REVOLVING CREDIT AGREEMENT

 

REVOLVING CREDIT AGREEMENT

 

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

 

W I T N E S S E T H

 

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

 

ARTICLE I

 

DEFINITIONS

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

Range of		Applicable
Borrower’s		Margin for		Applicable
Credit Rating		Base Rate		Margin for Euro
(S&P/Moody’s		Loans		Dollar Loans
Ratings)		(% per annum)		(% per annum)
Non-Investment Grade		0.250		1.050
BBB-/Baa3		0.0		0.800
BBB/Baa2		0.0		0.600
BBB+/Baa1		0.0		0.500
A-/A3 or better		0.0		0.450

 

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

 

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

 

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

 

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

 

“ Base Rate ” means, for any day, a fluctuating rate per annum equal to the higher of (a) the Federal Funds Rate plus ½ 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.”

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“ Capital Reserve ” shall mean $200 per year.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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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.

 

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

 

“ FMV Cap Rate ” means 7.50%.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“ Negative Pledg e” 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.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“ Permitted Liens ” means:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

29

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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ARTICLE II

 

THE CREDITS

 

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

 

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

 

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

 

(ii)            the aggregate amount of such Borrowing,

 

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

 

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

 

SECTION 2.3          Intentionally Omitted .

 

SECTION 2.4          Notice to Banks; Funding of Loans .

 

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

 

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

 

(c)            Intentionally Omitted.

 

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

 

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

 

SECTION 2.5          Notes .

 

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

 

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

 

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

 

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

 

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

 

SECTION 2.6          Method of Electing Interest Rates .

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

SECTION 2.7          Interest Rates .

 

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

 

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

 

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

 

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

 

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

 

SECTION 2.8          Fees .

 

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

 

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

 

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

 

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

 

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

 

SECTION 2.10        Intentionally Omitted .

 

SECTION 2.11        Optional Prepayments and Optional Decreases and Termination .

 

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

 

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

 

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

 

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

 

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

 

SECTION 2.12        General Provisions as to Payments .

 

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

 

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

 

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