution.

(D) Notwithstanding the foregoing requirements in paragraphs (A) and (B) above
to the contrary, the requirement that the Coverage and LTV Tests or

 

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the Debt Service Coverage Ratio of the Collateral Pool immediately prior to such
proposed Substitution, as applicable, be satisfied (or that the Aggregate Debt
Service Coverage Ratio not be reduced by more than 0.05:1.0 from the required
Aggregate Debt Service Coverage Ratio as set forth in clause (2)(a) of the
definition of Coverage and LTV Tests in effect on the Closing Date of the
proposed Substitution) after the addition of a proposed Substitute Mortgaged
Property may be waived temporarily by Fannie Mae in its sole discretion, if
neither the Aggregate Debt Service Coverage Ratio will be reduced nor the
Aggregate Loan to Value Ratio for such Collateral Pool will be increased as a
result of such proposed Substitution, based on factors that are not in conflict
with Fannie Mae’s Underwriting Requirements, including but not limited to the
then current Valuation of the Mortgaged Properties in such Collateral Pool, the
then current Aggregate Debt Service Coverage Ratio of such Collateral Pool, the
then current Aggregate Loan to Value Ratio or such Collateral Pool, the strength
of the Guarantor, the quality of the market where the proposed Substituted
Mortgaged Property is located, the quality of any proposed additional
Collateral, and the geographic distribution of the Mortgaged Properties in such
Collateral Pool at that time. In connection with a Substitution completed
pursuant to this Section 3.03(c)(i)(D), Borrower shall provide a Shortfall
Deposit and otherwise comply with the provisions of Section 3.02(c)(ii).

(ii) Fannie Mae shall evaluate the proposed Substitute Mortgaged Property in
accordance with the Underwriting Requirements, including an exit analysis
performed by Fannie Mae, and shall make underwriting determinations as to the
Debt Service Coverage Ratio and the Loan to Value Ratio of the proposed
Substitute Mortgaged Property and the Aggregate Debt Service Coverage Ratio and
the Aggregate Loan to Value Ratio for the applicable Collateral Pool on the
basis of the lesser of (A) the acquisition price of the proposed Substitute
Mortgaged Property if purchased by Borrower within twelve (12) months of the
related Substitution Request, and (B) a Valuation made with respect to the
proposed Substitute 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 Substitute
Mortgaged Properties, if Fannie Mae 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 for such
Collateral Pool and Aggregate Debt Service Coverage Ratio for such Collateral
Pool, Fannie Mae 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 Substitute Mortgaged Property to such
Collateral Pool, which determination shall not modify the Coverage and LTV
Tests. Borrower shall promptly provide any information reasonably required by
Fannie Mae to make the determination permitted by the preceding sentence.

(iii) Within (A) in the case of a Collateral Pool with ten (10) or fewer
Mortgaged Properties, thirty (30) days, or (B) in the case of a Collateral Pool
with more than ten (10) Mortgaged Properties, sixty (60) days in each case after
receipt of (1) the Substitution Request and (2) all reports, certificates and
documents required by the Underwriting Requirements, Fannie Mae shall notify
Borrower whether it has determined whether the proposed Substitute Mortgaged
Property meets the conditions for addition set forth in this Agreement. Within
five (5) Business Days after receipt of Fannie Mae’s written consent to the
Substitution Request, Borrower shall notify Fannie Mae in writing whether it
elects to add the

 

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proposed Substitute Mortgaged Property to such Collateral Pool. If Borrower
fails to respond within the period of five (5) Business Days, it shall be
conclusively deemed to have elected not to add the proposed Substitute Mortgaged
Property to such Collateral Pool.

(d) Closing. If, pursuant to this Section 3.03, Fannie Mae determines that the
conditions set forth herein for the Substitution of the proposed Substitute
Mortgaged Property into the applicable Collateral Pool in replacement of the
proposed Release Mortgaged Property, and the applicable Collateral Pool Borrower
timely elects to cause such Substitution to occur and all conditions contained
in this Section 3.03 and the applicable sections of Article 4, to the extent
Fannie Mae determines such Sections are applicable, are satisfied, then the
proposed Substitute Mortgaged Property shall be substituted into such Collateral
Pool in replacement of the proposed Release Mortgaged Property, at a closing to
be held at offices designated by Fannie Mae and reasonably acceptable to the
applicable Collateral Pool Borrower on a Closing Date proposed by such Borrower
and approved by Fannie Mae, 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 Fannie Mae’s receipt of the applicable
Collateral Pool Borrower’s election (or on such other date to which the
applicable Collateral Pool Borrower and Fannie Mae may agree); or

(ii) if the Substitution of a proposed Substitute Mortgaged Property is to occur
subsequent to the release of the Release Mortgaged Property, within ninety
(90) days after the release of the Release Mortgaged Property (the “Property
Delivery Deadline”), provided that such Property Delivery Deadline may be
extended by one (1) additional ninety (90) day period in the event the
applicable Collateral Pool Borrower provides evidence to Fannie Mae’s
satisfaction that it is diligently pursuing a 1031 exchange with respect to the
proposed Substitute Mortgaged Property in accordance with the terms of this
Section 3.03(d), provided that, on a case by case basis, Fannie Mae may consent
in its sole discretion to extend the Property Delivery Deadline by one
(1) additional ninety-five (95) day period (for a total of one hundred
eighty-five (185, or such later date as may apply in the event of a
“Presidentially Declared Disaster” pursuant to Section 17 or Revenue Procedure
2007-56) days if the applicable Collateral Pool Borrower is diligently pursuing
the acquisition of a proposed Substitute Mortgaged Property that is not in
connection with a 1031 exchange.

(e) Substitution Deposit.

(i) The Deposit. If the addition of a proposed Substitute Mortgaged Property is
to occur subsequent to the release of the Release Mortgaged Property pursuant to
Section 3.03(d), at the Closing Date of the release of the Release Mortgaged
Property, Borrower (or in the case of a Collateral Pool with only one
(1) Mortgaged Property prior to the release, Guarantor) shall deposit with
Fannie Mae the “Substitution Deposit” described in Section 3.03(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 4.08 of this Agreement, having a face amount equal to the
Substitution Deposit (or such lesser amount that has been deposited in cash). In
the event the Release Mortgaged Property is intended to be sold as part of a
like-kind exchange permitted under Section 1031 of the Internal

 

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Revenue Code, such Substitution Deposit shall be held by a qualified
intermediary, provided such qualified intermediary enters into documents
reasonably required by Fannie Mae assigning such Substitution Deposit to Fannie
Mae, and providing that such qualified intermediary shall distribute the
Substitution Deposit in accordance with this Agreement. In the case of a
Collateral Pool with only one (1) Mortgaged Property prior to the release, if
the relevant Borrower is not able to remain as the obligor on the Note
evidencing the related Loan, the relevant Borrower shall provide a replacement
Borrower acceptable to Fannie Mae, which replacement Borrower shall join into
the Note until the earlier of (A) such time that the Substitute Mortgaged
Property is added to the Collateral Pool and the Additional Borrower owning such
Substitute Mortgaged Property has joined into the Note and other related
Collateral Pool Loan Documents, and (B) the date the Note is paid in full
together with all prepayment premiums due thereunder.

(ii) Substitution Deposit Amount. The “Substitution Deposit” for each proposed
Substitution shall be an amount equal to, for a Fixed Loan, the Release Price
relating to such proposed Release Mortgaged Property; provided that in the event
that the applicable Collateral Pool shall contain only one (1) Mortgaged
Property after the completion of the Substitution, the Substitution Deposit
shall be the sum of (A) all Outstanding Loans for such Collateral Pool, plus
(B) any and all of the yield maintenance or prepayment premium for a Fixed Loan
through the end of the month in which the Property Delivery Deadline occurs as
if the Fixed Loan were to be prepaid in such month, plus (C) interest on the
Fixed Loan through the end of the month in which the Property Delivery Deadline
occurs.

(iii) Continued Payments on Outstanding Notes. Such Collateral Pool 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.

(iv) 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 3.03(d)(ii), then:

(A) such Collateral Pool Borrower shall have irrevocably waived its right to
substitute such Release Mortgaged Property with a proposed Substitute Mortgaged
Property, and the release of the Release Mortgaged Property shall be deemed to
require a prepayment (or partial prepayment) of the portion of the Note equal to
the Release Price relating to the Release Mortgaged Property, together with all
yield maintenance, fee maintenance or prepayment premium then due in connection
with such payment; and

(B) the applicable Collateral Pool Borrower shall comply with the requirements
set forth in Section 3.02(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 3.02(d) and the Letter of Credit, if applicable, delivered by
such Borrower pursuant to Section 3.03(e) and Section 4.08 of this Agreement
shall be returned to Borrower. However, if such Borrower fails to timely pay the
Release Price, Fannie Mae may draw upon the Substitution Deposit in satisfaction
of such obligation.

 

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(v) Substitution Deposit Disbursement. At closing of the Substitution, Fannie
Mae shall disburse the Substitution Deposit (including any interest accrued on
such Substitution Deposit) directly to the applicable Collateral Pool 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 the applicable Collateral Pool
Borrower adds a Substitute Mortgaged Property to such Collateral Pool prior to
the Property Delivery Deadline but the addition of such Substitute Mortgaged
Property has not in and of itself satisfied the requirements to close the
Substitution, the Substitution Deposit shall be reduced by the Allocable Loan
Amount of such Substitute Mortgaged Property as determined by Fannie Mae, and
such reduction in the Substitution Deposit shall be returned to the applicable
Collateral Pool Borrower, or in the case of a Letter of Credit, such Letter of
Credit shall be reduced by such reduction in the Substitution Deposit.

(f) Conditions Precedent to Substitutions. The obligation of Fannie Mae to make
a requested Substitution is subject to Fannie Mae’s determination that each of
the conditions precedent set forth in Article 4 of this Agreement have been
satisfied.

ARTICLE 4

CONDITIONS PRECEDENT TO ALL REQUESTS

 

  Section 4.01. Conditions Applicable to All Requests.

The obligation of Fannie Mae to close the transaction requested in a Request by
a Collateral Pool Borrower shall be subject to Fannie Mae’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 the applicable Collateral Pool Borrower
of Fannie Mae’s and Servicer’s reasonable third-party out-of-pocket fees and
expenses payable (without duplication) in accordance with this Agreement,
including, but not limited to, the legal fees and expenses described in
Section 8.04.

(b) No Material Adverse Effect. There has been no Material Adverse Effect on the
financial condition, business or prospects of the applicable Collateral Pool
Borrower or Guarantor or in the physical condition, operating performance or
value of any of the Mortgaged Properties in such Collateral Pool since the date
of the most recent Compliance Certificate.

(c) No Default. There shall have been no monetary or material non-monetary Event
of Default (as determined in Fannie Mae’s sole and absolute discretion) under
such Collateral Pool which has not been cured to the satisfaction of Fannie Mae,
provided however, that nothing contained in this section shall be construed to
require Fannie Mae to accept any cure, or grant any cure period not otherwise
provided for in the Loan Documents under which such Event of Default may arise,
and there shall exist no Event of Default or Potential Event of Default with
respect to such Collateral Pool on the Closing Date for the Request and, after
giving

 

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effect to the transaction requested in the Request, no Event of Default or
Potential Event of Default with respect to such Collateral Pool shall have
occurred which has not been cured to the satisfaction of Fannie Mae, provided
however, that nothing contained in this section shall be construed to require
Fannie Mae to accept any cure, or grant any cure period not otherwise provided
for in the Loan Documents under which such Event of Default may arise.

(d) No Insolvency. Receipt by Fannie Mae on the Closing Date for the Request of
evidence satisfactory to Fannie Mae that none of the applicable Collateral Pool
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, or,
after giving effect to such transactions, will be left with an unreasonably
small amount of 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) Accuracy of Information. No information, statement or report furnished in
writing to Fannie Mae by the applicable Collateral Pool Borrower in connection
with this Agreement or any other Loan Document with respect to such Collateral
Pool or in connection with the consummation of the transactions contemplated
hereby contains any statement which is incorrect in any material respect.

(f) Representations and Warranties. All representations and warranties made by
the applicable Collateral Pool Borrower and Guarantor in the Loan Documents and
the Guaranty shall be true and correct in all material respects on the Closing
Date for the Request (except to the extent any representation or warranty is
untrue or incorrect other than as a result of an act or omission that is a
breach of this Agreement) 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; provided, however, that in the case of any Request occurring after
the Effective Date, the date-down of such representations and warranties shall
exclude Article 9 (financing information) in the Certificate of Borrower related
to such Collateral Pool and any representation or warranty contained in any of
the other Loan Documents and the Guaranty that is solely related to an earlier
date. On the Closing Date of any Request, the applicable representations and
warranties as referred to in this Section 4.01(f) shall be deemed remade by the
applicable Collateral Pool Borrower.

(g) No Condemnation or Casualty. There shall not be pending or threatened any
condemnation or other taking, whether direct or indirect, against any Mortgaged
Property (other than a Release Mortgaged Property) in the applicable Collateral
Pool and there shall not have occurred any casualty to any improvements located
on the Mortgaged Property (other than a Release Mortgaged Property) in the
applicable Collateral Pool, which condemnation or casualty would have, or
reasonably may be expected to have, a Material Adverse Effect on the Mortgaged
Properties (other than the Release Mortgaged Property) in the applicable
Collateral Pool taken as a whole.

 

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

(i) Fully executed original copies of each Loan Document for such Collateral
Pool required to be executed in connection with the Request, duly executed and
delivered by the parties thereto (other than Fannie Mae), each of which shall be
in full force and effect;

(ii) Other than in connection with a Release Request, a Certificate of Borrower;

(iii) A Compliance Certificate;

(iv) An Organizational Certificate;

(v) Such other documents, instruments, approvals (and, if requested by Fannie
Mae, certified duplicates of executed copies thereof) and opinions as Fannie Mae
may reasonably request; and

(vi) Other than in connection with a Release Request, a Confirmation of
Guaranty.

(i) Covenants. There is no Potential Event of Default by the applicable
Collateral Pool Borrower or with respect to the applicable Collateral Pool’s
Loan.

 

  Section 4.02. Conditions Precedent to Initial Closing.

The obligation of Fannie Mae to enter into this Agreement is subject to each of
the following conditions precedent:

(a) Reserved.

(b) Delivery of an amendment to each Note, duly executed by the applicable
Collateral Pool Borrowers, reflecting the Loan and the Collateral securing each
Loan;

(c) Delivery of executed Security Instruments or amendments to each existing
Security Instrument affecting the Collateral Pools, as required by Fannie Mae to
make the terms of the Security Instrument for each Mortgaged Property consistent
with the terms of this Agreement, each such Security Instrument or amendment to
be recorded each in the applicable land records;

(d) Reserved;

(e) Reserved;

(f) Receipt by Fannie Mae of all reasonable legal fees and expenses payable by
the applicable Collateral Pool Borrower in connection with this Agreement;

 

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

(h) The applicable Collateral Pool 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 effect of preventing or
hindering performance of the terms and provisions of the Agreement or any other
Loan Documents and the Guaranty for such Collateral Pool, nor are there any
proceedings then in progress or, to its knowledge, contemplated which, if
successful, would lead to the issuance of any such order;

(i) If required by Fannie Mae, receipt by Fannie Mae of a new Title Insurance
Policy, or an endorsement to each Title Insurance Policy, for each Mortgaged
Property, amending the effective date of the Title Insurance Policy to the
Effective Date, showing no additional exceptions to coverage other than the
exceptions shown on the closing date under the Original Agreement (or, if
applicable, the last with respect to which the Title Insurance Policy was
endorsed) and other than Permitted Liens and other exceptions approved by Fannie
Mae, together with any reinsurance agreements required by Fannie Mae.

 

  Section 4.03. Conditions Precedent to Extension.

The obligation of Fannie Mae to consent to an Extension is subject to Fannie
Mae’s determination that each of the following conditions precedent has been
satisfied:

(a) The requirements of Section 1.05 (to the extent applicable) or Section 1.06,
as applicable, will be satisfied;

(b) Delivery of a Variable Loan Note or a Fixed Loan Note, or an amendment to
the applicable Note, duly executed by the applicable Collateral Pool Borrower,
reflecting all of the terms of the Extension;

(c) If required by Fannie Mae, delivery of executed amendments to each Security
Instrument affecting the applicable Collateral Pool required by Fannie Mae to
reflect the extension of maturity date and to be recorded each in the applicable
land records;

(d) If required by Fannie Mae, delivery by the applicable Collateral Pool
Borrower to Fannie Mae of the Rate Form for the applicable Loan;

(e) Receipt by Fannie Mae of all reasonable legal fees and expenses payable by
the applicable Collateral Pool Borrower in connection with the Extension;

(f) 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
Extension;

(g) The applicable Collateral Pool 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 effect of preventing or
hindering performance of the terms and provisions of the Agreement or any other
Loan Documents and the Guaranty for such Collateral Pool, nor are there any
proceedings then in progress or, to its knowledge, contemplated which, if
successful, would lead to the issuance of any such order; and

(h) If required by Fannie Mae, receipt by Fannie Mae of a new Title Insurance
Policy (if an endorsement is not available) or an endorsement to each Title
Insurance Policy for each Mortgaged Property in the applicable Collateral Pool,
amending the effective date of the Title Insurance Policy to the Closing Date,
showing no additional exceptions to coverage other than the exceptions shown on
the Effective Date (or, if applicable, the last Closing Date with respect to
which the Title Insurance Policy was endorsed) and other than Permitted Liens
and other exceptions approved by Fannie Mae, together with any reinsurance
agreements required by Fannie Mae.

 

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  Section 4.04. Conditions Precedent to Release of Property from the Collateral
Pool.

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

(a) The requirements of Section 3.02(c), as applicable, will be satisfied;

(b) Receipt by Fannie Mae on the Closing Date of the Re-Underwriting Fee;

(c) Receipt by Fannie Mae on the Closing Date of the Release Price and any other
amounts due under the terms of Section 3.02;

(d) Receipt by Fannie Mae on the Closing Date of the Release Fee;

(e) Reserved;

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

(g) If required by Fannie Mae, amendments to the Notes and the Security
Instruments, reflecting the release of the Release Mortgaged Property from the
applicable Collateral Pool and, as to any Security Instrument so amended, the
receipt by Fannie Mae 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 Fannie Mae determines the Release Mortgaged Property to be one (1) phase
of a project, and one (1) or more other phases of the project are Mortgaged
Properties which will remain in such Collateral Pool (“Remaining Mortgaged
Properties”), Fannie Mae must 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 in such Collateral Pool
and whether any cross use agreements or easements are necessary. In making this
determination, Fannie Mae shall evaluate access, utilities,

 

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

(i) Receipt by Fannie Mae of endorsements to the tie-in endorsements of the
Title Insurance Policies, if deemed necessary by Fannie Mae, to reflect the
release. Notwithstanding anything to the contrary herein, no release of any
Mortgaged Property in a Collateral Pool shall be made unless the applicable
Collateral Pool Borrower has provided title insurance to Fannie Mae in respect
of each of the Remaining Mortgaged Properties in such Collateral Pool in an
amount equal to (i) one hundred ten percent (110%) of the Initial Valuation of
such Mortgaged Properties (taking into account the title insurance coverage
provided by “tie-in” endorsements, if available) and, (ii) in the case of the
Mortgaged Properties located in states where tie-in endorsements are not
available, one hundred ten percent (110%) of the Valuation of such Mortgaged
Properties;

(j) Receipt by Fannie Mae on the Closing Date of a Confirmation of Obligations,
dated as of the Closing Date, signed by the applicable Collateral Pool Borrower
and Guarantor, pursuant to which such Borrower and Guarantor confirm their
obligations under the Loan Documents and the Guaranty to which they are a party;
and

(k) Receipt by Fannie Mae of all reasonable legal fees and expenses payable by
the applicable Collateral Pool Borrower in connection with the Release Request.

 

  Section 4.05. Conditions Precedent to Substitution of a Substitute Mortgaged
Property to the Collateral Pool.

Each Substitution is subject to Fannie Mae’s determination that each of the
following conditions precedent has been satisfied:

(a) The Underwriting Requirements will be satisfied with respect to the
Substitute Mortgaged Property;

(b) The requirements of Section 3.03(c), as applicable, will be satisfied;

(c) Receipt by Fannie Mae of the Substitution Fee;

(d) Receipt by Fannie Mae of all reasonable legal fees and expenses payable by
the applicable Collateral Pool Borrower in connection with the Substitution
Request;

(e) Receipt by Fannie Mae of the Re-Underwriting Fee;

(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 for such Collateral Pool required by
Fannie Mae, 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 reasonably satisfactory to Fannie
Mae and in form proper for recordation, as may be necessary in the reasonable
opinion of Fannie Mae to perfect

 

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the Lien created by the applicable additional Security Instrument, and any other
Substitute Loan Document for such Collateral Pool creating a Lien in favor of
Fannie Mae, and the payment of all taxes, fees and other charges payable in
connection with such execution, delivery, recording and filing;

(g) If required by Fannie Mae, amendments to the Notes and the Security
Instruments, reflecting the addition of any Additional Borrower and/or the
Substitute Mortgaged Property to such Collateral Pool and, as to any Security
Instrument so amended, the receipt by Fannie Mae 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

(h) If the Title Insurance Policy for the Substitute Mortgaged Property contains
a tie-in endorsement, an endorsement to each other Title Insurance Policy for
the Mortgaged Properties in the same Collateral Pool containing a tie-in
endorsement, adding a reference to the Substitute Mortgaged Property.

 

  Section 4.06. Delivery of Opinion Relating to Request for Extension or
Substitution Request.

With respect to the closing of a request for an Extension or a Substitution
Request, it shall be a condition precedent that Fannie Mae receives each of the
following, each dated as of the Closing Date for the Request, in form and
substance satisfactory to Fannie Mae in all respects, opinions of counsel
(including local counsel, as applicable) to the applicable Collateral Pool
Borrower and Guarantor, as to the due organization and qualification of the
applicable Collateral Pool Borrower and Guarantor, the due authorization,
execution, delivery and enforceability of each Loan Document for such Collateral
Pool executed in connection with the Request and such other matters as Fannie
Mae may reasonably require, each dated as of the Closing Date for the Request,
in form and substance satisfactory to Fannie Mae in all respects.

 

  Section 4.07. Delivery of Property-Related Documents.

With respect to a Substitute Mortgaged Property, it shall be a condition
precedent that Fannie Mae receive from the applicable Collateral Pool Borrower
each of the documents and reports required by Fannie Mae pursuant to the
Underwriting Requirements in connection with the pledge of such Mortgaged
Property and, each of the following, each dated (where possible) as of the
Closing Date for a Substitute Mortgaged Property, in form and substance
satisfactory to Fannie Mae 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 such commitment.

(b) An ACCORD Certificate (or other evidence reasonably satisfactory to Fannie
Mae) that all insurance required for the Mortgaged Property is in effect.

(c) Reserved.

(d) Evidence reasonably satisfactory to Fannie Mae of compliance of the
Mortgaged Property with Property Laws.

 

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(e) An Appraisal of the Mortgaged Property.

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

(g) A Completion/Repair and Security Agreement, if required by Fannie Mae,
together with required escrows, on the standard form required by Fannie Mae.

(h) An Assignment of Management Agreement, on the standard form required by
Fannie Mae.

(i) An Assignment of Leases and Rents, if Fannie Mae 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) A Certificate of Borrower.

(k) If applicable, a fully executed Master Lease and an estoppel certificate and
subordination agreement with respect to each Master Lease, each in form
previously approved by Fannie Mae.

(l) If applicable, a fully executed ground lease and an estoppel certificate
with respect to each ground lease, each in form and substance acceptable to
Fannie Mae.

(m) Copies of each commercial lease affecting a Mortgaged Property and, if
required by Fannie Mae, a tenant estoppel certificate and subordination,
non-disturbance and attornment agreement, each in form and substance
satisfactory to Fannie Mae.

(n) Copies of homeowners associations, easement, declarations and similar
agreements affecting any Mortgaged Property and, if required by Fannie Mae, an
estoppel certificate with respect to such agreements in form and substance
satisfactory to Fannie Mae.

 

  Section 4.08. Conditions Precedent to Letters of Credit.

The right or requirement of a Collateral Pool Borrower to provide a Letter of
Credit in connection with this Agreement is subject to Fannie Mae’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 Fannie Mae with a Letter of Credit pursuant to this Agreement, the
Letter of Credit shall be in form and substance satisfactory to Fannie Mae and
Fannie Mae 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 at least until the Property Delivery Deadline).

 

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(b) Draws Under Letter of Credit. Fannie Mae shall have the right in its sole
discretion to draw monies under the Letter of Credit:

(i) upon the occurrence of an Event of Default under such Collateral Pool;

(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 Property Delivery Deadline)
or such Collateral Pool Borrower has not replaced the Letter of Credit with
substitute cash collateral in the amount required by Fannie Mae; or

(iii) upon the downgrading of the ratings of the long-term or short-term debt
obligations of the Issuer below the level required by the Rating Requirements;
provided that Borrower shall have ten (10) Business Days after notice of such
downgrading to deliver to Fannie Mae either (A) an acceptable replacement Letter
of Credit or (B) substitute cash collateral in the amount required by Fannie
Mae.

(c) Deposit to Cash Collateral Account. If Fannie Mae draws under the Letter of
Credit pursuant to Section 4.08(b)(ii) or Section 4.08(b)(iii) above, Fannie Mae
shall deposit such draw monies into the Cash Collateral Account provided any
interest thereon shall inure to the benefit of Borrower.

(d) Default Draws. If Fannie Mae draws under the Letter of Credit pursuant to
Section 4.08(b)(i) above, Fannie Mae may in its sole discretion use monies drawn
under the Letter of Credit for any of the following purposes:

(i) to pay any amounts required to be paid by the applicable Collateral Pool
Borrower under the Loan Documents (including, without limitation, any amounts
required to be paid to Fannie Mae under this Agreement);

(ii) to (on such Collateral Pool Borrower’s behalf, or on its own behalf if
Fannie Mae becomes the owner of the Mortgaged Property) pre-pay any Note;

(iii) to make repairs required to address emergency or life and safety
conditions to any Mortgaged Property in such Collateral Pool; 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
Collateral Pool Borrower shall cause the Issuer’s counsel to deliver a legal
opinion in a customary form satisfactory to Fannie Mae.

(f) Any Letter of Credit delivered to Fannie Mae shall be a clean, irrevocable
Letter of Credit, naming Fannie Mae as beneficiary. Borrower agrees that the
Letter of Credit provides additional collateral for the applicable Note.

 

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ARTICLE 5

REPRESENTATIONS AND WARRANTIES

 

  Section 5.01. Representations and Warranties of Borrower.

The representations and warranties of each Borrower and Guarantor are contained
in the Certificates of Borrower.

 

  Section 5.02. Representations and Warranties of Fannie Mae.

Fannie Mae hereby represents and warrants to each Borrower as follows:

(a) Due Organization. Fannie Mae is a corporation duly organized and validly
existing under the Federal National Mortgage Association Charter Act, as
amended, 12 U.S.C. §1716 et seq.

(b) Power and Authority. Fannie Mae 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 Fannie Mae of this
Agreement, and the consummation by it of the transactions contemplated thereby,
and the performance by it of its obligations thereunder, have been duly and
validly authorized by all necessary action and proceedings by it or on its
behalf.

ARTICLE 6

AFFIRMATIVE COVENANTS OF BORROWER

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

 

  Section 6.01. Compliance with Agreements.

Each 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 6.02. 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. Each Borrower Party
shall continue to be duly qualified to do business in each jurisdiction in which
such qualification is necessary to the conduct of its business and where the
failure to be so qualified would adversely affect the validity of, the
enforceability of, or the ability to perform, its obligations under this
Agreement or any other Loan Document to which it is a party or by which it is
bound.

 

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  Section 6.03. Financial Statements; Accountants’ Reports; Other Information.

Borrower shall keep and maintain at all times (i) complete and accurate books of
accounts and records in sufficient detail to correctly reflect (x) all of
Borrower’s financial transactions and assets and (y) the results of the
operation of each Mortgaged Property and (ii) 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, but excluding bills to tenants for their share of utilities). In
addition, Borrower shall furnish, or cause to be furnished, to Servicer, and the
information set forth below in subclauses (a), (g), (i) and (o) to Fannie Mae
and all other information to Fannie Mae upon Fannie Mae’s request:

(a) Annual Financial Statements. As soon as available, and in any event within
one hundred and twenty (120) days after the close of each of Borrower’s fiscal
years during the term of this Agreement, its statement of operation 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 on a modified cash basis (i.e., accrual of revenue on a quarterly
basis and taxes and payroll on a monthly basis), and certified by the chief
financial officer or chief accounting officer or a vice-president in the
accounting or finance divisions of EQR to the effect that such financial
statements have been prepared (with appropriate accrual adjustments) 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. Together with each delivery of Borrower’s annual
financial statements required under the preceding sentence, Borrower shall
deliver or cause to be delivered, the audited financial statements of ERPOP and
EQR (including their respective balance sheets, and statements of operation) for
such fiscal year, prepared in accordance with GAAP, consistently applied, and
accompanied by a certificate of EQR’s independent certified public accountants
to the effect that such financial statements have been prepared on an accrual
accounting basis 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; provided,
however, that the ERPOP and EQR shall not be obligated to deliver any of the
financial statements or opinions described in this paragraph (i) for any
specified year if EQR has delivered to Fannie Mae its Form 10-K for the
specified year pursuant to Section 6.03(i) and the Form 10-K contains the
financial statements and opinions requested in this paragraph; and (ii) a
Certificate in the form of Exhibit I attached hereto.

(b) Quarterly Financial Statements. As soon as available, and in any event
within sixty (60) days after each of the first three fiscal quarters of each
fiscal year during the term of this Agreement, (a) EQR’s unaudited balance sheet
as of the end of such fiscal quarter and its unaudited statement of income and
retained earnings for the portion of the fiscal year ended with the last day of
such quarter, all in reasonable detail and stating in comparative form the
respective figures for the corresponding date and period in the previous fiscal
year, accompanied by a certificate of the chief financial officer or chief
accounting officer or a vice-president

 

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in the accounting or finance divisions of EQR to the effect that such financial
statements have been prepared on an accrual accounting basis in accordance with
GAAP consistently applied, and that such financial statements fairly present the
results of its operations and financial condition for the periods and dates
indicated subject to year-end adjustments in accordance with GAAP and (b) a
certificate in the form of Exhibit I attached hereto.

(c) Monthly Property Statements. Upon Fannie Mae’s request, on a monthly basis
within thirty (30) days of the last day of the prior month, a statement of
income and expenses of each Mortgaged Property accompanied by a certificate of
the chief financial officer or chief accounting officer or a vice-president in
the accounting or finance divisions of EQR to the effect that each such
statement of income and expenses fairly, accurately and completely presents the
operations of each such Mortgaged Property for the period indicated on a
modified cash accounting basis in accordance with customary real estate
management accounting practices.

(d) Annual Property Statements. On an annual basis within thirty (30) days of
the end of the fiscal year, an annual statement of income and expenses of each
Mortgaged Property accompanied by a certificate of the chief financial officer
or chief accounting officer of EQR to the effect that each such statement of
income and expenses fairly, accurately and completely presents the operations of
each such Mortgaged Property for the period indicated on a modified cash
accounting basis in accordance with customary real estate management accounting
practices.

(e) Updated Rent Rolls. Upon Fannie Mae’s request, a current Rent Roll for each
Mortgaged Property, accompanied by a certificate of the chief financial officer
or chief accounting officer or a vice president in the accounting or financial
divisions of EQR to the effect that each such Rent Roll fairly, accurately and
completely presents the information required therein. In addition, upon Fannie
Mae’s request, Borrower shall provide Fannie Mae with any other information
reasonably requested by Fannie Mae or necessary to comply with Fannie Mae’s
regulatory reporting requirements; provided, that Borrower shall not be required
to expend funds or use significant personnel time to obtain such information.

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

(g) Accountants’ Reports; Other Reports. Promptly upon receipt thereof, copies
of any reports or management letters submitted to any EQR Party by its
independent certified public accountants in connection with the examination of
its financial statements made by such accountants (except for reports otherwise
provided pursuant to clause (a) above); provided, however, that Borrower shall
only be required to deliver such reports and management letters to the extent
that they relate to Borrower, any Control Party or any of the Mortgaged
Properties. Promptly upon Fannie Mae’s request therefor, all schedules,
financial statements or other similar reports delivered by Borrower pursuant to
the Loan Documents or otherwise reasonably requested by Fannie Mae with respect
to Borrower’s business affairs or condition (financial or otherwise) or any of
the Mortgaged Properties.

 

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(h) Reserved.

(i) Security Law Reporting Information. Upon Fannie Mae’s request, and so long
as EQR or any other EQR Party is a reporting company under the Securities and
Exchange Act of 1934, promptly upon their becoming available, copies of (a) all
10K’s, 10Q’s, 8K’s, annual reports and proxy statements, and all replacement,
substitute or similar filings or reports required to be filed after the date of
this Agreement by the United States Securities and Exchange Commission or other
Governmental Authority exercising similar functions, and (b) all press releases
and other statements made available generally by any EQR Party or any Subsidiary
of any EQR Party to the public concerning material developments in the business
of such EQR Party or Subsidiary.

(j) Confidentiality of Certain Information. Borrower Parties shall not disclose
any terms, conditions, underwriting requirements or underwriting procedures of
the Credit Facility or any of the Loan Documents and the Guaranty; provided,
however, that such confidential information may be disclosed (A) as required by
law or pursuant to generally accepted accounting procedures, (B) to direct or
indirect owners of any Borrower Party, officers, directors, trustees, employees,
agents, partners, attorneys, accountants, engineers and other consultants of
Borrower Parties (collectively, “Borrower Party Representatives”) who need to
know such information, provided such Persons are instructed to treat such
information confidentially, (C) to any regulatory authority having jurisdiction
over a Borrower Party or any Borrower Party Representative, (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 (1) in compliance with any law, rule,
regulation or order applicable to a Borrower Party or any Borrower Party
Representative, (2) in response to any subpoena or other legal process or
information investigative demand or (3) in connection with any litigation to
which such Borrower Party or any Borrower Party Representative is a party.

(k) Reserved.

(l) Reserved.

(m) Reserved.

(n) Transmission of Financial Statements; Accountants’ Reports; Other
Information. All information required to be provided pursuant to this
Section 6.03 may be submitted through electronic delivery to a secure site that
Fannie Mae can access, and shall be deemed delivered upon such submission;
provided that the burden shall be on Borrower to provide the information
necessary for Fannie Mae to access such secure site.

(o) Bondholder’s Certificate. Promptly after the providing by EQR or any of its
Affiliates of any compliance certificate required under any documents between
EQR or any of its Affiliates and the holders of ERPOP’s public unsecured debt,
such compliance certificate.

(p) Liability of Chief Financial Officer and Chief Accounting Officer for
Certifications. Any certificate or other document executed by the chief
financial officer or chief accounting officer or a vice president in the
accounting or financial divisions of EQR pursuant to this Section or any other
provision of this Agreement or the other Loan Documents and the Guaranty, shall
be deemed to have been given by EQR, in its capacity as the general partner of
ERPOP. Accordingly, in such an event, none of the chief financial officer, chief
accounting officer, any such vice president, or EQR shall be personally liable
for any misrepresentation or omission contained in such certification or
document, or be otherwise personally liable in connection with such certificate
or document, but Borrower shall be liable for any misrepresentation, omission or
breach of the statements contained in the certificate or document.

 

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  Section 6.04. Access to Records; Discussions With Officers and Accountants

Upon Fannie Mae’s request and to the extent permitted by law and in addition to
the applicable requirements of the Security Instrument, Borrower shall permit
Fannie Mae:

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

(b) to discuss Borrower’s affairs, finances and accounts with any of Borrower’s
officers, partners and employees, provided that the chief financial officer or
chief accounting officer of EQR has been given the opportunity by Fannie Mae to
be a party to such discussions;

(c) to discuss Borrower’s affairs, finances and accounts with its independent
public accountants, provided that either the chief financial officer or chief
accounting officer of EQR has been given the opportunity by Fannie Mae to be a
party to such discussions;

(d) to discuss, with the chief financial officer and the other executive
officers of EQR, (1) EQR’s strategic business plan for the then current and the
then succeeding two fiscal years; (2) EQR’s annual budget (including capital
expenditure budgets and a review of the performance and projections for each
Mortgaged Property); and (3) EQR’s financial projections for the then current
and the then succeeding two fiscal years and to inspect any of the foregoing
that Borrower maintains in writing;

(e) to discuss, with the chief financial officer and the other executive
officers of EQR, EQR’s short and long range plans, including its plans for
operations, mergers, acquisitions and management, and to inspect any supporting
financial projections and schedules; and

(f) to receive any other information that Fannie Mae reasonably deems necessary
or relevant in connection with the Loan, any Loan Document or the Obligations.

Notwithstanding the foregoing, prior to an Event of Default or Potential Event
of Default, all inspections shall be conducted at reasonable times during normal
business hours. Notwithstanding the foregoing or any other provision of the Loan
Documents and the Guaranty, Borrower shall not be required to discuss with
Fannie Mae, or make information available to

 

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Fannie Mae regarding, any matters described in paragraphs (d) and (e) to the
extent that such matters are subject to a confidentiality agreement with a
Person that is not an Affiliate of Borrower.

Fannie Mae agrees to treat all information received by Fannie Mae (i) under
Sections 6.03(g), 6.04(d), 6.04(e) and 6.28 as confidential and (ii) which
Borrower requests in writing to the persons at Fannie Mae who receive any
information regarding Borrower, ERPOP or EQR that such information be treated as
confidential; 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 Fannie Mae, or its successors or
assigns, who need to know such information, provided such Persons are instructed
to treat such information confidentially, (C) by Fannie Mae to any successor or
assign of such Borrower Party, (D) to any federal or state regulatory authority
having jurisdiction over Fannie Mae, or its successors or assigns, (E) to any
other Person to which such delivery or disclosure may be necessary or
appropriate (w) in compliance with any law, rule, regulation or order applicable
to Fannie Mae, or its successors or assigns, (x) in response to any subpoena or
other legal process or information investigative demand, (y) in connection with
any litigation to which Fannie Mae, or its successors or assigns, is a party or
(z) solely in relation to confidential information described in subclause (i) of
the first sentence in this paragraph, in connection with any foreclosure,
deed-in-lieu of foreclosure or comparable conversion or any work-out or
restructuring of the Loan and this Agreement. Borrower agrees that information
subject to this confidentiality agreement does not include information which
(i) was publicly known, or otherwise known to Fannie Mae, or its successors or
assigns, at the time of disclosure, (ii) subsequently becomes publicly known
through no act of or omission by Fannie Mae, or its successors or assigns, other
than through disclosure by Borrower or by any other Person in violation of this
or any other confidentiality arrangement and Fannie Mae, or its successors or
assigns, has knowledge of such violation; provided, however, that in the event
Fannie Mae, or its successors or assigns, discloses confidential information to
any Borrower Party, such disclosing Borrower Party shall reasonably endeavor to
notify Borrower thereof as soon as possible after such disclosure has been made
and Borrower shall be afforded an opportunity to seek protective orders, or such
other confidential treatment of such disclosed information as Borrower may deem
reasonable.

 

  Section 6.05. Certificate of Compliance.

Borrower shall deliver to Fannie Mae concurrently with the delivery of the
financial statements and/or reports required to be delivered pursuant to
Sections 6.03(a) and 6.03(b) above a certificate signed by the chief financial
officer or chief accounting officer of EQR stating that, to the best of the
knowledge of the chief financial officer or chief accounting officer of EQR
executing such certificate following reasonable inquiry, no Event of Default or
Potential Event of Default has occurred, or if an Event of Default or Potential
Event of Default has occurred, specifying the nature thereof in reasonable
detail and the action which Borrower is taking or proposes to take with respect
thereto.

 

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  Section 6.06. Maintain Licenses, Permits, Etc.

Each 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.

 

  Section 6.07. Inform Fannie Mae of Material Events.

Borrower shall promptly inform Fannie Mae in writing of any of the following
(and shall deliver to Fannie Mae copies of any related written communications,
complaints, orders, judgments and other documents relating to the following) of
which Borrower has or obtains 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 (A) would
have a Material Adverse Effect on Borrower or any EQR Party, or (B) would have a
Material Adverse Impact;

(c) Legal Proceedings. The commencement or written threat of, or amendment to,
any proceedings by or against any EQR Party in any Federal, state or local court
or before any Governmental Authority (including any tax audit), or before any
arbitrator, in which parties adverse to any EQR Party have a reasonable chance
of prevailing and which if adversely determined would have, or at the time of
determination may reasonably be expected to have, (A) a Material Adverse Effect
on any EQR Party, or (B) a Material Adverse Impact and the results of any such
tax audit;

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

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

(f) Environmental Claim. The receipt of notice from any Governmental Authority
or other Person relating to any Environmental Claim involving Borrower or any of
its assets, including the Mortgaged Properties and which represents, in
Borrower’s reasonable judgment, a liability, contingent or otherwise, which
exceeds $100,000 with respect to any Mortgaged Property;

 

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(g) Material Adverse Effects. The occurrence of any act, omission, change or
event which has a Material Adverse Effect on any EQR Party, subsequent to the
date of the most recent audited financial statements of ERPOP or EQR delivered
to Fannie Mae pursuant to Section 6.03;

(h) Accounting Changes. Any material change in Borrower’s accounting policies or
financial reporting practices, unless otherwise disclosed by EQR or ERPOP in a
10-K or other filing;

(i) Trade Creditor Defaults. The failure of Borrower to pay after a final
adjudication any trade liability in excess of $100,000 to any Person.

The notice requirements set forth in subsections (b), (c), (d), (e) and
(g) above shall be deemed satisfied upon the delivery of EQR’s Form 10-K, Form
10-Q or any other public filing relating to and highlighting such matters upon
such delivery.

 

  Section 6.08. Compliance with Applicable Laws.

