Document:

Exhibit
10.1

FIFTH
AMENDMENT TO CREDIT AGREEMENT

THIS
FIFTH AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is made and entered into
effective as of July 11, 2006 (the “Effective Date”), by and among
HELMERICH & PAYNE INTERNATIONAL DRILLING CO., a Delaware corporation
(the “Borrower”), HELMERICH & PAYNE, INC., a Delaware
corporation (the “Parent”), and BANK OF OKLAHOMA, NATIONAL ASSOCIATION,
as Lender (in such capacity, the “Lender”) and as Administrative Agent
(in such capacity, the “Administrative Agent”), with reference to the
following:

RECITALS

A.            The Borrower, the Parent, the Lender
and the Administrative Agent are parties to that certain Credit Agreement dated
July 16, 2002, as amended by (i) that certain First Amendment to
Credit Agreement dated July 15, 2003, (ii) that certain Second
Amendment to Credit Agreement dated May 4, 2004, (iii) that certain
Third Amendment to Credit Agreement dated as of July 13, 2004, and (iv) that
certain Fourth Amendment to Credit Agreement dated as of July 12, 2005 (the
Credit Agreement, as amended by the First, Second, Third and Fourth Amendments
thereto, is hereinafter referred to as the “Credit Agreement”).
Capitalized terms used in this Amendment and not otherwise defined herein have
the respective meanings assigned to them in the Credit Agreement, and the rules of
construction set forth in the Credit Agreement shall also govern the
construction and interpretation of this Amendment.

B.            Pursuant to the Credit Agreement,
the Lender established the Facility in favor of the Borrower.

C.            The Borrower has requested that the
Lender (i) extend the Revolving Commitment Termination Date from July 11,
2006, to July 10, 2007 and (ii) extend the Facility Maturity Date
from June 30, 2008, to June 30, 2009.

D.            The Lender has agreed to the
foregoing requests, subject to the terms and conditions set forth in this
Amendment.

NOW, THEREFORE, in consideration of the premises
and the mutual covenants and agreements herein contained, and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereby amend the Credit Agreement as follows:

1.             EXTENSION OF THE FACILITY. As
of the Effective Date:

(i)            the Revolving Commitment Termination
Date is extended from July 11, 2006, to July 10, 2007, and the
definition of “Revolving Commitment Termination Date” appearing in Section 1.1
of the Credit Agreement is amended in its entirety to read as follows:

 

“Revolving
Commitment Termination Date” means July 10, 2007, or such
later date to which the Revolving Commitment Termination Date may be extended
from time to time pursuant to Section 2.5(c).

(ii)           the Facility Maturity Date is
extended from June 30, 2008, to June 30, 2009, and the definition of “Facility
Maturity Date” appearing in Section 1.1 of the Credit Agreement is amended
in its entirety to read as follows:

“Facility Maturity Date” means June 30,
2009, or such later date to which the
Facility Maturity Date may be extended from time to time pursuant to Section 2.5(c).

2.             WAIVER.

A.            Sections
7.1(a) and 7.1(b) of the Credit Agreement. For as long as
annual and quarterly financial statements that comply with the requirements of Section 7.1(a) and
Section 7.1(b) of the Credit Agreement are available to the Lenders
through publicly-available sources within the time periods required by the
Credit Agreement, the Borrower shall be deemed to have satisfied the
requirements of Section 7.1(a) and Section 7.1(b) of the
Credit Agreement (relating to annual and quarterly financial statements); provided, however,
that (i) the Borrower shall furnish a copy of the auditor’s opinion
prepared in connection with the audit of the Borrower’s annual financial
statements, (ii) the Borrower agrees to discuss with the Administrative Agent or its representatives all such financial statements made available
pursuant to publicly-available sources, and (iii) the
Administrative Agent reserves the right to require the Borrower to submit
financial statements in conformity with all of the requirements of the Credit
Agreement upon request by the Administrative Agent.

B.            Sections
7.1(d) of the Credit Agreement. The Borrower shall not be
required to furnish copies of any report or “management letter” described in Section 7.1(d) of
the Credit Agreement to the Administrative Agent; provided, however,
that (i) the Borrower shall furnish a copy of any report or “management
letter” that contains any disclosure or footnote that will have (or is
reasonably likely to have) a Material Adverse Effect, and (ii) the
Administrative Agent reserves the right at any time to reinstate the
requirements of Section 7.1(d) of the Credit Agreement or to require
the Borrower to submit any specific report or “management letter” in conformity
with all of the requirements of the Credit Agreement upon request by the
Administrative Agent.

C.            Sections
7.1(e) of the Credit Agreement. For as long as the filings,
registrations, reports, statements and notices described in Section 7.1(e) of
the Credit Agreement are available to the Lenders through publicly-available
sources, the Borrower shall not be required to furnish copies of the same to
the Lenders; provided, however, that (i) the Borrower shall
furnish the Administrative Agent a copy of each proxy statement and Form 8-K
filed with the SEC, and (ii) the Administrative Agent reserves the right
to require the Borrower to submit filings, registrations, reports, statements
and notices in conformity with all of the requirements of the Credit Agreement
upon request by the Administrative Agent.

 2
 

 

3.             CONDITIONS PRECEDENT. The
modifications to the Credit Agreement set forth in this Amendment shall be
effective from and after the Effective Date, but only when each of the
following conditions precedent shall have been satisfied:

A.            Execution of
Documents. This Amendment and such other documents or instruments as
may be contemplated by this Amendment or as may be reasonably necessary to
effectuate the intent and purposes of this Amendment shall have been duly and
validly authorized and executed by the parties thereto and delivered to the
Administrative Agent, all in form and substance satisfactory to the Lender.

B.            No Defaults.
There shall not have occurred or be continuing any Default or Event of Default.

C.            Legal
Matters. All legal matters incident to this Amendment and the transactions
contemplated hereby shall be satisfactory to the Administrative Agent and the
Lender.

4.             REPRESENTATIONS AND WARRANTIES.
The Borrower and the Parent confirm that, to the best of their knowledge, all
representations and warranties made by each of the Borrower and the Parent for
themselves or on behalf of a Credit Party in Article VI of the Credit
Agreement are and will be true and correct in all material respects on the
Effective Date (with the dates appearing in the first sentence of Section 6.5
thereof being changed to read September 30, 2003, September 30, 2004,
September 30, 2005, and March 31, 2006, respectively, and the date
appearing in the final sentence of Section 6.5 thereof being changed to
read September 30, 2005), except that:

(i)            the representations and warranties
set forth in Sections 2.6(a), 6.12(ii), 6.13(d), 6.14 and 7.6, respectively, of
the Credit Agreement are subject to the matters set forth in Schedules 2.6(a),
6.12(ii), 6.13(d), 6.14 and 7.6, respectively, attached hereto; and

(ii)           all of the representations and
warranties set forth in the Credit Agreement are subject to the fact that the
spin-off of Cimarex Energy Co. and related entities was consummated on September 30,
2002.

As used in this Paragraph
4, the phrase “to the best of their knowledge” means the current, actual
personal knowledge of the Executive Officers of the Borrower and the Parent,
without any undertaking by any of such Executive Officers to conduct any
inquiry for purposes of this Amendment.

