EX-10.5 6 a13-6530_1ex10d5.htm EX-10.5

Exhibit 10.5

LIMITED LIABILITY COMPANY AGREEMENT

ARCHSTONE PARALLEL RESIDUAL JV 2, LLC

by and between

AVB RESIDUAL PARALLEL II, LLC

and

EQR-PARALLEL RESIDUAL JV 2 MEMBER, LLC

FEBRUARY 27, 2013

TABLE OF CONTENTS

			Page

ARTICLE I	IN GENERAL		1

Section 1.1		Name	1

Section 1.2		Formation of Limited Liability Company	2

Section 1.3		Agreement; Inconsistencies with Act	2

Section 1.4		Principal Place of Business	2

Section 1.5		Registered Office and Registered Agent	2

Section 1.6		Term	2

Section 1.7		Permitted Businesses	2

Section 1.8		Qualification in Other Jurisdictions; Ongoing Organizational Maintenance	4

Section 1.9		Rules of Construction	4

Section 1.10		Title to Company Assets	5

ARTICLE II	DEFINITIONS		5

Section 2.1		Defined Terms	5

ARTICLE III	MEMBERS; MEMBERSHIP INTERESTS; CAPITAL CONTRIBUTIONS; GUARANTEES		15

Section 3.1		One Class of Members	15

Section 3.2		Members of the Company	15

Section 3.3		Capital Contributions and Capital Accounts	15

Section 3.4		Failure to Contribute Capital	16

Section 3.5		Parent Guaranty Delivered to the AVB Member	18

Section 3.6		Parent Guaranties delivered to Third Parties	18

Section 3.7		Members as Creditors	19

Section 3.8		No Right of Withdrawal or Resignation	20

Section 3.9		Limited Liability	20

Section 3.10		No Third Party Rights	20

ARTICLE IV	MANAGEMENT AND CONTROL OF THE COMPANY ASSETS AND THE BUSINESS		20

Section 4.1		Management Committee	20

Section 4.2		Designated Managers; Officers; Transition Team	22

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(continued)

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Section 4.3		Major Decisions	24

Section 4.4		Budgets and Business Plans	28

Section 4.5		Implementation of Approved Business Plan by the Designated Managers	29

Section 4.6		Reserves — General	30

Section 4.7		Contracts With Contracting Members; Management Agreements	30

Section 4.8		Limited Liability of Management Committee Representatives, Transition Team Members and Designated Managers	31

Section 4.9		Standard of Care of Management Committee Representatives, Transition Team Members and Designated Managers	31

Section 4.10		Transactions between the Company and an Interested Management Committee Representative or Designated Manager	31

Section 4.11		Bank Accounts	32

Section 4.12		Reimbursement of Expenses	32

Section 4.13		Reliance by Third Parties	32

Section 4.14		Authorization of the Transactions under the Purchase Agreement and Related Transactions	33

ARTICLE V	TAXES, ALLOCATIONS AND DISTRIBUTIONS		34

Section 5.1		Allocations and Tax Provisions	34

Section 5.2		Distributions	34

Section 5.3		Withholding	34

ARTICLE VI	ACCOUNTING, RECORDS AND REPORTING		35

Section 6.1		Accounting and Records	35

Section 6.2		Access to Accounting and Other Records	35

Section 6.3		Required Reports	36

Section 6.4		Tax Returns	37

Section 6.5		Tax Matters Partner	37

ARTICLE VII	INDEMNIFICATION, INSURANCE AND EXCULPATION		38

Section 7.1		Indemnification	38

Section 7.2		Procedures; Survival	39

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(continued)

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Section 7.3		Insurance	39

Section 7.4		Rights to Rely on Legal Counsel, Accountants	39

ARTICLE VIII	TRANSFER OF MEMBERSHIP INTERESTS; ADMISSION OF ADDITIONAL MEMBERS		40

Section 8.1		Transfer or Assignment of Membership or Manager Interests	40

Section 8.2		Conditions to Transfer by Member	40

Section 8.3		Permitted Transfers	40

Section 8.4		Transfer of Interests in Equity Residential, ERP or AVB	40

Section 8.5		Unauthorized Transfers Void	41

Section 8.6		Admission of Substitute Member; Liabilities	42

Section 8.7		Admission of Additional Members	42

ARTICLE IX	SPECIAL RIGHTS AND OBLIGATIONS OF MEMBERS AND THE COMPANY		42

Section 9.1		[Reserved]	42

Section 9.2		[Reserved]	42

Section 9.3		Other Business Activities of the Members	42

Section 9.4		Indemnification Claims Under Purchase Agreement	43

Section 9.5		[Reserved]	43

Section 9.6		Employees; Transition Plan	43

Section 9.7		Office Leases	43

ARTICLE X	DISSOLUTION AND LIQUIDATION OF THE COMPANY		44

Section 10.1		Events Causing Dissolution	44

Section 10.2		Liquidation and Winding Up	44

ARTICLE XI	REPRESENTATIONS AND WARRANTIES		45

Section 11.1		Representations and Warranties of ERP Member	45

Section 11.2		Representations and Warranties of AVB Member	46

ARTICLE XII	MISCELLANEOUS		47

Section 12.1		Complete Agreement	47

Section 12.2		Governing Law; Venue	47

Section 12.3		No Assignment; Binding Effect	47

iii

TABLE OF CONTENTS

(continued)

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Section 12.4	Severability	48

Section 12.5	No Partition	48

Section 12.6	Multiple Counterparts	48

Section 12.7	Additional Documents and Acts	48

Section 12.8	REIT Compliance	48

Section 12.9	Amendments	49

Section 12.10	No Waiver	49

Section 12.11	Time Periods	49

Section 12.12	Notices	49

Section 12.13	Dispute Resolution; Mediation	49

Section 12.14	Specific Performance	51

Section 12.15	No Third Party Beneficiary	51

Section 12.16	Waiver of Jury Trial	51

Section 12.17	Cumulative Remedies	51

Section 12.18	Exhibits and Schedules	52

Section 12.19	Interpretation	52

Section 12.20	Survival	52

Section 12.21	Attorneys’ Fees	52

Section 12.22	Confidentiality	52

LIMITED LIABILITY COMPANY AGREEMENT

This Limited Liability Company Agreement (this “Agreement”) is made and entered into as of February 27, 2013 (the “Effective Date”) between AVB Residual Parallel II, LLC, a Delaware limited liability company(“AVB Member”), and EQR-Parallel Residual JV 2 Member, LLC, a Delaware limited liability company (“ERP Member”).

R E C I T A L S

A. WHEREAS, AVB (as such term and any other capitalized term used in this Agreement is defined in Article II), Equity Residential and ERP have entered into the Purchase Agreement with Seller, pursuant to which they have agreed to acquire certain assets of Enterprise from Seller; and

B. WHEREAS, AVB, Equity Residential and ERP have entered into the Buyers Agreement, which sets forth certain understandings among AVB, Equity Residential and ERP concerning the acquisition of the assets of Enterprise pursuant to the Purchase Agreement; and

C. WHEREAS, the Buyers Agreement provides for the formation of a joint venture (referred to therein as “Archstone Residual JV”) and attaches a term sheet setting forth the terms applicable to the governance of such joint venture (referred to therein as the “Archstone Residual JV Term Sheet”) which are to be set forth in a definitive joint venture agreement (referred to therein as the “Definitive Archstone Residual JV Agreement”); and

D. WHEREAS, AVB Member is a wholly-owned subsidiary of AVB and ERP Member is a wholly-owned subsidiary of ERP; and

E. WHEREAS, exclusively with respect to the Company Assets, AVB Member and ERP Member desire to form the Company and to set forth in this Agreement the definitive terms for the governance of the Company, in furtherance of the provisions of the Buyers Agreement calling for the formation of Archstone Residual JV and the execution and delivery of the Definitive Archstone Residual JV Agreement consistent with the Archstone Residual JV Term Sheet.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, AVB Member and ERP Member hereby agree as follows:

ARTICLE I

IN GENERAL

Section 1.1 Name.

The name of the limited liability company is Archstone Parallel Residual JV 2, LLC (the “Company”).

Section 1.2 Formation of Limited Liability Company.

The Company was duly formed upon the filing of a certificate of formation of the Company with the Secretary of State of the State of Delaware on February 15, 2013, which certificate sets forth the information required by Section 18-201 of the Delaware Limited Liability Company Act (the “Certificate of Formation”). Michelle La Pelle, as an “authorized person” within the meaning of the Act, has executed, delivered and filed the Certificate of Formation of the Company with the Secretary of State of the State of Delaware, such execution, delivery and filing being hereby ratified and approved by the Members. Upon the filing of the Certificate of Formation with the Secretary of State of the State of Delaware, such person’s powers as an “authorized person” ceased.

Section 1.3 Agreement; Inconsistencies with Act.

(a) This Agreement constitutes the “limited liability company agreement” of the Company within the meaning of the Act.

(b) This Agreement shall govern the relationship of the Members, except to the extent a provision of this Agreement is expressly prohibited under the Act. If any provision of this Agreement is prohibited under the Act, this Agreement shall be considered amended to the least degree possible in order to make such provision effective under the Act.

Section 1.4 Principal Place of Business.

The principal place of business of the Company shall be c/o Equity Residential, Two North Riverside Plaza, Suite 400, Chicago, Illinois 60606. The Company may locate its place of business at any other place or places as may be Approved by the Members from time to time.

Section 1.5 Registered Office and Registered Agent.

The Company’s initial registered office shall be at the office of its registered agent at 1209 Orange Street, Wilmington, Delaware 19801, and the name of its initial registered agent is The Corporation Trust Company. The registered office and registered agent may be changed with the Approval of the Members from time to time by filing the address of the new registered office and/or the name of the new registered agent with the Secretary of State of the State of Delaware pursuant to the Act.

Section 1.6 Term.

The term of existence of the Company (the “Term”) shall continue until the Company is terminated, dissolved or liquidated in accordance with this Agreement and the Act.

Section 1.7 Permitted Businesses.

(a) The business of the Company shall be: (i) to acquire (in accordance with the Purchase Agreement and the Buyers Agreement), own, manage, operate, improve, develop, sell and otherwise deal with the Company Assets, and any other assets that may, from time to time, be acquired by the Company pursuant to this Agreement, directly or through Subsidiary Entities;

(ii) to incur, assume, pay, perform, discharge, satisfy, settle or otherwise resolve any liabilities that may, from time to time, be incurred by the Company pursuant to this Agreement, directly or through Subsidiary Entities; and (iii) to do all other lawful acts and things as may be necessary, desirable, expedient, convenient for or incidental to the furtherance and accomplishment of the foregoing objectives and purposes and for the protection and benefit of the Company. The Company shall not engage in any other business without the Approval of the Members.

(b) In connection with the Company’s business, the Company shall have the power and authority, subject to any Approval of the Members or Approval of the Management Committee required under this Agreement:

(i) to acquire, hold and dispose of any real or personal property;

(ii) to borrow money from banks, other lending institutions, Members, or Affiliates of Members, and in connection therewith, to hypothecate, encumber and grant security interests in the assets of the Company to secure repayment of the borrowed sums;

(iii) to purchase liability and other insurance to protect the Company’s property and business and to protect the assets of the Members and Management Committee Representatives;

(iv) to invest any Company funds temporarily (by way of example but not limitation) in demand deposits, money-market mutual funds, short-term governmental obligations, commercial paper or other investments;

(v) to sell or otherwise dispose of any, all or substantially all of the assets of the Company;

(vi) to execute all instruments and documents, including, without limitation, checks; drafts; notes and other negotiable instruments; mortgages or deeds of trust; security agreements; financing statements; documents providing for the acquisition, mortgage or disposition of the Company’s property; assignments; bills of sale; leases; contracts; partnership agreements, operating agreements of other limited liability companies; and any other instruments or documents necessary to conduct the business of the Company;

(vii) to employ accountants, legal counsel, managing agents or other experts to perform services for the Company and to compensate them from Company funds;

(viii) to enter into any and all other agreements, with any other Person as may be necessary or appropriate to the conduct of the Company’s business; and

(ix) to do and perform all other acts as may be necessary or appropriate to the conduct of the Company’s business.

(c) In connection with the formation of the Company and the execution of this Agreement, on or prior to the date hereof, the Company acquired the interests in certain Subsidiary Entities certain of which may be reflected on the organizational chart that is or may hereafter be attached hereto as Schedule A, and the Members hereby authorize ERP Member as

the Designated Manager to execute such documents and instruments, deliver such notices, make such filings and take such other acts as it may consider to be necessary to reflect in any official records in accordance with applicable legal requirements the acquisition by the Company of ownership or control over such Subsidiary Entities or otherwise further to effectuate the acquisition by the Company of ownership or control over such Subsidiary Entities.

Section 1.8 Qualification in Other Jurisdictions; Ongoing Organizational Maintenance.

ERP Member as the Designated Manager is authorized to cause the Company to be qualified or registered as required under applicable laws in any jurisdiction in which the Company transacts business and to execute, deliver and file any certificates and documents necessary to effect such qualification or registration. ERP Member as the applicable Designated Manager is authorized to cause the Company to comply with all applicable requirements of the State of Delaware for the filing of annual statements with the Secretary of State of the State of Delaware, and shall be responsible for the maintenance of minute books and the organizational documents of the Company.

Section 1.9 Rules of Construction.

The following rules of construction shall apply to this Agreement:

(a) Unless otherwise specifically and expressly limited in the context, any reference herein to a decision, determination, act, action, exercise of a right, power or privilege, or other procedure by a Member, Transition Team member or Management Committee Representative shall mean and refer to the decision, determination, act, action, exercise of a right, power, privilege, or other procedure by the Member, Transition Team member or Management Committee Representative in its sole and absolute discretion acting in the best interests of such Member (or, in the case of a Management Committee Representative or Transition Team member, the best interests of the Member which appointed such Management Committee Representative or Transition Team member) and not as a fiduciary for the Company or the other Member.

(b) All references in this Agreement to “Dollars” as a unit of currency shall be deemed a reference to United States dollars and United States currency.

(c) Unless explicitly stated to the contrary, the term “includes”, “including” and other expressions of inclusion shall be construed in each instance to mean “includes without limitation”, “including but not limited to” or other phraseology denoting the non-exclusive nature of the item to which reference is being made.

(d) The Members acknowledge that, as identified pursuant to express statements that appear on the face or cover page of certain schedules attached to this Agreement, certain schedules attached to this Agreement are incomplete or have been left blank. In such cases, the references to such schedule in this Agreement shall be disregarded (except for the provisions which are included in such schedule as attached hereto on the date hereof) unless and until the Management Committee or Members Approve the form of the complete, final form of the schedule that is to be considered so referenced herein.

Section 1.10 Title to Company Assets.

All Company assets, whether real or personal, tangible or intangible, shall be deemed to be owned by the Company as an entity, and no Member, individually, shall have any direct ownership interest in such property.

ARTICLE II

DEFINITIONS

Section 2.1 Defined Terms.