Each Collateral Pool Borrower shall comply in all material respects with all
Applicable Laws now or hereafter affecting any Mortgaged Property in such
Collateral Pool or any part of any Mortgaged Property in such Collateral Pool or
requiring any alterations, repairs or improvements to any Mortgaged Property in
such Collateral Pool. The applicable Collateral Pool Borrower shall comply with
all written notices from Governmental Authorities.

 

  Section 6.09. Alterations to the Mortgaged Properties.

Except as otherwise provided in the Loan Documents, Owner shall have the right
to undertake any alteration, improvement, demolition, removal, or construction
(collectively, “Alterations”) to any Mortgaged Property without the prior
consent of Fannie Mae; provided, however, that in any case, no such Alterations
shall be made to any Mortgaged Property without the prior written consent of
Fannie Mae if (i) such Alterations would reasonably be expected to adversely
affect the value of such Mortgaged Property or its operation as a Multifamily
Residential Property in substantially the same manner in which it is being
operated on the Effective Date or in relation to any Substitute Mortgaged
Property on the date such property became Collateral, (ii) the construction of
such Alterations 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 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 Alterations will be completed in more than 12 months from the date of
commencement or in the last year of the term of the applicable Collateral Pool
Loan. Notwithstanding the foregoing, Borrower must obtain Fannie Mae’s prior
written consent (which shall not be unreasonably withheld or delayed) to
construct Alterations with respect to the Mortgaged Property costing in excess
of $350,000; provided, however, 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 under this Agreement or by the Loan Documents or repairs or capital
improvements specifically required under any Loan Documents.

 

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  Section 6.10. Loan Document Taxes.

If any tax, assessment or Imposition (other than an income tax, franchise tax or
excise tax imposed on or measured by, the net income or capital (including
branch profits tax) of Fannie Mae (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 and the Guaranty or the obligations secured thereby, the interest
of Fannie Mae in the Mortgaged Properties, or Fannie Mae by reason of or as
holder of the Loan Documents and the Guaranty, the applicable Collateral Pool
Borrower shall pay all such Loan Document Taxes to, for, or on account of Fannie
Mae (or provide funds to Fannie Mae for such payment, as the case may be) as
they become due and payable and shall promptly furnish proof of such payment to
Fannie Mae, as applicable. In the event of passage of any law or regulation
permitting, authorizing or requiring such Loan Document Taxes to be levied,
assessed or charged, which law or regulation in the opinion of counsel to Fannie
Mae may prohibit the applicable Collateral Pool Borrower from paying the Loan
Document Taxes to or for Fannie Mae, such Borrower shall enter into such further
instruments as may be permitted by law to obligate such Borrower to pay such
Loan Document Taxes.

 

  Section 6.11. Further Assurances.

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

 

  Section 6.12. Ownership.

At all times during the Term of this Agreement:

(a) Each Borrower (other than Alban Towers, L.L.C., a District of Columbia
limited liability company) shall be a Delaware limited liability company or
Delaware limited partnership.

(b) The managing or sole member or managing or sole general partner of each
Borrower that is not a Tax Protected Asset Borrower shall be ERPOP or a Delaware
limited liability company, a Delaware limited partnership or a Delaware or
Illinois corporation at least ninety-nine percent (99%) owned (exclusive of
preferred unit interests existing on the Effective Date), directly or
indirectly, by ERPOP, and the day to day operation of each Borrower shall be
controlled, directly or indirectly, by ERPOP (provided, however, that if
Ownership Interests of a Borrower are the subject of a Tax-Free Exchange
Transfer that complies with Section 6.20, such Ownership Interests may be owned
by an EAT until the Outside Transfer Date, subject to the provisions of
Section 6.20 and Section 8(h) of the Guaranty).

(c) (i) A wholly-owned and Controlled direct or indirect subsidiary of ERPOP
shall be the sole general partner of Lexford Partnership, (ii) ERPOP shall
exclusively control the management and decisions of each Person that owns,
directly or indirectly, a Tax Protected Asset Borrower with respect to any
property that is a Mortgaged Property or is otherwise a part of the Collateral;
(iii) ERPOP shall own, directly or indirectly, at least fifty-one percent
(51%) of the Ownership Interests of each Tax Protected Asset Borrower; and
(iv) ERPOP, or a Person that is 100% owned (directly or indirectly) by ERPOP,
shall be entitled to receive substantially all of the distributions of each Tax
Protected Asset Borrower’s profits, capital proceeds and other assets.

 

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  Section 6.13. Limitations on Transfer.

(a) Definitions. The following terms have the respective meanings set forth
below:

“Transfer” (a) as to real property and other assets means a sale, assignment,
pledge, transfer or other disposition (whether voluntary or by operation of law)
of, or the granting or creating of a lien, encumbrance or security interest in,
any estate, rights, title or interest in such real property and/or assets, or
any portion thereof, and (b) as to any Person means (i) a sale, assignment,
pledge, transfer or other disposition of any direct or indirect Ownership
Interest in such Person, or (ii) the issuance or other creation of any new
direct or indirect Ownership Interest in such Person, or (iii) a merger or
consolidation of such Person into another entity or of another entity into such
Person, or (iv) the reconstitution of such Person from one type of entity to
another type of entity.

A “Change of Control” shall mean the earliest to occur of: (a) the date an
Acquiring Person becomes (by acquisition, consolidation, merger or otherwise),
directly or indirectly, the beneficial owner of more than 40% of the total
Voting Equity Capital of EQR then outstanding, or (b) the date on which EQR
shall cease for any reason to be a general partner with sole authority to manage
the day to day business of ERPOP, or (c) the date on which EQR shall cease for
any reason to own, directly or indirectly, 100% of the Ownership Interest in
each Borrower (provided, however, that a Change of Control shall not be deemed
to have occurred if ERPOP does not own, directly or indirectly, 100% of a Tax
Protected Asset Borrower, so long as the requirements of Section 6.12 continue
to be satisfied at all times during the Term of this Agreement with respect to
such Tax Protected Asset Borrower), or (d) the replacement (other than solely by
reason of retirement at age sixty-two or older, death or disability) of more
than 50% (or such lesser percentage as is required for decision-making by the
board of directors or trustees, if applicable) of the members of the board of
directors (or trustees, if applicable) of EQR over a one-year period where such
replacement shall not have been approved by a vote of at least a majority of the
board of directors (or trustees, if applicable) of EQR then still in office who
either were members of such board of directors (or trustees, if applicable) at
the beginning of such one-year period or whose election as members of the board
of directors (or trustees, if applicable) was previously so approved, or (e) the
date on which EQR shall cease to directly or indirectly Control any Borrower.

 

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“Control” (or any variation of such term) of one entity (the “controlled
entity”) by another (the “controlling entity”) means that the controlling entity
has the power and authority, directly or indirectly, to direct or cause the
direction of the management and policies of the controlled entity, by contract
or otherwise.

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

“Security” shall have the same meaning as in Section 2(1) of the Securities Act
of 1933, as amended.

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

(b) Acceleration of the Loan Upon Transfers of a Mortgaged Property or
Significant Interests. Subject to paragraph (c) hereof, Fannie Mae may, at
Fannie Mae’s option, declare an Event of Default if, without Fannie Mae’s prior
written consent, any of the following shall occur:

(i) a Transfer of all or any part of any Mortgaged Property or any interest in
the Mortgaged Property;

(ii) a Transfer of any Ownership Interest in Borrower;

(iii) a Transfer of any Ownership Interest in ERPOP so that immediately after
such Transfer either (a) EQR owns less than 50% of the partnership interests in
ERPOP or (b) 50% or more of the partnership interests in ERPOP are pledged or
otherwise encumbered; or

(iv) a Change of Control.

Fannie Mae shall not be required to demonstrate any actual impairment of its
security or any increased risk of default in order to exercise any of its
remedies with respect to an Event of Default under this Section 6.13.

(c) No Acceleration of the Loan For Transfers Caused By Certain Events.
Notwithstanding the foregoing provisions of this covenant, the occurrence of any
of the following events shall not constitute an Event of Default under this
Agreement, notwithstanding any provision of this Section to the contrary:

(i) a Transfer that occurs by devise, descent, or by operation of law upon the
death of a natural person who is the owner of an indirect Ownership Interest in
Borrower;

 

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(ii) The grant of a leasehold interest in individual dwelling units for a term
of two years or less or the grant of a leasehold interest to a commercial tenant
entered into pursuant to the terms and conditions of the Loan Documents;

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

(iv) The creation of a judgment lien or a mechanic’s or materialmen’s lien
against the Mortgaged Property which is released of record, insured or bonded
over or otherwise remedied to Fannie Mae’s satisfaction, within 30 days of the
date of creation (in the case of a judgment lien) or recordation (in the case of
a mechanic’s or materialmen’s lien);

(v) The grant of an easement, if prior to the granting of the easement Borrower
causes to be submitted to Fannie Mae all information required by Fannie Mae to
evaluate the easement, and if Fannie Mae determines that the easement will not
materially and adversely affect the operation or value of the Mortgaged Property
or Fannie Mae’s interest in the Mortgaged Property and Borrower pays to Fannie
Mae, on demand, all costs and expenses incurred by Fannie Mae in connection with
reviewing Borrower’s request. Fannie Mae shall not unreasonably withhold its
consent to (a) the grant of a utility easement serving the Mortgaged Property to
a publicly operated utility, or (b) the grant of an easement related to
expansion or widening of roadways, provided that such easement is in form and
substance reasonably acceptable to Fannie Mae and does not materially and
adversely affect the access, use or marketability of the Mortgaged Property.
Fannie Mae shall consent to the granting of any easement or the sale of small
portion of the Mortgaged Property where (i) such easement or sale is between
Borrower and an adjacent property owner, utility or local, state or federal
governmental entity; (ii) the granting of such easement or sale does not
materially affect Borrower’s access to the Mortgaged Property or the use of any
easements or amenities which benefit the Mortgaged Property; (iii) the granting
of such easement or sale does not result in the loss of the use of any units;
and (iv) the consideration paid to Borrower (which consideration may be retained
by Borrower as provided in the following sentence) is less than the lesser of
10% of the value of the Mortgaged Property (as determined at loan origination)
or $250,000. So long as no Event of Default exists, Borrower may retain any
compensation received from the easement holder or the land purchaser for its own
accounts (provided such consideration is less than the lesser of 10% of the
value of the Mortgaged Property (as determined at loan origination) or $250,000)
so long as Borrower promptly repairs any damage covered by such easement or
property grant. Fannie Mae shall promptly execute all release deeds and easement
agreements that comply with the foregoing requirements. Borrower shall be
responsible for preparing all such documents and shall pay on demand any
reasonable, out-of-pocket costs incurred by Fannie Mae in its review. Fannie
Mae’s consent also shall not be required for the granting of an easement, or the
entering into of any other use or access agreement (an “Ancillary Service
Agreement”), if: (u) such Ancillary Service Agreement is with a cable
television, communications, internet or other data or information supplier;
(v) such Ancillary Service Agreement contains a subordination to the applicable
Security Instrument in the form attached hereto as Exhibit S, the service
provider under such Ancillary Service Agreement executes and delivers a
subordination, non-disturbance and attornment agreement substantially in the
form

 

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attached hereto as Exhibit S, or such service provider and Fannie Mae execute
and deliver a mutually acceptable subordination, non-disturbance and attornment
agreement (Fannie Mae agrees to negotiate such agreement in good faith and with
reasonable promptness); (w) such Ancillary Service Agreement shall be a
commercially reasonable, arms-length transaction; (x) no material disruption of
income or material reduction in Gross Cash Flow shall occur on any Mortgaged
Property due to the performance and enforcement of such Ancillary Service
Agreement; (y) such Ancillary Service Agreement shall provide that the service
provider shall, upon receipt of a written request from Fannie Mae after the
occurrence of an Event of Default under the Security Agreement, pay all amounts,
if any, payable under the Ancillary Service Agreement to Fannie Mae; and
(z) upon Fannie Mae’s request, Borrower shall deliver to Fannie Mae a
fully-executed copy of any such Ancillary Service Agreement not previously
delivered to Fannie Mae;

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

(vii) The issuance by EQR or ERPOP of additional common stock, limited
partnership interests or other beneficial or ownership interests, convertible
debt, equity and other similar securities, and the subsequent Transfer of such
convertible debt or securities; provided, however, that no Change of Control
occurs as the result of such Transfer, either upon such Transfer or upon the
subsequent conversion to equity of such convertible debt or other securities;

(viii) The merger or consolidation of EQR into another Person (the “Surviving
REIT”) shall not constitute a Change of Control or other Event of Default so
long as (i) no Acquiring Person becomes (by acquisition, consolidation, merger
or otherwise), directly or indirectly, the beneficial owner of more than 40% of
the total Voting Equity Capital of the Surviving REIT then outstanding; (ii) the
Surviving REIT shall be a general partner of ERPOP or the “Surviving Operating
Partnership” (as defined below), as the case may be, with sole authority to
manage the day to day business of ERPOP or the Surviving Operating Partnership,
as the case may be, and (iii) no more than 50% (or such lesser percentage as is
required for decision-making by the board of directors or trustees, if
applicable) of the members of the board of directors or trustees, if applicable,
of the Surviving REIT are different than the members of the board of directors
of EQR on the date which is one year prior to the date on which the merger or
consolidation is consummated (other than changes solely by reason of retirement
at age sixty-two or older, death or disability), where such change shall not
have been approved by a vote of at least a majority of the board of directors
(or trustees, if applicable) of EQR then still in office who were members of
EQR’s board of directors (or trustees, if applicable) at the beginning of such
one-year period or whose election as members of the board of directors (or
trustees, if applicable) was previously so approved; provided, however, that if
the merger or consolidation involves a series of integrated transactions, then
such transactions must be completed within a 90-day period, and, in such case,
compliance with conditions (i) through (iv) shall be measured solely upon the
full consummation of the merger or consolidation, and further provided that such

 

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merger or consolidation does not effect a dissolution of Borrower. If any of the
conditions in clauses (i) through (iv) are not complied with, such merger or
consolidation shall constitute a Change of Control. For purposes of this
Agreement, the Surviving REIT shall be considered EQR from and after the date on
which the merger or consolidation is consummated. The merger or consolidation of
ERPOP into another Person (the “Surviving Operating Partnership”) shall not
constitute a Change of Control or other Event of Default so long as it does not
effect a Change of Control under the provisions of this paragraph (8); or

(ix) A Transfer to the extent it constitutes a Permitted Lien;

(x) A Transfer pursuant to Section 6.13(d) below;

(xi) Any Transfer of direct or indirect interests in Lexford Partnership,
provided that the requirements of Section 6.12(c) remain satisfied at all times
during the Term of this Agreement; or

(xii) Any Transfer by virtue of a Tax-Free Pledge.

 

  Section 6.14. Consent to Prohibited Transfers.

Fannie Mae may, in its sole discretion, consent to a Transfer that would
otherwise violate this Section 6.13 if, prior to the Transfer, the relevant
Borrower Party has satisfied each of the following requirements:

(a) the submission to Fannie Mae of all information required by Fannie Mae to
make the determination required by Section 6.13;

(b) the absence of any Event of Default;

(c) neither transferee nor guarantor is directly or indirectly owned by nor is a
Prohibited Person and each meets all of the eligibility, credit, management and
other standards (including any standards with respect to previous relationships
between Fannie Mae and the transferee and the organization of the transferee)
customarily applied by Fannie Mae at the time of the proposed Transfer to the
approval of borrowers or guarantors, as the case may be, in connection with the
origination or purchase of similar mortgages, deeds of trust or deeds to secure
debt on Multifamily Residential Properties;

(d) if transferor or any other person has obligations under any Loan Documents,
the execution by the transferee or one (1) or more individuals or entities
acceptable to Fannie Mae of an assumption agreement that is acceptable to Fannie
Mae and that, among other things, requires the transferee to perform all
obligations of transferor or such person set forth in such Loan Document, and
may require that the transferee comply with any provisions of this Instrument or
any other Loan Document which previously may have been waived by Fannie Mae;

(e) in the case of a Transfer of direct or indirect Ownership Interests in
Borrower Party, as the case may be, if transferor or any other person has
obligations under any Loan Documents, the execution by the transferee or one
(1) or more individuals or entities

 

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acceptable to Fannie Mae of an assumption agreement that is acceptable to Fannie
Mae and that, among other things, requires the transferee to perform all
obligations of transferor or such person set forth in such Loan Document, and
may require that the transferee comply with any provisions of this Instrument or
any other Loan Document which previously may have been waived by Fannie Mae;

(f) in the event such Transfer of direct or indirect Ownership Interests in
Borrower, IDOT Guarantor or Guarantor results in (1) a Change of Control or
(2) a Transfer of a Mortgaged Property, such Transfer must include all Mortgaged
Properties in a Collateral Pool;

(g) Fannie Mae’s receipt of all of the following:

(i) in the case of a Transfer or assumption of an entire Collateral Pool or
Pools, but not the Transfer or full assumption of the Credit Facility, a
transfer fee equal to one percent (1%) of the Loans Outstanding under such
Collateral Pool or Pools immediately prior to the Transfer, and in all other
cases, a transfer fee equal to 25 basis points (0.25%) of the Loans Outstanding
under this Agreement immediately prior to the Transfer.

(ii) Borrower shall reimburse on demand Fannie Mae for all of Fannie Mae’s
reasonable out-of-pocket costs (including reasonable attorneys’ fees) incurred
in reviewing the Transfer request.

(h) Fannie Mae determines that the Transfer shall not result in a “significant
modification,” as defined under applicable Treasury Regulations, of any Loan
that has been securitized in an MBS.

 

  Section 6.15. Change in Senior Management.

Borrower shall give Fannie Mae notice of any change in the identity of Senior
Management within ten (10) Business Days of the occurrence thereof; provided,
however, that the notice requirements set forth in this Section 6.15 shall be
deemed satisfied to the extent that Borrower has delivered to Fannie Mae a Form
10-K, 10-Q, 8-K or other applicable public filing for ERPOP and/or EQR relating
to and highlighting the applicable change in Senior Management.

 

  Section 6.16. Date-Down Endorsements.

At any time and from time to time, a Fannie Mae may obtain an endorsement to
each Title Insurance Policy containing a Revolving Credit Endorsement, amending
the effective date of the Title Insurance Policy to the date of the title search
performed in connection with the endorsement. The applicable Collateral Pool
Borrower shall pay for the cost and expenses incurred by Fannie Mae to the Title
Company in obtaining such endorsement, provided that, for each Title Insurance
Policy, it shall not be liable to pay for more than one (1) such endorsement in
any consecutive twelve (12) month period (including if such Borrower has paid
for such endorsements in connection with a Substitution or Release).

 

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  Section 6.17. Ownership of Mortgaged Properties.

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

 

  Section 6.18. Change in Property Manager.

Borrower shall give Fannie Mae notice of any change in the identity of the
Property Manager of the Mortgaged Property, and no such change shall be made
without the prior consent of Fannie Mae, which shall not be unreasonably
withheld, conditioned or delayed based on the criteria for approval of Property
Managers as required by Fannie Mae for similar loans anticipated to be purchased
by Fannie Mae. Notwithstanding the foregoing, so long as no Event of Default has
occurred and is continuing, Borrower may change the Property Manager to an
Affiliate of Borrower, or to any wholly-owned subsidiary of EQR, ERPOP, the
Surviving REIT or the Surviving Operating Partnership, without prior consent of
Fannie Mae, provided Borrower gives Fannie Mae prior written notice of such
change. As of the date hereof, Equity Residential Management, L.L.C., a Delaware
limited liability company (“Manager LLC”) is hereby approved as the Property
Manager.

 

  Section 6.19. ADA Litigation.

Borrower acknowledges that that certain lawsuit styled The Equal Rights Center
v. Equity Residential and ERP Operating Limited Partnership (United States
District Court for the District of Maryland, Case No. CCB-06-1060) (the “ADA
Litigation”) identifies various properties, owned by Borrower or other entities
affiliated with EQR, as having potential construction/design violations under
the Fair Housing Act and the Americans with Disabilities Act. Borrower shall
abide by all terms, provisions, requirements and conditions resulting from a
final adjudication, settlement, resolution or other disposition of the ADA
Litigation.

 

  Section 6.20. Tax-Free Exchange Transfers.

(a) Definitions. As used in this Section 6.20:

“Call/Put Option” means the unconditional right of an Ultimate Owner to acquire
all of the Ownership Interests in a Borrower from an EAT, or the unconditional
right of an EAT to sell all of the Ownership Interests in a Borrower to an
Ultimate Owner, at any time from the Effective Date until the Outside Transfer
Date or thereafter.

“EAT” means, individually or collectively, an “exchange accommodation
titleholder” as that term is used in Rev. Proc. 2000-37 and/or an entity that is
wholly-owned by such exchange accommodation title holder and that is disregarded
as an entity separate from such exchange accommodation titleholder for federal
income tax purposes.

“QEA Documents” means, collectively, a qualified exchange accommodation
agreement and any and all other documentation executed in connection with a
proposed tax-free exchange of a Mortgaged Property, or any direct or indirect
interest in a Borrower, after the Effective Date.

 

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“Outside Transfer Date” means the day that is that later of (i) one hundred
eighty five (185) days after the Effective Date or (ii) such later date as may
apply in the event of a “Presidentially Declared Disaster” pursuant to
Section 17 of the Revenue Procedure 2007-56.

“Tax-Free Exchange Transfer” means a one-time Transfer by an EAT to an Ultimate
Owner of all (but not less than all) of the Ownership Interests in a Borrower
for the purpose of completing a so-called “reverse exchange” in accordance with
Rev. Proc. 2000-37 or for the purpose of cancelling a so-called “parking
arrangement” established on the Effective Date to facilitate a so-called
“reverse exchange” in accordance with Rev. Proc. 2000-37.

“Tax-Free Note” means, with respect to each Borrower that is owned by an EAT, a
promissory note issued by such EAT to ERPOP and secured by a Tax-Free Pledge of
the Ownership Interests in such Borrower, which is to be repaid on consummation
of the Tax-Free Exchange Transfer with respect to such Borrower.

“Tax-Free Pledge” means a pledge by an EAT or all of the Ownership Interests in
a Borrower to secure the obligations of the EAT to ERPOP pursuant to the
associated Tax-Free Note.

“Transfer Documentation” means the form of documentation intended to effect the
proposed Tax Free Exchange Transfer, including but not limited to assignments of
Ownership Interests from EAT to Ultimate Owner.

“Ultimate Owner” means, individually or collectively: (a) ERPOP, (b) EQR, or
(c) another entity that is approved by Fannie Mae and that is wholly-owned,
directly or indirectly, by ERPOP and/or EQR, and that has entered into QEA
Documents with an EAT in form and substance approved by Fannie Mae.

(b) EAT Ownership Permitted. Notwithstanding any provision of this Article 6 or
any provision of the Security Instrument to the contrary, the direct ownership
by an EAT of 100% of a Borrower’s Ownership Interests shall not constitute a
Change of Control, so long as:

(i) such EAT has been approved by Fannie Mae and has entered into QEA Documents,
the form and substance of which have been approved by Fannie Mae, with an
Ultimate Owner;

(ii) a Tax-Free Exchange Transfer of such Ownership Interests occurs prior to
the Outside Transfer Date in accordance with the provisions of this
Section 6.20; and

(iii) EQR or a Person that is 100% owned and Controlled by EQR is the lessee
under a lease pursuant to which such lessee is entitled to beneficial ownership
and control over such Borrower’s Mortgaged Property.

 

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(c) Transfer Permitted. Notwithstanding any provision of this Article 6 or any
provision of the Security Instrument to the contrary, a Tax-Free Exchange
Transfer shall not constitute an Event of Default, subject to the following
terms and conditions:

(i) Borrower shall provide Fannie Mae with not fewer than ten (10) days prior
written notice of each proposed Tax-Free Exchange Transfer, which notice must be
accompanied by copies of the form of all Transfer Documentation;

(ii) Borrower shall obtain Fannie Mae’s approval of the form and substance of
all Transfer Documentation;

(iii) At the time of the proposed Tax-Free Exchange Transfer, no Event of
Default or Potential Event of Default shall have occurred or be continuing;

(iv) Borrower shall pay to Fannie Mae the cost of all title searches, title
insurance and recording costs, and all out of pocket costs of Fannie Mae related
to the Tax-Free Exchange Transfer, to the extent required;

(v) Borrower shall reaffirm in writing its obligations under the Note, this
Agreement, the applicable Security Instrument, and the other Loan Documents and
the Guaranty, and shall acknowledge and confirm that each such document remains
in full force and effect, by executing a confirmation of such obligations in
form satisfactory to Fannie Mae simultaneously with the completion of each
Tax-Free Exchange Transfer;

(vi) Borrower shall provide Fannie Mae with confirmation of the termination,
effective simultaneously with each Tax-Free Exchange Transfer, of any lease or
other agreement between EAT and Ultimate Owner with respect to the use,
occupancy or beneficial ownership of the applicable Mortgaged Property;
provided, however, that if such lease provides for automatic termination upon
consummation of the Tax-Free Exchange Transfer of the affected Mortgaged
Property, such confirmation shall not be necessary but Borrower shall deliver to
Fannie Mae promptly upon request such written confirmation or other assurances
from the EAT that such lease has terminated);

(vii) All Tax-Free Exchange Transfers must occur on or prior to the Outside
Transfer Date;

(viii) Borrower, and any general partner of a Borrower that is a limited
partnership, shall at all times be a Single Purpose entity, and the
Organizational Documents of each EAT that holds Ownership Interests in a
Borrower shall not be amended without the prior written consent of Fannie Mae;

(ix) concurrently with the effectiveness of each Tax-Free Exchange Transfer, the
applicable Borrower Organizational Documents shall be amended and restated to
conform to the form of Organizational Documents approved by Fannie Mae as of the
Effective Date for the Borrowers whose Ownership Interests are owned (directly
or indirectly) by Guarantor as of the Effective Date, such amended and restated
Organizational Documents to be in form approved by Fannie Mae prior to the
applicable Tax-Free Exchange Transfer or otherwise reasonable acceptable to
Fannie Mae;

 

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(x) Borrower shall not permit any amendment to the QEA Documents, or the
execution of any new QEA Document, unless the form of such amendment or such new
QEA Document has been approved by Fannie Mae; and

(xi) Borrower shall provide to Fannie Mae fully-executed copies of the Transfer
Documentation not later than two (2) Business Days following completion of the
applicable Tax-Free Exchange Transfer.

 

  Section 6.21. Single Purpose Entity.

Each Borrower shall maintain itself as a Single Purpose entity.

 

  Section 6.22. Non-Residential Leases.

(a) So long as no Event of Default exists under this Agreement or any Security
Instrument, Borrower may (i) renew commercial leases, and (ii) lease or use for
non-residential use (a) any non-residential portion of the Mortgaged Property;
and (b) residential units, not exceeding five (5) of the units of the Mortgaged
Property, for services associated with the use of the Mortgaged Property as a
multifamily property including, without limitation, Borrower may enter into
laundry leases (collectively, “Non-Residential Leases”); provided, that (u) such
Non-Residential Lease contains a subordination to the applicable Security
Interest in form previously approved by Fannie Mae, (v) the lessee under any
Non-Residential Lease that is 5% or more of the gross rental income executes and
delivers a subordination, non-disturbance and attornment agreement substantially
in the form previously approved by Fannie Mae, or such lessee and Fannie Mae
execute and deliver a mutually acceptable subordination, non-disturbance and
attornment agreement (Fannie Mae agrees to negotiate such agreement in good
faith and with reasonable promptness); (w) such Non-Residential Lease shall be a
commercially reasonable, arms-length transaction; (x) no material disruption of
income or material reduction in Gross Revenues shall occur on any Mortgaged
Property due to the performance and enforcement of such Non-Residential Lease;
(y) such Non-Residential Lease shall provide that the lessee shall, upon receipt
of a written request from Fannie Mae after the occurrence of an Event of Default
under the Security Instrument, pay all rents payable under the Non-Residential
Lease to Fannie Mae; and (z) upon Fannie Mae’s request, Borrower shall deliver
to Fannie Mae a fully-executed copy of any such Non-Residential Lease not
previously delivered to Fannie Mae. The rights of Borrower set forth in this
subsection shall be in addition to the rights of Borrower set forth in
Section 6.13(c)(5) above.

(b) Borrower shall use commercially reasonable efforts to obtain and deliver to
Fannie Mae an estoppel certificate with respect to each non-Residential Lease,
each recorded instrument of covenants, conditions and restrictions, and each
ground lease identified on Exhibit Q, and (b) a subordination, non-disturbance
and attornment agreement with respect to each non-Residential Lease identified
on Exhibit Q, each in a form previously approved by Fannie Mae.

 

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  Section 6.23. Reserved.

 

  Section 6.24. Springing Member.

Borrower shall provide written notice to Fannie Mae promptly of any change in a
Borrower’s springing member.

 

  Section 6.25. Reserved.

 

  Section 6.26. Reserved.

 

  Section 6.27. Condemnation.

(a) Borrower shall promptly notify Fannie Mae of any action or proceeding
relating to any condemnation or other taking, or conveyance in lieu thereof, of
all or any part of the Mortgaged Property, whether direct or indirect. Borrower
shall appear and prosecute or defend any action or proceeding relating to any
Condemnation unless during the existence of an Event of Default or otherwise
directed by Fannie Mae in writing. Borrower authorizes Fannie Mae to appear in
Fannie Mae’s name, in any action or proceeding relating to any Condemnation and,
during the existence of an Event of Default or to the extent the damages from
taking, Condemnation or conveyance in lieu exceeds $350,000.00, to commence,
prosecute, settle or compromise any claim in connection with any condemnation;
provided, however, that if no apartment units have been lost due to the taking,
condemnation or conveyance in lieu thereof, the use or operation of the
Mortgaged Property has not been materially altered or impaired, and the award or
payment (net of Borrower’s and Fannie Mae’s costs) does not exceed $350,000.00,
and there is no existing Event of Default, Borrower shall be entitled to retain
such award or payment and apply it to the costs of restoring the Mortgaged
Property (if feasible) and then retain any amount remaining for its own account.
This power of attorney is coupled with an interest and therefore is irrevocable.
However, nothing contained in this Section 6.27 shall require Fannie Mae to
incur any expense or take any action. Except as otherwise set forth herein,
Borrower hereby transfers and assigns to Fannie Mae all right, title and
interest of Borrower in and to any award or payment with respect to (i) any
Condemnation, or any conveyance in lieu of Condemnation, and (ii) any damage to
the Mortgaged Property caused by governmental action that does not result in a
Condemnation.

(b) Except as provided in Section 6.27(a), Fannie Mae may apply such awards or
proceeds, after the deduction of Fannie Mae’s expenses incurred in the
collection of such amounts, to the Restoration (defined below) or repair of the
Mortgaged Property or to the payment of the Indebtedness relating to the
applicable Collateral Pool, with the balance, if any, to Borrower.
Notwithstanding anything to the contrary set forth in this Agreement, the Note,
or any other Loan Document, if (i) no Event of Default exists, (ii) Fannie Mae
determines, in its discretion, that there will be sufficient funds to complete
Restoration (provided that Borrower may pledge cash collateral and/or pledge
Permitted Investments, or may post a Letter of Credit in accordance with the
requirements of subsections (c), (d) and (e) of this Section 6.27 to cover any
deficiency), and (iii) such condemnation does not occur during the last two
(2) years of the term of the Note relating to the applicable Collateral Pool,
Fannie Mae shall permit such proceeds or awards to be used for Restoration.
Unless Fannie Mae otherwise agrees in writing, any

 

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application of any awards or proceeds to the Indebtedness shall not extend or
postpone the due date of any monthly installments referred to in the Note,
Section 7 of the Security Instrument or any Collateral Agreement. Borrower
agrees to execute such further evidence of assignment of any awards or proceeds
as Fannie Mae may require.

(c) Until the earliest of (i) completion of Restoration in accordance with the
terms of this Agreement, or (ii) the date that Fannie Mae fully draws on the
Letter of Credit as permitted by this Agreement, or (iii) the Rating
Requirements are no longer satisfied, Borrower shall renew, amend or replace, as
applicable, the Letter of Credit in accordance with the terms of this Agreement,
to ensure that the Letter of Credit remains in effect, meets the Rating
Requirements, and does not expire or shall provide cash to Fannie Mae in the
amount that would have been required at the time if Borrower had not elected to
furnish the Letter of Credit within 10 days of the Rating Requirements not being
satisfied or at least 15 days prior to the date the Letter of Credit matures or
terminates. Fannie Mae shall return the Letter of Credit, or the proceeds of any
draws on such Letter of Credit (less all amounts which have been applied by
Fannie Mae pursuant to the terms hereof) to Borrower within five (5) business
days after the date on which Fannie Mae releases the lien of the Security
Instrument or, provided, no Events of Default exists at the time, within five
(5) business days after the completion of Restoration in accordance with the
terms hereof, as applicable. Borrower shall, promptly after receipt of notice
from Fannie Mae, deliver to Fannie Mae an amendment or replacement of the Letter
of Credit, if Fannie Mae determines the same is required in order to ensure that
there will be sufficient funds to complete Restoration. In the event Restoration
has not been completed, at least 15 days prior to the expiration date of the
Letter of Credit, Borrower shall either (i) cause the Letter of Credit to be
amended to extend its expiration date, (ii) furnish a replacement Letter of
Credit or (iii) provide cash to Fannie Mae in the amount which would have been
required at the time if Borrower had not elected to furnish the Letter of
Credit.

(d) If Borrower does not provide an amendment to, or replacement of, the Letter
of Credit when required pursuant to paragraph (c) above or provide the amount of
cash referenced in paragraph (c) above, Fannie Mae shall demand or draw the full
amount of the Letter of Credit and hold and apply the proceeds as permitted
hereunder in which case no Event of Default shall be deemed to exist by virtue
of Borrower’s failure to comply with said paragraph (c). If an Event of Default
has occurred and is continuing Fannie Mae may apply the proceeds of the Letter
of Credit pursuant to Section 6.27(e) of this Agreement. Nothing in this
Section 6.27 shall obligate Fannie Mae to apply all or any portion of the
proceeds of the Letter of Credit to cure any default under the Loan Documents or
to reduce the indebtedness evidenced by the Note. No application of proceeds of
the Letter of Credit by Fannie Mae shall be deemed to cure any default.

(e) Provided no Event of Default exists, after Fannie Mae has drawn on the
Letter of Credit, but prior to application of proceeds, Fannie Mae may, but is
not obligated to, permit Borrower to provide a replacement Letter of Credit that
complies with all the requirements of this Section, in which case Fannie Mae
shall return the proceeds of the demand or draw to Borrower, less Fannie Mae’s
reasonable, out-of-pocket costs and expenses (including reasonable,
out-of-pocket attorneys’ fees and expenses). If Fannie Mae draws on the Letter
of Credit and holds the proceeds under this Agreement, such funds shall be held
by Fannie Mae in escrow pursuant to Section 7(b) of the Security Instrument.
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Letter of Credit upon any default under any of the Loan Documents or as
otherwise permitted this Section 6.27, but in any event Fannie Mae shall have no
obligation to make a demand on the a draw on the Letter of Credit or apply the
proceeds of any draw on the Letter of Credit to cure a default under the Loan
Documents. Fannie Mae may hold the Letter of Credit or the proceeds of any
Letter of Credit until the date for return as determined pursuant to subsection
(c) of this Section 6.27, or apply all or any portion of the proceeds as
permitted by this Agreement or any of the Loan Documents and hold any remaining
proceeds until the date for return determined under subsection (c) of this
Section 6.27.

 

  Section 6.28. Insurance.

(a) Borrower shall maintain All Risk property insurance, builder’s risk
coverage, where and when applicable, general boiler and machinery coverage,
business income coverage, workers compensation insurance and commercial general
liability insurance with financially sound and reputable insurance companies or
associations reasonably satisfactory to Fannie Mae pursuant to the Underwriting
and Servicing Requirements and, except as provided below with respect to
Deductibles (“Deductible” shall mean any deductible under any insurance policy
and any self-retention or self-insurance mechanism), in such amounts and
covering such risks (subject to the provisions of subsection (d) below) that are
usually carried by companies engaging in similar businesses and owning similar
properties in the same general areas in which the Borrower and EQR operate. If
any of the Mortgaged Properties are located in an area identified by the Federal
Emergency Management Agency (or any successor to that agency) as an area having
special flood hazards, and if flood insurance is available in that area,
Borrower shall insure such Mortgaged Properties against loss by flood. On an
annual basis, the Borrower will initiate a discussion with Fannie Mae regarding
the scope, coverages, Deductibles, self-insurance, exclusions and carriers of
and relating to any such renewal policy.

(b) All premiums on insurance policies required under Section 6.28(a) shall be
paid in the manner provided in Section 7 of the Security Instrument, unless
Fannie Mae has designated in writing another method of payment. All such
policies shall be in a form reasonably approved by Fannie Mae. Annually Borrower
shall provide to Fannie Mae the comprehensive summaries of their insurance
program which are provided to the senior management of ERPOP and EQR at the same
time such summaries are provided to such senior management. Upon receipt by
Borrower, Borrower shall promptly deliver to Fannie Mae a copy of the insurance
binder and, thereafter, a duplicate original or a certified copy of the
insurance policy. Fannie Mae shall have the right to hold the duplicate original
or certified copy of the primary lead policies of all insurance required by
Section 6.28(a). Borrower shall promptly deliver to Fannie Mae a copy of all
renewal, cancellation and other material notices received by Borrower with
respect to the policies and all receipts for paid premiums. Upon receipt by
Borrower, Borrower shall promptly deliver to Fannie Mae a duplicate original or
a certified copy of the primary lead renewal policy in form reasonably
satisfactory to Fannie Mae. Upon written request by Fannie Mae for any other
insurance policies, Borrower shall provide Fannie Mae with copies of such
policies within five (5) days. All policies of property damage insurance shall
include a non-contributing, non-reporting mortgage clause in favor of, and in a
form approved by, Fannie Mae.

 

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(c) All insurance policies and renewals of insurance policies required by this
Section 6.28 shall be in amounts sufficient, together with payment by Borrower
or ERPOP of the Deductible (as reasonably determined by Borrower, subject
however to the provisions of this subsection), to cover 100% of the replacement
cost of the Mortgaged Property (or the allocated loan amount, if less). In
respect of the renewal policy in effect on the date hereof, ERPOP shall
guarantee to Fannie Mae under the Guaranty the Borrower’s obligation to pay any
Deductible or self-insurance under the insurance policies (the “Existing
Deductible”). Borrower and Fannie Mae shall consult with each other to determine
the amount of the insurance Deductible applicable to any renewal insurance
policy (the “New Deductible”). In the event that Borrower and Fannie Mae cannot
agree on the amount of the New Deductible, then ERPOP will guarantee to Fannie
Mae under the Guaranty the difference by which the New Deductible exceeds the
Deductible that Fannie Mae would otherwise require (but for the provisions of
this subsection) as evidenced in a written notice by Fannie Mae to Borrower (the
“Deductible Spread”).

The Deductible Spread guaranteed under the Guaranty may not exceed $12 million
or such larger other amount agreed upon by Fannie Mae in its discretion (the
“Maximum Amount”). In the event the Deductible Spread exceeds the Maximum
Amount, Borrower shall provide to Fannie Mae Additional Collateral or other
collateral approved by Fannie Mae in its discretion, in any case in an aggregate
amount determined by Fannie Mae in its reasonable discretion and shall provide
any legal opinions required by Fannie Mae. Notwithstanding the above, in the
event that the credit rating of the long-term unsecured debt of ERPOP assigned
by Moody’s or Standard & Poor’s falls below Baa3 or BBB- respectively (a
“Downgrade Event”), Borrower shall provide and maintain a Letter of Credit (or
provide for the required Deductible in the policy or provide for other
collateral acceptable to Fannie Mae in its discretion) to Fannie Mae with an
available amount determined by Fannie Mae in its reasonable discretion with the
intention of approximating the protection of the required New Deductible for the
term of the insurance policy relating to the New Deductible and on terms and
conditions satisfactory to Fannie Mae. Such Letter of Credit shall be provided
to Fannie Mae within 45 days after the Downgrade Event.

Fannie Mae acknowledges and agrees that, (i) as of the date hereof, Borrower
does not maintain insurance to cover mold-related matters that may affect any
Mortgaged Property and (ii) after the date hereof, Borrower may not maintain
insurance covering acts of terrorism that may affect any Mortgaged Property
unless required pursuant to the provisions set forth below (such coverage
described in clauses (i) and (ii) is individually and collectively, “Specialty
Insurance”). Borrower agrees that it shall periodically consult, but in no event
less than annually, with Fannie Mae to determine whether Borrower should obtain
any Specialty Insurance; provided, however, that Fannie Mae shall have the right
to require Borrower to obtain Specialty Insurance in the event that with respect
to a Mortgaged Property or Mortgaged Properties Fannie Mae (i) reasonably
determines that such Specialty Insurance is available at commercially reasonable
rates, and (ii) is requiring the purchase of such Specialty Insurance by its
borrowers owning similar properties in the same general areas in which the
Borrower and EQR operate. Any Specialty Insurance coverage required by Fannie
Mae pursuant to the preceding sentence shall take effect on the annual insurance
renewal date of Borrower first occurring after the date of Fannie Mae’s
determination. If Fannie Mae requires Borrower to obtain any Specialty
Insurance, then in lieu of obtaining the required Specialty Insurance, Borrower
shall have the right to furnish Fannie Mae with (i) an amendment to the Guaranty
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form and substance satisfactory to Fannie Mae in which ERPOP guarantees Fannie
Mae for any losses, costs and expenses or damages resulting from the failure of
Borrower to obtain the required Specialty Insurance up to a maximum amount
reasonably determined by Fannie Mae taking into account among other
considerations Fannie Mae’s overall credit exposure to EQR and its Affiliates,
the financial condition of EQR and its Affiliates, and Fannie Mae’s then
existing policies relating to the purchase of Specialty Insurance as applied to
companies owning similar properties in the same general areas in which the
Borrower and EQR operate (the “Specialty Insurance Maximum Amount”), and
(ii) for any amounts above the Specialty Insurance Maximum Amount, Additional
Collateral or other collateral approved by Fannie Mae in its discretion in an
amount reasonably determined by Fannie Mae with the intention of approximating
the protection needed above the Specialty Insurance Maximum Amount for the term
of the insurance policy relating to the required Specialty Insurance, and
(iii) any legal opinions required by Fannie Mae. Upon the occurrence of a
“Downgrade Event”, Borrower shall purchase the required Specialty Insurance,
promptly but in no event in more than 45 days.