 3
 

 

5.             GENERAL.

A.            Effect of
Amendment. The terms of this Amendment shall be incorporated into
and form a part of the Credit Agreement. Except as amended, modified and
supplemented by this Amendment, the Credit Agreement shall continue in full force
and effect in accordance with its original stated terms, all of which are
hereby reaffirmed in every respect as of the date hereof. In the event of any
irreconcilable inconsistency between the terms of this Amendment and the terms
of the Credit Agreement or any other Credit Document, the terms of this
Amendment shall control and govern, and the agreements shall be interpreted so
as to carry out and give full effect to the intent of this Amendment. All
references to the “Credit Agreement” appearing in any of the Credit Documents
shall hereafter be deemed references to the Credit Agreement as amended,
modified and supplemented by this Amendment. The Borrower and the Parent each
hereby reaffirm all Credit Documents to which it is a party, and acknowledge that
such Credit Documents will continue in full force and effect, unabated and
uninterrupted, and will remain its valid and binding obligations, enforceable
in accordance with their terms.

B.            Schedules. Schedules
2.6(a), 6.12(ii), 6.14 and 7.6 attached hereto are hereby substituted for the
corresponding schedules to the Credit Agreement.

C.            No Course of Dealing. This Amendment shall not establish a
course of dealing or be construed as evidence of any willingness on the Lender’s
part to grant other or future extensions or modifications, should any be
requested.

D.            Descriptive Headings. The descriptive headings of the
several sections of this Amendment are inserted for convenience only and shall
not be used in the construction of the content of this Amendment.

E.             Governing Law. This Amendment shall be construed and
enforced in accordance with, and the rights of the parties shall be governed
by, the laws of the State of Oklahoma.

F.             Reimbursement of Expenses. The Borrower and the Parent
agree, jointly and severally, to pay the reasonable fees and out-of-pocket
expenses of Crowe & Dunlevy, counsel to the Administrative Agent,
incurred in connection with the preparation of this Amendment and the
consummation of the transactions contemplated hereby and thereby.

G.            Counterpart Execution. This Amendment may be executed in
multiple counterparts, each of which shall be deemed an original hereof and all
of which shall be but one and the same original instrument.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.

SIGNATURE PAGE TO FOLLOW.]

 4
 

 

IN
WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this
Amendment to be duly executed and delivered as of the date first above written,
effective as of the Effective Date.

	
  BORROWER:

  	
   

  	
  HELMERICH & PAYNE INTERNATIONAL

  
	
   

  	
   

  	
  DRILLING CO.,

  
	
   

  	
   

  	
  a Delaware corporation

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
   

  	
  By:

  	
  /s/ Douglas E.
  Fears

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Douglas E. Fears

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Executive Vice President

  

 

	
  PARENT:

  	
   

  	
  HELMERICH & PAYNE, INC.,

  
	
   

  	
   

  	
  a Delaware corporation

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
   

  	
  By:

  	
  /s/ Douglas E.
  Fears

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Douglas E. Fears

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President

  

 

	
  ADMINISTRATIVE AGENT:

  	
   

  	
  BANK OF OKLAHOMA, NATIONAL

  
	
   

  	
   

  	
  ASSOCIATION

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
   

  	
  By:

  	
  /s/ Patrick R. Roberts

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Patrick R. Roberts

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Commercial Lending Officer

  

 

	
  LENDER:

  	
   

  	
  BANK OF OKLAHOMA, NATIONAL

  
	
   

  	
   

  	
  ASSOCIATION

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
   

  	
  By:

  	
  /s/ Patrick R. Roberts

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Patrick R. Roberts

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Commercial Lending Officer

  

 

Revolving
Commitment:

$50,000,000

 5Exhibit
10.1

 

 

REVOLVING CREDIT
BRIDGE AGREEMENT

dated as of July 6,
2006

among

ERP OPERATING
LIMITED PARTNERSHIP,

THE BANKS LISTED
HEREIN,

JPMORGAN CHASE BANK,
N.A.,

as Administrative
Agent,

and

J.P. MORGAN SECURITIES
INC.

as Sole Lead Arranger

and Sole Book
Runner

 

 

 

REVOLVING CREDIT
BRIDGE AGREEMENT

THIS REVOLVING
CREDIT BRIDGE AGREEMENT, dated as of July 6, 2006, is among ERP OPERATING
LIMITED PARTNERSHIP (the “Borrower”), the BANKS party hereto, and  JPMORGAN CHASE BANK, N.A., as Administrative
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:

“Absolute Rate
Auction” means a solicitation of Money Market Quotes setting forth Money
Market Absolute Rates pursuant to Section 2.3.

“Administrative
Agent” shall mean JPMorgan Chase Bank, 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.

“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 or Swingline Loans, its Domestic Lending Office, (ii) in
the case of its Euro-Dollar Loans, its Euro-Dollar Lending Office, and (iii) in
the case of its Money Market Loans, its Money Market 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 event that each of said two (2) highest
Credit Ratings shall not be Investment Grade Ratings or at least one 

 2
 

 

 

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.

	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Applicable

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Margin for

  	
   

  	
  Applicable

  	
   

  
	
  Range of

  	
   

  	
  Base Rate

  	
   

  	
  Margin for Euro

  	
   

  
	
  Borrower’s Credit Rating

  	
   

  	
  Loans

  	
   

  	
  Dollar Loans

  	
   

  
	
  (S&P/Moody’s
  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 and
each Designated Lender; provided, however, that the term “Bank” shall
exclude each Designated Lender when used in reference to a Committed Loan, the
Commitments or terms relating to the Committed Loans and the Commitments and
shall further exclude each Designated Lender for all other purposes hereunder
except that any Designated Lender which funds a Money Market Loan shall,
subject to Section 9.6(d), have the rights (including the rights given to
a Bank contained in Section 9.3 and otherwise in Article IX) and
obligations of a Bank associated with holding such Money Market Loan.

 3
 

 

“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.” 
The “prime rate” is a rate set by JPMorgan Chase Bank, N.A. based upon
various factors including JPMorgan Chase Bank, 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 Committed 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 

 4
 

 

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 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 

 5
 

 

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 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.

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

“Committed Loan”
means a loan made or to be made  by a
Bank pursuant to Section 2.1; provided that, if any such loan or
loans (or portions thereof) are combined or subdivided pursuant to a Notice of
Interest Rate Election, the term “Committed Loan” shall refer to the combined
principal amount resulting from such combination or to each of the separate
principal amounts resulting from such subdivision, as the case may be.

“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 

 6
 

 

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 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.

 7
 

 

“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, 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 

 8
 

 

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.

“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 

 9
 

 

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).

“Designated
Lender” means a special purpose corporation that (i) shall have become
a party to this Agreement pursuant to Section 9.6(d), and (ii) is not
otherwise a Bank.

“Designated
Lender Notes” means promissory notes of the Borrower, substantially in the
form of Exhibit A-1 hereto, evidencing the obligation of the
Borrower to repay Money Market Loans made by Designated Lenders, and “Designated
Lender Note” means any one of such promissory notes issued under Section 9.6(d) hereof.

