Document:

Exhibit 10.2

 

DPL INC.

STOCK OPTION PLAN

 

Management Stock Option Agreement

 

This
Agreement is made as of August 31, 2005 (the “Grant Date”), by and between
DPL Inc., an Ohio corporation (the “Company”) and Robert D. Biggs (the “Participant”).

 

WHEREAS,
the Committee, pursuant to the Company’s Stock Option Plan (the “Plan”), has
made an award to the Participant and authorized and directed the execution and
delivery of this Agreement;

 

NOW,
THEREFORE, in consideration of the foregoing, the mutual promises hereinafter
set forth, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Participant
hereby agree as follows:

 

1.                                       Award.  The
Participant is hereby granted a stock option (an “Option”) to purchase from the
Company up to a total of 350,000 Common Shares of the Company at the Fair
Market Value, as defined in the Plan, on the Grant Date, or $26.82 per share
(the “Exercise Price”).  The term of such
Option shall be three years, commencing on the Grant Date and ending on the
third anniversary thereof (the “Term”). 
This Option is not intended to qualify as an incentive stock option
under Code Section 422.

 

2.                                       Vesting and  Exercise.  The Option may be exercised only in
accordance with the Plan, as supplemented by this Agreement, and not otherwise.

 

a.                                       Vesting.  During its
Term and prior to its earlier termination in accordance with Section 3 of
this Agreement, and subject to Section 4 of this Agreement, the Option
shall vest in its entirety on June 30, 2006 if the Participant remains in
the continuous employment of the Company through such date.

 

b.                                      Exercise.  100% of the
Option shall become exercisable on June 30, 2006 if the participant
remains in the continuous employment of the Company through such date.  The Option may be exercised for less than the
full number of Shares for which the Option is then exercisable.  To the extent then exercisable, the Option
may be exercised by the Participant by giving written notice of exercise to the
Company in such form as may be provided by the Committee, specifying the number
of Shares with respect to which the Option is to be exercised and such other
information as the Committee may require. 
Such exercise shall be effective upon receipt by the Company of such
written notice together with the required payment of the Exercise Price and any
applicable withholding taxes.  

 

 

c.                                       Payment of Exercise Price. 
Payment of the Exercise Price may be made by cash, check (subject to
collection) or, provided that the Shares have been owned by the Participant for
at least six months prior to such payment, by the delivery (or attestation of
ownership) of Shares having a Fair Market Value equal to the aggregate Exercise
Price and any applicable withholding taxes. 
Alternatively, the Participant may make such payment by authorizing the
simultaneous sale of Shares (or a sufficient portion thereof) acquired upon
exercise through a brokerage or similar arrangement approved in advance by the
Committee.  Subject to the foregoing and
except as otherwise provided by the Committee before the Option is exercised,
the Company will deliver to the Participant, within a reasonable period of time
thereafter, a certificate or certificates representing the Shares so acquired,
registered in the name of the Participant or in accordance with other delivery
instructions provided by the Participant and acceptable to the Committee.

 

3.                                            Termination.  Except
as otherwise provided in this Section 3, the Option shall terminate upon
the expiration of its Term.  In no event
may the Option be exercised beyond its Term.

 

4.                                       Vesting. 
Notwithstanding the provisions of Sections 2(a) and 2(b) hereof,
the Option shall become fully vested and exercisable as provided in the Amended
and Restated Employment Agreement between the Company and the Participant dated
August 31, 2005 (the “Employment Agreement”).  If there is any inconsistency between (a) this
Agreement or the Management Stock Option Agreement by and between the Company
and the Participant dated October 5, 2004 and (b) the Employment
Agreement, then the terms of the Employment Agreement shall govern.

 

5.                                       Withholding.  The
Company shall withhold all applicable taxes required by law from all amounts
paid in respect of the Option.  A
Participant may satisfy the withholding obligation (i) by paying the
amount of any such taxes in cash or check (subject to collection), (ii) by
the delivery (or attestation of ownership) of Shares or (iii) with the
approval of the Committee, by having Shares deducted from the payment.  Alternatively, the Participant may satisfy
such obligation by authorizing the simultaneous sale of Shares (or a sufficient
portion thereof) acquired upon exercise through a brokerage or similar
arrangement approved in advance by the Committee.  The amount of the withholding and, if
applicable, the number of Shares to be delivered or deducted, as the case may
be, shall be determined by the Committee as of when the withholding is required
to be made, provided that the number of Shares so delivered or withheld shall
not exceed the minimum required amount of such withholding.

 

6.                                       Non-Assignability. 
Except as otherwise provided in this Section, the Option is not
assignable or transferable other than by will or by the laws of descent and
distribution and, during the Participant’s life, may be exercised only by the
Participant.  The Participant, with the
approval of the Committee, which approval

 

2

 

may be
withheld in its sole discretion, may transfer the Option for no consideration
to or for the benefit of any member or members of the Participant’s Immediate
Family (including, without limitation, to a trust for the benefit of any member
or members of the Participant’s Immediate Family or to a partnership or limited
liability company for one or more members of the Participant’s Immediate
Family) subject to such limits as the Committee may establish, and the
transferee shall remain subject to all the terms and conditions applicable to
the Option prior to such transfer.  The
foregoing right to transfer the Option shall apply to the right to consent to
amendments to this Agreement and, in the discretion of the Committee, shall
also apply to the right to transfer ancillary rights associated with the
Option.

 

7.                                       Rights as a Shareholder.  A
Participant shall have no rights as a shareholder with respect to any Shares
subject to this award until the date the Participant becomes the holder of
record of the Shares.

 

8.                                       No Right to Continued Service.  Nothing
herein shall obligate the Company or any Subsidiary to continue the Participant’s
employment or other service for any particular period or on any particular
basis of compensation.

 

9.                                       Burden and Benefit. 
The terms and provisions of this Agreement shall be binding upon, and
shall inure to the benefit of, the Participant and his or her executors or
administrators, heirs, and personal and legal representatives.

 

10.                                 Execution.  This
Option is not enforceable until this Agreement has been signed by the
Participant and the Company.  By
executing this Agreement, the Participant shall be deemed to have accepted and
consented to any action taken or to be taken under the Plan by the Committee,
the Board of Directors or their delegates.

 

11.                                 Governing Law.  This
Agreement shall be construed and enforced in accordance with the laws of the
State of Ohio, without regard to the conflict of laws principles thereof.

 

12.                                 Modifications.  Except
for alterations and amendments permitted under the Plan without the consent of
the Participant, no change or modification of this Agreement shall be valid
unless it is in writing and signed by the parties hereto.

 

13.                                 Entire Agreement. 
This Agreement and the Employment Agreement, together with the Plan, set
forth all of the promises, agreements, conditions, understandings, warranties
and representations between the parties hereto with respect to the Option, and
there are no promises, agreements, conditions, understandings, warranties or
representations, oral or written, express or implied, between them with respect
to the Option other than as set forth herein or therein.  The terms and conditions of the Plan, a copy
of which has been furnished to the Participant, are incorporated by reference
herein, and to the extent that any conflict may exist between any term or
provision of this Agreement and any term or provision of the Plan, the term or
provision of the Plan shall control.

 

3

 

Notwithstanding
the foregoing, Section 4 of this Agreement shall govern any conflict
related to vesting.

 

14.                                 Additional Definitions. 
Any capitalized term to the extent not defined below or elsewhere in
this Agreement shall have the same meaning as set forth in the Plan.

 

a.                                       “Immediate Family” means the Participant’s spouse, parents,
parents-in-law, children, stepchildren, adoptive relationships, sisters,
brothers and grandchildren (and, for this purpose, shall also include the
Participant).

 

15.                                 Construction.  The use
of the singular herein shall be deemed to include the plural and vice versa,
wherever appropriate.

 

16.                                 Notices.  Any and all
notices required herein shall be addressed: (i) if to the Company, to the
principal executive offices of the Company; and (ii) if to the
Participant, to his or her address as reflected in the records of the Company.

 

17.                                 Invalid or Unenforceable Provisions.  The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other provisions
hereof, and this Agreement shall be construed in all respects as if the invalid
or unenforceable provisions were omitted.

 

IN
WITNESS WHEREOF, the Company and the Participant have executed this Agreement
as of the date first above written.

 

 

	
   

  	
  DPL INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  James V. Mahoney

  
	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Robert D. Biggs

  
	
   

  	
   

  	
  Participant

  

 

4Exhibit 10.1

 

 

 

REVOLVING CREDIT AGREEMENT

 

dated as of August 30,
2005

 

among

 

ERP OPERATING LIMITED
PARTNERSHIP,

 

THE BANKS LISTED HEREIN,

 

and

 

BANK OF AMERICA, N.A.,

as Administrative Agent

 

and

 

MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED,

as Documentation Agent

 

and

 

DEUTSCHE BANK TRUST COMPANY
AMERICAS,

as Syndication Agent

 

 

 

 

REVOLVING CREDIT AGREEMENT

 

THIS REVOLVING CREDIT AGREEMENT, dated as of August 30,
2005, is among ERP OPERATING LIMITED PARTNERSHIP (the “Borrower”), the
BANKS party hereto, BANK OF AMERICA, N.A., as Administrative Agent, MERRILL
LYNCH, PIERCE, FENNER & SMITH INCORPORATED, as Documentation Agent,
and DEUTSCHE BANK TRUST COMPANY AMERICAS, as Syndication Agent.

 

W
I  T  N  E  S  S  E  T  H

 

WHEREAS, for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

SECTION 1.1         Definitions.  The following terms, as used herein, have the
following meanings:

 

“Administrative Agent” shall mean Bank
of America, N.A., in its capacity as Administrative Agent hereunder, and its
permitted successors in such capacity in accordance with the terms of this
Agreement.

 

“Administrative Questionnaire” means,
with respect to each Bank, an administrative questionnaire in the form prepared
by the Administrative Agent and submitted to the Administrative Agent (with a
copy to the Borrower) duly completed by such Bank.

 

“Agents” means, collectively, the
Administrative Agent, Merrill Lynch, Pierce, Fenner & Smith, as
Documentation Agent, and Deutsche Bank Trust Company Americas, as Syndication
Agent.

 

“Agreement” shall mean this Revolving
Credit Agreement as the same may from time to time hereafter be modified,
supplemented or amended.

 

“Applicable Interest Rate” means (i) with
respect to any Fixed Rate Indebtedness, the fixed interest rate applicable to
such Fixed Rate Indebtedness

 

 

at the time in question, and (ii) with respect to any Floating
Rate Indebtedness, either (x) the rate at which the interest rate applicable to
such Floating Rate Indebtedness is actually capped (or fixed pursuant to an
interest rate hedging device), at the time of calculation, if Borrower has
entered into an interest rate cap agreement or other interest rate hedging
device with respect thereto or (y) if Borrower has not entered into an interest
rate cap agreement or other interest rate hedging device with respect to such
Floating Rate Indebtedness, the greater of (A) the rate at which the
interest rate applicable to such Floating Rate Indebtedness could be fixed for
the remaining term of such Floating Rate Indebtedness, at the time of
calculation, by Borrower’s entering into any unsecured interest rate hedging
device either not requiring an upfront payment or if requiring an upfront
payment, such upfront payment shall be amortized over the term of such device
and included in the calculation of the interest rate (or, if such rate is
incapable of being fixed by entering into an unsecured interest rate hedging
device at the time of calculation, a fixed rate equivalent reasonably
determined by Administrative Agent) or (B) the floating rate applicable to
such Floating Rate Indebtedness at the time in question.

 

“Applicable Lending Office” means,
with respect to any Bank, (i) in the case of its Base Rate Loans, its
Domestic Lending Office, and (ii) in the case of its Euro-Dollar Loans,
its Euro-Dollar Lending Office.

 

“Applicable Margin” means, with
respect to each Loan, the respective percentages per annum determined, at any
time, based on the range into which Borrower’s Credit Rating then falls, in
accordance with the table set forth below. 
Any change in Borrower’s Credit Rating causing it to move to a different
range on the table shall effect an immediate change in the Applicable Margin.  In the event that Borrower receives two (2) Credit
Ratings that are not equivalent, the Applicable Margin shall be determined by
the lower of such two (2) Credit Ratings. 
In the event that Borrower receives more than two (2) Credit
Ratings, and such Credit Ratings are not equivalent, the Applicable Margin
shall be determined by the lower of the two (2) highest Credit Ratings,
provided that each of said two (2) highest Credit Ratings shall be
Investment Grade Ratings and at least one of which shall be an Investment Grade
Rating from S&P or Moody’s.  In the

 

2

 

event that each of said two (2) highest Credit Ratings shall not
be Investment Grade Ratings or at least one shall not be an Investment Grade
Rating from S&P or Moody’s, then the Applicable Margin shall be determined
by the lowest of the Credit Ratings.  In
the event that only one of the Rating Agencies shall have set Borrower’s Credit
Rating, then the Applicable Margin shall be based on such Credit Rating only.

 

	
  Range of

  	
   

  	
  Applicable

  	
   

  	
   

  	
   

  
	
  Borrower’s

  	
   

  	
  Margin for

  	
   

  	
  Applicable

  	
   

  
	
  Credit Rating

  	
   

  	
  Base Rate

  	
   

  	
  Margin for Euro

  	
   

  
	
  (S&P/Moody’s

  	
   

  	
  Loans

  	
   

  	
  Dollar Loans

  	
   

  
	
  Ratings)

  	
   

  	
  (% per annum)

  	
   

  	
  (% per annum)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Non-Investment
  Grade

  	
   

  	
  0.250

  	
   

  	
  1.050

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BBB-/Baa3

  	
   

  	
  0.0

  	
   

  	
  0.800

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BBB/Baa2

  	
   

  	
  0.0

  	
   

  	
  0.600

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BBB+/Baa1

  	
   

  	
  0.0

  	
   

  	
  0.500

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A-/A3 or better

  	
   

  	
  0.0

  	
   

  	
  0.450

  	
   

  

 

“Approved Bank” shall mean banks which
have (i)(a) a minimum net worth of $500,000,000 and/or (b) total
assets of $10,000,000,000, and (ii) a minimum long term debt rating of (a) BBB+
or higher by S&P, and (b) Baa1 or higher by Moody’s.

 

“Assignee” has the meaning set forth
in Section 9.6(c).

 

“Bank” means each bank listed on the
signature pages hereof, each Assignee which becomes a Bank pursuant to Section 9.6(c),
and their respective successors.

 

“Bankruptcy Code” shall mean Title 11
of the United States Code, entitled “Bankruptcy”, as amended from time to time,
and any successor statute or statutes.

 

“Base Rate” means, for any day, a
fluctuating rate per annum equal to the higher of (a) the Federal Funds
Rate plus 1⁄2 of 1% and (b) the rate of interest in effect for such day as
publicly announced from time to time by the Bank serving as the Administrative
Agent as its “prime rate.”

 

3

 

The “prime rate” is a rate set by Bank of America, N.A. based upon
various factors including Bank of America, N.A.’s costs and desired return,
general economic conditions and other factors, and is used as a reference point
for pricing some loans, which may be priced at, above, or below such announced
rate.  Any change in such rate announced
by the Bank serving as the Administrative Agent shall take effect at the
opening of business on the day specified in the public announcement of such
change.

 

“Base Rate Loan” means a Loan made or
to be made by a Bank as a Base Rate Loan in accordance with the applicable
Notice of Borrowing or Notice of Interest Rate Election or pursuant to Article VIII.

 

“Benefit Arrangement” means at any
time an employee benefit plan within the meaning of Section 3(3) of
ERISA which is not a Plan or a Multiemployer Plan and which is maintained or
otherwise contributed to by any member of the ERISA Group.

 

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

 

“Borrower’s Share” means Borrower’s or
EQR’s share of the liabilities or assets, as the case may be, of an Investment
Affiliate or Consolidated Subsidiary as reasonably determined by Borrower based
upon Borrower’s or EQR’s economic interest in such Investment Affiliate or
Consolidated Subsidiary, as the case may be, as of the date of such
determination.

 

“Borrowing” has the meaning set forth
in Section 1.3.

 

“Capital Leases” as applied to any
Person, means any lease of any property (whether real, personal or mixed) by
that Person as lessee which, in conformity with GAAP, is or should be accounted
for as a capital lease on the balance sheet of that Person.

 

“Capital Reserve” shall mean $200 per
year.

 

“Capitalized Property Value” means, as
of any date, (i) with respect to Stabilized Properties, the aggregate
amount of EBITDA (or Borrower’s Share thereof with respect to any Stabilized
Property owned by a Consolidated

 

4

 

Subsidiary or an Investment Affiliate) with respect to such Stabilized
Properties, divided by the FMV Cap Rate, and (ii) with respect to any
Non-Stabilized Property, the greater of (x) the aggregate amount of EBITDA with
respect to such Non-Stabilized Property (or Borrower’s Share thereof with
respect to any Non-Stabilized Property owned by a Consolidated Subsidiary or an
Investment Affiliate), divided by the FMV Cap Rate, and (y) the undepreciated
book value, determined in accordance with GAAP of such Non-Stabilized Property
(or Borrower’s Share thereof with respect to any Non-Stabilized Property owned
by a Consolidated Subsidiary or an Investment Affiliate).

 

“Cash and Cash Equivalents” shall mean
unrestricted (notwithstanding the foregoing, however, cash held in escrow in
connection with the completion of Code Section 1031 “like-kind” exchanges
shall be deemed to be “unrestricted” for purposes hereof) (i) cash, (ii) direct
obligations of the United States Government, including without limitation,
treasury bills, notes and bonds, (iii) interest bearing or discounted
obligations of Federal agencies and government sponsored entities or pools of
such instruments offered by Approved Banks and dealers, including without
limitation, Federal Home Loan Mortgage Corporation participation sale
certificates, Government National Mortgage Association modified pass through
certificates, Federal National Mortgage Association bonds and notes, and
Federal Farm Credit System securities, (iv) time deposits, domestic and
eurodollar certificates of deposit, bankers acceptances, commercial paper rated
at least A-1 by S&P and P-1 by Moody’s and/or guaranteed by a Person with
an Aa rating by Moody’s, an AA rating by S&P or better rated credit,
floating rate notes, other money market instruments and letters of credit each
issued by Approved Banks (provided that the same shall cease to be a “Cash or
Cash Equivalent” if at any time any such bank shall cease to be an Approved
Bank), (v) obligations of domestic corporations, including, without
limitation, commercial paper, bonds, debentures and loan participations, each
of which is rated at least AA by S&P and/or Aa2 by Moody’s and/or
guaranteed by a Person with an Aa rating by Moody’s, an AA rating by S&P or
better rated credit, (vi) obligations issued by states and local
governments or their agencies, rated at least MIG-1 by Moody’s and/or SP-1 by
S&P and/or guaranteed by an irrevocable letter of credit of an Approved
Bank (provided that the same shall cease to be a “Cash or Cash Equivalent” if
at any time any such bank shall cease to be an Approved Bank), (vii) repurchase
agreements with major

 

5

 

banks and primary government security dealers fully secured by the U.S.
Government or agency collateral equal to or exceeding the principal amount on a
daily basis and held in safekeeping, and (viii) real estate loan pool
participations, guaranteed by a Person with an AA rating given by S&P or
Aa2 rating given by Moody’s or better rated credit.

 

“Closing Date” means the date on or
after the Effective Date on which the conditions set forth in Section 3.1
shall have been satisfied to the satisfaction of the Administrative Agent.

 

“Code” shall mean the Internal Revenue
Code of 1986, as amended, and as it may be further amended from time to time,
any successor statutes thereto, and applicable U.S. Department of Treasury
regulations issued pursuant thereto in temporary or final form.

 

“Commitment” means, with respect to
each Bank, the amount set forth opposite the name of such Bank on the signature
pages hereof (and, for each Bank which is an Assignee, the amount set
forth in the Transfer Supplement entered into pursuant to Section 9.6(c) as
the Assignee’s Commitment), as such amount may be reduced from time to time
pursuant to Section 2.11(e) or reduced or increased in connection
with an assignment to an Assignee or from another Bank.

 

“Consolidated EBITDA” means, for any
twelve (12) month period, net earnings (loss), inclusive of the net incremental
gains (losses) on sales of condominium units, Raw Land and other
non-depreciated Properties, and exclusive of net derivative gains (losses) and
gains (losses) on the dispositions of depreciable Properties, as reflected in
reports filed by Borrower pursuant to the Securities Exchange Act of 1934, as
amended, before deduction (including amounts reported in discontinued
operations), for (i) depreciation and amortization expense and other
non-cash items as determined in good faith by Borrower for such period, (ii) Interest
Expense for such period, (iii) Taxes for such period, (iv) the gains
(and plus the losses) from extraordinary items, and (v) the gains
(and plus the losses) from non-recurring items, as determined in good faith by
Borrower, for such period, all of the foregoing without duplication. In each
case, amounts shall be reasonably determined by Borrower in accordance with
GAAP, except to the extent that GAAP by its terms shall not apply with

 

6

 

respect to the determination of non-cash and non-recurring items and
except that such net earnings (loss) shall only include Borrower’s Share of
such net earnings (loss) attributable to Consolidated Subsidiaries and shall
include, without duplication, Borrower’s Share of the net earnings (loss),
inclusive of the net incremental gains (losses) on sales of condominium units,
Raw Land and other non-depreciated Properties, and exclusive of net derivative
gains (losses) and gains (losses) on the dispositions of depreciable
Properties, of any Investment Affiliate before deduction (including amounts
reported in discontinued operations) for (i) depreciation and amortization
expense and other non-cash items of such Investment Affiliate as determined in
good faith by Borrower for such period, (ii) Interest Expense of such
Investment Affiliate for such period, (iii) Taxes of such Investment
Affiliate for such period, (iv) the gains (and plus the losses) from
extraordinary items of such Investment Affiliate, and (v) the gains (and
plus the losses) from non-recurring items of such Investment Affiliate as
determined in good faith by Borrower for such period.

 

“Consolidated Subsidiary” means at any
date any Person which is consolidated with Borrower or EQR in accordance with
GAAP.

 

“Contingent Obligation” as to any
Person means, without duplication, (i) any contingent obligation of such
Person required to be shown on such Person’s balance sheet in accordance with
GAAP, and (ii) any obligation required to be disclosed in the footnotes to
such Person’s financial statements, guaranteeing partially or in whole any
Non-Recourse Indebtedness, lease, dividend or other obligation, exclusive of
contractual indemnities (including, without limitation, any indemnity or
price-adjustment provision relating to the purchase or sale of securities or
other assets) and guarantees of non-monetary obligations (other than guarantees
of completion) which have not yet been called on or quantified, of such Person
or of any other Person.  The amount of any
Contingent Obligation described in clause (ii) shall be deemed to be (a) with
respect to a guaranty of interest or interest and principal, or operating
income guaranty, the Net Present Value of the sum of all payments required to
be made thereunder (which in the case of an operating income guaranty shall be
deemed to be equal to the debt service for the note secured thereby),
calculated at the Applicable Interest Rate, through (I) in the case of an
interest or interest and principal guaranty,

 

7

 

the stated date of maturity of the obligation (and commencing on the
date interest could first be payable thereunder), or (II) in the case of an
operating income guaranty, the date through which such guaranty will remain in
effect, and (b) with respect to all guarantees not covered by the
preceding clause (a), an amount equal to the stated or determinable amount of
the primary obligation in respect of which such guaranty is made or, if not
stated or determinable, the maximum reasonably anticipated liability in respect
thereof (assuming such Person is required to perform thereunder) as recorded on
the balance sheet and on the footnotes to the most recent financial statements
of Borrower required to be delivered pursuant to Section 4.4 hereof.  Notwithstanding anything contained herein to
the contrary, guarantees of completion shall not be deemed to be Contingent
Obligations unless and until a claim for payment or performance has been made
thereunder, at which time any such guaranty of completion shall be deemed to be
a Contingent Obligation in an amount equal to any such claim.  Subject to the preceding sentence, (i) in
the case of a joint and several guaranty given by such Person and another
Person (but only to the extent such guaranty is recourse, directly or
indirectly to Borrower), the amount of the guaranty shall be deemed to be 100%
thereof unless and only to the extent that such other Person has delivered Cash
or Cash Equivalents to secure all or any part of such Person’s guaranteed
obligations and (ii) in the case of a guaranty (whether or not joint and
several) of an obligation otherwise constituting Indebtedness of such Person,
the amount of such guaranty shall be deemed to be only that amount in excess of
the amount of the obligation constituting Indebtedness of such Person.  Notwithstanding anything contained herein to
the contrary, (xx) “Contingent Obligations” shall be deemed not to include
guarantees of Unused Commitments or of construction loans to the extent the
same have not been drawn, and (yy) the aggregate amount of all Contingent
Obligations of any Consolidated Subsidiary or Investment Affiliate (except to
the extent that any such Contingent Obligation is recourse to the Borrower or
EQR) which would otherwise exceed the total capital contributions of the
Borrower and EQR to such entity, together with the amount of any unfunded
obligations of the Borrower or EQR to make such additional equity contributions
to such entity that could be legally enforced by a creditor of such entity
shall be deemed to be equal to the amount of such capital contributions and
equity or loan commitments.  All matters
constituting “Contingent Obligations” shall be calculated without duplication.