(d) Borrower shall comply with all insurance requirements and shall not permit
any condition to exist on the Mortgaged Property that would invalidate any part
of any insurance coverage that this Agreement requires Borrower to maintain.

(e) In the event of casualty that materially damages six or more units of a
Mortgaged Property, Borrower shall give immediate written notice to the
insurance carrier and to Fannie Mae. During the existence of an Event of Default
or to the extent the proceeds of such insurance exceed ten percent (10%) of the
Allocable Loan Amount of a Mortgaged Property or $750,000.00, whichever is less,
Borrower hereby authorizes and appoints Fannie Mae as attorney-in-fact for
Borrower to make proof of loss, to adjust and compromise any claims under
policies of property damage insurance, to collect and receive the proceeds of
property damage insurance, and to deduct from such proceeds Fannie Mae’s
expenses incurred in the collection of such proceeds. This power of attorney is
coupled with an interest and therefore is irrevocable. However, nothing
contained in this Section 6.28 shall require Fannie Mae to incur any expense or
take any action. To the extent (i) there is no existing Event of Default, or
(ii) the proceeds do not exceed ten percent (10%) of the Allocable Loan Amount
or $750,000.00, whichever is less, then Borrower may make proof of loss, adjust
and compromise any claims without Fannie Mae’s consent and use such proceeds to
restore or repair the Mortgaged Property subject to the conditions set forth in
Section 6.28(f) hereof, and retain any remaining proceeds for its own account.
If the proceeds exceed the threshold noted above, Fannie Mae may, at Fannie
Mae’s option hold such proceeds to be used to reimburse the Borrower for the
cost of restoring and repairing the Mortgaged Property to a condition at least
equal to the condition of such Mortgaged Property immediately prior to such
casualty or to a condition approved by Fannie Mae (the “Restoration”), or with
the prior written consent of Borrower, which consent shall not be required if
there is an existing Event of Default, or if the conditions as to the
application of such funds for Restoration (or the substitution of a replacement
property) as set forth in Section 6.28(f) hereof are not satisfied, apply such
proceeds to the payment of the Obligations relating to the applicable Collateral
Pool, whether or not then due. To the extent Fannie Mae agrees or is required to
apply insurance proceeds to Restoration, Fannie Mae shall do so in accordance
with Fannie Mae’s then-current policies relating to the restoration of casualty
damage on similar Multifamily Residential Properties.

 

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(f) Unless with Borrower’s written consent or upon an Event of Default or the
failure to satisfy any of the conditions set forth in this Section 6.28(f),
Fannie Mae shall not exercise its option to apply insurance proceeds to the
payment of the Obligations relating to the applicable Collateral Pool.
Notwithstanding anything to the contrary set forth in this Agreement, or any
other Loan Document, if (i) no Event of Default exists, (ii) Fannie Mae
determines, in its reasonable discretion, that there will be sufficient funds to
complete Restoration (provided that Borrower may post a Letter of Credit or
pledge cash collateral and/or Permitted Investments in a manner consistent with
the provisions set forth in this Agreement to cover any deficiency), and
(iii) such casualty does not occur during the last two (2) years of the term of
the Note relating to the applicable Collateral Pool or this Agreement, Fannie
Mae shall permit such proceeds to be used for Restoration. To the extent that
Borrower and Fannie Mae agree to apply insurance or condemnation proceeds to the
Obligations, or Borrower does not satisfy any of the conditions set forth in the
immediately preceding sentence (other than the requirement that no Event of
Default exists), Fannie Mae shall permit the substitution of a Multifamily
Residential Property for the Mortgaged Property in accordance with the terms of
this Agreement.

(g) If any Mortgaged Property is sold at a foreclosure sale or Fannie Mae
acquires title to the Mortgaged Property, Fannie Mae shall automatically succeed
to all rights of Borrower in and to any insurance policies and unearned
insurance premiums and in and to the proceeds resulting from any damage to the
Mortgaged Property prior to such sale or acquisition. So long as no Event of
Default has occurred, Fannie Mae acknowledges and agrees that Borrower may use
blanket insurance policies to the extent, and for the purpose of satisfying the
requirements of this Section.

(h) Until such time as Borrower has delivered to Fannie Mae evidence deemed
satisfactory to Fannie Mae, in its reasonable discretion, that upon a casualty
or Condemnation of all or any portion of a Mortgaged Property that the Mortgaged
Property can be restored (1) in the case of a casualty, to substantially the
same or better condition than existed immediately prior to such casualty (with
at least the same projected rental income as existed immediately prior to such
casualty or condemnation) or, (2) with respect to a Condemnation, to a condition
reasonably acceptable to Fannie Mae as if no Nonconforming Use Approvals (as
defined below), were required (for purposes of this Section 6.28(h) only, such
condition shall be referred to as “Restored” or the “Restoration”) without
obtaining the discretionary authorizations or approvals from any Governmental
Authority to demonstrate that the Mortgaged Property can be Restored
notwithstanding its current nonconforming use (the “Nonconforming Use
Approvals”), upon the occurrence of any casualty event or Condemnation the
following Section 6.28(h) shall govern and control to the extent of any
inconsistencies with Sections 6.28(a) through (g) above.

(A) Notwithstanding anything to the contrary contained in Section 6.28(e) above,
if such casualty or Condemnation renders any of the apartment units unrentable,
Fannie Mae shall be entitled to receive all proceeds or awards relating to such
casualty or Condemnation.

(B) Fannie Mae will permit the Borrower to substitute a Multifamily Residential
Property for the Mortgaged Property in accordance with and subject to the
provisions of Section 3.03.

 

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(C) Fannie Mae will permit Borrower to Restore the Mortgaged Property subject to
the conditions set forth in Section 6.28(f) so long as, within one hundred
twenty (120) days of such casualty or Condemnation, Borrower has delivered to
Fannie Mae evidence deemed satisfactory to Fannie Mae in its reasonable
discretion that Borrower has obtained, or will be able to obtain in a diligent
manner, the Nonconforming Use Approvals to effectuate such Restoration in a
diligent and timely manner.

(D) If, within one hundred twenty (120) days of such casualty or Condemnation,
Borrower has not substituted the Mortgaged Property pursuant to
Section 6.28(h)(B) above (provided that, if such substitution is in process,
Fannie Mae will extend such time period by up to an additional sixty (60) days)
or satisfied the requirements for the Restoration as specified in
Section 6.28(h)(C) above, then:

(i) Borrower shall, within ten (10) days of Fannie Mae’s request, deliver to
Fannie Mae cash in an amount equal to the amount of the Deductible under
Borrower’s property insurance policy;

(ii) Borrower shall diligently, in good faith, take all commercially reasonable
actions necessary to obtain the Nonconforming Use Approvals and, if Borrower
obtains such Nonconforming Use Approvals, Borrower shall then Restore the
Property pursuant to Section 6.28(e) above;

(iii) Borrower shall promptly remove all damaged structures and debris and cause
the Mortgaged Property to be in good condition, order and repair; and

(iv) Fannie Mae shall continue to hold, as additional collateral, the proceeds
or awards related to such casualty or Condemnation, as well as the amount of the
Deductible referred to in clause (D)(i) above; provided, however, that if within
twelve (12) months of such casualty or Condemnation Borrower has not substituted
a Multifamily Residential Property for the Mortgaged Property pursuant to clause
(B) above or obtained the Nonconforming Use Approvals, Fannie Mae shall have the
right, but not the obligation, to apply such additional collateral to the
Obligations (without yield maintenance penalty or premium).

(i) Fannie Mae has approved the Borrower’s existing insurance program, which
includes the approval of the Borrower’s existing Deductibles, self-insurance,
insurance carriers and such insurance carriers’ respective credit ratings.
Fannie Mae agrees to accept future insurance policies from such insurance
carriers and other insurance carriers if (a) in Fannie Mae’s reasonable
judgment, the insurance program in the aggregate is similar or better to protect
Fannie Mae’s interests than the insurance program on the date of this Agreement,
and (b) in Fannie Mae’s reasonable judgment, the credit ratings of all insurance
carriers in the insurance program are, in the aggregate, similar or better to
protect Fannie Mae’s interests than the ratings of the insurance carriers, in
the aggregate, on the date of this Agreement.

 

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  Section 6.29. Oakwood Marina Del Rey Ground Lease.

(a) Borrower ASN Marina LLC is the lessee under that certain Amended and
Restated Lease Agreement dated November 30, 2001 by and between the County of
Los Angeles (the “County”), as lessor, and Marina del Rey Country Club
Apartments, as lessee, as evidenced by a Memorandum of Lease dated November 30,
2001 and recorded November 30, 2001 as Instrument No. 01-2274973; as assigned by
Marina Del Rey Country Club Apartments to Oakwood-Marina del Rey LLC by
Assignment of Lease and Deed dated as of November 30, 2001 and recorded
November 30, 2001 as Instrument No. 01-22749745; as amended by Amendment No. 1
dated May 20, 2003 and recorded October 24, 2003 as Instrument No. 03-3187361;
as further assigned by Oakwood-Marina del Rey LLC to ASN Marina LLC by
Assignment of Lease and Deed dated as of July 28, 2005, recorded August 24, 2005
as Instrument No. 05-2028687; as amended by Amendment No. 2 dated July 19, 2005,
as evidenced by Assignment of Lease and Deed recorded August 24, 2005 as
Instrument No. 05-2028687 (collectively, the “OMDR Ground Lease”). Pursuant to
the terms of the OMDR Ground Lease, the transaction contemplated by this
Agreement as to ASN Marina LLC and the Mortgaged Property that it owns requires
the prior consent of the County, and/or the payment of certain fees from ASN
Marina LLC to the County.

(b) Borrower has informed Fannie Mae that it is currently engaged in discussions
with officials from the County regarding the foregoing and it expects to receive
the County’s consent to the transaction contemplated by this Agreement and
confirmation that ASN Marina LLC will not owe any related fees to the County.
However, Borrower will not receive such consent and confirmation nor will it be
able to provide an estoppel certificate from the County for the OMDR Lease prior
to the Closing Date.

(c) Borrower shall notify Fannie Mae promptly of any decision by the County to
deny consent to the transaction contemplated by this Agreement or to require
payment of a fee or other amount pursuant to the OMDR Ground Lease.

(d) In the event the County determines that Borrower owes any fees or other
amount under the OMDR Ground Lease, Borrower agrees to pay such fees or amounts
in a timely manner. In the event (i) Borrower does not provide an estoppel
certificate from the County to Fannie Mae on or before May 15, 2013 which
provides that no default exists under the OMDR Ground Lease, then Fannie Mae, in
its sole discretion, may require the Borrower to, or (ii) the County denies
Borrower’s request for such consent, Borrower will, either (a) pay down the
Allocable Loan Amount for ASN Marina LLC (i.e., $76,529,644.00) within five
(5) days following Fannie Mae’s election, or (b) release the ASN Marina LLC
Mortgaged Property from the applicable Collateral Pool, in which case (1) the
Closing Date for the release of the applicable Mortgaged Property shall be five
(5) days following the date of Fannie Mae’s election, (2) upon the Closing Date
of the release of the ASN Marina LLC Mortgaged Property, Borrower shall deposit
with Fannie Mae a Substitution Deposit, and (3) Borrower shall submit a
Substitute Mortgaged Property in accordance with the provisions of Section 3.03
of this Agreement, provided that such Substitution must be effectuated on or
before the date that is sixty (60) days following the Closing Date of the
release of the ASN Marina LLC Mortgaged Property.

 

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  Section 6.30. Certificates of Good Standing; Certified Articles.

No later than March 4, 2013, Borrower shall deliver Fannie Mae copies of
(i) certificates of formation for each of Archstone 6 LLC, Archstone 5 LLC, and
Archstone Alban Towers LLC, certified by the Secretary of State of Delaware
(“DESOS”) within thirty (30) days prior to March 4, 2013, and (ii) Certificates
of Good Standing for each of Archstone 6 LLC, Archstone 5 LLC, and Archstone
Alban Towers LLC, issued by DESOS within thirty (30) days prior to March 4,
2013.

 

  Section 6.31. Veridian – Silver Spring Metro Owners Association, Inc.

(a) Borrower Silver Spring Gateway Residential LLC (“Gateway”) is the owner in
fee of certain condominium units comprising the Mortgaged Property located at
1121 E. West Highway, Silver Spring Maryland and known as the Veridian
(“Veridian”). Gateway conveyed its fee ownership interest in the unit comprising
the common areas of the Veridian (the “Common Area Site Unit”) to Silver Spring
Metro Owners Association (“HOA”) pursuant to a No Consideration Deed dated
January 27, 2010 made by Gateway and recorded on January 27, 2010 among the Land
Records of Montgomery County, Maryland in Liber 38745, folio, 52.

(b) Fannie Mae has required that Borrower cause HOA to grant to Fannie Mae a
valid first Lien on its fee interest in the Common Area Site Unit as additional
security for the Loan to Gateway. Borrower has informed Fannie Mae that because
HOA is not in good standing in the State of Maryland and will not be in good
standing by the Closing Date, Borrower cannot comply with this request by the
Closing Date. However, Borrower believes that it will be able to reinstate HOA
and, because Gateway is the sole member of HOA, cause it to grant a valid first
Lien on the fee interest in the Common Area Site Unit to Fannie Mae.

(c) Borrower shall keep Fannie Mae reasonably apprised of its progress in
reinstating the HOA. On or before April 29, 2013, unless such deadline is
otherwise extended by Fannie Mae in its sole discretion, Borrower shall
(1) cause HOA to grant to Fannie Mae a valid, first Lien on the Common Area Site
Unit, (2) at its sole cost and expense, cause the Title Company to issue a “date
down” endorsement to the Veridian title policy which includes the Common Area
Site Unit in the insured legal description and adds HOA as a grantor, and
(3) cause the HOA to execute such further documents as may be necessary to
effectuate the grant of such Lien including, without limitation, an amendment to
the Multifamily Deed of Trust, Assignment of Rents Security Agreement and
Fixture filing for Veridian dated as of the date of this Agreement.

 

  Section 6.32. Archstone Marina Del Rey Ground Lease.

(a) Borrowers Archstone Marina Del Rey-I LLC and Archstone Marina Del Rey-II LLC
are, jointly, the lessee under that certain Amended and Restated Lease Agreement
dated as of March 1, 2005 by and between the County, as lessor, and
Archstone-Smith Operating Trust, as lessee, as evidenced by a Memorandum of
Lease dated March 4, 2005 and recorded April 4, 2005 as Instrument
No. 05-0768919; as assigned by Archstone-Smith Operating Trust to (i) Archstone
Marina Del Rey-I LLC (f/k/a Tishman Speyer Archstone-Smith Marina Del Rey–I,
LLC) by Assignment of Lease and Assumption of Ground Lease dated as of
October 5, 2007 and recorded October 18, 2007 as Instrument No. 20072372589 and
(ii) Archstone Marina Del Rey-II LLC (f/k/a Tishman Speyer Archstone-Smith
Marina Del Rey–II, LLC) by Assignment of Lease and Assumption of Ground Lease
dated as of October 5, 2007 and recorded October 18,

 

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2007 as Instrument No. 20072372590 (collectively, the “AMDR Ground Lease”).
Pursuant to the terms of the AMDR Ground Lease, the transaction contemplated by
this Agreement as to Archstone Marina Del Rey-I LLC and Archstone Marina Del
Rey-II LLC and the Mortgaged Property that each of them owns requires the prior
consent of the County, and/or the payment of certain fees from either or both of
Archstone Marina Del Rey-I LLC and Archstone Marina Del Rey-II LLC to the
County.

(b) Borrower has informed Fannie Mae that it is currently engaged in discussions
with officials from the County regarding the foregoing and it expects to receive
the County’s consent to the transaction contemplated by this Agreement and
confirmation that Archstone Marina Del Rey-I LLC and/or Archstone Marina Del
Rey-II LLC will not owe any related fees to the County. However, Borrower will
not receive such consent and confirmation nor will it be able to provide an
estoppel certificate from the County for the AMDR Lease prior to the Closing
Date.

(c) Borrower shall notify Fannie Mae promptly of any decision by the County to
deny consent to the transaction contemplated by this Agreement or to require
payment of a fee or other amount pursuant to the AMDR Ground Lease.

(d) In the event the County determines that Borrower owes any fees or other
amount under the AMDR Ground Lease, Borrower agrees to pay such fees or amounts
in a timely manner. In the event (i) Borrower does not provide an estoppel
certificate from the County to Fannie Mae on or before May 15, 2013 which
provides that no default exists under the AMDR Ground Lease, then Fannie Mae, in
its sole discretion, may require the Borrower to, or (ii) the County denies
Borrower’s request for such consent, Borrower will, either (a) pay down the
Allocable Loan Amount for Archstone Marina Del Rey-I LLC and Archstone Marina
Del Rey-II LLC (i.e., $145,035,377.00) within five (5) days following Fannie
Mae’s election, or (b) release the Archstone Marina Del Rey-I LLC and Archstone
Marina Del Rey-II LLC Mortgaged Property from the applicable Collateral Pool, in
which case (1) the Closing Date for the release of the applicable Mortgaged
Property shall be five (5) days following the date of Fannie Mae’s election,
(2) upon the Closing Date of the release of the Archstone Marina Del Rey-I LLC
and Archstone Marina Del Rey-II LLC Mortgaged Property, Borrower shall deposit
with Fannie Mae a Substitution Deposit, and (3) Borrower shall submit a
Substitute Mortgaged Property in accordance with the provisions of Section 3.03
of this Agreement, provided that such Substitution must be effectuated on or
before the date that is sixty (60) days following the Closing Date of the
release of the Archstone Marina Del Rey-I LLC and Archstone Marina Del Rey-II
LLC Mortgaged Property.

 

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ARTICLE 7

NEGATIVE COVENANTS OF BORROWER

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

 

  Section 7.01. Other Activities.

Other than actions reasonable, customary, and deemed to be necessary, in the
reasonable judgment of Fannie Mae, in connection with a Transfer permitted
hereunder and subject to the provisions of Section 6.13, no Borrower Party
shall:

(a) in the case of any Borrower or managing member or general partner of a
Borrower, amend its Organizational Documents in any material respect without the
prior written consent of Fannie Mae;

(b) in the case of any Borrower Party not described in (a) of this Section 7.01,
amend its Organizational Documents in any way that would have a material adverse
effect on any Borrower Party’s ability to perform its obligations under the Loan
Documents without the prior written consent of Fannie Mae;

(c) dissolve or liquidate in whole or in part (except for the sale of Mortgaged
Properties in the ordinary course of business);

(d) in the case of any Borrower or managing member or general partner of a
Borrower, except as otherwise provided in this Agreement, without the prior
written consent of Fannie Mae, merge or consolidate with any Person;

(e) in the case of any Borrower Party not described in (d) of this Section 7.01,
if such merger or consolidation would have a Material Adverse Effect on any
Borrower Party’s ability to perform its obligations under the Loan Documents,
merge or consolidate with any other Person without the prior written consent of
Fannie Mae;

(f) use, or permit to be used, any Mortgaged Property in the applicable
Collateral Pool for any uses or purposes other than as a Multifamily Residential
Property and ancillary uses consistent with Multifamily Residential Properties;

(g) in the case of any Borrower or managing member or general partner of a
Borrower, convert from one type of legal entity to another type of legal entity;
or

(h) in the case of any Borrower Party not described in (g) of this Section 7.01,
if such conversion would have a Material Adverse Effect on any Borrower Party’s
ability to perform its obligations under the Loan Documents, convert from one
type of legal entity to another type of legal entity.

Each Borrower Party shall promptly provide Fannie Mae with notice and a copy of
any amendment of its Organizational Documents that does not require prior
written consent of Fannie Mae.

 

  Section 7.02. Liens.

Borrower shall not create, incur, assume or suffer to exist any Lien on
Borrower’s interest in any Mortgaged Property in its Collateral Pool or any part
of any Mortgaged Property, except the Permitted Liens.

 

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  Section 7.03. Indebtedness.

Borrower and any general partner of Borrower shall not incur or be obligated at
any time with respect to aggregate Indebtedness (other than the Loan), in excess
of $350,000; provided, however, that for purposes of this Section 7.03, the
calculation of Indebtedness shall exclude Indebtedness (A) relating to claims
for work, labor, or materials affecting any Mortgaged Property and that
(i) consists of current trade liabilities incurred for work commissioned in the
ordinary course of Borrower’s business, (ii) is payable in accordance with
customary practices, and (iii) is unsecured or secured by mechanic’s or
materialmen’s liens against such Mortgaged Properties which are released of
record or otherwise remedied to Fannie Mae’s satisfaction, within thirty
(30) days of the date of creation, (B) unsecured debt the proceeds of which are
used to pay for Alterations permitted under the Loan Documents, and (C) real
estate taxes which Borrower is contesting pursuant to the terms and conditions
of the Security Instruments. Except for a Tax-Free Note secured by a Tax-Free
Pledge, none of Borrower or any entity whose sole asset is a direct or indirect
ownership interest in Borrower shall incur any “mezzanine debt,” issue any
preferred equity or incur any similar Indebtedness or equity with respect to any
Mortgaged Property; provided, for avoidance of doubt, the foregoing shall not
construed to limit the issuance by any entity that is or intends to qualify as a
real estate investment trust (within the meaning of the Code) of preferred
interests in order to satisfy minimum shareholder requirements, so long as such
preferred interests do not include rights the exercise of which could result in
a Change of Control.

 

  Section 7.04. Principal Place of Business; Name Change.

Borrower shall not change its principal place of business, its state of
formation or its name or the location of its books and records, each as set
forth in Borrower’s Certificate, without first giving thirty (30) days’ prior
written notice to Fannie Mae and, in the case of a change in the name of
Borrower, unless Borrower furnishes documentation reasonably required by Fannie
Mae or its legal counsel sufficient, in their reasonable discretion, and at the
expense of Borrower, to protect Fannie Mae’s security interest in the Mortgaged
Property and UCC Collateral (as defined in the applicable Security Instrument),
including title policy endorsements and UCC financing statements and/or
amendments sufficient to continue the perfection of Fannie Mae’s security
interest have been properly filed and copies have been delivered to Fannie Mae.

 

  Section 7.05. Condominiums.

Borrower shall not submit any Mortgaged Property in its Collateral Pool to a
condominium regime during the Term of this Agreement. Notwithstanding the
foregoing, the Mortgaged Properties commonly known as Archstone Columbia
Crossing, having an address at 1957 Columbia Pike, Arlington, Virginia;
Archstone San Mateo, having an address at 1101 Park Place, San Mateo,
California; and Archstone Pentagon City, having an address at 801 15th Street
South, Arlington, Virginia are subject to a condominium regime and shall be
permitted to be subject to such regime during the term of this Agreement. In
addition, such Mortgaged Properties shall be subject to the terms of the
Security Instrument with respect to the operation of such condominium regime.

 

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  Section 7.06. Restrictions on Distributions.

Borrower shall not make any distributions of any nature or kind whatsoever to
the owners of its Ownership Interests as such if, at the time of such
distribution, an Event of Default has occurred and remains uncured.

 

  Section 7.07. Master Leases.

No Mortgaged Property may be master leased or otherwise leased in whole or in
bulk, provided that the Mortgaged Properties identified on Exhibit M are master
leased to Master Tenant pursuant to a Master Lease in the form approved by
Fannie Mae prior to the Effective Date. Borrower shall not, without the prior
written consent of Fannie Mae, which consent shall be given in Fannie Mae’s
reasonable discretion, agree to any material modification or amendment to any
Master Lease and shall not terminate any Master Lease without Fannie Mae’s prior
written consent, unless after such termination all Resident Agreements related
to the relevant Mortgaged Property shall remain in full force and effect with
Borrower becoming a landlord under such Resident Agreements, provided that
Fannie Mae’s consent shall no longer be required after a Mortgaged Property is
released from a Collateral Pool. In the event Master Tenant terminates the
Master Lease, Borrower shall promptly provide notice of such termination to
Fannie Mae. Notwithstanding the foregoing, the Master Lease currently in effect
for the Mortgaged Property known as Oakwood Marina Del Ray may be terminated by
the applicable Collateral Pool Borrower, or by the master tenant thereunder,
pursuant to a right of termination in effect as of the Effective Date. Neither
Section 4(f) of the applicable Security Instrument nor Section 6.22 of this
Agreement shall apply to a Master Lease.

ARTICLE 8

FEES

 

  Section 8.01. Re-Underwriting Fee.

On the Closing Date of any Extension, Release, or Substitution (on the Closing
Date of the Release of the Release Mortgaged Property under such Substitution),
the applicable Collateral Pool Borrower shall pay to Fannie Mae a
re-underwriting fee equal to the product of $5,000 multiplied by the number of
Mortgaged Properties in such Collateral Pool at the time of such Extension,
Release Request, or Substitution Request, as applicable (the “Re-Underwriting
Fee”).

 

  Section 8.02. [Reserved]

 

  Section 8.03. Due Diligence Fees.

(a) Initial Due Diligence Fees. The applicable Collateral Pool Borrower shall
pay to Fannie Mae actual due diligence fees in connection with the underwriting
of the transactions referred to in Recital D of this Agreement, including
underwriting the Mortgaged Properties with respect to the loan-to-value and debt
service coverage requirements imposed by Fannie Mae as a condition to entering
into this Agreement.

 

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(b) Additional Due Diligence Fees for Substitute Mortgaged Properties. The
applicable Collateral Pool Borrower shall pay to Fannie Mae actual due diligence
fees including Fannie Mae’s review fee of $1,500 for each Mortgaged Property
(the “Additional Due Diligence Fees”) with respect to each proposed Substitute
Mortgaged Property anticipated to be added to a Collateral Pool. In connection
with any Substitution Request, Borrower shall pay to Fannie Mae a deposit equal
to the product obtained by multiplying

(i) $12,000 by

(ii) the number of Substitute Mortgaged Properties (such amount to be allocated
to Fannie Mae for its due diligence expenses).

Any Additional Due Diligence Fees not covered by the deposit shall be paid by
Borrower on the Closing Date (or if the proposed Substitute Mortgaged Property
does not become part of the Collateral Pool, on demand) for the Substitute
Mortgaged Property. Any portion of the Additional Due Diligence Fee paid to
Fannie Mae not actually used by Fannie Mae to cover reasonable due diligence
expenses shall be promptly refunded to the applicable Collateral Pool Borrower.

 

  Section 8.04. Legal Fees and Expenses.

(a) Initial Legal Fees. The applicable Collateral Pool Borrower shall pay, or
reimburse Fannie Mae and Servicer for, all reasonable out-of-pocket third-party
legal fees and expenses incurred by Fannie Mae and Servicer in connection with
the preparation, review and negotiation of (i) this Agreement and any other Loan
Documents and the Guaranty executed on the date of this Agreement and (ii) any
items that any Collateral Pool Borrower is required to deliver after the Closing
Date pursuant to the terms of this Agreement.

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

 

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  Section 8.05. Failure to Close any Request.

If a Collateral Pool Borrower makes a Request and fails to close on the Request
for any reason other than the default by Fannie Mae, then such Borrower shall
pay to Fannie Mae all actual cost and expenses (including any breakage costs)
incurred by Fannie Mae in connection with the failure to close.

ARTICLE 9

EVENTS OF DEFAULT

 

  Section 9.01. Events of Default.

Each of the following events shall constitute an “Event of Default” under this
Agreement, whatever the reason for such event and whether it shall be voluntary
or involuntary, or within or without the control of Borrower or Guarantor or be
effected by operation of law or pursuant to any judgment or order of any court
or any order, rule or regulation of any Governmental Authority, provided that,
except with respect to the Loans secured by the Mortgaged Properties comprising
a Collateral Pool, an Event of Default that relates solely to any Collateral
Pool shall not be an Event of Default under the Loan secured by any other
Collateral Pool:

(a) the occurrence of a default under any Loan Document related to such
Borrower’s Collateral Pool beyond the cure period, if any, set forth therein; or

(b) the failure by Borrower to pay within thirty (30) days of its due date or
request by Fannie Mae, as applicable, when due any amount payable by Borrower
under any Note, any Security Instrument, this Agreement or any other Loan
Document, including any fees, costs or expenses; provided, however, that
(i) such thirty (30) day grace period shall not apply to: (A)regularly scheduled
monthly payments of principal, interest, discount (if any) or any payment upon
the Maturity Date (as defined in the Note) or the applicable Pool Termination
Date or (B) any fees, costs or expenses due and payable on the Effective Date or
any fees, costs or expenses due and payable on the Closing Date of any Request;
and (ii) such thirty (30) day grace period shall not be more than (or in
addition to) any other grace period provided in the Note, any Security
Instrument, this Agreement or any other Loan Document; or

(c) the failure by Borrower to perform or observe any covenant set forth in
Section 6.07 (Inform Fannie Mae of Material Events), Section 6.09 (Alterations
to Mortgaged Properties), Section 6.12 (Ownership), Section 6.13 (Limitations on
Transfer), Section 6.17 (Ownership of Mortgaged Properties), Section 6.18
(Change in Property Manager), Section 6.29 (Oakwood Marina Del Rey Ground
Lease), Section 6.30 (Certificates of Good Standing; Certified Articles),
Section 6.31 (Veridian – Silver Spring Metro Owners Association, Inc.),
Section 6.32 (Archstone Marina Del Rey Ground Lease), Section 7.01 (Other
Activities), Section 7.02 (Liens), Section 7.03 (Indebtedness), Section 7.06
(Restrictions on Distributions), Section 7.07 (Master Leases); or

(d) the failure by Borrower to perform or observe any covenant contained in
Article 6 or Article 7 (other than those sections specifically referenced in
Section 9.01(c) above) for thirty (30) days after receipt of notice of such
failure by such Borrower from Fannie Mae,

 

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provided that such period shall be extended for up to thirty (30) additional
days if such Borrower, in the discretion of Fannie Mae, is diligently pursuing a
cure of such default within thirty (30) days after receipt of notice from Fannie
Mae; or

(e) any warranty, representation or other written statement made by or on behalf
of Borrower or Guarantor contained in this Agreement, any other Loan Document or
in any instrument furnished in compliance with or in reference to any of the
foregoing, is false or misleading in any material respect on any date when made
or deemed made and, in the case of any warranty, representation or other written
statement that was not intentionally false or misleading when made, and in
Fannie Mae’s reasonable judgment is curable, remains uncured for thirty
(30) days after notice of such false or misleading statement shall have been
given to Borrower; or

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

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

 

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

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

(j) a dissolution or liquidation for any reason (whether voluntary or
involuntary) of any Borrower Party, except in connection with the sale of
Mortgaged Properties in the ordinary course of business; or

(k) any final and nonappealable judgment against a Borrower Party (other than
ERPOP or EQR), any attachment or other levy against any portion of Borrower
Party’s (other than ERPOP’s or EQR’s) assets with respect to a claim or claims
in an amount in excess of $250,000 individually and/or $500,000 in the aggregate
remains unpaid, unstayed on appeal undischarged, unbonded, not fully insured or
undismissed for a period of ninety (90) days;

(l) any final and nonappealable judgment against ERPOP or EQR, any attachment or
other levy against any portion of ERPOP’s or EQR’s assets with respect to a
claim or claims in an amount in excess of $10,000,000 individually remains
unpaid, unstayed on appeal undischarged, unbonded, not fully insured or
undismissed for a period of ninety (90) days; or

(m) the failure by Borrower or Guarantor to perform or observe any material
term, covenant, condition or agreement hereunder, other than as contained in
subsections (a) through (k) above, or in any other Loan Document, within thirty
(30) days after receipt of notice from Fannie Mae identifying such failure,
provided such period shall be extended for up to thirty (30) additional days if
Borrower, in the discretion of Fannie Mae, is diligently pursuing a cure of such
default within thirty (30) days after receipt of notice from Fannie Mae and
corrective action is instituted by Borrower within such period and pursued
diligently and in good faith, then such failure shall not constitute an Event of
Default unless such failure is not cured by Borrower within sixty (60) days
after receipt of notice from Fannie Mae identifying such failure.
Notwithstanding the foregoing, there shall be no cure period for a default by
the Guarantor under Section 8(h) of the Guaranty.

 

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ARTICLE 10

REMEDIES

 

  Section 10.01. Remedies; Waivers.

Upon the occurrence of an Event of Default, Fannie Mae may do any one or more of
the following with respect to any Loan secured by a Collateral Pool to which the
Event of Default (or the Borrower causing such Event of Default) relates
(without presentment, protest or notice of protest, all of which are expressly
waived by each Borrower Party):

(a) by written notice to the defaulting Collateral Pool Borrower, to be
effective upon dispatch and declare the principal of, and interest on, the Loans
and all other sums owing by such Borrower to Fannie Mae under any of the Loan
Documents for such Collateral Pool immediately due and payable, whereupon the
principal of, and interest on, the Loans and all other sums owing by such
Collateral Pool Borrower to Fannie Mae under any of the Loan Documents for such
Collateral Pool will become immediately due and payable.

(b) Fannie Mae shall have the right to pursue any other remedies available to it
under any of the Loan Documents and the Guaranty for such Collateral Pool.

(c) Fannie Mae shall have the right to pursue all remedies available to it at
law or in equity, including obtaining specific performance and injunctive relief
with respect to such Collateral Pool.

 

  Section 10.02. Waivers; Rescission of Declaration.

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

 

  Section 10.03. Fannie Mae’s Right to Protect Collateral and Perform Covenants
and Other Obligations.

If any Borrower or Guarantor fails to perform the covenants and agreements
contained in this Agreement or any of the other Loan Documents and the Guaranty
for the applicable Collateral Pool, after all applicable grace periods, if any,
then Fannie Mae at Fannie Mae’s option may make such appearances, disburse such
sums and take such action as Fannie Mae deems necessary, in its sole discretion,
to protect Fannie Mae’s interest, including (i) disbursement of reasonable
attorneys’ fees, (ii) entry upon the Mortgaged Property to make repairs and
replacements, (iii) procurement of satisfactory insurance with respect to the
Mortgaged Properties in such Collateral Pool as provided in Section 6.28 of this
Agreement, and (iv) if the Security Instrument is on a leasehold, exercise of
any option to renew or extend the ground lease on behalf of Borrower and the
curing of any default of Borrower in the terms and conditions of the ground
lease. Any amounts disbursed by Fannie Mae pursuant to this Section 10.03,

 

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with interest thereon, shall become additional Indebtedness of Collateral Pool
Borrower secured by the applicable Collateral Pool Loan Documents. Unless the
applicable Collateral Pool Borrower and Fannie Mae agree to other terms of
payment, such amounts shall be immediately due and payable and shall bear
interest from the date of disbursement at the weighted average, as determined by
Fannie Mae, of the interest rates in effect from time to time for each Loan
unless collection from such Borrower of interest at such rate would be contrary
to Applicable Law, in which event such amounts shall bear interest at the
highest rate which may be collected from such Borrower under Applicable Law.
Nothing contained in this Section 10.03 shall require Fannie Mae to incur any
expense or take any action hereunder.

 

  Section 10.04. No Remedy Exclusive.

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

 

  Section 10.05. No Waiver.

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

 

  Section 10.06. No Notice.

To entitle Fannie Mae to exercise any remedy reserved to Fannie Mae in this
Article 10, it shall not be necessary to give any notice, other than such notice
as may be required under the applicable provisions of this Agreement or any of
the other Loan Documents and the Guaranty.

 

  Section 10.07. Cash Management.

In addition to the other remedies set forth herein and elsewhere in the Loan
Documents and the Guaranty, upon an Event of Default, Fannie Mae shall be
entitled to mandate the use of a lockbox bank account or other depositary
account, to be maintained under the control and supervision of Fannie Mae, for
all income of each Mortgaged Property, including rents, service charges,
insurance payments and other items of revenue.

ARTICLE 11

IMPOSITION DEPOSITS

 

  Section 11.01. Insurance and Water/Sewer Waived; Other Imposition Deposits
Required.

Each Collateral Pool Borrower shall establish funds for taxes, insurance
premiums and certain other charges for each Mortgaged Property in such
Collateral Pool in accordance with Section 7(a) of the Security Instrument for
each such Mortgaged Property. Notwithstanding the foregoing and the provisions
of Subsection 7(a) of the Security Instrument for each such

 

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Mortgaged Property, and subject to the conditions of this Article 11, provided
that no Event of Default has occurred and is continuing and Collateral Pool
Borrower has timely delivered to Fannie Mae any insurance bills, premium notices
and other invoices, bills and notices with respect to Impositions pursuant to
the requirements of this Section 11.01, Fannie Mae shall not require Collateral
Pool Borrower to deposit with Fannie Mae any sums for Imposition Deposits ONLY
to the extent they relate to any water and sewer charges (collectively, “Water
Charges”), the premiums for fire and other hazard insurance, rent loss insurance
and such other insurance as Fannie Mae may require under Section 19 of the
Security Instrument (collectively, “Insurance Premiums”), and Taxes. Such
Collateral Pool Borrower must (i) pursuant to the terms of Section 19 of the
Security Instrument, provide Fannie Mae with proof of payment (e.g., paid
receipts or cancelled checks) of all Water Charges, Insurance Premiums, Taxes
and other Impositions, (ii) with respect to Impositions for insurance, pursuant
to the terms of Section 19 of the Security Instrument, deliver to Fannie Mae the
original (or a duplicate original) of a renewal policy in form satisfactory to
Fannie Mae, and (iii) to the extent not covered in (i) or (ii) above, pay
Impositions for which Fannie Mae is not collecting Imposition Deposits no later
than the date sixty (60) days after the date such Impositions are due and, in
any event, before the addition of any interest, fine, penalty or cost for
nonpayment, and deliver to Fannie Mae evidence of such timely payment. In the
event that (A) an Event of Default has occurred and is continuing or (B) such
Collateral Pool Borrower does not timely pay any of the Impositions as described
in Section 7(a) of the Security Instrument and this Section 11.01, or fails to
provide Fannie Mae with proof of such payment as set forth in Section 7(a) of
the Security Instrument and this Section 11.01, Fannie Mae may immediately
thereafter require such Collateral Pool Borrower to deposit with Fannie Mae all
of the Imposition Deposits as provided in this Article 11 and in Section 7(a) of
the Security Instrument without regard to the second sentence of this
Section 11.01, which shall be applicable only so long as the current Borrower
remains as the record title owner of the Mortgaged Property, and shall
immediately terminate and have no further force or effect upon a sale or
exchange of the Mortgaged Property by the applicable Borrower to a third-party
purchaser in which the Indebtedness secured by the Security Instrument is
assumed by such third-party purchaser.

 

  Section 11.02. Imposition Deposits.

Notwithstanding the provision of Section 7(d) of the Security Instrument, but
subject to Section 11.01, on or before the first day of each Loan Year after the
Effective Date, and on or before the Closing Date of a Substitution Request or a
Release Request, if Fannie Mae determines, based on the foregoing methodology,
that a modified amount is required to be deposited with Fannie Mae as Imposition
Deposits, applicable Collateral Pool Borrower shall deposit any deficiency with
Fannie Mae, or Fannie Mae shall release any overage to such Collateral Pool
Borrower, provided that, in the case of the latter, no Event of Default or
Potential Event of Default then exists hereunder. The applicable Collateral Pool
Borrower shall, subject to such Collateral Pool Borrower’s right to contest
under Section 15(d) of the Security Instruments, pay each Imposition relating to
a Mortgaged Property before the last date upon which such payment may be made
without any penalty or interest charge being added. Subject to such Collateral
Pool Borrower’s right to contest under Section 15(d) of the Security
Instruments, such Collateral Pool Borrower shall deliver to Fannie Mae evidence
that such Borrower has paid each Imposition within thirty (30) days after making
such payment.

 

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  Section 11.03. Replacement Reserves.

Each Collateral Pool Borrower has executed a Replacement Reserve Agreement for
each of the Mortgaged Properties in the respective Collateral Pool and shall
(unless waived by Fannie Mae) make all deposits for replacement reserves in
accordance with the terms of the Replacement Reserve Agreement.

 

  Section 11.04. Completion/Repair Reserves.

Each Collateral Pool Borrower that has executed a Completion/Repair and Security
Agreement for the Mortgaged Properties in the respective Collateral Pool shall
(unless waived by Fannie Mae) make all deposits for completion reserves in
accordance with the terms of the Completion/Repair and Security Agreement.

ARTICLE 12

LIMITS ON PERSONAL LIABILITY

 

  Section 12.01. Personal Liability to Borrower.

(a) Limits on Personal Liability. Except as otherwise provided in this Article
12, neither Borrower nor any partner, member, shareholder, employee, trustee,
officer, director, agent or Affiliate of Borrower, or any partner, member,
shareholder, employee, trustee, officer, director, agent, or Affiliate of any
such Affiliate or heir, legal representative or successor or assign of the
foregoing (the “Exculpated Parties”) shall have any personal liability under
this Agreement, the Note, the Security Instruments or any other Loan Document
for the performance of any Obligations of Borrower under the Loan Documents, and
Fannie Mae’s only recourse for the payment and performance of the Obligations
shall be Fannie Mae’s exercise of its rights and remedies with respect to the
Mortgaged Property and any other Collateral held by Fannie Mae as security for
the Obligations. This limitation on the Exculpated Parties’ liability shall not
limit or impair Fannie Mae’s enforcement of its rights against Guarantor under
the Guaranty.