“Designating
Lender” shall have the meaning set forth in Section 9.6(d) hereof.

“Designation
Agreement” means a designation agreement in substantially the form of Exhibit G
attached hereto, entered into by a Bank and a Designated Lender and accepted by
the Administrative Agent.

“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 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 

 10
 

 

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 New York, NY 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 H (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 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 

 11
 

 

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 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).

 

 12

 

 

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

“EQR 2005 Form 10-K”
means EQR’s annual report on Form 10-K for 2005, as filed with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended.

 13
 

 

 

“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 Committed 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

 14
 

 

 

day funds in the approximate amount of the Euro-Dollar
Loan being made, continued or converted by JPMorgan Chase Bank, N.A. and with a
term equivalent to such Interest Period would be offered by JPMorgan Chase
Bank, N.A.’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(b).

“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

 15
 

 

 

Day as so published on the next succeeding Domestic
Business 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.

 16
 

 

 

“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 Committed Loans
which are Base

 17
 

 

 

Rate Loans at such time, or (ii) all Euro-Dollar
Loans having the same Interest Period at such time; provided that, if a
Committed 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.

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

 18
 

 

“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:

(1) with
respect to each Euro-Dollar Borrowing, the period commencing on the date of
such Borrowing specified in the Notice of Borrowing or on the date specified in
the applicable Notice of Interest Rate Election and ending 1, 2 or 3 months
thereafter (or such shorter period, but in no

 19
 

 

 

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.

(2)  Intentionally
Omitted.

(3)  with
respect to each Money Market LIBOR Loan, the period commencing on the date of
borrowing specified in the applicable Money Market Quote Request and ending
such number of months thereafter (or for a period of less than one month but in
no event less than seven (7) days) as the Borrower may elect in accordance
with Section 2.3; 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)

 20
 

 

 

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.

(4)  with
respect to each Money Market Absolute Rate Loan, the period commencing on the
date of borrowing specified in the applicable Money Market Quote Request and
ending such number of days thereafter (but not less than seven (7) days,
or more than 90 days) as the Borrower may elect in accordance with Section 2.3;
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; and

(b)  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
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

 21
 

 

 

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.

“LIBOR Auction”
means a solicitation of Money Market Quotes setting forth Money Market Margins
based on the Euro-Dollar Rate pursuant to Section 2.3.

“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

 22
 

 

 

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

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

“Loan Documents”
means this Agreement, the Notes, the EQR 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 July 6, 2007, 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

 

 23

 

 

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

“Money Market
Absolute Rate” has the meaning set forth in Section 2.3(d).

“Money Market
Absolute Rate Loan” means a loan made or to be made by a Bank pursuant to
an Absolute Rate Auction.

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

“Money Market
Lending Office” means, as to each Bank, its Domestic Lending Office or such
other office, branch or affiliate of such Bank as it may hereafter designate as
its Money Market Lending Office by notice to the Borrower and the
Administrative Agent; provided that any Bank may from time to time by
notice to the Borrower and the Administrative Agent designate separate Money
Market Lending Offices for its Money Market LIBOR Loans, on the one hand, and
its Money Market Absolute Rate Loans, on the other hand, in which case all
references herein to the Money Market Lending Office of such Bank shall be
deemed to refer to either or both of such offices, as the context may require.

“Money Market
LIBOR Loan” means a loan made or to be made by a Bank pursuant to a LIBOR
Auction (including such a loan bearing interest at the Base Rate pursuant to Article VIII).

“Money Market
Loan” means a Money Market LIBOR Loan or a Money Market Absolute Rate Loan.

“Money Market
Margin” has the meaning set forth in Section 2.3(d)(2).

“Money Market
Quote” means an offer by a Bank to make a Money Market Loan in accordance
with Section 2.3.

“Money Market
Quote Request” shall have the meaning set forth in Section 2.3(b).

“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 

 24
 

 

 

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.

“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 

 25
 

 

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 Exhibits
A-1 and A-2 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 C
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 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).

 26
 

 

 

“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, 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 

 27
 

 

 

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;

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, 

 28
 

 

 

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 Committed Loans and the denominator of which
shall be the aggregate amount of all of the Banks’ outstanding Committed 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.

“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, 

 29
 

 

 

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.

“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.

 30
 

 

 

“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
(provided, that in the case of Swingline Loans, the amount of each Bank’s
funded participation interest in such Swingline Loans shall be considered for
purposes hereof as if it were a direct loan and not a participation interest,
and the aggregate amount of Swingline Loans owing to the Swingline Lender shall
be considered for purposes hereof as reduced by the amount of such funded
participation interests).

“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.

 31
 

 

 

“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.

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

“Swingline
Commitment” has the meaning set forth in Section 2.16(a).

“Swingline
Lender” means JPMorgan Chase Bank, N.A., in its capacity as Swingline
Lender hereunder, and its permitted successors in such capacity in accordance
with the terms of this Agreement.

“Swingline Loan”
means a loan made or to be made by the Swingline Lender pursuant to Section 2.16.

“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 

 32
 

 

 

(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 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 

 33
 

 

 

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

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

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 

 34
 

 

 

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 and Swingline Loans, have the same initial Interest Period. Borrowings
are classified for purposes of this Agreement either by reference to the
pricing of Loans comprising such Borrowing (e.g., a “Fixed Rate
Borrowing” is a Euro-Dollar Borrowing or a Money Market Borrowing
(excluding any such Borrowing consisting of Money Market LIBOR Loans bearing
interest at the Base Rate pursuant to Article VIII), and a “Euro-Dollar
Borrowing” is a Borrowing comprised of Euro-Dollar Loans) or by
reference to the provisions of Article II under which participation therein
is determined (i.e., a “Committed Borrowing” is a Borrowing under
Section 2.1 in which all Banks participate in proportion to their
Commitments, while a “Money Market Borrowing” is a Borrowing under Section 2.3
in which a Bank’s share is determined on the basis of its bid in accordance
therewith, and a “Swingline Borrowing” is a Borrowing under Section 2.16
in which only the Swingline Lender participates (subject to the provisions of
said Section 2.16)).

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 Committed 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 Committed Loans plus such Bank’s Pro Rata Share of Swingline Loans by such
Bank at any one time outstanding 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), or in any amount required to
repay the Swingline Lender the amount of any Swingline Loan) and, other than
with respect to Money Market Loans and Swingline Loans, shall be made from the
several Banks 

 35
 

 

 

ratably in proportion to their respective Commitments.
In no event shall the aggregate Loans outstanding at any time exceed
$500,000,000, as the same may be reduced from time to time as a result of
cancellation of Commitments by Borrower or pursuant to Section 2.10
hereof. 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 11:30 a.m. (New York
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         Money Market Borrowings.