 

8

 

“Credit Rating” means the rating
assigned by the Rating Agencies to Borrower’s senior unsecured long term
indebtedness.

 

“Customary Non-Recourse Carve-Outs”
means fraud, misrepresentation, misapplication of cash, waste, environmental
claims and liabilities and other circumstances customarily excluded by
institutional lenders from exculpation provisions and/or included in separate
indemnification agreements.

 

“Debt Restructuring” means a
restatement of, or material change in, the amortization or other financial
terms of any Indebtedness of EQR, the Borrower or any Consolidated Subsidiary
or Investment Affiliate.

 

“Debt Service” means, for any period,
Interest Expense for such period plus scheduled principal amortization
(excluding any individual scheduled principal payment which exceeds 25% of the
original principal amount of an issuance of Indebtedness) for such period on
all Indebtedness of Borrower or EQR (excluding Indebtedness of any Consolidated
Subsidiary or Investment Affiliate), on a consolidated basis, plus
Borrower’s Share of scheduled principal amortization for such period on all
Indebtedness of all Consolidated Subsidiaries and Investment Affiliates for
which there is no recourse to EQR or Borrower (or any Property thereof), plus,
without duplication, EQR’s and Borrower’s actual or potential liability for
principal amortization (excluding any individual scheduled principal payment
which exceeds 25% of the original principal amount of an issuance of
Indebtedness) for such period on all Indebtedness of all Consolidated
Subsidiaries and Investment Affiliates that is recourse to EQR or Borrower (or
any Property thereof).

 

“Default” means any condition or event
which with the giving of notice or lapse of time or both would, unless cured or
waived, become an Event of Default.

 

“Default Rate” has the meaning set
forth in Section 2.6(d).

 

“Development Activity” means (a) the
development and construction of one or more apartment buildings by the Borrower
or any of its Subsidiaries, (b) the financing by the Borrower, EQR or any
Subsidiaries or Investment Affiliates of either or both of any such development
or

 

9

 

construction or (c) the incurrence by the Borrower, EQR or any
Subsidiaries or Investment Affiliates of either or both of any Contingent
Obligations in connection with such development or construction (other than
purchase contracts for Real Property Assets which are not payable until
completion of development or construction), valued at the cost of such projects
under development and construction in the case of assets owned by the Borrower,
EQR or any Subsidiaries, or the Borrower’s Share of the cost of such projects
under development and construction in the case of assets owned by Investment
Affiliates.

 

“Domestic Business Day” means any day
except a Saturday, Sunday or other day on which commercial banks in Chicago,
Illinois are authorized or required by law to close.

 

“Domestic Lending Office” means, as to
each Bank, its office located at its address in the United States set forth in
its Administrative Questionnaire (or identified in its Administrative
Questionnaire as its Domestic Lending Office) or such other office as such Bank
may hereafter designate as its Domestic Lending Office by notice to the
Borrower and the Administrative Agent.

 

“Down REIT” means a limited liability
company, corporation or limited partnership in which the only interest in such
limited liability company, corporation or partnership not owned (directly or
indirectly) by Borrower shall be preference interests or preference units,
respectively, and which limited liability company, corporation or limited
partnership, as the case may be (collectively, a “Down REIT Guarantor”),
has executed and delivered to the Administrative Agent, on behalf of the Banks,
(i) a Guaranty of Payment in the form attached hereto as Exhibit D
(a “Down REIT Guaranty”), (ii) all documents reasonably requested
by the Administrative Agent relating to the existence of such Down REIT
Guarantor, and the authority for and validity of such Down REIT Guaranty,
including, without limitation, the organizational documents of such Down REIT
Guarantor, modified or supplemented prior to the date of such Down REIT
Guaranty, each certified to be true, correct and complete by such Down REIT
Guarantor, not more than ten (10) days prior to the date of such Down REIT
Guaranty, together with a good standing certificate from the Secretary of State
(or the equivalent thereof) of the State of formation of such Down REIT
Guarantor, to be dated not more than ten (10) days prior to the date of
such Down REIT

 

10

 

Guaranty, as well as authorizing resolutions in respect of such Down
REIT Guaranty, and (iii) an opinion of counsel with respect to such Down
REIT Guarantor and Down REIT Guaranty, in form and substance reasonably
acceptable to the Administrative Agent, with respect to due organization,
existence, good standing and authority, and validity and enforceability of such
Down REIT Guaranty.  In addition, for
purposes of this definition, a Down REIT Guaranty shall not be deemed to
constitute Unsecured Debt of the applicable Down REIT Guarantor.

 

“Down REIT Guarantor” shall have the
meaning set forth in the definition of Down REIT.

 

“Down REIT Guaranty” shall have the
meaning set forth in the definition of Down REIT.

 

“Down REIT Guaranty Proceeds” shall
have the meaning set forth in Section 9.18(a) hereof.

 

“EBITDA” means, for any twelve (12)
month period, net earnings (loss), exclusive of net derivative gains (losses)
and gains (losses) on the dispositions of Properties, before deduction
(including amounts reported in discontinued operations) for (i) depreciation
and amortization expense and other non-cash items as determined in good faith
by Borrower for such period, (ii) Interest Expense for such period, (iii) Taxes
for such period, (iv) the gains (and plus the losses) from
extraordinary items, and (v) the gains (and plus the losses) from
non-recurring items, as determined in good faith by Borrower, all of the
foregoing without duplication. In each case, amounts shall be reasonably
determined by Borrower in accordance with GAAP, except to the extent that GAAP
by its terms shall not apply with respect to the determination of non-cash and
non-recurring items. EBITDA shall not be deemed to include corporate level
general and administrative expenses and other corporate expenses, such as land
holding costs, employee and trustee stock and stock option expenses and pursuit
costs write-offs, all as determined in good faith by Borrower.

 

“Effective Date” means the date this
Agreement becomes effective in accordance with Section 9.9.

 

“Environmental Affiliate” means any
partnership, joint venture, trust or corporation in which an equity interest is
owned by the Borrower and/or EQR, either

 

11

 

directly or indirectly, and, as a result of the ownership of such
equity interest, the Borrower and/or EQR may have recourse liability for
Environmental Claims against such partnership, joint venture or corporation (or
the property thereof).

 

“Environmental Approvals” means any
permit, license, approval, ruling, variance, exemption or other authorization
required under applicable Environmental Laws.

 

“Environmental Claim” means, with
respect to any Person, any notice, claim, demand or similar communication
(written or oral) by any other Person alleging potential liability of such
Person for investigatory costs, cleanup costs, governmental response costs, natural
resources damage, property damages, personal injuries, fines or penalties
arising out of, based on or resulting from (i) the presence, or release
into the environment, of any Materials of Environmental Concern at any
location, whether or not owned by such Person or (ii) circumstances
forming the basis of any violation, or alleged violation, of any Environmental
Law, in each case (with respect to both (i) and (ii) above) as to
which there is a reasonable possibility of an adverse determination with respect
thereto and which, if adversely determined, would have a Material Adverse
Effect.

 

“Environmental Laws” means any and all
federal, state, and local statutes, laws, judicial decisions, regulations,
ordinances, rules, judgments, orders, decrees, plans, injunctions, permits,
concessions, grants, licenses, agreements and other governmental restrictions
relating to the environment, the effect of the environment on human health or
emissions, discharges or releases of Materials of Environmental Concern into the
environment including, without limitation, ambient air, surface water, ground
water, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Materials of Environmental Concern or the clean up or other remediation
thereof.

 

“EQR” means Equity Residential, a
Maryland real estate investment trust, the sole general partner of the
Borrower.

 

“EQR 2004 Form 10-K” means EQR’s
annual report on Form 10-K for 2004, as filed with the Securities and
Exchange Commission pursuant to the Securities Exchange Act of 1934, as
amended.

 

12

 

“ERISA” means the Employee Retirement
Income Security Act of 1974, as amended, or any successor statute.

 

“ERISA Group” means the Borrower, any
Subsidiary and all members of a controlled group of corporations and all trades
or businesses (whether or not incorporated) under common control which,
together with the Borrower or any Subsidiary, are treated as a single employer
under Section 414 of the Code.

 

“Euro-Dollar Borrowing” has the
meaning set forth in Section 1.3.

 

“Euro-Dollar Business Day” means any
Domestic Business Day on which commercial banks are open for international
business (including dealings in dollar deposits) in London.

 

“Euro-Dollar Lending Office” means, as
to each Bank, its office, branch or affiliate located at its address set forth
in its Administrative Questionnaire (or identified in its Administrative
Questionnaire as its Euro-Dollar Lending Office) or such other office, branch
or affiliate of such Bank as it may hereafter designate as its Euro-Dollar
Lending Office by notice to the Borrower and the Administrative Agent.

 

“Euro-Dollar Loan” means a Loan made
or to be made by a Bank as a Euro-Dollar Loan in accordance with the applicable
Notice of Borrowing or Notice of Interest Rate Election.

 

“Euro-Dollar Rate” means, for any
applicable Interest Period for any Euro-Dollar Loan, the rate per annum equal
to the British Bankers Association LIBOR Rate (“BBA LIBOR”), as published by
Reuters (or other commercially available source providing quotations of BBA
LIBOR as designated by the Administrative Agent from time to time) at
approximately 11:00 a.m., London time, two Business Days prior to the commencement
of such Interest Period, for Dollar deposits (for delivery on the first day of
such Interest Period) with a term equivalent such Interest Period.  If such rate is not available at such time
for any reason, the “Euro-Dollar Rate” for such Interest Period shall be the
rate per annum determined by the Administrative Agent to be the rate at which
deposits in Dollars for delivery on the first day of such Interest Period in
same

 

13

 

day funds in the approximate amount of the Euro-Dollar Loan being made,
continued or converted by Bank of America and with a term equivalent to such
Interest Period would be offered by Bank of America’s London Branch to major
banks in the London interbank eurodollar market at their request at
approximately 11:00 a.m. (London time) two Business Days prior to the
commencement of such Interest Period.

 

“Euro-Dollar Reserve Percentage”
means, with respect to any applicable Interest Period, for any day that
percentage (expressed as a decimal) which is in effect on such day as
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement (including basic,
supplemental, emergency, special and marginal reserves) generally applicable to
financial institutions regulated by the Federal Reserve Board comparable in
size and type to the Person serving as the Administrative Agent under
Regulation D of the Federal Reserve Board, in respect of “Eurocurrency
liabilities”, or under any similar or successor regulation with respect to
Eurocurrency liabilities or Eurocurrency funding (or in respect of any other
category of liabilities which include deposits by reference to which the
interest rate on Euro-Dollar Loans is determined), whether or not the Person
serving as the Administrative Agent has any Euro-Currency liabilities or such
requirement otherwise in fact applies to the Person serving as the
Administrative Agent. The Euro-Dollar Rate shall be adjusted automatically as of
the effective date of each change in the Euro-Dollar Reserve Percentage.

 

“Event of Default” has the meaning set
forth in Section 6.1.

 

“Facility Fee” has the meaning set
forth in Section 2.8(a).

 

“Federal Funds Rate” means, for any
day, the rate per annum (rounded upward, if necessary, to the nearest 1/100th
of 1%) equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published by the Federal Reserve Bank of New York
on the Domestic Business Day next succeeding such day, provided that (i) if
such day is not a Domestic Business Day, the Federal Funds Rate for such day
shall be such rate on such transactions on the next preceding Domestic Business
Day as so published on the next succeeding Domestic Business

 

14

 

Day, and (ii) if no such rate is so published on such next
succeeding Domestic Business Day, the Federal Funds Rate for such day shall be
the average rate quoted to the Administrative Agent on such day on such
transactions as determined by the Administrative Agent.

 

“Federal Reserve Board” means the
Board of Governors of the Federal Reserve System as constituted from time to
time.

 

“Financing Partnership” means any
Subsidiary which is wholly-owned, directly or indirectly, by Borrower or by
Borrower and EQR.

 

“FIN46(R)” has the meaning set forth
in the definition of “GAAP”.

 

“Fiscal Quarter” means a fiscal
quarter of a Fiscal Year.

 

“Fiscal Year” means the fiscal year of
Borrower and EQR which shall be the twelve (12) month period ending on the last
day of December in each year.

 

“Fixed Charges” for any twelve (12)
month period means (without duplication) the sum of (i) Debt Service for
such period, (ii) the product of the average number of apartment units
owned (directly or beneficially) by Borrower, EQR, or any wholly-owned
Subsidiary of either or both during such period and the Capital Reserve for
such period, (iii) Borrower’s Share of the aggregate sum of the product of
the average number of apartment units owned (directly or beneficially) by each
Consolidated Subsidiary (other than wholly-owned Subsidiaries of Borrower
and/or EQR) and Investment Affiliate during such period and the Capital Reserve
for such period, (iv) dividends on preferred units payable by Borrower
during such period, and (v) distributions made by the Borrower during such
period to EQR for the purpose of paying dividends on preferred shares in EQR.

 

“Fixed Rate Borrowing” has the meaning
set forth in Section 1.3.

 

“Fixed Rate Indebtedness” means all
Indebtedness which accrues interest at a fixed rate.

 

15

 

“Floating Rate Indebtedness” means all
Indebtedness which is not Fixed Rate Indebtedness and which is not a Contingent
Obligation or an Unused Commitment.

 

“FMV Cap Rate” means 7.50%.

 

“GAAP” means generally accepted
accounting principles recognized as such in the opinions and pronouncements of
the Accounting Principles Board and the American Institute of Certified Public
Accountants and the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, which are applicable to the circumstances as of the
date of determination; provided, however, that with respect to the financial
covenants, including the related definitions, (i) GAAP shall be deemed
modified to eliminate the effect of FASB Interpretations No. 46(R),
Consolidation of Variable Interest Entities, an Interpretation of Accounting
Research Bulletin (ARB) No. 51 (“FIN 46(R)”), issued by the
Financial Accounting Standards Board, on the operation of such covenants, and (ii) only
Borrower’s Share of any income, expense, assets and liabilities of any
Investment Affiliate shall be taken into account.

 

“Gross Asset Value” means, (i) with
respect to all Stabilized Properties and Non-Stabilized Properties, each such
Property’s Capitalized Property Value, plus (ii) the value of any Cash or
Cash Equivalents (including Cash or Cash Equivalents held in restricted Section 1031
accounts under the control of the Borrower or EQR) owned by Borrower, EQR or
any wholly-owned Subsidiary of either, plus (iii) the book value,
determined in accordance with GAAP, of readily marketable Securities and
Investment Mortgages owned by the Borrower, EQR or their wholly-owned
Consolidated Subsidiaries, plus (iv) Borrower’s Share of the value of any
Cash or Cash Equivalents (including Cash or Cash Equivalents held in restricted
Section 1031 accounts under the control of a non-wholly owned Consolidated
Subsidiary or by an Investment Affiliate) owned by any such Consolidated
Subsidiary or Investment Affiliate, plus (v) Borrower’s Share of the book
value, determined in accordance with GAAP, of readily marketable Securities and
Investment Mortgages owned by any non-wholly owned Consolidated Subsidiary or
Investment Affiliate.

 

“Group of Loans” means, at any time, a
group of Loans consisting of (i) all Loans which are Base Rate Loans

 

16

 

at such time, or (ii) all Euro-Dollar Loans having the same
Interest Period at such time; provided that, if a Loan of any particular
Bank is converted to or made as a Base Rate Loan pursuant to Section 8.2
or 8.5, such Loan shall be included in the same Group or Groups of Loans from
time to time as it would have been in if it had not been so converted or made.

 

“Guaranty” means the Guaranty of
Payment, dated as of the date hereof, executed by EQR in favor of the
Administrative Agent and the Banks.

 

“Indebtedness”, as applied to any
Person (and without duplication), means (a) all indebtedness, obligations
or other liabilities of such Person for borrowed money, (b) all
indebtedness, obligations or other liabilities of such Person evidenced by
Securities or other similar instruments, (c) all reimbursement
obligations, contingent or otherwise, of such Person with respect to letters of
credit actually issued for such Person’s account or upon such Person’s
application, (d) all obligations of such Person to pay the deferred and
unpaid purchase price of Property except any such deferred and unpaid purchase
price that constitutes an accrued expense or trade payable, (e) all
obligations in respect of Capital Leases (including ground leases) of such
Person, (f) all indebtedness, obligations or other liabilities of such
Person or others secured by a Lien on any asset of such Person, whether or not
such indebtedness, obligations or liabilities are assumed by, or are a personal
liability of such Person, in the case of items of Indebtedness incurred under
clauses (a), (b), (c) and (d) to the extent that any such items
(other than letters of credit), in accordance with GAAP, would be included as
liabilities on the liability side of the balance sheet of such Person,
exclusive, however, of all accounts payable, accrued interest and expenses,
prepaid rents, security deposits and dividends and distributions declared but
not yet paid. Indebtedness also includes, to the extent not otherwise included,
any obligation of Borrower or EQR, as well as Borrower’s Share of any
obligation of any Consolidated Subsidiary or Investment Affiliate, to be liable
for, or to pay as obligor, guarantor or otherwise (other than for purposes of
collection in the ordinary course of business), Indebtedness of another Person
(other than Borrower, EQR, a Consolidated Subsidiary or an Investment
Affiliate). Indebtedness shall not include any Intracompany Indebtedness. “Intracompany
Indebtedness” means indebtedness whose obligor is Borrower, EQR, any

 

17

 

Consolidated Subsidiary or any Investment Affiliate and whose obligee
is Borrower, EQR or any wholly-owned Consolidated Subsidiary.

 

“Indemnitee” has the meaning set forth
in Section 9.3(b).

 

“Interest Expense” means, for any
period and without duplication, total interest expense, whether paid, accrued
or capitalized (including the interest component of Capital Leases but
excluding interest expense covered by an interest reserve established under a
loan facility, as well as any interest expense under any construction loan or
construction activity that under GAAP is required to be capitalized) of
Borrower or EQR (excluding any such interest expense accrued or capitalized on
Indebtedness of any Consolidated Subsidiary or Investment Affiliate), including
without limitation all commissions, discounts and other fees and charges owed
with respect to drawn letters of credit, amortized costs of Interest Rate
Contracts incurred on or after the Closing Date and the Facility Fees payable
to the Banks in accordance with Section 2.8, plus Borrower’s Share
of accrued or paid interest with respect to any Indebtedness of Consolidated
Subsidiaries or Investment Affiliates for which there is no recourse to EQR or
Borrower, plus, without duplication, EQR’s and Borrower’s actual or
potential liability for accrued, paid or capitalized interest (including the
interest component of Capital Leases but excluding interest expense covered by
an interest reserve established under a loan facility, as well as any interest
expense under any construction loan or construction activity that under GAAP is
required to be capitalized) with respect to Indebtedness of Consolidated Subsidiaries
or Investment Affiliates that is recourse to EQR or Borrower, calculated for
all Fixed Rate Indebtedness at the actual interest rate in effect with respect
to all Indebtedness outstanding as of the last day of such period and, in the
case of all Floating Rate Indebtedness, the actual rate of interest in effect
with respect to such Floating Rate Indebtedness outstanding for the period
during which no Interest Rate Contract is in effect, and, during the period
that an Interest Rate Contract is in effect with respect to such Floating Rate
Indebtedness, the strike rate payable under such Interest Rate Contract if
lower than the actual rate of interest.

 

“Interest Period” means, with respect
to each Euro-Dollar Borrowing, the period commencing on the date of such
Borrowing specified in the Notice of Borrowing or on

 

18

 

the date specified in the applicable Notice of Interest Rate Election
and ending 1, 2, 3 or 6 months thereafter (or such shorter period, but in no
event less than 7 days, as Borrower may request, subject to the approval of the
Administrative Agent), as the Borrower may elect in the applicable Notice of
Borrowing or Notice of Interest Rate Election; provided that:

 

(a)  any
such Interest Period which would otherwise end on a day which is not a
Euro-Dollar Business Day shall be extended to the next succeeding Euro-Dollar
Business Day unless such Euro-Dollar Business Day falls in another calendar
month, in which case such Interest Period shall end on the next preceding
Euro-Dollar Business Day;

 

(b)  any
such Interest Period which begins on the last Euro-Dollar Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall, subject to
clause (c) below, end on the last Euro-Dollar Business Day of a calendar
month; and

 

(c)  any
such Interest Period which would otherwise end after the Maturity Date shall
end on the Maturity Date.

 

“Interest Rate Contracts” means,
collectively, interest rate swap, collar, cap or similar agreements providing
interest rate protection.

 

“Investment Affiliate” means any
Person in whom EQR or Borrower holds an equity interest, directly or
indirectly, other than Consolidated Subsidiaries, excluding the effects of
consolidation required by FIN46(R), Military Housing Affiliates and Securities
and other passive interests.

 

“Investment Grade Rating” means a
rating for a Person’s senior long-term unsecured debt, or if no such rating has
been issued, a “shadow” rating, of BBB- or better from S&P or Fitch, or a
rating or “shadow” rating of Baa3 or better from Moody’s.  Any such “shadow” rating shall be evidenced
by a letter from the applicable Rating Agency or by such other evidence as may
be reasonably acceptable to the Administrative Agent (as to any such other
evidence, the

 

19

 

Administrative Agent shall present the same to, and discuss the same
with, the Banks).

 

“Investment Mortgages” means mortgages
securing indebtedness directly or indirectly owed to Borrower, EQR or
Subsidiaries of either or both, including certificates of interest in real
estate mortgage investment conduits.

 

“Joint Venture Parent” means Borrower
, EQR or one or more Financing Partnerships of Borrower which directly owns any
interest in a Joint Venture Subsidiary.

 

“Joint Venture Subsidiary” means any
entity (other than a Financing Partnership) in which (i) a Joint Venture
Parent owns at least 20% of the economic interests and (ii) the sale or
financing of any Property owned by such Joint Venture Subsidiary is
substantially controlled by a Joint Venture Parent, subject to customary
provisions set forth in the organizational documents of such Joint Venture
Subsidiary with respect to refinancings or rights of first refusal granted to
other members of such Joint Venture Subsidiary. 
For purposes of the preceding sentence, the sale or financing of a
Property owned by a Joint Venture Subsidiary shall be deemed to be substantially
controlled by a Joint Venture Parent if such Joint Venture Parent has the
ability to exercise a buy-sell right in the event of a disagreement regarding
the sale or financing of such Property. In addition, the relationship of a
Joint Venture Parent as a tenant in common in any asset with other tenants in
common in the same asset shall be treated as if such relationship were a
general partnership for purposes of this definition. For purposes of the
definition of Unencumbered Asset Value, a Joint Venture Subsidiary shall be
deemed to include any entity (other than a Financing Partnership) in which a
Qualified Joint Venture Partner owns the balance of the interests.

 

“Lien” means, with respect to any
asset, any mortgage, lien, pledge, charge, security interest or encumbrance of
any kind, or any other type of preferential arrangement, in each case that has
the effect of creating a security interest in respect of such asset.  For the purposes of this Agreement, the Borrower,
EQR or any Subsidiary of either or both shall be deemed to own subject to a
Lien any asset which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional

 

20

 

sale agreement, capital lease or other title retention agreement
relating to such asset.

 

“Loan” means a Base Rate Loan or a
Euro-Dollar Loan and “Loans” means Base Rate Loans or Euro-Dollar Loans
or any combination of the foregoing.

 

“Loan Documents” means this Agreement,
the Notes, the Guaranty and any Down REIT Guaranty.

 

“Margin Stock” shall have the meaning
provided such term in Regulation U.

 

“Material Adverse Effect” means an
effect resulting from any circumstance or event or series of circumstances or
events, of whatever nature (but excluding general economic conditions), which
does or could reasonably be expected to, materially and adversely, (i) impair
the ability of the Borrower and/or EQR and their Consolidated Subsidiaries,
taken as a whole, to perform their respective obligations under the Loan
Documents or (ii)impair the ability of Administrative Agent or the Banks to
enforce the Loan Documents.

 

“Material Plan” means at any time a
Plan or Plans having aggregate Unfunded Liabilities in excess of $5,000,000.

 

“Materials of Environmental Concern”
means and includes pollutants, contaminants, hazardous wastes, toxic and
hazardous substances, asbestos, lead, petroleum and petroleum by-products.

 

“Maturity Date” shall mean the date
when all of the Obligations hereunder shall be due and payable which shall be August 29,
2006, unless accelerated pursuant to the terms hereof.

 

“Military Housing” shall mean
projects, the primary purpose of which is the acquisition, development,
construction, maintenance and operation of military family housing and military
unaccompanied housing on or near military installations of the United States of
America in collaboration with the United States of America.

 

“Military Housing Affiliates” shall
mean any Consolidated Subsidiary or Investment Affiliate of the

 

21

 

 

Borrower or EQR which only has an investment in Military Housing.

 

“Moody’s” means Moody’s Investors
Service, Inc. or any successor thereto.