(b) Exceptions to Limits on Personal Liability. Each Collateral Pool Borrower
shall be personally liable to Fannie Mae for the repayment of a portion of the
Loans and other amounts due under the Loan Documents evidencing such Collateral
Pool Borrower’s Loan equal to any actual loss or actual damage suffered by
Fannie Mae as a result of (i) failure of such Borrower to pay to Fannie Mae,
upon demand after an Event of Default, all Rents to which Fannie Mae is entitled
under Section 3(a) of the Security Instrument encumbering the Mortgaged Property
and the amount of all security deposits collected by such Borrower from tenants
then in residence; (ii) failure of such Borrower to apply all insurance
proceeds, condemnation proceeds or security deposits from tenants as required by
the this Agreement or the Security Instrument encumbering the Mortgaged
Property; (iii) failure of such Borrower to comply with its obligations under
the Loan Documents with respect to the delivery of books and records and
financial statements; (iv) fraud or written material misrepresentation by such
Borrower or any officer, director, partner or member of Borrower in connection
with the application for or creation of the Obligations or any request for any
action or consent by Fannie Mae; (v) failure to comply with any and all
indemnification obligations contained in Section 18 (environmental) of any
Security Instrument; (vi) distribution by the Borrower of any Rents in any
Calendar Quarter

 

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to the extent that all amounts due and payable to third parties by such
Borrower, including but not limited to all operating expenses, capital
expenditures and amounts payable under the Loan Documents have not been paid in
full (except that such Borrower will not be personally liable to the extent that
such Borrower lacks the legal right to direct the disbursement of such sums
because of a bankruptcy, receivership or similar judicial proceeding; (vii) the
acquisition by any Borrower of any property or operation of any business not
permitted by Section 33 (single purpose) of any Security Instrument securing
such Borrower’s Loan or Section 6.21 hereof; (vii) Borrower’s failure to deliver
to Fannie Mae the estoppel certificates and the subordination, non-disturbance
and attornment agreements referred to in Section 6.22(b); or (viii) the
dissolution or liquidation of a Borrower (x) as a result of the resignation of a
person (other than a Recognized Springing Member) acting as a “springing member”
of such borrower, or (y) as a result of the failure of any such springing member
to be replaced upon the death, incapacity or resignation of any such springing
member.

(c) Full Recourse. Each Collateral Pool Borrower shall be personally liable to
Fannie Mae for the payment and performance of all Obligations upon the
occurrence of any of the following Events of Default: (i) if a Transfer shall
occur in violation of Section 6.13 of this Agreement or if any Mortgaged
Property or any part thereof is otherwise conveyed, assigned, mortgaged,
pledged, leased or encumbered in any way other than as permitted under this
Agreement or any Security Instrument without the prior written consent of Fannie
Mae; or (ii) a Bankruptcy Event. As used in this subparagraph, the term
“Bankruptcy Event” means any one or more of the following events which occurs
during the Term of the Agreement:

(i) The Borrower (A) commences a voluntary case (or, if applicable, a joint
case) under any chapter of the Bankruptcy Code, (B) institutes (by petition,
application, answer, consent or otherwise) any other bankruptcy, insolvency,
reorganization, arrangement, readjustment of debt, dissolution, liquidation or
similar proceeding relating to it under the laws of any jurisdiction, (C) makes
a general assignment for the benefit of creditors, (D) applies for, consents to
or acquiesces in the appointment of any receiver, liquidator, custodian,
sequestrator, trustee or similar officer for it or for all or any substantial
part of the Mortgaged Property or (E) admits in writing its inability to pay its
debts generally as they mature.

(ii) Guarantor or any Affiliate of Guarantor files an involuntary petition
against the Borrower under any chapter of the Bankruptcy Code or under any other
bankruptcy, insolvency, reorganization, arrangement, readjustment of debt,
dissolution, liquidation or similar proceeding relating to the Borrower under
the laws of any jurisdiction.

(iii) Both (A) an involuntary petition under any chapter of the Bankruptcy Code
is filed against the Borrower or the Borrower directly or indirectly becomes the
subject of any bankruptcy, insolvency, reorganization, arrangement, readjustment
of debt, dissolution, liquidation or similar proceeding relating to it under the
laws of any jurisdiction, or in equity, and (B) the Borrower or any Affiliate of
the Borrower has acted in concert or conspired with such creditors of the
Borrower (other than Fannie Mae) to cause the filing thereof with the intent to
interfere with enforcement rights of Fannie Mae after the occurrence of an Event
of Default.

 

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(d) Permitted Transfer Not Release. No Transfer by any party of its Ownership
Interests in the Borrower shall release the party from liability under this
Article 12, this Agreement or any other Loan Document, unless Fannie Mae shall
have approved the Transfer in accordance with this Agreement, or such Transfer
is otherwise permitted in this Agreement, and shall have expressly released the
party in connection with the Transfer.

(e) Miscellaneous. To the extent that any Borrower has personal liability under
this Section 12.01, or Guarantor has liability under the Guaranty, such
liability shall be joint and several and Fannie Mae may exercise its rights
against such Borrower or Guarantor personally without regard to whether Fannie
Mae has exercised any rights against any Mortgaged Property securing the Loan to
such Borrower or any other security, or pursued any rights against any
guarantor, or pursued any other rights available to Fannie Mae under the Loan
Documents and the Guaranty or Applicable Law. For purposes of this Article 12,
the term “Mortgaged Property” shall not include any funds that (i) have been
applied by Borrower as required or permitted by the Loan Documents prior to the
occurrence of an Event of Default, or (ii) are owned by Borrower or Guarantor
and which Borrower was unable to apply as required or permitted by the Loan
Documents and the Guaranty because of a bankruptcy, receivership, or similar
judicial proceeding.

 

  Section 12.02. Additional Borrowers.

If the owner of a Substitute Mortgaged Property is an Additional Borrower, the
owner of such Substitute Mortgaged Property must demonstrate to the satisfaction
of Fannie Mae that:

(i) the Additional Borrower is a Single-Purpose entity; and

(ii) the Additional Borrower shall be owned as described in Section 6.12.

In addition, on the Closing Date of the addition of a Substitute Mortgaged
Property, the owner of such Substitute Mortgaged Property, if such owner is an
Additional Borrower, shall become a party to a contribution agreement in a
manner satisfactory to Fannie Mae, shall deliver a Certificate of Borrower in
form and substance satisfactory to Fannie Mae, and execute and deliver, along
with the other applicable Collateral Pool Borrowers, any other Loan Documents
required by Fannie Mae. Any Additional Borrower of a Substitute Mortgaged
Property which becomes added to a Collateral Pool shall be a Borrower for
purposes of this Agreement and shall execute and deliver to Fannie Mae an
amendment adding such Additional Borrower as a party to this Agreement and
revising the Exhibits hereto, as applicable, to reflect the Substitute Mortgaged
Property, identify the applicable Collateral Pool, and add the Additional
Borrower, in each case satisfactory to Fannie Mae.

Upon the release of a Mortgaged Property, the Borrower which owns such Release
Mortgaged Property shall automatically without further action be released from
its obligations under this Agreement and the other Loan Documents, except for
any liabilities or obligations of such Borrower which arose prior to the Closing
Date of such release, and except as specifically set forth in Section 18 of the
Security Instrument.

 

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  Section 12.03. Borrower Agency Provisions.

(a) Each Borrower and Additional Borrower hereby irrevocably designates EQR as
the borrower agent (the “Borrower Agent”) to be its agent and in such capacity
to receive on behalf of Borrower all proceeds, receive all notices on behalf of
Borrower under this Agreement, make all Requests under this Agreement, and
execute, deliver and receive all instruments, certificates, Requests, documents,
amendments, writings and further assurances now or hereafter required hereunder,
on behalf of such Borrower, and hereby authorizes Fannie Mae to pay over all
loan proceeds hereunder in accordance with the direction of Borrower Agent. Each
Borrower hereby acknowledges that all notices required to be delivered by Fannie
Mae to any Borrower shall be delivered to Borrower Agent and thereby shall be
deemed to have been received by such Borrower.

(b) The handling of this credit facility as a co-borrowing facility with a
Borrower Agent in the manner set forth in this Agreement is solely as an
accommodation to Borrower and is at their request. Fannie Mae shall not incur
liability to Borrower as a result thereof. To induce Fannie Mae to do so and in
consideration thereof, each Borrower hereby indemnifies Fannie Mae and holds
Fannie Mae harmless from and against any and all liabilities, expenses, losses,
damages and claims of damage or injury asserted against Fannie Mae by any Person
arising from or incurred by reason of Borrower Agent handling of the financing
arrangements of Borrower as provided herein, reliance by Fannie Mae on any
request or instruction from Borrower Agent or any other action taken by Fannie
Mae with respect to this Section 12.03 except due to willful misconduct or gross
negligence of the indemnified party.

 

  Section 12.04. Waivers With Respect to Other Borrower Secured Obligation.

To the extent that a Security Instrument or any other Loan Document executed by
one (1) Collateral Pool Borrower secures an Obligation of another Collateral
Pool Borrower (the “Other Borrower Secured Obligation”), and/or to the extent
that a Collateral Pool Borrower has guaranteed the debt of another Borrower
subject to such Collateral Pool pursuant to Article 12, the Borrower who
executed such Loan Document and/or guaranteed such debt (the “Waiving Borrower”)
hereby agrees to the provisions of this Section 12.04. To the extent that any
Mortgaged Properties are located in California, the references to the California
Code below shall apply to this Agreement and any California Security Instrument
securing a California Mortgaged Property, otherwise the California Code shall
have no effect on this Agreement or any other Loan Document.

(a) The Waiving Borrower hereby waives any right it may now or hereafter have to
require the beneficiary, assignee or other secured party under such Loan
Document, as a condition to the exercise of any remedy or other right against it
thereunder or under any other Loan Document executed by the Waiving Borrower in
connection with the Other Borrower Secured Obligation: (i) to proceed against
the other Borrower or any other person, or against any other collateral assigned
to Fannie Mae by either Borrower or any other person; (ii) to pursue any other
right or remedy in Fannie Mae’s power; (iii) to give notice of the time, place
or terms of any public or private sale of real or personal property collateral
assigned to Fannie Mae by the other Borrower or any other person (other than the
Waiving Borrower), or otherwise to comply with Section 9615 of the California
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time) with respect to any such personal property collateral located in the State
of California; or (iv) to make or give (except as otherwise expressly provided
in the Security Documents) any presentment, demand, protest, notice of dishonor,
notice of protest or other demand or notice of any kind in connection with the
Other Borrower Secured Obligation or any collateral (other than the Collateral
described in such Security Document) for the Other Borrower Secured Obligation.

(b) The Waiving Borrower hereby waives any defense it may now or hereafter have
that relates to: (i) any disability or other defense of the other Borrower or
any other person; (ii) the cessation, from any cause other than full
performance, of the Other Borrower Secured Obligation; (iii) the application of
the proceeds of the Other Borrower Secured Obligation, by the other Borrower or
any other person, for purposes other than the purposes represented to the
Waiving Borrower by the other Borrower or otherwise intended or understood by
the Waiving Borrower or the other Borrower; (iv) any act or omission by Fannie
Mae which directly or indirectly results in or contributes to the release of the
other Borrower or any other person or any collateral for any Other Borrower
Secured Obligation; (v) the unenforceability or invalidity of any Security
Document or other Borrower Loan Document (other than the Security Instrument
executed by the Waiving Borrower that secures the Other Borrower Secured
Obligation) or guaranty with respect to any Other Borrower Secured Obligation,
or the lack of perfection or continuing perfection or lack of priority of any
Lien (other than the Lien of such Security Instrument) which secures any Other
Borrower Secured Obligation; (vi) any failure of Fannie Mae to marshal assets in
favor of the Waiving Borrower or any other person; (vii) any modification of any
Other Borrower Secured Obligation, including any renewal, extension,
acceleration or increase in interest rate; (viii) any and all rights and
defenses arising out of an election of remedies by Fannie Mae, even though that
election of remedies, such as a nonjudicial foreclosure with respect to security
for a guaranteed obligation, has destroyed the Waiving Borrower’s rights of
subrogation and reimbursement against the principal by the operation of
Section 580d of the California Code of Civil Procedure or otherwise; (ix) any
law which provides that the obligation of a surety or guarantor must neither be
larger in amount nor in other respects more burdensome than that of the
principal or which reduces a surety’s or guarantor’s obligation in proportion to
the principal obligation; (x) any failure of Fannie Mae to file or enforce a
claim in any bankruptcy or other proceeding with respect to any person; (xi) the
election by Fannie Mae, in any bankruptcy proceeding of any person, of the
application or non-application of Section 1111(b)(2) of the Bankruptcy Code;
(xii) any extension of credit or the grant of any lien under Section 364 of the
Bankruptcy Code; (xiii) any use of cash collateral under Section 363 of the
Bankruptcy Code; or (xiv) any agreement or stipulation with respect to the
provision of adequate protection in any bankruptcy proceeding of any person. The
Waiving Borrower further waives any and all rights and defenses that it may have
because the Other Borrower Secured Obligation is secured by real property; this
means, among other things, that: (A) Fannie Mae may collect from the Waiving
Borrower without first foreclosing on any real or personal property collateral
pledged by the other Borrower; (B) if Fannie Mae forecloses on any real property
collateral pledged by the other Borrower, then (1) the amount of the Other
Borrower Secured Obligation may be reduced only by the price for which that
collateral is sold at the foreclosure sale, even if the collateral is worth more
than the sale price, and (2) Fannie Mae may foreclose on the real property
encumbered by the Security Instrument executed by the Waiving Borrower and
securing the Other Borrower Secured Obligation even if Fannie Mae, by
foreclosing on the real property collateral of the Other Borrower, has destroyed
any right the Waiving Borrower may have to collect from the Other Borrower. The
foregoing sentence is an

 

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unconditional and irrevocable waiver of any rights and defenses the Waiving
Borrower may have because the Other Borrower Secured Obligation is secured by
real property. These rights and defenses being waived by the Waiving Borrower
include, but are not limited to, any rights or defenses based upon Section 580a,
580b, 580d or 726 of the California Code of Civil Procedure. Without limiting
the generality of the foregoing or any other provision hereof, the Waiving
Borrower further expressly waives, except as provided in Section 12.04(g) below,
to the extent permitted by law any and all rights and defenses, which might
otherwise be available to it under California Civil Code Sections 2787 to 2855,
inclusive, 2899 and 3433, or under California Code of Civil Procedure Sections
580a, 580b, 580d and 726, or any of such sections.

(c) The Waiving Borrower hereby waives any and all benefits and defenses under
California Civil Code Section 2810 and agrees that by doing so the Security
Instrument executed by the Waiving Borrower and securing the Other Borrower
Secured Obligation shall be and remain in full force and effect even if the
other Borrower had no liability at the time of incurring the Other Borrower
Secured Obligation, or thereafter ceases to be liable. The Waiving Borrower
hereby waives any and all benefits and defenses under California Civil Code
Section 2809 and agrees that by doing so the Waiving Borrower’s liability may be
larger in amount and more burdensome than that of the other Borrower. The
Waiving Borrower hereby waives the benefit of all principles or provisions of
law, which are or might be in conflict with the terms of any of its waivers, and
agrees that the Waiving Borrower’s waivers shall not be affected by any
circumstances, which might otherwise constitute a legal or equitable discharge
of a surety or a guarantor. The Waiving Borrower hereby waives the benefits of
any right of discharge and all other rights under any and all statutes or other
laws relating to guarantors or sureties, to the fullest extent permitted by law,
diligence in collecting the Other Borrower Secured Obligation, presentment,
demand for payment, protest, all notices with respect to the Other Borrower
Secured Obligation, which may be required by statute, rule of law or otherwise
to preserve Fannie Mae’s rights against the Waiving Borrower hereunder,
including notice of acceptance, notice of any amendment of the Loan Documents
evidencing the Other Borrower Secured Obligation, notice of the occurrence of
any default or Event of Default, notice of intent to accelerate, notice of
acceleration, notice of dishonor, notice of foreclosure, notice of protest,
notice of the incurring by the other Borrower of any obligation or indebtedness
and all rights to require Fannie Mae to (i) proceed against the other Borrower,
(ii) proceed against any general partner of the other Borrower, (iii) proceed
against or exhaust any collateral held by Fannie Mae to secure the Other
Borrower Secured Obligation, or (iv) if the other Borrower is a partnership,
pursue any other remedy it may have against the other Borrower or any general
partner of the other Borrower, including any and all benefits under California
Civil Code Sections 2845, 2849 and 2850.

(d) The Waiving Borrower understands that the exercise by Fannie Mae of certain
rights and remedies contained in a Security Instrument executed by the other
Borrower (such as a nonjudicial foreclosure sale) may affect or eliminate the
Waiving Borrower’s right of subrogation against the other Borrower and that the
Waiving Borrower may therefore incur a partially or totally nonreimburseable
liability. Nevertheless, the Waiving Borrower hereby authorizes and empowers
Fannie Mae to exercise, in its sole and absolute discretion, any right or
remedy, or any combination thereof, which may then be available, since it is the
intent and purpose of the Waiving Borrower that its waivers shall be absolute,
independent and unconditional under any and all circumstances.

 

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(e) In accordance with Section 2856 of the California Civil Code, the Waiving
Borrower also waives any right or defense based upon an election of remedies by
Fannie Mae, even though such election (e.g., nonjudicial foreclosure with
respect to any collateral held by Fannie Mae to secure repayment of the Other
Borrower Secured Obligation) destroys or otherwise impairs the subrogation
rights of the Waiving Borrower to any right to proceed against the other
Borrower for reimbursement, or both, by operation of Section 580d of the
California Code of Civil Procedure or otherwise.

(f) In accordance with Section 2856 of the California Civil Code, the Waiving
Borrower waives any and all other rights and defenses available to the Waiving
Borrower by reason of Sections 2787 through 2855, inclusive, of the California
Civil Code, including any and all rights or defenses the Waiving Borrower may
have by reason of protection afforded to the other Borrower with respect to the
Other Borrower Secured Obligation pursuant to the antideficiency or other laws
of the State of California limiting or discharging the Other Borrower Secured
Obligation, including Sections 580a, 580b, 580d, and 726 of the California Code
of Civil Procedure.

(g) In accordance with Section 2856 of the California Civil Code and pursuant to
any other Applicable Law, the Waiving Borrower agrees to withhold the exercise
of any and all subrogation, contribution and reimbursement rights against
Borrower, against any other person, and against any collateral or security for
the Other Borrower Secured Obligation, including any such rights pursuant to
Sections 2847 and 2848 of the California Civil Code, until the Other Borrower
Secured Obligation has been indefeasibly paid and satisfied in full, all
obligations owed to Fannie Mae under the Loan Documents have been fully
performed, and Fannie Mae have released, transferred or disposed of all of their
right, title and interest in such collateral or security.

(h) Each Borrower hereby irrevocably and unconditionally agrees that in the
event that, notwithstanding Section 12.04(g) hereof, to the extent its agreement
and waiver set forth in Section 12.04(g) is found by a court of competent
jurisdiction to be void or voidable for any reason and such Borrower has any
subrogation or other rights against any other Borrower, any such claims, direct
or indirect, that such Borrower may have by subrogation rights or other form of
reimbursement, contribution or indemnity, against any other Borrower or to any
security or any such Borrower, shall be and such rights, claims and indebtedness
are hereby deferred, postponed and fully subordinated in time and right of
payment to the prior payment, performance and satisfaction in full of the
Obligations. Until payment and performance in full with interest (including
post-petition interest in any case under any chapter of the Bankruptcy Code) of
the Obligations, each Borrower agrees not to accept any payment, or satisfaction
of any kind, of Indebtedness of any other Borrower in respect of any such
subrogation rights arising by virtue of payments made pursuant to this Article
12, and hereby assigns such rights or indebtedness to Fannie Mae, including the
right to file proofs of claim and to vote thereon in connection with any case
under any chapter of the Bankruptcy Code, including the right to vote on any
plan of reorganization. In the event that any payment on account of any such
subrogation rights shall be received by any Borrower in violation of the
foregoing, such payment shall be held in trust for the benefit of Fannie Mae,
and any amount so collected should be turned over to Fannie Mae for application
to the Obligations.

 

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(i) At any time without notice to the Waiving Borrower, and without affecting or
prejudicing the right of Fannie Mae to proceed against the Collateral described
in any Loan Document executed by the Waiving Borrower and securing the Other
Borrower Secured Obligation, (i) the time for payment of the principal of or
interest on, or the performance of, the Other Borrower Secured Obligation may be
extended or the Other Borrower Secured Obligation may be renewed in whole or in
part; (ii) the time for the other Borrower’s performance of or compliance with
any covenant or agreement contained in the Loan Documents evidencing the Other
Borrower Secured Obligation, whether presently existing or hereinafter entered
into, may be extended or such performance or compliance may be waived; (iii) the
maturity of the Other Borrower Secured Obligation may be accelerated as provided
in the related Note or any other related Loan Document; (iv) the related Note or
any other related Loan Document may be modified or amended by Fannie Mae and the
other Borrower in any respect, including an increase in the principal amount;
and (v) any security for the Other Borrower Secured Obligation may be modified,
exchanged, surrendered or otherwise dealt with or additional security may be
pledged or mortgaged for the Other Borrower Secured Obligation.

(j) It is agreed among each Borrower and Fannie Mae that all of the foregoing
waivers are of the essence of the transaction contemplated by this Agreement and
the Loan Documents and that but for the provisions of this Article 12 and such
waivers Fannie Mae would decline to enter into this Agreement.

(k) Waiving Borrower represents and warrants having established with other
Borrower adequate means of obtaining, on an ongoing basis, such information as
waiving Borrower may require concerning all matters bearing on the risk of
nonpayment or nonperformance of the Obligations. Waiving Borrower assumes sole,
continuing responsibility for obtaining such information from sources other than
from Fannie Mae. Fannie Mae has no duty to provide any information to Waiving
Borrower.

 

  Section 12.05. Joint and Several Obligation; Cross-Guaranty.

Notwithstanding anything contained in this Agreement or the other Loan Documents
to the contrary (but subject to the last sentence of Section 12.02 and the
provisions of Section 12.12), each Borrower shall have joint and several
liability for all Obligations of the Loan secured by such Borrower’s Collateral
Pool. Notwithstanding the intent of all of the parties to this Agreement that
all Obligations of each Borrower with respect to a Collateral Pool under this
Agreement and the other Borrower Loan Documents shall be joint and several
Obligations of each Borrower subject to such Collateral Pool, each Borrower, on
a joint and several basis, hereby irrevocably guarantees to Fannie Mae and its
successors and assigns, the full and prompt payment of the Loan secured by such
Borrower’s Collateral Pool (whether at stated maturity, by acceleration or
otherwise) and performance of, all Obligations secured by such Borrower’s
Collateral Pool owed or hereafter owing to Fannie Mae by each other Borrower
owning a Mortgaged Property subject to the same Collateral Pool. Each Borrower
agrees that its guaranty obligation hereunder is an unconditional guaranty of
payment and performance and not merely a guaranty of collection. The Obligations
of each Borrower under this Agreement shall not be subject to any counterclaim,
set-off, recoupment, deduction, cross-claim or defense based upon any claim any
Borrower may have against Fannie Mae or any other Borrower.

 

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  Section 12.06. No Impairment.

Each Borrower agrees that the provisions of this Article 12 are for the benefit
of Fannie Mae and their successors, transferees, endorsees and assigns, and
nothing herein contained shall impair, as between any other Borrower and Fannie
Mae, the obligations of such other Borrower under the Loan Documents.

 

  Section 12.07. Election of Remedies.

(a) Fannie Mae, in its discretion, may (i) bring suit against any one or more
Collateral Pool Borrower, jointly and severally, without any requirement that
Fannie Mae first proceed against any other Borrower or any other Person;
(ii) compromise or settle with any one or more Borrower, or any other Person,
for such consideration as Fannie Mae may deem proper; (iii) release one or more
Borrower, or any other Person, from liability; and (iv) otherwise deal with any
Borrower and any other Person, or any one or more of them, in any manner, or
resort to any of the Collateral at any time held by it for performance of the
Obligations or any other source or means of obtaining payment of the
Obligations, and no such action shall impair the rights of Fannie Mae to collect
from any Borrower any amount guaranteed by any Borrower under this Article 12.

(b) If, in the exercise of any of its rights and remedies, Fannie Mae shall
forfeit any of its rights or remedies, including its rights to enter a
deficiency judgment against any Collateral Pool Borrower or any other Person,
whether because of any Applicable Laws pertaining to “election of remedies” or
the like, each Collateral Pool Borrower hereby consents to such action by Fannie
Mae and waives any claim based upon such action, even if such action by Fannie
Mae shall result in a full or partial loss or any rights of subrogation which
each such Borrower might otherwise have had but for such action by Fannie Mae.
Any election of remedies which results in the denial or impairment of the right
of Fannie Mae to seek a deficiency judgment against any Collateral Pool Borrower
shall not impair any other such Collateral Pool Borrower’s obligation to pay the
full amount of the Obligations secured by the applicable Collateral Pool. In the
event Fannie Mae shall bid at any foreclosure or trustee’s sale or at any
private sale permitted by law or any of the Loan Documents, Fannie Mae may bid
all or less than the amount of the Obligations secured by the applicable
Collateral Pool and the amount of such bid need not be paid by Fannie Mae but
shall be credited against the Obligations secured by the applicable Collateral
Pool. The amount of the successful bid at any such sale, whether Fannie Mae or
any other party is the successful bidder, shall be conclusively deemed to be
fair market value of the Collateral secured by the applicable Collateral Pool
and the difference between such bid amount and the remaining balance of the
Obligations secured by the applicable Collateral Pool shall be conclusively
deemed to be amount of the Obligations secured by the applicable Collateral Pool
guaranteed under this Article 12, notwithstanding that any present or future law
or court decision or ruling may have the effect of reducing the amount of any
deficiency claim to which Fannie Mae might otherwise be entitled but for such
bidding at any such sale.

 

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  Section 12.08. Subordination of Other Obligations.

(a) Each Borrower hereby irrevocably and unconditionally agrees that all amounts
payable from time to time to such Borrower by any other Borrower pursuant to any
agreement, whether secured or unsecured, whether of principal, interest or
otherwise, other than the amounts referred to in this Article 12 (collectively,
the “Subordinated Obligations”), shall be and such rights, claims and
indebtedness are, hereby deferred, postponed and fully subordinated in time and
right of payment to the prior payment, performance and satisfaction in full of
the Obligations; provided, however, that payments may be received by any
Borrower in accordance with, and only in accordance with, the provisions of
Section 12.08(b) hereof.

(b) Until the Obligations under all the Loan Documents and the Guaranty have
been finally paid in full or fully performed and all the Loan Documents and the
Guaranty for such Collateral Pool have been terminated, each such Collateral
Pool Borrower irrevocably and unconditionally agrees it will not ask, demand,
sue for, take or receive, directly or indirectly, by set-off, redemption,
purchase or in any other manner whatsoever, any payment with respect to, or any
security or guaranty for, the whole or any part of the Subordinated Obligations,
and in issuing documents, instruments or agreements of any kind evidencing the
Subordinated Obligations, each such Collateral Pool Borrower hereby agrees that
it will not receive any payment of any kind on account of the Subordinated
Obligations, so long as any of the Obligations under all the Loan Documents and
the Guaranty are outstanding or any of the terms and conditions of any of the
Loan Documents and the Guaranty are in effect; provided, however, that,
notwithstanding anything to the contrary contained herein, if no Potential Event
of Default or Event of Default or any other event or condition which would
constitute an Event of Default after notice or lapse of time or both has
occurred and is continuing under any of the Loan Documents and the Guaranty
pertaining to such Collateral Pool, then (i) payments may be received by such
Borrower in respect of the Subordinated Obligations in accordance with the
stated terms thereof, and (ii) each such Borrower and Guarantor shall be
permitted to make distributions in accordance with the terms of the applicable
Organizational Documents. Except as aforesaid, each Borrower agrees not to
accept any payment or satisfaction of any kind of indebtedness of any other
Borrower in respect of the Subordinated Obligations and hereby assigns such
rights or indebtedness to Fannie Mae, which assignment shall be of no further
force and effect upon full satisfaction of the Obligations, including the right
to file proofs of claim and to vote thereon in connection with any case under
any chapter of the Bankruptcy Code, including the right to vote on any plan of
reorganization. In the event that any payment on account of Subordinated
Obligations shall be received by any Borrower in violation of the foregoing,
such payment shall be held in trust for the benefit of Fannie Mae, and any
amount so collected shall be turned over to Fannie Mae upon demand.

 

  Section 12.09. Insolvency and Liability of Other Borrower.

So long as any of the Obligations are outstanding with respect to the applicable
Collateral Pool, if a petition under any chapter of the Bankruptcy Code is filed
by or against any Collateral Pool Borrower (the “Subject Borrower” for the
purposes of Section 12.09, Section 12.10, Section 12.11 and Section 12.12 of
this Agreement), each other Collateral Pool Borrower subject to such Collateral
Pool (each, an “Other Borrower” for the purposes of Section 12.09,
Section 12.10, Section 12.11 and Section 12.12 of this Agreement) agrees to file
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Subject Borrower in any bankruptcy or other proceeding in which the filing of
claims is required by law in connection with indebtedness owed by the Subject
Borrower and to assign to Fannie Mae all rights thereunder up to the amount of
such indebtedness, which assignment shall be of no further force and effect upon
full satisfaction of the Obligations. In all such cases, the Person or Persons
authorized to pay such claims shall pay to Fannie Mae the full amount thereof
and Fannie Mae agrees to pay such Other Borrower any amounts received in excess
of the amount necessary to pay the Obligations of the Loan secured by such
Borrower’s Mortgaged Property. Each Other Borrower hereby assigns to Fannie Mae
all of such Borrower’s rights to all such payments to which such Other Borrower
would otherwise be entitled but not to exceed the full amount of the
Obligations. In the event that, notwithstanding the foregoing, any such payment
shall be received by any Other Borrower before the Obligations shall have been
finally paid in full, such payment shall be held in trust for the benefit of and
shall be paid over to Fannie Mae upon demand. Furthermore, notwithstanding the
foregoing, the liability of each Borrower hereunder shall in no way be affected
by:

(a) the release or discharge of any Other Borrower in any creditors’,
receivership, bankruptcy or other proceedings; or

(b) the impairment, limitation or modification of the liability of any Other
Borrower or the estate of any Other Borrower in bankruptcy resulting from the
operation of any present or future provisions of any chapter of the Bankruptcy
Code or other statute or from the decision in any court.

 

  Section 12.10. Preferences, Fraudulent Conveyances, Etc.

If Fannie Mae is required to refund, or voluntarily refunds, any payment
received from any Borrower because such payment is or may be avoided,
invalidated, declared fraudulent, set aside or determined to be void or voidable
as a preference, fraudulent conveyance, impermissible setoff or a diversion of
trust funds under the bankruptcy laws or for any similar reason, including
without limitation any judgment, order or decree of any court or administrative
body having jurisdiction over any Borrower or any of its property, or upon or as
a result of the appointment of a receiver, intervenor, custodian or conservator
of, or trustee or similar officer for, any Borrower or any substantial part of
its property, or otherwise, or any statement or compromise of any claim effected
by Fannie Mae with any Borrower or any other claimant (a “Rescinded Payment”),
then each Other Borrower’s liability to Fannie Mae shall continue in full force
and effect, or each Other Borrower’s liability to Fannie Mae shall be reinstated
and renewed, as the case may be, with the same effect and to the same extent as
if the Rescinded Payment had not been received by Fannie Mae, notwithstanding
the cancellation or termination of any of the Loan Documents, and regardless of
whether Fannie Mae contested the order requiring the return of such payment. In
addition, each Other Borrower shall pay, or reimburse Fannie Mae for, all
expenses (including all reasonable attorneys’ fees, court costs and related
disbursements) incurred by Fannie Mae in the defense of any claim that a payment
received by Fannie Mae in respect of all or any part of the Obligations must be
refunded. The provisions of this Section 12.10 shall survive the termination of
the Borrower Loan Documents and any satisfaction and discharge of any Borrower
by virtue of any payment, court order or any federal or state law.

 

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  Section 12.11. Maximum Liability of Each Borrower.

Notwithstanding anything contained in this Agreement or any of the Loan
Documents to the contrary, if the obligations of any Borrower under this
Agreement or any of the other Loan Documents or any Security Instruments granted
by any Borrower are determined to exceed the reasonably equivalent value
received by such Borrower in exchange for such obligations or grant of such
Security Instruments under any Fraudulent Transfer Law (as hereinafter defined),
then such liability of such Borrower shall be limited to a maximum aggregate
amount equal to the largest amount that would not render its obligations under
this Agreement or all the Other Loan Documents subject to avoidance as a
fraudulent transfer or conveyance under Section 548 of Title 11 of the United
States Code or any applicable provisions of comparable state law (collectively,
the “Fraudulent Transfer Laws”), in each case after giving effect to all other
liabilities of such Borrower, contingent or otherwise, that are relevant under
the Fraudulent Transfer Laws (specifically excluding, however, any liabilities
of such Borrower in respect of Indebtedness to any Other Borrower or any other
Person that is an Affiliate of the Other Borrower to the extent that such
Indebtedness would be discharged in an amount equal to the amount paid by such
Borrower in respect of the Obligations) and after giving effect (as assets) to
the value (as determined under the applicable provisions of the Fraudulent
Transfer Laws) of any rights to subrogation, reimbursement, indemnification or
contribution of such Borrower pursuant to Applicable Law or pursuant to the
terms of any agreement including the Contribution Agreement.

 

  Section 12.12. Liability Cumulative.

The liability of each Borrower under this Article 12 is in addition to and shall
be cumulative with all liabilities of such Borrower to Fannie Mae under this
Agreement and all the other Loan Documents to which such Borrower is a party or
in respect of any Obligations of any Other Borrower.

ARTICLE 13

MISCELLANEOUS PROVISIONS

 

  Section 13.01. Counterparts.

To facilitate execution, this Agreement may be executed in any number of
counterparts. It shall not be necessary that the signatures of, or on behalf of,
each party, or that the signatures of all persons required to bind any party,
appear on each counterpart, but it shall be sufficient that the signature of, or
on behalf of, each party, appear on one (1) or more counterparts. All
counterparts shall collectively constitute a single agreement. It shall not be
necessary in making proof of this Agreement to produce or account for more than
the number of counterparts containing the respective signatures of, or on behalf
of, all of the parties hereto.

 

  Section 13.02. Amendments, Changes and Modifications.

This Agreement may be amended, changed, modified, altered or terminated only by
written instrument or written instruments signed by all of the parties hereto.

 

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  Section 13.03. Payment of Costs, Fees and Expenses.

The applicable Collateral Pool Borrower shall pay, on demand, all reasonable
third-party out-of-pocket fees, costs, charges or expenses (including the
reasonable fees and expenses of attorneys, accountants and other experts)
incurred by Fannie Mae in connection with:

(a) Any amendment, consent, review or waiver to or requested under this
Agreement or any of the Loan Documents and the Guaranty (whether or not any such
amendments, consents or waivers are entered into) for such Collateral Pool.

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

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

The applicable Collateral Pool Borrower shall also pay, on demand, any transfer
taxes, documentary taxes, assessments or charges made by any Governmental
Authority by reason of the execution, delivery, filing, recordation, performance
or enforcement of any of the Loan Documents and the Guaranty or the Loans.
However, such Borrower will not be obligated to pay any franchise, excise,
estate, inheritance, income, excess profits or similar tax on Fannie Mae. Any
attorneys’ fees and expenses payable by such Borrower pursuant to this
Section 13.03 shall be recoverable separately from and in addition to any other
amount included in such judgment, and such obligation is intended to be
severable from the other provisions of this Agreement and to survive and not be
merged into any such judgment. Any amounts payable by Borrower pursuant to this
Section 13.03, with interest thereon if not paid when due, shall become
additional Indebtedness of such Borrower secured by the Loan Documents
evidencing the Loan secured by Borrower’s Mortgaged Property. Such amounts shall
bear interest from the date such amounts are due until paid in full at the
weighted average, as determined by Fannie Mae, of the interest rates in effect
from time to time for each Loan unless collection from such Borrower of interest
at such rate would be contrary to Applicable Law, in which event such amounts
shall bear interest at the highest rate which may be collected from such
Borrower under Applicable Law. The provisions of this Section 13.03 are
cumulative with, and do not exclude the application and benefit to Fannie Mae
of, any provision of any other Loan Document relating to any of the matters
covered by this Section 13.03.

 

  Section 13.04. Payment Procedure.

All payments to be made to Fannie Mae pursuant to this Agreement or any of the
Loan Documents and the Guaranty shall be made in lawful currency of the United
States of America and in immediately available funds by wire transfer to an
account designated by Fannie Mae before 1:00 p.m. (Eastern Standard Time or
Eastern Daylight Time, as applicable) on the date when due.

 

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  Section 13.05. Payments on Business Days.

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

 

  Section 13.06. Choice of Law; Consent to Jurisdiction; Waiver of Jury Trial.

NOTWITHSTANDING ANYTHING IN THE NOTES, THE SECURITY DOCUMENTS OR ANY OF THE
OTHER LOAN DOCUMENTS AND THE GUARANTY TO THE CONTRARY, EACH OF THE TERMS AND
PROVISIONS, AND RIGHTS AND OBLIGATIONS OF BORROWER UNDER THIS AGREEMENT AND THE
NOTES, GUARANTOR UNDER THE GUARANTY, AND BORROWER AND GUARANTOR UNDER THE OTHER
LOAN DOCUMENTS AND THE GUARANTY, SHALL BE GOVERNED BY, INTERPRETED, CONSTRUED
AND ENFORCED PURSUANT TO AND IN ACCORDANCE WITH THE LAWS OF THE DISTRICT OF
COLUMBIA (EXCLUDING THE LAW APPLICABLE TO CONFLICTS OR CHOICE OF LAW) EXCEPT TO
THE EXTENT OF PROCEDURAL AND SUBSTANTIVE MATTERS RELATING ONLY TO (i) THE
CREATION, PERFECTION AND FORECLOSURE OF LIENS AND SECURITY INTERESTS, AND
ENFORCEMENT OF THE RIGHTS AND REMEDIES, AGAINST THE MORTGAGED PROPERTIES, WHICH
MATTERS SHALL BE GOVERNED BY THE LAWS OF THE JURISDICTION IN WHICH THE MORTGAGED
PROPERTY IS LOCATED, (ii) THE PERFECTION, THE EFFECT OF PERFECTION AND
NON-PERFECTION AND FORECLOSURE OF SECURITY INTERESTS ON PERSONAL PROPERTY (OTHER
THAN DEPOSIT ACCOUNTS), WHICH MATTERS SHALL BE GOVERNED BY THE LAWS OF THE
JURISDICTION DETERMINED BY THE CHOICE OF LAW PROVISIONS OF THE UNIFORM
COMMERCIAL CODE IN EFFECT FOR THE JURISDICTION IN WHICH THE MORTGAGED PROPERTY
IS LOCATED AND (iii) THE PERFECTION, THE EFFECT OF PERFECTION AND NON-PERFECTION
AND FORECLOSURE OF DEPOSIT ACCOUNTS, WHICH MATTERS SHALL BE GOVERNED BY THE LAWS
OF THE JURISDICTION IN WHICH THE DEPOSIT ACCOUNT IS LOCATED. BORROWER AND
GUARANTOR AGREE THAT ANY CONTROVERSY ARISING UNDER OR IN RELATION TO THE NOTES,
THE SECURITY DOCUMENTS (OTHER THAN THE SECURITY INSTRUMENTS) OR ANY OTHER LOAN
DOCUMENT SHALL BE, EXCEPT AS OTHERWISE PROVIDED HEREIN, LITIGATED IN DISTRICT OF
COLUMBIA. THE LOCAL AND FEDERAL COURTS AND AUTHORITIES WITH JURISDICTION IN
DISTRICT OF COLUMBIA SHALL, EXCEPT AS OTHERWISE PROVIDED HEREIN, HAVE
JURISDICTION OVER ALL CONTROVERSIES WHICH MAY ARISE UNDER OR IN RELATION TO THE
LOAN DOCUMENTS AND THE GUARANTY, INCLUDING THOSE CONTROVERSIES RELATING TO THE
EXECUTION, JURISDICTION, BREACH, ENFORCEMENT OR COMPLIANCE WITH THE NOTES, THE
SECURITY DOCUMENTS

 

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(OTHER THAN THE SECURITY INSTRUMENTS) OR ANY OTHER ISSUE ARISING UNDER, RELATING
TO, OR IN CONNECTION WITH ANY OF THE LOAN DOCUMENTS AND THE GUARANTY. BORROWER
AND GUARANTOR IRREVOCABLY CONSENT TO SERVICE, JURISDICTION, AND VENUE OF SUCH
COURTS FOR ANY LITIGATION ARISING FROM THE NOTES, THE SECURITY DOCUMENTS OR ANY
OF THE OTHER LOAN DOCUMENTS AND THE GUARANTY, AND WAIVES ANY OTHER VENUE TO
WHICH IT MIGHT BE ENTITLED BY VIRTUE OF DOMICILE, HABITUAL RESIDENCE OR
OTHERWISE. NOTHING CONTAINED HEREIN, HOWEVER, SHALL PREVENT LENDER FROM BRINGING
ANY SUIT, ACTION OR PROCEEDING OR EXERCISING ANY RIGHTS AGAINST BORROWER AND
GUARANTOR AND AGAINST THE COLLATERAL IN ANY OTHER JURISDICTION IN WHICH ANY
MORTGAGED PROPERTY IS LOCATED. INITIATING SUCH SUIT, ACTION OR PROCEEDING OR
TAKING SUCH ACTION IN ANY OTHER PERMITTED JURISDICTION SHALL IN NO EVENT
CONSTITUTE A WAIVER OF THE AGREEMENT CONTAINED HEREIN THAT THE LAWS OF DISTRICT
OF COLUMBIA SHALL GOVERN THE RIGHTS AND OBLIGATIONS OF BORROWER AND GUARANTOR
AND LENDER AS PROVIDED HEREIN OR THE SUBMISSION HEREIN BY BORROWER AND GUARANTOR
TO PERSONAL JURISDICTION WITHIN THE DISTRICT OF COLUMBIA. BORROWER, GUARANTOR
AND LENDER (A) COVENANT AND AGREE NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO
ANY ISSUE ARISING UNDER ANY OF THE LOAN DOCUMENTS AND THE GUARANTY TRIABLE BY A
JURY AND (B) WAIVE ANY RIGHT TO TRIAL BY JURY TO THE EXTENT THAT ANY SUCH RIGHT
SHALL NOW OR HEREAFTER EXIST. THIS WAIVER IS INTENDED TO ENCOMPASS INDIVIDUALLY
EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A JURY TRIAL WOULD
OTHERWISE ACCRUE. FURTHER, BORROWER AND GUARANTOR HEREBY CERTIFY THAT NO
REPRESENTATIVE OR AGENT OF LENDER (INCLUDING, BUT NOT LIMITED TO, LENDER’S
COUNSEL) HAS REPRESENTED, EXPRESSLY OR OTHERWISE, TO BORROWER OR GUARANTOR THAT
LENDER WILL NOT SEEK TO ENFORCE THE PROVISIONS OF THIS SECTION 13.06. THE
FOREGOING PROVISIONS WERE KNOWINGLY, WILLINGLY AND VOLUNTARILY AGREED TO BY
BORROWER AND GUARANTOR UPON CONSULTATION WITH INDEPENDENT LEGAL COUNSEL SELECTED
BY BORROWER’S AND GUARANTOR’S FREE WILL.