As used in this Agreement, the following terms shall have the following meanings:

“Accountants” means the independent certified public accountants Approved by the Members and engaged from time to time by the Company for purposes of reviewing or auditing the Company’s financial statements and performing such other services as are required to be performed by the Accountants by this Agreement.

“Act” means the Delaware Limited Liability Company Act, as amended or superseded from time to time.

“Additional Capital Requested Amount” has the meaning set forth in Section 3.3(b).

“Adjusted Asset Value” means, with respect to any asset of the Company, such adjusted basis of such asset for federal income tax purposes, except as follows:

(i) The Adjusted Asset Value of any asset contributed to the Company by a Member shall be the gross fair market value of such asset as determined jointly by the Management Committee and the contributing Member, in their joint and reasonable discretion.

(ii) If the Management Committee reasonably determines that an adjustment is necessary or appropriate to reflect the relative Proportionate Shares of the Members in the Company, the Adjusted Asset Values of all Company assets shall be adjusted to equal their gross fair market value, as determined by the Management Committee, taking Section 7701(g) of the Code into account, as of the following times: (a) a Capital Contribution (other than a de minimis capital contribution) to the Company by a new or existing Member; (b) any distribution by the Company to an Member of more than a de minimis amount of Company property (other than cash); (c) any distribution by the Company to an Member of more than a de minimis amount of cash in connection with the redemption of all or a portion of a Member’s Membership Interest in the Company; and (d) at such other times as the Management Committee reasonably determines necessary or advisable in order to comply with Treasury Regulations Sections 1.704-1(b) and 1.704-2.

(iii) The Adjusted Asset Values of Company property shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Section 734(b) or 743(b) of the Code, but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Treasury Regulations Section 1.704-

1(b)(2)(iv)(m); provided, however, that Adjusted Asset Values shall not be adjusted pursuant to this paragraph to the extent that the Management Committee reasonably determines that an adjustment pursuant to paragraph (ii) above is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this paragraph (iii).

(iv) The Adjusted Asset Value of an asset shall be adjusted by the Depreciation taken into account with respect to such asset, for purposes of computing Profits and Losses.

Any determination to be made by the Management Committee pursuant to this definition shall be made with the Approval of the Management Committee.

“Adjusted Capital Account” means, with respect to any Member, such Member’s Capital Account as of the end of the relevant Fiscal Year, after giving effect to the following adjustments: (i) credit to such Capital Account any amounts which such Member is obligated or treated as obligated to restore with respect to any deficit balance in such Capital Account pursuant to Treasury Regulations Section 1.704-1(b)(2)(ii)(c), or is deemed to be obligated to restore with respect to any deficit balance pursuant to the penultimate sentences of Treasury Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5); and (ii) debit to such Capital Account the items described in Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6). The foregoing definition of Adjusted Capital Account is intended to comply with the provisions of Treasury Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.

“Affiliate” or “Affiliated” means, with respect to any Person, (i) any Person who directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control with such Person, or (ii) any Person in which such Person has, directly or indirectly, a twenty five percent (25%) or more ownership or beneficial interests. A Person shall be deemed to control a Person if it owns, directly or indirectly, at least twenty five percent (25%) of the ownership interest in such Person or otherwise has the power to direct the management, operations or business of such Person. Notwithstanding the foregoing, an Affiliate of the Company that is controlled by the Company shall not be deemed to be an Affiliate of any Member for any of the purposes of this Agreement.

“Agreement” means this Limited Liability Company Agreement and any amendments hereto.

“Annual Budget” means, for the Company, an annual operating and, if applicable, capital budget.

“Approval of the Management Committee,” “Approval by the Management Committee” or similar phrases means the unanimous approval of the AVB Representatives and ERP Representatives excluding, with respect to any matter as to which a Capital Defaulting Member has no approval rights pursuant to Section 3.4, the Management Committee Representatives appointed by the Capital Defaulting Member.

“Approval of the Members,” “Approval by the Members” or similar phrases means the unanimous approval of the Members, excluding, with respect to any matter as to which a

Capital Defaulting Member has no approval rights pursuant to Section 3.4, such Capital Defaulting Member.

“Approved Business Plan,” means each Initial Business Plan for the Company and each amendment or revision thereto or update thereof which is Approved by the Members or Approved by the Management Committee. The Approved Business Plan is anticipated to set forth the mutually-agreed-upon plan for the ownership, operation, management and disposition of the Company Assets through the anticipated holding period therefor.

“Archstone Subsidiaries” means the subsidiaries acquired, directly or indirectly, by the Company from Enterprise pursuant to the Purchase Agreement and the Buyers Agreement. The Archstone Subsidiaries are listed on Schedule B.

“Authorized Unilateral Decision” means any action, decision or transaction which a Member has the authority to undertake pursuant to this Agreement without the Approval of the Management Committee or Members hereunder.

“AVB” means AvalonBay Communities, Inc., a Maryland corporation, and its successors and permitted assigns.

“AVB Member” has the meaning set forth in the introductory paragraph of this Agreement and includes its successors and permitted assigns.

“AVB Representatives” has the meaning set forth in Section 4.1(a).

“Business Day” means any day excluding a Saturday, Sunday or any other day during which there is no scheduled trading on the New York Stock Exchange.

“Buyers Agreement” means that certain Joint Buyers Agreement, dated as of November 26, 2012, among Equity Residential, ERP and AVB.

“Capital Account” means the capital account established on behalf of each Member on the books of the Company. In general, the Capital Account of each Member shall be initially credited with the amount of such Member’s initial Capital Contribution to the Company, as set forth on Schedule C. Thereafter, each such Member’s Capital Account shall be increased by (a) the amount of money contributed by such Member to the Company, (b) the Adjusted Asset Value of any property contributed by such member to the Company (net of liabilities securing such contributed property that the Company is considered to assume or take subject to under Section 752 of the Code), and (c) allocations to such Member of Profits and other items of book income and gain, and is decreased by (d) the amount of money distributed to the Member by the Company, (e) the Adjusted Asset Value of property distributed by the Company to the Member (net of liabilities securing such distributed property that the Member is considered to assume or take subject to under Section 752 of the Code) and (f) allocations to such Member of Losses and other items of book loss and deduction, and is otherwise adjusted in accordance with the additional rules set forth in Treasury Regulations Section 1.704-1(b)(2)(iv). The Capital Accounts shall also be adjusted (x) as reasonably determined by the Management Committee, to reflect any redemption, forfeiture or transfer of Membership Interests, and (y) in accordance with Treasury Regulations Section 1.704-1(b)(2)(iv)(m). It is the intent of the Members that the

Capital Accounts of all Members be determined and maintained in accordance with the principles of Treasury Regulations Section 1.704-1(b)(2)(iv) at all times throughout the full term of the Company. Accordingly, the Management Committee is authorized to make any other adjustments to the Capital Accounts so that the Capital Accounts and allocations thereto comply with said Section of the Treasury Regulations, provided that such adjustments do not have a material adverse effect on any Member. Any determination to be made by the Management Committee pursuant to this definition shall be made with the Approval of the Management Committee.

“Capital Contribution” means any contribution to the capital of the Company in cash or other assets or property by a Member in accordance with Article III.

“Capital Default Amount” has the meaning set forth in Section 3.4.

“Capital Default Loan” has the meaning set forth in Section 3.4(a).

“Capital Defaulting Member” has the meaning set forth in Section 3.4.

“Capital Transaction” means the sale, financing, refinancing, total or partial destruction, condemnation or other disposition of any Archstone Residual Asset or any other substantial asset of the Company or any Subsidiary Entity.

“Certificate of Formation” has the meaning set forth in Section 1.2 of this Agreement.

“Change in Board Control” means, with respect to any Person, during any period beginning on or after the date hereof, individuals who at the beginning of such period constituted such Person’s board of directors (or equivalent governing body), and any new member of such board whose nomination to or election by such board was approved by a vote of at least a majority of the board members then still in office who either were board members at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of such board.

“Code” means the Internal Revenue Code of 1986 as amended, or corresponding provisions of subsequent superseding federal revenue laws.

“Company” has the meaning set forth in Section 1.1.

“Company Assets” means the interests in the Archstone Subsidiaries, acquired, directly or indirectly, by the Company pursuant to the Purchase Agreement and the Buyers Agreement.

“Company Minimum Gain” means “partnership minimum gain” set forth in Treasury Regulations Section 1.704-2(b)(2).

“Contingent Obligation” means (a) any Guaranty Obligation or (b) any direct or indirect obligation or liability, contingent or otherwise, incurred pursuant to any Rate Contract.

“Contracting Member” means, in relation to any contract that is entered into between the Company or any Subsidiary Entity and a Member or that Member’s Affiliates, the Member that is or whose Affiliate is the party to that contract.

“Covered Person” has the meaning set forth in Section 7.1.

“Depreciation” means, with respect to any Company asset for any Fiscal Year or other period, the depreciation, depletion or amortization, as the case may be, allowed or allowable for federal income tax purposes in respect of such asset for such fiscal year or other period; provided, however, that if there is a difference between the Adjusted Asset Value and the adjusted tax basis of such asset, Depreciation means with respect to such asset “book depreciation, depletion or amortization” as determined under Treasury Regulations Section 1.704-1(b)(2)(iv)(g)(3); provided however that, if any property has a zero adjusted basis for federal income tax purposes, Depreciation may be determined under any reasonable method selected by the Management Committee.

“Designated Manager” has the meaning set forth in Section 4.2(a).

“Discussion Period” has the meaning set forth in Section 12.13.

“Dissolution Event” has the meaning set forth in Section 10.1.

“Distributable Cash” means, for any period, the excess, if any, of (a) the aggregate Gross Receipts during such period of any kind and description over (b) the sum of the aggregate Expenditures paid during such period, subject to the reserve requirements set forth in Section 4.6.

“Economic Capital Account” means, with respect to any Member, such Member’s Capital Account as of the date of determination, after crediting to such Capital Account any amounts that the Member is deemed obligated to restore under Treasury Regulations Section 1.704-2.

“Emergency Costs” means costs and expenses which are (or are to be) incurred in the reasonable belief that such expenditures are required to (i) correct a condition that if not corrected would endanger imminently the preservation or safety of an Archstone Residual Asset, (ii) avoid the imminent suspension of any necessary service in or to such Archstone Residual Asset, or (iii) prevent the Company, any Subsidiary Entity, any of the Members or Parents or any of their respective agents, officers, employees or representatives from being subjected imminently to criminal or substantial civil penalties in connection with an Archstone Residual Asset.

“Enterprise” means Archstone Enterprise LP, a Delaware limited partnership.

“Entity” means any general partnership, limited partnership, corporation, limited liability company, limited liability partnership, joint venture, trust, business trust, cooperative or association or other comparable business entity.

“Equity Residential” means Equity Residential, a Maryland real estate investment trust, and its successors and permitted assigns.

“ERP” means ERP Operating Limited Partnership, an Illinois limited partnership, and its successors and permitted assigns.

“ERP Member” has the meaning set forth in the introductory paragraph of this Agreement and includes its successors and permitted assigns.

“ERP Representatives” has the meaning set forth in Section 4.1(a).

“Expenditures” means, for any period, the sum of all cash expenditures or reserves during such period (determined on a consolidated basis for the Company and all Subsidiary Entities) including, without limitation: (i) all cash expenditures for operating expenses, (ii) principal, interest, fees, debt service payments and other payments on account of any indebtedness, (iii) expenditures for capital improvements and other expenses of a capital nature with respect to any Archstone Residual Asset, (iv) additions to reserves pursuant to Section 4.6, (v) any and all expenditures related to any acquisition, development, sale, disposition, financing or refinancing of any Archstone Residual Asset or other capital asset, (vi) any other expenses incurred in connection with the Company’s business, and (vii) any organizational expenses incurred by or on behalf of the Company (but not any costs or expenses incurred by ERP Member or AVB Member in connection with the formation of the Company and its Subsidiary Entities as applicable, including the costs and expenses incurred in connection with the negotiation, execution and delivery of this Agreement, which costs and expenses shall be the sole responsibility of ERP Member and AVB Member, respectively). In no event shall any deduction be made for non-cash expenses such as depreciation or amortization.

“Extraordinary Transaction” has the meaning set forth in Section 8.4.

“Fiscal Year” means the Company’s fiscal year. The Company’s fiscal year shall be its taxable year. The Company’s taxable year shall be the calendar year, unless otherwise required by the Code or Treasury Regulations, or other applicable law in the case of the Company’s taxable year(s) for foreign, state or local tax purposes, as reasonably determined by the Management Committee.

“Funding Notice” has the meaning set forth in Section 3.3(b).

“Governmental Authority” means any governmental or political subdivision, whether federal, state, local or foreign, or any agency or instrumentality of any such government or political subdivision, or any federal, state, local or foreign court, authority, tribunal, department, bureau or commission, in each case having jurisdiction over the matter.

“Gross Receipts” means, for any period, any and all cash receipts (including, without limitation, gross proceeds resulting from a Capital Transaction) during such period (determined on a consolidated basis for the Company and all Subsidiary Entities), including, without limitation, Capital Contributions and amounts released from (or paid from) reserves.

“Guaranty Equalization Payment” has the meaning set forth in Section 3.6(b).

“Guaranty Obligation” means, as applied to any Person, any direct or indirect liability of that Person with respect to, or the pledge or encumbrance by that Person of any of its property as collateral for, any Indebtedness, lease, dividend, letter of credit or other obligation (the “primary obligation”) of another Person (the “primary obligor”), including any obligation of that Person, whether or not contingent, (a) to purchase, repurchase or otherwise acquire such primary obligations or any Property constituting direct or indirect security therefor, or (b) to advance or provide funds (i) for the payment or discharge of any such primary obligation, or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency or any balance sheet item, level of income or financial condition of the primary obligor, or (c) to purchase securities, other properties or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation, (d) on account of any letter of credit issued to any creditor or obligee of the primary obligor or (e) otherwise to assure or hold harmless the holder of any such primary obligation against loss in respect thereof.

“Hypothetical Liquidation” shall mean a hypothetical liquidation of the Company in accordance with the terms of this Agreement that includes (i) a sale of all of the assets of the Company for cash at prices equal to their Adjusted Asset Values and (ii) the cash contribution by the Members of the aggregate maximum amounts, if any, that the Members would be required to contribute to the Company under this Agreement as and to the extent such amounts would be needed to pay all partnership recourse liabilities.

“Indebtedness” of any Person means without duplication, (a) all indebtedness for borrowed money, (b) all obligations issued, undertaken or assumed as the deferred purchase price of property or services, (c) all reimbursement obligations with respect to surety bonds, letters of credit, bankers’ acceptances and similar instruments (in each case, to the extent non-contingent), (d) all obligations evidenced by notes, bonds, debentures or similar instruments, (e) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to properties acquired by the Person (even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such properties), and (f) all obligations under capital leases, (g) all indebtedness referred to in clauses (a) through (f) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any lien upon or in any property (including accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness.

“Indemnified Losses” has the meaning set forth in Section 7.1 of this Agreement.