 

“Multiemployer Plan” means at any time
an employee pension benefit plan within the meaning of Section 4001(a)(3) of
ERISA to which any member of the ERISA Group is then making or accruing an
obligation to make contributions or has within the preceding five plan years
made contributions, including for these purposes any Person which ceased to be
a member of the ERISA Group during such five year period.

 

“Multifamily Residential Property
Mortgages” means Investment Mortgages issued by any Person engaged
primarily in the business of developing, owning, and managing multifamily
residential property.

 

“Multifamily Residential Property
Partnership Interests” means partnership or joint venture interests, or
common or preferred stock, or membership, trust or other equity interests
issued by any Person engaged primarily in the business of developing, owning,
and managing multifamily residential property, but excluding Securities.

 

“Negative Pledge” means, with respect
to any Property, any covenant, condition, or other restriction entered into by
the owner of such Property or directly binding on such Property which prohibits
or limits the creation or assumption of any Lien upon such Property to secure
any or all of the Obligations; provided, however, that such term shall not
include (a) any covenant, condition or restriction contained in any ground
lease from a Governmental Authority, or (b) any financial covenant (such
as a limitation on secured indebtedness) given for the benefit of any Person
that may be violated by the granting of any Lien on any Property to secure any
or all of the Obligations.

 

“Net Income” means, for any period,
the net earnings (or loss) after Taxes of the Borrower, on a consolidated
basis, for such period calculated in conformity with GAAP.

 

22

 

“Net Present Value” shall mean, as to
a specified or ascertainable dollar amount, the present value, as of the date
of calculation of any such amount, using a discount rate equal to the Base Rate
in effect as of the date of such calculation.

 

“Non-Multifamily Residential Property”
means Property which is not (i) used for lease, operation or use as a
multifamily residential property, (ii) Unimproved Assets or Raw Land, (iii) Securities,
(iv) Multifamily Residential Property Mortgages, or (v) Multifamily
Residential Property Partnership Interests.

 

“Non-Recourse Indebtedness” means
Indebtedness with respect to which recourse for payment is limited to (i) specific
assets related to a particular Property or group of Properties encumbered by a
Lien securing such Indebtedness or (ii) any Subsidiary or Investment
Affiliate (provided that if a Subsidiary or Investment Affiliate is a
partnership, there is no recourse to Borrower or EQR as a general partner of
such partnership); provided, however, that personal recourse of Borrower or EQR
for any such Indebtedness for Customary Non-Recourse Carve-Outs in non-recourse
financing of real estate shall not, by itself, prevent such Indebtedness from
being characterized as Non-Recourse Indebtedness.

 

“Non-Stabilized Property” means any
Property owned or leased by Borrower, EQR, a Consolidated Subsidiary or an
Investment Affiliate that is not a Stabilized Property.

 

“Notes” means promissory notes of the
Borrower, substantially in the form of Exhibit A hereto, evidencing
the obligation of the Borrower to repay the Loans, and “Note” means any
one of such promissory notes issued hereunder.

 

“Notice of Borrowing” means a notice
substantially in the form of Exhibit B attached hereto and made a
part hereof.

 

“Notice of Interest Rate Election” has
the meaning set forth in Section 2.6.

 

“Obligations” means all obligations,
liabilities, indemnity obligations and Indebtedness of every nature of the
Borrower, from time to time owing to Administrative

 

23

 

Agent or any Bank under or in connection with this Agreement or any
other Loan Document.

 

“Parent” means, with respect to any
Bank, any Person controlling such Bank.

 

“Participant” has the meaning set
forth in Section 9.6(b).

 

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

 

“Period Fraction” means, with respect
to any period of time, a fraction, the numerator of which is the actual number
of days in such period, and the denominator of which is three hundred and sixty
(360).

 

“Permitted Holdings” means Development
Activity, Raw Land, Securities, Non-Multifamily Residential Property,
Investment Mortgages, and Investment Affiliates.

 

“Permitted Liens” means:

 

a.             Liens
for Taxes, assessments or other governmental charges not yet due and payable or
which are being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted in accordance with the terms hereof;

 

b.             statutory
liens of carriers, warehousemen, mechanics, materialmen and other similar liens
imposed by law, which are incurred in the ordinary course of business for sums
not more than sixty (60) days delinquent or which are being contested in good
faith in accordance with the terms hereof;

 

c.             deposits
made in the ordinary course of business in connection with worker’s
compensation, unemployment insurance and other social security legislation or
to secure liabilities to insurance carriers;

 

d.             utility
deposits and other deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, purchase contracts,

 

24

 

construction contracts, governmental
contracts, statutory obligations, surety bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of business;

 

e.             Liens
for purchase money obligations for equipment (or Liens to secure Indebtedness
incurred within 90 days after the purchase of any equipment to pay all or a
portion of the purchase price thereof or to secure Indebtedness incurred solely
for the purpose of financing the acquisition of any such equipment, or
extensions, renewals, or replacements of any of the foregoing for the same or
lesser amount); provided that (i) the Indebtedness secured by any
such Lien does not exceed the purchase price of such equipment, (ii) any
such Lien encumbers only the asset so purchased and the proceeds upon sale,
disposition, loss or destruction thereof, and (iii) such Lien, after
giving effect to the Indebtedness secured thereby, does not give rise to an
Event of Default;

 

f.              easements,
rights-of-way, zoning restrictions, other similar charges or encumbrances and
all other items listed on Schedule B to the owner’s title insurance
policies, except in connection with any Indebtedness, for any of the Real
Property Assets, so long as the foregoing do not interfere in any material
respect with the use or ordinary conduct of the business of the owner and do
not diminish in any material respect the value of the Property to which it is
attached or for which it is listed;

 

g.             Liens
and judgments (i) which have been or will be bonded (and the Lien thereby
removed other than on any cash or securities serving as security for such bond)
or released of record within thirty (30) days after the date such Lien or
judgment is entered or filed against EQR, Borrower, or any Subsidiary, or (ii) which
are being contested in good faith by appropriate proceedings for review and in
respect of which there shall have been secured a subsisting stay of execution
pending such appeal or proceedings;

 

25

 

h.             Liens
on Property of the Borrower, EQR or the Subsidiaries of either or both (other
than Qualifying Unencumbered Property) securing Indebtedness which may be
incurred or remain outstanding without resulting in an Event of Default
hereunder; and

 

i.              Liens
in favor of the Borrower, EQR or a Consolidated Subsidiary against any asset of
Borrower, any Consolidated Subsidiary or any Investment Affiliate.

 

“Person” means an individual, a
corporation, a partnership, an association, a trust, a limited liability
company or any other entity or organization, including a government or
political subdivision or an agency or instrumentality thereof.

 

“Plan” means at any time an employee
pension benefit plan (other than a Multiemployer Plan) which is covered by
Title IV of ERISA or subject to the minimum funding standards under Section 412
of the Code and either (i) is maintained, or contributed to, by any member
of the ERISA Group for employees of any member of the ERISA Group or (ii) has
at any time within the preceding five years been maintained, or contributed to,
by any Person which was at such time a member of the ERISA Group for employees
of any Person which was at such time a member of the ERISA Group.

 

“Pro Rata Share” means, with respect
to any Bank, a fraction (expressed as a percentage), the numerator of which
shall be the amount of such Bank’s Commitment and the denominator of which
shall be the aggregate amount of all of the Banks’ Commitments, as adjusted
from time to time in accordance with the provisions of this Agreement;
provided, however, that if the Commitments shall have been terminated, then “Pro
Rata Share” shall mean, with respect to any Bank, a fraction (expressed as
a percentage), the numerator of which shall be the amount of such Bank’s
outstanding Loans and the denominator of which shall be the aggregate amount of
all of the Banks’ outstanding Loans.

 

“Property” means, with respect to any
Person, any real or personal property, building, facility, structure, equipment
or unit, or other asset owned or leased by such Person.

 

26

 

“Public Debt” shall have the meaning
set forth in Section 9.18(a) hereof.

 

“Qualified Joint Venture Partner”
means (a) pension funds, insurance companies, banks, investment banks or
similar institutional entities, each with significant experience in making
investments in commercial real estate, and (b) commercial real estate
companies of similar quality and experience.

 

“Qualifying Unencumbered Property”
means any Property (including Raw Land and Property with Development Activity)
from time to time which is owned directly or indirectly in fee (or ground
leasehold) by Borrower, EQR, a Financing Partnership or a Joint Venture
Subsidiary, which (i) is Raw Land, Property with Development Activity or
an operating multifamily residential property, (ii) is not subject (nor
are any equity interests in such Property that are owned directly or indirectly
by Borrower or EQR subject) to a Lien which secures Indebtedness of any Person
other than Permitted Liens, (iii) is not subject (nor are any equity
interests in such Property that are owned directly or indirectly by Borrower or
EQR subject) to any Negative Pledge, and (iv) in the case of any Property
that is owned by a Subsidiary of the Borrower or EQR, is owned by a Subsidiary
that does not have any outstanding Unsecured Debt (other than those items of
Indebtedness set forth in clauses (d) or (e) of the definition of
Indebtedness, or any Contingent Obligation except for guarantees for borrowed
money). In addition, in the case of any Property that is owned by a Subsidiary
of Borrower and/or EQR, if such Subsidiary shall commence any proceeding under
any bankruptcy, insolvency or similar law, or any such involuntary case shall
be commenced against it and shall remain undismissed and unstayed for a period
of 90 days, then, simultaneously with the occurrence of such conditions, such
Property shall no longer constitute a Qualifying Unencumbered Property.  Notwithstanding the foregoing, for the
purposes of this definition, a Property shall be deemed to be wholly-owned by
Borrower if such Property shall be owned by a Down REIT or a wholly-owned
Subsidiary of such Down REIT.

 

“Rating Agencies” means, collectively,
S&P, Moody’s and Fitch Ratings Inc.

 

“Raw Land” means Real Property Assets
upon which no material improvements have been commenced.

 

27

 

“Real Property Assets” means, as of
any time, the real property assets (including interests in participating
mortgages in which the Borrower’s interest therein is characterized as equity
according to GAAP) owned directly or indirectly by the Borrower, EQR and the
Consolidated Subsidiaries of either or both at such time.

 

“Recourse Debt” shall mean
Indebtedness that is not Non-Recourse Indebtedness.

 

“Regulation U” means Regulation U of
the Federal Reserve Board, as in effect from time to time.

 

“Required Banks” means at any time
Banks having at least 51% of the aggregate amount of the Commitments or, if the
Commitments shall have been terminated, holding Notes evidencing at least 51%
of the aggregate unpaid principal amount of the Loans.

 

“S&P” means Standard &
Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., or
any successor thereto.

 

“Secured Debt” means Indebtedness of
EQR, on a consolidated basis, and without duplication, Borrower’s Share of any
Indebtedness of any Investment Affiliate, (i) the payment of which is secured
by a Lien on any Property owned or leased by EQR, Borrower, or any Subsidiary
or Investment Affiliate of either or both, or (ii) which is unsecured
Indebtedness of any Subsidiary or Investment Affiliate of Borrower or EQR,
which Subsidiary or Investment Affiliate is not a guarantor of the Obligations
and which Indebtedness is not recourse to the Borrower or EQR (other than for
Customary Non-Recourse Carve-Outs), or (iii) which is Unsecured Tax Exempt
Indebtedness.

 

“Securities” means any stock, partnership
interests, shares, shares of beneficial interest, voting trust certificates,
bonds, debentures, notes or other evidences of indebtedness, secured or
unsecured, convertible, subordinated or otherwise, or in general any
instruments commonly known as “securities,” or any certificates of interest,
shares, or participations in temporary or interim certificates for the purchase
or acquisition of, or any right to subscribe to, purchase or acquire any of the
foregoing, all of which shall be passive investments.

 

28

 

“Solvent” means, with respect to any
Person, that the fair saleable value of such Person’s assets exceeds the
Indebtedness of such Person.

 

“Stabilized Property” means (i) with
respect to any income-producing Property acquired by Borrower, EQR, any
Consolidated Subsidiary or any Investment Affiliate, such Property shall have
been owned by Borrower, EQR, any Consolidated Subsidiary or any Investment
Affiliate for at least four (4) complete Fiscal Quarters, and (ii) with
respect to any Property under construction or redevelopment, such Property
shall have been owned by Borrower, EQR, any Consolidated Subsidiary or any
Investment Affiliate for at least four (4) complete Fiscal Quarters after
the earlier to occur of (x) eighteen (18) months after substantial completion
(i.e., the issuance of a certificate of occupancy for the applicable Property),
and (b) the last day of the Fiscal Quarter in which the applicable
Property achieves an occupancy rate of not less than 93%.

 

“Subsidiary” means any corporation or
other entity of which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions are at the time directly or indirectly owned by
the Borrower and/or EQR.

 

“Taxes” means all federal, state,
local and foreign income and gross receipts taxes.

 

“Term” has the meaning set forth in Section 2.9.

 

“Termination Event” shall mean (i) a
“reportable event”, as such term is described in Section 4043 of ERISA
(other than a “reportable event” not subject to the provision for 30-day notice
to the PBGC), or an event described in Section 4062(e) of ERISA, (ii) the
withdrawal by any member of the ERISA Group from a Multiemployer Plan during a
plan year in which it is a “substantial employer” (as defined in Section 4001(a)(2) of
ERISA), or the incurrence of liability by any member of the ERISA Group under Section 4064
of ERISA upon the termination of a Multiemployer Plan, (iii) the filing of
a notice of intent to terminate any Plan under Section 4041 of ERISA,
other than in a standard termination within the meaning of Section 4041 of
ERISA, or the treatment of a Plan amendment as a distress termination under Section 4041
of ERISA, (iv) the institution by the PBGC of proceedings to terminate,
impose

 

29

 

liability (other than for premiums under Section 4007 of ERISA) in
respect of, or cause a trustee to be appointed to administer, any Plan or (v) any
other event or condition that might reasonably constitute grounds for the
termination of, or the appointment of a trustee to administer, any Plan or the
imposition of any liability or encumbrance or Lien on the Real Property Assets
or any member of the ERISA Group under ERISA.

 

“Unencumbered Asset Value” means the
sum of (i) the Capitalized Property Value of all Qualifying Unencumbered
Property, (ii) the value of any Cash or Cash Equivalent (including Cash or
Cash Equivalents held in restricted Section 1031 accounts under the
control of the Borrower) owned by Borrower, EQR or any wholly-owned Subsidiary
of either, and (iii) the book value, determined in accordance with GAAP,
of readily marketable Securities and Investment Mortgages owned by the
Borrower, EQR or their wholly-owned Subsidiaries not subject to any Lien, plus (iv) Borrower’s
Share of the value of any Cash or Cash Equivalents (including Cash or Cash
Equivalents held in restricted Section 1031 accounts under the control of
a non-wholly owned Consolidated Subsidiary or by an Investment Affiliate) owned
by any such Consolidated Subsidiary or Investment Affiliate, plus (v) Borrower’s
Share of the book value, determined in accordance with GAAP, of readily
marketable Securities and Investment Mortgages owned by any non-wholly owned
Consolidated Subsidiary or Investment Affiliate, provided, however, that the
aggregate value of those items set forth in clauses (iii) and (v) shall
not exceed thirty percent (30%) of Unencumbered Asset Value.

 

“Unimproved Assets” means Real
Property Assets, other than Raw Land, upon which no material improvements have
been completed which completion is evidenced by a certificate of occupancy or
its equivalent and is less than 90% leased in the aggregate (based upon number
of units).

 

“United States” means the United
States of America, including the fifty states and the District of Columbia.

 

“Unsecured Debt” means Indebtedness of
EQR, on a consolidated basis, which is not Secured Debt.

 

“Unused Commitments” shall mean an
amount equal to all unadvanced funds (other than unadvanced funds in connection
with any construction loan) which any third party

 

30

 

is obligated to advance to Borrower or another Person or otherwise
pursuant to any loan document, written instrument or otherwise.

 

SECTION 1.2         Accounting
Terms and Determinations. 
Unless otherwise specified herein, all accounting terms used herein
shall be interpreted, all accounting determinations hereunder shall be made,
and all financial statements required to be delivered hereunder shall be
prepared, in accordance with GAAP applied on a basis consistent (except for
changes concurred in by the Borrower’s independent public accountants and, with
respect to financial covenants including the related definitions, except for
eliminating the effects of FIN 46(R)) with the most recent audited consolidated
financial statements of the Borrower and its Consolidated Subsidiaries
delivered to the Administrative Agent; provided that for purposes of
references to the financial results and information of “EQR, on a consolidated
basis,” EQR shall be deemed to own one hundred percent (100%) of the
partnership interests in Borrower; and provided further that, if the
Borrower notifies the Administrative Agent that the Borrower wishes to amend
any covenant in Article V to eliminate the effect of any change in GAAP on
the operation of such covenant (or if the Administrative Agent notifies the
Borrower that the Required Banks wish to amend Article V for such
purpose), then the Borrower’s compliance with such covenant shall be determined
on the basis of GAAP in effect immediately before the relevant change in GAAP
became effective, until either such notice is withdrawn or such covenant is
amended in a manner reasonably satisfactory to the Borrower and the Required
Banks.

 

SECTION 1.3         Types of
Borrowings. 
The term “Borrowing” denotes the aggregation of Loans of one or
more Banks to be made to the Borrower pursuant to Article II on the same
date, all of which Loans are of the same type (subject to Article VIII)
and, except in the case of Base Rate Loans, have the same initial Interest
Period.  Borrowings are classified for
purposes of this Agreement by reference to the pricing of Loans comprising such
Borrowing (e.g., a “Fixed Rate Borrowing” is a Euro-Dollar
Borrowing, and a “Euro-Dollar Borrowing” is a Borrowing comprised of
Euro-Dollar Loans).

 

31

 

ARTICLE II

 

THE
CREDITS

 

SECTION 2.1         Commitments
to Lend.  Each Bank severally
agrees, on the terms and conditions set forth in this Agreement, to make Loans
to the Borrower pursuant to this Article from time to time during the term
hereof in amounts such that the aggregate principal amount of such Bank’s Pro
Rata Share of the Loans shall not exceed the amount of its Commitment. Each
Borrowing outstanding under this Section 2.1 shall be in an aggregate
principal amount of $3,000,000, or an integral multiple of $100,000 in excess
thereof (except that any such Borrowing may be in the aggregate amount
available in accordance with Section 3.2(b)) and shall be made from the
several Banks ratably in proportion to their respective Commitments.  In no event shall the aggregate Loans
outstanding at any time exceed $600,000,000, as the same may be reduced from
time to time as a result of cancellation of Commitments by Borrower. Subject to
the limitations set forth herein, any amounts repaid may be reborrowed.

 

SECTION 2.2         Notice of
Borrowing.  The Borrower shall
give Administrative Agent notice not later than 10:00 a.m. (Chicago time)
(x) one Domestic Business Day before each Base Rate Borrowing, or (y) three
Euro-Dollar Business Days before each Euro-Dollar Borrowing, specifying:

 

(i)            the date of
such Borrowing, which shall be a Domestic Business Day in the case of a Base
Rate Borrowing or a Euro-Dollar Business Day in the case of a Euro-Dollar
Borrowing,

 

(ii)           the
aggregate amount of such Borrowing,

 

(iii)          whether the
Loans comprising such Borrowing are to be Base Rate Loans or Euro-Dollar Loans,
and

 

(iv)          in the case
of a Euro-Dollar Borrowing, the duration of the Interest Period applicable
thereto, subject to the provisions of the definition of Interest Period.

 

SECTION 2.3         Intentionally
Omitted.

 

SECTION 2.4         Notice to
Banks; Funding of Loans.

 

32

 

(a)           Upon receipt of a Notice of Borrowing
from Borrower in accordance with Section 2.2 hereof, the Administrative
Agent shall, on the date such Notice of Borrowing is received by the
Administrative Agent, promptly notify each Bank of the contents thereof and of
such Bank’s share of such Borrowing, of the interest rate determined pursuant
thereto and the Interest Period(s) (if different from those requested by the
Borrower) and such Notice of Borrowing shall not thereafter be revocable by the
Borrower, unless Borrower shall pay any applicable expenses pursuant to Section 2.13.

 

(b)           Not later
than 1:00 p.m. (Chicago time) on the date of each Borrowing as indicated
in the Notice of Borrowing, each Bank shall (except as provided in subsection (c) of
this Section) make available its share of such Borrowing in Federal funds
immediately available in Chicago, to the Administrative Agent at its address
referred to in Section 9.1.

 

(c)           Intentionally
Omitted.

 

(d)           Unless the
Administrative Agent shall have received notice from a Bank prior to the date
of any Borrowing that such Bank will not make available to the Administrative
Agent such Bank’s share of such Borrowing, the Administrative Agent may assume
that such Bank has made such share available to the Administrative Agent on the
date of such Borrowing in accordance with subsection (b) of this Section 2.4
and the Administrative Agent may, in reliance upon such assumption, but shall
not be obligated to, make available to the Borrower on such date a
corresponding amount on behalf of such Bank. 
If and to the extent that such Bank shall not have so made such share
available to the Administrative Agent, such Bank and the Borrower severally
agree to repay to the Administrative Agent forthwith on demand, and in the case
of the Borrower one (1) Domestic Business Day after demand, such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to the Borrower until the date such amount is
repaid to the Administrative Agent, at (i) in the case of the Borrower, a
rate per annum equal to the interest rate applicable thereto pursuant to Section 2.7
and (ii) in the case of such Bank, the Federal Funds Rate.  If such Bank shall repay to the
Administrative Agent such corresponding amount, such amount so repaid shall
constitute

 

33

 

such Bank’s Loan included in such Borrowing
as of the date of such Borrowing for purposes of this Agreement.

 

SECTION 2.5         Notes.

 

(a)           The Loans of
each Bank shall be evidenced by a single Note payable to the order of such Bank
for the account of its Applicable Lending Office.

 

(b)           Each Bank
may, by notice to the Borrower and the Administrative Agent, request that its
Loans of a particular type be evidenced by a separate Note in an amount equal
to the aggregate unpaid principal amount of such Loans. Any additional costs
incurred by the Administrative Agent, the Borrower or the Banks in connection
with preparing such a Note shall be at the sole cost and expense of the Bank
requesting such Note. In the event any Loans evidenced by such a Note are paid
in full prior to the Maturity Date, any such Bank shall return such Note to Borrower.  Each such Note shall be in substantially the
form of Exhibit A hereto with appropriate modifications to reflect
the fact that it evidences solely Loans of the relevant type.  Upon the execution and delivery of any such
Note, any existing Note payable to such Bank shall be replaced or modified
accordingly.  Each reference in this
Agreement to the “Note” of such Bank shall be deemed to refer to and
include any or all of such Notes, as the context may require.

 

(c)           Upon receipt
of each Bank’s Note pursuant to Section 3.1(a), the Administrative Agent
shall forward such Note to such Bank. 
Each Bank shall record the date, amount, type and maturity of each Loan
made by it and the date and amount of each payment of principal made by the
Borrower with respect thereto, and may, if such Bank so elects in connection
with any transfer or enforcement of its Note, endorse on the appropriate schedule appropriate
notations to evidence the foregoing information with respect to each such Loan
then outstanding; provided that the failure of any Bank to make any such
recordation or endorsement shall not affect the obligations of the Borrower
hereunder or under the Notes.  Each Bank
is hereby irrevocably authorized by the Borrower so to endorse its Note and to
attach to and make a part of its Note a continuation of any such schedule as
and when required.

 

34

 

(d)           The Loans
shall mature, and the principal amount thereof shall be due and payable, on the
Maturity Date.

 

(e)           There shall
be no more than ten (10) Euro-Dollar Groups of Loans outstanding at any
one time.

 

SECTION 2.6         Method of
Electing Interest Rates.

 

(a)           The Loans
included in each Borrowing shall bear interest initially at the type of rate
specified by the Borrower in the applicable Notice of Borrowing.  Thereafter, the Borrower may from time to
time elect to change or continue the type of interest rate borne by each Group
of Loans (subject in each case to the provisions of Article VIII), as
follows:

 

(i)            if such
Loans are Base Rate Loans, the Borrower may elect to convert all or any portion
of such Loans to Euro-Dollar Loans as of any Euro-Dollar Business Day;

 

(ii)           if such
Loans are Euro-Dollar Loans, the Borrower may elect to convert all or any
portion of such Loans to Base Rate Loans and/or elect to continue all or any
portion of such Loans as Euro-Dollar Loans for an additional Interest Period or
additional Interest Periods, in each case effective on the last day of the then
current Interest Period applicable to such Loans, or on such other date
designated by Borrower in the Notice of Interest Rate Election provided
Borrower shall pay any losses pursuant to Section 2.13.