 

  Section 13.07. Severability.

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

 

  Section 13.08. Notices.

(a) Manner of Giving Notice. Each notice, direction, certificate or other
communication hereunder (in this Section 13.08 referred to collectively as
“notices” and singly as a “notice”) which any party is required or permitted to
give to the other party pursuant to this Agreement shall be in writing and shall
be deemed to have been duly and sufficiently given if:

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

 

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

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

addressed to the parties as follows:

 

As to each Borrower:    c/o Equity Residential    Two North Riverside Plaza,
Suite 400    Chicago, Illinois 60606    Attention: General Counsel    Telephone:
(312) 474-1300    Telecopier: (312) 454-0039 with a copy to:    c/o Equity
Residential    Two North Riverside Plaza, Suite 400    Chicago, Illinois 0660   
Attention: Chief Financial Officer    Telephone: (312) 474-1300    Telecopy:
(312) 526-9252           And to:    Hogan Lovells US LLP    555 Thirteenth
Street, N.W.    Washington, D.C. 20004    Attention: Lee E. Berner, Esq.   
Telephone: (202) 637-6449    Telecopy: (202) 637-5910 As to Servicer:    Wells
Fargo Multifamily Capital, Inc.    375 Park Avenue    Mail Code NY 4060    New
York, New York 10152    Attention:    David S. Kaplan    Telecopy:    (212)
214-8461

 

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As to Fannie Mae:    Fannie Mae    3900 Wisconsin Avenue, N.W.    Washington,
D.C. 20016-2899    Attention:    Vice President for Multifamily Asset Management
   Telecopy No.:    (301) 280 2064 with a copy to:    Arent Fox LLP    1675
Broadway    New York, NY 10019    Attention: David L. Dubrow, Esq.    Telephone:
(212) 484-3957    Facsimile.: (212) 484-3990

(b) Change of Notice Address. Any party may, by notice given pursuant to this
Section 13.08, change the person or persons and/or address or addresses, or
designate an additional person or persons or an additional address or addresses,
for its notices, but notice of a change of address shall only be effective upon
receipt. Each party agrees that it shall not refuse or reject delivery of any
notice given hereunder, that it shall acknowledge, in writing, receipt of the
same upon request by the other party and that any notice rejected or refused by
it shall be deemed for all purposes of this Agreement to have been received by
the rejecting party on the date so refused or rejected, as conclusively
established by the records of the U.S. Postal Service, the courier service or
facsimile.

 

  Section 13.09. Further Assurances and Corrective Instruments.

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

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

 

  Section 13.10. Term of this Agreement.

This Agreement shall continue in effect until the Facility Termination Date.

 

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  Section 13.11. Assignments; Third-Party Rights.

No Borrower shall assign this Agreement, or delegate any of its obligations
hereunder, without the prior written consent of Fannie Mae. Fannie Mae may
assign its rights and obligations under this Agreement separately or together,
without Borrower’s consent.

 

  Section 13.12. Headings.

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

 

  Section 13.13. General Interpretive Principles.

For purposes of this Agreement, except as otherwise expressly provided or unless
the context otherwise requires, (i) the terms defined in Appendix I and
elsewhere in this Agreement have the meanings assigned to them in this Agreement
and include the plural as well as the singular, and the use of any gender herein
shall be deemed to include the other genders; (ii) accounting terms not
otherwise defined herein have the meanings assigned to them in accordance with
GAAP; (iii) references herein to “Articles,” “Sections,” “subsections,”
“paragraphs” and other subdivisions without reference to a document are to
designated Articles, Sections, subsections, paragraphs and other subdivisions of
this Agreement; (iv) a reference to a subsection without further reference to a
Section is a reference to such subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to paragraphs and
other subdivisions; (v) a reference to an Exhibit or a Schedule without a
further reference to the document to which the Exhibit or Schedule is attached
is a reference to an Exhibit or Schedule to this Agreement; (vi) the words
“herein,” “hereof,” “hereunder” and other words of similar import refer to this
Agreement as a whole and not to any particular provision; and (vii) the word
“including” means “including, but not limited to.”

 

  Section 13.14. Interpretation.

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

 

  Section 13.15. Standards for Decisions, Etc.

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

 

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  Section 13.16. Decisions in Writing.

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

 

  Section 13.17. Supersedes Original Agreement.

This Agreement replaces and supersedes the Original Agreement in its entirety as
it relates to the Loans.

 

  Section 13.18. USA Patriot Act.

Fannie Mae hereby notifies each Borrower that pursuant to the requirements of
the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26,
2001)), it is required to obtain, verify and record information that identifies
each Borrower, which information includes the name and address of each Borrower
and other information that will allow such Fannie Mae to identify each Borrower
in accordance with such Act.

 

  Section 13.19. All Asset Filings.

If Fannie Mae believes that an “all-asset” collateral description, as
contemplated by Section 9-504(2) of the UCC, is appropriate as to any Collateral
under any Loan Document, Fannie Mae is irrevocably authorized to use such a
collateral description, whether in one or more separate filings or as part of
the collateral description in a filing that particularly describes the
Collateral.

 

  Section 13.20. Ratification; Conflict.

Except as expressly amended by the provisions of this Agreement or any other
documents executed in connection with this Agreement, all of the Loan Documents
and the Guaranty remain in full force and effect. If any provision of this
Agreement is in conflict with any provision of any other Loan Document, the
provision contained in this Master Agreement shall control and such conflicting
provision or provisions of such other Loan Document shall be deemed to be
amended hereby to the extent necessary to make such other provision consistent
with this Agreement in all respects.

 

  Section 13.21. Special Provisions Regarding Payment of Interest on Imposition
Deposits.

Notwithstanding anything in the Loan Documents to the contrary, including but
not limited to Section 7(b) of each Security Instrument, Fannie Mae shall be
required to pay Borrower any interest, earnings or profits on the Imposition
Deposits at a rate per annum equal to the prevailing Federal Funds Target Rate
less one-quarter of one percent (0.25%) and not the Federal Funds Effective
Rate, as otherwise set forth in the Security Instruments. “Federal Funds Target
Rate” shall mean, for any day, the rate per annum announced by the Federal
Reserve Board as the “Federal Funds Target Rate.”

[Remainder of page intentionally left blank.]

 

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

 

BORROWER AGENT: EQUITY RESIDENTIAL, a Maryland real estate investment trust, as
Borrower Agent for: COLLATERAL POOL 3 BORROWER:    SMITH PROPERTY HOLDINGS SIX
(D.C.) L.P., a Delaware limited partnership    By:     Archstone DC 6 Holdings
LLC,      

a Delaware limited liability company,

its member

      By:     Archstone DC Property Holdings LP,         

a Delaware limited partnership,

its sole member

         By:     Archstone 5 Holdings LP,            

a Delaware limited partnership,

its general partner

            By:     Archstone DC Investments 5-I LP,               

a Delaware limited partnership,

its general partner

               By:     Archstone Master Holdings GP LLC,                  

a Delaware limited liability company,

its general partner

                  By:     ERP Operating Limited Partnership,                  
  

an Illinois limited partnership,

its sole member

                     By:     Equity Residential,                        

a Maryland real estate investment trust,

its general partner

                        By:   

/s/ Robert Garechana

                        Name:    Robert Garechana                         Title:
   Senior Vice President – Treasurer   

 

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ASN HOBOKEN I LLC, a Delaware limited liability company    By:     Archstone
Hoboken Holdings LLC,      

a Delaware limited liability company,

its sole managing member

      By:     DB Master Accommodation LLC,         

a Delaware limited liability company,

its sole managing member

         By:     DB Like-Kind Exchange Services Corp.,            

a Delaware corporation,

its sole managing member

            By:    

/s/ Brenton J. Allen

               Name:   

Brenton J. Allen

               Title:   

President

               By:    

/s/ Vickie Chaplin

               Name:   

Vickie Chaplin

               Title:   

Associate

      ASN HOBOKEN II LLC, a Delaware limited liability company    By:     DB
Master Accommodation LLC,      

a Delaware limited liability company,

its sole managing member

      By:     DB Like-Kind Exchange Services Corp.,         

a Delaware corporation,

its sole managing member

         By:    

/s/ Brenton J. Allen

               Name:   

Brenton J. Allen

               Title:   

President

               By:    

/s/ Vickie Chaplin

               Name:   

Vickie Chaplin

               Title:   

Associate

        

 

 

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SMITH PROPERTY HOLDINGS 4411 CONNECTICUT L.L.C., a Delaware limited liability
company    By:     Archstone DC 6 Holdings LLC,      

a Delaware limited liability company,

its member

      By:     Archstone DC Property Holdings LP,         

a Delaware limited partnership,

its sole member

         By:     Archstone 5 Holdings LP,            

a Delaware limited partnership,

its general partner

            By:     Archstone DC Investments 5-I LP,               

a Delaware limited partnership,

its general partner

               By:     Archstone Master Holdings GP LLC,                  

a Delaware limited liability company,

its general partner

                  By:     ERP Operating Limited Partnership,                  
  

an Illinois limited partnership,

its sole member

                     By:     Equity Residential,                        

a Maryland real estate investment trust,

its general partner

                        By:   

/s/ Robert Garechana

                        Name:    Robert Garechana                         Title:
   Senior Vice President – Treasurer   

 

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SMITH PROPERTIES HOLDINGS PARC VISTA L.L.C., a Delaware limited liability
company    By:     Archstone Master Holdings LLC,      

a Delaware limited liability company,

its sole member

      By:     ERP Operating Limited Partnership,         

an Illinois limited partnership,

its sole member

         By:     Equity Residential,            

a Maryland real estate investment trust,

its general partner

            By:    

/s/ Robert Garechana

               Name:    Robert Garechana                Title:    Senior Vice
President – Treasurer      

 

Master Credit Facility Agreement

Jupiter EQR Credit Facility

 

S-4

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ASN MARINA LLC, a Delaware limited liability company    By:     Archstone Master
Holdings LLC,      

a Delaware limited liability company,

its sole member

            By:     ERP Operating Limited Partnership,               

an Illinois limited partnership,

its sole member

               By:     Equity Residential,                  

a Maryland real estate investment trust,

its general partner

                  By:    

/s/ Robert Garechana

                     Name:    Robert Garechana                   Title:   
Senior Vice President – Treasurer   

 

Master Credit Facility Agreement

Jupiter EQR Credit Facility

 

S-5

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ASN SEATTLE LLC, a Delaware limited liability company    By:     DB Master
Accommodation LLC,      

a Delaware limited liability company,

its sole managing member

      By:     DB Like-Kind Exchange Services Corp.,         

a Delaware corporation,

its sole managing member

         By:    

/s/ Brenton J. Allen

               Name:   

Brenton J. Allen

               Title:   

President

               By:    

/s/ Vickie Chaplin

               Name:   

Vickie Chaplin

               Title:   

Associate

        

 

Master Credit Facility Agreement

Jupiter EQR Credit Facility

 

S-6

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ASN SANTA CLARA LLC, a Delaware limited liability company    By:     Archstone
Master Property Holdings LLC,      

a Delaware limited liability company,

its sole member

      By:     Lexford Properties, L.P.,         

an Ohio limited partnership,

its managing member

         By:     Lexford Partners, L.L.C.,            

an Ohio limited liability company,

its general partner

            By:     ERP Operating Limited Partnership,               

an Illinois limited partnership,

its sole member

               By:     Equity Residential,                  

a Maryland real estate investment trust,

its general partner

                  By:    

/s/ Robert Garechana

                     Name:    Robert Garechana                   Title:   
Senior Vice President – Treasurer   

 

Master Credit Facility Agreement

Jupiter EQR Credit Facility

 

S-7

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ASN SANTA MONICA LLC, a Delaware limited liability company    By:     Archstone
Master Property Holdings LLC,      

a Delaware limited liability company,

its sole member

      By:     Lexford Properties, L.P.,         

an Ohio limited partnership,

its managing member

         By:     Lexford Partners, L.L.C.,            

an Ohio limited liability company,

its general partner

            By:     ERP Operating Limited Partnership,               

an Illinois limited partnership,

its sole member

               By:     Equity Residential,                  

a Maryland real estate investment trust,

its general partner

                  By:    

/s/ Robert Garechana

                     Name:    Robert Garechana                   Title:   
Senior Vice President – Treasurer   

 

Master Credit Facility Agreement

Jupiter EQR Credit Facility

 

S-8

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SMITH PROPERTY HOLDINGS WATER PARK TOWERS L.L.C., a Delaware limited liability
company    By:     Archstone Master Holdings LLC,      

a Delaware limited liability company,

its sole member

      By:     ERP Operating Limited Partnership,         

an Illinois limited partnership,

its sole member

         By:     Equity Residential,            

a Maryland real estate investment trust,

its general partner

            By:    

/s/ Robert Garechana

                  Name:    Robert Garechana                   Title:    Senior
Vice President – Treasurer         

 

Master Credit Facility Agreement

Jupiter EQR Credit Facility

 

S-9

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ARCHSTONE CAMARGUE I LLC, a Delaware limited liability company    By:    
Archstone Master Property Holdings LLC,      

a Delaware limited liability company,

its sole member

      By:     Lexford Properties, L.P.,         

an Ohio limited partnership,

its managing member

         By:     Lexford Partners, L.L.C.,            

an Ohio limited liability company,

its general partner

            By:     ERP Operating Limited Partnership,               

an Illinois limited partnership,

its sole member

               By:     Equity Residential,                  

a Maryland real estate investment trust,

its general partner

                  By:    

/s/ Robert Garechana

                     Name:    Robert Garechana                      Title:   
Senior Vice President – Treasurer      

 

Master Credit Facility Agreement

Jupiter EQR Credit Facility

 

S-10

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ARCHSTONE CAMARGUE II LLC, a Delaware limited liability company    By:    
Archstone Master Property Holdings LLC,      

a Delaware limited liability company,

its sole member

      By:     Lexford Properties, L.P.,         

an Ohio limited partnership,

its managing member

         By:     Lexford Partners, L.L.C.,            

an Ohio limited liability company,

its general partner

            By:     ERP Operating Limited Partnership,               

an Illinois limited partnership,

its sole member

               By:     Equity Residential,                  

a Maryland real estate investment trust,

its general partner

                  By:    

/s/ Robert Garechana

                     Name:    Robert Garechana                      Title:   
Senior Vice President – Treasurer      

 

Master Credit Facility Agreement

Jupiter EQR Credit Facility

 

S-11

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ARCHSTONE CAMARGUE III LLC, a Delaware limited liability company    By:    
Archstone Master Property Holdings LLC,      

a Delaware limited liability company,

its managing member

      By:     Lexford Properties, L.P.,         

an Ohio limited partnership,

its managing member

         By:     Lexford Partners, L.L.C.,            

an Ohio limited liability company,

its general partner

            By:     ERP Operating Limited Partnership,               

an Illinois limited partnership,

its sole member

               By:     Equity Residential,                  

a Maryland real estate investment trust,

its general partner

                  By:    

/s/ Robert Garechana

                  Name:    Robert Garechana                   Title:    Senior
Vice President – Treasurer   

 

Master Credit Facility Agreement

Jupiter EQR Credit Facility

 

S-12

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ASN SAN MATEO LLC, a Delaware limited liability company    By:     Archstone San
Mateo Holdings LLC,      

a Delaware limited liability company,

its sole member

      By:     Archstone Master Property Holdings LLC,         

a Delaware limited liability company,

its sole member

         By:     Lexford Properties, L.P.,            

an Ohio limited partnership,

its managing member

            By:     Lexford Partners, L.L.C.,               

an Ohio limited liability company,

its general partner

               By:     ERP Operating Limited Partnership,                  

an Illinois limited partnership,

its sole member

                  By:     Equity Residential,                     

a Maryland real estate investment trust,

its general partner

                     By:    

/s/ Robert Garechana

                     Name:    Robert Garechana                      Title:   
Senior Vice President – Treasurer   

 

Master Credit Facility Agreement

Jupiter EQR Credit Facility

 

S-13

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ARCHSTONE SOUTH MARKET LLC, a Delaware limited liability company    By:    
Archstone Master Property Holdings LLC,      

a Delaware limited liability company,

its sole member

      By:     Lexford Properties, L.P.,         

an Ohio limited partnership,

its managing member

         By:     Lexford Partners, L.L.C.,            

an Ohio limited liability company,

its general partner

            By:     ERP Operating Limited Partnership,               

an Illinois limited partnership,

its sole member

               By:     Equity Residential,                  

a Maryland real estate investment trust,

its general partner

                  By:   

/s/ Robert Garechana

                  Name:    Robert Garechana                   Title:    Senior
Vice President – Treasurer   

 

Master Credit Facility Agreement

Jupiter EQR Credit Facility

 

S-14

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ASN FAIRCHASE LLC, a Delaware limited liability company    By:     Archstone
Master Property Holdings LLC,      

a Delaware limited liability company,

its sole member

      By:     Lexford Properties, L.P.,         

an Ohio limited partnership,

its managing member

         By:     Lexford Partners, L.L.C.,            

an Ohio limited liability company,

its general partner

            By:     ERP Operating Limited Partnership,               

an Illinois limited partnership,

its sole member

               By:     Equity Residential,                  

a Maryland real estate investment trust,

its general partner

                  By:   

/s/ Robert Garechana

                  Name:    Robert Garechana                   Title:    Senior
Vice President – Treasurer   

 

Master Credit Facility Agreement

Jupiter EQR Credit Facility

 

S-15

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ARCHSTONE FAIRCHASE II LLC, a Delaware limited liability company    By:    
Archstone Master Property Holdings LLC,      

a Delaware limited liability company,

its sole member

      By:     Lexford Properties, L.P.,         

an Ohio limited partnership,

its managing member

         By:     Lexford Partners, L.L.C.,            

an Ohio limited liability company,

its general partner

            By:     ERP Operating Limited Partnership,               

an Illinois limited partnership,

its sole member

               By:     Equity Residential,                  

a Maryland real estate investment trust,

its general partner

                  By:   

/s/ Robert Garechana

                  Name:    Robert Garechana                   Title:    Senior
Vice President – Treasurer   

 

Master Credit Facility Agreement

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S-16

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SMITH PROPERTY HOLDINGS VAN NESS L.P., a Delaware limited partnership    By:    
Archstone DC 5 Holdings LLC,      

a Delaware limited liability company,

its member

      By:     Archstone DC Property Holdings LP,         

a Delaware limited partnership,

its sole member

         By:     Archstone 5 Holdings LP,            

a Delaware limited partnership,

its general partner

            By:     Archstone DC Investments 5-I LP,               

a Delaware limited partnership,

its general partner

               By:     Archstone Master Holdings GP LLC,                  

a Delaware limited liability company,

its general partner

                  By:     ERP Operating Limited Partnership,                  
  

an Illinois limited partnership,

its sole member

                     By:     Equity Residential,                        

a Maryland real estate investment trust,

its general partner

                        By:   

/s/ Robert Garechana

                        Name:    Robert Garechana                         Title:
   Senior Vice President – Treasurer   

 

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COLLATERAL POOL 4 BORROWER: SMITH PROPERTY HOLDINGS THREE (D.C.) L.P., a
Delaware limited partnership    By:     Archstone CCP Inc.,      

a Delaware corporation,

its general partner

      By:    

/s/ Robert Garechana

         Name:    Robert Garechana          Title:    Vice President – Treasurer
     

SMITH PROPERTY HOLDINGS ALBAN TOWERS, L.L.C.,

a Delaware limited liability company

   By:     Archstone DC 7 Holdings LLC,      

a Delaware limited liability company,

its member

      By:     Archstone DC Investments 7 LLC,         

a Delaware limited liability company,

its sole member

         By:     Archstone DC Investments 7-I LP,            

a Delaware limited partnership,

its member

            By:     Archstone Master Holdings GP LLC,               

a Delaware limited liability company,

its general partner

               By:     ERP Operating Limited Partnership,                  

an Illinois limited partnership,

its sole member

                  By:     Equity Residential,                     

a Maryland real estate investment trust,

its general partner

                     By:   

/s/ Robert Garechana

                     Name:    Robert Garechana                      Title:   
Senior Vice President – Treasurer   

 

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S-18

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ALBAN TOWERS, L.L.C., a District of Columbia limited liability company    By: 
   Smith Property Holdings Alban Towers, L.L.C.,       a Delaware limited
liability company,
its sole member       By:     Archstone DC 7 Holdings LLC,          a Delaware
limited liability company,
its member          By:     Archstone DC Investments 7 LLC,             a
Delaware limited liability company,
its sole member             By:     Archstone DC Investments 7-I LP,            
   a Delaware limited partnership,
its member                By:     Archstone Master Holdings GP LLC,            
      a Delaware limited liability company,
its general partner                   By:     ERP Operating Limited Partnership,
                     an Illinois limited partnership,
its sole member                      By:     Equity Residential,               
         a Maryland real estate investment trust,
its general partner                         By:    

/s/ Robert Garechana

                          

Name:

   Robert Garechana                           

Title:

   Senior Vice President – Treasurer   

 

Master Credit Facility Agreement

Jupiter EQR Credit Facility

 

S-19

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ASN CAMBRIDGEPARK LLC,    a Delaware limited liability company    By:  
Archstone Master Holdings LLC,     

a Delaware limited liability company,

its sole member

     By:   ERP Operating Limited Partnership,       

an Illinois limited partnership,

its sole member

       By:   Equity Residential,         

a Maryland real estate investment trust,

its general partner

         By:  

/s/ Robert Garechana

               Name:   Robert Garechana                Title:   Senior Vice
President – Treasurer      

ARCHSTONE COLUMBIA CROSSING LLC,

a Delaware limited liability company

   By:   Archstone Master Property Holdings LLC,     

a Delaware limited liability company,

its sole member

     By:   Lexford Properties, L.P.,       

an Ohio limited partnership,

its managing member

       By:   Lexford Partners, L.L.C.,         

an Ohio limited liability company,

its general partner

         By:   ERP Operating Limited Partnership,           

an Illinois limited partnership,

its sole member

           By:   Equity Residential,             

a Maryland real estate investment trust,

its general partner

             By:   

/s/ Robert Garechana

                Name:    Robert Garechana                    Title:    Senior
Vice President – Treasurer      

 

Master Credit Facility Agreement

Jupiter EQR Credit Facility

 

S-20

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ARCHSTONE ARLINGTON COURTHOUSE PLAZA LLC,   a Delaware limited liability company
  By:   DB Master Accommodation LLC,     a Delaware limited liability company,  
  its sole managing member     By:   DB Like-Kind Exchange Services Corp.,      
a Delaware corporation,       its sole managing member       By:  

/s/ Brenton J. Allen

        Name:  

Brenton J. Allen

        Title:  

President

        By:  

/s/ Vickie Chaplin

        Name:  

Vickie Chaplin

        Title:  

Associate

   

 

Master Credit Facility Agreement

Jupiter EQR Credit Facility

 

S-21

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ARCHSTONE MARINA DEL REY-I LLC,     a Delaware limited liability company     By:
  Archstone Master Holdings LLC,      

a Delaware limited liability company,

its sole member

      By:   ERP Operating Limited Partnership,        

an Illinois limited partnership,

its sole member

        By:   Equity Residential,          

a Maryland real estate investment trust,

its general partner

          By:  

/s/ Robert Garechana

            Name:   Robert Garechana           Title:   Senior Vice President –
Treasurer    

ARCHSTONE MARINA DEL REY-II LLC,

a Delaware limited liability company

    By:   Smith Property Holdings Columbia Road L.P.,      

a Delaware limited partnership,

its sole member

      By:   Archstone Master Holdings GP LLC,        

a Delaware limited liability company,

its general partner

        By:   ERP Operating Limited Partnership,          

an Illinois limited partnership,

its sole member

          By:   Equity Residential,            

a Maryland real estate investment trust,

its general partner

            By:  

/s/ Robert Garechana

            Name:   Robert Garechana               Title:   Senior Vice
President – Treasurer    

 

Master Credit Facility Agreement

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S-22

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ARCHSTONE PLAYA DEL REY LLC,   a Delaware limited liability company   By:   DB
Master Accommodation LLC,     a Delaware limited liability company,     its sole
managing member     By:   DB Like-Kind Exchange Services Corp.,       a Delaware
corporation,       its sole managing member       By:  

/s/ Brenton J. Allen

        Name:  

Brenton J. Allen

        Title:  

President

        By:  

/s/ Vickie Chaplin

        Name:  

Vickie Chaplin

        Title:  

Associate

   

ARCHSTONE GLENDALE LLC,

a Delaware limited liability company

  By:   DB Master Accommodation LLC,     a Delaware limited liability company,  
  its sole managing member     By:   DB Like-Kind Exchange Services Corp.,      
a Delaware corporation,       its sole managing member       By:  

/s/ Brenton J. Allen

        Name:  

Brenton J. Allen

        Title:  

President

        By:  

/s/ Vickie Chaplin

        Name:  

Vickie Chaplin

        Title:  

Associate

   

 

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S-23

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ARCHSTONE HARBORSIDE LLC,   a Delaware limited liability company   By:  
Archstone Master Holdings LLC,    

a Delaware limited liability company,

its sole member

    By:   ERP Operating Limited Partnership,      

an Illinois limited partnership,

its sole member

      By:   Equity Residential,        

a Maryland real estate investment trust,

its general partner

        By:  

/s/ Robert Garechana

          Name:   Robert Garechana           Title:   Senior Vice President –
Treasurer    

EQR-DUPONT CORCORAN, LLC,

a Delaware limited liability company

  By:   EQR-District Holding, LLC,    

a Delaware limited liability company,

its sole member

    By:   ERP Operating Limited Partnership,      

an Illinois limited partnership,

its managing member

      By:   Equity Residential,        

a Maryland real estate investment trust,

its general partner

        By:  

/s/ Robert Garechana

          Name:   Robert Garechana           Title:   Senior Vice President –
Treasurer    

 

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S-24

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ASN MURRAY HILL LLC,       a Delaware limited liability company       By:     DB
Master Accommodation LLC,          a Delaware limited liability company,      
   its sole managing member          By:     DB Like-Kind Exchange Services
Corp.,             a Delaware corporation,             its sole managing member
            By:   

/s/ Brenton J. Allen

               Name:   

Brenton J. Allen

               Title:   

President

               By:   

/s/ Vickie Chaplin

               Name:   

Vickie Chaplin

               Title:   

Associate

        

 

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S-25

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EQR – SILVER SPRING GATEWAY RESIDENTIAL LLC,   a Delaware limited liability
company   By:   EQR-Silver Spring Gateway, LLC,    

a Delaware limited liability company,

its sole member

    By:   EQR Acquisitions, LP,      

a Delaware limited partnership,

its sole member

      By:   EQR-Acquisitions GP, LLC,        

a Delaware limited liability company,

its general partner

        By:   ERP Operating Limited Partnership,          

an Illinois limited partnership,

its sole member

          By:   Equity Residential,            

a Maryland real estate investment trust,

its general partner

              By:  

/s/ Robert Garechana

              Name:   Robert Garechana               Title:   Senior Vice
President – Treasurer  

EQR–PEGASUS APARTMENTS, LP,

a Delaware limited partnership

  By:   ERP-QRS Glenlake Club, Inc.,    

an Illinois corporation,

its general partner

    By:  

/s/ Robert Garechana

        Name:   Robert Garechana     Title:   Vice President – Treasurer  

 

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S-26

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LENDER: FANNIE MAE, the corporation duly organized under the Federal National
Mortgage Association Charter Act, as amended, 12 U.S.C. §1716 et seq. and duly
organized and existing under the laws of the United States By:  

/s/ Manuel Menendez, Jr.

Name:   Manuel Menendez, Jr. Title:   Senior Vice President

 

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SCHEDULE I

BORROWERS

POOL 3

ASN Santa Monica LLC, a Delaware limited liability company

Archstone Camargue I LLC, a Delaware limited liability company

Archstone Camargue II LLC, a Delaware limited liability company

Archstone Camargue III LLC, a Delaware limited liability company

ASN San Mateo LLC, a Delaware limited liability company

Archstone South Market LLC, a Delaware limited liability company

ASN Fairchase LLC, a Delaware limited liability company

Archstone Fairchase II LLC, a Delaware limited liability company

Smith Property Holdings Van Ness L.P., a Delaware limited partnership

ASN Hoboken I LLC, a Delaware limited liability company

ASN Hoboken II LLC, a Delaware limited liability company

ASN Santa Clara LLC, a Delaware limited liability company

Smith Property Holdings Parc Vista L.L.C., a Delaware limited liability company

Smith Property Holdings Water Park Towers L.L.C., a Delaware limited liability
company

Smith Property Holdings Six (D.C.) L.P., a Delaware limited partnership

Smith Property Holdings 4411 Connecticut L.L.C., a Delaware limited liability
company

ASN Seattle LLC, a Delaware limited liability company

ASN Marina LLC, a Delaware limited liability company

 

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Schedule I-1

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POOL 4

Archstone Playa Del Rey LLC, a Delaware limited liability company

Smith Property Holdings Three (D.C.) L.P., a Delaware limited partnership

Smith Property Holdings Alban Towers, L.L.C., a Delaware limited liability
company

Alban Towers, L.L.C., a District of Columbia limited liability company

Smith Property Holdings Three (D.C.) L.P., a Delaware limited partnership

ASN CambridgePark LLC, a Delaware limited liability company

Smith Property Holdings Three (D.C.) L.P., a Delaware limited partnership

Archstone Columbia Crossing LLC, a Delaware limited liability company

Archstone Arlington Courthouse Plaza LLC, a Delaware limited liability company

Archstone Marina Del Rey-I LLC, a Delaware limited liability company

Archstone Marina Del Rey-II LLC, a Delaware limited liability company

EQR–Silver Spring Gateway Residential, LLC, a Delaware limited liability company

EQR-Pegasus Apartments, LP, a Delaware limited partnership

Archstone Glendale LLC, a Delaware limited liability company

Archstone Harborside LLC, a Delaware limited liability company

EQR-Dupont Corcoran, LLC, a Delaware limited liability company

ASN Murray Hill LLC, a Delaware limited liability company

 

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Schedule I-2

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APPENDIX I

DEFINITIONS

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

“Additional Borrower” means the owner of a Substitute Mortgaged Property, which
entity shall be a Single-Purpose Delaware limited liability company or Delaware
limited partnership that is not a Prohibited Person, and (i) either (a) has as
its managing or sole member or sole or managing general partner either ERPOP or
a Delaware limited liability company, a Delaware limited partnership or a
Delaware corporation at least ninety-nine percent (99%) owned, directly or
indirectly (exclusive of preferred unit interests existing on the Effective
Date), directly or indirectly, by ERPOP and (in the case of a limited liability
company) managed by ERPOP, or (b) is not owned, directly or indirectly, by a
Prohibited Person, and has been approved by Fannie Mae, and (ii) becomes a
Borrower under the Agreement and the applicable Loan Documents.

“Additional Collateral” means (a) a Letter of Credit that satisfies the
requirements of Section 6.27, to the extent applicable or otherwise on terms and
conditions satisfactory to Fannie Mae, (b) cash collateral deposited with Fannie
Mae or its designee and otherwise held in an interest bearing account (or such
other type of account as Borrower and Fannie Mae may approve), in a manner
approved by Fannie Mae in its discretion, and/or (c) Permitted Investments
delivered to Fannie Mae or its designee and otherwise held by such party
pursuant to the terms of documentation acceptable to Fannie Mae in its
reasonable discretion.

“Additional Due Diligence Fees” means the due diligence fees paid by the
applicable Collateral Pool Borrower to Fannie Mae with respect to each
Substitute Mortgaged Property, as set forth in Section 8.03(b).

“Additional Guarantor” shall mean any entity which entity is not a Prohibited
Person, nor owned, directly or indirectly, by a Prohibited Person, and which
entity enters into a confirmation and joinder agreement as provided in the
Guaranty and, with regard to any concurrent transfer, such transfer shall not
cause a Change of Control.

“Adjustable Rate” has the meaning set forth in each Variable Loan Note
evidencing a Variable Loan (which rate includes the Variable Loan Fee).

“Affiliate” or “Affiliated” means, when used with reference to a specified
Person, (a) any Person that, directly or indirectly, through one or more
intermediaries, controls or is controlled by, or is under common control with,
the specified Person, (b) any Person that is an officer of, partner in or
trustee of, or serves in a similar capacity with respect to, the specified
Person or of which the specified Person is an officer, partner or trustee, or
with respect to which the specified Person serves in a similar capacity, (c) any
Person that, directly or indirectly, is the beneficial owner of ten percent
(10%) or more (or, solely if the specified Person is ERPOP or EQR, twenty
percent (20%) or more) of any class of equity securities of, or otherwise has a
substantial beneficial interest in, the specified Person or of which the
specified Person is, directly or

 

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Appendix I-1

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indirectly, the owner of ten percent (10%) or more of any class of equity
securities or in which the specified Person has a substantial beneficial
interest, and (d) for the specified Person, any of the individual’s spouse,
issue, parents, siblings and a trust for the benefit of the individual’s spouse
or issue, or both. For the purposes of this definition, “control” (including
with correlative meanings, the terms “controlling,” “controlled by” and “under
common control with”), as applied to any Person, means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
(other than property management) and policies of that Person, whether through
the ownership of voting securities, ownership interests or by contract or
otherwise.

“Aggregate Debt Service Coverage Ratio” means, with respect to any Collateral
Pool for any specified date, the ratio (expressed as a percentage) of—

 

  (a) the aggregate of the Net Operating Income for the Mortgaged Properties in
such Collateral Pool

to

 

  (b) the Debt Service for such Collateral Pool on the specified date.

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

 

  (a) the Loans Outstanding secured by the Mortgaged Properties in such
Collateral Pool on the specified date,

to

 

  (b) the aggregate of the Valuations most recently obtained prior to the
specified date for all of the Mortgaged Properties in such Collateral Pool.

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

“Allocable Loan Amount” means the portion of the Loans secured by a Collateral
Pool allocated to a particular Mortgaged Property by Fannie Mae in accordance
with the Agreement.

“Alterations” shall have the meaning set forth in Section 6.09.

“AMDR Ground Lease” shall have the meaning set forth in Section 6.32(a).

“Amortization Period” means the period of thirty (30) years.

“Applicable Law” means (a) all applicable provisions of all constitutions,
statutes, rules, regulations and orders of all governmental bodies, all
Governmental Approvals and all orders, judgments and decrees of all courts and
arbitrators, (b) all zoning, building, environmental and other laws, ordinances,
rules, regulations and restrictions of any Governmental Authority

 

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affecting the ownership, management, use, operation, maintenance or repair of
any Mortgaged Property, including the Americans with Disabilities Act (if
applicable), the Fair Housing Amendment Act of 1988 and Hazardous Materials Laws
(as defined in the Security Instrument), (c) any building permits or any
conditions, easements, rights-of-way, covenants, restrictions of record or any
recorded or unrecorded agreement affecting or concerning any Mortgaged Property
including planned development permits, condominium declarations, and reciprocal
easement and regulatory agreements with any Governmental Authority, (d) all
laws, ordinances, rules and regulations, whether in the form of rent control,
rent stabilization or otherwise, that limit or impose conditions on the amount
of rent that may be collected from the units of any Mortgaged Property, and
(e) requirements of the Borrower’s insurance companies or similar organizations,
affecting the operation or use of any Mortgaged Property or the consummation of
the transactions to be effected by the Agreement or any of the other Loan
Documents and the Guaranty.

“Appraisal” means an appraisal of Multifamily Residential Property conforming to
the requirements of the Financial Institutions Reform, Recovery and Enforcement
Act of 1989, as amended.

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

“Bankruptcy Code” means Title 11 of the United States Code entitled “Bankruptcy”
as now and hereafter in effect, or any successor statute.

“Borrower” shall have the meaning given to such term in the preamble to this
Agreement.

“Borrower Agent” shall have the meaning set forth in Section 12.03(a).

“Borrower Parties” means, with respect to any Collateral Pool, the applicable
Collateral Pool Borrower, each Guarantor, the general partner or managing member
of each applicable Collateral Pool Borrower and each Ultimate Owner.

“Borrower Party” shall mean any of the Borrower Parties, individually.

“Borrower Party Representatives” shall have the meaning set forth in
Section 6.03(j).

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

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

“Calendar Year” means the 12-month period from the first day of January to and
including the last day of December, and each 12-month period thereafter.

“Cap Rate” means, for each Mortgaged Property, subject to Section 2.04(c) of the
Agreement, a capitalization rate reasonably selected by Fannie Mae for use in
determining the Valuations, as disclosed to Borrower from time to time.

 

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

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

“Cash Equivalents” means Permitted Investments having maturities of not more
than twelve (12) months from the date of acquisition of such Permitted
Investments.

“Cash Flow Sweep” shall have the meaning set forth in Section 1.07.

“Certificate of Borrower” shall mean a certificate in substantially the same
form and substance as the Certificate of Borrower delivered by Borrower on the
Closing Date.

“Change of Control” means the Transfer of a Controlling Interest.

“Closing Date” means each date after the Effective Date on which a transaction
requested in a Request is required to take place.

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

“Collateral Agreement” means any separate agreement between Borrower and Fannie
Mae for the purpose of establishing replacement reserves for the Mortgaged
Property, establishing a fund to assure completion of repairs or improvements
specified in that agreement, or assuring reduction of the outstanding principal
balance of the Indebtedness if the occupancy of or income from the Mortgaged
Property does not increase to a level specified in that agreement, or any other
agreement or agreements between Borrower and Fannie Mae which provide for the
establishment of any other fund, reserve or account.

“Collateral Event” means a Request for an Extension, Release, or Substitution,
an Event of Default or other event which may invalidate the outstanding
Allocable Loan Amounts or other Collateral Pool determinations.

“Collateral Pool” means individually and collectively, all of the Collateral
that secures a Loan. The Collateral Pools are identified on Exhibit A of the
Agreement.

“Collateral Pool Borrower” means individually and collectively, each Borrower
that owns Collateral that is a part of such Collateral Pool (each of which may
be referred to a “Collateral Pool (APPLICABLE POOL NUMBER) Borrower,” i.e., each
Borrower that owns collateral that is part of Collateral Pool 3 may be referred
to as a Collateral Pool 3 Borrower).

“Common Area Site Unit” shall have the meaning set forth in Section 6.31(a).

“Compliance Certificate” means a certificate of Borrower substantially in the
form of Exhibit F to the Agreement.

 

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“Condemnation”, with respect to any Mortgaged Property, means (a) any action or
proceeding for the taking of the Mortgaged Property, or any part thereof or
interest therein, for public or quasi-public use under the power of eminent
domain, by reason of any public improvement or condemnation proceeding, or in
any other similar manner or (b) the conveyancing of any Mortgaged Property under
the threat or contemplation of any action or proceeding described in clause (a).

“Confirmation of Guaranty” means a confirmation of the Guaranty executed by
Guarantor in connection with any Request after the Initial Closing,
substantially in the form of Exhibit E to the Agreement.

“Contribution Agreement” means a Contribution Agreement by and among Borrower
and any Additional Borrowers, as the same may be amended, modified or
supplemented from time to time.

“Control Party” means any party (other than ERPOP or EQR) that controls the
decisions of an Additional Borrower.

“County” shall have the meaning set forth in Section 6.29(a).

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

(1) For any Collateral Pool that secures a Variable Loan, (a) the Aggregate Debt
Service Coverage Ratio is not less than, 0.95:1.0; and (b) the Aggregate Loan to
Value Ratio does not exceed sixty-five percent (65%).

(2) For any Collateral Pool that secures a Fixed Loan, (a) the Aggregate Debt
Service Coverage Ratio is not less than, during the first three Loan Years,
0.95:1.0; during the fourth and fifth Loan Years, 1:0:1.0; during the sixth and
seventh Loan Years, 1.05:1.0, and during the eighth through tenth Loan Years,
1:10:1.0; and (b) the Aggregate Loan to Value Ratio does not exceed sixty-five
percent (65%).

“Credit Facility” means, collectively, the Variable Loans and Fixed Loans
outstanding under this Agreement.

“Debt Service” means, for any Collateral Pool, –

(a) [Intentionally Deleted]

(b) (1) For use in determining the Aggregate Debt Service Coverage Ratio, for
purposes of determining compliance with the Coverage and LTV Tests, (2) for use
in determining the Release Price pursuant to Section 3.02(c) of the Agreement
and for any other determination to be made under Section 3.02 of the Agreement,
(3) for use in determining compliance with the Substitution provisions in
Section 3.03, (4) for other ongoing monitoring purposes pursuant to
Section 2.04(b) of the Agreement, (5) for use in

 

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determining the percentage of Cash Flow Sweep pursuant to Section 1.07(a)( or
(b) of the Agreement, and (6) for all other monitoring and compliance purposes,
as of any specified date, the sum of the amount of interest and principal
amortization, during the twelve (12) month period immediately succeeding the
specified date, with respect to the Loans Outstanding on the specified date,
except that, for these purposes:

(i) each Variable Loan shall be deemed to require level monthly payments of
principal and interest (at an interest rate equal to the Strike Rate (as defined
in the relevant Interest Rate Hedge and Hedge Security Agreement) in an amount
necessary to fully amortize the original principal amount of the Variable Loan
over the Amortization Period, with such amortization deemed to commence on the
first day of the twelve (12) month period; and

(ii) each Fixed Loan shall require level monthly payments of principal and
interest (at the interest rate set forth in the applicable Fixed Loan Note for
such Fixed Loan) in an amount necessary to fully amortize the original principal
amount of the Fixed Loan over the Amortization Period, with such amortization to
commence on the first day of the twelve (12) month period.