“Initial Business Plan” means the business plan for the Company that is described on Schedule D (or, if Schedule D does not contain a reference to a business plan for the Company, the first business plan for the Company that is developed and Approved by the Management Committee subsequent to the date hereof pursuant to Section 4.3(a)). The Initial Business Plan shall include an Annual Budget for the remainder of the 2013 calendar year. The Members have targeted the completion of the Initial Business Plan for the quarterly meeting anticipated to occur in June, 2013.

“JAMS” has the meaning set forth in Section 12.13.

“Major Decision” has the meaning set forth in Section 4.3.

“Management Committee” has the meaning set forth in Section 4.1(a).

“Management Committee Representative” has the meaning set forth in Section 4.1(a).

“Member” or “Members” means AVB Member, ERP Member or any successors or Substitute Members thereto.

“Member Nonrecourse Debt” means “partner nonrecourse debt” as set forth in Treasury Regulations Section 1.704-2(b)(4).

“Member Nonrecourse Deductions” means “partner nonrecourse deductions” as set forth in Treasury Regulations Section 1.704-2(i)(2).

“Membership Interest” means the entire ownership interest of a Member in the Company at any particular time, including all economic rights and voting rights of the Member in the Company, the right of such Member to any and all benefits to which a Member may be entitled as provided in this Agreement and under law, and the obligations of such Member to comply with all of the terms and provisions set forth in this Agreement and under applicable law.

“Minimum Gain Attributable to Member Nonrecourse Debt” means “partner nonrecourse debt minimum gain” as determined in accordance with Treasury Regulations Section 1.704-2(i)(2).

“Non-Contracting Member” means, in any relation to any contract that is entered into between the Company or any Subsidiary Entity and a Member or that Member’s Affiliates, the Member that is not the Contracting Member.

“Non-Discretionary Funding Requirements” means funds needed to meet any or all of the following obligations of the Company or any Subsidiary Entity, except to the extent that an Approved Business Plan expressly provides for the non-payment of any of the following amounts:

(i) [Reserved];

(ii) [Reserved];

(iii) insurance premiums and utility payments;

(iv) any expenditure required by any present or future law, ordinance, order, rule, regulation or requirement of any Governmental Authority except to the extent that the Management Committee or Members have Approved the failure to perform such alteration, repair or replacement, or have Approved action to contest the application of such law, ordinance, rule, regulation or requirement or have Approved action to appeal such order; and

(v) any amount required to be paid pursuant to any final non-appealable order, judgment, or decree of any Governmental Authority having jurisdiction over any Archstone Residual Asset.

“Nonrecourse Deductions” has the meaning set forth in Treasury Regulations Sections 1.704-2(b)(1) and (c).

“Nonrecourse Liabilities” has the meaning set forth in Treasury Regulations Section 1.704-2(b)(3).

“Office Leases” means the interests acquired, directly or indirectly, by the Company from Enterprise pursuant to the Purchase Agreement and the Buyers Agreement (or to which the Company has succeeded through the acquisition of interests in entities acquired by the Company from Enterprise pursuant to the Purchase Agreement and the Buyers Agreement) in and to the office leases more particularly described in Schedule L attached hereto.

“Over-Guarantying Member” has the meaning set forth in Section 3.6(b).

“Parent” means, in relation to ERP Member, ERP.

“Parent Guaranty” means (a) that certain Guaranty, of even date herewith, executed and delivered by ERP in favor of AVB Member (but not any other person), pursuant to which ERP has guaranteed the obligations of ERP Member to fund its Capital Contributions to the Company and to pay and perform its other obligations under this Agreement and (b) that certain Guaranty, of even date herewith, executed and delivered by AVB in favor of ERP Member (but not any other person), pursuant to which AVB has guaranteed the obligations of AVB Member to fund its Capital Contributions to the Company and to pay and perform its other obligations under this Agreement. The form of such Parent Guaranty is substantially in the form of Exhibit 2 attached hereto.

“Person” means any individual or Entity, and the heirs, executors, administrators, legal representatives, successors and assigns of such Person where the context so permits.

“Profits” and “Losses” means, for each Fiscal Year or other period, the Company’s items of taxable income or loss for such year or other period, determined in accordance with Section 703(a) of the Code (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Section 703(a)(1) of the Code shall be included in taxable income or loss), with the following adjustments: (i) any income of the Company that is exempt from federal income tax and not otherwise taken into account in computing Profits or Losses shall be added to such taxable income or loss; (ii) any expenditures of the Company described in Section 705(a)(2)(B) of the Code or treated as Section 705(a)(2)(B) of the Code expenditures pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(i) shall be subtracted from such taxable income or loss; (iii) gain or loss resulting from any disposition of a property with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Adjusted Asset Value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs from its Adjusted Asset Value; (iv) in lieu of the depreciation, amortization and other cost recovery deductions taken into account in computing such taxable income or loss, the Company shall compute such deductions based on the

Depreciation of a property; (v) if the Adjusted Asset Value of an asset is adjusted pursuant to the definition of Adjusted Asset Value (except with respect to Depreciation), then the amount of such adjustment shall be treated as an item of gain or loss and included in the computation of Profits and Losses; and (vi) items of Company gross income, gains, deductions and losses allocated pursuant to Sections B(1) through (and including) B(7) of Schedule E shall not be included in the computation of Profits and Losses.

“Proportionate Share” means, unless and until there has been a transfer of an interest in the Company or an admission of a new Member, with respect to AVB Member, 40%, and with respect to ERP Member, 60%.

“Purchase Agreement” means that certain Asset Purchase Agreement, dated as of November 26, 2012, among Equity Residential, ERP, AVB, Lehman Brothers Holdings, Inc., a Delaware corporation, and Enterprise.

“Rate Contract” means interest rate and currency swap agreement, cap, floor and collar agreement, interest rate insurance, currency spot and forward contract and other agreement or arrangement designed to provide protection against fluctuations in interest or currency exchange rates.

“REIT” means a “real estate investment trust” as defined in Section 856 of the Code.

“Responsible Member” has the meaning set forth in Section 3.6(c).

“Restricted Holder” has the meaning set forth in Section B(1) of Schedule E.

“Seller” means Enterprise and Lehman Brothers Holdings, Inc., collectively.

“Subsidiary Entity” means any Entity that is directly or indirectly wholly-owned and controlled by the Company.

“Substitute Member” means a Person that acquires a Membership Interest and that has been admitted as a Member pursuant to Article VIII of this Agreement.

“Successor Parent” has the meaning set forth in Section 8.4.

“Target Balance” means, with respect to any Member as of the close of any period for which allocations are made under Schedule E, the net amount such Member would receive (or be required to contribute) in a Hypothetical Liquidation of the Company as of the close of such period, expressed as a negative number if the Member is required to contribute a net amount to the Company in connection with a Hypothetical Liquidation and expressed as a positive number if the Member would receive a net distribution in connection with a Hypothetical Liquidation.

“Tax Items” has the meaning set forth in Section C(1) of Schedule E.

“Tax Matters Member” means the “tax matters partner” as defined in Section 6231(a)(7) of the Code.

“Term” has the meaning set forth in Section 1.6 of this Agreement.

“Third Party Entity” means any Entity that is not an Affiliate of the Company.

“Transfer” means sell, assign, transfer, mortgage, pledge, hypothecate, encumber, exchange or otherwise dispose of, whether or not for value, and whether voluntarily, by operation of law or otherwise.

“Transition Team” means the working group of representatives appointed by ERP Member and AVB Member to assist with the administration of routine decisions related to the Company, as more fully described in Section 4.2(j).

“Treasury Regulations” means the temporary and final regulations issued by the U.S. Treasury Department under the Code, as amended or superseded from time to time.

“Under-Guarantying Member” has the meaning set forth in Section 3.6(b).

ARTICLE III

MEMBERS; MEMBERSHIP INTERESTS; CAPITAL CONTRIBUTIONS; GUARANTEES

Section 3.1 One Class of Members.

All Members of the Company shall be of one class.

Section 3.2 Members of the Company.

Effective upon the adoption and execution of this Agreement, AVB Member and ERP Member are the sole Members of the Company. The respective addresses and Proportionate Shares in the Company of AVB Member and ERP Member are set forth in Schedule C. Additional Members may not be admitted to the Company except in accordance with Section 8.7 hereof.

Section 3.3 Capital Contributions and Capital Accounts

(a) Initial Capital Contributions. Each Member has contributed or agrees to contribute to the Company the amount of capital having the value set forth opposite such Member’s name on Schedule C in exchange for its Membership Interest which capital shall be contributed in such form as may be required to enable the Company to acquire the Company Assets pursuant to the Purchase Agreement and the Buyers Agreement.

(b) Additional Capital Contributions. If a Designated Manager determines (after taking into account any existing cash reserves of the Company) that capital is needed to (i) restore operating reserves to a level as contemplated in the applicable Approved Business Plan or Annual Budget, (ii) fund any cash needs of the Company as contemplated in any applicable Approved Business Plan or as would not exceed the amounts that may be expended in accordance with Section 4.3(i), or arise pursuant to Authorized Unilateral Decisions, (iii) fund

Emergency Costs, (iv) fund Non-Discretionary Funding Requirements, or (v) fund to any Designated Manager any fees or expense reimbursements due to it hereunder or fund to any Covered Person any amounts due on account of any of the Company’s indemnification obligations or obligations to advance expenses as provided for in Section 7.1 or 7.2, such Designated Manager shall issue a notice (a “Funding Notice”) substantially in the form attached hereto as Exhibit 1 setting forth the amount of capital being requested (the “Additional Capital Requested Amount”). Within ten (10) Business Days following the date of receipt of a Funding Notice, each Member shall pay to the Company as a Capital Contribution such Member’s Proportionate Share of the Additional Capital Requested Amount. Any funds advanced by the Members to the Company pursuant to this Section constitute additional Capital Contributions to the Company.

(c) Limitations. No Member shall have any liability for the repayment of the Capital Contribution of any other Member and, subject to Section 3.6, each Member shall look only to the assets of the Company for return of its Capital Contributions.

(d) No Right to Return of Contribution; No Interest on Capital. Except as provided in this Agreement, no Member shall have the right to withdraw or receive any return of, or interest on, any Capital Contribution or on any balance in such Member’s Capital Account. If the Company is required to return any Capital Contribution to a Member, the Member shall not have the right to receive any property other than cash.

(e) Capital Accounts. The Company shall establish and maintain an individual Capital Account for each Member.

Section 3.4 Failure to Contribute Capital.

If any Member fails to make a Capital Contribution required under Section 3.3(b) by the date such Capital Contribution is due and such failure continues for ten (10) Business Days after written notice from the Member which has not failed to make its Capital Contribution (any such failing Member shall be a “Capital Defaulting Member” and the amount of the failed Capital Contribution shall be the “Capital Default Amount”), then the non-Capital Defaulting Member shall have any one and only one of the following remedies:

(a) to advance to the Company (or, at its election, cause any of its Affiliates to advance to the Company) on behalf of, and as a loan to, the Capital Defaulting Member, an amount equal to the Capital Default Amount (each such loan, a “Capital Default Loan”). The Capital Account of the Capital Defaulting Member shall be credited with the amount of such Capital Default Loan, which shall be deemed to be a Capital Contribution made by the Capital Defaulting Member, and such amount shall constitute a debt owed by the Capital Defaulting Member to the non-Capital Defaulting Member (or its applicable Affiliate that has funded the Capital Default Loan). Any Capital Default Loan shall bear interest at a rate equal to 15% per annum and shall be payable from any distributions due the Capital Defaulting Member hereunder, but shall in all events be payable in full by the ninetieth (90th) day following the date such Capital Default Loan was made. Interest on a Capital Default Loan to the extent unpaid shall accrue and compound monthly. A Capital Default Loan shall be prepayable at any time or from time to time without penalty. While any Capital Default Loan is outstanding,

notwithstanding anything in this Agreement to the contrary, all distributions to the Capital Defaulting Member hereunder shall be applied first to payment of any interest due under any Capital Default Loan and then to principal until all amounts due thereunder are paid in full. All payments made in repayment of any Capital Default Loan shall be applied first toward payment of unpaid accrued interest and then (if any remains) toward payment of principal. If a Capital Default Loan is not paid on or prior to the date such Capital Default Loan becomes due, the non-Capital Defaulting Member (or its applicable Affiliate that has funded the Capital Default Loan) may pursue all available rights and remedies against the Capital Defaulting Member and, pursuant to the applicable Parent Guaranty, its Parent (and if the non-Capital Defaulting Member’s Affiliate has funded the Capital Default Loan, it shall be entitled to all of the rights of a non-Capital Defaulting Member under this Section 3.4, including all rights to enforce the Parent Guaranty as if it were the “Creditor Member” thereunder);

(b) to revoke the Funding Notice for both Members, whereupon any Capital Contributions paid by the non-Capital Defaulting Member pursuant to such Funding Notice shall be returned, in which event the Members may reconsider the needs of the Company for additional Capital Contributions, and any Member may thereafter issue any Funding Notice as permitted hereunder following such reconsideration; or

(c) to contribute its required Capital Contribution and pursue its rights under the Parent Guaranty delivered by the Parent of the Capital Defaulting Member with respect to such Capital Default Amount.

Unless the non-Capital Defaulting Member shall have elected to revoke the Funding Notice for both Members pursuant to Section 3.4(b), then, until either the Capital Default Loan made by the non-Capital Defaulting Member shall have been repaid in full or the amounts due with respect to such Capital Contribution have been funded by the Capital Defaulting Member or its Parent pursuant to the Parent Guaranty, the Capital Defaulting Member and the Management Committee Representatives appointed by it shall have no voting or approval rights hereunder. Such voting and approval rights shall be restored in the event that the Capital Defaulting Member (or its Parent, pursuant to its Parent Guaranty) repays the Capital Default Loan in accordance with the terms of this Agreement, but the Capital Defaulting Member and the Management Committee Representatives appointed by it shall be bound by all decisions that were made without its or their approval while the Capital Default Loan was outstanding. Notwithstanding the foregoing, under no circumstances shall the non-Capital Defaulting Member or the Management Committee Representatives appointed by it have any authority, without the written consent of the Capital Defaulting Member or, as applicable, the Management Committee Representatives appointed by it, to cause the Company to incur on behalf of the Company any indebtedness which includes any recourse obligations of any Member, to engage in any transaction with any Affiliate of the non-Capital Defaulting Member, or to amend this Agreement, nor shall the Capital Defaulting Member forfeit any of its rights to receive distributions, to receive reports or obtain information as a result of the making of any Capital Default Loan.

Section 3.5 Parent Guaranty Delivered to the AVB Member.

Concurrently with the execution and delivery of this Agreement, AVB has delivered its Parent Guaranty to ERP Member, and ERP has delivered its Parent Guaranty to AVB Member. No creditor or third party shall have rights to enforce any obligations under such Parent Guaranty.

Section 3.6 Parent Guaranties delivered to Third Parties.