 

Each such election shall be made by delivering a notice (a “Notice
of Interest Rate Election”) to the Administrative Agent at least three (3) Euro-Dollar
Business Days before the conversion or continuation selected in such notice is
to be effective.  A Notice of Interest
Rate Election may, if it so specifies, apply to only a portion of the aggregate
principal amount of the relevant Group of Loans; provided that (i) such
portion is allocated ratably among the Loans comprising such Group of Loans, (ii) the
portion to which such Notice of Interest Rate Election applies, and the
remaining portion to which it does not apply, are each $500,000 or any larger
multiple of $100,000, (iii) there shall be no more than ten (10) Euro-Dollar
Groups of Loans outstanding at any time, (iv) no Loan may be continued as,
or converted into, a Euro-Dollar Loan when any Event of

 

35

 

Default has occurred and is continuing, and (v) no Interest Period
shall extend beyond the Maturity Date.

 

(b)           Each Notice
of Interest Rate Election shall specify:

 

(i)            the Group of
Loans (or portion thereof) to which such notice applies;

 

(ii)           the date on
which the conversion or continuation selected in such notice is to be
effective, which shall comply with the applicable clause of subsection (a) above;

 

(iii)          if the Loans
comprising such Group of Loans are to be converted, the new type of Loans and,
if such new Loans are Euro-Dollar Loans, the duration of the initial Interest
Period applicable thereto; and

 

(iv)          if such
Loans are to be continued as Euro-Dollar Loans for an additional Interest
Period, the duration of such additional Interest Period.

 

Each Interest Period specified in a Notice of Interest Rate Election
shall comply with the provisions of the definition of Interest Period.

 

(c)           Upon receipt
of a Notice of Interest Rate Election from the Borrower pursuant to subsection (a) above,
the Administrative Agent shall notify each Bank the same day as it receives
such Notice of Interest Rate Election of the contents thereof, the interest
rates determined pursuant thereto and the Interest Periods (if different from
those requested by the Borrower) and such notice shall not thereafter be
revocable by the Borrower.  If the
Borrower fails to deliver a timely Notice of Interest Rate Election to the
Administrative Agent for any Group of Loans which are Euro-Dollar Loans, such
Loans shall be converted into Base Rate Loans on the last day of the then
current Interest Period applicable thereto.

 

SECTION 2.7         Interest
Rates.

 

(a)           Each Base
Rate Loan shall bear interest on the outstanding principal amount thereof, for
each day from the date such Loan is made until the date it is repaid or
converted into a Euro-Dollar Loan pursuant to Section 2.6 or at the
Maturity Date, at a rate per annum equal to the Base

 

36

 

Rate plus the Applicable Margin for Base Rate
Loans for such day.  Such interest shall
be payable on the first Domestic Business Day of each month.

 

(b)           Subject to Section 8.1,
each Euro-Dollar Loan shall bear interest on the outstanding principal amount
thereof, for each day during the Interest Period applicable thereto, at a rate
per annum equal to the sum of the Applicable Margin for Euro-Dollar Loans for
such day plus the Euro-Dollar Rate applicable to such Interest Period.  Such interest shall be payable on the last
day of each Interest Period or on the first Domestic Business Day of each
month, if sooner, as well as on the date of any prepayment of any such
Euro-Dollar Loan.

 

(c)           In the event
that, and for so long as, any Event of Default shall have occurred and be
continuing, the outstanding principal amount of the Loans, and, to the extent
permitted by applicable law, overdue interest in respect of all Loans, shall
bear interest at the annual rate equal to the sum of the Base Rate and four
percent (4%) (the “Default Rate”).

 

(d)           The
Administrative Agent shall determine each interest rate applicable to the Loans
hereunder.  The Administrative Agent
shall give prompt notice to the Borrower and the Banks of each rate of interest
so determined, and its determination thereof shall be conclusive in the absence
of demonstrable error.

 

SECTION 2.8         Fees.

 

(a)           Facility Fee.  Commencing as of February 1, 2006, the
Borrower shall pay to the Administrative Agent for the account of the Banks
ratably in proportion to their respective Commitments a facility fee (the “Facility
Fee”) of fifteen basis points (0.15%) per annum on the aggregate
Commitments.  The facility fee shall be
payable in arrears on May 1, 2006 and on the Maturity Date.

 

(b)           Upfront Fee.  If the Loans shall not have been repaid in
full and the Commitments terminated on or before January 31, 2006, then,
on February 1, 2006, the Borrower shall pay to the Administrative Agent
for the account of the Banks ratably in proportion to their respective
Commitments an upfront fee of fifteen basis points (0.15%) on the aggregate
Commitments.

 

37

 

(c)           Unused Fee.  If at any time prior to February 1,
2006, the aggregate average Loans outstanding shall be less than $200,000,000,
then the Borrower shall pay to the Administrative Agent for the account of the
Banks ratably in proportion to their respective Commitments, an unused fee (the
“Unused Fee”) equal to fifteen basis points (0.15%) per annum on the
amount by which the average daily outstanding aggregate Loans are less than
$200,000,000, calculated based on the number of days in such period on which
the aggregate Loans are less than $200,000,000. The Unused Fee shall be payable
in arrears on November 1, 2005 and February 1, 2006, or the Maturity
Date if sooner to occur.

 

(d)           Fees
Non-Refundable. 
All fees set forth in this Section 2.8 shall be deemed to have been
earned on the date payment is due in accordance with the provisions hereof and
shall be non-refundable.  The obligation
of the Borrower to pay such fees in accordance with the provisions hereof shall
be binding upon the Borrower and shall inure to the benefit of the
Administrative Agent and the Banks regardless of whether any Loans are actually
made.

 

SECTION 2.9         Maturity
Date.  The term (the “Term”)
of the Commitments (and each Bank’s obligations to make Loans) shall terminate
and expire on the Maturity Date.  Upon
the date of the termination of the Term, any Loans then outstanding (together
with accrued interest thereon and all other Obligations) shall be due and
payable on such date.

 

SECTION 2.10       Intentionally
Omitted.

 

SECTION 2.11       Optional
Prepayments and Optional Decreases and Termination.

 

(a)           The Borrower
may, upon at least one (1) Domestic Business Day’s notice to the
Administrative Agent (which shall promptly notify each of the Banks), prepay
any Group of Loans which are Base Rate Loans, in whole at any time, or from
time to time in part in amounts aggregating One Million Dollars ($1,000,000) or
any larger multiple of One Hundred Thousand Dollars ($100,000), by paying the
principal amount to be prepaid. Each such optional prepayment shall be applied
to prepay ratably the Loans of the several Banks included in such Group of
Loans or Borrowing included in such Group of Loans or Borrowing.

 

(b)           The Borrower
may, upon at least one (1) Euro-Dollar Business Day’s notice to the
Administrative Agent

 

38

 

(which shall promptly notify each of the
Banks), prepay any Euro-Dollar Loan as of the last day of the Interest Period
applicable thereto.  Except as provided
in Article VIII and except with respect to any Euro-Dollar Loan which has
been converted to a Base Rate Loan pursuant to Section 8.2, 8.3 or 8.4
hereof, the Borrower may not prepay all or any portion of the principal amount
of any Euro-Dollar Loan prior to the end of the Interest Period applicable
thereto unless the Borrower shall also pay any applicable expenses pursuant to Section 2.13.  Any such prepayment shall be upon at least
three (3) Euro-Dollar Business Days’ notice to the Administrative
Agent.  Each such optional prepayment
shall be in the amounts set forth in Section 2.11(a) above and shall
be applied to prepay ratably the Loans of the Banks included in any Group of
Loans which are Euro-Dollar Loans, except that any Euro-Dollar Loan which has
been converted to a Base Rate Loan pursuant to Section 8.2, 8.3 or 8.4
hereof may be prepaid without ratable payment of the other Loans in such Group
of Loans which have not been so converted.

 

(c)           The Borrower
may at any time and from time to time cancel all or any part of the
Commitments. If there are Loans then outstanding or, if there are no Loans
outstanding at such time as to which the Commitments with respect thereto are
being cancelled, upon at least one (1) Domestic Business Day’s notice to
the Administrative Agent (which shall promptly notify each of the Banks),
whereupon, in either event, all or such portion of the Commitments, as
applicable, shall terminate as to the Banks, pro rata on the date set forth in
such notice of cancellation, and, if there are any Loans then outstanding,
Borrower shall prepay, as applicable, all or such portion of Loans outstanding
on such date in accordance with the requirements of Section 2.11(a) and
(b). Borrower shall be permitted to designate in its notice of cancellation
which Loans, if any, are to be prepaid.

 

(d)           Any amounts
so prepaid pursuant to Section 2.11 (a) or (b) may be
reborrowed.

 

SECTION 2.12       General
Provisions as to Payments.

 

(a)           The Borrower
shall make each payment of interest on the Loans and of fees hereunder, not
later than 12:00 Noon (Chicago time) on the date when due, in Federal or other
funds immediately available in Chicago, to the Administrative Agent at its
address referred to in Section 9.1. 
The Administrative Agent will promptly (and if

 

39

 

received prior to 12:00 noon, on the same
Domestic Business Day, if received after 12:00 noon on the immediately following
Domestic Business Day) distribute to each Bank its ratable share of each such
payment received by the Administrative Agent for the account of the Banks.  If and to the extent that the Administrative
Agent shall receive any such payment for the account of the Banks on or before
12:00 Noon (Chicago time) on any Domestic Business Day, and Administrative
Agent shall not have distributed to any Bank its applicable share of such
payment on such Domestic Business Day, Administrative Agent shall distribute such
amount to such Bank together with interest thereon, for each day from the date
such amount should have been distributed to such Bank until the date
Administrative Agent distributes such amount to such Bank, at the Federal Funds
Rate.  Whenever any payment of principal
of, or interest on the Base Rate Loans or of fees shall be due on a day which
is not a Domestic Business Day, the date for payment thereof shall be extended
to the next succeeding Domestic Business Day. 
Whenever any payment of principal of, or interest on, the Euro-Dollar
Loans shall be due on a day which is not a Euro-Dollar Business Day, the date
for payment thereof shall be extended to the next succeeding Euro-Dollar
Business Day unless such Euro-Dollar Business Day falls in another calendar
month, in which case the date for payment thereof shall be the next preceding
Euro-Dollar Business Day. If the date for any payment of principal is extended
by operation of law or otherwise, interest thereon shall be payable for such
extended time.

 

(b)           Unless the
Administrative Agent shall have received notice from the Borrower prior to the
date on which any payment is due to the Banks hereunder that the Borrower will
not make such payment in full, the Administrative Agent may assume that the
Borrower has made such payment in full to the Administrative Agent on such date
and the Administrative Agent may, in reliance upon such assumption, cause to be
distributed to each Bank on such due date an amount equal to the amount then
due such Bank.  If and to the extent that
the Borrower shall not have so made such payment, each Bank shall repay to the
Administrative Agent forthwith on demand such amount distributed to such Bank
together with interest thereon, for each day from the date such amount is
distributed to such Bank until the date such Bank repays such amount to the
Administrative Agent, at the Federal Funds Rate.

 

40

 

SECTION 2.13       Funding
Losses.  If the Borrower
makes any payment of principal with respect to any Euro-Dollar Loan (pursuant
to Article II, VI or VIII or otherwise) on any day other than the last day
of the Interest Period applicable thereto, or if the Borrower fails to borrow,
continue or convert to any Euro-Dollar Loans after notice has been given to any
Bank in accordance with Section 2.4(a) or 2.6, or if Borrower shall
deliver a Notice of Interest Rate Election specifying that a Euro-Dollar Loan
shall be converted on a date other than the first (lst) day of the then current
Interest Period applicable thereto, the Borrower shall reimburse each Bank
within 15 days after certification of such Bank of such loss or expense (which
shall be delivered by each such Bank to Administrative Agent for delivery to
Borrower) for any resulting loss or expense incurred by it (or by an existing
Participant in the related Loan), including (without limitation) any loss
incurred in obtaining, liquidating or employing deposits from third parties,
but excluding loss of margin for the period after any such payment or failure
to borrow, continue or convert, provided that such Bank shall have
delivered to Administrative Agent and Administrative Agent shall have delivered
to the Borrower a certification as to the amount of such loss or expense, which
certification shall set forth in reasonable detail the basis for and
calculation of such loss or expense and shall be conclusive in the absence of
demonstrable error.

 

SECTION 2.14       Computation
of Interest and Fees. All interest and fees shall be computed
on the basis of a year of 360 days and paid for the actual number of days
elapsed (including the first day but excluding the last day).

 

SECTION 2.15       Use of
Proceeds.  The Borrower shall
use the proceeds of the Loans for general corporate purposes, including,
without limitation, the acquisition of real property to be used in the Borrower’s
existing business and for general working capital needs of the Borrower.

 

ARTICLE III

 

CONDITIONS

 

SECTION 3.1         Closing.  The closing hereunder shall occur on the date
when each of the following conditions is

 

41

 

satisfied (or waived by the Administrative
Agent and the Banks), each document to be dated the Closing Date unless
otherwise indicated:

 

(a)           the Borrower
shall have executed and delivered to the Administrative Agent a Note for the
account of each Bank dated on or before the Closing Date complying with the
provisions of Section 2.5;

 

(b)           the
Borrower, the Administrative Agent and each of the Banks shall have executed
and delivered to the Borrower and the Administrative Agent a duly executed
original of this Agreement;

 

(c)           EQR shall
have executed and delivered to the Administrative Agent a duly executed
original of the Guaranty and each Down REIT Guarantor shall have executed and
delivered to the Administrative Agent a duly executed original of a Down REIT
Guaranty;

 

(d)           the
Administrative Agent shall have received an opinion of DLA Piper Rudnick Gray
Cary US LLP, counsel for the Borrower, acceptable to the Administrative Agent,
the Banks and their counsel;

 

(e)           intentionally
omitted;

 

(f)            the
Administrative Agent shall have received all documents the Administrative Agent
may reasonably request relating to the existence of the Borrower and EQR, the
authority for and the validity of this Agreement and the other Loan Documents,
and any other matters relevant hereto, all in form and substance satisfactory
to the Administrative Agent.  Such
documentation shall include, without limitation, the agreement of limited
partnership of the Borrower, as well as the certificate of limited partnership
of the Borrower, both as amended, modified or supplemented to the Closing Date,
certified to be true, correct and complete by a senior officer of the Borrower
as of a date not more than ten (10) days prior to the Closing Date,
together with a certificate of existence as to the Borrower from the Secretary
of State (or the equivalent thereof) of Illinois, to be dated not more than
thirty (30) days prior to the Closing Date, as well as the declaration of trust
of EQR, as amended, modified or supplemented to the Closing Date, certified to
be true, correct and complete by a senior officer of EQR as of a date not more
than ten (10) days prior to the Closing Date, together with a good
standing

 

42

 

certificate as to EQR from the Secretary of
State (or the equivalent thereof) of Maryland, to be dated not more than thirty
(30) days prior to the Closing Date;

 

(g)           the
Administrative Agent shall have received all certificates, agreements and other
documents and papers referred to in this Section 3.1 and the Notice of
Borrowing referred to in Section 3.2, if applicable, unless otherwise
specified, in sufficient counterparts, satisfactory in form and substance to
the Administrative Agent in its sole discretion;

 

(h)           the
Borrower, EQR and each Down REIT Guarantor shall have taken all actions
required to authorize the execution and delivery of this Agreement and the
other Loan Documents to be executed by Borrower, EQR and each Down REIT
Guarantor, as the case may be, and the performance thereof by the Borrower, EQR
and each Down REIT Guarantor;

 

(i)            the
Administrative Agent shall be satisfied that neither the Borrower, EQR nor any
Consolidated Subsidiary is subject to any present or contingent environmental
liability which could have a Material Adverse Effect;

 

(j)            the
Administrative Agent shall have received, for its and any other Bank’s account,
all fees due and payable pursuant to Section 2.8 hereof on or before the
Closing Date, and the fees and expenses accrued through the Closing Date of
Skadden, Arps, Slate, Meagher & Flom LLP shall have been paid directly
to such firm, if required by such firm and if such firm has delivered an
invoice in reasonable detail of such fees and expenses in sufficient time for
the Borrower to approve and process the same;

 

(k)           the
Administrative Agent shall have received copies of all consents, licenses and
approvals, if any, required in connection with the execution, delivery and
performance by the Borrower, EQR and the applicable Consolidated Subsidiaries,
and the validity and enforceability, of the Loan Documents, or in connection
with any of the transactions contemplated thereby, and such consents, licenses
and approvals shall be in full force and effect;

 

(l)            the
Administrative Agent shall have received 
(or Borrower shall have made publicly available) the audited financial
statements of the Borrower and its Consolidated

 

43

 

Subsidiaries and of EQR for the fiscal year
ended December 31, 2004; and

 

(m)          no Event of
Default shall have occurred.

 

SECTION 3.2         Borrowings.  The obligation of any Bank to make a Loan on
the occasion of any Borrowing is subject to the satisfaction of the following
conditions:

 

(a)           receipt by
the Administrative Agent of a Notice of Borrowing as required by Section 2.2;

 

(b)           immediately
after such Borrowing or issuance, the aggregate outstanding principal amount of
the Loans will not exceed the aggregate amount of the Commitments;

 

(c)           immediately
before and after such Borrowing, no Event of Default shall have occurred and be
continuing both before and after giving effect to the making of such Loans;

 

(d)           the
representations and warranties contained in this Agreement and the other Loan
Documents (other than representations and warranties which expressly speak as
of a different date and other than the representation and warranty set forth in
Section 4.4(c)(i)) shall be true and correct in all material respects on
and as of the date of such Borrowing both before and after giving effect to the
making of such Loans;

 

(e)           no law or
regulation shall have been adopted, no order, judgment or decree of any
governmental authority shall have been issued, and no litigation shall be
pending, which does or seeks to enjoin, prohibit or restrain, the making or
repayment of the Loans or the consummation of the transactions contemplated by
this Agreement and the other Loan Documents; and

 

(f)            with respect
to the initial Borrowing hereunder only, no event, act or condition shall have
occurred after the date of the most recent financial statements of Borrower
which, in the reasonable judgment of the Administrative Agent, or the Required
Banks, as the case may be, has had or is likely to have a Material Adverse
Effect.

 

Each Borrowing hereunder shall be deemed to be a representation and
warranty by the Borrower on the date of

 

44

 

such Borrowing as to the facts specified in clauses (b), (c), (d), (e),
and (f) (with respect to the initial Borrowing hereunder only, and only to
the extent that Borrower is or should have been aware of any Material Adverse
Effect) of this Section, except as otherwise disclosed in writing by Borrower
to the Banks.  Notwithstanding anything
to the contrary, no Borrowing shall be permitted if such Borrowing or issuance
would cause Borrower to fail to be in compliance with any of the covenants
contained in this Agreement or in any of the other Loan Documents.

 

ARTICLE IV

 

REPRESENTATIONS
AND WARRANTIES

 

In order to induce the Administrative Agent
and each of the Banks which is or may become a party to this Agreement to make
the Loans, the Borrower makes the following representations and warranties as
of the Closing Date.  Such representations
and warranties shall survive the effectiveness of this Agreement, the execution
and delivery of the other Loan Documents and the making of the Loans.

 

SECTION 4.1         Existence
and Power.  The Borrower is a
limited partnership, duly formed and validly existing as a limited partnership
under the laws of the State of Illinois and has all powers and all material
governmental licenses, authorizations, consents and approvals required to own
its property and assets and carry on its business as now conducted or as it
presently proposes to conduct and has been duly qualified and is in good
standing in every jurisdiction in which the failure to be so qualified and/or
in good standing is likely to have a Material Adverse Effect.  EQR is a real estate investment trust, duly
formed, validly existing and in good standing as a real estate investment trust
under the laws of the State of Maryland and has all powers and all material
governmental licenses, authorizations, consents and approvals required to own
its property and assets and carry on its business as now conducted or as it
presently proposes to conduct and has been duly qualified and is in good
standing in every jurisdiction in which the failure to be so qualified and/or
in good standing is likely to have a Material Adverse Effect.

 

SECTION 4.2         Power and
Authority.  The Borrower has
the partnership power and authority to execute, deliver

 

45

 

and carry out the terms and provisions of,
and to consummate the transactions contemplated by, each of the Loan Documents
to which it is a party and has taken all necessary partnership action, if any,
to authorize the execution and delivery on behalf of the Borrower and the
performance by the Borrower of, and the consummation of the transactions
contemplated by, such Loan Documents. 
The Borrower has duly executed and delivered each Loan Document to which
it is a party in accordance with the terms of this Agreement, and each such
Loan Document constitutes the legal, valid and binding obligation of the
Borrower, enforceable in accordance with its terms, except as enforceability
may be limited by applicable insolvency, bankruptcy or other laws affecting
creditors’ rights generally, or general principles of equity, whether such
enforceability is considered in a proceeding in equity or at law.  EQR has the power and authority to execute,
deliver and carry out the terms and provisions, and the consummation of the
transactions contemplated by, each of the Loan Documents on behalf of the
Borrower to which the Borrower is a party and has taken all necessary action to
authorize the execution and delivery on behalf of the Borrower and the
performance by the Borrower of such Loan Documents.

 

SECTION 4.3         No Violation.  Neither the execution, delivery or
performance by or on behalf of the Borrower of the Loan Documents to which it
is a party, nor compliance by the Borrower with the terms and provisions
thereof nor the consummation of the transactions contemplated by the Loan
Documents, (i) will materially contravene any applicable provision of any
law, statute, rule, regulation, order, writ, injunction or decree of any court
or governmental instrumentality, (ii) will materially conflict with or
result in any breach of any of the terms, covenants, conditions or provisions
of, or constitute a default under, or result in the creation or imposition of
(or the obligation to create or impose) any Lien upon any of the property or
assets of the Borrower or any of its Consolidated Subsidiaries pursuant to the
terms of, any indenture, mortgage, deed of trust, or other agreement or other
instrument to which the Borrower (or of any partnership of which the Borrower
is a partner) or any of its Consolidated Subsidiaries is a party or by which it
or any of its property or assets is bound or to which it is subject, or (iii) will
cause a material default by the Borrower under any organizational document of
any Person in which the Borrower has an interest, or cause a material default
under the Borrower’s agreement or certificate of

 

46

 

 

limited
partnership, the consequences of which conflict, breach or default would have a
Material Adverse Effect, or result in or require the creation or imposition of
any Lien whatsoever upon any Property (except as contemplated herein).

 

SECTION 4.4                          Financial
Information.

 

(a)                                  The
consolidated balance sheet of the Borrower and its Consolidated Subsidiaries,
dated as of December 31, 2004, and the related consolidated statements of
Borrower’s financial position for the fiscal year then ended, reported on by
Ernst & Young LLP, a copy of which has been delivered to each of the
Banks, fairly present, in conformity with GAAP, the consolidated financial
position of the Borrower and its Consolidated Subsidiaries as of such date and
their consolidated results of operations and cash flows for such fiscal year.

 

(b)                                 The
consolidated balance sheet of EQR, dated as of December 31, 2004, and the
related consolidated statements of EQR’s financial position for the fiscal year
then ended, reported on by Ernst & Young LLP and set forth in the EQR
2004 Form 10-K, a copy of which has been delivered to each of the Banks,
fairly present, in conformity with GAAP, the consolidated financial position of
EQR and its Consolidated Subsidiaries as of such date and their consolidated
results of operations and cash flows for such fiscal year.

 

(c)                                  Since June 30,
2005, (i) except as may have been disclosed in writing to the Banks,
nothing has occurred prior to the Closing Date having a Material Adverse
Effect, and (ii) except as previously disclosed to the Banks, neither the
Borrower nor EQR has incurred any material indebtedness or guaranty on or
before the Closing Date.

 

SECTION 4.5                          Litigation.  Except as previously disclosed by the
Borrower in writing to the Banks prior to the date hereof, there is no action,
suit or proceeding pending against, or to the knowledge of the Borrower
threatened against or affecting, nor, to the knowledge of the Borrower, any
investigation of, (i) the Borrower, EQR or any of their Consolidated
Subsidiaries, (ii) the Loan Documents or any of the transactions
contemplated by the Loan Documents or (iii) any of their assets, before
any court or arbitrator or any governmental body, agency or official in which
there is a reasonable possibility of an

 

47

 

adverse
decision which could, individually or in the aggregate, have a Material Adverse
Effect or which in any manner draws into question the validity or
enforceability of this Agreement or the other Loan Documents.

 

SECTION 4.6                          Compliance
with ERISA. 
The transactions contemplated by the Loan Documents will not constitute
a nonexempt prohibited transaction (as such term is defined in Section 4975
of the Code or Section 406 of ERISA) that could subject the Administrative
Agent or the Banks to any tax or penalty for prohibited transactions imposed
under Section 4975 of the Code or Section 502(i) of ERISA.

 

SECTION 4.7                          Environmental
Matters.  The Borrower and
EQR each conducts reviews of the effect of Environmental Laws on the business,
operations and properties of the Borrower, EQR and Consolidated Subsidiaries of
either or both when necessary in the course of which it identifies and
evaluates associated liabilities and costs (including, without limitation, any
capital or operating expenditures required for clean-up or closure of
properties presently owned, any capital or operating expenditures required to
achieve or maintain compliance with environmental protection standards imposed
by law or as a condition of any license, permit or contract, any related
constraints on operating activities, and any actual or potential liabilities to
third parties, including employees, and any related costs and expenses).  On the basis of this review, the Borrower and
EQR each has reasonably concluded that such associated liabilities and costs,
including the costs of compliance with Environmental Laws, are unlikely to have
a Material Adverse Effect.