(a)           The Money Market Option. From
time to time during the Term, and provided that at such time the Borrower
maintains an Investment Grade Rating from both S&P and Moody’s, the
Borrower may, as set forth in this Section 2.3, request the Banks during
the Term to make offers to make Money Market Loans to the Borrower, not to
exceed, at such time, the lesser of (i) fifty percent (50%) of the
aggregate Commitments, and (ii) the aggregate Commitments less all Loans
then outstanding. Subject to the provisions of this Agreement, the Borrower may
repay any outstanding Money Market Loan on any day which is a Euro-Dollar
Business Day and any amounts so repaid may be reborrowed, up to the amount
available under this Section 2.3 at the time of such Borrowing, until the
Domestic Business Day next preceding the Maturity Date. The Banks may, but
shall have no obligation to, make such offers and the Borrower may, but 

 36
 

 

 

shall have no obligation to, accept any such offers in
the manner set forth in this Section 2.3.

(b)           Money Market Quote Request. When
the Borrower wishes to request offers to make Money Market Loans under this
Section, it shall transmit to the Administrative Agent by facsimile
transmission a request substantially in the form of Exhibit B
hereto (a “Money Market Quote Request”) so as to be received not later
than 10:30 A.M. (New York time) on (x) the fourth Euro-Dollar
Business Day prior to the date of Borrowing proposed therein, in the case of a
LIBOR Auction or (y) the Domestic Business Day next preceding the date of
Borrowing proposed therein, in the case of an Absolute Rate Auction (or, in
either case, such other time or date as the Borrower and the Administrative
Agent shall have mutually agreed and shall have notified to the Banks not later
than the date of the Money Market Quote Request for the first LIBOR Auction or
Absolute Rate Auction for which such change is to be effective) specifying:

1.               the proposed date of Borrowing, which shall
be a Euro-Dollar Business Day in the case of a LIBOR Auction or a
Domestic Business Day in the case of an Absolute Rate Auction,

2.               the aggregate amount of such Borrowing, which
shall be $3,000,000 or a larger multiple of $100,000,

3.               the duration of the Interest Period
applicable thereto (which shall not be less than 7 days or more than 90 days),
subject to the provisions of the definition of Interest Period, and

4.               whether the Money Market Quotes requested are
to set forth a Money Market Margin or a Money Market Absolute Rate.

The Borrower may request
offers to make Money Market Loans for more than one Interest Period in a single
Money Market Quote Request. No Money Market Quote Request shall be given within
four Euro-Dollar Business Days (or such other number of days as the
Borrower and the Administrative Agent may agree) of any other Money Market
Quote Request. Together with the delivery of each Money Market Quote Request,
Borrower shall pay to the Administrative Agent, a fee equal to $2,500.

 37
 

 

 

(c)           Invitation for Money Market Quotes.
Promptly upon receipt of a Money Market Quote Request, the Administrative Agent
shall send to the Banks by facsimile or electronic transmission a copy thereof,
which shall constitute an invitation by the Borrower to each Bank to submit
Money Market Quotes offering to make the Money Market Loans to which such Money
Market Quote Request relates in accordance with this Section (an “Invitation
for Money Market Quotes”).

(d)           Submission and Contents of Money
Market Quotes.

1.             Each Bank may submit a Money Market
Quote containing an offer or offers to make Money Market Loans in response to
any Invitation for Money Market Quotes. Each Money Market Quote must comply
with the requirements of this subsection (d) and must be submitted to the
Administrative Agent by facsimile transmission at its offices specified in or
pursuant to Section 9.1 not later than (x) 10:00 A.M. (New York
time) on the third Euro-Dollar Business Day prior to the proposed date of
Borrowing, in the case of a LIBOR Auction or (y) 9:30 A.M. (New York
time) on the proposed date of Borrowing, in the case of an Absolute Rate
Auction (or, in either case, such other time or date as the Borrower and the
Administrative Agent shall have mutually agreed and shall have notified to the
Banks not later than the date of the Money Market Quote Request for the first
LIBOR Auction or Absolute Rate Auction for which such change is to be
effective); provided that Money Market Quotes submitted by the Bank
serving as the Administrative Agent (or any affiliate of the Bank serving as
the Administrative Agent) in the capacity of a Bank may be submitted, and may
only be submitted, if the Bank serving as the Administrative Agent or such
affiliate notifies the Borrower of the terms of the offer or offers contained
therein not later than (x) one hour prior to the deadline for the other
Banks, in the case of a LIBOR Auction or (y) 15 minutes prior to the
deadline for the other Banks, in the case of an Absolute Rate Auction. Subject
to Articles III and VI, any Money Market Quote so made shall be irrevocable
except with the written consent of the Administrative Agent given on the
instructions of the Borrower. Such Money Market Loans may be funded by such
Bank’s Designated Lender (if any) as provided in Section 9.6(d), however,
such Bank shall not be required to specify in its Money Market Quote whether
such Money Market Loans will be funded by such Designated Lender.

 38
 

 

 

2.             Each Money Market Quote shall be in
substantially the form of Exhibit D hereto and shall in any case
specify:

(a)            
the proposed date of Borrowing,

(b)             the principal amount of the Money Market Loan
for which each such offer is being made, which principal amount (w) may be
greater than or less than the Commitment of the quoting Bank, (x) must be
$3,000,000 or a larger multiple of $100,000, (y) may not exceed the
principal amount of Money Market Loans for which offers were requested and (z) may
be subject to an aggregate limitation as to the principal amount of Money
Market Loans for which offers being made by such quoting Bank may be accepted,

(c)             in the case of a LIBOR Auction, the margin
above or below the applicable Euro-Dollar Rate (the “Money Market Margin”)
offered for each such Money Market Loan, expressed as a percentage (specified
to the nearest 1/10,000th of 1%) to be added to or subtracted from such base
rate,

(d)             in the case of an Absolute Rate Auction, the
rate of interest per annum (specified to the nearest 1/10,000th of 1%) (the “Money
Market Absolute Rate”) offered for each such Money Market Loan, and

(e)             the identity of the quoting Bank.

A Money Market Quote may
set forth up to five separate offers by the quoting Bank with respect to each
Interest Period specified in the related Invitation for Money Market Quotes.

3.              
Any Money Market Quote shall be disregarded if it:

(a)             is not substantially in conformity with Exhibit D
hereto or does not specify all of the information required by subsection (d)(2) above;

(b)             contains qualifying, conditional or similar
language (except for an aggregate limitation as provided in subsection (d)(2)(b) above);

 39
 

 

 

(c)             proposes terms other than or in addition to
those set forth in the applicable Invitation for Money Market Quotes(except for
an aggregate limitation as provided in subsection (d)(2) above); or

(d)             arrives after the time set forth in subsection
(d)(1).

(e)           Notice to Borrower. The
Administrative Agent shall promptly (and in any event no later than 10:30 A.M.
(New York time) on the third Euro-Dollar Business Day prior to the date of the
proposed Borrowing) notify the Borrower in writing of the terms (x) of any
Money Market Quote submitted by a Bank that is in accordance with subsection (d) and
(y) of any Money Market Quote that amends, modifies or is otherwise
inconsistent with a previous Money Market Quote submitted by such Bank with
respect to the same Money Market Quote Request. Any such subsequent Money
Market Quote shall be disregarded by the Administrative Agent unless such
subsequent Money Market Quote is submitted solely to correct a manifest error
in such former Money Market Quote or modifies the terms of such previous Money
Market Quote to provide terms more favorable to Borrower. The Administrative
Agent’s notice to the Borrower shall specify (A) the aggregate principal
amount of Money Market Loans for which offers have been received for each
Interest Period specified in the related Money Market Quote Request, (B) the
respective principal amounts and Money Market Margins or Money Market Absolute
Rates, as the case may be, so offered and (C) if applicable, limitations
on the aggregate principal amount of Money Market Loans for which offers in any
single Money Market Quote may be accepted.