(a) Allocation of Guaranty Liability. Subject to Section 3.6(c) below, liability under any Guaranty Obligation that is delivered by any of the Members or their Parents with respect to any Indebtedness or Contingent Obligation of the Company or any Subsidiary Entity shall, as between the Members and their Parents, be apportioned in proportion to the Members’ Proportionate Shares, and any payments made under any such Guaranty Obligation (other than payments made by a Responsible Member) shall be deemed additional Capital Contributions to the Company.

(b) Guaranty Equalization Payments. Subject to Section 3.6(c), if at any time a Member or its Affiliate or Parent shall have made a payment under or otherwise satisfied any Guaranty Obligation with respect to any Indebtedness or Contingent Obligation of the Company or any Subsidiary Entity, and on or prior to such time, the other Member or its Affiliate or Parent shall not have made a payment under or otherwise satisfied an equivalent Guaranty Obligation with respect to the same Indebtedness or Contingent Obligation of the Company or any Subsidiary Entity in an amount that is in proportion to its Proportionate Share of the aggregate cumulative amounts by which both Members and their Affiliates and Parents have made payments under or otherwise satisfied such Guaranty Obligations, then the Member (the “Under-Guarantying Member”) that has (together with its Affiliates and Parent) paid amounts or otherwise satisfied amounts on account of such aggregate Guaranty Obligations that are less than its Proportionate Share of the aggregate cumulative amounts paid or satisfied by both Members and their Affiliates and Parents under such aggregate Guaranty Obligations shall, immediately upon demand by the other Member (the “Over-Guarantying Member”), pay or cause to be paid to the Over-Guarantying Member (on behalf of itself and as applicable its Affiliates and Parent) such sums (each, a “Guaranty Equalization Payment”) as may be sufficient to cause the sum of the amounts by which such aggregate Guaranty Obligations have been paid or satisfied by the Over-Guarantying Member and its Affiliate and Parent, minus the amount of the Guaranty Equalization Payment so paid to the Over-Guarantying Member, to equal the Over-Guarantying Member’s Proportionate Share of the aggregate cumulative amounts by which such aggregate Guaranty Obligations have been paid or satisfied by both Members and their Affiliates and Parents. The obligation of the Under-Guarantying Member and its Parent to make such Guaranty Equalization Payment shall be absolute, irrevocable and unconditional under any and all circumstances whatsoever and irrespective of any set-off, counterclaim or defense to payment which the Under-Guarantying Member or its Affiliate or Parent may have or claim to have against the obligee of the Guaranty Obligations. If the Under-Guarantying Member does not pay the Guaranty Equalization Payment or cause it to be paid to the Over-Guarantying Member (on behalf of itself and as applicable its Affiliates and Parent) immediately upon demand therefor, then the unpaid amount of such Guaranty Equalization Payment shall bear interest at the rate applicable to Capital Default Loans until paid in full (which interest shall

be immediately due and payable), and, without limiting any other available rights or remedies of the Over-Guarantying Member against the Under-Guarantying Member or its Parent (including any rights or remedies under such Parent’s Parent Guaranty), any distributions or payments thereafter otherwise payable by the Company to the Under-Guarantying Member shall be withheld from such Member and instead paid to the Over-Guarantying Member until such time as the full amount of the Guaranty Equalization Payment (plus all accrued but unpaid interest thereon) has been paid to the Over-Guarantying Member. The Under-Guarantying Member shall be deemed a Capital Defaulting Member for purposes of this Agreement and shall lose voting rights as more particularly set forth in Section 3.4 until the Under-Guarantying Member has paid, or caused to be paid, the Guaranty Equalization Payment.

(c) Carveout Exposure. Notwithstanding the provisions of Sections 3.6(a) or (b) to the contrary, if any amount is paid or payable under any Indebtedness or Contingent Obligation of the Company or any Subsidiary Entity, or under any Guaranty Obligation of any Member or its Parent with respect to any Indebtedness or Contingent Obligation of the Company or any Subsidiary Entity, as a result of any act or omission on the part of one of the Members or their Affiliates which is not an Authorized Unilateral Decision or not reasonably within the scope of decisions, actions or transactions that were Approved by the Members or Approved by the Management Committee, then the Member whose act or omission (or whose Affiliate’s act or omission) solely resulted in the obligation to make such payment (such Member, the “Responsible Member”) shall have exclusive responsibility, as between the Members, for satisfying the payment obligations arising under such Indebtedness, Contingent Obligation or Guaranty Obligation as a result of such act or omission of the Responsible Member or its Affiliate; the Responsible Member shall have no rights to require the other Member or its Parent to make any Guaranty Equalization Payment on account of any such payment obligations; and the Responsible Member shall indemnify, defend, protect and hold harmless the Company, the other Member and its Parent from any losses, damages, liabilities, costs and expenses, including prepayment premiums, default rate interest, legal fees and disbursements, arising from any such act or omission under any such Indebtedness, Contingent Obligation or Guaranty Obligation, except, in each case, to the extent that the amount so paid or payable under such Indebtedness, Contingent Obligation or Guaranty Obligation is applied to reduce the principal balance due upon such Indebtedness or the principal balance due upon Indebtedness that is guaranteed or supported by such Contingent Obligation or Guaranty Obligation.

(d) Schedule F which is or may be attached hereto identifies the Guaranty Obligations of the Members, their Parents and Affiliates as of the date of this Agreement and may include certain additional provisions applicable thereto.

(e) [Reserved]

Section 3.7 Members as Creditors.

With the Approval of the Members and subject to any other applicable terms in this Agreement, any Member may lend money to and transact other business with the Company as a creditor and, subject to applicable law, any Member has the same rights and obligations with respect thereto as a person who is not a Member.

Section 3.8 No Right of Withdrawal or Resignation.

No Member shall have the right to withdraw or resign from the Company except with the Approval of the Members, and then only upon such terms and conditions as may be specifically agreed upon between the Members. Notwithstanding any other provision of this Agreement, unless otherwise Approved by the Members, the withdrawing or resigning Member shall not be entitled to any return or repayment of its Capital Contribution or other distribution or transfer in the event of withdrawal or resignation. The foregoing provisions are exclusive and no Member shall be entitled to claim any distribution or transfer upon withdrawal or resignation under Section 18-604 of the Act or otherwise.

Section 3.9 Limited Liability.

Except as expressly set forth in this Agreement or required by law, no Member shall (a) be personally liable for any Indebtedness, Contingent Obligation or other liability or obligation of the Company, whether that Indebtedness, Contingent Obligation or liability or obligation arises in contract, tort, or otherwise, solely by reason of being a Member of the Company, or (b) have any obligation to restore any deficit or negative balance in the Capital Account of such Member.

Section 3.10 No Third Party Rights.

Any obligations or rights of the Company or the Members to make or require any Capital Contribution under this Article III shall not result in the grant of any rights or confer any benefits upon any Person who is not a Member.

ARTICLE IV

MANAGEMENT AND CONTROL OF THE COMPANY ASSETS AND THE BUSINESS

Section 4.1 Management Committee

(a) Composition. The Company shall have a Management Committee (the “Management Committee”) which shall be composed of four (4) individuals (each, a “Management Committee Representative”). Two (2) Management Committee Representatives shall be Persons appointed by AVB Member (the “AVB Representatives”) and two Management Committee Representatives shall be Persons appointed by ERP Member (the “ERP Representatives”). As of the date hereof, the initial AVB Representatives are Leo Horey and Matthew Birenbaum, and the initial ERP Representatives are Alan George and Mark Parrell.

(b) Vacancies; Removal. Each Management Committee Representative shall hold office at the discretion of the Member appointing such Management Committee Representative. Any AVB Representative may be removed and replaced, with or without cause and for any reason at any time, by (and only by) AVB Member. Any ERP Representative may be removed and replaced, with or without cause and for any reason at any time, by (and only by) ERP Manager. A Management Committee Representative may also resign of its own volition at any time, by written notice to the Members. In the event of any vacancy in the office of a Management Committee Representative, such vacancy shall be filled, by written notice to the

Members, by an individual designated by (i) AVB Member if such vacancy relates to an AVB Representative, and (ii) ERP Member if such vacancy relates to an ERP Representative.

(i) Meetings of the Management Committee shall be held once per fiscal quarter of the Company on such dates and at such places and times as may be Approved by the Members. The agenda items for each quarterly meeting shall include a review of the Company’s business and the progress in implementing the Approved Business Plan and the other activities of the Company.

(ii) With the Approval of the Members, Management Committee meetings may be held more frequently than quarterly.

(iii) Management Committee Representatives may vote in person or by proxy; such proxy may be granted in writing, by electronic transmission (as defined in the Act), or as otherwise permitted by applicable law.

(iv) At the election of either Member, Management Committee meetings may be held by telephone conference or other communications equipment by means of which all participating Management Committee Representatives can simultaneously hear each other during the meeting.

(v) Any action required or permitted to be taken by the Management Committee may be taken without a meeting, if a consent to such action is delivered in writing or via electronic transmission (as defined in the Act) by the requisite number of the Management Committee Representatives. Such written consent or a record of such electronic transmission shall be filed with the records of the Management Committee.

(d) Attendance at Management Committee Meetings. Subject to Section 3.4, no action may be taken at a meeting of the Management Committee unless at least one Management Committee Representative appointed by each Member is present in person or as otherwise permitted in Section 4.1(c). Notwithstanding the foregoing, during any period when a Member shall be a Capital Defaulting Member, action may be taken at a meeting of the Management Committee without regard to the attendance at such meeting of the Management Committee Representatives appointed by such Capital Defaulting Member, but only with respect to matters as to which its Management Committee Representatives have no voting rights as more fully provided in Section 3.4, and only if at least five (5) Business Days’ notice of the meeting shall have been provided to the Capital Defaulting Member and an opportunity to be present at such meeting (in person or via telephone) shall have been provided to such Capital Defaulting Member.

(e) Voting Rights; Required Votes. Except as provided below, and subject to Section 3.4, each Management Committee Representative shall be entitled to cast one vote with respect to any matter requiring Approval of the Management Committee. Any action, decision or transaction considered by the Management Committee at a meeting thereof must be Approved by the Management Committee in order to be authorized; provided that any action to be considered by the Management Committee involving any contract or agreement between the Company and a

Contracting Member shall not be effective or authorized unless it is unanimously approved by the Management Committee Representatives appointed by the Non-Contracting Member (which approval shall constitute “Approval by the Management Committee” for all purposes hereof) and the Management Committee Representatives appointed by the Contracting Member shall have no right to vote or approve of any such action. Notwithstanding anything to the contrary contained herein, if only one of the Management Committee Representatives appointed by a Member is present in person, via other means permitted pursuant to Section 4.1(c) or by proxy at a meeting of the Management Committee, the votes cast by such Management Committee Representative shall count as two (2) votes and shall be deemed to consist of the entire voting power of both Management Committee Representatives appointed by such Member.

(f) Approval by Members in Lieu of the Management Committee. At any time, the Members may consider and Approve or disapprove any action, decision or transaction that this Agreement contemplates will be considered, Approved or disapproved by the Management Committee. In the event of any conflict or inconsistency between any action, decision or transaction that has been Approved by the Members and any action, decision or transaction that has been Approved by the Management Committee, the action, decision or transaction Approved by the Members shall govern and control, and shall not be overridden or superseded by an action, decision or transaction Approved by the Management Committee unless such action, decision or transaction is also Approved by the Members.

(g) Delegation to Subcommittees, Etc. Either the Management Committee or the Members may Approve from time to time the delegation of authority with respect to the administration or management of certain decisions or functions to subcommittees, working groups or individuals, whose authority shall be limited to the decisions or functions so delegated to them. Consistent with the limited authority so delegated to them, such subcommittees, working groups or individuals shall be considered to be Designated Managers for the purposes of this Agreement. Any such subcommittee, working group or individual, if appointed by Approval of the Management Committee, shall be subject to all limits upon the authority of the Management Committee provided for in this Agreement, including, without limitation, the limits set forth in Section 4.1(f). As of the date hereof, the Members have delegated to the Transition Team the authority to administer routine decisions related to the Company, as more fully described in Section 4.2(j).

Section 4.2 Designated Managers; Officers; Transition Team.

(a) As expressly provided in this Agreement, or at any time and from time to time hereafter with the Approval of the Members or the Approval of the Management Committee, Members or other Persons may be designated as managers or authorized signatories or agents of the Company with respect to the performance of specific duties, actions, functions or tasks, with respect to the execution of documents or consummation of transactions, or otherwise with respect to specific assets or obligations of the Company, and the scope of the authority of each such designated manager, signatory or agent, and applicable period of time within which such authority may be exercised, shall (if not expressly stated in this Agreement) be as provided for in the applicable Approval of the Members or Approval of the Management Committee. Each such designated manager, signatory or agent is referred to herein as a “Designated Manager” and is intended to be a “manager” as defined in the Act having the specific authority expressly

described herein or in the applicable Approval of the Members or Approval of the Management Committee.

(b) The Designated Managers shall include, throughout the Term, general administrative managers. In accordance with the allocation of responsibilities for the administrative management of the Company that is or hereafter shall be provided for in Schedule J attached hereto or as otherwise specifically allocated pursuant to this Agreement, the applicable Designated Manager as designated in Schedule J attached hereto or otherwise in this Agreement shall have the sole authority on behalf of the Company with respect to the administrative functions and responsibilities that are allocated to it on Schedule J attached hereto or otherwise in this Agreement, together with the authority, rights and powers to do any and all acts and things necessary, proper, appropriate, advisable, incidental or convenient in connection with such functions and responsibilities, but all subject to the limitations, restrictions, conditions and requirements set forth in this Agreement.

(d) [Reserved]

(e) [Reserved]

(f) Unless a Designated Manager is hereafter designated with the Approval of the Members or the Approval of the Management Committee to implement any Approved Business Plan or other action on behalf of the Company other than as described in Schedule J attached hereto, the Management Committee shall retain the administrative responsibilities with respect to the development of proposals for and proposed revisions to business plans, the implementation and monitoring of the applicable Approved Business Plan therefor, and the other actions of the Company.

(g) Each Person appointed as a Designated Manager shall serve at the discretion of the Members, and such Person may be removed upon the Approval of the Members (if such Person was appointed with the Approval of the Members or the Approval of the Management Committee) or removed upon the Approval of the Management Committee (if such Person was appointed with the Approval of the Management Committee).

(h) Without limiting any Designated Manager’s express obligations under this Agreement, the Members hereby agree that no Designated Manager shall have any fiduciary duty to the Company or the Members, any such requirement of fiduciary duty being forever and unconditionally waived by the Members to the extent permitted by the Act. Notwithstanding anything to the contrary in this Agreement, in addition to the express limitations set forth in this Agreement with respect to the duties and obligations of the Designated Manager, no Designated Manager shall be in default of its duties and obligations under this Agreement in the event that (i) such Designated Manager is unable to cause the Company or a Member to take any action because the action to be taken constitutes a Major Decision and such Major Decision is not then Approved, or (ii) such Designated Manager is unable to cause the Company or a Member to take any action due to a lack of available Company funds.