 

SECTION 4.8                          Taxes.  United States Federal income tax returns of
the Borrower, EQR and their Consolidated Subsidiaries have been prepared and
filed through the fiscal year ended December 31, 2003.  The Borrower, EQR and their Consolidated
Subsidiaries have filed all United States Federal income tax returns and all
other material tax returns which are required to be filed by them and have paid
all taxes due pursuant to such returns or pursuant to any assessment received
by the Borrower, EQR or any Consolidated Subsidiary, except such taxes, if any,
as are reserved against in accordance with GAAP, such taxes as are being
contested in good faith by appropriate proceedings or such taxes, the failure
to make payment of which when due and payable will not have, in the aggregate,
a Material Adverse

 

48

 

Effect.
The charges, accruals and reserves on the books of the Borrower, EQR and their
Consolidated Subsidiaries in respect of taxes or other governmental charges
are, in the opinion of the Borrower, adequate.

 

SECTION 4.9                          Full
Disclosure. 
All information heretofore furnished by the Borrower to the
Administrative Agent or any Bank for purposes of or in connection with or
pursuant to this Agreement or any transaction contemplated hereby or thereby is
true and accurate in all material respects on the date as of which such
information is stated or certified.  The
Borrower has disclosed to the Administrative Agent, in writing any and all
facts existing on the Closing Date which have or may have (to the extent the
Borrower can now reasonably foresee) a Material Adverse Effect.

 

SECTION 4.10                    Solvency.  On the Closing Date and after giving effect
to the transactions contemplated by the Loan Documents occurring on the Closing
Date, the Borrower will be Solvent.

 

SECTION 4.11                    Use of
Proceeds; Margin Regulations. 
All proceeds of the Loans will be used by the Borrower only in
accordance with the provisions hereof. 
No part of the proceeds of any Loan will be used by the Borrower to
purchase or carry any Margin Stock or to extend credit to others for the
purpose of purchasing or carrying any Margin Stock in any manner that might
violate the provisions of Regulations T, U or X of the Federal Reserve
Board.  Neither the making of any Loan
nor the use of the proceeds thereof will violate or be inconsistent with the
provisions of Regulations T, U or X of the Federal Reserve Board.

 

SECTION 4.12                    Governmental
Approvals.  No order, consent,
approval, license, authorization, or validation of, or filing, recording or
registration with, or exemption by, any governmental or public body or
authority, or any subdivision thereof, is required to authorize, or is required
in connection with the execution, delivery and performance of any Loan Document
or the consummation of any of the transactions contemplated thereby other than
those that have already been duly made or obtained and remain in full force and
effect or those which, if not made or obtained, would not have a Material
Adverse Effect.

 

SECTION 4.13                    Investment
Company Act; Public Utility Holding Company Act.  Neither the Borrower, EQR nor

 

49

 

any
Consolidated Subsidiary is (x) an “investment company” or a company “controlled”
by an “investment company”, within the meaning of the Investment Company
Act of 1940, as amended, (y) a “holding company” or a “subsidiary
company” of a “holding company” or an “affiliate” of either a
“holding company” or a “subsidiary company” within the meaning of
the Public Utility Holding Company Act of 1935, as amended, or (z) subject to
any other federal or state law or regulation which purports to restrict or
regulate its ability to borrow money or otherwise obtain extensions of credit.

 

SECTION 4.14                    Principal
Offices.  As of the Closing
Date, the principal office, chief executive office and principal place of business
of the Borrower is Two North Riverside Plaza, Suite 400, Chicago, Illinois
60606.

 

SECTION 4.15                    REIT Status.  For the fiscal year ended December 31,
2004, EQR qualified and EQR intends to continue to qualify as a real estate
investment trust under the Code.

 

SECTION 4.16                    No Default.  No Event of Default or, to the best of the
Borrower’s knowledge, Default exists and the Borrower is not in default in any
material respect beyond any applicable grace period under or with respect to
any other material agreement, instrument or undertaking to which it is a party
or by which it or any of its property is bound in any respect, the existence of
which default is likely to result in a Material Adverse Effect.

 

SECTION 4.17                    Compliance
With Law.  To the Borrower’s
knowledge, the Borrower and each of the Real Property Assets are in compliance
with all laws, rules, regulations, orders, judgments, writs and decrees,
including, without limitation, all building and zoning ordinances and codes,
the failure to comply with which is likely to have a Material Adverse Effect.

 

SECTION 4.18                    Organizational
Documents.  The documents
delivered pursuant to Section 3.1(f) constitute, as of the Closing
Date, all of the organizational documents (together with all amendments and
modifications thereof) of the Borrower and EQR.   The Borrower represents that it has
delivered to the Administrative Agent true, correct and complete copies, as of
the Closing Date, of each of the documents set forth in this Section 4.18,
except for exhibits to the Borrower’s partnership agreement identifying

 

50

 

the
current list of partners which, with the permission of the Banks, have been
omitted therefrom.

 

SECTION 4.19                    Qualifying
Unencumbered Properties. 
As of June 30, 2005, each Property listed on Exhibit D
as a Qualifying Unencumbered Property (i) is Raw Land, a Property with
Development Activity or an operating multifamily residential property owned or
ground leased (directly or beneficially) by Borrower, EQR, or a Consolidated
Subsidiary or Investment Affiliate of either or both, (ii) is not subject
(nor are any equity interests in such Property that are owned directly or
indirectly by Borrower or EQR subject) to a Lien which secures Indebtedness of
any Person, other than Permitted Liens, (iii) is not subject (nor are any
equity interests in such Property that are owned directly or indirectly by
Borrower or EQR subject) to any Negative Pledges, and (iv) is not owned by
a Subsidiary of the Borrower or EQR (other than the Borrower) that has any
outstanding Unsecured Debt (other than those items of Indebtedness set forth in
clauses (d) or (e) of the definition of Indebtedness, or any
Contingent Obligation other than guarantees for borrowed money).  All of the information set forth on Exhibit D
is true and correct in all material respects.

 

ARTICLE V

 

AFFIRMATIVE
AND NEGATIVE COVENANTS

 

The Borrower covenants and agrees that, so
long as any Bank has any Commitment hereunder or any Obligations remain unpaid:

 

SECTION 5.1                          Information.  The Borrower will deliver to each of the
Banks:

 

(a)                                  as soon as
available and in any event within five (5) Domestic Business Days after
the same is filed with the Securities and Exchange Commission (but in no event
later than 125 days after the end of each fiscal year of the Borrower) a
consolidated balance sheet of the Borrower, EQR and their Consolidated
Subsidiaries as of the end of such fiscal year and the related consolidated
statements of Borrower’s and EQR’s operations and consolidated statements of
Borrower’s and EQR’s cash flow for such fiscal year, setting forth in each case
in comparative form the figures as of the end of and for the previous fiscal
year, all

 

51

 

reported
on in a manner acceptable to the Securities and Exchange Commission on Borrower’s
and EQR’s Form 10K and reported on by Ernst & Young LLP or other
independent public accountants of nationally recognized standing;

 

(b)                                 as soon as
available and in any event within five (5) Domestic Business Days after
the same is filed with the Securities and Exchange Commission (but in no event
later than 80 days after the end of each of the first three quarters of each
fiscal year of the Borrower and EQR), (i) a consolidated balance sheet of
the Borrower, EQR and their Consolidated Subsidiaries as of the end of such
quarter and the related consolidated statements of Borrower’s and EQR’s
operations and consolidated statements of Borrower’s and EQR’s cash flow for
such quarter and for the portion of the Borrower’s or EQR’s fiscal year ended
at the end of such quarter, all reported on in the form provided to the
Securities and Exchange Commission on Borrower’s and EQR’s Form 10Q, and (ii) and
such other information reasonably requested by the Administrative Agent or any
Bank;

 

(c)                                  simultaneously
with the delivery of each set of financial statements referred to in clauses (a) and
(b) above, a certificate of the chief financial officer, the chief
accounting officer or treasurer of the Borrower (i) setting forth in
reasonable detail the calculations required to establish whether the Borrower
was in compliance with the requirements of Section 5.8 on the date of such
financial statements; (ii) certifying (x) that such financial statements fairly
present in all material respects the financial condition and the results of
operations of the Borrower on the dates and for the periods indicated, on the
basis of GAAP, with respect to the Borrower subject, in the case of interim
financial statements, to normally recurring year-end adjustments, and (y) that
such officer has reviewed the terms of the Loan Documents and has made, or
caused to be made under his or her supervision, a review in reasonable detail
of the business and condition of the Borrower during the period beginning on
the date through which the last such review was made pursuant to this Section 5.1(c) (or,
in the case of the first certification pursuant to this Section 5.1(c),
the Closing Date) and ending on a date not more than ten (10) Domestic
Business Days prior to the date of such delivery and that (1) on the basis
of such financial statements and such review of the Loan Documents, no Event of
Default existed under Section 6.1(b) with respect to Sections 5.8 and
5.9 at or as of the date of said financial statements, and (2) on the
basis of such review of the Loan

 

52

 

Documents
and the business and condition of the Borrower, to the best knowledge of such
officer, as of the last day of the period covered by such certificate no
Default or Event of Default under any other provision of Section 6.1
occurred and is continuing or, if any such Default or Event of Default has
occurred and is continuing, specifying the nature and extent thereof and the
action the Borrower proposes to take in respect thereof.  Such certificate shall set forth the
calculations required to establish the matters described in clauses (1) and
(2) above;

 

(d)                                 (i) within
five (5) Domestic Business Days after any officer of the Borrower obtains
knowledge of any Default or Event of Default, if such Default or Event of
Default is then continuing, a certificate of the chief financial officer, the
chief accounting officer, treasurer, controller, or other executive officer of
the Borrower setting forth the details thereof and the action which the
Borrower is taking or proposes to take with respect thereto; and (ii) promptly
and in any event within five (5) Domestic Business Days after the Borrower
obtains knowledge thereof, notice of (x) any litigation or governmental
proceeding pending or threatened against the Borrower or the Real Property
Assets as to which there is a reasonable possibility of an adverse
determination and which, if adversely determined, is likely to individually or
in the aggregate, result in a Material Adverse Effect, and (y) any other event,
act or condition which is likely to result in a Material Adverse Effect;

 

(e)                                  promptly
upon the mailing thereof to the shareholders of EQR generally, copies of all
financial statements, reports and proxy statements so mailed;

 

(f)                                    promptly
upon the filing thereof and to the extent that the same are not publicly
available, copies of all registration statements (other than the exhibits
thereto and any registration statements on Form S-8 or its equivalent) and
reports on Forms 10-K, 10-Q and 8-K (or their equivalents) (other than the
exhibits thereto, which exhibits will be provided upon request therefor by any
Bank) which EQR shall have filed with the Securities and Exchange Commission;

 

(g)                                 Promptly and
in any event within thirty (30) days, if and when any member of the ERISA Group
(i) gives or is required to give notice to the PBGC of any “reportable
event” (as defined in Section 4043 of ERISA) with respect to

 

53

 

any
Plan which might constitute grounds for a termination of such Plan under Title
IV of ERISA, or knows that the plan administrator of any Plan has given or is
required to give notice of any such reportable event, a copy of the notice of
such reportable event given or required to be given to the PBGC; (ii) receives
notice of complete or partial withdrawal liability under Title IV of ERISA or
notice that any Multiemployer Plan is in reorganization, is insolvent or has
been terminated, a copy of such notice; (iii) receives notice from the
PBGC under Title IV of ERISA of an intent to terminate, impose liability (other
than for premiums under Section 4007 of ERISA) in respect of, or appoint a
trustee to administer, any Plan, a copy of such notice; (iv) applies for a
waiver of the minimum funding standard under Section 412 of the Code, a
copy of such application; (v) gives notice of intent to terminate any Plan
under Section 4041(c) of ERISA, a copy of such notice and other information
filed with the PBGC; (vi) gives notice of withdrawal from any Plan
pursuant to Section 4063 of ERISA, a copy of such notice; or (vii) fails
to make any payment or contribution to any Plan or Multiemployer Plan or in
respect of any Benefit Arrangement or makes any amendment to any Plan or
Benefit Arrangement which has resulted or could result in the imposition of a
Lien or the posting of a bond or other security, and in the case of clauses (i) through
(vii) above, which event could result in a Material Adverse Effect, a
certificate of the chief financial officer or the chief accounting officer of
the Borrower setting forth details as to such occurrence and action, if any,
which the Borrower or applicable member of the ERISA Group is required or proposes
to take;

 

(h)                                 promptly and
in any event within ten (10) days after the Borrower obtains actual
knowledge of any of the following events, a certificate of the Borrower,
executed by an officer of the Borrower, specifying the nature of such
condition, and the Borrower’s or, if the Borrower has actual knowledge thereof,
the Environmental Affiliate’s proposed initial response thereto:  (i) the receipt by the Borrower, or, if
the Borrower has actual knowledge thereof, any of the Environmental Affiliates
of any communication (written or oral), whether from a governmental authority,
citizens group, employee or otherwise, that alleges that the Borrower, or, if
the Borrower has actual knowledge thereof, any of the Environmental Affiliates,
is not in compliance with applicable Environmental Laws, and such noncompliance
is likely to have a Material Adverse Effect, (ii) the Borrower

 

54

 

shall
obtain actual knowledge that there exists any Environmental Claim pending against
the Borrower or any Environmental Affiliate and such Environmental Claim is
likely to have a Material Adverse Effect or (iii) the Borrower obtains
actual knowledge of any release, emission, discharge or disposal of any
Material of Environmental Concern that is likely to form the basis of any
Environmental Claim against the Borrower or any Environmental Affiliate which
in any such event is likely to have a Material Adverse Effect;

 

(i)                                     promptly and
in any event within five (5) Domestic Business Days after receipt of any
material notices or correspondence from any company or agent for any company
providing insurance coverage to the Borrower relating to any loss which is
likely to result in a Material Adverse Effect, copies of such notices and
correspondence; and

 

(j)                                     from time to
time such additional information regarding the financial position or business
of the Borrower, EQR and their Subsidiaries as the Administrative Agent, at the
request of any Bank, may reasonably request in writing.

 

SECTION 5.2                          Payment of
Obligations. 
Each of the Borrower, EQR and their Consolidated Subsidiaries will pay
and discharge, at or before maturity, all its respective material obligations
and liabilities including, without limitation, any obligation pursuant to any
agreement by which it or any of its properties is bound, in each case where the
failure to so pay or discharge such obligations or liabilities is likely to
result in a Material Adverse Effect, and will maintain in accordance with GAAP,
appropriate reserves for the accrual of any of the same.

 

SECTION 5.3                          Maintenance
of Property; Insurance; Leases.

 

(a)                                  The Borrower
and/or EQR will keep, and will cause each Consolidated Subsidiary to keep, all
property useful and necessary in its business, including without limitation the
Real Property Assets (for so long as it constitutes Real Property Assets), in
good repair, working order and condition, ordinary wear and tear excepted, in
each case where the failure to so maintain and repair will have a Material
Adverse Effect.

 

55

 

(b)                                 The Borrower
and/or EQR shall maintain, or cause to be maintained, insurance with such
insurers, on such properties, in such amounts and against such risks (excluding
terrorist insurance and mold insurance) as is consistent with insurance
maintained by businesses of comparable type and size in the industry, and
furnish the Administrative Agent satisfactory evidence thereof promptly upon
Administrative Agent’s reasonable request.

 

SECTION 5.4                          Conduct of Business
and Maintenance of Existence. 
The Borrower and EQR will continue to engage in business of the same
general type as now conducted by the Borrower and EQR, and each will preserve,
renew and keep in full force and effect, its partnership and trust existence
and its respective rights, privileges and franchises necessary for the normal
conduct of business unless the failure to maintain such rights and franchises
does not have a Material Adverse Effect.

 

SECTION 5.5                          Compliance
with Laws.  The Borrower and
EQR will and will cause their Subsidiaries to comply in all material respects
with all applicable laws, ordinances, rules, regulations, and requirements of
governmental authorities (including, without limitation, Environmental Laws,
and all zoning and building codes with respect to the Real Property Assets and
ERISA and the rules and regulations thereunder and all federal securities
laws) except where the necessity of compliance therewith is contested in good
faith by appropriate proceedings or where the failure to do so will not have a
Material Adverse Effect or expose Administrative Agent or the Banks to any
material liability therefor.

 

SECTION 5.6                          Inspection
of Property, Books and Records. 
Each of the Borrower and EQR will keep proper books of record and
account in which full, true and correct entries shall be made of all dealings
and transactions in relation to its business and activities in conformity with
GAAP, modified as required by this Agreement and applicable law; and will
permit representatives of any Bank at such Bank’s expense to visit and inspect
any of its properties, including without limitation the Real Property Assets,
to examine and make abstracts from any of its books and records and to discuss
its affairs, finances and accounts with its officers and independent public
accountants, all at such reasonable times during normal business hours, upon
reasonable prior notice and as often as may reasonably be desired.  Administrative Agent shall coordinate any
such

 

56

 

visit
or inspection to arrange for review by any Bank requesting any such visit or
inspection.

 

SECTION 5.7                          Intentionally
Omitted.

 

SECTION 5.8                          Financial
Covenants.

 

(a)                                  Indebtedness
to Gross Asset Value. 
Borrower shall not permit the ratio of Indebtedness of Borrower and EQR
(excluding Indebtedness of Consolidated Subsidiaries or Investment Affiliates),
and Borrower’s Share of Indebtedness of all Consolidated Subsidiaries and
Investment Affiliates to Gross Asset Value of Borrower and EQR to exceed 0.60:1
at any time.

 

(b)                                 Secured Debt
to Gross Asset Value. 
Borrower shall not permit the ratio of Secured Debt of Borrower and EQR
(excluding Indebtedness of Consolidated Subsidiaries or Investment Affiliates),
and Borrower’s Share of Secured Debt of all Consolidated Subsidiaries and
Investment Affiliates to Gross Asset Value of Borrower and EQR to exceed 0.40:1
at any time.

 

(c)                                  Consolidated
EBITDA to Fixed Charges Ratio. 
Borrower shall not permit the ratio of Consolidated EBITDA for the then
most recently completed twelve (12) month period to Fixed Charges for the then
most recently completed twelve (12) month period to be less than 1.50:1.

 

(d)                                 Unencumbered
Pool.  Borrower shall not
permit the ratio of the Unencumbered Asset Value to outstanding Unsecured Debt
to be less than 1.50:1 at any time.

 

(e)                                  Permitted
Holdings.  Borrower’s and EQR’s
primary business will be the ownership, operation and development of
multifamily residential property (including conversions to condominiums) and any
other business activities of Borrower, EQR and Subsidiaries of either or both
will remain incidental thereto. 
Notwithstanding the foregoing, Borrower, EQR and Subsidiaries of either
or both may acquire or maintain Permitted Holdings if and so long as the
aggregate value of Permitted Holdings, whether held directly or indirectly (but
without duplication) by Borrower, EQR and/or their Subsidiaries, does not
exceed, at any time, thirty percent (30%) of Gross Asset Value of Borrower and
EQR as a whole.

 

57

 

(f)                                    Calculation.  Each of the foregoing ratios and financial
requirements shall be calculated as of the last day of each Fiscal Quarter.

 

SECTION 5.9                          Restriction
on Fundamental Changes.

 

(a)                                  Neither the
Borrower nor EQR shall enter into any merger or consolidation, unless (i) either
(x) the Borrower or EQR is the surviving entity, or (y) the individuals
constituting EQR’s Board of Trustees immediately prior to such merger or
consolidation represent a majority of the surviving entity’s Board of Directors
or Board of Trustees after such merger or consolidation, and (ii) the
entity which is merged with Borrower or EQR is predominantly in the commercial
real estate business.

 

(b)                                 The Borrower
shall not amend its agreement of limited partnership or other organizational
documents in any manner that would have a Material Adverse Effect without the
Administrative Agent’s consent, which shall not be unreasonably withheld.  EQR shall not amend its declaration of trust,
by-laws, or other organizational documents in any manner that would have a
Material Adverse Effect without the Administrative Agent’s consent, which shall
not be unreasonably withheld.

 

(c)                                  The Borrower
shall deliver to Administrative Agent copies of all amendments to its agreement
of limited partnership or to EQR’s declaration of trust, by-laws, or other
organizational documents simultaneously with the first delivery of financial
statements referred to in Sections 5.1(a) or (b) above following the
effective date of any such amendment.

 

SECTION 5.10                    Changes in
Business.  Except for
Permitted Holdings, neither the Borrower nor EQR shall enter into any business
which is substantially different from that conducted by the Borrower or EQR on
the Closing Date after giving effect to the transactions contemplated by the
Loan Documents.  The Borrower shall carry
on its business operations through the Borrower and its Subsidiaries and
Investment Affiliates.

 

SECTION 5.11                    Margin Stock.  None of the proceeds of any Loan will be
used, directly or indirectly, for the purpose, whether immediate, incidental or
ultimate, of buying or carrying any Margin Stock in any manner that might

 

58

 

violate
the provisions of Regulations T, U or X of the Federal Reserve Board.

 

SECTION 5.12                    Intentionally
Omitted.

 

SECTION 5.13                    EQR Status.

 

(a)                                  Status. EQR shall
at all times (i) remain a publicly traded company listed on the New York
Stock Exchange or another national stock exchange located in the United States
and (ii) maintain its status as a self-directed and self-administered real
estate investment trust under the Code.

 

(b)                                 Indebtedness.  EQR shall not, and shall not permit any of
its Subsidiaries to, directly or indirectly, create, incur, assume or otherwise
become or remain directly or indirectly liable with respect to any
Indebtedness, except:

 

(1)                                  the
Obligations; and

 

(2)                                  Indebtedness
which, after giving effect thereto, may be incurred or may remain outstanding
without giving rise to an Event of Default or Default.

 

(c)                                  Disposal of
Partnership Interests. 
EQR will not directly or indirectly convey, sell, transfer, assign,
pledge or otherwise encumber or dispose of any of its partnership interests in
Borrower, except for the reduction of EQR’s interest in the Borrower arising
from Borrower’s issuance of partnership interests in the Borrower or the
retirement of preference units by Borrower.