(c) For use in determining the Aggregate Debt Service Coverage Ratio for
purposes of determining compliance with the Interest Rate Hedge and Hedge
Security Agreement, as of any specified date, the sum of the amount of interest
and principal amortization that would be payable during the twelve (12) month
period immediately succeeding the specified date, with respect to the amount of
the Variable Loan Outstanding, except that, for these purposes, the Variable
Loan shall be deemed to require level monthly payments of principal and interest
at an interest rate equal to the Adjustable Rate.

(d) For use in determining whether the requirements of Section 1.05(c) and
Section 1.06(c) have been satisfied, as of any specified date, the sum of the
amount of interest and principal amortization, during the twelve (12) month
period immediately succeeding the specified date, with respect to the Loans
Outstanding on the specified date, except that, for these purposes each
applicable Loan shall be deemed to require level monthly payments of principal
and interest (at an interest rate equal to the Strike Rate (as determined
pursuant to Section 1.09)) in an amount necessary to fully amortize the original
principal amount of the Loan over the Amortization Period, with such
amortization deemed to commence on the first day of the twelve (12) month period

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

(a) the Net Operating Income utilizing expenses on a trailing twelve (12) month
basis and income on a current basis, with such adjustments as Fannie Mae may
make for similar loans anticipated to be purchased by Fannie Mae for the subject
Mortgaged Property

to

 

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Appendix I-6

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

“DESOS” shall have the meaning set forth in Section 6.30.

“Effective Date” shall have the meaning set forth in the opening paragraph.

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

“EQR Party” means each of Borrower, ERPOP, EQR or any Control Party and “EQR
Parties” means all such Persons, collectively.

“EQR” means Equity Residential, a Maryland real estate investment trust

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

“ERPOP” means ERP Operating Limited Partnership, an Illinois limited
partnership.

“Event of Default” means any event defined to be an “Event of Default” under
Article 9.

“Excess Cash Flow” means Gross Revenues derived from all Mortgaged Properties in
the applicable Collateral Pool in excess of the sum of (i) amounts required from
time to time to timely make all regular payments due under the applicable Note,
(ii) any and all other indebtedness, obligations and liabilities of the
applicable Collateral Pool Borrower permitted under the Loan Documents,
(iii) reasonable and customary operating costs and expenses of the Mortgaged
Property, (iv) reasonable reserves for working capital and future payment of
taxes, insurance and replacements with respect to the Mortgaged Properties and
(v) reasonable capital expenditures.

“Exculpated Parties” shall have the meaning set forth in Section 12.01(a).

“Extension” shall mean any extension set forth in Section 1.05 or Section 1.06.

“Extension Notice” means written notice from the applicable Collateral Pool
Borrower to Fannie Mae requesting an Extension.

“Facility Termination Date” means, at any time during which Loans are
Outstanding, the latest maturity date for any Loan Outstanding.

 

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

“Fannie Mae Commitment” shall have the meaning set forth in
Section 1.08(a)(iii).

“Fixed Loan” means a fixed-rate loan made to a Collateral Pool Borrower each of
which is or shall be evidenced by a Fixed Loan Note.

“Fixed Loan Note” means a promissory note which was issued by the applicable
Collateral Pool Borrower concurrently with the funding of each Fixed Loan to
evidence such Collateral Pool Borrower’s obligation to repay the Fixed Loan,
each as amended, modified, supplemented, consolidated or restated from time to
time.

“Fraudulent Transfer Laws” shall have the meaning set forth in Section 12.11.

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

“Gateway” shall have the meaning set forth in Section 6.31(a).

“General Conditions” shall have the meaning set forth in Article 4.

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

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

“Gross Cash Flow” means, for any specified period, with respect to any
Multifamily Residential Property, all income in respect of such Multifamily
Residential Property as reflected on the certified operating statement for such
specified period as adjusted to exclude unusual income (e.g., temporary or
nonrecurring income), income not allowed under the Underwriting and Servicing
Requirements (e.g., interest income, furniture income, etc.), and the value of
any unreflected concessions.

“Gross Revenues” means, for any specified period, with respect to any
Multifamily Residential Property, all income in respect of such Multifamily
Residential Property as reflected on the certified operating statement for such
specified period as adjusted to exclude unusual income (e.g. temporary or
nonrecurring income), income not allowed by Fannie Mae for similar loans
anticipated to be purchased by Fannie Mae (e.g. interest income, furniture
income, etc.), and the value of any unreflected concessions.

“Guarantor” means, individually and collectively, ERP Operating Limited
Partnership and any Additional Guarantor.

 

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“Guaranty” means individually and collectively, (i) the Guaranty (Pool 3) and
the Guaranty (Pool 4) (collectively, the “Pool Guaranties”) executed and
delivered by Guarantor as of the Effective Date, (ii) the Master Guaranty and
Indemnity Agreement executed and delivered by Guarantor as of the Effective
Date, and (iii) any other guaranties that may be executed and delivered by
Guarantor in substantially the same form as the Pool Guaranties following the
Effective Date.

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

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

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

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

“Highest Rating Category” means, with respect to a Permitted Investment, that
the Permitted Investment is rated by S&P or Moody’s in the highest rating given
by that rating agency for that general category of security.

“HOA” shall have the meaning set forth in Section 6.31(a).

“Impositions” and “Imposition Deposits” shall have the meaning set forth in the
Security Instrument.

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

(a) indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services (other than (i) current trade liabilities incurred
in the ordinary course of business and payable in accordance with customary
practices, and (ii) for construction of improvements to property, if such person
has a non-contingent contract to purchase such property, or (iii) amounts to be
paid by such Person, in performance stages or upon completion, pursuant to a
written contract for the making of capital improvements to a Mortgaged Property
permitted by this Agreement or the other Loan Documents);

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

 

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Appendix I-9

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

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

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

(f) as to any Person (“guaranteeing person”), any obligation of (a) the
guaranteeing person or (b) another Person (including any bank under any letter
of credit) to induce the creation of a primary obligation (as defined below)
with respect to which the guaranteeing person has issued a reimbursement,
counterindemnity or similar obligation, in either case guaranteeing, or in
effect guaranteeing, any indebtedness, lease, dividend or other obligation
(“primary obligations”) of any third person (“primary obligor”) in any manner,
whether directly or indirectly (without double counting), including any
obligation of the guaranteeing person, whether or not contingent, to
(1) purchase any such primary obligation or any property constituting direct or
indirect security therefor, (2) advance or supply funds for the purchase or
payment of any such primary obligation or to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (3) purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary
obligation, or (4) otherwise assure or hold harmless the owner of any such
primary obligation against loss in respect of the primary obligation, provided,
however, that the term “Contingent Obligation” shall not include endorsements of
instruments for deposit or collection in the ordinary course of business. The
amount of any Contingent Obligation of any guaranteeing person shall be deemed
to be the lesser of (i) an amount equal to the stated or determinable amount of
the primary obligation in respect of which such Contingent Obligation is made
and (ii) the maximum amount for which such guaranteeing person may be liable
pursuant to the terms of the instrument embodying such Contingent Obligation,
unless such primary obligation and the maximum amount for which such
guaranteeing person may be liable are not stated or determinable, in which case
the amount of such Contingent Obligation shall be such guaranteeing person’s
maximum reasonably anticipated liability in respect thereof as determined by
Owner in good faith. Notwithstanding the foregoing, nothing in this subsection
(f) shall preclude the obligations with respect to any Borrower in connection
with the Loans.

“Initial Mortgaged Properties” means the Multifamily Residential Properties
described on Exhibit A to this Agreement and are part of a Collateral Pool as of
the Effective Date.

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

 

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

“Interest Rate Hedge” shall have the meaning set forth in Section 1.09.

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

“Issuer” shall have the meaning set forth in Section 4.08(a).

“Key Principal” means Guarantor and any person or entity who becomes a Key
Principal after the date of this Instrument and is identified as such in an
amendment or supplement to this Instrument.”

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

“Fannie Mae” shall have the meaning set forth in the first paragraph of the
Agreement, and shall also refer to any replacement Fannie Mae.

“Letter of Credit” means a letter of credit (i) issued by an issuer that meets
and continues to meet Fannie Mae’s requirements for ratings of issuers of
acceptable letters of credit as set forth in the Underwriting and Servicing
Requirements (the “Rating Requirements”), (ii) complying with all other
requirements for letters of credit contained in the Underwriting and Servicing
Requirements (including the furnishing of an opinion of issuer’s counsel
relating to the issuer and the letter of credit) and (iii) with a term of at
least 364 days. The term “Letter of Credit” shall also include any replacement
letter of credit, and any amendment or renewal of the letter of credit or the
replacement letter of credit, meeting the requirements of this definition. If
Borrower at any time provides a confirming letter of credit, a replacement
confirming letter of credit or an amendment or renewal of the confirming letter
of credit or the replacement confirming letter of credit, the same shall meet
the requirements of this definition, and the term “Letter of Credit” shall also
include the confirming letter of credit as so amended, renewed or replaced.

“Lexford Partnership” means Lexford Properties, L.P., an Ohio limited
partnership.

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

“Loan” means a Variable Loan and/or a Fixed Loan.

 

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Appendix I-11

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“Loan Amount” means, for any Loan, the outstanding principal amount of the Loan
made to a Collateral Pool Borrower. The amount of the Loan to each Collateral
Pool Borrower, as of the Effective Date, is shown on Exhibit A to the Agreement.

“Loan Document Taxes” shall have the meaning set forth in Section 6.10.

“Loan Documents” means with respect to any Collateral Pool, the Agreement, the
Notes, the Security Documents, all documents executed by a Collateral Pool
Borrower or Guarantor pursuant to the General Conditions set forth in Article 4
of the Agreement and any other documents executed by a Collateral Pool Borrower
or Guarantor from time to time in connection with the Agreement or the
transactions contemplated by the Agreement, except the Guaranty.

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

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

to

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

“Loan Year” means the twelve (12) month period from the first day of the first
calendar month after the Effective Date to and including the last day before the
first anniversary of the Effective Date, and each twelve (12) month period
thereafter.

“Master Lease” means, individually and collectively, any lease of an entire
Mortgaged Property to a single tenant, which Master Lease and the tenant
thereunder shall be satisfactory to Fannie Mae.

“Master Tenant” means the tenant of the Improvements under one or more Master
Leases.

“Material Adverse Effect” means, with respect to any circumstance, act,
condition or event of whatever nature (including any adverse determination in
any litigation, arbitration, or governmental investigation or proceeding),
whether singly or in conjunction with any other event or events, act or acts,
condition or conditions, or circumstance or circumstances, whether or not
related, a material adverse change in or a materially adverse effect upon any of
(a) the business, operations, property or condition (financial or otherwise) of
Borrower or Guarantor, (b) the present or future ability of Borrower or
Guarantor to perform the Obligations for which it is liable, (c) the validity,
priority, perfection or enforceability of the Agreement or any other Loan
Document or the rights or remedies of Fannie Mae under any Loan Document, or
(d) the value of, or Fannie Mae’s ability to have recourse against, any
Mortgaged Property.

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

 

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or acts, condition or conditions, or circumstance or circumstances, whether or
not related, that could reasonably be expected to have a material adverse change
in or a materially adverse effect upon any of: (a) the value, financial
condition, operations, property or business of any Mortgaged Property;
(b) Fannie Mae’s ability to have recourse against any Mortgaged Property;
(c) the rights and remedies of Fannie Mae under any Loan Documents and the
Guaranty or under this Agreement or the present or future ability of Borrower to
perform the Obligations; or (d) the validity, priority, perfection or
enforceability of any Security Instrument, this Agreement or any other Loan
Document or the rights or remedies of Fannie Mae under any Loan Document.

“MBS” has the meaning set forth in Section 6.13(b)(vii)(F).

“Moody’s” means Moody’s Investors Service, Inc., a corporation organized and
existing under the laws of the State of Delaware, and its successors and
assigns, if such successors and assigns shall continue to perform the functions
of a securities rating agency.

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

“Multifamily Residential Property” means a residential property, located in the
United States, containing five or more dwelling units in which not more than
twenty percent (20%) of the net rentable area is or will be rented to
non-residential tenants, and conforming to the requirements of Fannie Mae for
similar loans anticipated to be purchased by Fannie Mae.

“Net Operating Income” means, for any specified period, with respect to any
Multifamily Residential Property, the aggregate net income during such period
equal to Gross Revenues during such period less the aggregate Operating Expenses
during such period. If a Mortgaged Property is not owned by a Borrower or an
Affiliate of a Borrower for the entire specified period, the Net Operating
Income for the Mortgaged Property for the time within the specified period
during which the Mortgaged Property was owned by a Borrower or an Affiliate of a
Borrower shall be the Mortgaged Property’s net operating income determined by
Fannie Mae in accordance with the underwriting procedures set forth by Fannie
Mae for similar loans anticipated to be purchased by Fannie Mae.

“Note” means any Fixed Loan Note and/or Variable Loan Note.

“Obligations” means the aggregate of the obligations of a Collateral Pool
Borrower and Guarantor under the Agreement and the other Loan Documents and the
Guaranty.

“OMDR Ground Lease” shall have the meaning set forth in Section 6.29(a).

“One-Month LIBOR Rate” means the British Bankers Association fixing of the
London Inter-Bank Offered Rate for 1-month U.S. Dollar-denominated deposits as
reported by Telerate through electronic transmission. If the Index is no longer
available, or is no longer posted through electronic transmission, Fannie Mae
will choose a new index that is based upon comparable information and provide
notice thereof to Borrower.

 

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Appendix I-13

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

“Organizational Certificate” means, collectively, certificates from Borrower and
Guarantor to Fannie Mae, in the form of Exhibit G-1 through G-3 to the
Agreement, certifying as to certain organizational matters with respect to each
Borrower and Guarantor.

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

“Other Borrower” shall have the meaning set forth in Section 12.09 of the
Agreement.

“Other Borrower Secured Obligation” shall have the meaning set forth in
Section 12.04.

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

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

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

“Permitted Investments” means one or more of the following:

 

  (i) Cash;

 

  (ii) Government or U.S. Treasury securities of any maturity rated in the
Highest Rating Category;

 

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Appendix I-14

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  (iii) Fannie Mae, Freddie Mac and Ginnie Mae agency mortgage-backed securities
(single family or multifamily), provided that the value allocated to such
securities will be discounted by three percent (3%);

 

  (iv) Money market funds pre-approved in writing by Fannie Mae with an
investment objective that is limited to government or U.S. Treasury securities
rated in the Highest Rating Category; or

 

  (v) Any other investment approved in writing by Fannie Mae.

“Permitted Liens” means, with respect to a Mortgaged Property:

 

  (i) the exceptions to title to the Mortgaged Property set forth in the Title
Insurance Policy for the Mortgaged Property which are approved by Fannie Mae;

 

  (ii) Liens securing Obligations to Fannie Mae, including the Lien of the
Security Instrument encumbering the Mortgaged Property;

 

  (iii) Liens for taxes not yet delinquent;

 

  (iv) Liens in respect of property imposed by law arising in the ordinary
course of business such as materialmen’s, mechanics’, warehousemen’s, carriers’,
landlords’ and other nonconsensual statutory Liens which (A) are not yet due and
payable or (B) are released of record, bonded over or otherwise remedied to
Fannie Mae’s satisfaction within sixty (60) days of the date of commencement of
enforcement of any such Lien or before such earlier date on which Borrower’s
interest in the applicable property is subject to forfeiture by enforcement of
any such Lien;

 

  (v) Subject to (1) the provisions of Section 20 of the Security Instrument and
(2) Borrower providing Fannie Mae with a copy of each document within sixty
(60) days of the later of (x) the execution of such document, and (y) the date
such document is recorded: easements, rights-of-way, restrictions (including
zoning restrictions), matters of plat, minor defects or irregularities in title,
licenses or lease agreements for laundry, cable television, telephone and other
similar Liens which, in the aggregate, do not materially reduce the value of the
Mortgaged Property or materially interfere with the operation and use of, or the
ordinary conduct of the business on, the Mortgaged Property (provided that any
laundry or cable television licenses or leases shall not be a Permitted Lien if
it does not comply with Fannie Mae’s requirement for similar loans anticipated
to be purchased by Fannie Mae). Notwithstanding the foregoing, to the extent any
of the foregoing items could reasonably be deemed to adversely affect (on an
aggregate basis) the value of the Mortgaged Property by more than the lesser of
(A) $1,000,000 and (B) ten percent (10%) of the value of the Mortgaged Property,
such item shall not be considered a Permitted Lien and shall require Fannie
Mae’s prior written consent.

 

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Appendix I-15

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

  (vi) any other Liens expressly permitted by the Loan Documents (including any
delinquent tax Liens being contested in accordance with the terms of the
Security Instrument); and

 

  (vii) any other Liens approved by Fannie Mae.

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

“Pool Termination Date” means, at any time during which the Loans are
Outstanding with respect to a particular Collateral Pool, the latest maturity
date for any Loan Outstanding, taking into account any Extensions permitted
under Section 1.05 and Section 1.06.

“Potential Event of Default” means with respect to a particular Collateral Pool
any event which, with the giving of notice or the passage of time, or both,
would constitute an Event of Default.

“Prohibited Person” means (i) a Person that is the subject of, whether voluntary
or involuntary, any case, proceeding or other action against such Person under
any existing or future law of any jurisdiction relating to bankruptcy,
insolvency, reorganization, liquidation, rehabilitation, receivership, or relief
of debtors, or (ii) any Person with whom Fannie Mae is prohibited from doing
business pursuant to any law, rule, regulation, judicial proceeding or
administrative directive, or (iii) any Person identified on the federal
“Excluded Parties List System,” the federal “Office of Foreign Assets and
Control Specially Designated Nationals and Blocked Persons” list, the U.S.
Department of Housing and Urban Development’s “Limited Denial of Participation,
HUD Funding Disqualifications and Voluntary Abstentions List,” or on Fannie
Mae’s “Multifamily Applicant Experience Check,” each of which may be amended
from time to time and any successor or replacement thereof, or (iv) a Person
that is determined by Fannie Mae to pose an unacceptable credit risk due to the
aggregate amount of debt of such Person owned by Fannie Mae, or (v) a Person
that has caused any unsatisfactory experience of a material nature with Fannie
Mae, such as a default, fraud, intentional misrepresentation, litigation,
arbitration or other similar act, or (vi) a Person that is, or whose senior
management is, the subject of any pending criminal indictment or criminal
investigation relating to an alleged felony or has ever been convicted of a
felony or held liable for fraud in a civil or criminal action, or (vii) a Person
that does not meet the requirements of Section 26 of the Certificate of Borrower
Parties.

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

“Property Delivery Deadline” shall have the meaning set forth in
Section 3.03(d)(ii).

“Property Manager” means Equity Residential Management, L.L.C., a Delaware
limited liability company, or any other entity hired to operate and manage the
Mortgaged Property, whose hiring is subject to the written approval and consent
of Fannie Mae.

 

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Appendix I-16

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“Rate Form” means the completed and executed document from Borrower to Fannie
Mae pursuant to Section 1.08(a)(ii), substantially in the form of Exhibit H to
the Agreement, specifying the terms and conditions of the Note rate to be issued
for a requested Extension.

“Rate Change Date” has the meaning set forth in each Variable Loan Note
evidencing a Variable Loan.

“Recognized Springing Member” means a springing member who is provided by a
nationally-recognized company that provides independent directors and springing
members.

“Release” shall have the meaning set forth in Section 3.01.

“Release Documents” mean instruments releasing the applicable Security
Instrument as a Lien on a Mortgaged Property, and UCC-3 Termination Statements
terminating the UCC-1 Financing Statements, and such other documents and
instruments to evidence the release of such Mortgaged Property from a Collateral
Pool.

“Release Fee” means $10,000 for each Release Mortgaged Property.

“Release Mortgaged Property” means the Mortgaged Property to be released
pursuant to Article 3.

“Release Price” shall have the meaning set forth in Section 3.02(c)(i).

“Release Request” means a written request, substantially in the form of Exhibit
J to the Agreement, to obtain a release of Collateral from a Collateral Pool.

“Remaining Mortgaged Properties” shall have the meaning set forth in
Section 4.04(h).

“Remaining Net Sale Proceeds” shall have the meaning set forth in
Section 3.02(c)(iii).

“Rent Roll” means, with respect to any Multifamily Residential Property, a rent
roll prepared and certified by the owner of the Multifamily Residential
Property, on Fannie Mae Form 4243 or on another form approved by Fannie Mae and
containing substantially the same information as Form 4243 requires.

“Replacement Reserve Agreement” means a Replacement Reserve and Security
Agreement, reasonably required by Fannie Mae, and completed in accordance with
requirements of Fannie Mae for similar loans anticipated to be purchased by
Fannie Mae.

“Request” means a Substitution Request, a Release Request or a request for an
Extension.

“Rescinded Payment” shall have the meaning set forth in Section 12.10.

“Resident Agreement” means, with respect to any Mortgaged Property that is
subject to a Master Lease, a written agreement for occupancy of a portion of a
Mortgaged Property by an individual resident.

“Re-Underwriting Fee” shall have the meaning set forth in Section 8.01.

 

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Jupiter EQR Credit Facility

 

Appendix I-17

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“S&P” shall mean Standard & Poor’s Credit Markets Services, a division of The
McGraw-Hill Companies, Inc., a New York corporation, and its successors and
assigns, if such successors and assigns shall continue to perform the functions
of a securities rating agency.

“SDAT” shall have the meaning set forth in Section 6.30.

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

“Security Documents” means the Security Instruments, the Replacement Reserve
Agreements in connection with Master Leases, and any other documents executed by
the applicable Collateral Pool Borrower from time to time to secure any of such
Collateral Pool Borrower’s obligations under the Loan Documents.

“Security Instrument” means, for each Mortgaged Property, a Multifamily
Mortgage, Deed of Trust or Deed to Secure Debt, Assignment of Leases and Rents
and Security Agreement given by a Borrower to or for the benefit of Fannie Mae
to secure the obligations of Collateral Pool Borrower under the Loan Documents.
With respect to each Mortgaged Property owned by a Borrower, the Security
Instrument shall be substantially in the form published by Fannie Mae from time
to time for use in the state in which the Mortgaged Property is located. The
amount secured by the Security Instrument shall be equal to the aggregate amount
of Loans Outstanding for the applicable Collateral Pool in effect from time to
time; provided, however, that Security Instruments recorded against a Mortgaged
Property or where there is a material mortgage, recording or intangible tax
applicable to the recordation of the Security Instrument, the amount secured by
such Security Instrument shall be limited to a maximum secured principal amount
equal to the product obtained by multiplying (i) the Valuation of such Mortgaged
Property on the date is it added to the applicable Collateral Pool by (ii) one
hundred fifteen percent (115%).

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

“Servicer” means the loan servicer selected by Fannie Mae to which Fannie Mae
may delegate all or any portion of its responsibilities under this Agreement and
the other Loan Documents pursuant to a servicing agreement between Fannie Mae
and Servicer. As of the Effective Date, Wells Fargo Multifamily Capital Inc. has
been selected as Servicer of the Loans.

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

 

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

 

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

 

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Jupiter EQR Credit Facility

 

Appendix I-18

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

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

 

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

 

  (v) has accurately maintained its financial statements, accounting records and
other partnership or corporate documents separate from those of any other
Person, subject to appropriate consolidation (for accounting purposes) with
those of other Affiliates in accordance with GAAP (provided, however, that all
consolidated financial statements prepared with respect to any Affiliate of
Borrower will include footnote references to indicate that the Mortgaged
Properties are owned by an entity the equity interests in which are owned in
part by EQR (or a wholly-owned subsidiary of EQR) and in part by ERPOP);

 

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

 

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

 

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

 

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

 

  (x) has not acquired obligations or securities of any other Person;

 

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

 

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

 

  (xiii) has paid the salaries of its own employees, if any;

 

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

 

  (xv) has not engaged in a non-exempt prohibited transaction described in
Section 406 of ERISA or Section 4975 of the Internal Revenue Code to the extent
it is subject to ERISA;

 

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Appendix I-19

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  (xvi) has complied with the requirements of Section 33 of the Security
Instrument;

 

  (xvii) has paid its expenses and liabilities out of its own funds, including
through the use of capital contributions.

“Strike Rate” shall have the definition given in the applicable Hedge Security
Agreement.

“Subject Borrower” shall have the meaning set forth in Section 12.09.

“Subordinated Obligations” shall have the meaning set forth in Section 12.08.

“Subsidiary” means, as to any Person, a corporation, partnership or other entity
of which shares of stock or other ownership interests having ordinary voting
power (other than stock or such other ownership interests having such power only
by reason of the happening of a contingency) to elect a majority of the board of
directors or other managers of such corporation, partnership or other entity are
at the time owned, or the management of which is otherwise controlled, directly
or indirectly through one or more intermediaries, or both, by such Person.

“Substitute Cash Collateral” shall have the meaning set forth in
Section 3.02(d)(ii).

“Substitute Mortgaged Property” means each Multifamily Residential Property
owned by any Borrower or Additional Borrower (either in fee simple or as tenant
under a ground lease meeting all of Fannie Mae’s requirements for similar loans
anticipated to be purchased by Fannie Mae) and added to a Collateral Pool after
the Effective Date in connection with a substitution of Collateral as permitted
by Section 3.03.

“Substitution” shall have the meaning set forth in Section 3.03.

“Substitution Deposit” shall have the meaning set forth in Section 3.03(e).

“Substitution Fee” means with respect to any Substitution effected in accordance
with Section 3.03, a fee in the amount of $10,000 for each substitute property
added to a Collateral Pool.

“Substitution Loan Documents” means the Security Instrument covering a
Substitute Mortgaged Property and any other documents, instruments or
certificates reasonably required by Fannie Mae in form and substance
satisfactory to Fannie Mae and Borrower in connection with the addition of the
Substitute Mortgaged Property to a Collateral Pool pursuant to Article 3. When
possible, such Substitution Loan Documents shall be based substantially on the
documents executed on the Effective Date or that otherwise have been executed as
of the Effective Date with respect to the Loans, with changes (i) required to
comply with the laws of the state where the Substitute Mortgaged Property is
located and (ii) as may be required by Fannie Mae due to the character and
quality of the Substitute Mortgaged Property based on Fannie Mae’s Underwriting
Requirements.

“Substitution Request” means a written request substantially in the form of
Exhibit J to the Agreement for a Substitution made pursuant to Section 3.03.

 

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Jupiter EQR Credit Facility

 

Appendix I-20

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“Surveys” means the as-built surveys of the Mortgaged Properties prepared in
accordance with Fannie Mae’s requirements for similar loans that are anticipated
to be purchased by Fannie Mae.

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

“Tax Protected Asset Borrower” means, individually or collectively, the
following Borrowers: ASN Santa Clara LLC, ASN Santa Monica LLC, Archstone
Camargue I LLC, Archstone Camargue II LLC, Archstone Camargue III LLC, ASN San
Mateo LLC, Archstone South Market LLC, ASN Fairchase LLC, Archstone Fairchase II
LLC, Smith Property Holdings Three (D.C.) L.P., Archstone Columbia Crossing LLC.

“Term of this Agreement” shall be determined as provided in Section 13.10.

“Three-Month LIBOR” means the British Bankers Association fixing of the London
Inter-Bank Offered Rate for 3-month U.S. Dollar-denominated deposits as reported
by Telerate through electronic transmission. If the Index is no longer
available, or is no longer posted through electronic transmission, Fannie Mae
will choose a new index that is based upon comparable information and provide
notice thereof to Borrower.

“Title Company” means First American Title Insurance Company or such other
company(ies) approved by Fannie Mae, provided that the Title Company shall be
the same for each Mortgaged Property in the same Collateral Pool.

“Title Insurance Policies” means the mortgagee’s policies of title insurance
issued by the Title Company from time to time relating to each of the Security
Instruments, conforming to Fannie Mae’s requirements for similar loans
anticipated to be purchased by Fannie Mae, together with such endorsements,
coinsurance, reinsurance and direct access agreements with respect to such
policies as Fannie Mae may, from time to time, consider necessary or
appropriate, including variable credit endorsements, if available, and tie-in
endorsements, if available, and with an aggregate limit of liability under the
policy (subject to the limitations contained in sections of the Stipulations and
Conditions of the policy relating to a Determination and Extent of Liability)
equal to the aggregate amount of Loans Outstanding for the applicable Collateral
Pool, or such lower amount as Fannie Mae has expressly approved.

“Trailing 3 Month Period” means, for any specified date, the three (3) month
period ending with the later of (i) the last day of the most recent Calendar
Quarter or (ii) the month for which financial statements have been delivered by
Borrower to Fannie Mae pursuant to Section 2.04 and Section 6.03.

“Trailing 12 Month Period” means, for any specified date, the twelve (12) month
period ending with the later of (i) the last day of the most recent Calendar
Quarter or (ii) the month for which financial statements have been delivered by
Borrower to Fannie Mae pursuant to Section 2.04 and Section 6.03.

 

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Appendix I-21

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“Treasury Regulations” means Regulations, revenue rulings and other public
interpretations of the Internal Revenue Code by the Internal Revenue Service, as
such regulations, rulings and interpretations may be amended or otherwise
revised from time to time.

“Underwriting Requirements” means Fannie Mae’s overall requirements for
Multifamily Residential Properties in connection with similar loans sold or
anticipated to be sold to Fannie Mae, pursuant to Fannie Mae’s then current
guidelines, including, requirements relating to appraisals, physical needs
assessments, environmental site assessments, and servicing and asset management,
as such requirements may be amended, modified, updated, superseded, supplemented
or replaced from time to time

“Valuation” means, for any specified date, with respect to a Multifamily
Residential Property, (a) if an Appraisal of the Multifamily Residential
Property was more recently obtained than a Cap Rate for the Multifamily
Residential Property, the Appraised Value of such Multifamily Residential
Property, or (b) if a Cap Rate for the Multifamily Residential Property was more
recently obtained than an Appraisal of the Multifamily Residential Property, the
value derived by dividing—

 

  (i) the Net Operating Income of such Multifamily Residential Property, by

 

  (ii) the most recent Cap Rate determined by Fannie Mae or determined pursuant
to Section 2.04.

Notwithstanding the foregoing, any Valuation for a Multifamily Residential
Property calculated for a date occurring before the date twelve (12) months
after the date on which the Multifamily Residential Property becomes a part of a
Collateral Pool shall equal the Appraised Value of such Multifamily Residential
Property, unless Fannie Mae determines that changed market or property
conditions warrant that the value be determined as set forth in the preceding
sentence.

“Variable Loan” means a variable-rate loan made to Borrower under this Agreement
that has been purchased by Fannie Mae under Fannie Mae Structured Adjustable
Rate Mortgage program.

“Variable Loan Fee” means, with respect to any Variable Loan converted and
extended after the Effective Date, the number of basis points determined at the
time of such closing by Fannie Mae.

Variable Loan Note” means a promissory note in the form attached as Exhibit C
hereto, executed by the Collateral Pool 4 Borrower upon the conversion of the
Loan secured by Collateral Pool 4 to a Variable Loan in accordance with this
Agreement, as the same may be amended, restated or otherwise modified from time
to time.

“Veridian” shall have the meaning set forth in Section 6.31(a).

“Waiving Borrower” shall have the meaning set forth in Section 12.04.

 

Master Credit Facility Agreement

Jupiter EQR Credit Facility

 

Appendix I-22

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EXHIBIT B TO MASTER CREDIT FACILITY AGREEMENT (TERM LOAN)

[INTENTIONALLY DELETED]

 

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Jupiter EQR Credit Facility

 

B-1

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EXHIBIT C TO MASTER CREDIT FACILITY AGREEMENT (TERM LOAN)

[NOTE: THIS IS A ONE-MONTH SARM FORM;

THREE-MONTH SARM IS AVAILABLE DURING EXTENSION PERIOD

AND NOTE WILL BE REVISED ACCORDINGLY]

VARIABLE LOAN NOTE

(Collateral Pool     )

 

US $[            ]   [                    ,         ]

FOR VALUE RECEIVED, the undersigned (“Borrower”) jointly and severally (if more
than one) promises to pay to the order of FANNIE MAE, the corporation duly
organized under the Federal National Mortgage Association Charter Act, as
amended, 12 U.S.C. §1716 et seq. and duly organized and existing under the laws
of the United States (“Fannie Mae”), the principal sum of              Dollars
(US $        ), with interest on the unpaid principal balance from the
Disbursement Date until fully paid at the rates applicable from time to time set
forth in this Variable Loan Note (“Note”).

This Note is executed and delivered by Borrower pursuant to that certain Master
Credit Facility Agreement, dated as of February 27, 2013 by and among Borrower,
Fannie Mae and others (as amended, modified, supplemented or restated from time
to time, the “Master Agreement”), to evidence the obligation of Borrower to
repay a Variable Loan made by Fannie Mae to Borrower in accordance with the
terms of the Master Agreement. This Note is entitled to the benefit and security
of the Loan Documents provided for in the Master Agreement, to which reference
is hereby made for a statement of all of the terms and conditions under which
the Variable Loan evidenced hereby is made. All references to Loan Documents and
Security Documents herein shall be with respect to Collateral Pool 4 (the
“Collateral Pool”) as further identified in the Master Agreement.

Section 1. Defined Terms. In addition to defined terms found elsewhere in this
Note, as used in this Note, the following definitions shall apply:

Adjustable Rate. The initial Adjustable Rate shall be     % per annum until the
first Rate Change Date. From and after each Rate Change Date until the next Rate
Change Date, the Adjustable Rate shall be the sum of (i) the Current Index, and
(ii) the Margin, which sum is then rounded to three decimal places, subject to
the limitations that the Adjustable Rate shall not be less than the Margin.

Amortization Period: N/A.

Business Day: Any day other than a Saturday, Sunday or any other day on which
Fannie Mae is not open for business.

 

Master Credit Facility Agreement

Jupiter EQR Credit Facility

 

C-1

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

Current Index: The published Index that is effective on the Business Day
immediately preceding the applicable Rate Change Date.

Default Rate: A rate equal to the lesser of four (4) percentage points above the
then-applicable Adjustable Rate or the maximum interest rate which may be
collected from Borrower under applicable law.

Disbursement Date: The date of disbursement of Loan proceeds hereunder.

First Payment Date: The first day of                     ,         . [For
example, if the Note date is January 1, then the First Payment Date will be
February 1. If the Note date is any day other than January 1, then the First
Payment Date will be March 1.]

Indebtedness: The principal of, interest on, or any other amounts due at any
time under, this Note, the Security Instrument or any other Loan Document,
including prepayment premiums, late charges, default interest, and advances to
protect the security of the Security Instrument under Section 12 of the Security
Instrument.

Index: The British Bankers Association fixing of the London Inter-Bank Offered
Rate for 1-month U.S. Dollar-denominated deposits as reported by Reuters through
electronic transmission. If the Index is no longer available, or is no longer
posted through electronic transmission, Fannie Mae will choose a new index that
is based upon comparable information and provide notice thereof to Borrower.

Initial Adjustable Rate:     % per annum until the first Rate Change Date.

Fannie Mae: The holder of this Note.

Loan: The loan evidenced by this Note.

Loan Year: The period beginning on the Disbursement Date and ending on the day
before the twelfth Rate Change Date and each successive twelve- (12) month
period thereafter.

Margin:     %, which amount includes the Variable Loan Fee.

Maturity Date: The first day of [            ], or any earlier date on which the
unpaid principal balance of this Note becomes due and payable by acceleration or
otherwise.

Payment Change Date: The first day of the month following each Rate Change Date
until this Note is repaid in full.

Prepayment Lockout Period: None.

 

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Jupiter EQR Credit Facility

 

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Prepayment Premium Term: The period beginning on the Disbursement Date and
ending on the last calendar day of [            ].

Rate Change Date: The First Payment Date and the first day of each month
thereafter until this Note is repaid in full.

Security Instrument: Individually and collectively, various multifamily
mortgages, deeds to secure debt or deeds of trust described in the Master
Agreement comprising Collateral Pool 4.

Servicing Payment Date: Two (2) Business Days prior to the date each monthly
payment is due under this Note.

Variable Loan Fee: Has the meaning set forth in the Master Agreement.

Event of Default and other capitalized terms used but not defined in this Note
shall have the meanings given to such terms in the Master Agreement or, if not
defined in the Master Agreement, as defined in the Security Instrument.

Section 2. Address for Payment. All payments due under this Note shall be
payable at c/o Wells Fargo Bank, N.A., 2010 Corporate Ridge – Suite 1000,
McLean, Virginia 22102, Attention: Servicing Department, or such other place as
may be designated by written notice to Borrower from or on behalf of Fannie Mae.

Section 3. Payment of Principal and Interest. This Note will accrue interest on
the outstanding principal balance at the Adjustable Rate. Principal and interest
shall be paid as follows:

(a) Short Month Interest. If disbursement of principal is made by Fannie Mae to
Borrower on any day other than the first day of the month, interest for the
period beginning on the Disbursement Date and ending on and including the last
day of the month in which such disbursement is made shall be payable
simultaneously with the execution of this Note.

(b) Interest Accrual. Interest shall accrue on the unpaid principal balance of
this Note at the Adjustable Rate and shall be computed on an actual/360 basis.
The amount of interest payable each month by Borrower pursuant to Paragraph 3(d)
below will be based on the actual number of calendar days during such month and
shall be calculated by multiplying the unpaid principal balance of this Note by
the applicable Adjustable Rate, dividing the product by 360 and multiplying the
quotient by the actual number of days elapsed during the month. Borrower
understands that the amount of interest payable each month will vary based on
the unpaid principal balance of this Note, the Adjustable Rate and the actual
number of calendar days during such month.

(c) Adjustable Rate. The Initial Adjustable Rate shall be in effect until the
first Rate Change Date. On the first Rate Change Date and each Rate Change Date
thereafter, the Adjustable Rate shall change until the Loan is repaid in full.
From and after each Rate Change Date until the next Rate Change Date, the
Adjustable Rate shall be the sum of (i) the

 

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Current Index, and (ii) the Margin, which sum is then rounded to three decimal
places, subject to the limitations that the Adjustable Rate shall not be less
than the Margin. Accrued interest on this Note shall be paid in arrears.

(d) Monthly Payments. Borrower acknowledges and agrees to pay all payments
required each month as set forth below (the “Required Monthly Payments”) due
under this Note to the Fannie Mae on the Servicing Payment Date even though such
Required Monthly Payments are due on the first day of every month.

 

  x Interest Only Loan. Consecutive monthly installments of interest only, each
in the amount of the Required Monthly Payment, shall be payable on the First
Payment Date and on the first day of each month thereafter until the entire
unpaid principal balance evidenced by this Note is fully paid. The entire unpaid
principal balance and accrued but unpaid interest, if not sooner paid, shall be
due and payable on the Maturity Date. The initial Required Monthly Payment shall
be              Dollars (US $        ). Thereafter, on each Payment Change Date
the Required Monthly Payment shall change based on the then-applicable
Adjustable Rate and the actual number of calendar days during the applicable
month. The amount of each Required Monthly Payment shall be calculated utilizing
the interest accrual method stated in Paragraph 3(b) above.

(e) [Intentionally deleted.]

(f) Notice of Interest Rate Change. Before each Payment Change Date, Fannie Mae
shall re-calculate the Adjustable Rate and shall notify Borrower (in the manner
specified in the Security Instrument for giving notices) of any change in the
Adjustable Rate and the Required Monthly Payment.

(g) Correction to Required Monthly Payment. If Fannie Mae at any time
determines, in its sole but reasonable discretion, that it has miscalculated the
amount of the Required Monthly Payment (whether because of a miscalculation of
the Adjustable Rate or otherwise), then Fannie Mae shall give notice to Borrower
of the corrected amount of the Required Monthly Payment (and the corrected
Adjustable Rate, if applicable) and (i) if the corrected amount of the Required
Monthly Payment represents an increase, then Borrower shall, within thirty
(30) calendar days thereafter, pay to Fannie Mae any sums that Borrower would
have otherwise been obligated under this Note to pay to Fannie Mae had the
amount of the Required Monthly Payment not been miscalculated, or (ii) if the
corrected amount of the Required Monthly Payment represents a decrease thereof
and Borrower is not otherwise in breach or default under any of the terms and
provisions of the Note, the Security Instrument or any other loan document
evidencing or securing the Note, then Borrower shall within thirty (30) calendar
days thereafter be paid the sums that Borrower would not have otherwise been
obligated to pay to Fannie Mae had the amount of the Required Monthly Payment
not been miscalculated.

 

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(h) Payments Before Due Date. Any regularly scheduled monthly installment of
principal and interest that is received by Fannie Mae before the date it is due
shall be deemed to have been received on the due date solely for the purpose of
calculating interest due.

(i) Accrued Interest. Any accrued interest remaining past due for thirty
(30) days or more shall be added to and become part of the unpaid principal
balance and shall bear interest at the rate or rates specified in this Note. Any
reference herein to “accrued interest” shall refer to accrued interest which has
not become part of the unpaid principal balance. Any amount added to principal
pursuant to the Loan Documents shall bear interest at the applicable rate or
rates specified in this Note and shall be payable with such interest upon demand
by Fannie Mae and absent such demand, as provided in this Note for the payment
of principal and interest.

Section 4. Application of Payments. If at any time Fannie Mae receives, from
Borrower or otherwise, any amount applicable to the Indebtedness which is less
than all amounts due and payable at such time, Fannie Mae may apply that payment
to amounts then due and payable in any manner and in any order determined by
Fannie Mae, in Fannie Mae’s discretion. Borrower agrees that neither Fannie
Mae’s acceptance of a payment from Borrower in an amount that is less than all
amounts then due and payable nor Fannie Mae’s application of such payment shall
constitute or be deemed to constitute either a waiver of the unpaid amounts or
an accord and satisfaction.