(i) The Members acknowledge that certain officers have been appointed prior to the date hereof with respect to certain Subsidiary Entities, and from time to time hereafter, with the Approval of the Management Committee or the Members, officers of the Subsidiary Entities may be appointed, removed or replaced. Notwithstanding the foregoing, any officer of a Subsidiary Entity who is an employee of a Member (or its Parent or any Affiliate thereof) shall hold office at the discretion of such Member, and may be removed and replaced, with or without cause and for any reason at any time, by (and only by) such Member. In the event of any vacancy in any office of any Subsidiary Entity, such vacancy shall be filled by an individual designated by (i) AVB Member if such vacancy relates to an office that was previously filled by an employee of AVB Member (or its Parent or any Affiliate thereof), and (ii) ERP Member if such vacancy relates to an office that was previously filled by an employee of ERP Member (or its Parent or any Affiliate thereof).

(j) Pursuant to Section 4.1(g), the Members have delegated to the Transition Team the authority to administer routine decisions related to the Company, as more fully described in this Section 4.2(j). The initial members of the Transition Team include representatives who have been appointed by ERP Member and representatives who have been appointed by AVB Member, and decisions may be made by the Transition Team only with the agreement of at least one member who has been appointed by ERP Member and one member who has been appointed by AVB Member, and without any objection to the proposed decision from any member of the Transition Team. Vacancies on the Transition Team shall be filled by the Member whose appointee has resigned or been removed. At any time, at the election of any Member, effective upon written notice to the other Member, the authority of the Transition Team to administer certain classes or categories of decisions shall be suspended, and the authority to administer such classes or categories of decisions shall revert to the Management Committee. If the Transition Team is unable to agree upon a proposed decision, then that decision shall be referred to the Management Committee for Approval in accordance with this Agreement.

Section 4.3 Major Decisions.

Notwithstanding any other provision of this Agreement to the contrary, no Member, Transition Team member or Designated Manager shall take or cause any of the following actions, make any of the following decisions or enter into any of the following transactions (each a “Major Decision”), whether by or on behalf of the Company directly, or by or on behalf of any of the Subsidiary Entities, without first obtaining the Approval of the Management Committee (or, pursuant to Section 4.1(f), the Approval of the Members) (it being understood that such Approval may be obtained through the approvals that are granted in an Approved Business Plan or Annual Budget and that the Members’ or the Management Committee’s approval of any such Approved Business Plan or Annual Budget shall be deemed to include the approval of all matters identified therein and of the implementation thereof by the applicable Designated Managers in good faith and in the ordinary course of business) or take any other action which contravenes the conditions or limitations that expressly apply to any Approval by the Members or Approval by the Management Committee pursuant to the terms of this Agreement:

(a) Approval of or Modification to Business Plans. Approval of any Initial Business Plan or any modification of, departure from or suspension of any Approved Business Plan outside the ordinary course of business.

(b) Acquisition of Interests in Real Property. Invest in, purchase or otherwise acquire (whether by merger, consolidation or acquisition of equity interests or assets, or any other business combination, and whether directly or indirectly) any real property or direct or indirect interest therein.

(c) Acquire or Form New Subsidiary Entities. Purchase or otherwise acquire (whether by merger, consolidation or acquisition of equity interests or assets, or any other business combination) or form any Subsidiary Entity.

(d) Amend Organizational Documents. Amend or otherwise change any material provision of any organizational document of any Subsidiary Entity.

(e) Enter into New Partnership. Enter into or establish any partnership, joint venture or similar arrangement (including, without limitation, funds or other investment vehicles) with a Third Party Entity.

(f) Changes to Governing Boards of Subsidiary Entities. Voluntarily permit any changes to any board, management committee or similar governing board of any Subsidiary Entity.

(g) Sales and Dispositions. Cause any sale, transfer, assignment, conveyance, exchange or other disposition of any Archstone Residual Asset, except in accordance with the Approved Business Plan for an Archstone Residual Asset (it being understood that, in developing the Approved Business Plans, the Members intend to consider whether such plans should prescribe maximum thresholds for any seller indemnities and maximum periods for survival of post-closing seller liabilities for purchase and sale agreements that could be entered into without the Approval of the Management Committee) and for a price that is (i) not less than 95% of the target price designated in the Approved Business Plan if such target price is expressed as a single value and not as a range of values) and (ii) not less than the lowest value designated in the Approved Business Plan (if the target price is expressed as a range of values.

(h) Restrictive Agreements. Enter into, amend or modify any agreement that would restrict the sale, transfer, assignment, conveyance, exchange or other disposition of any of the Company Assets.

(i) Annual Budget. Approval of an Annual Budget, or modify an Annual Budget or expend (or commit to expend) sums in excess of the amounts budgeted in an Annual Budget, if such modifications or expenditures on an aggregate cumulative basis for any year would exceed 110% of the total budgeted amount in the original Annual Budget for such year (unless such modification or expenditure or arises from Emergency Costs or Non-Discretionary Funding Requirements, or arises from costs incurred in connection with marketing activities for the disposition of assets in accordance with Section 4.3(g), or in connection with the defense, pursuit, satisfaction of judgments with respect to, or settlement of claims consistent with Section 4.3(q), or in connection with the review, pursuit or settlement of insurance claims or condemnation proceedings consistent with Section 4.3(u)).

(j) Additional Capital Contributions. Issue a Funding Notice other than in accordance with Section 3.3(b).

(k) Indebtedness; Contingent Obligations. Cause the Company or any Subsidiary Entity to incur, assume, prepay, purchase, amend, extend, renew, refinance, recast, compromise or otherwise deal with any Indebtedness or incur, assume, amend, extend, renew, refinance, recast, compromise or otherwise deal with any Contingent Obligations (other than receivables and payables incurred and equipment leases entered into in the ordinary course of business (i) in accordance with an applicable Approved Business Plan (as adjusted pursuant to Section 4.3(i)) or (ii) in accordance with an Authorized Unilateral Decision).

(l) Additional Advances/Drawdowns on Credit Facilities. Obtain advances or drawdowns on construction or development loans or any other credit facility, in each case, other than advances and drawdowns on construction or development loans or credit facilities that are in existence on the date hereof provided that such advances or drawdowns are in accordance with the terms of such loans or credit facilities and are pursuant to the applicable Approved Business Plan.

(m) Liens. Mortgage, pledge, hypothecate or subject to any type of lien (other than inchoate liens for contractors and subcontractors, real estate taxes and utility charges established by applicable law) any of the assets of the Company or any Subsidiary Entity, or amend, extend or renew any of the agreements entered into in connection with the foregoing.

(n) Accountants. Engage, remove or appoint any accountants for the Company or any Subsidiary Entity (other than the Accountants).

(o) Change Accounting Principles or Policies. Except as required by changes in law or changes in generally accepted accounting principles, change any financial accounting principles or policies in any material respect.

(p) Repatriate Funds. Repatriate funds held in overseas accounts.

(q) Legal Proceedings. (i) Commence any legal or arbitration proceeding on behalf of the Company or any Subsidiary Entity (except for routine collection matters, tenant disputes or matters that arise from disputes the resolution of which is within the settlement authority of the applicable Designated Manager under this Section 4.3(q)); (ii) confess a judgment against the Company or any Subsidiary Entity; (iii) settle on behalf of the Company or any Subsidiary Entity any claim that has been asserted in any legal or arbitration proceeding or that has been threatened (regardless of whether any such proceeding has been commenced) except with respect to any liabilities arising from acts or occurrences after the Effective Date related to any subject matter for which a Member has been designated the Designated Manager, in accordance with a settlement agreement approved by such Designated Manager in which the claimant’s claims against any Parent, the Company or applicable Subsidiary Entity (as applicable) on account of the matters so asserted or threatened are fully released and the amount paid or payable in connection with the settlement of any claim or claims asserted or threatened by any single claimant with respect to the subject matter of such proceeding or threat does not exceed the sum of $250,000; or (iv) except in connection with the management and administration of the Company Assets within the authority of the applicable Designated Manager, engage legal counsel for the Company or any Subsidiary Entity. Each Designated Manager that enters into a settlement agreement on behalf of the Company as provided herein shall provide prompt notice

of such settlement to the other Member, and shall provide prompt notification to the other Member from time to time of material developments and material anticipated costs and expenses in connection with any material legal or arbitration proceeding for any Archstone Residual Asset for which it has been designated the Designated Manager.

(r) Transactions with Members, Affiliates. Enter into, consummate, amend, modify or terminate any transaction or arrangement between the Company or any Subsidiary Entity and any Member or any Affiliate of any Member.

(s) Bankruptcy. Cause any of the following to occur with respect to the Company or any Subsidiary Entity: (i) making an assignment for the benefit of creditors; (ii) filing a voluntary petition in bankruptcy; (iii) filing a petition or answer seeking for itself any reorganization, arrangement, composition, readjustment, liquidation or similar relief under any statute, law or regulation; (iv) filing an answer or other pleading admitting or failing to contest the material allegations of a petition filed against it in any proceeding of this nature; (v) filing a petition seeking, consenting to or acquiescing in the appointment of a trustee, receiver or liquidator, whether for itself or for all or any substantial part of its properties; or (vi) taking any action in furtherance of the foregoing.

(t) Lending Company Funds. Lend funds belonging to the Company or any Subsidiary Entity, or extend credit on behalf of the Company or any Subsidiary Entity, to any Person other than to a Subsidiary Entity in connection with the implementation of the funding of capital which has been Approved by the Members or Approved by the Management Committee but only if the funding of such capital in the form of a loan, rather than as an equity contribution (unless Approved by the Members or Approved by the Management Committee) would not reasonably be anticipated to have any material adverse impact upon any Member; and if such funds are so lent or credit is so extended, extend, renew, recast, compromise or otherwise deal with such lent funds or extension of credit.

(u) [Reserved]

(v) Reorganization. Cause the formation of any Subsidiary Entity or any Affiliate of the Company, or merge the Company or any Subsidiary Entity into any other Person, or convert the form of such Entity into a different form of Entity or otherwise enter into any similar entity reorganization.

(w) Dissolution of the Company; In-Kind Distributions. Except in accordance with Section 10.1, cause the dissolution and winding-up of the Company or any Subsidiary Entity, except for the dissolution and liquidation of a Subsidiary Entity following the approved sale of all of the assets owned by such Subsidiary Entity, or make any in-kind distribution of the assets of the Company or any Subsidiary Entity.

(x) Insurance. Determine, modify or waive the requirements of the Company’s insurance program, including insurers, coverage and policy amounts, as set forth in or to be set forth in Schedule I attached hereto.

(y) Material Liabilities. Take any action that is not contemplated in the Approved Business Plan and is not an Authorized Unilateral Decision that would reasonably be anticipated

to create a material liability, obligation, cost or expense for the Company or any Subsidiary Entity other than on account of Emergency Costs or Non-Discretionary Funding Requirements.

(z) Employees. Except for routine decisions as approved by the Transition Team: hire or terminate (except in accordance with the Transition Plan referenced in Section 9.6) any employee of the Company or any Subsidiary Entity; increase the compensation or benefits payable to any employee of the Company or any Subsidiary Entity; grant any (or any increase in) employment, retention, bonus, severance, change of control or termination pay awards or equity-based cash awards (including cash bonuses or dividend equivalent rights); or establish, adopt, enter into or amend any collective bargaining (or similar), bonus, profit-sharing, thrift, compensation, stock option, restricted stock, stock unit, dividend equivalent, pension, retirement, deferred compensation, employment, loan, retention, consulting, indemnification, termination, severance or other similar plan, agreement, trust, fund, policy or arrangement with any director, officer, employee or independent contractor.

(aa) Tax Elections. Make, rescind or revoke any material tax election (whether or not such election is filed with a tax return) or change a material method of tax accounting, amend any material tax return, agree to waive or extend any period of adjustment, assessment or collection of material taxes, or settle or compromise any material federal, state, local or foreign income tax liability, audit, claim or assessment, or enter into any material closing agreement related to taxes, or surrender any right to claim any material tax refund unless in each case such action is required by applicable law.

(bb) Prohibited Tax Shelter Transactions. Use any assets of the Company or any Subsidiary Entity in a “prohibited tax shelter transaction” within the meaning of Section 4965(e)(1) of the Code.

(cc) Reserves. Except for reserves that are expressly provided for in the Approved Business Plan or the Annual Budget or that are consistent with Section 4.6, establish reserves for future working capital or other capital needs or for any other purpose of the Company or any Subsidiary Entity.

(dd) Designation of any Designated Manager. Except for the appointment of members of the Transition Team in accordance with Section 4.2(j), appoint or remove any Person as a Designated Manager or, subject to Section 4.2(i), appoint or remove any Person as a member, manager or officer of any Subsidiary Entity.

It is understood and agreed that any Member or Designated Manager may initiate a request to the Management Committee for consideration of a proposed Major Decision.

Section 4.4 Budgets and Business Plans.

(a) On or before October 15th of each year during the term hereof, the applicable Designated Manager shall prepare and submit to the Members for Approval of the Members a proposed update to the Initial Business Plan and a proposed annual budget for the next calendar year.

(b) At the first quarterly Management Committee meeting following the completion of each Fiscal Year, the agenda items shall include a review of the then-current Approved Business Plan and the proposed updates and proposed annual budget submitted by the applicable Designated Manager to determine whether the proposed updates or other adjustments thereto should be Approved, and to approve of proposed Annual Budget for the ensuing year. However, unless the Approval of the Management Committee is obtained for proposed adjustments to the previously-approved Approved Business Plan (or the previously-approved Annual Budget), the previously-approved Approved Business Plan (including, where applicable, any capital budgets, to the extent that such previously-approved capital budgets and the Approved Business Plan contemplated the continuation of capital expenditures for particular projects in future periods inclusive of the period in question) shall remain in full force and effect (except with respect to the elements of the Approved Business Plan that consist of the portion of the previously-approved Annual Budget that involves an operating budget, as provided below). If the Management Committee does not approve of an Annual Budget that includes an operating budget for any Archstone Residual Asset for any year, then, until an operating budget for such asset for such year is Approved by the Management Committee, the operating budget included in the prior year’s Annual Budget shall be utilized with adjustments thereto to reflect (i) any increases in particular line items that have been Approved by the Management Committee, (ii) as to other items, adjustments to reflect increases in the cost of living and increases in the cost of non-discretionary items (such as debt service payments, property taxes, insurance premiums (for coverages required pursuant to the applicable Approved Business Plan), utility charges or costs required to be incurred pursuant to the requirements of contracts), and (iii) increases resulting from emergencies or force majeure events.

(c) The Members acknowledge that one of the purposes of the Company is to realize upon and dispose of the Company Assets and, accordingly, the Approved Business Plan for the Company Assets shall include the anticipated timelines for the holding of such Company Assets and the agreed-upon floor prices (and other applicable minimum terms) at which the Company would be authorized to dispose of its interest in the applicable assets. The applicable Designated Manager shall have the principal responsibility for coordinating the implementation of the aspects of the Approved Business Plan relating to the initiation and pursuit of the marketing of the applicable Company Assets for which it has been appointed the Designated Manager, and for keeping the Members informed of the status of such marketing efforts. Transfers of the Company Assets by the Company (or any Subsidiary Entity) shall be authorized subject to Section 4.3(g).