(f)            Acceptance and Notice by Borrower.
Not later than 11:00 A.M. (New York time) on (x) the third Euro-Dollar
Business Day prior to the proposed date of Borrowing, in the case of a LIBOR
Auction or (y) the proposed date of Borrowing, in the case of an Absolute
Rate Auction (or, in either case, such other time or date as the Borrower and
the Administrative Agent shall have mutually agreed and shall have notified to
the Banks not later than the date of the Money Market Quote Request for the
first LIBOR Auction or Absolute Rate Auction for which such change is to be
effective), the Borrower shall notify the Administrative Agent of its
acceptance or non-acceptance of the offers so notified to it pursuant to
subsection (e). In the case of acceptance, such notice (a “Notice of Money
Market Borrowing”) shall specify the aggregate principal amount of offers
for each Interest Period that are accepted. The

 

 40

 

 

Borrower may accept any
Money Market Quote in whole or in part; provided that:

1.               the aggregate principal amount of each Money
Market Borrowing may not exceed the applicable amount set forth in the related
Money Market Quote Request;

2.               the principal amount of each Money Market
Borrowing must be $3,000,000 or a larger multiple of $100,000;

3.               acceptance of offers may only be made on the
basis of ascending Money Market Margins or Money Market Absolute Rates, as the
case may be; and

4.               the Borrower may not accept any offer that is
described in subsection (d)(3) or that otherwise fails to comply with the
requirements of this Agreement.

(g)           Allocation by Administrative Agent.
If offers are made by two or more Banks with the same Money Market Margins or Money
Market Absolute Rates, as the case may be, for a greater aggregate principal
amount than the amount in respect of which such offers are permitted to be
accepted for the related Interest Period, the principal amount of Money Market
Loans in respect of which such offers are accepted shall be allocated by the
Administrative Agent among such Banks as nearly as possible (in multiples of
$100,000, as the Administrative Agent may deem appropriate) in proportion to
the aggregate principal amounts of such offers.  The Administrative Agent shall promptly (and
in any event within one (1) Domestic Business Day after such offers are
accepted) notify the Borrower and each such Bank in writing of any such
allocation of Money Market Loans. Determinations by the Administrative Agent of
the allocation of Money Market Loans shall be conclusive in the absence of
manifest error.

(h)           Notification by Administrative
Agent. Upon receipt of the Borrower’s Notice of Money Market Borrowing in
accordance with Section 2.3(f) hereof, the Administrative Agent
shall, on the date such Notice of Money Market Borrowing is received by the
Administrative Agent, promptly notify each Bank (and such Notice of Money
Market Borrowing shall not thereafter be revocable by the Borrower) (i) of
the principal amount of the Money Market Borrowing accepted by the Borrower,
and (ii) of such Bank’s share (if any) of such Money Market Borrowing. A
Bank who is notified that it 

 41
 

 

 

has been selected to make a Money Market Loan may
designate its Designated Lender (if any) to fund such Money Market Loan on its
behalf, as described in Section 9.6(d). Any Designated Lender which funds
a Money Market Loan shall on and after the time of such funding become the
obligee under such Money Market Loan and be entitled to receive payment thereof
when due. No Bank shall be relieved of its obligation to fund a Money Market
Loan, and no Designated Lender shall assume such obligation, prior to the time
the applicable Money Market Loan is funded.

(i)            Funding of Committed Loans Not
Affected. Notwithstanding anything to the contrary contained herein, each
Bank shall be required to fund its Pro Rata Share of Committed Loans in
accordance with  Section 2.1 hereof
despite the fact that any Bank’s Commitment may have been or may be exceeded as
a result of such Bank’s making of Money Market Loans.

SECTION 2.4         Notice
to Banks; Funding of Loans.

(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. (New
York 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 New York, to the Administrative Agent at its address
referred to in Section 9.1.

(c)           Not later than 3:00 p.m. (New
York time) on the date of each Swingline Borrowing as indicated in the
applicable Notice of Borrowing, the Swingline Lender shall make available such
Swingline Borrowing in Federal funds immediately available in New York, NY, to
the Administrative Agent at its address referred to herein.

 42
 

 

 

(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 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 (including Swingline Loans and Money Market Loans) 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-2 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 

 43
 

 

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.

(d)           The Committed Loans shall mature, and
the principal amount thereof shall be due and payable, on the Maturity Date.
The Swingline Loans shall mature, and the principal amount thereof shall be due
and payable, in accordance with Section 2.16(b)(iii).

(e)           Each Money Market Loan included in
any Money Market Borrowing shall mature, and the principal amount thereof shall
be due and payable, together with accrued interest thereon, on the earlier to
occur of (i) last day of the Interest Period applicable to such Borrowing
or (ii) the Maturity Date.

(f)            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 Committed
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:

 44
 

 

 

(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 Committed Loan may be continued as, or converted into, a
Euro-Dollar Loan when any Event of 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 

 45
 

 

 

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.

(d)           If the Borrower shall fail to pay any
principal of or interest on any Money Market Loan when due, such Money Market
Loan shall bear interest, payable on demand, for each day until paid at a rate
per annum equal to the Base Rate until (in the case of a failure to pay
interest) such failure shall become an Event of Default and thereafter (or
immediately in the case of a failure to pay principal) at a rate per annum
equal to the sum of 4% plus the Base Rate for such day.

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 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 

 46
 

 

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)           Subject to Section 8.1, each
Money Market LIBOR Loan shall bear interest on the outstanding principal amount
thereof, for the Interest Period applicable thereto, at a rate per annum equal
to the sum of the Euro-Dollar Rate for such Interest Period (determined in
accordance with Section 2.7(b) as if the related Money Market LIBOR
Borrowing were a Euro-Dollar Borrowing) plus (or minus) the Money Market
Margin quoted by the Bank making such Loan in accordance with Section 2.3.
Each Money Market Absolute Rate Loan shall bear interest on the outstanding
principal amount thereof, for the Interest Period applicable thereto, at a rate
per annum equal to the Money Market Absolute Rate quoted by the Bank making
such Loan in accordance with Section 2.3. Such interest shall be payable
for each Interest Period on the last day thereof and, if such Interest Period
is longer than one month, at intervals of one month after the first day thereof.
Any overdue principal of or interest on any Money Market Loan shall bear
interest, payable on demand, for each day until paid at a rate per annum equal
to the Base Rate until (in the case of a failure to pay interest) such failure
shall become an Event of Default and thereafter (or immediately in the case of
the failure to pay principal) at a rate per annum equal to the sum of 4% plus
the Base Rate for such day.

(d)           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”).

(e)           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.