 

ARTICLE VI

 

DEFAULTS

 

SECTION 6.1                          Events of
Default.  If one or more of
the following events (“Events of Default”) shall have occurred and be
continuing:

 

(a)                                  the Borrower
shall fail to pay when due any principal of any Loan, or the Borrower shall
fail to pay when due interest on any Loan or any fees or any other amount
payable hereunder and the same shall continue for a period of five (5) days
after the same becomes due;

 

59

 

(b)                                 the Borrower
shall fail to observe or perform any covenant contained in Section 5.8, Section 5.9,
Section 5.11 or Section 5.13;

 

(c)                                  the Borrower
shall fail to observe or perform any covenant or agreement contained in this
Agreement (other than those covered by clause (a), (b), (e), (f), (g), (h),
(j), (n) or (o) of this Section 6.1) for 30 days after written notice
thereof has been given to the Borrower by the Administrative Agent, or if such
default is of such a nature that it cannot with reasonable effort be completely
remedied within said period of thirty (30) days such additional period of time
as may be reasonably necessary to cure same, provided Borrower commences such
cure within said thirty (30) day period and diligently prosecutes same, until
completion, but in no event shall such extended period exceed ninety (90) days;

 

(d)                                 any
representation, warranty, certification or statement made or deemed made by the
Borrower in this Agreement or in any certificate, financial statement or other
document delivered pursuant to this Agreement shall prove to have been
incorrect in any material respect when made (or deemed made) and the defect
causing such representation or warranty to be incorrect when made (or deemed
made) is not removed within thirty (30) days after written notice thereof from
Administrative Agent to Borrower;

 

(e)                                  the
Borrower, EQR, any Subsidiary or any Investment Affiliate shall default in the
payment when due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) of any amount owing in respect of any
Recourse Debt (other than the Obligations) for which the aggregate outstanding
principal amount exceeds $50,000,000 and such default shall continue beyond the
giving of any required notice and the expiration of any applicable grace period
and such default has not been waived, in writing, by the holder of any such
Debt; or the Borrower, EQR, any Subsidiary or any Investment Affiliate shall
default in the performance or observance of any obligation or condition with
respect to any such Recourse Debt or any other event shall occur or condition
exist beyond the giving of any required notice and the expiration of any
applicable grace period, if the effect of such default, event or condition is
to accelerate the maturity of any such indebtedness or to permit (without any
further

 

60

 

requirement
of notice or lapse of time) the holder or holders thereof, or any trustee or
agent for such holders, to accelerate the maturity of any such indebtedness;

 

(f)                                    the Borrower
or EQR shall commence a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, or shall
consent to any such relief or to the appointment of or taking possession by any
such official in an involuntary case or other proceeding commenced against it,
or shall make a general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or admit in writing its
inability to pay its debts as such debts become due, or shall take any action
to authorize any of the foregoing;

 

(g)                                 an
involuntary case or other proceeding shall be commenced against the Borrower or
EQR seeking liquidation, reorganization or other relief with respect to it or
its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part
of its property, and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of 90 days; or an order for relief shall
be entered against the Borrower or EQR under the federal bankruptcy laws as now
or hereafter in effect;

 

(h)                                 one or more
final, non-appealable judgments or decrees (or one or more judgments which
is/are not stayed pending appeal) in an aggregate amount of Fifty Million
Dollars ($50,000,000) or more shall be entered by a court or courts of
competent jurisdiction against the Borrower, EQR or any of their respective
Consolidated Subsidiaries (other than any judgment as to which, and only to the
extent, a reputable insurance company has acknowledged coverage of such claim
in writing) and (i) any such judgments or decrees shall not be stayed,
discharged, paid, bonded or vacated within thirty (30) days or (ii) enforcement
proceedings shall be commenced by any creditor on any such judgments or
decrees;

 

61

 

(i)                                     there shall
be a change in the majority of the Board of Directors or Board of Trustees of
EQR during any twelve (12) month period, excluding any change in directors or
trustees resulting from (w) the retirement of any director or trustee as a
result of compliance with any written policy of EQR requiring retirement from
the Board upon reaching the age specified in such policy, (x) the death or
disability of any director or trustee, or (y) satisfaction of any requirement
for the majority of the members of the board of directors or trustees of EQR to
qualify under applicable law as independent directors or trustees or (z) the
replacement of any director or trustee who is an officer or employee of EQR or
an affiliate of EQR with any other officer or employee of EQR or an affiliate
of EQR;

 

(j)                                     any Person
(including affiliates of such Person) or “group” (as such term is defined in
applicable federal securities laws and regulations) shall acquire more than
thirty percent (30%) of the common shares of EQR;

 

(k)                                  intentionally
omitted;

 

(l)                                     any
Termination Event with respect to a Plan shall occur as a result of which
Termination Event or Events any member of the ERISA Group has incurred or may incur
any liability to the PBGC or any other Person and the sum (determined as of the
date of occurrence of such Termination Event) of the insufficiency of such Plan
and the insufficiency of any and all other Plans with respect to which such a
Termination Event shall have occurred and be continuing (or, in the case of a
Multiemployer Plan with respect to which a Termination Event described in
clause (ii) of the definition of Termination Event shall have occurred and
be continuing, the liability of the Borrower) is equal to or greater than
$20,000,000 and which the Administrative Agent reasonably determines will have
a Material Adverse Effect;

 

(m)                               any member
of the ERISA Group shall commit a failure described in Section 302(f)(1) of
ERISA or Section 412(n)(1) of the Code and the amount of the lien
determined under Section 302(f)(3) of ERISA or Section 412(n)(3) of
the Code that could reasonably be expected to be imposed on any member of the
ERISA Group or their assets in respect of such failure shall be equal to or
greater than $20,000,000 and which the Administrative Agent reasonably
determines will have a Material Adverse Effect;

 

62

 

(n)                                 at any time,
for any reason the Borrower or EQR seeks to repudiate its obligations under any
Loan Document; or

 

(o)                                 a default
beyond any applicable notice or grace period under any of the other Loan
Documents.

 

SECTION 6.2                          Rights and
Remedies.

 

(a)                                  Upon the
occurrence of any Event of Default described in Sections 6.1(f) or (g), the
Commitments shall immediately terminate and the unpaid principal amount of, and
any and all accrued interest on, the Loans and any and all accrued fees and
other Obligations hereunder shall automatically become immediately due and
payable, with all additional interest from time to time accrued thereon and
without presentation, demand, or protest or other requirements of any kind
(including, without limitation, valuation and appraisement, diligence,
presentment, notice of intent to demand or accelerate and notice of
acceleration), all of which are hereby expressly waived by the Borrower; and
upon the occurrence and during the continuance of any other Event of Default,
subject to the provisions of Section 6.2(b), the Administrative Agent may
(and upon the demand of the Required Banks shall), by written notice to the
Borrower, in addition to the exercise of all of the rights and remedies
permitted the Administrative Agent and the Banks at law or equity or under any
of the other Loan Documents, declare the Commitments terminated and the unpaid
principal amount of and any and all accrued and unpaid interest on the Loans
and any and all accrued fees and other Obligations hereunder to be, and the
same shall thereupon be, immediately due and payable with all additional
interest from time to time accrued thereon and (except as otherwise as provided
in the Loan Documents) without presentation, demand, or protest or other
requirements of any kind (including, without limitation, valuation and
appraisement, diligence, presentment, notice of intent to demand or accelerate
and notice of acceleration), all of which are hereby expressly waived by the
Borrower.

 

(b)                                 Notwithstanding
anything to the contrary contained in this Agreement or in any other Loan
Document, the Administrative Agent and the Banks each agree that any exercise
or enforcement of the rights and remedies granted to the Administrative Agent
or the Banks under this

 

63

 

Agreement
or at law or in equity with respect to this Agreement or any other Loan
Documents shall be commenced and maintained by the Administrative Agent on
behalf of the Administrative Agent and/or the Banks.  The Administrative
Agent shall act at the direction of the Required Banks in connection with the
exercise of any and all remedies at law, in equity or under any of the Loan
Documents or, if the Required Banks are unable to reach agreement within thirty
(30) days of commencement of discussions, then, from and after an Event of
Default and the the end of such thirty (30) day period, the Administrative
Agent may pursue such rights and remedies as it may determine if it shall
reasonably determine that the same shall be in the best interests of the Banks,
taken as a whole.

 

SECTION 6.3                          Notice of
Default.  The Administrative
Agent shall give notice to the Borrower under Section 6.1(c) promptly
upon being requested to do so by the Required Banks and shall thereupon notify
all the Banks thereof.  The
Administrative Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default (other than nonpayment of
principal of or interest on the Loans) unless Administrative Agent has received
notice in writing from a Bank or Borrower or any court or governmental agency referring
to this Agreement or the other Loan Documents, describing such event or
condition.  Should Administrative Agent
receive notice of the occurrence of a Default or Event of Default expressly
stating that such notice is a notice of a Default or Event of Default, or
should Administrative Agent send Borrower a notice of Default or Event of
Default, Administrative Agent shall promptly give notice thereof to each Bank.

 

SECTION 6.4                          Distribution
of Proceeds after Default. 
Notwithstanding anything contained herein to the contrary, from and
after an Event of Default, to the extent proceeds are received by
Administrative Agent, such proceeds will be distributed to the Banks pro rata
in accordance with the unpaid principal amount of the Loans.

 

64

 

ARTICLE VII

 

THE
AGENTS

 

SECTION 7.1                          Appointment
and Authorization. 
Each Bank irrevocably appoints and authorizes the Administrative Agent
to take such action as agent on its behalf and to exercise such powers under
this Agreement and the other Loan Documents as are delegated to the
Administrative Agent by the terms hereof or thereof, together with all such
powers and discretion as are reasonably incidental thereto. Except as set forth
in Sections 7.8 and 7.9 hereof, the provisions of this Article VII are
solely for the benefit of Administrative Agent and the Banks, and Borrower
shall not have any right to rely on or enforce any of the provisions of this Article VII.  In performing its functions and duties under
this Agreement, Administrative Agent shall act solely as an agent of the Banks
and does not assume and shall not be deemed to have assumed any obligation
toward or relationship of agency or trust with or for the Borrower.

 

SECTION 7.2                          Agency and
Affiliates. Bank of America, N.A. shall have the
same rights and powers under this Agreement as any other Bank and may exercise
or refrain from exercising the same as though it were not the Administrative
Agent, and Bank of America, N.A. and its affiliates may accept deposits from,
lend money to, and generally engage in any kind of business with the Borrower,
EQR or any Subsidiary or affiliate of the Borrower as if it were not the
Administrative Agent hereunder, and the term “Bank” and “Banks” shall include
Bank of America, N.A. in its individual capacity.

 

SECTION 7.3                          Action by
Administrative Agent. 
The obligations of the Administrative Agent hereunder are only those
expressly set forth herein.  Without
limiting the generality of the foregoing, the Administrative Agent shall not be
required to take any action with respect to any Default or Event of Default,
except as expressly provided in Article VI.  The duties of Administrative Agent shall be
administrative in nature.  Subject to the
provisions of Sections 7.1, 7.5 and 7.6, Administrative Agent shall administer
the Loans in the same manner as it administers its own loans.

 

SECTION 7.4                          Consultation
with Experts. 
As between Administrative Agent and the Banks, the Administrative Agent
may consult with legal counsel (who may be counsel for the Borrower),
independent public accountants and other experts selected by it and shall not
be liable for

 

65

 

any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts.

 

SECTION 7.5                          Liability of
the Agents. 
As between the Agents and the Banks, none of the Agents nor any of their
affiliates nor any of their directors, officers, agents or employees, shall be
liable for any action taken or not taken by any of them in connection herewith (i) with
the consent or at the request of the Required Banks or (ii) in the absence
of its own gross negligence or wilful misconduct.  As between the Agents and the Banks, none of
the Agents nor any of their directors, officers, agents or employees, shall be
responsible for or have any duty to ascertain, inquire into or verify (i) any
statement, warranty or representation made in connection with this Agreement or
any borrowing hereunder; (ii) the performance or observance of any of the
covenants or agreements of the Borrower, except with respect to payment of
principal and interest; (iii) the satisfaction of any condition specified
in Article III, except receipt of items required to be delivered to the
Administrative Agent; or (iv) the validity, effectiveness or genuineness
of this Agreement, the other Loan Documents or any other instrument or writing
furnished in connection herewith.  As
between the Agents and the Banks, the Agents shall not incur any liability by
acting in reliance upon any notice, consent, certificate, statement, or other
writing (which may be a bank wire, or similar writing) believed by them to be
genuine or to be signed by the proper party or parties.

 

SECTION 7.6                          Indemnification.  Each Bank shall, ratably in accordance with
its Commitment, indemnify the Agents and their affiliates and directors,
officers, agents and employees (to the extent not reimbursed by the Borrower),
against any cost, expense (including counsel fees and disbursements), claim,
demand, action, loss or liability (except such as result from such indemnitee’s
gross negligence or wilful misconduct) that such indemnitee may suffer or incur
in connection with its duties as Administrative Agent, documentation agent or
syndication agent under this Agreement, the other Loan Documents or any action
taken or omitted by such indemnitee hereunder as Administrative Agent,
documentation agent or syndication agent. 
In the event any Agents shall, subsequent to their receipt of
indemnification payment(s) from Banks in accordance with this Section, recoup
any amount from the Borrower, or any other party liable therefor in connection

 

66

 

with
such indemnification, the applicable Agent shall reimburse the Banks which
previously made the payment(s) pro rata, based upon the actual amounts
which were theretofore paid by each Bank. 
The applicable Agent shall reimburse such Banks so entitled to
reimbursement within two (2) Domestic Business Days after its receipt of
such funds from the Borrower or such other party liable therefor.

 

SECTION 7.7                          Credit
Decision.  Each Bank
acknowledges that it has, independently and without reliance upon the Agents or
any other Bank, and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement.  Each Bank also acknowledges
that it will, independently and without reliance upon the Agents or any other
Bank, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
any action under this Agreement.

 

SECTION 7.8                          Successor
Administrative Agent. 
The Administrative Agent may resign at any time by giving notice thereof
to the Banks and the Borrower, and the Administrative Agent shall resign in the
event the Commitment of the Bank serving as the Administrative Agent is reduced
to less than $10,000,000.  Upon any such
resignation, the Required Banks shall have the right to appoint a successor
Administrative Agent, which successor Administrative Agent shall, provided no
Event of Default has occurred and is then continuing, be subject to Borrower’s
approval, which approval shall not be unreasonably withheld or delayed.  If no successor Administrative Agent shall
have been so appointed by the Required Banks and (if required) approved by the
Borrower, or, if so appointed, shall not have accepted such appointment within
30 days after the retiring Administrative Agent gives notice of resignation,
then the retiring Administrative Agent may, on behalf of the Banks, appoint a
successor Administrative Agent, who shall act until the Required Banks shall
appoint a successor Administrative Agent. 
In any event, the retiring Administrative Agent shall continue to act as
Administrative Agent until such time as a successor Administrative Agent shall
have been so appointed by the Required Banks, approved by Borrower (if
required), and assumed its duties hereunder. Upon the acceptance of its
appointment as the Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall thereupon succeed to and
become vested with all the rights and duties of the

 

67

 

retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged
from its duties and obligations hereunder. After any retiring Administrative
Agent’s resignation hereunder, the provisions of this Article shall inure
to its benefit as to any actions taken or omitted to be taken by it while it
was the Administrative Agent.  For gross
negligence or willful misconduct, as determined by the Required Banks
(excluding for such determination the Bank serving as Administrative Agent in
its capacity as a Bank), the Administrative Agent may be removed at any time by
giving at least thirty (30) Domestic Business Days prior written notice to the
Administrative Agent and Borrower.  Such
resignation or removal shall take effect upon the acceptance of appointment by
a successor Administrative Agent, in accordance with the provisions of this Section 7.8.

 

SECTION 7.9                          Consents and
Approvals.  All communications
from Administrative Agent to the Banks requesting the Banks’ determination,
consent, approval or disapproval (i) shall be given in the form of a
written notice to each Bank, (ii) shall be accompanied by a description of
the matter or item as to which such determination, approval, consent or
disapproval is requested, or shall advise each Bank where such matter or item
may be inspected, or shall otherwise describe the matter or issue to be
resolved, (iii) shall include, if reasonably requested by a Bank and to
the extent not previously provided to such Bank, written materials and a
summary of all oral information provided to Administrative Agent by Borrower in
respect of the matter or issue to be resolved, (iv) shall include
Administrative Agent’s recommended course of action or determination in respect
thereof and (v) shall include, in boldface type, a statement that if any
Bank does not respond to such request within ten (10) Domestic Business
Days and provide a written explanation of the reasons behind any objection,
such Lender shall be deemed to have approved of or consented to, as applicable,
the recommendation or determination of the Administrative Agent described in
such request.  Each Bank shall reply
promptly, but in any event within ten (10) Domestic Business Days after
receipt of the request therefor from Administrative Agent (the “Bank Reply
Period”).  Unless a Bank shall give
written notice to Administrative Agent that it objects to the recommendation or
determination of Administrative Agent within the Bank Reply Period, such Bank
shall be deemed to have approved of or consented to such recommendation or
determination.  With respect to decisions

 

68

 

requiring
the approval of the Required Banks or all the Banks, Administrative Agent shall
submit its recommendation or determination for approval of or consent to such
recommendation or determination to all Banks and upon receiving the required
approval or consent shall follow the course of action or determination of the
Required Banks (and each non-responding Bank shall be deemed to have concurred
with such recommended course of action) or all the Banks, as the case may be.

 

ARTICLE VIII

 

CHANGE
IN CIRCUMSTANCES

 

SECTION 8.1                          Basis for
Determining Interest Rate Inadequate or Unfair.  If on or prior to the first day of any Interest
Period for any Euro-Dollar Borrowing:

 

(a)                                  the
Administrative Agent determines in good faith that deposits in dollars (in the
applicable amounts) are not being offered in the relevant market for such
Interest Period, or

 

(b)                                 Banks having
50% or more of the aggregate amount of the Commitments advise the
Administrative Agent that the Euro-Dollar Rate, as determined by the
Administrative Agent will not adequately and fairly reflect the cost to each
such Bank of funding its Euro-Dollar Loans for such Interest Period,

 

the Administrative Agent shall forthwith give notice thereof to the
Borrower and the Banks, whereupon until the Administrative Agent notifies the
Borrower that the circumstances giving rise to such suspension no longer exist,
the obligations of the Banks to make Euro-Dollar Loans shall be suspended.  Unless the Borrower notifies the
Administrative Agent at least two Domestic Business Days before the date of any
Euro-Dollar Borrowing for which a Notice of Borrowing has previously been given
that it elects not to borrow on such date, such Borrowing shall instead be made
as a Base Rate Borrowing.  For purposes
of Section 8.1(b), in determining whether the Euro-Dollar Rate, as
determined by Administrative Agent, will not adequately and fairly reflect the
cost to any Bank of funding its Euro-Dollar Loans for such Interest Period,
such determination will be based solely on the ability of such Bank to obtain

 

69

 

matching funds in the London interbank market at a reasonably
equivalent rate.

 

SECTION 8.2                          Illegality.  If, on or after the date of this Agreement,
the adoption of any applicable law, rule or regulation, or any change in
any applicable law, rule or regulation, or any change in the interpretation
or administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by any Bank (or its Euro-Dollar Lending Office) with any request or
directive (whether or not having the force of law) made after the Closing Date
of any such authority, central bank or comparable agency shall make it unlawful
for any Bank (or its Euro-Dollar Lending Office) to make, maintain or fund its
Euro-Dollar Loans, the Administrative Agent shall forthwith give notice thereof
to the other Banks and the Borrower, whereupon until such Bank notifies the
Borrower and the Administrative Agent that the circumstances giving rise to
such suspension no longer exist, the obligation of such Bank to make
Euro-Dollar Loans, shall be suspended. 
With respect to Euro-Dollar Loans, before giving any notice to the
Administrative Agent pursuant to this Section, such Bank shall designate a
different Euro-Dollar Lending Office if such designation will avoid the need
for giving such notice and will not, in the judgment of such Bank, be otherwise
disadvantageous to such Bank.  If such
Bank shall determine that it may not lawfully continue to maintain and fund any
of its outstanding Euro-Dollar Loans to maturity and shall so specify in such
notice, the Borrower shall be deemed to have delivered a Notice of Interest
Rate Election and such Euro-Dollar Loan shall be converted as of such date to a
Base Rate Loan (without payment of any amounts that Borrower would otherwise be
obligated to pay pursuant to Section 2.13 hereof with respect to Loans
converted pursuant to this Section 8.2) in an equal principal amount from
such Bank (on which interest and principal shall be payable contemporaneously
with the related Euro-Dollar Loans of the other Banks), and such Bank shall
make such a Base Rate Loan.

 

If, at any time, it shall be unlawful for any
Bank to make, maintain or fund its Euro-Dollar Loans, the Borrower shall have
the right, upon five (5) Domestic Business Day’s notice to the
Administrative Agent, to either (x) cause a bank, reasonably acceptable to the
Administrative Agent, to offer to purchase the Commitments of such Bank for an
amount equal to such Bank’s outstanding

 

70

 

Loans and all amounts due such Bank hereunder (including, without
limitation, interest, Facility Fees, Unused Fees, Upfront Fees and all amounts
payable pursuant to Section 2.13), and to become a Bank hereunder, or
obtain the agreement of one or more existing Banks to offer to purchase the
Commitments of such Bank for such amount, which offer such Bank is hereby
required to accept, or (y) to repay in full all Loans then outstanding of such
Bank, together with interest thereon, Facility Fees and all other amounts due
such Bank hereunder (including, without limitation, amounts payable pursuant to
Section 2.13), upon which event, such Bank’s Commitments shall be deemed
to be cancelled pursuant to Section 2.11(e).  Any Bank subject to this paragraph shall
retain the benefits of Sections 8.3, 8.4 and 9.3 for the period prior to such
purchase or cancellation.

 

SECTION 8.3                          Increased
Cost and Reduced Return.

 

(a)                                  If, on or
after the date hereof in the case of Loans made pursuant to Section 2.1,
the adoption of any applicable law, rule or regulation, or any change in
any applicable law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Bank (or its Applicable Lending Office) with any
request or directive (whether or not having the force of law) made after the
Closing Date of any such authority, central bank or comparable agency, shall impose,
modify or deem applicable any reserve (including, without limitation, any such
requirement imposed by the Federal Reserve Board (but excluding with respect to
any Euro-Dollar Loan any such requirement to the extent reflected in an
applicable Euro-Dollar Reserve Percentage)), special deposit, insurance
assessment or similar requirement against assets of, deposits with or for the
account of, or credit extended by, any Bank (or its Applicable Lending Office)
or shall impose on any Bank (or its Applicable Lending Office) or on the London
interbank market any other condition materially more burdensome in nature,
extent or consequence than those in existence as of the Closing Date affecting
such Bank’s Euro-Dollar Loans, its Note, or its obligation to make Euro-Dollar
Loans, and the result of any of the foregoing is to increase the cost to such
Bank (or its Applicable Lending Office) of making or maintaining any
Euro-Dollar Loan, or to reduce the amount of any sum received or receivable by
such Bank (or its Applicable Lending Office) under this Agreement or under its
Note with respect to such Euro-Dollar Loans, by

 

71

 

 

an
amount deemed by such Bank to be material, then, within 15 days after demand by
such Bank (with a copy to the Administrative Agent), the Borrower shall pay to
such Bank such additional amount or amounts (based upon a reasonable allocation
thereof by such Bank to the Euro-Dollar Loans made by such Bank hereunder) as
will compensate such Bank for such increased cost or reduction to the extent
such Bank generally imposes such additional amounts on other borrowers of such
Bank in similar circumstances.

 

(b)           If any Bank shall have reasonably
determined that, after the date hereof, the adoption of any applicable law, rule or
regulation regarding capital adequacy, or any change in any law, rule or
regulation regarding capital adequacy, or any change in the interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by any Bank any request or directive regarding capital adequacy
(whether or not having the force of law) made after the Closing Date of any
such authority, central bank or comparable agency, has or would have the effect
of reducing the rate of return on capital of such Bank (or its Parent) as a
consequence of such Bank’s obligations hereunder to a level below that which
such Bank (or its Parent) could have achieved but for such adoption, change,
request or directive (taking into consideration its policies with respect to
capital adequacy) by an amount reasonably deemed by such Bank to be material,
then from time to time, within 15 days after demand by such Bank (with a copy
to the Administrative Agent), the Borrower shall pay to such Bank such
additional amount or amounts as will compensate such Bank (or its Parent) for
such reduction to the extent such Bank generally imposes such additional
amounts on other borrowers of such Bank in similar circumstances.

 

(c)           Each Bank will promptly notify the
Borrower and the Administrative Agent of any event of which it has knowledge,
occurring after the date hereof, which will entitle such Bank to compensation
pursuant to this Section and will designate a different Applicable Lending
Office if such designation will avoid the need for, or reduce the amount of,
such compensation and will not, in the reasonable judgment of such Bank, be
otherwise disadvantageous to such Bank. 
If such Bank shall fail to notify Borrower of any such event within 90
days following the end of the month during which such event occurred, then
Borrower’s liability for any amounts described in this Section incurred by
such

 

72

 

Bank
as a result of such event shall be limited to those attributable to the period
occurring subsequent to the ninetieth (90th) day prior to the date upon which
such Bank actually notified Borrower of the occurrence of such event.  A certificate of any Bank claiming
compensation under this Section and setting forth a reasonably detailed
calculation of the additional amount or amounts to be paid to it hereunder
shall be conclusive in the absence of demonstrable error.  In determining such amount, such Bank may use
any reasonable averaging and attribution methods.

 

(d)           If at any time, any Bank shall be owed
amounts pursuant to this Section 8.3, the Borrower shall have the right,
upon five (5) Domestic Business Day’s notice to the Administrative Agent
to either (x) cause a bank, reasonably acceptable to the Administrative Agent,
to offer to purchase the Commitments of such Bank for an amount equal to such
Bank’s outstanding Loans and all amounts due such Bank hereunder (including,
without limitation, interest, Facility Fees, Unused Fees, Upfront Fees and all
amounts payable pursuant to Section 2.13 and this Section 8.3), and
to become a Bank hereunder, or to obtain the agreement of one or more existing
Banks to offer to purchase the Commitments of such Bank for such amount, which
offer such Bank is hereby required to accept, or (y) to repay in full all Loans
then outstanding of such Bank, together with interest thereon, Facility Fees,
Unused Fees, Upfront Fees and all other amounts due such Bank hereunder
(including, without limitation, amounts payable pursuant to Section 2.13
and this Section 8.3), upon which event, such Bank’s Commitment shall be
deemed to be cancelled pursuant to Section 2.11(e).  Any Bank subject to this Section 8.3(d) shall
retain the benefits of Sections 8.3, 8.4 and 9.3 for the period prior to such
purchase or cancellation.

 

SECTION 8.4         Taxes.

 

(a)           Any and all payments by the Borrower to
or for the account of any Bank or the Administrative Agent hereunder or under
any other Loan Document shall be made free and clear of and without deduction
for any and all present or future taxes, duties, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto, excluding,
in the case of each Bank and the Administrative Agent, taxes imposed on its
income, and franchise taxes imposed on it, by the jurisdiction under the laws
of which such Bank or the Administrative Agent (as the case may be) is
organized or any political subdivision

 

73

 

thereof
and, in the case of each Bank, taxes imposed on its income, and franchise or
similar taxes imposed on it, by the jurisdiction of such Bank’s Applicable
Lending Office or any political subdivision thereof or by any other
jurisdiction (or any political subdivision thereof) as a result of a present or
former connection between such Bank or Administrative Agent and such other
jurisdiction or by the United States (all such non-excluded taxes, duties,
levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as “Non-Excluded Taxes”).  If the Borrower shall be required by law to
deduct any Non-Excluded Taxes from or in respect of any sum payable hereunder
or under any Note, (i) the sum payable shall be increased as necessary so
that after making all required deductions (including deductions applicable to
additional sums payable under this Section 8.4) such Bank or the
Administrative Agent (as the case may be) receives an amount equal to the sum
it would have received had no such deductions been made, (ii) the Borrower
shall make such deductions, (iii) the Borrower shall pay the full amount
deducted to the relevant taxation authority or other authority in accordance
with applicable law and (iv) the Borrower shall furnish to the
Administrative Agent, at its address referred to in Section 9.1, the
original or a certified copy of a receipt evidencing payment thereof.