Section 4.5 Implementation of Approved Business Plan by the Designated Managers.

Each of the Designated Managers shall, subject to the availability of Company revenues and Capital Contributions, implement the then applicable Approved Business Plan for the respective Company Assets in good faith and in the ordinary course of business, and, subject to Section 4.3 and the other terms of this Agreement, shall have the sole authority to manage the Company’s business in accordance therewith and to incur all expenses reasonably necessary in connection therewith. In performing their duties under this Section 4.5, the Designated Managers shall have the sole power and authority, acting alone, and in the name and on behalf of the Company, to execute for and on behalf of the Company (both on behalf of itself and on behalf of any Subsidiary Entity) any and all documents and instruments which may be necessary

to carry on the business of the Company or the Subsidiary Entities, except to the extent that the prior Approval of the Members or Approval of the Management Committee is required pursuant to any provision of this Agreement (including Section 4.3).

Section 4.6 Reserves — General.

The Company shall maintain and shall cause the Subsidiary Entities to maintain, such reserves as are Approved by the Members or Approved by the Management Committee or set forth in the Approved Business Plan. The Members intend the Approved Business Plan to provide for the retention of sufficient amounts of cash on hand in the accounts of the Company and the Subsidiary Entities to pay reasonably anticipated costs and expenses for the applicable Company Assets covered by such Approved Business Plan.

Section 4.7 Contracts With Contracting Members; Management Agreements.

(a) Except as expressly set forth in an Approved Business Plan or otherwise Approved by the Members or Approved by the Management Committee, neither any Member nor any Designated Manager shall cause or permit the Company or any Subsidiary Entity to engage or pay any compensation to a Member or any Affiliate of a Member for the provision of services to the Company or any Subsidiary Entity.

(b) [Reserved]

(c) Notwithstanding any provision herein to the contrary, in its sole discretion, the Non-Contracting Member, acting on behalf of the Company or any Subsidiary Entity, may terminate (or otherwise exercise the rights and remedies of the Company or a Subsidiary Entity under) any other agreements with any Contracting Member or any Affiliate of the Contracting Member pursuant to the terms of any such agreement (after it complies with the requirements set forth in the immediately following paragraph), provided that the Non-Contracting Member may not so act on behalf of the Company or any Subsidiary Entity to terminate any such agreement pursuant to any “without cause” termination right. No decision under any such agreement that would constitute a “Major Decision” under this Agreement may be made on behalf of the Company or any Subsidiary Entity without the Approval of the Members or Approval of the Management Committee.

(d) Notwithstanding the provisions of Section 4.7(c), if the Non-Contracting Member reasonably believes that the Contracting Member or any Affiliate of the Contracting Member is not fulfilling its obligations under any agreement, the Non-Contracting Member shall, before exercising any termination right or other right or remedy thereunder, (i) obtain any and all necessary consents and approvals, and (ii) provide the Contracting Member (or Affiliate) with written notice thereof, which shall have 30 days from its receipt of the notice to remedy the situation to the Non-Contracting Member’s reasonable satisfaction; provided, that if such situation is reasonably susceptible of cure, but a period longer than 30 days is reasonably required to complete the cure, then such Contracting Member (or Affiliate) shall have an additional period to remedy the situation so long as such Contracting Member (or Affiliate) promptly commences to remedy the situation and diligently prosecutes the same to completion, but such additional period shall not exceed an additional 60 days. If the Non-Contracting

Member is not reasonably satisfied that the situation has been remedied within such period, the Non-Contracting Member shall have the right to terminate the applicable agreement pursuant to the terms thereof, and replace such Contracting Member (or Affiliate) with an Entity selected by the Contracting Member from a list provided by the Non-Contracting Member provided that the list includes the names of at least three (3) Persons unaffiliated with the Non-Contracting Member, all of whom have at least ten (10) years’ experience in performing the services that were provided under the applicable terminated agreement.

Section 4.8 Limited Liability of Management Committee Representatives, Transition Team Members and Designated Managers.

Except as expressly set forth in this Agreement or as required by law, no Management Committee Representative, Transition Team member or Designated Manager shall be personally liable for any debt, obligation or liability of the Company whether that liability or obligation arises in contract, tort or otherwise, solely by reason of being a Management Committee Representative, Transition Team member or Designated Manager of the Company.

Section 4.9 Standard of Care of Management Committee Representatives, Transition Team Members and Designated Managers.

Each Management Committee Representative, Transition Team member and Designated Manager shall perform the respective duties as Management Committee Representative, Transition Team member and Designated Manager in good faith, and in the ordinary course of business, consistent with the terms of this Agreement, subject, in the case of Management Committee Representatives, to the terms of Section 1.9, and subject, in the case of Management Committee Representatives, Transition Team members and Designated Managers, to the terms of Section 7.4. Management Committee Representatives, and Designated Managers do not, in any manner, guarantee the return of the Members’ Capital Contributions or a profit for the Members from the operations of the Company. Management Committee Representatives, Designated Managers and Transition Team members shall not be liable to the Company or to any Member for any loss or damage sustained by the Company or any Member, unless the loss or damage shall have been the result of fraud, gross negligence, willful misconduct, a willful, knowing or intentional breach of this Agreement, or the result of any act or omission performed or omitted by it not in good faith.

Section 4.10 Transactions between the Company and an Interested Management Committee Representative or Designated Manager.

Notwithstanding that it may constitute a conflict of interest, a Management Committee Representative or Designated Manager that is not a Member or Affiliate of a Member may directly or indirectly engage in any transaction (including without limitation the purchase, sale, lease, or exchange of any property, or the lending of funds, or the rendering of any service, or the establishment of any salary, other compensation, or other terms of employment) with the Company; provided however that in each case (a) such transaction is not expressly prohibited by this Agreement, (b) the terms and conditions of such transaction on an overall basis are fair and reasonable to the Company, and (c) the transaction has been Approved by the Members after disclosure of all material facts relating to the conflict or potential conflict.

Section 4.11 Bank Accounts.

Subject to cash management protocols to be Approved by the Management Committee (or Transition Team) (which protocols shall include, without limit, protocols with respect to the signing of checks and the authorization of wire transfers), the applicable Designated Manager as set forth in Schedule J attached hereto may from time to time open bank accounts in the name of the Company (which shall be segregated from, and not commingled with the funds of any Person other than a Subsidiary Entity) in accordance with the terms of Schedule J attached hereto.

Section 4.12 Reimbursement of Expenses.

(a) In connection with their respective services hereunder, the Management Committee Representatives and Designated Managers shall be entitled to reimbursement from the Company of all third-party out-of-pocket expenses of the Company reasonably incurred and paid by such Management Committee Representative or Designated Manager on behalf of the Company.

(b) In connection with their respective services as a Designated Manager, ERP Member and AVB Member shall be entitled to receive fees from the Company, as an Expenditure of the Company, in the amounts, for the term, and payable at the times set forth on Schedule K as and when Approved by the Management Committee; provided, however, that, if not provided for on Schedule K or otherwise Approved by the Management Committee, then such fees shall be paid on a quarterly basis, in advance. On a quarterly basis, the Members shall review in good faith the appropriateness of the compensation arrangements under this Agreement (including, if applicable, any fees provided for on Schedule K) in light of the magnitude of work and services that are being provided by the applicable Designated Managers in consideration thereof, and the allocation of administrative responsibilities and functions as between the Members, and shall, if mutually agreed to, make appropriate adjustments thereto. Each Member acknowledges and agrees that, unless both Members are satisfied with the compensation arrangements that are provided for pursuant to this Agreement, either Member shall have the right, in connection with the quarterly review provided for in this Section 4.12(b), to require the allocation of administrative responsibilities and functions as between the Members to be revisited, in order to obtain an allocation of the work and services required to be performed in connection with such administrative responsibilities and functions as between the Members in a manner that is consistent with their respective Proportionate Shares.

Section 4.13 Reliance by Third Parties.

Any Person dealing with the Company or any Subsidiary Entity may rely upon a certificate signed by any Member or Designated Manager as to:

(i) the identity of the Members or Designated Managers;

(ii) the existence or non-existence of any fact or facts that constitute a condition precedent to acts by the Company or any Subsidiary Entity or that are in any other manner germane to the affairs of the Company or any Subsidiary Entity;

(iii) the Persons or Designated Managers that are authorized to execute and deliver any instrument or document of, or on behalf of, the Company or any Subsidiary Entity; or

(iv) any act or failure to act by the Company or any Subsidiary Entity, or any other matter whatsoever, involving the Company or any Subsidiary Entity.

Section 4.14 Authorization of the Transactions under the Purchase Agreement and Related Transactions.

The Members have determined that it is in the best interests of the Company to acquire the interests in the Company Assets and Subsidiary Entities, all in accordance with the Purchase Agreement and the Buyers Agreement, and to consummate the closing under the Purchase Agreement and all transactions related thereto. The Members have approved the form, terms and provisions of the bills of sale, assignments and other transfer and other instruments by which such acquisition and other transactions are to occur, as well as the other documents identified on Schedule H. The execution and delivery by the ERP Member or AVB Member as a Member or Designated Manager on behalf of the Company (whether in its individual capacity or in its capacity, after giving effect to the Initial Closing (as defined in the Buyer’s Agreement), as the member or manager of any Subsidiary Entity) of any such bills of sale, assignments, other transfer instruments and other documents identified on Schedule H shall constitute the binding act of the Company (and as applicable, such Subsidiary Entity) in all respects, and all such bills of sale, assignments, other transfer and other instruments, and other documents identified on Schedule H, are hereby approved, adopted and confirmed in all respects. The ERP Member and the AVB Member each in its capacity as a Member or Designated Manager is also hereby authorized on behalf of the Company (whether in its individual capacity or in its capacity, after giving effect to the Initial Closing, as the member or manager of any Subsidiary Entity) to do or cause to be done any and all such acts or things and to execute and deliver any and all such further documents and papers as it may deem necessary or appropriate to carry out the full intent and purpose of the authorizations in this Section 4.14 connection with the consummation of the transactions under the Purchase Agreement by which the Company will acquire the interests in the Company Assets and Subsidiary Entities and all transactions related thereto, and, to the extent that ERP Member or AVB Member in its capacity as a Member or Designated Manager has already done any actions or things to effectuate the consummation of such transactions or any other purposes of the authorizations in this Section 4.14, the doing of such actions is hereby ratified, approved, confirmed and adopted in all respects. Any such documents executed or actions taken by a Member of the purported capacity of a “Designated General Administrative Manager” of the Company shall be deemed for all purposes to have been executed or taken by it in its capacity as a Designated Manager, shall constitute the binding act of the Company (and as applicable, such Subsidiary Entity) in all respects, and are hereby approved, adopted and confirmed in all respects.

ARTICLE V

TAXES, ALLOCATIONS AND DISTRIBUTIONS

Section 5.1 Allocations and Tax Provisions.

Notwithstanding any contrary provision of this Agreement, rules governing allocations of income, gains, losses and deductions, certain tax matters and related items are set forth in Schedule E attached hereto and made a part hereof.

Section 5.2 Distributions.

Subject to Section 3.4, distributions of Distributable Cash or other assets of the Company if any, may be made to the Members and in such amounts as may be Approved by the Management Committee from time to time not less frequently than quarterly (and, in the case of proceeds of sale, promptly following the remittance of the proceeds of sale to the Company), to the Members pro rata in accordance with their respective Proportionate Shares.

Section 5.3 Withholding.

(a) General. Each Member shall, to the fullest extent permitted by applicable law, indemnify and hold harmless the Company and each Covered Person who is or who is deemed to be the responsible withholding agent for U.S. federal, state or local or non-U.S. income tax purposes against all claims, liabilities and expenses of whatever nature relating to the Company’s or such Covered Person’s obligation to withhold and to pay over, or otherwise pay, any withholding or other taxes payable by the Company with respect to such Member or as a result of such Member’s participation in the Company.

(b) Authority to Withhold; Treatment of Withheld Tax. Notwithstanding any other provision of this Agreement, each Member hereby authorizes the Company to withhold and to pay over, or otherwise pay, any withholding or other taxes payable or required to be deducted by the Company or any of its Affiliates (pursuant to the Code or any provision of U.S. federal, state or local or non-U.S. tax law) with respect to such Member or as a result of such Member’s participation in the Company (including as a result of a distribution in kind to such Member). If and to the extent that the Company shall be required to withhold or pay any such withholding or other taxes, such Member shall be deemed for all purposes of this Agreement to have received from the Company as of the time that such withholding or other tax is withheld or paid, whichever is earlier, a distribution of Distributable Cash in the amount thereof, pursuant to the Section 5.2, to the extent that such Member would have received a cash distribution, pursuant to Section 5.2, but for such withholding. To the extent that such withholding or payment exceeds the cash distribution that such Member would have received but for such withholding, ERP Member shall notify such Member as to the amount of such excess and such Member shall make a prompt payment to the Company of such amount by wire transfer, which payment shall not constitute a Capital Contribution and, consequently, shall not increase the Capital Account of such Member.

(c) Withholding Tax Rate. Any withholdings referred to in this Section 5.3 shall be made at the maximum applicable statutory rate under the applicable tax law unless ERP Member

shall have received an opinion of counsel, or other evidence, reasonably satisfactory to ERP Member to the effect that a lower rate is applicable or that no withholding or payment is required.

(d) Withholding from Distributions to the Company. In the event that the Company or any Subsidiary Entity receives a distribution or payment from or in respect of which tax has been withheld, the Company shall be deemed to have received cash in an amount equal to the amount of such withheld tax, and amounts withheld shall be deemed to be Distributable Cash that has been paid to the Member to whom such withholding is attributable. To the extent that such payment exceeds the cash distribution that such Member would have received but for such withholding, ERP Member shall notify such Member as to the amount of such excess and such Member shall make a prompt payment to the Company of such amount by wire transfer, which payment shall not constitute a Capital Contribution and, consequently, shall not increase the Capital Account of such Member.

ARTICLE VI

ACCOUNTING, RECORDS AND REPORTING

Section 6.1 Accounting and Records.

The books and records of the Company shall be kept, and its financial position and the results of its operations recorded, in accordance with generally accepted accounting principles. The books and records of the Company shall reflect all Company transactions and shall be appropriate and adequate for the Company’s business in accordance with the Act. Except as specifically provided herein, all books and records of the Company shall be maintained for the Company by AVB Member.

Section 6.2 Access to Accounting and Other Records.

The following provisions of this Section 6.2 shall supersede and act in lieu of the provisions of Section 18-305 of the Act:

(a) Upon request of any Member, the other Member shall promptly deliver or cause to be delivered to the requesting Member, at the expense of the Company, a copy of the following records, to the extent that such other Member is responsible hereunder for the maintenance of such records: (i) a current list of the full name and last known address of each Member and the Capital Contributions and Proportionate Share held of record by each Member; (ii) a current list of the Management Committee Representatives and Designated Managers; and (iii) the Company’s federal, state and local income tax returns and reports, if any, for each of its taxable years.