 47
 

 

 

SECTION 2.8         Fees.

(a)           Unused Fee. If at any time from
and after July 13, 2006 and on or prior to December 15, 2006,
Borrower shall fail to maintain an average outstanding balance of Loans of not
less than $100,000,000, 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 0.45% per annum of
the amount by which the average outstanding Loans during such period are less
than $100,000,000. The Unused Fee shall be payable, in arrears, on September 30,
2006 and December 31, 2006 or on the Maturity Date, if sooner.

(b)           Facility Fee. Commencing as of
December 16, 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”) equal to 0.15% per annum on the
aggregate Commitments. The facility fee shall be payable in arrears on September 30,
December 31, March 31, and June 30 during the Term, and on the
Maturity Date.

(c)           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       Mandatory Prepayment. If at any
time the Revolving Credit Agreement, dated as of April 1, 2005, among the
Borrower, the Administrative Agent and the banks party thereto shall be amended
or amended and restated or replaced so as to increase the aggregate commitments
thereunder, Borrower shall pay to the Administrative Agent, for the account of
the Banks, on or before the earlier to occur of (x) thirty (30) days after the
date of such amendment 

 48
 

 

or replacement, and (y) the end of any Interest
Period occurring after such amendment or replacement (but only to the extent of
the Loans maturing at the end of any such Interest Period), an amount equal to
the increase in the aggregate commitments thereunder (but in no event more than
the outstanding balance of the Loans). Borrower shall make such prepayment
together with interest accrued to the date of the prepayment on the principal
amount prepaid. In connection with the prepayment of a Euro-Dollar Loan prior
to the maturity thereof, the Borrower shall also pay any applicable expenses
pursuant to Section 2.13. Each such prepayment shall be applied to prepay
ratably the Loans of the Banks. Amounts prepaid pursuant to this Section 2.10
may not be reborrowed and the Commitments shall be deemed to have been reduced
accordingly.

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(or any
Money Market Borrowing bearing interest at the Base Rate pursuant to Section 8.1),
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. The Borrower
may, from time to time on any Domestic Business Day so long as prior notice is
given to the Administrative Agent and Swingline Lender no later than 2:00 p.m.
(New York time) on the day on which Borrower intends to make such prepayment,
prepay any Swingline Loans in whole or in part in amounts aggregating $100,000
or a higher integral multiple of $100,000 (or, if less, the aggregate
outstanding principal amount of all Swingline Loans then outstanding) by paying
the principal amount to be prepaid no later than 3:00 p.m. (New York time)
on such day. Each such optional prepayment shall be applied to prepay ratably
the Loans of the several Banks included in such Group of Loans or Borrowing(or
the Swingline Lender in the case of Swingline Loans) 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 (which shall promptly notify
each of the Banks), prepay any Euro-Dollar Loan as of the last day of the
Interest Period 

 49
 

 

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)           Intentionally Omitted.

(d)           Intentionally Omitted.

(e)           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. A reduction of the Commitments pursuant
to this Section 2.11(e) shall not effect a reduction in the Swingline
Commitment (unless so elected by the Borrower) until the aggregate Commitments
have been reduced to an amount equal to or less than the Swingline Commitment.

(f)            Any amounts so prepaid pursuant to Section 2.11
(a), (b), (c) or (d) may be reborrowed. In the event Borrower elects
to cancel all or any portion of the Commitments and the Swingline Commitment
pursuant to Section 2.11(e) hereof, such amounts may not be
reborrowed.

 50
 

 

 

(g)           The Borrower may not prepay any
portion of a Money Market Loan except with the prior consent of the Bank or
Designated Lender holding such Money Market Loan.

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 1:00 p.m.
(New York time) on the date when due, in Federal or other funds immediately
available in New York, to the Administrative Agent at its address referred to
in Section 9.1. The Administrative Agent will promptly (and if received
prior to 1:00 p.m., on the same Domestic Business Day, if received after
1:00 p.m. on the immediately following Domestic Business Day) distribute
to each Bank its ratable share (or applicable share with respect to Money
Market Loans) 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 1:00 p.m.
(New York 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 Swingline
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. Whenever any payment of principal of, or
interest on, the Money Market 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. 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.

 51
 

 

 

(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.

SECTION 2.13       Funding Losses. If the Borrower
makes any payment of principal with respect to any Euro-Dollar Loan or Money
Market LIBOR Loan or Money Market Absolute Rate 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 or Money Market LIBOR Loans or Money Market
Absolute Rate 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 or Money Market LIBOR Loan or Money Market Absolute
Rate 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.

 52
 

 

 

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;
provided, however, that no Swingline Loan shall be used more than once for the
purpose of refinancing another Swingline Loan, in whole or part.

SECTION 2.16       Swingline Loan Subfacility.

(a)           Swingline Commitment. Subject
to the terms and conditions of this Section 2.16, the Swingline Lender, in
its individual capacity, agrees to make certain revolving credit loans to the
Borrower (each a “Swingline Loan” and, collectively, the “Swingline
Loans”) from time to time during the term hereof; provided, however,
that the aggregate amount of Swingline Loans outstanding at any time shall not
exceed the lesser of (i) ten percent (10%) of the aggregate Commitments,
and (ii) the aggregate Commitments less all Loans then outstanding (the “Swingline
Commitment”). Subject to the limitations set forth herein, any amounts
repaid in respect of Swingline Loans may be reborrowed.

(b)           Swingline Borrowings.

(i)            Notice of Borrowing. With
respect to any Swingline Borrowing, the Borrower shall give the Swingline
Lender and the Administrative Agent notice in writing in the form attached
hereto as Exhibit C, which is received by the Swingline Lender and
Administrative Agent not later than 2:00 p.m. (New York time) on the
proposed date of such Swingline Borrowing (and confirmed by telephone by such
time), specifying (A) that a Swingline Borrowing is being requested, (B) the
amount of such Swingline Borrowing, (C) the proposed date of such
Swingline Borrowing, which shall be a Domestic Business Day, and (D) stating
that no Default or Event of Default has occurred and is continuing both before
and after giving effect to such Swingline Borrowing. Such notice shall be
irrevocable.

 

 53

 

 

(ii)           Minimum Amounts. Each
Swingline Borrowing shall be in a minimum principal amount of $1,000,000, or an
integral multiple of $100,000 in excess thereof.