Section 5. Security. The Indebtedness is secured, among other things, by the
Security Instrument, and reference is made to the Security Instrument for other
rights of Fannie Mae concerning the collateral for the Indebtedness.

Section 6. Acceleration. If an Event of Default has occurred and is continuing,
the entire unpaid principal balance, any accrued interest, the prepayment
premium payable under Section 10, if any, and all other amounts payable under
this Note and any other Loan Document shall at once become due and payable, at
the option of Fannie Mae, without any prior notice to Borrower. Fannie Mae may
exercise this option to accelerate regardless of any prior forbearance.

Section 7. Late Charge. MONTHLY PAYMENTS UNDER THIS NOTE ARE DUE ON THE FIRST
DAY OF EACH AND EVERY MONTH UNTIL THIS NOTE IS PAID IN FULL. BORROWER HEREBY
AGREES THAT SUCH PAYMENTS SHALL BE MADE TO THE LENDER ON THE SERVICING PAYMENT
DATE. THERE IS NO “GRACE” PERIOD FOR ANY MONTHLY INSTALLMENTS DUE HEREUNDER.
Subject to the provisions of Section 9.01(b) of the Master Agreement, if any
monthly installment due hereunder is not received by Fannie Mae on or before the
first day of each month or if any other amount payable under this Note or under
the Security Instrument or any other Loan Document is not received by Fannie Mae
before or on the date such amount is due, counting from and including the date
such amount is due, Borrower shall pay to Fannie Mae, immediately and without
demand by Fannie Mae, a late charge equal to five percent (5%) of such monthly
installment or other amount due (provided that in connection with the payment in
full on the Maturity Date, if such payment is not received by Fannie Mae on or
before the fifth (5th) day after the Maturity Date, counting from and including
the Maturity Date, Borrower shall pay to Fannie Mae, immediately and without
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(1%) of such payment or other amount due). Borrower acknowledges that its
failure to make timely payments will cause Fannie Mae to incur additional
expenses in servicing and processing the Loan and that it is extremely difficult
and impractical to determine those additional expenses. Borrower agrees that the
late charge payable pursuant to this Paragraph represents a fair and reasonable
estimate, taking into account all circumstances existing on the date of this
Note, of the additional expenses Fannie Mae will incur by reason of such late
payment. The late charge is payable in addition to, and not in lieu of, any
interest payable at the Default Rate pursuant to Section 8.

Section 8. Default Rate. So long as any monthly installment or any other payment
due under this Note remains past due for thirty (30) days or more, interest
under this Note shall accrue on the unpaid principal balance from the earlier of
the due date of the first unpaid monthly installment or other payment due, as
applicable, at the Default Rate. If the unpaid principal balance and all accrued
interest are not paid in full on the Maturity Date, the unpaid principal balance
and all accrued interest shall bear interest from the Maturity Date at the
Default Rate. Borrower also acknowledges that its failure to make timely
payments will cause Fannie Mae to incur additional expenses in servicing and
processing the Loan, that, during the time that any monthly installment or
payment under this Note is delinquent for more than thirty (30) days, Fannie Mae
will incur additional costs and expenses arising from its loss of the use of the
money due and from the adverse impact on Fannie Mae’s ability to meet its other
obligations and to take advantage of other investment opportunities, and that it
is extremely difficult and impractical to determine those additional costs and
expenses. Borrower also acknowledges that, during the time that any monthly
installment or other payment due under this Note is delinquent for more than
thirty (30) days, Fannie Mae’s risk of nonpayment of this Note will be
materially increased and Fannie Mae is entitled to be compensated for such
increased risk. Borrower agrees that the increase in the rate of interest
payable under this Note to the Default Rate represents a fair and reasonable
estimate, taking into account all circumstances existing on the date of this
Note, of the additional costs and expenses Fannie Mae will incur by reason of
the Borrower’s delinquent payment and the additional compensation Fannie Mae is
entitled to receive for the increased risks of nonpayment associated with a
delinquent loan.

Section 9. Limits on Personal Liability; Joint and Several Obligation. The
provisions of Article 12 of the Master Agreement (entitled “Limits on Personal
Liability”) are hereby incorporated into this Note by this reference to the
fullest extent as if the text of such Sections were set forth in its entirety
herein.

Section 10. Lockout; Voluntary and Involuntary Prepayments.

(a) Borrower may voluntarily prepay all (or a portion) of the indebtedness
evidenced hereby subject to the prepayment provisions and any Prepayment Lockout
Period described in Schedule A.

(b) A prepayment premium shall be payable in connection with any prepayment made
under this Note as provided below:

(i) At any time after the expiration of the Prepayment Lockout Period, Borrower
may voluntarily prepay all (or a portion) of the unpaid principal balance of
this Note only on the last calendar day of a calendar month (the “Last Day of
the Month”) and only if Borrower has complied with all of the following:

(1) Borrower must give Fannie Mae at least thirty (30) days (if given via U.S.
Postal Service) or twenty (20) days (if given via facsimile, email or overnight
courier), but not more than sixty (60) days, prior written notice of Borrower’s
intention to make a prepayment (the “Prepayment Notice”). The Prepayment Notice
shall be given in writing (via facsimile, email, U.S. Postal Service or
overnight courier) and addressed to Fannie Mae. The Prepayment Notice shall
include, at a minimum, the Business Day upon which Borrower intends to make the
prepayment (the “Intended Prepayment Date”).

 

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(2) Borrower acknowledges that the Fannie Mae is not required to accept any
voluntary prepayment of this Note on any day other than the Last Day of the
Month even if Borrower has given a Prepayment Notice with an Intended Prepayment
Date other than the Last Day of the Month or if the Last Day of the Month is not
a Business Day. Therefore, even if Fannie Mae accepts a voluntary prepayment on
any day other than the Last Day of the Month, for all purposes (including the
accrual of interest and the calculation of the prepayment premium), any
prepayment received by Fannie Mae on any day other than the Last Day of the
Month shall be deemed to have been received by Fannie Mae on the Last Day of the
Month and any prepayment calculation will include interest to and including the
Last Day of the Month in which such prepayment occurs. If the Last Day of the
Month is not a Business Day, then the Borrower must make the payment on the
Business Day immediately preceding the Last Day of the Month.

(3) Any prepayment shall be made by paying (A) the amount of principal being
prepaid, (B) all accrued interest (calculated to the Last Day of the Month),
(C) all other sums due Fannie Mae at the time of such prepayment, and (D) the
prepayment premium calculated pursuant to Schedule A.

(4) If, for any reason, Borrower fails to prepay this Note within five
(5) Business Days after the Intended Prepayment Date, then Fannie Mae shall have
the right, but not the obligation, to recalculate the prepayment premium
pursuant to Schedule A based upon the date that Borrower actually prepays this
Note. Notwithstanding the foregoing, if the delayed prepayment occurs in a month
other than the month stated in the original Prepayment Notice, then Fannie Mae
shall (a) have the right, but not the obligation, to recalculate the prepayment
premium pursuant to Schedule A based upon the date that Borrower actually
prepays this Note and (b) recalculate the amount of interest payable. In either
instance, for purposes of recalculation, such new prepayment date shall be
deemed the “Intended Prepayment Date.”

(ii) Upon Fannie Mae’s exercise of any right of acceleration under this Note,
Borrower shall pay to Fannie Mae, in addition to the entire unpaid principal
balance of this Note outstanding at the time of the acceleration, (A) all
accrued interest and all other sums due Fannie Mae under this Note and the other
Loan Documents, and (B) the prepayment premium calculated pursuant to Schedule
A.

 

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(iii) Any application by Fannie Mae of any collateral or other security to the
repayment of any portion of the unpaid principal balance of this Note prior to
the Maturity Date and in the absence of acceleration shall be deemed to be a
partial prepayment by Borrower, requiring the payment to Fannie Mae by Borrower
of a prepayment premium.

(c) Notwithstanding the provisions of Section 10(b), no prepayment premium shall
be payable (1) with respect to any prepayment occurring as a result of the
application of any insurance proceeds or condemnation award under the Security
Instrument, or (2) as provided in subparagraph (c) of Schedule A.

(d) Schedule A is hereby incorporated by reference into this Note.

(e) Any permitted or required prepayment of less than the entire unpaid
principal balance of this Note shall not extend or postpone the due date of any
subsequent monthly installments, provided the amount of each monthly installment
shall be recomputed to reflect such prepayment of the Indebtedness.

(f) Borrower recognizes that any prepayment of the unpaid principal balance of
this Note, whether voluntary or involuntary or resulting from a default by
Borrower, will result in Fannie Mae’s incurring loss, including reinvestment
loss, additional expense and frustration or impairment of Fannie Mae’s ability
to meet its commitments to third parties. Borrower agrees to pay to Fannie Mae
upon demand damages for the detriment caused by any prepayment, and agrees that
it is extremely difficult and impractical to ascertain the extent of such
damages. Borrower therefore acknowledges and agrees that the formula for
calculating prepayment premiums set forth on Schedule A represents all the
damages Fannie Mae will incur because of a prepayment.

(g) Borrower further acknowledges that the prepayment premium provisions of this
Note are a material part of the consideration for the Loan evidenced by this
Note, and acknowledges that the terms of this Note are in other respects more
favorable to Borrower as a result of the Borrower’s voluntary agreement to the
prepayment premium provisions.

Section 11. Costs and Expenses. Borrower shall pay on demand all reasonable
expenses and costs, including reasonable fees and out-of-pocket expenses of
attorneys and expert witnesses and costs of investigation, actually incurred by
Fannie Mae as a result of any default under this Note or in connection with
efforts to collect any amount due under this Note, or to enforce the provisions
of any of the other Loan Documents, including those incurred in post-judgment
collection efforts and in any bankruptcy proceeding (including any action for
relief from the automatic stay of any bankruptcy proceeding) or judicial or
non-judicial foreclosure proceeding.

Section 12. Forbearance. Any forbearance by Fannie Mae in exercising any right
or remedy under this Note, the Security Instrument, or any other Loan Document
or otherwise afforded by applicable law, shall not be a waiver of or preclude
the exercise of that or any other right or remedy. The acceptance by Fannie Mae
of any payment after the due date of such payment, or in an amount which is less
than the required payment, shall not be a waiver of Fannie Mae’s right to
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right or remedy with respect to any failure to make prompt payment. Enforcement
by Fannie Mae of any security for Borrower’s obligations under this Note shall
not constitute an election by Fannie Mae of remedies so as to preclude the
exercise of any other right or remedy available to Fannie Mae.

Section 13. Waivers. Except as expressly provided in this Note or the Master
Agreement, presentment, demand, notice of dishonor, protest, notice of
acceleration, notice of intent to demand or accelerate payment or maturity,
presentment for payment, notice of nonpayment, grace, and diligence in
collecting the Indebtedness are waived by Borrower and all endorsers and
guarantors of this Note and all other third party obligors.

Section 14. Loan Charges. Borrower agrees to pay an effective rate of interest
equal to the sum of the interest rate provided for in this Note and any
additional rate of interest resulting from any other charges of interest or in
the nature of interest paid or to be paid in connection with the Loan evidenced
by this Note and any other fees or amounts to be paid by Borrower pursuant to
any of the other Loan Documents. Neither this Note nor any of the other Loan
Documents shall be construed to create a contract for the use, forbearance or
detention of money requiring payment of interest at a rate greater than the
maximum interest rate permitted to be charged under applicable law. If any
applicable law limiting the amount of interest or other charges permitted to be
collected from Borrower in connection with the Loan is interpreted so that any
interest or other charge provided for in any Loan Document, whether considered
separately or together with other charges provided for in any other Loan
Document, violates that law, and Borrower is entitled to the benefit of that
law, that interest or charge is hereby reduced to the extent necessary to
eliminate that violation. The amounts, if any, previously paid to Fannie Mae in
excess of the permitted amounts shall be applied by Fannie Mae to reduce the
unpaid principal balance of this Note. For the purpose of determining whether
any applicable law limiting the amount of interest or other charges permitted to
be collected from Borrower has been violated, all Indebtedness that constitutes
interest, as well as all other charges made in connection with the Indebtedness
that constitute interest, shall be deemed to be allocated and spread ratably
over the stated term of the Note. Unless otherwise required by applicable law,
such allocation and spreading shall be effected in such a manner that the rate
of interest so computed is uniform throughout the stated term of the Note.

Section 15. Commercial Purpose. Borrower represents that the Indebtedness is
being incurred by Borrower solely for the purpose of carrying on a business or
commercial enterprise, and not for personal, family or household purposes.

Section 16. Counting of Days. Except where otherwise specifically provided, any
reference in this Note to a period of “days” means calendar days, not Business
Days.

Section 17. Choice of Law; Consent to Jurisdiction; Waiver of Jury Trial. The
provisions of Section 13.06 of the Master Agreement (entitled “Choice of Law;
Consent to Jurisdiction; Waiver of Jury Trial”) are hereby incorporated into
this Note by this reference to the fullest extent as if the text of such Section
were set forth in its entirety herein.

Section 18. Captions. The captions of the paragraphs of this Note are for
convenience only and shall be disregarded in construing this Note.

 

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Section 19. Notices. All notices, demands and other communications required or
permitted to be given by Fannie Mae to Borrower pursuant to this Note shall be
given in accordance with Section 13.08 of the Master Agreement.

Section 20. Security for this Note. The indebtedness evidenced by this Note is
secured by other Security Documents executed by Collateral Pool Borrower.
Reference is made hereby to the Master Agreement and the Security Documents for
additional rights and remedies of Fannie Mae relating to the Indebtedness
evidenced by this Note. Each Security Document shall be released in accordance
with the provisions of the Master Agreement and the Security Documents.

Section 21. Loan May Not Be Reborrowed. Borrower may not re-borrow any amounts
under this Note which it has previously borrowed and repaid under this Note

Section 22. Variable Loan. This Note is issued to evidence a Variable Loan made
in accordance with the terms of the Master Agreement.

Section 23. Cross-Default with Master Agreement. The occurrence and continuance
of an Event of Default with respect to the Collateral Pool under the Master
Agreement shall constitute an “Event of Default” under this Note, and,
accordingly, upon the occurrence of an Event of Default under the Master
Agreement with respect to the Collateral Pool, the entire principal amount
outstanding hereunder and accrued interest thereon shall at once become due and
payable, at the option of the holder hereof.

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ATTACHED SCHEDULES. The following Schedules are attached to this Note:

x  Schedule A Prepayment Premium (required)

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IN WITNESS WHEREOF, Borrower has signed and delivered this Note under seal or
has caused this Note to be signed and delivered under seal by its duly
authorized representative (which authorized representative shall have no
personal liability hereunder). Borrower intends that this Note shall be deemed
to be signed and delivered as a sealed instrument.

 

BORROWER: [ADD EACH BORROWER FOR SUCH COLLATERAL POOL]

 

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SCHEDULE A

[TO BE INSERTED]

 

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[Initial Page to Schedule A to Variable Loan Note]

 

 

INITIAL(S)

 

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EXHIBIT D TO MASTER CREDIT FACILITY AGREEMENT (TERM LOAN)

[INTENTIONALLY DELETED]

 

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EXHIBIT E TO MASTER CREDIT FACILITY AGREEMENT (TERM LOAN)

[JOINDER TO AND] CONFIRMATION OF GUARANTY

(Collateral Pool     )

THIS [JOINDER TO AND] CONFIRMATION OF GUARANTY (the “Confirmation”) is made as
of the      day of                     , 20    , by ERP OPERATING LIMITED
PARTNERSHIP, a Delaware limited partnership (“Guarantor”, [and
(vii)                     (“Additional Guarantor”)], for the benefit of FANNIE
MAE, the corporation duly organized under the Federal National Mortgage
Association Charter Act, as amended, 12 U.S.C. §1716 et seq. and duly organized
and existing under the laws of the United States (“Fannie Mae”).

A. Guarantor entered into or joined into that certain Guaranty (Collateral Pool
    ) dated as of February [    ], 2013, for the benefit of Fannie Mae (the
“Guaranty”) to guaranty the Guaranteed Obligations (as defined in the Guaranty)
under that certain Master Credit Facility Agreement, dated as of February
[    ], 2013 (the “Master Agreement”) by and among the borrowers set forth
therein (individually and collectively, the “Borrower”), Fannie Mae and other
borrowers signatory thereto. All capitalized terms used but not defined in
this Confirmation shall have the meanings ascribed to such terms in
the Guaranty. All references to Loan Documents herein shall be with respect to
Collateral Pool              (the “Collateral Pool”) as further defined in the
Master Agreement.

B. [Borrower and Fannie Mae have modified the credit facility under the Master
Agreement] OR [Additional Borrower has joined into the Master Agreement as a
Borrower under Collateral Pool     ] and made certain other changes to the terms
and conditions of the Master Agreement pursuant to that certain
[                    ] Amendment to Master Agreement dated as of even date
herewith (the “[                    ] Amendment”).] OR [Additional Guarantor
owns, directly or indirectly, an ownership interest in Borrower and has agreed
to join into the Guaranty as a Guarantor thereunder.]

C. [As a condition to entering into the [                    ] Amendment] OR
[Pursuant to the terms of the Master Agreement, Additional Guarantor is required
to join into the Guaranty and] Guarantor is required to confirm its obligations
under the Guaranty.

NOW, THEREFORE, the parties hereto, in consideration of the mutual promises and
agreements contained in this Confirmation and the Guaranty, and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, hereby agree as follows:

Section 1. Guarantor hereby [(i) acknowledges and consents to [the addition of
the Additional Borrower][the joinder of the Additional Guarantor in the
Guaranty] under the Master Agreement], (ii) the other changes and the terms and
conditions of the Master Agreement all as set forth in the
[                    ] Amendment, and (iii)] confirms to Fannie Mae that the
terms and provisions (including the representations, warranties and covenants)
of the Guaranty remain in full force and effect.

 

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Section 2. [FOR JOINDER OF ADDITIONAL GUARANTORS — Additional Guarantor hereby
joins into the Guaranty as if it were an original Guarantor thereunder and
hereby agrees that all references in the Guaranty and the Loan Documents to
any Guarantor shall include the Additional Guarantor, including but not limited
to, the Master Agreement and the Guarantor. Further, any references in any
Security Instrument to “Key Principal” shall be deemed to include Additional
Guarantor.]

Section 3. [FOR JOINDER OF ADDITIONAL GUARANTORS — The provisions of Section 25
of the Guaranty (entitled “Exculpation”) are hereby incorporated into
this Confirmation by this reference to the fullest extent as if such text of
such provisions was set forth in their entirety herein.]

Section 4. Guarantor hereby confirms and ratifies the Loan Documents it has
previously executed in connection with the Master Agreement.

Section 5. This Confirmation may be executed in counterparts by the parties
hereto, and each such counterpart shall be considered an original and all such
counterparts shall constitute one and the same instrument.

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IN WITNESS WHEREOF, Guarantor [and Additional Guarantor] [has/have] signed and
delivered this Confirmation of Guaranty under seal or has caused this
Confirmation of Guaranty to be signed and delivered under seal by [its/their]
duly authorized representative (which representative shall have no personal
liability hereunder) as of the day and year first above written.

Dated as of                     , 20    

 

GUARANTOR: [INSERT GUARANTOR SIGNATURE BLOCKS] [ADDITIONAL GUARANTOR: INSERT
ADDITIONAL GUARANTOR SIGNATURE BLOCK]

 

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EXHIBIT F TO MASTER CREDIT FACILITY AGREEMENT (TERM LOAN)

COMPLIANCE CERTIFICATE

(Collateral Pool     )

The undersigned (“Borrower”) hereby certifies to FANNIE MAE, the corporation
duly organized under the Federal National Mortgage Association Charter Act, as
amended, 12 U.S.C. §1716 et seq. and duly organized and existing under the laws
of the United States (“Fannie Mae”), as follows:

Section 1. Master Agreement. Borrower is a party to that certain Master Credit
Facility Agreement (Term Loan), dated as of February [    ], 2013, by and among
Borrower, Fannie Mae and other borrowers signatory thereto (as amended,
restated, supplemented or modified from time to time, the “Master Agreement”).
This Certificate is issued pursuant to the terms of the Master Agreement.

Section 2. Borrower Agent. Pursuant to the provisions of Section 12.03 of the
Master Agreement, Borrower has irrevocably designated Equity Residential as
Borrower Agent under the Loan Documents.

Section 3. Satisfaction of Conditions. Borrower hereby represents, warrants and
covenants to Fannie Mae that all conditions to the Request with respect to which
this Certificate is issued have been satisfied.

Section 4. Capitalized Terms. All capitalized terms used but not defined in this
Certificate shall have the meanings ascribed to such terms in the Master
Agreement.

Section 5. Limits on Personal Liability. The provisions of Article 12 of the
Master Agreement (entitled “Limits on Personal Liability”) are hereby
incorporated into this Certificate by this reference to the fullest extent as if
the text of such Article were set forth in its entirety herein.

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IN WITNESS WHEREOF, Borrower has signed this Certificate under seal or has
caused this Certificate to be signed and delivered under seal by its duly
authorized representative (which representative shall have no personal liability
hereunder).

Dated:                     ,     

 

BORROWER: [ADD EACH BORROWER FOR SUCH COLLATERAL POOL]

 

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EXHIBIT G-1 TO MASTER CREDIT FACILITY AGREEMENT (TERM LOAN)

ORGANIZATIONAL CERTIFICATE

(Collateral Pool     )

(Borrower)

I, the undersigned,                                          [insert Secretary
or Officer not signing the Loan Documents] hereby certify as follows:

Section 1. Position. I am an Officer of                     , a
                     (collectively, “Borrower”), and I am authorized to deliver
this Certificate on behalf of Borrower.

Section 2. Master Agreement. Borrower entered into that certain Master Credit
Facility Agreement (Term Loan), dated as of February [    ], 2013, by and among
(x) Borrower, (y) FANNIE MAE, the corporation duly organized under the Federal
National Mortgage Association Charter Act, as amended, 12 U.S.C. §1716 et seq.
and duly organized and existing under the laws of the United States (“Fannie
Mae”), and (z) other borrowers signatory thereto (as amended, restated or
otherwise modified from time to time, the “Master Agreement”). This Certificate
is issued pursuant to the terms of the Master Agreement and the signatory hereto
shall have no personal liability in connection with the execution and delivery
of this Certificate.

Section 3. Due Authorization of Request. I hereby certify that no action by the
members of Borrower is necessary to duly authorize the execution and delivery
of, and the consummation of the transaction contemplated by the Request with
respect to which this Certificate is delivered, or, if necessary, that attached
as Exhibit A to this Certificate is a true copy of resolutions duly adopted at a
meeting of the board of directors, partners or members, as the case may be, that
authorize the action. Any such resolutions are in full force and effect and are
unmodified as of the date of this Certificate.

Section 4. No Changes. Since the date of the most recent Organizational
Certificate delivered to Fannie Mae, or, if there are none, since the date of
the Master Agreement, there have been no changes in any of the Organizational
Documents of Borrower, except as set forth in Exhibit B to this Certificate, and
Borrower remains duly qualified in the jurisdictions in which it is required to
be qualified under the terms of the Master Agreement.

Section 5. Incumbency Certificate. One or more of the persons authorized to
execute and deliver any documents required to be delivered in connection with
the Request are as follows:

 

Name

    

Office

             

 

    

 

  

 

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Section 6. Capitalized Terms. All capitalized terms used but not defined in this
Certificate shall have the meanings ascribed to such terms in the Master
Agreement between the Borrowers owning Collateral Pool     .

Section 7. Limits on Personal Liability. The provisions of Article 12 of the
Master Agreement (entitled “Limits on Personal Liability”) are hereby
incorporated into this Certificate by this reference to the fullest extent as if
the text of such Article were set forth in its entirety herein.

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Dated:                     

 

By:  

 

Name:  

 

Title:   [Secretary/Officer]

 

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Exhibit A

Resolutions

 

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Exhibit B

Changes to Organizational Documents

 

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EXHIBIT G-2 TO MASTER CREDIT FACILITY AGREEMENT (TERM LOAN)

ORGANIZATIONAL CERTIFICATE

(Collateral Pool     )

(Guarantor)

I, the undersigned,                                          [insert Secretary
or Officer not signing the Loan Documents], hereby certify as follows:

Section 1. Position. I am an Officer of Equity Residential, the General Partner
of ERP Operating Limited Partnership, an Illinois limited partnership
(“Guarantor”), and I am authorized to deliver this Certificate on behalf of
Guarantor.

Section 2. Guaranty. Pursuant to that certain Master Credit Facility Agreement
(Term Loan) dated February [    ], 2013 (the “Master Agreement”), Guarantor
entered into that certain Guaranty, dated as of February [    ], 2013, for the
benefit of FANNIE MAE, the corporation duly organized under the Federal National
Mortgage Association Charter Act, as amended, 12 U.S.C. §1716 et seq. and duly
organized and existing under the laws of the United States (“Fannie Mae”) (as
amended, restated or otherwise modified from time to time, the “Guaranty”). This
Certificate is issued pursuant to the terms of the Guaranty. The signatory
hereto shall have no personal liability in connection with the execution and
delivery of this Certificate.

Section 3. Due Authorization of Request. I hereby certify that no action by the
members, board of directors, shareholders or partners, as the case may be, of
Guarantor is necessary to duly authorize the execution and delivery of, and the
consummation of the transaction contemplated by the Request with respect to
which this Certificate is delivered, or, if necessary, that attached as Exhibit
A to this Certificate is a true copy of resolutions duly adopted at a meeting of
the board of directors, partners or members, as the case may be, that authorize
the action. Any such resolutions are in full force and effect and are unmodified
as of the date of this Certificate.

Section 4. No Changes. Since the date of the most recent Organizational
Certificate delivered to Fannie Mae, or, if there are none, since the date of
the Guaranty, there have been no changes in any of the Organizational Documents
of Guarantor, except as set forth in Exhibit B to this Certificate, and
Guarantor remains in existence and is duly qualified in the jurisdictions in
which it is required to be qualified under the terms of the Guaranty.

Section 5. Incumbency Certificate. One or more of the persons authorized to
execute and deliver any documents required to be delivered by Guarantor in
connection with the Request are as follows:

 

Name

    

Office

            

 

    

 

  

 

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Section 6. Capitalized Terms. All capitalized terms used but not defined in this
Certificate shall have the meanings ascribed to such terms in the Master
Agreement.

Section 7. Limits on Personal Liability. The provisions of Article 12 of the
Master Agreement (entitled “Limits on Personal Liability”) are hereby
incorporated into this Certificate by this reference to the fullest extent as if
the text of such Article were set forth in its entirety herein.

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Dated:                     

 

By:  

 

Name:  

 

Title:   [Secretary/Officer]

 

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Exhibit A

Resolutions

 

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Exhibit B

Changes to Organizational Documents

 

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EXHIBIT H TO MASTER CREDIT FACILITY AGREEMENT (TERM LOAN)

RATE FORM

(Collateral Pool     )

[MAY BE FURTHER REVISED TO REFLECT RATE LOCK BY SERVICER]

Pursuant to Section 1.08 of that certain Master Credit Facility Agreement (Term
Loan) dated as of February [    ], 2013 (as amended from time to time, the
“Master Agreement”) by and among FANNIE MAE, the corporation duly organized
under the Federal National Mortgage Association Charter Act, as amended, 12
U.S.C. §1716 et seq. and duly organized and existing under the laws of the
United States (“Fannie Mae”), and the undersigned (individually and
collectively, “Borrower”). Borrower hereby requests that Fannie Mae issue to it
an advance with the following terms:

 

Designation of Loan                    ¨Variable Loan    FOR SARM VARIABLE LOAN
ONLY:      Proposed Adjustable Rate                        %  

Loan Amount

   $                      

Term

                        months  

Initial 1-Month Libor

   _____              

Margin

                                             bps  

Proposed Initial Adjustable Rate

   _____              

Variable Loan Fee

   $                      

Breakage Fee Deposit

   $                      

Closing Date no later than

                       ,             

Fannie Mae will provide Borrower with written confirmation when and if it has
obtained a commitment for the purchase by Fannie Mae for cash of a Loan having
the characteristics described above. In the event that the lowest available note
rate is greater than that specified above, Fannie Mae will not proceed without
the prior written authorization of Borrower.

Borrower certifies that all conditions contained in Article 2 of the Master
Agreement that are required to be satisfied specifically by the Borrower will be
satisfied on or before the Closing Date.

 

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Defined terms used herein shall have the same meaning as set forth in the Master
Agreement.

The provisions of Article 12 of the Master Agreement (entitled “Limits on
Personal Liability”) are hereby incorporated into this Form by this reference to
the fullest extent as if the text of such Article were set forth in its entirety
herein.

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Dated:                     

 

BORROWER: [ADD EACH BORROWER FOR SUCH COLLATERAL POOL]

 

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Pursuant to Section 1.08 of the Master Agreement, Fannie Mae hereby confirms
that it has obtained a commitment for the purchase by Fannie Mae for cash in
conformance with the terms noted above except for the following:

Dated:                     

 

LENDER: FANNIE MAE By:  

 

Name:  

 

Title:  

 

 

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EXHIBIT I TO MASTER CREDIT FACILITY AGREEMENT (TERM LOAN)

FORM OF ANNUAL AND QUARTERLY

FINANCIAL STATEMENT CERTIFICATES

CERTIFICATION

The undersigned on behalf of EQR-SOMBRA 2008 LIMITED PARTNERSHIP, a Delaware
limited partnership, EQR-CHELSEA SQUARE LIMITED PARTNERSHIP, a Washington
limited partnership, SHEFFIELD APARTMENTS, L.L.C., a Virginia limited liability
company, EQR-BELLAGIO, L.L.C., a Delaware limited liability company, EQR-SOMBRA
2008 LIMITED PARTNERSHIP, as sole beneficiary and CITY NATIONAL BANK OF FLORIDA,
not personally but solely as Trustee, under that certain Land Trust Agreement
dated as of November 21, 2003 and known as Trust Number 2401-1461-00, as amended
and EQR-SOMBRA 2008 LIMITED PARTNERSHIP, as sole beneficiary and CITY NATIONAL
BANK OF FLORIDA, not personally but solely as Trustee, under that certain Land
Trust Agreement dated as of October 24, 2006 and known as Trust Number
2401-2821-00 [add any Additional Owner] (individually and collectively, the
“Owner”) hereby certifies to Fannie Mae as follows:

 

  1. All capitalized terms used and not defined in this Certificate shall have
the meaning ascribed to such terms in that certain Term Loan Agreement dated as
of December 16, 2008 by and among the Owner and Wells Fargo Bank, N.A. (the
“Term Loan Agreement”).

 

  2. The Owner and sole member of general partner of Owner have not incurred and
are not obligated with respect to aggregate Indebtedness (other than the
Mortgage Loans) in excess of $250,000, except as permitted by Section 3.3(g) of
the Term Loan Agreement.

 

  3. Borrower has received no notice of any building code violation, or if
Borrower has received such notice, evidence of remediation;

 

  4. Borrower has made no application for rezoning nor received any notice that
the Mortgaged Property has been or is being rezoned; and

 

  5. Borrower has taken no action and has no knowledge of any action that would
violate the provisions of Section 11.02(b)(1)(F) (ADJUST TO CORRECT SECTION
REFERENCE) (Transfers – Mortgaged Property) regarding liens encumbering the
Mortgaged Property.

Dated: [                    ]

[SIGNED BY THE BORROWER]

 

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EXHIBIT J TO MASTER CREDIT FACILITY AGREEMENT (TERM LOAN)

REQUEST

(Collateral Pool     )

(Release/Substitution)

                    ,             

Wells Fargo Multifamily Capital, Inc.

375 Park Avenue

Mail Code NY 4060

New York, New York 10152

(“Servicer” on behalf of Fannie Mae (“Fannie Mae”))

[Note: Subject to change in the event Servicer or its address changes]

 

Re: REQUEST issued pursuant to Master Credit Facility Agreement, dated as of
February [    ], 2013, by and between the undersigned (“Borrower”), Fannie Mae
and others (as amended from time to time, the “Master Agreement”)

Ladies and Gentlemen:

This constitutes [a Release] [a Substitution] Request pursuant to the terms of
the above-referenced Master Agreement with respect to Collateral Pool     .

[SELECT APPROPRIATE SECTIONS]

Section 1. Substitution Request. Borrower hereby requests that the Multifamily
Residential Property described in this Request be added to the Collateral Pool
in connection with a substitution of Collateral in accordance with the terms of
the Master Agreement. Following is the information required by the Master
Agreement with respect to this Request:

(a) Property Description Package. Attached to this Request is the information
and documents relating to the proposed Substitute Mortgaged Property required to
be delivered to Fannie Mae pursuant to the terms of the Master Agreement;

(b) Due Diligence Fees. Enclosed with this Request is a check in payment of a
deposit for all Additional Due Diligence Fees required to be submitted with this
Request pursuant to Section 8.03 of the Master Agreement; and

(c) Accompanying Documents. All reports, certificates and documents required to
be delivered pursuant to the conditions contained in Sections 4.01 and 4.05 of
the Master Agreement will be delivered on or before the Closing Date.

Section 2. Fees. If Fannie Mae consents to the addition of the proposed
Substitute Mortgaged Property to the Collateral Pool, and Borrower elects to add
the Substitute Mortgaged

 

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Property to the Collateral Pool, Borrower shall pay the Substitution Fee [and
Re-Underwriting Fee] to Fannie Mae, pursuant to the terms of the Master
Agreement, as one of the conditions to the closing of the Substitute Mortgaged
Property.

AND/OR

Section 1. Release Request. Borrower hereby requests that the Release Property
described in this Request be released from the Collateral Pool in accordance
with the terms of the Master Agreement. Following is the information required by
the Master Agreement with respect to this Request:

(a) Description of Release Property. The name, address and location (county and
state) of the Mortgaged Property, or other designation of the proposed Release
Property is as follows:

 

Name:  

 

Address:  

 

 

 

Location:  

 

(b) Accompanying Documents. All documents, instruments and certificates required
to be delivered pursuant to the conditions contained in Sections 4.01 and 4.04
of the Master Agreement will be delivered on or before the Closing Date.

Section 2. Release Price. Borrower shall pay the Release Price, if applicable,
as a condition to the closing of the release of the Release Property from the
Collateral Pool.

Section 3. Fees. If Fannie Mae consents to the release of the proposed Release
Mortgaged Property from the Collateral Pool, and Borrower elects to release the
Release Mortgaged Property from the Collateral Pool, Borrower shall pay the
Release Fee and Re-Underwriting Fee to Fannie Mae as one of the conditions to
the closing of the Release Mortgaged Property.

Section 4. Limits on Personal Liability. The provisions of Article 12 of the
Master Agreement (entitled “Limits on Personal Liability”) are hereby
incorporated into this Request by this reference to the fullest extent as if the
text of such Article were set forth in its entirety herein.

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This Request is being executed by an authorized representative of Borrower and
such authorized representative shall have no personal liability hereunder.

 

Sincerely, [ADD EACH BORROWER FOR SUCH COLLATERAL POOL]

 

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EXHIBIT K TO MASTER CREDIT FACILITY AGREEMENT (TERM LOAN)

CONFIRMATION OF OBLIGATIONS

(Collateral Pool     )

THIS CONFIRMATION OF OBLIGATIONS (the “Confirmation of Obligations”) is made as
of the              day of                     ,     , by and among
                    , a              (individually and collectively,
“Borrower”), for the benefit of FANNIE MAE, the corporation duly organized under
the Federal National Mortgage Association Charter Act, as amended, 12 U.S.C.
§1716 et seq. and duly organized and existing under the laws of the United
States (“Fannie Mae”).

RECITALS

A. Borrower, Fannie Mae and others are parties to that certain Master Credit
Facility Agreement (Term Loan), dated as of February [    ], 2013 (as amended
from time to time, the “Master Agreement”). All references to Loan Documents and
Security Documents herein shall be with respect to Collateral Pool      (the
“Collateral Pool”) as further identified in the Master Agreement.

B. Fannie Mae has designated Wells Fargo Multifamily Capital, Inc. as the
servicer of the Loan contemplated by the Master Agreement.

C. Borrower has delivered to Fannie Mae a Release Request pursuant to the Master
Agreement to release a Release Property from the Collateral Pool.

D. Fannie Mae has consented to the Release Request.

E. The parties are executing this Confirmation of Obligations pursuant to the
Master Agreement to confirm that each remains liable for all of its obligations,
except with respect to the Release Property, under the Master Agreement and the
other Loan Documents notwithstanding the release of the Release Property from
the Collateral Pool.

NOW, THEREFORE, Borrower, in consideration of Fannie Mae’s consent to the
release of the Release Property from the Collateral Pool and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, hereby agree as follows:

Section 1. Confirmation of Obligations. Borrower confirms that, except with
respect to the Release Property, none of its respective obligations under the
Master Agreement and the Loan Documents is affected by the release of the
Release Property from the Collateral Pool, and each of its respective
obligations under the Master Agreement and the Loan Documents shall remain in
full force and effect, and it shall be fully liable for the observance of all
such obligations, notwithstanding the release of the Release Property from the
Collateral Pool.

Section 2. Beneficiaries. This Confirmation of Obligations is made for the
express benefit of Fannie Mae.

 

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Section 3. Capitalized Terms. All capitalized terms used in this Confirmation of
Obligations which are not specifically defined herein shall have the respective
meanings set forth in the Master Agreement.

Section 4. Counterparts. This Confirmation of Obligations may be executed in
counterparts by the parties hereto, and each such counterpart shall be
considered an original and all such counterparts shall constitute one and the
same instrument.

Section 5. Limits on Personal Liability. The provisions of Article 12 of the
Master Agreement (entitled “Limits on Personal Liability”) are hereby
incorporated into this Confirmation of Obligations by this reference to the
fullest extent as if the text of such Article were set forth in its entirety
herein.

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IN WITNESS WHEREOF, the Borrower has signed this Confirmation under seal or has
caused this Confirmation of Obligations to be signed and delivered under seal by
its duly authorized representative (which representative shall have no personal
liability hereunder).

 

BORROWER: [ADD EACH BORROWER FOR SUCH COLLATERAL POOL]

 

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EXHIBIT L TO MASTER CREDIT FACILITY AGREEMENT (TERM LOAN)

[INTENTIONALLY DELETED]

 

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EXHIBIT M TO MASTER CREDIT FACILITY AGREEMENT (TERM LOAN)

LIST OF MASTER LEASES

 

Property Name

  

Property Address

Oakwood Marina Del Rey    411 Via Marina, Marina Del Ray, CA

 

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EXHIBIT N TO AMENDED AND RESTATED MASTER CREDIT FACILITY AGREEMENT

[INTENTIONALLY DELETED]

 

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EXHIBIT O TO MASTER CREDIT FACILITY AGREEMENT (TERM LOAN)

INTEREST RATE HEDGE SECURITY, PLEDGE AND ASSIGNMENT AGREEMENT

(Collateral Pool     ) [FOR CONVERTED POOLS]

THIS INTEREST RATE HEDGE SECURITY, PLEDGE AND ASSIGNMENT AGREEMENT (this
“Agreement”), dated as of                     , 20    , is by and between
                                         , a
                                         (“Grantor”), and FANNIE MAE, the
corporation duly organized under the Federal National Mortgage Association
Charter Act, as amended, 12 U.S.C. §1716 et seq. (“Fannie Mae”).

RECITALS:

A. The Borrowers identified on Schedule I attached hereto (individually and
collectively, “Borrower”), Fannie Mae and others are party to that certain
Master Credit Facility Agreement (Term Loan) dated as of February [    ], 2013
(such agreement, as the same may be amended, supplemented or otherwise modified
or amended and restated, from time to time, the “Master Agreement”), pursuant to
which Borrower has obtained that certain Variable Loan to Collateral Pool     
Borrower in accordance with and subject to the terms of the Master Agreement. As
set forth in Section 1.2 of this Agreement, all capitalized terms not otherwise
defined herein shall have their respective meanings set forth in the Master
Agreement. All references to Loan Documents and Security Documents herein shall
be with respect to Collateral Pool      (the “Collateral Pool”) as further
identified in the Master Agreement.

B. The Variable Loan (the “Variable Loan”) made pursuant to the Master Agreement
is evidenced by that certain Amended and Restated Variable Loan Note made by
Borrower dated as of [                    ] (the “Note”). The Note is secured
by, among other things, the Hedge Documents (defined below) and various
Multifamily Mortgages, Deeds of Trust, and/or Deeds to Secure Debt, Assignment
of Rents and Security Agreements from Borrower to Fannie Mae (collectively, the
“Security Instrument”), granting a lien on each property identified as a
Mortgaged Property in the Collateral Pool in the Master Agreement (collectively,
the “Property”).

C. As required by the Fannie Mae, Grantor has agreed to acquire, maintain and
pledge to Fannie Mae hereunder one or more interest rate caps (individually and
collectively, an “Interest Rate Cap”) or interest rate swaps (individually and
collectively, an “Interest Rate Swap”; individually or together with an Interest
Rate Cap, an “Interest Rate Hedge”) pursuant to certain documents attached as
Exhibit A to this Agreement (the “Hedge Documents”), in order to provide
additional support and collateral for Borrower’s obligations to Fannie Mae under
the Master Agreement.

D. Grantor derives substantial benefit from the Variable Loan to Borrower.

E. As security for Borrower’s obligations under the Master Agreement and the
Note, Grantor and Fannie Mae are entering into this Agreement.

 

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NOW, THEREFORE, in consideration of the mutual covenants and undertakings set
forth in this Agreement and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged by Grantor and Fannie Mae,
Grantor and Fannie Mae agree as follows:

ARTICLE 1

DEFINITIONS; RULES OF CONSTRUCTION

Section 1.1. Incorporation of Recitals. The recitals set forth in this Agreement
are, by this reference, incorporated into and deemed a part of this Agreement.