(b) Each Member also has the right to inspect and copy during normal business hours any of the Company’s books and records required to be maintained by the other Member, including (i) the Certificate of Formation of the Company, any amendments to the Certificate of Formation, and executed copies of any powers of attorney granted for the purpose of executing the Certificate of Formation; (ii) this Agreement and any amendments to this Agreement; (iii) financial statements of the Company; and (iv) the written minutes of any meeting of the

Management Committee or the Members and any written consents of the Management Committee or the Members for actions taken without a meeting.

(c) Management Committee Representatives and Designated Managers shall also have the right to inspect any and all books and records of the Company required to be maintained hereunder by the Members for purposes reasonably related to their duties as Management Committee Representatives or Designated Managers.

(d) Each Member shall also have the right to inspect any and all books and records maintained by the other Member in connection with any administrative function or responsibility for which that other Member has been designated as a Designated Manager.

Section 6.3 Required Reports.

The applicable Designated Manager as is or hereafter shall be designated on Schedule J attached hereto shall furnish to each Member the following reports prepared for and at the expense of the Company. The AVB Member shall be the Designated Manager for the preparation and distribution of Company-level reports:

(a) Annual Financial Reports. Within the time period designated on Schedule J attached hereto (or, if not designated thereon, as Approved by the Management Committee), the applicable Designated Manager as is or hereafter shall be designated on Schedule J attached hereto shall arrange for, and furnish to the Members, annual audited financial statements for such (full or partial) calendar year accurately reflecting the financial condition of the Company and each Subsidiary Entity, all prepared by the Accountants in accordance with generally accepted accounting principles consistently applied. The audit shall be performed by the Accountants.

(b) Quarterly Reports; Other Information. The applicable Designated Manager as is or hereafter shall be designated on Schedule J attached hereto shall, within the time period designated on Schedule J attached hereto (or, if not designated thereon, as Approved by the Management Committee), cause to be prepared and furnished to the Members unaudited balance sheets and profit and loss statements and unaudited cash flow statements accurately reflecting the operating results of the Company and each Subsidiary Entity, a comparison to the Annual Budget, and containing a narrative executive summary. The applicable Designated Manager as is or hereafter shall be designated on Schedule J attached hereto shall provide to the Members, promptly upon receipt, copies of any and all monthly reports delivered to the Company or any Subsidiary Entity pursuant to any Management Agreement. Each Member is entitled to receive all information reasonably requested to permit such Member to complete deferred tax/FAS 109 calculations on a quarterly basis.

(c) Bank Accounts. With respect to the bank account or accounts maintained by a Member as the Designated Manager in the name of the Company, that Member shall:

(i) promptly following the receipt of any bank account statement, send a copy of such bank account statement to the other Member;

(ii) to the extent permitted and reasonably practicable, arrange to have the applicable bank send such bank account statements directly to the other Member; and

promptly following request, provide to the other Member information regarding deposits or withdrawals from any such bank accounts or any other information related to such bank accounts as reasonably requested by the other Member.

(d) The costs and expenses incurred by the Company or a Designated Manager in establishing and maintaining the books and records of the Company, as well as the annual audit of the books and records of the Company and the Subsidiary Entities, and the costs and expenses incurred in preparing and furnishing any and all such reports and information shall be borne by the Company.

Section 6.4 Tax Returns.

ERP Member shall cause to be prepared by the Accountants all tax returns required of the Company and each Subsidiary Entity. Not later than August 1 of each year ERP Member shall distribute or cause to be distributed to the Members drafts of the proposed tax returns to be filed on behalf of the Company or any Subsidiary Entity. Following the distribution of such draft tax returns, but prior to ten (10) Business Days prior to the due date for the filing thereof (or such alternative date as may be Approved by the Management Committee), any of the Members may provide comments and input to such Designated Manager, and such Member and the Designated Manager shall consult with the Accountants concerning the comments and input so provided, as to the advisability of incorporating such comments and input into the tax returns to be so filed. Following the preparation of revised tax returns reflecting such input and comments (to the extent deemed appropriate by the Accountants), such Designated Manager shall timely file or cause to be timely filed all such tax returns required to be filed by the Company as reasonably determined by the Members. All decisions regarding or affecting the reporting or characterization for tax purposes of any material items of Company income, gain, loss or deduction shall require the Approval of the Members (which approval shall not be unreasonably withheld).

Section 6.5 Tax Matters Partner.

ERP Member is designated the Tax Matters Member of the Company as provided in Section 6231(a)(7) of the Code and corresponding provisions of applicable state law. This designation is effective only for the purpose of activities performed pursuant to the Code, corresponding provisions of applicable state law and under this Agreement. ERP Member shall inform the Members of all tax audits and other tax proceedings, promptly update the Members of all material developments with respect thereto and provide copies of all correspondence with and submissions to the tax authorities. ERP Member shall not make any material decision or take any material action as the Tax Matters Member that could adversely affect a Member or its Parent or Affiliate without the prior consent of such Member. ERP Member, as the Tax Matters Member, shall permit the Members at the Company’s expense to participate in any tax audit or other proceeding which could affect the taxes of the Company or income or loss allocable to or

taxes payable by any Member with respect to its interest in the Company. ERP Member shall also perform its obligations with respect to tax matters under Schedule E.

ARTICLE VII

INDEMNIFICATION, INSURANCE AND EXCULPATION

Section 7.1 Indemnification.

(a) To the fullest extent permitted by law, the Company shall indemnify, hold harmless and defend ERP Member, AVB Member, each Parent, each Affiliate of any Member, each Management Committee Representative, each Designated Manager, each Member’s, Affiliate’s, Parent’s agents, officers, partners, members, employees, representatives, directors or shareholders (including, without limitation, any members of the Transition Team) and each Subsidiary Entity’s officers, agents and employees (each, a “Covered Person”) from and against any and all losses, claims, damages, liabilities, whether joint or several, expenses (including legal fees and expenses), judgments, fines and other amounts paid in settlement (collectively, “Indemnified Losses”), incurred or suffered by such Covered Person, as a party or otherwise, in connection with any threatened, pending or completed claim, demand, action, suit or proceeding, whether civil, criminal, administrative or investigative, and whether formal or informal, arising out of or in connection with the business or the operation of the Company or any Subsidiary Entity, unless the Indemnified Losses were the result of fraud, gross negligence, willful misconduct or a willful, knowing or intentional breach of this Agreement by such Covered Person, or the result of any act or omission performed or omitted by such Covered Person not in good faith (in which case the Company shall have no indemnification obligation with respect to such Indemnified Losses) or the Indemnified Losses arise pursuant to a Guaranty Obligation (in which case the Company shall have no indemnification obligation with respect to such Indemnified Losses but the provisions of Section 3.6 shall apply).

(b) No Covered Person shall be liable to the Company or to any Member for any loss or damage sustained by the Company or any Member, unless the loss or damage shall have been the result of fraud, gross negligence, willful misconduct or a willful, knowing or intentional breach of this Agreement by such Covered Person, or the result of any act or omission performed or omitted by such Covered Person not in good faith.

(c) To the fullest extent permitted by law, unless it is determined that a Covered Person is not entitled to be indemnified therefor pursuant to this Section 7.1, expenses incurred by such Covered Person in defending any claim, demand, action, suit or proceeding subject to this Section shall, from time to time, be advanced by the Company prior to the final disposition of such claim, demand, action, suit or proceeding upon receipt by the Company of an undertaking by or on behalf of the Covered Person to repay such amount.

(d) The indemnification provided by this Section 7.1 shall be in addition to any other rights to which any Covered Person may be entitled under this Agreement, any other agreement, as a matter of law or otherwise, and shall inure to the benefit of the heirs, legal representatives, successors, assigns and administrators of the Covered Person.

Section 7.2 Procedures; Survival.

(a) If a Covered Person wishes to make a claim under Section 7.1, the Covered Person should notify the Company in writing within ten (10) days after receiving written notice of the commencement of any action that may result in a right to be indemnified under Section 7.1; provided however that the failure to notify the Company shall not relieve the Company of any liability for indemnification pursuant to Section 7.1 (except to the extent that the failure to give notice will have been materially prejudicial to the Company).

(b) A Covered Person shall have the right to employ separate legal counsel in any action pursuant to Section 7.1 and to participate in the defense of the action. The fees and expenses of such legal counsel shall be at the expense of the Covered Person unless (i) the Members or Management Committee have Approved the Company’s payment of such fees and expenses, (ii) the Company has failed to assume the defense of the action without reservation and employ counsel within a reasonable period of time after being given the notice required above, or (iii) the named parties to any such action (including any impleaded parties) include both the Covered Person and the Company and the Covered Person has been advised by its legal counsel that representation of the Covered Person and the Company by the same counsel would be inappropriate under applicable standards of professional conduct because of actual or potential differing interests between them. It is understood, however, that the Company shall, in connection with any one such action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of only one separate firm of attorneys at any time for all such Covered Persons having actual or potential differing interests with the Company.

(c) The Company shall not be liable for any settlement of any action against any Covered Person for which the Company is required to indemnify such Covered Person hereunder which is agreed to without the Approval of the Members or Management Committee.

(d) The indemnification obligations set forth in this Article VII hereof shall survive the termination of this Agreement.

Section 7.3 Insurance.

The Company shall maintain, for the benefit of the Company, its Subsidiary Entities, the Members, the Management Committee Representatives and the Designated Managers, and at the expense of the Company, policies of insurance in compliance with Schedule I attached hereto.

Section 7.4 Rights to Rely on Legal Counsel, Accountants.

No Covered Person shall be liable, responsible or accountable in damages or otherwise to the Company or any Member for any performance or omission to perform any acts in reliance on the advice of accountants or legal counsel for the Company.

ARTICLE VIII

TRANSFER OF MEMBERSHIP INTERESTS; ADMISSION OF ADDITIONAL MEMBERS

Section 8.1 Transfer or Assignment of Membership or Manager Interests.

No Member shall be entitled to assign, convey, sell, encumber or in any manner alienate or otherwise Transfer all or part of such Member’s Membership Interest except in strict compliance with each and all of the other Sections of this Article VIII. No Designated Manager shall be entitled to assign, convey, sell, encumber or in any manner alienate or otherwise Transfer all of part of such Designated Manager’s rights, interests, duties or obligations under this Agreement, in its capacity as a Designated Manager, without the Approval of the Members, except, in the case of a Designated Manager which is also a Member, to a successor to which the entire Membership Interest of such Designated Manager has been Transferred in full compliance with this Agreement.

Section 8.2 Conditions to Transfer by Member.

Except as provided in Section 8.3 or Section 8.4, no Member may Transfer all or part of such Member’s Membership Interest, nor shall the direct or indirect interests in any Member be transferred to any Person if, as a result thereof, that Member would no longer be directly or indirectly wholly-owned by ERP or Equity Residential (in the case of a Transfer of the interests in ERP Member) or AVB (in the case of a Transfer of the interests in AVB Member), unless such Transfer has been approved in writing by the other Member in its sole and absolute discretion.

Section 8.3 Permitted Transfers.

A Member shall be permitted to Transfer all or any part of its Membership Interest without further consent hereunder to an Affiliate of that Member which is directly or indirectly wholly-owned by ERP or Equity Residential (in the case of a Transfer by ERP Member) or by AVB (in the case of a Transfer by AVB Member), so long as, in connection with such Transfer that Member’s Parent provides to the other Member a ratification and reaffirmation of its Parent Guaranty and such Transfer would not be a violation of or an event of default under, or give rise to a right to accelerate any indebtedness described in, any note, mortgage, loan agreement or similar instrument or document to which the Company or any Subsidiary Entity is a party unless such violation or event of default shall be waived by the parties thereto.

Section 8.4 Transfer of Interests in Equity Residential, ERP or AVB.

Notwithstanding anything to the contrary contained in this Agreement, (a) neither Transfers of interests in ERP, nor the issuance or redemption of interests in ERP, nor Transfers of common or preferred shares or other equity interests in Equity Residential, nor issuance or redemption of common or preferred shares or other equity interests in Equity Residential (other than those occurring in connection with an Extraordinary Transaction), shall constitute a “Transfer” of the interest of ERP Member under this Agreement, or constitute a default, breach or withdrawal by ERP Member or any other violation of this Agreement by ERP Member; (b)

neither Transfers of shares of stock in AVB, nor issuance or redemption of shares of stock in AVB (other than those occurring in connection with an Extraordinary Transaction), shall constitute a “Transfer” of the interest of AVB Member under this Agreement, or constitute a default, breach or withdrawal by AVB Member or any other violation of this Agreement by AVB Member; and (c) notwithstanding clauses (a) and (b) above, neither any merger or other consolidation of Equity Residential, ERP or AVB with any other Person, nor any transfer of all or substantially all of the common equity of Equity Residential, ERP or AVB (including by way of tender offer), nor any sale of all or substantially all of the assets of Equity Residential, ERP or AVB, nor any transfer, issuance or redemption of common or preferred shares or other equity interests in ERP or Equity Residential or AVB, as applicable, in connection with such a merger or consolidation of Equity Residential, ERP or AVB, as applicable (each, an “Extraordinary Transaction”), shall constitute a “Transfer” of the interest of ERP Member or AVB Member, as applicable, under this Agreement, or constitute a default, breach or withdrawal by ERP Member or AVB Member, as applicable, or any other violation of this Agreement by ERP Member or AVB Member, as applicable, so long as, in the case of any such Extraordinary Transaction, the surviving Entity or buyer (the “Successor Parent”), as applicable, in any such transaction provides notice of such transaction to the other Member within five (5) Business Days thereafter and certifies that as of the date of consummation of, and after giving effect to, such transaction, it is either (i) a publicly traded company which continues to qualify as a REIT and has total equity as determined in accordance with U.S. generally accepted accounting principles of not less than $1.5 billion, or (ii) it has total equity as determined in accordance with U.S. generally accepted accounting principles of not less than $2 billion. If the Successor Parent delivers a notice and certificate in accordance with clause (ii) of the immediately preceding sentence, then, within ninety (90) days following the end of each fiscal year of the Successor Parent thereafter, the Successor Parent shall deliver a certificate to the other Member that certifies that, at the end of such fiscal year, it had total equity as determined in accordance with U.S. generally accepted accounting principles of not less than $2 billion. For the avoidance of doubt, a Change in Board Control of Equity Residential or AVB shall not constitute a “Transfer” of the interest of ERP Member or AVB Member, as applicable, under this Agreement, or constitute a default, breach or withdrawal by ERP Member or AVB Member, as applicable, or any other violation of this Agreement by ERP Member or AVB Member, as applicable.

Section 8.5 Unauthorized Transfers Void.

Any Transfer or purported Transfer in violation of the provisions of this Article VIII shall be null and void ab initio and shall constitute a material breach of this Agreement. In the event of any Transfer or purported Transfer of all or any part of a Member’s Membership Interest in violation of this Agreement, without limiting any other rights or remedies of the Company or the other Members, the assignee or purported assignee shall have no right to participate in the management of the business and affairs of the Company or to become a Member, or to receive any distributions of any kind or to receive any part of the share of profits or other compensation by way of income and the return of contributions, or any allocation of income, gain, loss, deduction, credit or other items to the owner of such Membership Interest in the Company would otherwise be entitled.