(iii)          Repayment of Swingline Loans. Each
Swingline Loan shall be due and payable on the earliest of (A) 5 Domestic
Business Days from the date of the applicable Swingline Borrowing, (B) the
date of the next Committed Borrowing or (C) the Maturity Date. In
addition, in no event shall Swingline Loans be outstanding for more than ten (10) Domestic
Business Days in any calendar month. If, and to the extent, any Swingline Loans
shall be outstanding on the date of any Committed Borrowing, such Swingline
Loans shall first be repaid from the proceeds of such Committed Borrowing prior
to the disbursement of the same to the Borrower. If, and to the extent, a
Committed Borrowing is not requested prior to the Maturity Date or the end of
the 5-Domestic Business Day period after a Swingline Borrowing, the
Borrower shall be deemed to have requested a Committed Borrowing comprised
entirely of Base Rate Loans in the amount of the applicable Swingline Loan then
outstanding, the proceeds of which shall be used to repay such Swingline Loan
to the Swingline Lender. In addition, the Swingline Lender may, at any time, in
its sole discretion, by written notice to the Borrower and the Administrative
Agent, demand repayment of its Swingline Loans by way of a Committed Borrowing,
in which case the Borrower shall be deemed to have requested a Committed
Borrowing comprised entirely of Base Rate Loans in the amount of such Swingline
Loans then outstanding, the proceeds of which shall be used to repay such
Swingline Loans to the Swingline Lender. Any Committed Borrowing which is
deemed requested by the Borrower in accordance with this Section 2.16(b)(iii) is
hereinafter referred to as a “Mandatory Borrowing”. Each Bank hereby
irrevocably agrees to make Committed Loans promptly upon receipt of notice from
the Swingline Lender of any such deemed request for a Mandatory Borrowing in
the amount and in the manner specified in the preceding sentences and on the
date such notice is received by such Bank (or the next Domestic Business Day if
such notice is received after 1:00 P.M. (New York time)) notwithstanding (I) the
amount of the Mandatory Borrowing may not comply with the minimum amount of
Committed Borrowings otherwise required hereunder, (II) whether any
conditions specified in Section 3.2 are then satisfied, (III) whether
a Default or an Event of Default then exists, (IV) failure of any such
deemed request for a Committed Borrowing to be made by the time otherwise
required in Section 2.2, (V) the date of such Mandatory 

 54
 

 

 

Borrowing (provided that
such date must be a Domestic Business Day), or (VI) any termination of the
Commitments immediately prior to such Mandatory Borrowing or contemporaneously
therewith; provided, however, that no Bank shall be obligated to
make Committed Loans in respect of a Mandatory Borrowing if a Default or an
Event of Default then exists and the applicable Swingline Loan was made by the
Swingline Lender without receipt of a written Notice of Borrowing in the form
specified in subclause (i) above or after Administrative Agent has
delivered a notice of Default or Event of Default which has not been rescinded.

(iv)          Purchase of Participations. In
the event that any Mandatory Borrowing cannot for any reason be made on the
date otherwise required above (including, without limitation , as a result of
the commencement of a proceeding under the Bankruptcy Code with respect to the
Borrower), then each Bank hereby agrees that it shall forthwith, upon demand,
purchase (as of the date the Mandatory Borrowing would otherwise have occurred,
but adjusted for any payment received from the Borrower on or after such date
and prior to such purchase) from the Swingline Lender such participations in
the outstanding Swingline Loans as shall be necessary to cause each such Bank
to share in such Swingline Loans ratably based upon its Pro Rata Share
(determined before giving effect to any termination of the Commitments pursuant
hereto), provided that (A) all interest payable on the Swingline Loans
with respect to any participation shall be for the account of the Swingline
Lender until but excluding the day upon which the Mandatory Borrowing would
otherwise have occurred, and (B) in the event of a delay caused by any
purchasing Bank between the day upon which the Mandatory Borrowing would
otherwise have occurred and the time any purchase of a participation pursuant
to this sentence is actually made, such purchasing Bank shall be required to
pay to the Swingline Lender interest on the principal amount of such
participation for each day from and including the day upon which the Mandatory
Borrowing would otherwise have occurred to but excluding the date of payment
for such participation, at the rate equal to the Federal Funds Rate, for the
two (2) Domestic Business Days after the date the Mandatory Borrowing
would otherwise have occurred, and thereafter at a rate equal to the Base Rate.
Notwithstanding the foregoing, no Bank shall be obligated to purchase a
participation in any Swingline Loan if a Default or an Event of Default then
exists and such Swingline Loan was made by the Swingline Lender without receipt
of a written Notice of Borrowing in the form 

 55
 

 

 

specified in subclause (i) above
or after Administrative Agent has delivered a notice of Default or Event of
Default which has not been rescinded.

(c)           Interest Rate. Each Swingline
Loan shall bear interest on the outstanding principal amount thereof, for each
day from the date such Swingline Loan is made until the date it is repaid, at a
rate per annum equal to the Federal Funds Rate for such day, plus the
Applicable Margin for Euro-Dollar Loans.

ARTICLE III

CONDITIONS

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

 56
 

 

 

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 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 

 57
 

 

 

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 Subsidiaries and of EQR for the fiscal year ended December 31,
2005; and

(m)          no Event of Default shall have
occurred.

SECTION 3.2         Borrowings. The obligation of
any Bank to make a Loan or the obligation of the Swingline Lender to make a
Swingline 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 or a Notice of Money
Market Borrowing as required by Section 2.3;

(b)           immediately after such Borrowing, 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 

 58
 

 

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;

(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 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
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 

 59
 

 

 

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 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 

 60
 

 

 

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 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, 2005,
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, 2005, 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 2005 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 

 61
 

 

their consolidated results of operations and cash
flows for such fiscal year.

(c)           Since March 31, 2006, (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 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 

 62
 

 

 

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,
2004. 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
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 

 63
 

 

 

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 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 2005, 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, 2005, 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 

 64
 

 

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

SECTION 4.19       Qualifying Unencumbered Properties.
As of March 31, 2006, each Property listed on Exhibit F 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 F is true and correct in all
material respects.

 

 65

 

 

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 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 

 66
 

 

 

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 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 

 67
 

 

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 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 

 68
 

 

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 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 

 69
 

 

 

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.

(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 

 70
 

 

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 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.

 71
 

 

 

(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.

(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 

 72
 

 

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 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 

 73
 

 

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;

(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;

 74
 

 

 

(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 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

 

 75

 

 

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;

(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 

 76
 

 

 

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;

(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 and the
Swingline Commitment 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 

 77
 

 

 

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 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 (including, without limitation, those set forth in Section 6.4
hereof) 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 

 78
 

 

 

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.

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. JPMorgan
Chase Bank, 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 JPMorgan Chase Bank, 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 JPMorgan Chase Bank, 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 

 79
 

 

 

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
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 Administrative Agent.
As between Administrative Agent and the Banks, neither the Administrative Agent
nor any of its affiliates nor any of its 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 Administrative Agent and the Banks, neither the
Administrative Agent nor any of its 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 Administrative Agent and the
Banks, the Administrative Agent 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 it 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 Administrative
Agent and its affiliates and directors, 

 80
 

 

 

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 under this Agreement, the other Loan Documents or any action taken or
omitted by such indemnitee hereunder as Administrative Agent. In the event that
the Administrative Agent shall, subsequent to its 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 with such
indemnification, the Administrative 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 Administrative 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
Administrative Agent 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 Administrative Agent 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. 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, which shall 

 81
 

 

 

be the 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 retiring Administrative Agent, and the
retiring Administrative Agent  shall be
discharged from its duties and obligations hereunder. The rights and duties of
the Administrative Agent to be vested in any successor Administrative Agent
shall include, without limitation, the rights and duties as Swingline Lender. 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), 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 

 82
 

 

 

(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 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 or Money Market LIBOR Loan:

(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 

 83
 

 

 

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 (i) 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, or (ii) any Money Market LIBOR Borrowing for which a Notice of
Money Market Borrowing has previously been given, the Money Market LIBOR Loans
comprising such Borrowing shall bear interest for each day from and including
the first day to but excluding the last day of the Interest Period applicable
thereto at the Base Rate for such day. 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 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 in case of the event described above 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 

 84
 

 

 

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
Loans and all amounts due such Bank hereunder (including, without limitation,
interest, Facility Fees, Unused 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 2.16(f), 2.16(g), 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 (x) the date
hereof in the case of Committed Loans made pursuant to Section 2.1, or (y) the
date of the related Money Market Quote, in the case of any Money Market Loan,
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 

 85
 

 

 

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 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 

 86
 

 

(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 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 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 and all 

 87
 

 

 

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 2.16(f), 2.16(g), 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 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.