 

(b)           In addition, the Borrower agrees to pay
any present or future stamp or documentary taxes and any other excise or
property taxes, or charges or similar levies which arise from any payment made
hereunder or under any Note or from the execution or delivery of, or otherwise
with respect to, this Agreement or any Note (hereinafter referred to as “Other
Taxes”).

 

(c)           The Borrower agrees to indemnify each
Bank and the Administrative Agent for the full amount of Non-Excluded Taxes or
Other Taxes (including, without limitation, any Non-Excluded Taxes or Other
Taxes imposed or asserted by any jurisdiction on amounts payable under this Section 8.4)
paid by such Bank or the Administrative Agent (as the case may be) and, so long
as such Bank or Administrative Agent has promptly paid any such Non-Excluded
Taxes or Other Taxes, any liability for penalties and interest arising
therefrom or with respect thereto.  This
indemnification shall be made within 15 days from the date such Bank or the
Administrative Agent (as the case may be) makes demand therefor.

 

74

 

(d)           Each Bank organized under the laws of a
jurisdiction outside the United States, on or prior to the date of its
execution and delivery of this Agreement in the case of each Bank listed on the
signature pages hereof and on or prior to the date on which it becomes a
Bank in the case of each other Bank, shall provide the Borrower with an
Internal Revenue Service Form W-8BEN or W-8ECI, as appropriate, or any
successor form prescribed by the Internal Revenue Service, and shall provide
Borrower with two further copies of any such form or certification on or before
the date that any such form or certification expires or becomes obsolete and
after the occurrence of any event requiring a change in the most recent form
previously delivered by it to Borrower, certifying (i) in the case of a Form 1001,
that such Bank is entitled to benefits under an income tax treaty to which the
United States is a party which reduces the rate of withholding tax on payments
of interest or certifying that the income receivable pursuant to this Agreement
is effectively connected with the conduct of a trade or business in the United
States, and (ii) in the case of being under Sections 1442(c)(1) and
1442(a) of the Code, that it is entitled to an exemption from United
States backup withholding tax.  If the
form provided by a Bank at the time such Bank first becomes a party to this
Agreement indicates a United States interest withholding tax rate in excess of
zero, withholding tax at such rate shall be considered excluded from “Non-Excluded
Taxes” as defined in Section 8.4(a).

 

(e)           For any period with respect to which a
Bank has failed to provide the Borrower with the appropriate form pursuant to Section 8.4(d) (unless
such failure is due to a change in treaty, law or regulation occurring
subsequent to the date on which a form originally was required to be provided),
such Bank shall not be entitled to indemnification under Section 8.4(c) with
respect to Non-Excluded Taxes imposed by the United States; provided, however,
that should a Bank, which is otherwise exempt from or subject to a reduced rate
of withholding tax, become subject to Non-Excluded Taxes because of its failure
to deliver a form required hereunder, the Borrower shall take such steps as
such Bank shall reasonably request to assist such Bank to recover such Taxes so
long as Borrower shall incur no cost or liability as a result thereof.

 

(f)            If the Borrower is required to pay
additional amounts to or for the account of any Bank pursuant to this Section 8.4,
then such Bank will change the jurisdiction of

 

75

 

its Applicable Lending Office so as to
eliminate or reduce any such additional payment which may thereafter accrue if
such change, in the judgment of such Bank, is not otherwise disadvantageous to
such Bank.

 

(g)           If, at any time, any Bank shall be owed
amounts pursuant to this Section 8.4, the Borrower shall have the right,
upon five (5) Domestic Business Day’s notice to the Administrative Agent
to either (x) cause a bank, reasonably acceptable to the Administrative Agent,
to offer to purchase the Commitments of such Bank for an amount equal to such
Bank’s outstanding Loans and all amounts due such Bank hereunder (including,
without limitation, interest, Facility Fees, Unused Fees, Upfront Fees, and all
amounts payable pursuant to Section 2.13 and this Section 8.4), and
to become a Bank hereunder, or to obtain the agreement of one or more existing
Banks to offer to purchase the Commitments of such Bank for such amount, which
offer such Bank is hereby required to accept, or (y) to repay in full all Loans
then outstanding of such Bank, together with interest thereon, Facility Fees,
Unused Fees, Upfront Fees, and all other amounts due such Bank hereunder
(including, without limitation, amounts payable pursuant to Section 2.13
and this Section 8.4), upon which event, such Bank’s Commitment shall be
deemed to be cancelled pursuant to Section 2.11(c).  Any Bank subject to this Section 8.4(d) shall
retain the benefits of Sections 8.3, 8.4 and 9.3 for the period prior to such
purchase or cancellation.

 

SECTION 8.5         Base Rate Loans Substituted for Affected
Euro-Dollar Loans. 
If (i) the obligation of any Bank to make Euro-Dollar Loans has
been suspended pursuant to Section 8.2 or (ii) any Bank has demanded
compensation under Section 8.3 or 8.4 with respect to its Euro-Dollar
Loans and the Borrower shall, by at least five Euro-Dollar Business Days’ prior
notice to such Bank through the Administrative Agent, have elected that the
provisions of this Section shall apply to such Bank, then, unless and
until such Bank notifies the Borrower that the circumstances giving rise to
such suspension or demand for compensation no longer exist:

 

(a)           Borrower shall be deemed to have
delivered a Notice of Interest Rate Election with respect to such affected
Euro-Dollar Loans and thereafter all Loans which would otherwise be made by
such Bank as Euro-Dollar Loans shall be made instead as Base Rate Loans (on
which interest

 

76

 

and principal shall be payable
contemporaneously with the related Euro-Dollar Loans of the other Banks), and

 

(b)           after each of its Euro-Dollar Loans has
been repaid, all payments of principal which would otherwise be applied to
repay such Euro-Dollar Loans shall be applied to repay its Base Rate Loans
instead, and

 

(c)           Borrower will not be required to make any
payment which would otherwise be required by Section 2.13 with respect to
such Euro-Dollar Loans converted to Base Rate Loans pursuant to clause (a) above.

 

ARTICLE IX

 

MISCELLANEOUS

 

SECTION 9.1         Notices.  All notices, requests and other
communications to any party hereunder shall be in writing (including bank wire,
facsimile transmission followed by telephonic confirmation or similar writing)
and shall be given to such party:  (x) in
the case of the Borrower or the Administrative Agent, at its address, or
facsimile number set forth on the signature pages hereof with a duplicate
copy thereof, in the case of the Borrower, to the Borrower, at Equity
Residential, Two North Riverside Plaza, Suite 400, Chicago, Illinois
60606, Attn: General Counsel, and to DLA Piper Rudnick Gray Cary US LLP, 203
North LaSalle Street, Suite 1900, Chicago, Illinois 60601, Attn: James M.
Phipps, Esq., (y) in the case of any Bank, at its address, or facsimile
number set forth in its Administrative Questionnaire or (z) in the case of any
party, such other address, or facsimile number as such party may hereafter
specify for the purpose by notice to the Administrative Agent and the Borrower
and, if such party is the Borrower or the Administrative Agent, the Banks.  Each such notice, request or other
communication shall be effective (i) if given by facsimile transmission,
when such facsimile is transmitted to the facsimile number specified in this Section and
the appropriate answerback or facsimile confirmation is received, (ii) if
given by certified registered mail, return receipt requested, with first class
postage prepaid, addressed as aforesaid, upon receipt or refusal to accept
delivery, (iii) if given by a nationally recognized overnight carrier, 24
hours after such communication is deposited with such carrier with postage

 

77

 

prepaid for next day delivery, or (iv) if
given by any other means, when delivered at the address specified in this
Section; provided that notices to the Administrative Agent under Article II
or Article VIII shall not be effective until received. The Administrative
Agent shall promptly notify the Banks of any change in the address of the
Borrower or the Administrative Agent.

 

SECTION 9.2         No Waivers.  No failure or delay by the Administrative
Agent or any Bank in exercising any right, power or privilege hereunder or
under any Note shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.  The rights and remedies herein provided shall
be cumulative and not exclusive of any rights or remedies provided by law.

 

SECTION 9.3         Expenses; Indemnification.

 

(a)           The Borrower shall pay within thirty (30)
days after written notice from the Administrative Agent, (i) all
reasonable out-of-pocket costs and expenses of the Administrative Agent
(including reasonable fees and disbursements of special counsel Skadden, Arps,
Slate, Meagher & Flom LLP), in connection with the preparation of this
Agreement, the Loan Documents and the documents and instruments referred to
therein, and any waiver or consent hereunder or any amendment hereof or any
Default or Event of Default or alleged Default or Event of Default, (ii) all
reasonable fees and disbursements of special counsel Skadden, Arps, Slate,
Meagher & Flom LLP in connection with the syndication of the Loans and
(iii) if an Event of Default occurs, all reasonable out-of-pocket expenses
incurred by the Administrative Agent and each Bank (the Administrative Agent
shall promptly submit any expenses of any of the Banks to Borrower for
reimbursement), including fees and disbursements of counsel for the
Administrative Agent and each of the Banks, in connection with the enforcement
of the Loan Documents and the instruments referred to therein and such Event of
Default and collection, bankruptcy, insolvency and other enforcement
proceedings resulting therefrom; provided, however, that the
attorneys’ fees and disbursements for which Borrower is obligated under this
subsection (a)(iii) shall be limited to the reasonable
non-duplicative fees and disbursements of (A) counsel for Administrative
Agent, and (B) counsel for all of the Banks as a group; and provided,
further, that all other

 

78

 

costs and expenses for which Borrower is
obligated under this subsection (a)(iii) shall be limited to the
reasonable non-duplicative costs and expenses of Administrative Agent.  For purposes of this Section 9.3(a)(iii), (1) counsel for Administrative Agent shall mean
a single outside law firm representing Administrative Agent, and (2) counsel
for all of the Banks as a group shall mean a single outside law firm
representing such Banks as a group (which law firm may or may not be the same
law firm representing Administrative Agent).

 

(b)           The Borrower agrees to indemnify the
Administrative Agent and each Bank, their respective affiliates and the
respective directors, officers, agents and employees of the foregoing (each an “Indemnitee”)
and hold each Indemnitee harmless from and against any and all liabilities,
losses, damages, costs and expenses of any kind, including, without limitation,
the reasonable fees and disbursements of counsel, which may be incurred by such
Indemnitee in connection with any investigative, administrative or judicial
proceeding that may at any time (including, without limitation, at any time
following the payment of the Obligations) be asserted against any Indemnitee,
as a result of, or arising out of, or in any way related to or by reason of, (i) any
of the transactions contemplated by the Loan Documents or the execution,
delivery or performance of any Loan Document, (ii) any violation by the
Borrower, EQR or the Environmental Affiliates of any applicable Environmental
Law, (iii) any Environmental Claim arising out of the management, use,
control, ownership or operation of property or assets by the Borrower, EQR or
any of the Environmental Affiliates, including, without limitation, all on-site
and off-site activities of Borrower or any Environmental Affiliate involving
Materials of Environmental Concern, (iv) the breach of any environmental
representation or warranty set forth herein, but excluding those liabilities,
losses, damages, costs and expenses (a) for which such Indemnitee has been
compensated pursuant to the terms of this Agreement, (b) incurred solely
by reason of the gross negligence, wilful misconduct, bad faith or fraud of any
Indemnitee as finally determined by a court of competent jurisdiction, (c) violations
of Environmental Laws relating to a Property which are caused by the act or
omission of such Indemnitee after such Indemnitee takes possession of such
Property or (d) any liability of such Indemnitee to any third party based
upon contractual obligations of such Indemnitee owing to such third party which
are not expressly

 

79

 

set forth in the Loan Documents.  In addition, the indemnification set forth in
this Section 9.3(b) in favor of any director, officer, agent or
employee of Administrative Agent or any Bank shall be solely in his or her
respective capacity as such director, officer, agent or employee.  The Borrower’s obligations under this Section shall
survive the termination of this Agreement and the payment of the Obligations.

 

SECTION 9.4         Sharing of
Set-Offs. 
In addition to any rights now or hereafter granted under applicable law
or otherwise, and not by way of limitation of any such rights, upon the
occurrence and during the continuance of any Event of Default, each Bank is
hereby authorized at any time or from time to time, without presentment,
demand, protest or other notice of any kind to the Borrower or to any other
Person, any such notice being hereby expressly waived, but subject to the prior
consent of the Administrative Agent, to set off and to appropriate and apply
any and all deposits (general or special, time or demand, provisional or final)
and any other indebtedness at any time held or owing by such Bank (including,
without limitation, by branches and agencies of such Bank wherever located) to
or for the credit or the account of the Borrower against and on account of the
Obligations of the Borrower then due and payable to such Bank under this
Agreement or under any of the other Loan Documents, including, without
limitation, all interests in Obligations purchased by such Bank.  Each Bank agrees that if it shall by
exercising any right of set-off or counterclaim or otherwise (except pursuant
to Sections 8.2, 8.3, 8.4 or 9.6), receive payment of a proportion of the
aggregate amount of principal and interest due with respect to any Note held by
it, which is greater than the proportion received by any other Bank, the Bank
receiving such proportionately greater payment shall purchase such
participations in the Notes held by the other Banks, and such other adjustments
shall be made, as may be required so that all such payments of principal and
interest with respect to the Notes held by the Banks shall be shared by the
Banks pro rata; provided that nothing in this Section shall impair
the right of any Bank to exercise any right of set-off or counterclaim it may
have to any deposits not received in connection with the Loans and to apply the
amount subject to such exercise to the payment of indebtedness of the Borrower
other than its indebtedness under the Notes. 
The Borrower agrees, to the fullest extent it may effectively do so
under applicable law, that any holder of a participation in a Note, whether or
not acquired

 

80

 

pursuant to the foregoing arrangements, may
exercise rights of set-off or counterclaim and other rights with respect to
such participation as fully as if such holder of a participation were a direct
creditor of the Borrower in the amount of such participation. Notwithstanding
anything to the contrary contained herein, any Bank may, by separate agreement
with the Borrower, waive its right to set off contained herein or granted by
law and any such written waiver shall be effective against such Bank under this
Section 9.4.

 

SECTION 9.5         Amendments and Waivers.  Any provision of this Agreement or the Notes
or other Loan Documents may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed by the Borrower and the Required
Banks (and, if the rights or duties of the Administrative Agent in its capacity
as Administrative Agent are affected thereby, by the Administrative Agent); provided
that no such amendment or waiver with respect to this Agreement, the Notes or
any other Loan Documents shall, unless signed by all the Banks, (i) increase
or decrease the Commitment of any Bank (except for a ratable decrease in the
Commitments of all Banks) or subject any Bank to any additional obligation, (ii) reduce
the principal of or rate of interest on any Loan or any fees hereunder, (iii) postpone
the date fixed for any payment of principal of or interest on any Loan or any
fees hereunder or for any reduction or termination of any Commitment, (iv) change
the percentage of the Commitments or of the aggregate unpaid principal amount
of the Notes, or the number of Banks, which shall be required for the Banks or
any of them to take any action under this Section or any other provision
of this Agreement, (v) release the Guaranty or any Down REIT Guaranty, (vi) modify
the definition of “Required Banks”, or (vii) modify the provisions of this
Section 9.5.

 

SECTION 9.6         Successors and Assigns.

 

(a)           The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that the Borrower may not assign or
otherwise transfer any of its rights under this Agreement or the other Loan
Documents without the prior written consent of all Banks and the Administrative
Agent and any Bank may not assign or otherwise transfer any of its interest
under this Agreement except as permitted in subsection (b) and (c) of
this Section 9.6.

 

81

 

(b)           Any Bank may at any time grant (i) prior
to the occurrence of an Event of Default, to an existing Bank or one or more
banks, finance companies, insurance companies or other financial institutions
in minimum amounts of not less than $5,000,000 (or any lesser amount in the
case of participations to an existing Bank) (it being understood that no Bank
may hold Commitments of which less than $10,000,000 in the aggregate is for its
own account, unless its Commitments shall have been reduced to zero) and (ii) after
the occurrence and during the continuance of an Event of Default, to any Person
in any amount (in each case, a “Participant”), participating interests
in its Commitment or any or all of its Loans, with (and subject to) the consent
of, provided that no Event of Default shall have occurred and be continuing,
the Borrower, which consent shall not be unreasonably withheld or delayed.  The Administrative Agent shall be notified by
any such Bank of any such participation prior to the same becoming effective.
Any participation made during the continuation of an Event of Default shall not
be affected by the subsequent cure of such Event of Default.  In the event of any such grant by a Bank of a
participating interest to a Participant, whether or not upon notice to the Borrower
and the Administrative Agent, such Bank shall remain responsible for the
performance of its obligations hereunder, and the Borrower and the
Administrative Agent shall continue to deal solely and directly with such Bank
in connection with such Bank’s rights and obligations under this Agreement.  Any agreement pursuant to which any Bank may
grant such a participating interest shall provide that such Bank shall retain
the sole right and responsibility to enforce the obligations of the Borrower
hereunder including, without limitation, the right to approve any amendment,
modification or waiver of any provision of this Agreement; provided that
such participation agreement may provide that such Bank will not agree to any
modification, amendment or waiver of this Agreement described in clause (i),
(ii), (iii), (iv) or (v) of Section 9.5 without the consent of
the Participant.  The Borrower agrees
that each Participant shall, to the extent provided in its participation
agreement, be entitled to the benefits of Article VIII with respect to its
participating interest. An assignment or other transfer which is not permitted
by subsection (c) or (d) below shall be given effect for
purposes of this Agreement only to the extent of, and subject to the
restrictions with respect to, a participating interest granted in accordance
with this subsection (b).

 

82

 

(c)           Any Bank may at any time assign to (i) prior
to the occurrence of an Event of Default, (A) an existing Bank, (B) one
or more banks, finance companies, insurance or other financial institutions
which (1) has (or, in the case of a bank which is a subsidiary, such bank’s
parent has) a rating of its senior debt obligations of not less than Baa-1 by
Moody’s or a comparable rating by a rating agency acceptable to Administrative
Agent and (2) has total assets in excess of Ten Billion Dollars
($10,000,000,000), or (C) with the prior consent and approval of the
Administrative Agent and Borrower, a wholly-owned affiliate of such transferor
Bank if such transferor Bank then meets the requirements of clause (i)(B) or,
if such transferor Bank’s parent then meets the requirements of clause (i)(B),
a wholly-owned affiliate of such parent, in each case in minimum amounts of not
less than Ten Million Dollars ($10,000,000) and integral multiples of One
Million Dollars ($1,000,000) thereafter (or any lesser amount in the case of
assignments to an existing Bank) (it being understood that no Bank may hold
Commitments of less than $10,000,000 in the aggregate, unless its Commitments
shall have been reduced to zero) and (ii) after the occurrence and during
the continuance of an Event of Default, to any Person in any amount (in each
case, an “Assignee”), all or a proportionate part of all, of its rights
and obligations under this Agreement, the Notes and the other Loan Documents,
and, in either case, such Assignee shall assume such rights and obligations,
pursuant to a Transfer Supplement in substantially the form of Exhibit ”C”
hereto executed by such Assignee and such transferor Bank, with (and subject
to) the consent of the Administrative Agent and, provided that no Event of
Default shall have occurred and be continuing, the Borrower, which consent
shall not be unreasonably withheld or delayed; provided that if an
Assignee is an affiliate of such transferor Bank which meets the requirements
of clause (i)(B) above or was a Bank immediately prior to such assignment,
no such consent shall be required.  Upon
execution and delivery of such instrument and payment by such Assignee to such
transferor Bank of an amount equal to the purchase price agreed between such
transferor Bank and such Assignee, such Assignee shall be a Bank party to this
Agreement and shall have all the rights and obligations of a Bank with a
Commitment as set forth in such instrument of assumption, and no further
consent or action by any party shall be required and the transferor Bank shall
be released from its obligations hereunder to a corresponding extent.  Upon the consummation of any assignment
pursuant to this subsection (c), the transferor

 

83

 

Bank,
the Administrative Agent and the Borrower shall make appropriate arrangements
so that, if required, a new Note is issued to the Assignee.  In connection with any such assignment, the
transferor Bank shall pay to the Administrative Agent an administrative fee for
processing such assignment in the amount of $2,500 provided that such fee shall
be paid by the Assignee if such assignment is required by Section 8.2, 8.3
or 8.4.  If the Assignee is not
incorporated under the laws of the United States of America or a state thereof,
it shall deliver to the Borrower and the Administrative Agent certification as
to exemption from deduction or withholding of any United States federal income
taxes in accordance with Section 8.4. 
Any assignment made during the continuation of an Event of Default shall
not be affected by any subsequent cure of such Event of Default.

 

(d)           Any Bank may at any time assign all or
any portion of its rights under this Agreement and its Note to a Federal
Reserve Bank.  No such assignment shall
release the transferor Bank from its obligations hereunder.

 

(e)           No Assignee, Participant or other
transferee of any Bank’s rights shall be entitled to receive any greater payment
under Section 8.3 or 8.4 than such Bank would have been entitled to
receive with respect to the rights transferred, unless such transfer is made
with the Borrower’s prior written consent or by reason of the provisions of Section 8.2,
8.3 or 8.4 requiring such Bank to designate a different Applicable Lending
Office under certain circumstances or at a time when the circumstances giving
rise to such greater payment did not exist.

 

SECTION 9.7         Collateral.  Each of the Banks represents to the
Administrative Agent and each of the other Banks that it in good faith is not
relying upon any “margin stock” (as defined in Regulation U) as collateral in
the extension or maintenance of the credit provided for in this Agreement.

 

SECTION 9.8         Governing
Law; Submission to Jurisdiction.

 

(a)           THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND
THEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF
THE STATE OF ILLINOIS (WITHOUT GIVING EFFECT TO THE PRINCIPLES THEREOF RELATING
TO CONFLICTS OF LAW).

 

84

 

(b)           Any legal action or proceeding with
respect to this Agreement or any other Loan Document and any action for
enforcement of any judgment in respect thereof may be brought in the courts of
the State of Illinois or of the United States of America for the Northern
District of Illinois, and, by execution and delivery of this Agreement, the
Borrower hereby accepts for itself and in respect of its property, generally
and unconditionally, the non-exclusive jurisdiction of the aforesaid courts and
appellate courts from any thereof.  The
Borrower irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the hand delivery, or
mailing of copies thereof by registered or certified mail, postage prepaid, to
the Borrower at its address set forth below. 
The Borrower hereby irrevocably waives any objection which it may now or
hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Agreement or any other
Loan Document brought in the courts referred to above and hereby further
irrevocably waives and agrees not to plead or claim in any such court that any
such action or proceeding brought in any such court has been brought in an
inconvenient forum.  Nothing herein shall
affect the right of the Administrative Agent to serve process in any other manner
permitted by law or to commence legal proceedings or otherwise proceed against
the Borrower in any other jurisdiction.

 

SECTION 9.9         Counterparts; Integration; Effectiveness.  This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.  This Agreement constitutes the entire
agreement and understanding among the parties hereto and supersedes any and all
prior agreements and understandings, oral or written, relating to the subject
matter hereof.  This Agreement shall
become effective upon receipt by the Administrative Agent and the Borrower of
counterparts hereof signed by each of the parties hereto (or, in the case of
any party as to which an executed counterpart shall not have been received,
receipt by the Administrative Agent in form satisfactory to it of telegraphic
or other written confirmation from such party of execution of a counterpart
hereof by such party).

 

SECTION 9.10       WAIVER OF
JURY TRIAL. 
EACH OF THE BORROWER, THE ADMINISTRATIVE AGENT AND THE BANKS HEREBY
IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY

 

85

 

LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.

 

SECTION 9.11       Survival.  All indemnities set forth herein (including,
without limitation, Sections 8.4 and 9.3) shall survive the execution and
delivery of this Agreement and the other Loan Documents and the making and
repayment of the Obligations.

 

SECTION 9.12       Domicile of Loans.  Each Bank may transfer and carry its Loans
at, to or for the account of any domestic or foreign branch office, subsidiary
or affiliate of such Bank.