Section 1.2. Capitalized Terms; Definitions. All capitalized terms used in this
Agreement shall have the meanings given to those terms in this Agreement.
Capitalized terms used in this Agreement and not defined in this Agreement, but
defined in the Master Agreement, shall have the meanings given to those terms in
the Master Agreement. Unless otherwise defined in this Agreement, terms used in
this Agreement that are defined in the Uniform Commercial Code as adopted in the
State of Delaware (“UCC”) shall have the meaning given those terms in the UCC.

Section 1.3. Interpretation. Words importing any gender include all genders. The
singular form of any word used in this Agreement shall include the plural, and
vice versa, unless the context otherwise requires. Words importing persons
include natural persons, firms, associations, partnerships and corporations. The
parties hereto acknowledge that each party and their respective counsel have
participated in the drafting and revision of this Agreement. Accordingly, the
parties agree that any rule of construction which disfavors the drafting party
shall not apply in the interpretation of this Agreement or any statement or
supplement or exhibit hereto.

Section 1.4. Reference Materials. Sections mentioned by number only are the
respective sections of this Agreement so numbered. Reference to “this section”
or “this subsection” shall refer to the particular section or subsection in
which such reference appears. Any captions, titles or headings preceding the
text of any section and any table of contents or index attached to this
Agreement are solely for convenience of reference and shall not constitute part
of this Agreement or affect its meaning, construction or effect.

ARTICLE 2

TERMS OF INTEREST RATE HEDGE

Section 2.1. General Terms. To protect against fluctuations in interest rates
during the term of the Note, Grantor shall make arrangements for an Interest
Rate Hedge to be in place and maintained at all times with respect to the
Variable Loan in accordance with the following terms and conditions:

(a) Term. Except as hereinafter permitted, the initial Interest Rate Hedge
purchased by Grantor with respect to the Loan (the “Initial Interest Rate
Hedge”) shall be in effect for a period beginning on or prior to the Closing
Date of such Variable Loan and terminating not earlier than the first to occur
of (i) the last day of the [twelfth (12th)] [twenty-fourth

 

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(24th)] [CONFORM TO EXTENSION TERM] full calendar month thereafter and (ii) the
Pool Termination Date. A subsequent Interest Rate Hedge (the “Subsequent
Interest Rate Hedge”) shall be required if the Initial Interest Rate Hedge
expires or terminates prior to the Pool Termination Date. Each Subsequent
Interest Rate Hedge must be in effect for a period beginning on or prior to the
day of the expiration of the prior Interest Rate Hedge, and ending not earlier
than the first to occur of (i) the last day of the twelfth (12th) full calendar
month thereafter, and (ii) the Pool Termination Date as such date may be
extended pursuant to Section 1.05 or Section 1.06 of the Master Agreement, as
applicable. It is the intention of the parties, and a condition of the Variable
Loan, that the Grantor or Borrower shall obtain, and shall maintain at all times
during the term of this Agreement so long as any Variable Loan is Outstanding,
one or more Interest Rate Hedges in an aggregate notional principal amount equal
to the Variable Loan Outstanding in effect from time to time and until the Pool
Termination Date and meeting the conditions set forth in this Agreement.

(b) Notional Amount. The notional amount of the Initial Interest Rate Hedge
shall be equal to the original principal balance of the Variable Loan for the
entire term of the Initial Interest Rate Hedge. The notional amount of any
Subsequent Interest Rate Hedge shall be equal to the outstanding principal
balance of the Variable Loan at the time that any Subsequent Interest Rate Hedge
is to become effective. If the outstanding principal balance of the Variable
Loan decreases, Grantor may amend the Interest Rate Hedge to provide for a
decrease in the notional amount to an amount equal to the reduced amount of the
Variable Loan, provided that Fannie Mae gives its prior written approval to the
documents reflecting the amendment (which approval shall not be unreasonably
withheld, delayed or conditioned).

(c) Strike Rate. Each Initial Interest Rate Hedge that is an Interest Rate Cap
shall have a strike rate (the “Strike Rate”) and each Initial Interest Rate
Hedge that is an Interest Rate Swap shall have a fixed rate (the “Fixed Rate”)
not greater than the highest interest rate that would result in an Aggregate
Debt Service Coverage Ratio of not less than 1.0 to 1.0 (assuming amortization)
as determined by Fannie Mae pursuant to the Master Agreement. If the Subsequent
Interest Rate Hedge is an Interest Rate Swap, it shall have a Fixed Rate of not
greater than the highest interest rate that would result in an Aggregate Debt
Service Coverage Ratio of not less than .95 to 1.0 (assuming amortization). If
the Subsequent Interest Rate Hedge is an Interest Rate Cap, it shall have a
Strike Rate of not greater than the lowest rate that would result in an
Aggregate Debt Service Coverage Ratio of not less than 1.0 to 1.0 (assuming
amortization).

(d) Interest Rate Hedge Documents and Counterparty. All Interest Rate Hedges
shall be evidenced, governed and secured on terms and conditions, and pursuant
to hedge agreements and related documentation in form and content reasonably
acceptable to Fannie Mae. The seller of the Interest Rate Hedge (seller and its
transferees and assigns, the “Counterparty”) shall at all times be a financial
institution acceptable to Fannie Mae as a hedge counterparty.

Section 2.2. Payments Made under Interest Rate Hedge. The Hedge Documents shall
require the Counterparty to make all payments due to Grantor under the Interest
Rate Hedge directly to Fannie Mae for so long as the Interest Rate hedge is
subject to the pledge established hereunder. Such payments will be paid over to
Grantor only if (i) there is no Event of Default (as hereinafter defined), and
(ii) Fannie Mae has received payment in full for all amounts due under the Note
and other Loan Documents.

 

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Section 2.3. Termination of Interest Rate Hedge; Exercise of Rights. For so long
as an Interest Rate Hedge is pledged as collateral pursuant to the terms of this
Agreement, Grantor shall not terminate, transfer or consent to any transfer of
any existing Interest Rate Hedge without Fannie Mae’s prior written consent;
provided, however, that if, and at such time as, the Variable Loan due and owing
by Borrower under the Master Agreement and all other Loan Documents is paid in
full, Grantor shall have the right to terminate the existing Interest Rate Hedge
with respect to such Variable Loan in accordance with this Agreement. If an
Interest Rate Hedge 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 Hedge satisfying the requirements of this Agreement. For so long
as an Interest Rate Hedge is pledged as collateral pursuant to the terms of this
Agreement, Borrower shall not exercise any right or remedy under any Interest
Rate Hedge Documents without Fannie Mae’s prior written consent and shall
exercise its rights and remedies under the Hedge Documents as directed by Fannie
Mae in writing. Rights and remedies under the Hedge Documents include, but are
not limited to, any right to designate an “Early Termination Date” or otherwise
terminate the Interest Rate Hedge due to the occurrence of a “Termination
Event,” an “Additional Termination Event” or an “Event of Default.” All terms
appearing in this Section in quotation marks are used as defined in the Hedge
Documents.

ARTICLE 3

[INTENTIONALLY OMITTED]

ARTICLE 4

SECURITY INTEREST IN COLLATERAL; FURTHER ASSURANCES

Section 4.1. Security Interest in Collateral. As security for the due, punctual,
full and exact payment, performance or observance by Borrower of: (i) all
Borrower’s obligations under the Master Agreement, the Note and the other Loan
Documents (the “Obligations”), whether at stated maturity, by acceleration or
otherwise, whether now outstanding or hereafter arising, and (ii) all other
obligations which may be owing to Fannie Mae from time to time under the
Variable Loan Documents, Grantor hereby assigns, pledges, grants, hypothecates,
sets over and delivers to Fannie Mae, its successors and assigns, a lien and
continuing security interest to Fannie Mae in and to all of Grantor’s right,
title and interest in and to the following property whether now owned or
hereafter acquired (all of which is collectively, the “Collateral”):

(i) the Interest Rate Hedge and the related Hedge Documents;

(ii) any and all moneys (collectively, “Payments”) payable to Grantor, from time
to time, pursuant to the Hedge Documents by the Counterparty held in the course
of payment or collection by Fannie Mae or otherwise;

(iii) all rights, liens and security interests or guarantees now existing or
hereafter granted by the Counterparty or any other person to secure or guaranty
payment of the Payments due pursuant to any of the Hedge Documents;

(iv) all rights of Grantor under any of the foregoing, including all rights of
Grantor to the Payments, contract rights and general intangibles now existing or
hereafter arising with respect to any or all of the foregoing;

 

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(v) all documents, writings, books, files, records and other documents arising
from or relating to any of the foregoing, whether now existing or hereafter
arising;

(vi) all extensions, renewals and replacements of the foregoing;

(vii) all cash and non-cash proceeds and products of any of the foregoing,
including, without limitation, interest, dividends, cash, instruments, proceeds
of any insurance, and other property from time to time received, receivable or
otherwise distributed or distributable in respect of or in exchange for any or
all of the foregoing;

(viii) all rights of Grantor under any of the foregoing, including all rights of
Grantor to the Payments, contract rights and general intangibles now existing or
hereafter arising with respect to any or all of the foregoing; and

(ix) all right, title and interest in all payments received (but not the
obligations for any payments due) under the Hedge Documents.

TO HAVE AND TO HOLD the Collateral, together with all right, title, interest,
powers, privileges and preferences pertaining or incidental thereto, unto Fannie
Mae, its successors and assigns, forever, subject, however, to the terms,
covenants and conditions herein set forth. Grantor hereby authorizes Fannie Mae
to file financing statements, continuation statements and financing statement
amendments in such form as Fannie Mae may require to perfect or continue the
perfection of this security interest in the Collateral and Grantor agrees, if
Fannie Mae so requests, to execute and deliver to Fannie Mae such financing
statements, continuation statements and amendments. Grantor shall pay all filing
costs and all costs and expenses of any record searches for financing statements
that Fannie Mae may require.

Section 4.2. Further Assurances. At any time and from time to time, at the
expense of Grantor, Grantor shall promptly give, execute, deliver, file and
record any notice, statement, instrument, document, agreement or other paper and
do such other acts and things that may be necessary, or that Fannie Mae may
request, in order to perfect, continue and protect any security interest granted
or purported to be granted by this Agreement or to enable Fannie Mae to exercise
and enforce its rights and remedies under this Agreement.

Section 4.3. Competing Security Arrangements. Grantor shall not execute, file,
permit to be filed or suffer to remain on file in any jurisdiction any security
agreement, financing statement or like agreement or instrument with respect to
the Collateral, or any part of the Collateral, naming anyone other than Fannie
Mae as the secured party. Grantor shall not sell, exchange or transfer or
otherwise dispose of any of the Collateral, or any interest in the Collateral,
other than any security interest or other lien in favor of Fannie Mae.

Section 4.4. No Change. Grantor shall provide Fannie Mae thirty (30) days
written notice after any change in principal place of business or chief
executive office. Grantor shall not voluntarily or involuntarily change its name
or identity, without at least thirty (30) days prior written notice to Fannie
Mae.

Section 4.5. Defense of Collateral. Grantor will defend the Collateral against
all claims and demands of all persons at any time claiming the same or any
interest in the Collateral.

 

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ARTICLE 5

DELIVERY OF HEDGE DOCUMENTS

Section 5.1. Acquisition of Interest Rate Hedge; Delivery of Hedge Documents.
Grantor has, on or before the date of this Agreement, executed and delivered the
Hedge Documents to the Counterparty and has delivered to Fannie Mae fully
executed copies of such Hedge Documents. True, complete and correct copies of
the Hedge Documents and all amendments thereto, fully executed by all parties,
are attached as Exhibit A hereto. Grantor hereby represents and warrants to
Fannie Mae that there is no additional security for or any other arrangements or
agreements relating to the Hedge Documents and that the Counterparty has
consented to Grantor’s pledge of its rights and interests in the Hedge Documents
to Fannie Mae as security for the Loan.

Section 5.2. Obligations Remain Absolute. Nothing contained herein shall relieve
Borrower of its primary obligation to pay all amounts due in respect of its
obligations under the Master Agreement, the Note or the applicable Loan
Documents.

Section 5.3. Subsequent Interest Rate Hedges. Grantor agrees to execute and
deliver to Fannie Mae a Supplemental Interest Rate Hedge Security, Pledge and
Assignment Agreement in the form attached as Exhibit B hereto with respect to
each Subsequent Interest Rate Hedge (a “Supplemental Agreement”) to be pledged
to Fannie Mae. Grantor shall, no less than five (5) days before the date any
Subsequent Interest Rate Hedge is to be pledged by Grantor to Fannie Mae,
execute and deliver the Hedge Documents representing such Subsequent Interest
Rate Hedge to the Counterparty and deliver to Fannie Mae fully executed
originals of such Hedge Documents to be held under this Agreement as part of the
Collateral.

ARTICLE 6

REPRESENTATIONS AND WARRANTIES

Section 6.1. Representations and Warranties of Grantor. Grantor represents and
warrants to Fannie Mae on the Closing Date that:

(a) It has all requisite power and authority to enter into this Agreement and to
carry out its obligations under this Agreement; the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated by this Agreement have been duly authorized by all necessary action
on the part of Grantor; this Agreement has been duly executed and delivered by
it and is the valid and binding obligation of Grantor, enforceable against it in
accordance with its terms;.

(b) With respect to an Interest Rate Cap, if applicable, Grantor has paid to the
Counterparty the entire cost of the initial Interest Rate Cap.

(c) No consent of any other person or entity and no authorization, approval, or
other action by, and no notice to or filing with, any governmental authority or
regulatory body is required or will be required (i) for the pledge by Grantor of
the Collateral pursuant to this Agreement or any Supplemental Agreement or for
the execution, delivery or performance of this Agreement or any Supplemental
Agreement by Grantor (other than the consent of the

 

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Counterparty under the Interest Rate Hedge where such consent has been obtained,
(ii) for the perfection or maintenance of the security interest created hereby
or by any Supplemental Agreement (including the first priority nature of such
security interest) other than the filing of any financing statement as may be
required by the UCC, or (iii) for the execution, delivery or performance of this
Agreement by Grantor; there are no conditions precedent to the effectiveness of
this Agreement that have not been satisfied or waived.

(d) Neither the execution nor delivery of this Agreement or any Supplemental
Agreement nor the performance by Grantor of its obligations under this Agreement
or any Supplemental Agreement, nor the consummation of the transactions
contemplated by this Agreement or any Supplemental Agreement, will (i) conflict
with any provision of the organizational documents of Grantor; (ii) conflict
with, result in a breach of, or constitute a default (or an event which would,
with the passage of time or the giving of notice or both, constitute a default)
under, or give rise to a right to terminate, amend, modify, abandon or
accelerate, any contract, agreement, promissory note, lease, indenture,
instrument or license to which Grantor is a party or by which Grantor’s assets
or properties may be bound or affected; (iii) violate or conflict with any
federal, state or local law, statute, ordinance, rule, regulation, order,
judgment, decree or arbitration award which is either applicable to, binding
upon or enforceable against Grantor; (iv) result in or require the creation or
imposition of any lien, security interest, option or other charge or encumbrance
(“Liens”) upon or with respect to the Collateral, other than Liens in favor of
Fannie Mae; (v) violate any legally protected right of any Person or give to any
Person a right or claim against Grantor; or (vi) require the consent, approval,
order or authorization of, or the registration, declaration or filing (except to
the extent that the filing of financing statements may be applicable) with, any
federal, state or local government entity.

(e) Grantor is and shall be the sole legal and beneficial owner of, and has and
will have good and marketable title to (and has full right and authority to
pledge and assign), the Collateral, free and clear of all Liens (other than in
favor of Fannie Mae), all fiduciary obligations of any kind and any adverse
claim of title thereto and the Collateral is not subject to any offset, right of
redemption, defense or counterclaim of a third party. There is no additional
security for or any other arrangements or agreements relating to the Hedge
Documents, except as may have been disclosed to Fannie Mae in writing.

(f) The security interest of Fannie Mae in the Collateral is, or when it
attaches shall be, a first, prior and perfected security interest. No financing
statement covering the Collateral, or any part of the Collateral (other than any
financing statement naming only Fannie Mae as the secured party), is outstanding
or is on file in any public office.

(g) Grantor’s exact legal name is set forth in the first paragraph of this
Agreement, or in the case of a Supplemental Agreement, is as set forth therein.

(h) Grantor has not commenced (within the meaning of Title 11, U.S. Code, and
any similar state law for the relief of debtors, a “Bankruptcy Law”) a voluntary
case, consented to the entry of an order for relief against it in an involuntary
case, or consented to the appointment of a receiver or custodian of it or for
any part of its property, nor has a court of competent jurisdiction entered an
order or decree under any Bankruptcy Law that is for relief against it in an
involuntary case or appointed a receiver or custodian for Grantor or any part of
its property.

(i) Grantor is an “eligible contract participant” within the meaning of the
Commodities Futures Modernization Act of 2000.

 

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Section 6.2. Maintenance, Administration of Interest Rate Hedge. Grantor agrees
to comply with the provisions of the Master Agreement and this Agreement related
to obtaining and maintaining at all applicable times an Interest Rate Hedge
which satisfies the requirements of this Agreement and the Master Agreement.

ARTICLE 7

EVENTS OF DEFAULT; RIGHTS AND REMEDIES

Section 7.1. Event of Default. The occurrence of any one or more of the
following events shall constitute an Event of Default under this Agreement:

(a) the failure by Grantor to observe and perform any duty, obligation or
covenant required to be observed or performed by this Agreement or any
Supplemental Agreement;

(b) any representation or warranty on the part of Grantor contained in this
Agreement or repeated and reaffirmed in this Agreement or any Supplemental
Agreement proves to be false, misleading or incorrect when made or deemed made;
and

(c) the occurrence and continuance of an Event of Default under the Master
Agreement, the Note, the Security Instrument or any other Loan Document.

Section 7.2. Remedies on Default. If any Event of Default under this Agreement
has occurred and is continuing:

(a) At the direction of Fannie Mae, Grantor shall deliver all Collateral to
Fannie Mae or its designee;

(b) Fannie Mae may, without further notice, exercise all rights, privileges or
options pertaining to the Collateral as if Fannie Mae were the absolute owner of
such Collateral, upon such terms and conditions as Fannie Mae may determine, all
without liability except to account for property actually received by Fannie
Mae, and Fannie Mae shall have no duty to exercise any of those rights,
privileges or options and shall not be responsible for any failure to do so or
delay in so doing; and

(c) Fannie Mae may, subject to the terms of the applicable Hedge Documents,
exercise in respect of the Collateral, in addition to other rights and remedies
provided for in this Agreement or otherwise available to it, all of the rights
and remedies of a secured party under the UCC and also may, without notice
except as specified below, sell the Collateral at public or private sale, at any
of the offices of Fannie Mae or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as may be commercially reasonable. Grantor
agrees that, to the extent notice of sale shall be required by applicable law,
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Grantor of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification. Fannie Mae
shall not be obligated to make any sale of Collateral regardless of notice of
sale having been given. Fannie Mae may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was so
adjourned. In case of any sale by Fannie Mae of any of the Collateral, the
Collateral so sold may be retained by Fannie Mae until the selling price is paid
by the purchaser, but Fannie Mae shall not incur any liability in case of
failure of the purchaser to take up and pay for the Collateral so sold. In case
of any such failure, such Collateral so sold may be again similarly sold. After
deducting all costs or expenses of every kind (including, without limitation,
the reasonable attorneys’ fees and legal expenses incurred by Fannie Mae),
Fannie Mae shall apply the residue of the proceeds of any sale or sales in such
manner as Fannie Mae may deem advisable.

The foregoing rights and remedies (i) shall be cumulative and concurrent,
(ii) may be pursued separately, successively or concurrently against Grantor and
any other party obligated under the Obligations, or against the Collateral, or
any other security for the Obligations, at the sole discretion of Fannie Mae,
(iii) may be exercised as often as occasion therefor shall arise, it being
agreed by Grantor that the exercise or failure to exercise any of same shall not
in any event be construed as a waiver or release thereof or of any other right,
remedy or recourse, and (iv) are intended to be and shall be non-exclusive.
Nothing in this Agreement shall require or be construed to require Fannie Mae to
accept tender of performance of any of Grantor’s obligations under this
Agreement after the expiration of any time period set forth in this Agreement
for the performance of such obligations and the expiration of any applicable
cure periods, if any.

Section 7.3. Application of Proceeds. Fannie Mae shall apply the Collateral or
the cash proceeds actually received from any sale or other disposition of the
Collateral in its sole and absolute discretion as follows:

(a) to reimburse Fannie Mae for any amounts due to it pursuant to Section 8.1 of
this Agreement including the expenses of preparing for sale, selling and the
like and to reasonable attorneys’ fees and legal expenses incurred by Fannie Mae
in connection therewith;

(b) to the repayment of all amounts then due and unpaid on the Obligations in
such order of priority as Fannie Mae may determine; and

(c) to purchase any required Subsequent Interest Rate Cap that meets the
requirements of this Agreement or any of the other Loan Documents.

If the proceeds of sale, collection or other realization of or upon the
Collateral are insufficient to cover the costs and expenses of such realization
and the payment in full of the Obligations, Borrower shall remain liable for the
deficiency, except to the extent that Borrower’s liability for payment and
performance of the Obligations is limited by the terms of the Note and Master
Agreement.

Section 7.4. No Additional Waiver Implied by One Waiver. If any agreement
contained in this Agreement is breached by Grantor and thereafter waived by
Fannie Mae in writing, such waiver shall be limited to the particular breach so
waived and shall not be deemed to waive any other breach under this Agreement.

 

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Section 7.5. Fannie Mae Appointed Attorney-in-Fact. Grantor hereby appoints
Fannie Mae, through any duly authorized officer of Fannie Mae, as Grantor’s
attorney-in-fact, with full authority in the place and stead of Grantor and in
the name of Grantor or otherwise, from time to time in Fannie Mae’s discretion
during the continuance of an Event of Default, to take any action and to execute
any instrument which Fannie Mae may deem necessary or advisable to exercise the
rights and remedies granted in this Agreement, including, to receive, endorse
and collect all instruments made payable to Grantor representing any interest
payment, dividend, or other distribution in respect of the Collateral or any
part of the Collateral and to give full discharge for the same. Grantor agrees
that the power of attorney established pursuant to this Section 7.5 shall be
deemed coupled with an interest and shall be irrevocable.

Section 7.6. Nature of Fannie Mae’s Rights. The right of Fannie Mae to the
Collateral held for its benefit under this Agreement shall not be subject to any
right of redemption Grantor might otherwise have and shall not be suspended,
discontinued or reduced or terminated for any cause, including, without limiting
the generality of the foregoing, any event constituting force majeure or any
acts or circumstances that may constitute commercial frustration of purpose.

ARTICLE 8

MISCELLANEOUS PROVISIONS

Section 8.1. Fees, Costs and Expenses; Indemnification. Grantor agrees to
reimburse Fannie Mae, on demand, for all reasonable out-of-pocket costs and
expenses incurred by Fannie Mae in connection with the administration and
enforcement of this Agreement or any Supplemental Agreement and agrees to
indemnify and hold harmless Fannie Mae from and against any and all losses,
costs, claims, damages, penalties, causes of action, suits, judgments,
liabilities and expenses (including, without limitation, reasonable attorneys’
fees and expenses) incurred by Fannie Mae under this Agreement or any
Supplemental Agreement or in connection with this Agreement or any Supplemental
Agreement, unless such liability shall be due to willful misconduct or gross
negligence on the part of Fannie Mae or its agents or employees. If Grantor
fails to do any act or thing which it has covenanted to do under this Agreement
or any Supplemental Agreement or any representation or warranty on the part of
Grantor contained in this Agreement or any Supplemental Agreement or repeated
and reaffirmed in this Agreement or any Supplemental Agreement is breached,
Fannie Mae may (but shall not be obligated to) do the same or cause it to be
done or remedy any such breach, and may expend its funds for such purpose. Any
and all amounts so expended by Fannie Mae shall be repayable to it by Grantor
upon Fannie Mae’s demand. The obligations of Grantor under this Section shall
survive the termination of this Agreement or any Supplemental Agreement and the
discharge of the other obligations of Grantor under this Agreement or any
Supplemental Agreement.

Section 8.2. Termination. This Agreement and each Supplemental Agreement and the
assignments, pledges and security interests created or granted by this Agreement
and each Supplemental Agreement shall create a continuing security interest in
the Collateral and shall automatically terminate without any further action upon
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the Note and all Loan Documents. Upon termination of this Agreement, if
requested by Grantor, Fannie Mae shall execute and deliver to Grantor for
recording or filing in each office in which any assignment or financing
statement relative to the Collateral or the agreements relating thereto or any
part of the Collateral, shall have been filed or recorded, a termination
statement or release under applicable law (including, if relevant, any financing
statement), releasing Fannie Mae’s interest in the Collateral and such other
documents and instruments as Grantor may reasonably request, all without
recourse to or any warranty whatsoever by Fannie Mae and at the cost and expense
of Grantor. Upon termination of this Agreement, the Grantor and Counterparty are
hereby authorized to amend, modify or restate the Hedge Documents as necessary
to delete all references to Fannie Mae and to evidence the termination of any
rights or interests granted to Fannie Mae therein.

Section 8.3. No Deemed Waiver. No failure on the part of Fannie Mae or any of
its agents to exercise, and no course of dealing with respect to, and no delay
in exercising, any right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise by Fannie Mae or any of its
agents of any right, power or remedy hereunder preclude any other or further
exercise thereof or the exercise of any other right, power or remedy. The
remedies herein are cumulative and are not exclusive of any remedies provided by
law.

Section 8.4. Entire Agreement. This Agreement, the Master Agreement, and all
Supplemental Agreements created from time to time constitute the entire
agreement and supersede all prior agreements and understandings, both written
and oral, among the parties to this Agreement with respect to the subject matter
of this Agreement. This Agreement may not be amended, changed, waived or
modified except by a writing executed by each party hereto.

Section 8.5. Successors and Assigns. This Agreement shall inure to the benefit
of, and be enforceable by, Grantor, Fannie Mae and their respective successors
and permitted assigns, and nothing herein expressed or implied shall be
construed to give any other person any legal or equitable rights under this
Agreement. Grantor shall not assign any of the rights, interests or obligations
under this Agreement without the prior written consent of Fannie Mae.

Section 8.6. Amendment. This Agreement may be amended, changed, waived or
modified only by an instrument in writing executed by the duly authorized
representatives of the parties.

Section 8.7. Notices. All notices under this Agreement shall be given in writing
to the other party at the address, and in the manner, provided in Section 13.08
of the Master Agreement.

Section 8.8. Liability of Grantor. Notwithstanding anything to the contrary
contained in this Agreement, the personal liability of Grantor, any general
partner, member, manager, or shareholder, as applicable, of Grantor to pay
amounts due in connection with the obligations of Grantor under this Agreement
shall be limited as and to the extent provided in the Master Agreement. The
foregoing limitation shall not limit or impair any right to proceed against any
collateral that may be pledged to the payment of Grantor’s obligations or that
may otherwise be available under any Loan Document.

 

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Section 8.9. Governing Law. The provisions of Section 13.06 of the Master
Agreement entitled “Choice of Law; Consent to Jurisdiction; Waiver of Jury
Trial,” are hereby incorporated into this Agreement by this reference to the
fullest extent as if the text of such provisions were set forth in their
entirety herein.

Section 8.10. Severability. If any term or other provision of this Agreement or
any Supplemental Agreement is invalid, illegal or incapable of being enforced by
any rule of law or public policy, all other conditions and provisions of this
Agreement and any Supplemental Agreements shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party.

Section 8.11. Multiple Counterparts. This Agreement may be simultaneously
executed in multiple counterparts, all of which shall constitute one and the
same instrument and each of which shall be, and shall be deemed to be, an
original.

Section 8.12. Non-Recourse. The provisions of Article 12 of the Master Agreement
hereby are incorporated into this Agreement by this reference.

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Grantor and Fannie Mae have caused this Agreement to be signed as an instrument
under seal, on the date first written above, by their respective officers duly
authorized (which authorized representatives shall have no personal liability
hereunder).

 

GRANTOR: [TO BE INSERTED]

 

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LENDER:

FANNIE MAE By:  

 

Name:  

 

Title:  

 

 

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[Counterparty Acknowledgment for Interest Rate Swap Only]

                    . (“Counterparty”) as the provider of the Interest Rate
Hedge described in this Interest Rate Hedge Security, Pledge and Assignment
Agreement hereby acknowledges that Grantor has granted to Fannie Mae a security
interest as collateral in Grantor’s rights under the Hedge Documents.
Counterparty hereby consents to such security interest, provided that
Counterparty’s consent is expressly limited to Fannie Mae and any subsequent
holder of the Note, as secured party under the Master Agreement.

Counterparty further agrees (i) not to consent or agree to any further
assignments by Grantor of the Interest Rate Hedge, whether as security or
otherwise, without Fannie Mae’s prior written consent, (ii) not to agree to any
amendment or modification of the Interest Rate Hedge or the Hedge Documents or
any waiver in respect of thereto without Fannie Mae’s prior written consent, and
(iii) not to terminate or agree to any termination of, the Interest Rate Hedge
or any of Counterparty’s obligations thereunder prior to the stated maturity,
without Fannie Mae’s prior written consent unless such termination is in
connection with an event of default or termination event under the Interest Rate
Hedge for which the Grantor is the defaulting party or an affected
party. Nothing herein shall be construed as requiring the consent of Fannie Mae
for the performance by Grantor of any of its obligations under the Interest Rate
Hedge or the Hedge Documents, it being understood that Grantor is not released
from any of its obligations under the Interest Rate Hedge or the Hedge
Documents, and Counterparty may exercise its rights and remedies under the Hedge
Documents without the prior written consent of Fannie Mae.

 

ACKNOWLEDGED AND CONSENTED TO: [COUNTERPARTY] By:  

 

Name:  

 

Title:  

 

 

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SCHEDULE I

Collateral Pool          Borrower:

 

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EXHIBIT A

Hedge Documents

[TO BE ATTACHED]

 

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EXHIBIT B

SUPPLEMENTAL INTEREST RATE HEDGE SECURITY, PLEDGE AND ASSIGNMENT AGREEMENT

(Collateral Pool         )

THIS SUPPLEMENTAL INTEREST RATE HEDGE SECURITY, PLEDGE AND ASSIGNMENT AGREEMENT
(“Supplemental Agreement”), dated as of                    , 20    , is by and
between                     , a                     , together with successors
and assigns (“Grantor”) and FANNIE MAE, its successors, transferees and assigns
(“Fannie Mae”).

This Supplemental Agreement supplements the Interest Rate Hedge Security, Pledge
and Assignment Agreement dated as of                     , by and between
Grantor and Fannie Mae (the “Agreement”).

RECITALS

A. Grantor and Fannie Mae entered into the Agreement pursuant to which Grantor
is required to acquire and maintain or replace, as appropriate, an Interest Rate
Hedge at all times during the term of the Variable Loan. Each Interest Rate
Hedge will be represented by one or more Hedge Documents.

B. [The Initial Interest Rate Hedge has expired][Borrower has extended the
maturity date of the Variable Loan pursuant to the Master Agreement] and Grantor
is entering into a Subsequent Interest Rate Hedge (as such term is defined in
the Agreement) as required by the Master Agreement and the Agreement.

C. As security for Collateral Pool          Borrower’s obligations under the
Master Agreement, the Note and the other Loan Documents, Grantor is entering
into this Supplemental Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and undertakings set
forth in this Supplemental Agreement and other good and valuable consideration,
the receipt and sufficiency of which are acknowledged by Grantor, the parties
agree as follows:

Section 1. Definitions. All capitalized terms used in this Supplemental
Agreement have the meanings given to those terms in the Agreement or elsewhere
in this Supplemental Agreement unless the context or use clearly indicates a
different meaning.

Section 2. Rules of Construction. The rules of construction set forth in the
Agreement shall apply to this Supplemental Agreement in their entirety, except
that in applying such rules, the term “Supplemental Agreement” shall be
substituted for the term “Agreement”.

Section 3. Grant of Security Interest. As security for the due, punctual, full
and exact payment, performance or observance by Borrower of: (i) all
Obligations, as defined in the Agreement, whether at stated maturity, by
acceleration or otherwise, whether now outstanding or hereafter arising, and
(ii) all other obligations which may be owing to Fannie Mae from time to time

 

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under the Loan Documents, Grantor confirms and grants to Fannie Mae a continuing
security interest in and to the Collateral, as defined in the Agreement, as it
relates to the Subsequent Interest Rate Hedge described in the attached Interest
Rate Cap Documents and all such Interest Rate Hedge Documents, whether now owned
or hereafter acquired.

Section 4. Acquisition of Interest Rate Hedge; Delivery of Interest Rate Hedge
Documents. Grantor has, no less than five (5) days before the date of this
Supplemental Agreement, executed and delivered the Hedge Documents representing
the Subsequent Interest Rate Hedge to the Counterparty and has delivered to
Fannie Mae fully executed originals of such Hedge Documents to be held under the
Agreement as a part of the Collateral. The documents attached to this
Supplemental Agreement as Attachment I are true, complete and correct copies of
the Hedge Documents and all amendments thereto, representing the Subsequent
Interest Rate Hedge, fully executed by all parties. There is no and shall be no
additional security for or any other arrangements or agreements relating to the
Interest Rate Hedge or the Hedge Documents.

Section 5. Representations and Warranties. As of the date of this Supplemental
Agreement, Grantor repeats and confirms all representations and warranties made
by Grantor in the Agreement.

Section 6. Agreement Confirmed. Except as supplemented by this Supplemental
Agreement, Grantor and Fannie Mae confirm the original Agreement as previously
supplemented and amended from time to time.

Section 7. Obligations Remain Absolute. Nothing contained in this Supplemental
Agreement shall relieve Borrower of its primary obligation to pay all amounts
due in respect of its obligations under the Loan Documents.

Section 8. Governing Law. The provisions of the Agreement are hereby
incorporated into this Supplemental Agreement by this reference to the fullest
extent as if the text of such provisions were set forth in their entirety
herein.

Section 9. Liability of Grantor. Notwithstanding anything to the contrary
contained in this Supplemental Agreement, the personal liability of Grantor, any
general partner, member, manager, or shareholder, as applicable, of Grantor to
pay amounts due in connection with the obligations of Grantor under this
Supplemental Agreement shall be limited as and to the extent provided in the
Master Agreement. The foregoing limitation shall not limit or impair any right
to proceed against any collateral that may be pledged to the payment of
Grantor’s obligations or that may otherwise be available under any Loan
Document.

Section 10. Non-Recourse. The provisions of Article 12 of the Master Agreement
hereby are incorporated into this Supplemental Agreement by this reference.

[Remainder of page intentionally left blank; signature page follows]

 

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Grantor and Fannie Mae have caused this Supplemental Agreement to be signed and
sealed, on the date first written above, by their officers or representatives
duly authorized (which authorized representatives shall have no personal
liability hereunder).

 

GRANTOR: [TO BE INSERTED]

 

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LENDER: FANNIE MAE By:  

 

Name:  

 

Title:  

 

 

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[Counterparty Acknowledgment for Interest Rate Swap Only]

                    . (“Counterparty”) as the provider of the Interest Rate
Hedge described in this Supplemental Interest Rate Hedge Security, Pledge and
Assignment Agreement hereby acknowledges that Grantor has granted to Fannie Mae
a security interest as collateral in Grantor’s rights under the Hedge Documents.
Counterparty hereby consents to such security interest, provided that
Counterparty’s consent is expressly limited to Fannie Mae and any subsequent
holder of the Note, as secured party under the Master Agreement.

Counterparty further agrees (i) not to consent or agree to any further
assignments by Grantor of the Interest Rate Hedge, whether as security or
otherwise, without Fannie Mae’s prior written consent, (ii) not to agree to any
amendment or modification of the Interest Rate Hedge or the Hedge Documents or
any waiver in respect of thereto without Fannie Mae’s prior written consent, and
(iii) not to terminate or agree to any termination of, the Interest Rate Hedge
or any of Counterparty’s obligations thereunder prior to the stated maturity,
without Fannie Mae’s prior written consent unless such termination is in
connection with an event of default or termination event under the Interest Rate
Hedge for which the Grantor is the defaulting party or an affected
party. Nothing herein shall be construed as requiring the consent of Fannie Mae
for the performance by Grantor of any of its obligations under the Interest Rate
Hedge or the Hedge Documents, it being understood that Grantor is not released
from any of its obligations under the Interest Rate Hedge or the Hedge
Documents, and Counterparty may exercise its rights and remedies under the Hedge
Documents without the prior written consent of Fannie Mae.

 

ACKNOWLEDGED AND CONSENTED TO: [COUNTERPARTY] By:  

 

Name:  

 

Title:  

 

 

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ATTACHMENT I

Hedge Documents for Subsequent Interest Rate Hedge

[TO BE ATTACHED]

 

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EXHIBIT P TO MASTER CREDIT FACILITY AGREEMENT (TERM LOAN)

FORM OF LETTER OF CREDIT

[LETTER OF CREDIT ISSUER’S LETTER OF CREDIT FORM]

IRREVOCABLE LETTER OF CREDIT NO.         

(Collateral Pool         )

                    , 20    

Fannie Mae

Drawer AM

Multifamily Operations – Asset Management

3900 Wisconsin Avenue, N.W.

Washington, DC 20016

 

  Re: [Archstone Credit Facility – Collateral Pool         ]

Dear Sir or Madam:

For the account of [Insert name of account party/customer], we hereby open in
your favor our Irrevocable Letter of Credit No.          (“Credit”) for an
amount not exceeding a total of U.S. $            , effective immediately and
expiring on                     , 20    , or if such day is not a business day,
the next following business day (“Expiration Date”).

Funds under this Credit are available to you against a sight draft on us
completed by you or Wells Fargo, N.A. on your behalf, completed in substantially
the form attached as Attachment I, for all [or any part of] of this Credit.

We will promptly honor [your draft/all drafts] drawn in compliance with the
terms of this Credit if received on or before 5:00 p.m.
[Eastern][Central][Mountain][Pacific] time on the Expiration Date at [Insert
Letter of Credit Issuer’s address].

Drafts presented at our office at the address set forth above no later than
10:00 a.m. [Eastern][Central][Mountain][Pacific] time on any business day shall
be honored on the date of presentation, by payment in accordance with your
payment instructions that accompany each such draft. If requested by you,
payment under this Credit may be made by wire transfer of immediately available
funds to your account as specified in the draft [(whether executed by you or
Wells Fargo, N.A.)], or by deposit of same day funds in your designated account
that you maintain with us.

This Credit shall be governed by and subject to the Uniform Customs and Practice
for Documentary Credits (2007 revision), International Chamber of Commerce
Publication No. 600 (“UCP 600”), and to the extent not inconsistent with the UCP
600, laws of the State of                     .

 

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Sincerely, [Insert Letter of Credit Issuer’s name] By:  

 

Name:  

 

Title:  

 

 

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ATTACHMENT I

TO

LETTER OF CREDIT

SIGHT DRAFT

[Insert Letter of Credit Issuer’s name and address]

                    , 20    

Pay on demand to Fannie Mae the sum of U.S. $            in immediately
available funds to:

ABA Number:

Telegraphic Abbreviation:

Account Number:

Note:

This draft is drawn under your Irrevocable Letter of Credit No.         .

 

FANNIE MAE By:  

 

Name:  

 

Title:  

 

 

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EXHIBIT Q

CERTAIN NON-RESIDENTIAL LEASES, CCRS, AND GROUND LEASES

CCRs (estoppels requested)

 

Property

    

CCR

Courthouse Plaza

     Declaration of Easements, Covenants, Restrictions and Agreements, dated
May 11, 2007, by and among CESC One Courthouse Plaza, L.L.C., CESC Two
Courthouse Plaza Limited Partnership, Smith Property Holdings Three L.P.,
Arlington Hotel Associates LLC and The County Board of Arlington County,
Virginia

Non-Residential Leases (SNDAs requested)

 

Property

  

CCR/Lease

Camargue    Champion Parking 83rd St. Corp. Connecticut Heights    GTP Towers V,
LLC Oakwood Marina Del Rey    Steven Hwang Oakwood Marina Del Rey    Andrew
Spring Oakwood Marina Del Rey    Rodger Lolley Oakwood Marina Del Rey    Wells
Fargo South Market    Oliver Fernandez DDS/St. Francis Dentistry South Market   
Enterprise Rent-a-Car South Market    Bank of America South Market    Moscone
Market (Elias and Maguy Abdulmassih) South Market    Nova Salon (Kim Pham a&
David Kim) South Market    Pazzia Inc., and Massimo Ballerini South Market   
New Osha Thai LLC Courthouse Plaza    City Market and Deli Murray Hill    Care
to Care Murray Hill    United States of America Pegasus    Caffe Primo

Ground Leases

 

Property

 

Ground Lease

Archstone Van Ness   Ground Lease dated December 31, 1966, as amended
Oakwood Marina Del Rey   Amended and Restated Lease Agreement dated November 30,
2001 (Archstone) Marina Del
Rey   Amended and Restated Lease Agreement dated as of March 1, 2005 Alban
Towers   Ground Lease dated as August 6, 1999

 

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EXHIBIT S

The rights of                      (“Company”) under this Agreement are and
shall remain subject and subordinate to the operation and effect of: (i) all
present and future ground or underlying leases involving all or any part of the
Mortgaged Property; and (ii) any mortgage, deed of trust or other security
instrument now or hereafter affecting the Mortgaged Property; and (iii) all
renewals, modifications, replacements, consolidations and extensions of or
participations in those transactions evidenced by documents referred to in
(i) and (ii) above, whether the same shall be in existence on the date hereof or
created hereafter (any such lease, mortgage, deed of trust or other instrument
being referred to as a “Mortgage” and the person or persons having the benefit
of same being referred to as a “Mortgagee”). Company also agrees that any such
Mortgagee shall have the right at any time to subordinate its Mortgage to this
Agreement on such terms as it shall deem appropriate in its reasonable
discretion. Company’s acknowledgment and agreement of subordination provided for
in this Paragraph is self-operative and no further instrument of subordination
shall be required, however, Company shall execute such further assurances
thereof as may be reasonably requested, from time to time, by Borrower.

 

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