 

 88

 

 

(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.

(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

 89
 

 

 

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 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 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 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

 90
 

 

 

2.16(f), 2.16(g), 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 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,

 91
 

 

 

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 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

 92
 

 

 

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 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

 93
 

 

 

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 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

 94
 

 

 

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, 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 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 or the Swingline Lender in its capacity as Administrative
Agent or Swingline Lender, as applicable, are affected thereby, by the
Administrative Agent or Swingline Lender, as applicable); 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

 95
 

 

 

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 EQR Guaranty or, except as provided below, 
any Down REIT Guaranty, (vi) modify the definition of “Required
Banks”, or (vii) modify the provisions of this Section 9.5. At such
time as the Borrower shall sell its interest in any Down REIT Guarantor to an
unaffiliated third party in an arms-length transaction, the Down REIT
Guaranty of such Down REIT Guarantor shall be deemed to have terminated and
released, and the Banks hereby authorize the Administrative Agent to enter into
an agreement, confirming the termination and release of such Down REIT
Guaranty, at the Borrower’s sole cost and expense.

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.

(b)           Any Bank may at any time grant (i) from
and after December 15, 2006 and 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 or in the case of participations with respect to Money Market Loans only)
(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 (other
than with respect to

 96
 

 

 

Money Market Loans), 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).

(c)           Any Bank may at any time assign to (i) from
and after December 15, 2006 and 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

 97
 

 

 

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
“E” 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; and provided further that such
assignment may, but need not, include rights of the transferor Bank in respect
of outstanding Money Market Loans. 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 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.

 

 98

 

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 (each, a “Designating
Lender”) may at any time designate one Designated Lender to fund Money
Market Loans on behalf of such Designating Lender subject to the terms of this Section 9.6(d) and
the provisions in Sections 9.6(b) and (c) shall not apply to such
designation. No Bank may designate more than one (1) Designated Lender at
any one time. The parties to each such designation shall execute and deliver to
the Administrative Agent for its acceptance a Designation Agreement. Upon such
receipt of an appropriately completed Designation Agreement executed by a
Designating Lender and a designee representing that it is a Designated Lender,
the Administrative Agent will accept such Designation Agreement and will give
prompt notice thereof to the Borrower, whereupon, (i) the Borrower shall
execute and deliver to the Designating Lender a Designated Lender Note payable
to the order of the Designated Lender, (ii) from and after the effective
date specified in the Designation Agreement, the Designated Lender shall become
a party to this Agreement with a right (subject to the provisions of Section 2.3(b))
to make Money Market Loans on behalf of its Designating Lender pursuant to Section 2.3
after the Borrower has accepted a Money Market Loan (or portion thereof) of the
Designating Lender, and (iii) the Designated Lender shall not be required
to make payments with respect to any obligations in this Agreement except to
the extent of excess cash flow of such Designated Lender which is not otherwise
required to repay obligations of such Designated Lender which are then due and
payable; provided, however, that regardless of such designation
and assumption by the Designated Lender, the Designating Lender shall be and
remain obligated to the Borrower, the Administrative Agent and the Banks for
each and every obligation of the Designating Lender and its related Designated
Lender with respect to this Agreement, including, without limitation, any
indemnification obligations under Section 7.6 hereof and any sums
otherwise payable to the Borrower by the Designated Lender. Each Designating
Lender shall serve as the administrative agent of the Designated Lender and
shall on behalf of, and to the exclusion of, the Designated Lender: (i) receive
any and all payments made for the benefit of the Designated Lender and (ii) give
and receive all communications and notices and take all actions hereunder,
including, without limitation, votes, approvals, waivers, consents and
amendments under or relating to this Agreement 

 99
 

 

and the other Loan
Documents. Any such notice, communication, vote, approval, waiver, consent or
amendment shall be signed by the Designating Lender as administrative agent for
the Designated Lender and shall not be signed by the Designated Lender on its
own behalf and shall be binding upon the Designated Lender to the same extent
as if signed by the Designated Lender on its own behalf. The Borrower, the
Administrative Agent and the Banks may rely thereon without any requirement
that the Designated Lender sign or acknowledge the same. No Designated Lender
may assign or transfer all or any portion of its interest hereunder or under any
other Loan Document, other than assignments to the Designating Lender which
originally designated such Designated Lender or otherwise in accordance with
the provisions of Sections 9.6 (b) and (c).

(e)           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.

(f)            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 NEW YORK (WITHOUT GIVING EFFECT TO THE PRINCIPLES THEREOF RELATING
TO CONFLICTS OF LAW).

 100
 

 

(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 New York or of the United States of America for the Southern
District of New York, 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 

 101
 

 

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 2.16(g), 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 EQR 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 

 102
 

 

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 or Section 2.16(e),
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) or
Section 2.16(e). 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 Sections 2.4(c) or
2.16(e) 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
Sections 2.4(b) or 2.16(e) 

 103
 

 

shall not 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 

 104
 

 

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;

 105
 

 

(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 

 106
 

 

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 

 107
 

 

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 

 108
 

 

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.

 

 109
 

 

(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 and Designated Lenders agree with Borrower that any funds, claims, or
distributions actually received by the Administrative Agent for the account of
any Bank or Designated Lender 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 

 110
 

 

principal, interest and
other amounts then owed in respect of the Obligations or of an issuance of
Public Debt, as the case may be) among the Administrative Agent, the Banks and
the Designated Lenders 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 or Designated Lender 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, any Bank or Designated
Lender 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, the Banks and the Designated Lenders 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, the Banks and the Designated Lenders 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 

 111
 

Agent, the Banks and the
Designated Lenders and their respective successors and assigns. Nothing
contained herein or in any Down REIT 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,
any Bank or any Designated Lender 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 

 112
 

 

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 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.”

 113
 

 

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 and Treasurer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Facsimile number: (312) 454-0039

  
	
   

  	
  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 and Treasurer

  
				

 

 114
 

 

	
  Commitments

  	
   

  
	
   

  	
  JPMORGAN CHASE BANK, N.A., as 

  
	
  $500,000,000

  	
  Administrative Agent, as 

  
	
   

  	
  Swingline Lender and as a Bank

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Marc E. Costantino

  
	
   

  	
   

  	
  Name:

  	
  Marc E. Costantino

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  

 

 115

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00106-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00106-of-00352.parquet"}]]