 

SECTION 9.13       Limitation
of Liability. 
No claim may be made by the Borrower or any other Person acting by or
through Borrower against the Administrative Agent or any Bank or the
affiliates, directors, officers, employees, attorneys or agent of any of them
for any consequential or punitive damages in respect of any claim for breach of
contract or any other theory of liability arising out of or related to the
transactions contemplated by this Agreement or by the other Loan Documents, or
any act, omission or event occurring in connection therewith; and the Borrower
hereby waives, releases and agrees not to sue upon any claim for any such
damages, whether or not accrued and whether or not known or suspected to exist
in its favor.

 

SECTION 9.14       Recourse Obligation. This Agreement and the Obligations
hereunder are fully recourse to the Borrower and to EQR pursuant to the
Guaranty and to any Down REIT Guarantor pursuant to any Down REIT Guaranty.
Notwithstanding the foregoing, no recourse under or upon any obligation,
covenant, or agreement contained in this Agreement shall be had against any
officer, director, shareholder or employee of the Borrower or any officer,
director, shareholder or employee of EQR except in the event of fraud or
misappropriation of funds on the part of such officer, director, shareholder or
employee.

 

SECTION 9.15       Confidentiality.  The Administrative Agent and each Bank shall
use reasonable efforts to assure that information about Borrower, EQR and its
Subsidiaries and Investment Affiliates, and the Properties thereof and their
operations, affairs and financial condition, not generally disclosed to the
public, which is furnished to Administrative Agent or any Bank pursuant to the
provisions hereof or any other Loan Document is used only for the

 

86

 

purposes
of this Agreement and shall not be divulged to any Person other than the
Administrative Agent, the Banks, and their affiliates and respective officers,
directors, employees and agents who are actively and directly participating in
the evaluation, administration or enforcement of the Loan, this Agreement, the
Loan Documents and the extension of credit hereunder, except:  (a) to their attorneys and accountants, (b) in
connection with the enforcement of the rights and exercise of any remedies of
the Administrative Agent and the Banks hereunder and under the other Loan
Documents, (c) in connection with assignments and participations and the
solicitation of prospective assignees and participants referred to in Section 9.6
hereof, who have agreed in writing to be bound by a confidentiality agreement
substantially equivalent to the terms of this Section 9.15, and (d) as
may otherwise be required or requested by any regulatory authority having
jurisdiction over the Administrative Agent or any Bank or by any applicable
law, rule, regulation or judicial process.

 

SECTION 9.16       Bank’s
Failure to Fund.

 

(a)           Unless the Administrative Agent shall
have received notice from a Bank prior to the date of any Borrowing that such
Bank will not make available to the Administrative Agent such Bank’s share of
such Borrowing, the Administrative Agent may assume that such Bank has made
such share available to the Administrative Agent on the date of such Borrowing
in accordance with subsection (b) of Section 2.4, and the
Administrative Agent may, in reliance upon such assumption, make available to
Borrower on such date a corresponding amount. 
If and to the extent that such Bank shall not have so made such share
available to the Administrative Agent, such Bank and Borrower severally agree
to repay to the Administrative Agent forthwith on demand such corresponding
amount together with interest thereon, in accordance with the provisions of Section 2.4(c).  If such Bank shall repay to the
Administrative Agent such corresponding amount, such amount so repaid shall
constitute such Bank’s Loan included in such Borrowing for purposes of this
Agreement as of the date of such Borrowing. 
Nothing contained in this Section or Section 2.4(c) shall
be deemed to reduce the Commitment of any Bank or in any way affect the rights
of Borrower with respect to any defaulting Bank or Administrative Agent.  The failure of any Bank to make available to
the Administrative Agent such Bank’s share of any Borrowing in accordance with Section 2.4(b) shall
not

 

87

 

relieve any other Bank of its obligations to
fund its Commitment, in accordance with the provisions hereof.

 

(b)           If a Bank does not remit to
Administrative Agent such Bank’s Pro Rata Share of a Loan in accordance herewith,
then neither Administrative Agent nor the other Banks shall be required or
obligated to fund such Bank’s Pro Rata Share of such Loan.

 

(c)           As used herein, the following terms shall
have the meanings set forth below:

 

(i)            “Defaulting Bank” shall mean any
Bank which (x) does not remit to the Administrative Agent such Bank’s Pro Rata
Share of a Loan in accordance herewith for a period of five (5) Domestic
Business Days after notice of such failure from Administrative Agent, (y) shall
otherwise fail to perform such Bank’s obligations under the Loan Documents for
a period of five (5) Domestic Business Days after notice of such failure
from Administrative Agent, or (z) shall fail to pay the Administrative Agent or
any other Bank, as the case may be, upon demand, such Bank’s Pro Rata Share of
any costs, expenses or disbursements incurred or made by the Administrative
Agent and payable by such Bank pursuant to the terms of the Loan Documents for
a period of five (5) Domestic Business Days after notice of such failure
from Administrative Agent, and in all cases, such failure is not as a result of
a good faith dispute as to whether such advance is properly required to be made
pursuant to the provisions of this Agreement, or as to whether such other
performance or payment is properly required pursuant to the provisions of this
Agreement.

 

(ii)           “Junior Creditor”  means any Defaulting Bank which has not (x)
fully cured each and every default on its part under the Loan Documents and (y)
unconditionally tendered to the Administrative Agent such Defaulting Bank’s Pro
Rata Share of all costs, expenses and disbursements required to be paid or
reimbursed pursuant to the terms of the Loan Documents.

 

(iii)          “Payment in Full” means, as of any
date, the receipt by the Banks who are not Junior Creditors of an amount of
cash, in lawful currency of the United States, sufficient to indefeasibly pay
in full all Senior Debt.

 

(iv)          “Senior Debt” means (x)
collectively, any and all indebtedness, obligations and liabilities of the

 

88

 

Borrower to the Banks who are not Junior Creditors, or any of them,
from time to time, whether fixed or contingent, direct or indirect, joint or
several, due or not due, liquidated or unliquidated, determined or undetermined,
arising by contract, operation of law or otherwise, whether on open account or
evidenced by one or more instruments, and whether for principal, premium,
interest (including, without limitation, interest accruing after the filing of
a petition initiating any proceeding referred to in Section 6.1(f) or
(g)), reimbursement for fees, indemnities, costs, expenses or otherwise, which
arise under, in connection with or in respect of the Loans or the Loan
Documents, and (y) any and all deferrals, renewals, extensions and refundings
of, or amendments, restatements, rearrangements, modifications or supplements
to, any such indebtedness, obligation or liability.

 

(v)           “Subordinated Debt”  means (x) any and all indebtedness,
obligations and liabilities of Borrower to one or more Junior Creditors from
time to time, whether fixed or contingent, direct or indirect, joint or
several, due or not due, liquidated or unliquidated, determined or
undetermined, arising by contract, operation of law or otherwise, whether on
open account or evidenced by one or more instruments, and whether for
principal, premium, interest (including, without limitation, interest accruing
after the filing of a petition initiating any proceeding referred to in Section 6.1(f) or
(g)), reimbursement for fees, indemnities, costs, expenses or otherwise, which
arise under, in connection with or in respect of the Loans or the Loan
Documents, and (y) any and all deferrals, renewals, extensions and refundings
of, or amendments, restatements, rearrangements, modifications or supplements
to, any such indebtedness, obligation or liability.

 

(d)           Immediately upon a Bank’s becoming a
Junior Creditor, no Junior Creditor shall, prior to Payment in Full of all
Senior Debt:

 

(i)            accelerate, demand payment of, sue upon,
collect, or receive any payment upon, in any manner, or satisfy or otherwise
discharge, any Subordinated Debt, whether for principal, interest or otherwise;

 

(ii)           take or enforce
any Liens to secure Subordinated Debt or attach or levy upon any assets of
Borrower to enforce any Subordinated Debt;

 

89

 

(iii)          enforce or apply
any security for any Subordinated Debt; or

 

(iv)          incur any debt or
liability, or the like, to, or receive any loan, return of capital, advance,
gift or any other property from, the Borrower.

 

(e)           In the event of:

 

(i)            any insolvency,
bankruptcy, receivership, liquidation, dissolution, reorganization,
readjustment, composition or other similar proceeding relating to Borrower;

 

(ii)           any
liquidation, dissolution or other winding-up of the Borrower, voluntary or
involuntary, whether or not involving insolvency, reorganization or bankruptcy
proceedings;

 

(iii)          any assignment
by the Borrower for the benefit of creditors;

 

(iv)          any sale or other
transfer of all or substantially all assets of the Borrower; or

 

(v)           any other marshaling of the assets of the Borrower;

 

each of the Banks
shall first have received Payment in Full of all Senior Debt before any payment
or distribution, whether in cash, securities or other property, shall be made
in respect of or upon any Subordinated Debt. 
Any payment or distribution, whether in cash, securities or other
property that would otherwise be payable or deliverable in respect of
Subordinated Debt to any Junior Creditor but for this Agreement shall be paid
or delivered directly to the Administrative Agent for distribution to the Banks
in accordance with this Agreement until Payment in Full of all Senior
Debt.  If any Junior Creditor receives
any such payment or distribution, it shall promptly pay over or deliver the
same to the Administrative Agent for application in accordance with the
preceding sentence.

 

(f)            Each Junior Creditor shall file in any
bankruptcy or other proceeding of Borrower in which the filing of claims is
required by law, all claims relating to Subordinated Debt that such Junior
Creditor may have against Borrower and assign to the Banks who are not Junior

 

90

 

Creditors
all rights of such Junior Creditor thereunder. 
If such Junior Creditor does not file any such claim prior to forty-five
(45) days before the expiration of the time to file such claim, Administrative
Agent, as attorney-in-fact for such Junior Creditor, is hereby irrevocably authorized
to do so in the name of such Junior Creditor or, in Administrative Agent’s sole
discretion, to assign the claim to a nominee and to cause proof of claim to be
filed in the name of such nominee.  The
foregoing power of attorney is coupled with an interest and cannot be
revoked.  The Administrative Agent shall,
to the exclusion of each Junior Creditor, have the sole right, subject to Section 9.5
hereof, to accept or reject any plan proposed in any such proceeding and to
take any other action that a party filing a claim is entitled to take.  In all such cases, whether in administration,
bankruptcy or otherwise, the Person or Persons authorized to pay such claim
shall pay to Administrative Agent the amount payable on such claim and, to the
full extent necessary for that purpose, each Junior Creditor hereby transfers
and assigns to the Administrative Agent all of the Junior Creditor’s rights to
any such payments or distributions to which Junior Creditor would otherwise be
entitled.

 

(g)           (i)  If any
payment or distribution of any character or any security, whether in cash,
securities or other property, shall be received by any Junior Creditor in
contravention of any of the terms hereof, such payment or distribution or
security shall be received for the benefit of, and shall promptly be paid over
or delivered and transferred to, Administrative Agent for application to the
payment of all Senior Debt, to the extent necessary to achieve Payment in
Full.  In the event of the failure of any
Junior Creditor to endorse or assign any such payment, distribution or
security, Administrative Agent is hereby irrevocably authorized to endorse or
assign the same as attorney-in-fact for such Junior Creditor.

 

(ii)           Each
Junior Creditor shall take such action (including, without limitation, the
execution and filing of a financing statement with respect to this Agreement
and the execution, verification, delivery and filing of proofs of claim,
consents, assignments or other instructions that Administrative Agent may
require from time to time in order to prove or realize upon any rights or
claims pertaining to Subordinated Debt or to effectuate the full benefit of the
subordination contained herein) as may, in Administrative Agent’s sole and
absolute discretion, be necessary or

 

91

 

desirable to
assure the effectiveness of the subordination effected by this Agreement.

 

(h)           (i)  Each Bank that becomes a Junior
Creditor understands and acknowledges by its execution hereof that each other
Bank is entering into this Agreement and the other Loan Documents in reliance
upon the absolute subordination in right of payment and in time of payment of
Subordinated Debt to Senior Debt as set forth herein.

 

(ii)           Only
upon the Payment in Full of all Senior Debt shall any Junior Creditor be
subrogated to any remaining rights of the Banks which are not Defaulting Banks
to receive payments or distributions of assets of the Borrower made on or
applicable to any Senior Debt.

 

(iii)          Each
Junior Creditor agrees that it will deliver all instruments or other writings
evidencing any Subordinated Debt held by it to Administrative Agent, promptly
after request therefor by the Administrative Agent.

 

(iv)          No
Junior Creditor may at any time sell, assign or otherwise transfer any
Subordinated Debt, or any portion thereof, including, without limitation, the
granting of any Lien thereon, unless and until satisfaction of the requirements
of Section 9.6 above and the proposed transferee shall have assumed in
writing the obligation of the Junior Creditor to the Banks under this
Agreement, in a form acceptable to the Administrative Agent.

 

(v)           If
any of the Senior Debt should be invalidated, avoided or set aside, the
subordination provided for herein nevertheless shall continue in full force and
effect and, as between the Banks which are not Defaulting Banks and all Junior
Creditors, shall be and be deemed to remain in full force and effect.

 

(vi)          Each
Junior Creditor hereby irrevocably waives, in respect of Subordinated Debt, all
rights (x) under Sections 361 through 365, 502(e) and 509 of the
Bankruptcy Code (or any similar sections hereafter in effect under any other
Federal or state laws or legal or equitable principles relating to bankruptcy,
insolvency, reorganizations, liquidations or otherwise for the relief of
debtors or protection of creditors), and (y) to seek or obtain conversion to a
different type of proceeding or to seek or obtain dismissal of a proceeding, in
each case in relation to a bankruptcy, reorganization, insolvency or

 

92

 

other proceeding
under similar laws with respect to the Borrower.  Without limiting the generality of the
foregoing, each Junior Creditor hereby specifically waives (A) the right
to seek to give credit (secured or otherwise) to the Borrower in any way under Section 364
of the Bankruptcy Code unless the same is subordinated in all respects to
Senior Debt in a manner acceptable to Administrative Agent in its sole and
absolute discretion and (B) the right to receive any collateral security
(including any “super priority” or equal or “priming” or replacement Lien) for
any Subordinated Debt unless the Banks which are not Defaulting Banks have
received a senior position acceptable to the Banks in their sole and absolute
discretion to secure all Senior Debt (in the same collateral to the extent
collateral is involved).

 

(i)            (i)  In addition to and not in
limitation of the subordination effected by this Section 9.16, the
Administrative Agent and each of the Banks which are not Defaulting Banks may
in their respective sole and absolute discretion also exercise any and all
other rights and remedies available at law or in equity in respect of a
Defaulting Bank; and

 

(ii)           The
Administrative Agent shall give each of the Banks notice of the occurrence of a
default under this Section 9.16 by a Defaulting Bank and if the
Administrative Agent and/or one or more of the other Banks shall, at their
option, fund any amounts required to be paid or advanced by a Defaulting Bank,
the other Banks who have elected not to fund any portion of such amounts shall
not be liable for any reimbursements to the Administrative Agent and/or to such
other funding Banks.

 

(j)            Notwithstanding anything to the contrary
contained or implied herein, a Defaulting Bank shall not be entitled to vote on
any matter as to which a vote by the Banks is required hereunder, including,
without limitation, any actions or consents on the part of the Administrative
Agent as to which the approval or consent of all the Banks or the Required
Banks is required under Article VIII, Section 9.5 or elsewhere, so
long as such Bank is a Defaulting Bank; provided, however, that
in the case of any vote requiring the unanimous consent of the Banks, if all
the Banks other than the Defaulting Bank shall have voted in accordance with
each other, then the Defaulting Bank shall be deemed to have voted in
accordance with such Banks.

 

93

 

(k)           Each of the Administrative Agent and any
one or more of the Banks which are not Defaulting Banks may, at their
respective option, (i) advance to the Borrower such Bank’s Pro Rata Share
of the Loans not advanced by a Defaulting Bank in accordance with the Loan
Documents, or (ii) pay to the Administrative Agent such Bank’s Pro Rata
Share of any costs, expenses or disbursements incurred or made by the
Administrative Agent pursuant to the terms of this Agreement not theretofore
paid by a Defaulting Bank.  Immediately
upon the making of any such advance by the Administrative Agent or any one of
the Banks, such Bank’s Pro Rata Share and the Pro Rata Share of the Defaulting
Bank shall be recalculated to reflect such advance.  All payments, repayments and other
disbursements of funds by the Administrative Agent to Banks shall thereupon
and, at all times thereafter be made in accordance with such Bank’s
recalculated Pro Rata Share unless and until a Defaulting Bank shall fully cure
all defaults on the part of such Defaulting Bank under the Loan Documents or
otherwise existing in respect of the Loans or this Agreement, at which time the
Pro Rata Share of the Bank(s) which advanced sums on behalf of the Defaulting
Bank and of the Defaulting Bank shall be restored to their original
percentages.

 

SECTION 9.17       No
Bankruptcy Proceedings. 
Each of the Borrower, the Banks and the Administrative Agent hereby
agrees that it will not institute against any Designated Lender or join any
other Person in instituting against any Designated Lender any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceeding under any
federal or state bankruptcy or similar law, until the later to occur of (i) one
year and one day after the payment in full of the latest maturing commercial
paper note issued by such Designated Lender and (ii) the Maturity Date.

 

SECTION 9.18       Down REIT
Guaranties.

 

(a)           Notwithstanding
any other provision hereof or of any other Loan Document to the contrary, the
Administrative Agent, the Banks agree with Borrower that any funds, claims, or
distributions actually received by the Administrative Agent for the account of
any Bank as a result of the enforcement of, or pursuant to, any Down REIT
Guaranty, net of the Administrative Agent’s and the Banks’ expenses of
collection thereof (such net amount, “Down REIT Guaranty Proceeds”),
shall be made available for distribution equally and ratably (in proportion to
the aggregate amount of principal, interest and other amounts

 

94

 

then owed in respect of the Obligations or of an issuance of Public
Debt, as the case may be) among the Administrative Agent and the Banks and the
trustee or trustees of any Unsecured Debt, not subordinated to the Obligations
(or to the holders thereof), issued by Borrower, before or after the Effective
Date, in offerings registered under the Securities Act of 1933, as amended, or
in transactions exempt from registration pursuant to rule 144A or
Regulation 8 thereunder or listed on non-U.S. securities exchanges (“Public
Debt”), and the Administrative Agent is hereby authorized by Borrower, by
each Bank (on its own behalf and on behalf of its Designated Lender, if any)
and by each Down REIT Guarantor by its execution and delivery of a Down REIT
Guaranty, to make such Down REIT Guaranty Proceeds so available.  No Bank shall have any interest in any amount
paid over by the Administrative Agent to the trustee or trustees in respect of
any Public Debt (or to the holders thereof) pursuant to the foregoing
authorization.  This Section 9.18
shall apply solely to Down REIT Guaranty Proceeds, and not to any payments,
funds, claims or distributions received by the Administrative Agent or any Bank
directly or indirectly from Borrower or any other Person other than from a Down
REIT Guarantor pursuant to a Down REIT Guaranty.  Borrower is aware of the terms of the Down
REIT Guaranties, and specifically understands and agrees with the
Administrative Agent and the Banks that, to the extent Down REIT Guaranty
Proceeds are distributed to holders of Public Debt or their respective
trustees, such Down REIT Guarantor has agreed that the Obligations will not be
deemed reduced by any such distributions and such Down REIT Guarantor shall
continue to make payments pursuant to its Down REIT Guaranty until such time as
the Obligations have been paid in full (and the Commitments have been
terminated), after taking into account any such distributions of Down REIT
Guaranty Proceeds in respect of Indebtedness other than the Obligations.

 

(b)           Nothing
contained herein shall be deemed (1) to limit, modify, or alter the rights
of the Administrative Agent and the Banks under any Down REIT Guaranty, (2) to
subordinate the Obligations to any Public Debt, or (3) to give any holder
of Public Debt (or any trustee for such holder) any rights of subrogation.

 

(c)           This
Section 9.18 and all Down REIT Guaranties,
are for the sole benefit of the Administrative Agent and the Banks and their
respective successors and assigns. 
Nothing contained herein or in any Down REIT

 

95

 

Guaranty shall be deemed for the benefit of any holder of Public Debt,
or any trustee for such holder; nor shall anything contained herein or therein
be construed to impose on the Administrative Agent or any Bank any fiduciary
duties, obligations or responsibilities to the holders of any Public Debt or
their trustees (including, but not limited to, any duty to pursue any Down REIT
Guarantor for payment under its Down REIT Guaranty).

 

SECTION 9.19       USA PATRIOT
Act Notice. 
Each Bank that is subject to the Act (as hereinafter defined) and the
Administrative Agent (for itself and not on behalf of any Bank) hereby notifies
the Borrower that pursuant to the requirements of the USA PATRIOT Act (Title
III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it
is required to obtain, verify and record information that identifies the
Borrower, which information includes the name and address of the Borrower and
other information that will allow such Bank or the Administrative Agent, as
applicable, to identify the Borrower in accordance with the Act.

 

SECTION 9.20       Public/Private
Information.  The Borrower
hereby acknowledges that (a) the Administrative Agent will make available
to the Banks materials and/or information provided by or on behalf of the
Borrower hereunder (collectively, “Borrower Materials”) by posting the Borrower
Materials on IntraLinks or another similar electronic system (the “Platform”)
and (b) certain of the Banks may be “public-side” lenders (i.e., Banks that
do not wish to receive material non-public information with respect to the
Borrower or its securities) (each, a “Public Lender”).  The Borrower hereby agrees that (w) all
Borrower Materials that are to be made available to Public Lenders shall be
clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that
the word “PUBLIC” shall appear prominently on the first page thereof; (x)
by marking Borrower Materials “PUBLIC”, the Borrower shall be deemed to have
authorized the Administrative Agent and the Banks to treat such Borrower
Materials as not containing any material non-public information with respect to
the Borrower or its securities for purposes of United States Federal and state
securities laws (provided, however, that to the extent such Borrower Materials
constitute Information, they shall be treated as set forth in Section 9.15);
(y) all Borrower Materials marked “PUBLIC” are permitted to be made available
through a portion of the Platform marked “PUBLIC” or through

 

96

 

a portion of the Platform designated “Public
Investor;” and (z) the Administrative Agent shall be entitled to treat any
Borrower Materials that are not marked “PUBLIC” as being suitable only for
posting on a portion of the Platform not designated “Public Investor.”

 

97

 

IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.

 

 

	
   

  	
  ERP OPERATING LIMITED PARTNERSHIP

  
	
   

  	
   

  
	
   

  	
  By: Equity Residential

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Mark J. Parrell

  	
   

  
	
   

  	
   

  	
  Name: 
  Mark J. Parrell

  
	
   

  	
   

  	
  Title: 
  Senior Vice President & Treasurer

  
	
   

  	
   

  
	
   

  	
  Facsimile number:

  	
  (312) 426-0457

  
	
   

  	
   

  	
  and

  
	
   

  	
   

  	
  (312) 426-9252

  
	
   

  	
  Address:

  	
  Two North Riverside Plaza

  
	
   

  	
   

  	
  Suite 400

  
	
   

  	
   

  	
  Chicago, Illinois 60606

  
	
   

  	
   

  	
  Attn:

  	
  Chief Financial

  
	
   

  	
   

  	
   

  	
  Officer

  
								

 

	
  For purposes of agreeing to be bound

  
	
  by the provisions of Section 5.13
  only:

  
	
   

  
	
  EQUITY RESIDENTIAL

  
	
   

  
	
   

  
	
  By:

  	
  /s/ Mark J. Parrell

  	
   

  
	
   

  	
  Name: 
  Mark J. Parrell

  
	
   

  	
  Title: 
  Senior Vice President & Treasurer

  

 

98

 

	
  Commitments

  	
   

  
	
   

  	
   

  
	
  $200,000,000

  	
  BANK OF AMERICA, N.A., as

  
	
   

  	
  Administrative Agent and as a 

  
	
   

  	
  Bank

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael W. Edwards

  	
   

  
	
   

  	
  Name: 
  Michael W. Edwards

  
	
   

  	
  Title: 
  Senior Vice President

  
	
   

  	
   

  
	
   

  	
  Bank of America, N.A.

  
	
   

  	
  Mail Code

  
	
   

  	
  231 South LaSalle Street

  
	
   

  	
  Chicago, Illinois 60697

  
	
   

  	
  Attention:

  
	
   

  	
  Telecopy:

  

 

99

 

	
  $200,000,000

  	
  DEUTSCHE BANK TRUST COMPANY 

  
	
   

  	
  AMERICAS, as Syndication Agent and

  
	
   

  	
  as a Bank

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Linda Wang

  	
   

  
	
   

  	
   

  	
  Name: 
  Linda Wang

  
	
   

  	
   

  	
  Title: 
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ George Reynolds

  	
   

  
	
   

  	
   

  	
  Name: 
  George Reynolds

  
	
   

  	
   

  	
  Title: 
  Vice President

  

 

100

 

	
  $200,000,000

  	
  MERRILL LYNCH BANK USA, as a Bank

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David Millett

  	
   

  
	
   

  	
   

  	
  Name: 
  David Millett

  
	
   

  	
   

  	
  Title: 
  Vice President

  

 

101

 

	
  Total Commitments

  	
   

  
	
   

  	
   

  
	
  $600,000,000

  	
   

  

 

102

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00090-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00090-of-00352.parquet"}]]