Section 8.6 Admission of Substitute Member; Liabilities.

(a) An assignee of all or any part of Membership Interest shall be admitted as a Substitute Member only if (i) the Transfer of such Membership Interest complies in all respects with this Article VIII and (ii) the prospective Substitute Member delivers a signed instrument pursuant to which the assignee agrees to all of the terms and conditions of, and to be bound by, this Agreement, and to assume all of the obligations of the transferring Member and to be subject to all the restrictions and obligations to which the transferring Member is subject under the terms of this Agreement. The admission of a Substitute Member shall not release the transferring Member from any liability to the Company or to the other Members in respect of its Membership Interest that may have existed prior to such admission.

(b) ERP Member shall reflect the admission of such Substitute Member in the records of the Company as soon as possible after satisfaction of the conditions set forth in this Agreement. Schedule C of this Agreement shall be deemed to be amended to reflect the admission of the Substitute Member upon such admission; and each of Members then of record hereby consents to such amendment to the extent required by law or this Agreement.

Section 8.7 Admission of Additional Members.

Unless the Approval of the Members has been obtained, and then, only in accordance with the terms and conditions Approved by the Members, the Company shall not admit any additional Members.

ARTICLE IX

SPECIAL RIGHTS AND OBLIGATIONS OF MEMBERS AND THE COMPANY

Section 9.1 [Reserved]

Section 9.2 [Reserved]

Section 9.3 Other Business Activities of the Members.

Neither the Members nor any Affiliates of the Members shall be obligated to present any investment opportunity to the Company or any other Member, even if the opportunity is of a character consistent with the Company’s other activities and interests. The Members and the Members’ Affiliates may engage in or possess any interest, directly or indirectly, in any other business venture of any nature or description independently or with others, including but not limited to, the ownership, financing, leasing, operation, management, syndication, brokerage, or development of real property competitive with the Company Assets. Membership in the Company and the assumption by either Member of any duties hereunder shall be without prejudice to such Member’s rights (or the rights of its affiliates) to have or pursue such other interests and activities and to receive and enjoy profits or compensation therefrom, and neither the Company nor the other Member(s) shall have any right by virtue of this Agreement in and to such ventures or the income or profits derived therefrom.

Section 9.4 Indemnification Claims Under Purchase Agreement.

Each Member acknowledges and agrees that any claim for indemnification which the Company may have against the Seller pursuant to the Purchase Agreement shall be asserted in compliance with Section 5.6 of the Buyer’s Agreement. If any Member determines that a basis exists for the Company to assert a claim against the Seller, it shall deliver written notice thereof to the other Member specifying in reasonable detail the factual basis of such claim, stating the amount of losses (or if not known, a good faith estimate of the amount of losses) and the method of computation thereof, containing a reference to any and all provisions of the Purchase Agreement with respect to which indemnification could be sought and stating its good faith determination (and specifying in reasonable detail the factual basis for such determination) that such claim is an “Archstone Residual Claim” as such term is defined in the Buyers Agreement. Promptly following the delivery of such notice, the Members shall meet and confer to determine whether to Approve the making of such claim pursuant to the Purchase Agreement, subject to compliance with the terms of Section 5.6 of the Buyers Agreement.

Section 9.5 [Reserved]

Section 9.6 Employees; Transition Plan.

(a) The Members acknowledge and agree that the Company and the Archstone Subsidiaries shall be bound by the Transition Plan (as defined in the Buyers Agreement) approved by Equity Residential, ERP and AVB pursuant to Section 6.2(b) of the Buyers Agreement. No amendment, modification, waiver or departure from the requirements of the Transition Plan or Section 6.2(b) of the Buyers Agreement shall be entered into or adopted without the Approval of the Members.

(b) If, pursuant to the Transition Plan, one or more employees are to be retained by any Subsidiary Entity following the date of this Agreement, then the Company shall cause such Subsidiary Entity to comply with all applicable laws with respect to such employees, and all policies with respect to wages, salaries, benefits, severance and all other applicable employment-related matters shall be as Approved by the Members. Any decision to terminate any employee of any Subsidiary Entity following the Transition Period (as defined in the Buyers Agreement) shall require the Approval of the Members.

(c) With respect to any employee who is to be terminated by any Subsidiary Entity subsequent to the date hereof, the Company shall cause such Subsidiary Entity to comply with the requirements of 29 USC §2101 et seq., the Worker Adjustment and Retraining Notification Act, or any state law analogue. Each Member shall be required to contribute its Proportionate Share of any Severance (as defined in the Buyers Agreement) that is due and payable to such employee to the extent that the retained cash of the Company or applicable Subsidiary Entity is insufficient therefor.

Section 9.7 Office Leases.

With respect to any Office Leases that are acquired by the Company or to which the Company succeeds as a result of the acquisition of the Company Assets, the Members agree to use their commercially reasonable efforts to cooperate to mitigate the costs associated with such

Office Lease. If any Parent shall have elected pursuant to Section 6.3(a) of the Buyers Agreement to assume any Office Lease or to obtain the sublease of premises under an Office Lease prior to the date of this Agreement, but the applicable consents or other conditions necessary to effectuate such election shall not have been obtained or satisfied prior to the date of this Agreement, then the Members shall be bound by, and shall cause the Company to comply with, the obligations of their respective Parents under the Buyers Agreement, so as to enable such assumption or sublease to be effectuated once the applicable consents or other conditions necessary to effectuate such election have been obtained or satisfied. Notwithstanding anything to the contrary contained in the Buyers Agreement, the Members agree to cooperate in good faith following the date of this Agreement on substantially the same terms as are provided in Section 6.3(a) of the Buyers Agreement should any of the Parents seek to assume any particular Office Lease or sublease any premises leased thereunder on terms consistent with the terms provided in Section 6.3(a) of the Buyers Agreement, notwithstanding that the “Initial Closing” referred to therein has occurred, but only if the Company has not, with respect to any particular Office Lease or premises leased thereunder, entered into an assignment of such Office Lease or sublease of such premises with a Third Party Entity with the Approval of the Members or the Approval of the Management Committee. The Members acknowledge that AVB has elected to assume the lease of premises on Research Boulevard in Austin, Texas subject to receiving applicable landlord consent, and shall cause the Company to cause its applicable Subsidiary Entity to assign such lease to AVB upon AVB’s assumption of the obligations thereunder, promptly following the receipt of the applicable landlord consent.

ARTICLE X

DISSOLUTION AND LIQUIDATION OF THE COMPANY

Section 10.1 Events Causing Dissolution.

The Company shall be dissolved only upon the occurrence of any of the following events (“Dissolution Event”):

(a) The sale, exchange or other disposition or distribution of all or substantially all of the assets and properties of the Company;

(b) The Approval of the Members; or

The bankruptcy or dissolution of a Member shall not cause the Member to cease to be a member of the Company and, upon the occurrence of such an event, the business of the Company shall continue without dissolution.

Section 10.2 Liquidation and Winding Up.

Upon the occurrence of a Dissolution Event, the Company shall be liquidated and the Management Committee (or other Person designated by the Management Committee or a decree

of court) shall wind up the affairs of the Company. In such case, the Management Committee (or such Designated Manager or other Person designated by the Management Committee or a decree of court) shall have the authority, in its sole and absolute discretion, to sell the Company’s assets and properties or distribute them in kind. The Management Committee or other Person winding up the affairs of the Company shall promptly proceed to the liquidation of the Company. In proceeding with the winding-up process, it is the Members’ objective that the winding-up process for the Company shall be completed within three (3) years following the sale of the Company’s last asset (assuming that the Company and its Subsidiary Entities are not then parties to any outstanding litigation which has not been resolved). If the Approval of the Members is obtained, the Members may elect to accelerate the winding-up process by mutually agreeing to set aside reserves or entering into a cost-sharing agreement with respect to any trailing liabilities of the Company or its Subsidiary Entities. In a liquidation, the assets and property of the Company shall be distributed in the following order of priority:

(a) To the payment of all debts and liabilities of the Company in the order of priority as provided by law (other than outstanding loans from a Member or Management Committee Representative);

(b) To the establishment of any reserves deemed necessary by the Management Committee or the Person winding up the affairs of the Company, for any contingent liabilities or obligations of the Company (including those of the Person serving as the liquidator);

(d) The balance, if any, to the Members in accordance with Section 5.2 of this Agreement.

Upon liquidation of the Company, no Member shall be required to contribute any amount to the Company solely because of a deficit or negative balance in the Capital Account of such Member and any deficit or negative balance shall not be considered an asset of the Company for any purpose.

ARTICLE XI

REPRESENTATIONS AND WARRANTIES

Section 11.1 Representations and Warranties of ERP Member.

ERP Member hereby represents and warrants to AVB Member as follows:

(a) Organization. ERP Member is a limited liability company duly organized, validly existing and in good standing under the laws of the state of Delaware and has all requisite limited liability company power and authority to own, lease and operate its properties and to carry on its business as it is presently being conducted.

(b) Authorization; Validity of Agreements.

(i) ERP Member has the requisite limited liability company power and authority to execute and deliver this Agreement and to perform all of its obligations hereunder. The execution and delivery by ERP Member of this Agreement, and the performance by ERP Member of its obligations hereunder, have been duly authorized by, and no other proceedings, actions or authorizations on the part of ERP Member or any holder of equity interest in ERP Member are necessary to authorize the execution and delivery by ERP Member of this Agreement.

(ii) This Agreement has been duly executed and delivered and constitutes the legal, valid and binding obligation of ERP Member, enforceable against them in accordance with its terms, except that (a) such enforcement may be subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws, now or hereafter in effect, affecting creditors’ rights generally, and (b) general equitable principles.

(a) Consents and Approvals; No Violations. The execution and delivery by ERP Member of this Agreement, and the performance by ERP Member of its obligations hereunder, does not and will not (a) violate, contravene or conflict with any provision of any organizational documents of ERP Member; (b) violate, contravene or conflict with any material orders or laws applicable to ERP Member or any of its material properties or assets; or (c) require on the part of ERP Member any filing or registration with, notification to, or authorization, consent or approval of, any Governmental Authority, except for such filings or registrations with, notifications to, or authorizations, consents or approvals of any Governmental Authority as may be referenced in Section 7.3 of the Purchase Agreement.

Section 11.2 Representations and Warranties of AVB Member.

AVB Member hereby represents and warrants to ERP Member as follows:

(a) Organization. AVB Member is a limited liability company that is duly organized, validly existing and in good standing under the laws of the state of Delaware and has all requisite limited liability company power and authority to own, lease and operate its properties and to carry on its business as it is presently being conducted.

(b) Authorization; Validity of Agreements.

(i) AVB Member has the requisite limited liability company power and authority to execute and deliver this Agreement and to perform all of its obligations hereunder. The execution and delivery by AVB Member of this Agreement, and the performance by AVB Member of its obligations hereunder, have been duly authorized by, and no other proceedings, actions or authorizations on the part of AVB Member or any holder of equity interest in it are necessary to authorize the execution and delivery by AVB Member of this Agreement.

(ii) This Agreement has been duly executed and delivered and constitutes the legal, valid and binding obligation of AVB Member, enforceable against it in accordance with its terms, except that (a) such enforcement may be subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws, now or hereafter in effect, affecting creditors’ rights generally, and (b) general equitable principles.

(c) Consents and Approvals; No Violations. The execution and delivery by AVB Member and the performance by AVB Member of its obligations hereunder, does not and will not (a) violate, contravene or conflict with any provision of any organizational documents of AVB Member; (b) violate, contravene or conflict with any material orders or laws applicable to AVB or any of its respective material properties or assets; or (c) require on the part of AVB Member any filing or registration with, notification to, or authorization, consent or approval of, any Governmental Authority, except for such filings or registrations with, notifications to, or authorizations, consents or approvals of any Governmental Authority as may be referenced in Section 8.3 of the Purchase Agreement.

ARTICLE XII

MISCELLANEOUS

Section 12.1 Complete Agreement.

This Agreement and the Certificate of Formation constitute the complete and exclusive statement of agreement among the Members with respect to the subject matter hereof. This Agreement and the Certificate of Formation replace and supersede all prior agreements by and among the Members or any of them in respect of the Company including, without limitation, the Archstone Residual JV Term Sheet that is attached to the Buyers Agreement (but does not supersede as among the Parents the provisions of the Buyers Agreement that survive the Initial Closing). This Agreement and the Certificate of Formation supersede all prior written and oral statements; and no representation, statement, condition or warranty not contained in this Agreement or the Certificate of Formation shall be binding on the Members or the Company or have any force or effect whatsoever.

Section 12.2 Governing Law; Venue.

This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without regard to the principles of conflicts of law; provided that in the event of any conflict or inconsistency between the provisions of this Agreement and the requirements of the Act, the provisions of this Agreement shall govern to the extent permitted under the Act. Proper venue for any litigation involving this Agreement shall be in any federal or state court located in the State of Delaware. Each Member hereto hereby irrevocably and unconditionally waives, to the extent permitted by law, any objection which it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Agreement brought in any court referred to in this Section 12.2. The Members hereby irrevocably waive, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. This provision shall survive the termination of this Agreement.

Section 12.3 No Assignment; Binding Effect.

This Agreement may not be transferred or assigned by any party hereto other than in the case of a Member, in full compliance with Article VIII hereof as an integrated part of a permissible Transfer of all of the Membership Interest of the Member. Any purported

assignment, sale, Transfer, delegation or other disposition, except as expressly permitted herein, shall be null and void and shall constitute a material breach of this Agreement. Subject to the foregoing restrictions and Article VIII hereof, this Agreement shall be binding upon and inure to the benefit of the Members and their respective successors and assigns.

Section 12.4 Severability.

If any provision of this Agreement is held to be illegal, invalid, or unenforceable under any present or future laws applicable to the Company effective during the Term of this Agreement, such provision shall be fully severable; this Agreement shall be construed and enforced as if such illegal, invalid, or unenforceable provision had never comprised a part of this Agreement; and the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid, or unenforceable provision or by its severance from this Agreement.

Section 12.5 No Partition.

No Member shall have the right to partition the Company or the Company Assets or any part thereof or interest therein, or to file a complaint or institute any proceeding at law or in equity to partition the Company or the Company Assets or any part thereof or interest therein. Each Member, for such Member and its successors and assigns, hereby waives any such rights. The Members intend that, during the term of this Agreement, the rights of the Members and their successors in interest, as among themselves, shall be governed solely by the terms of this Agreement and by the Act.

Section 12.6 Multiple Counterparts.

This Agreement may be executed in one or more counterparts, each of which shall be deemed a duplicate original and all of which, when taken together, shall constitute one and the same document. Execution and delivery of this Agreement by exchange of facsimile copies bearing the signatures of the parties shall constitute a valid and binding execution and delivery of this Agreement by the parties.

Section 12.7 Additional Documents and Acts.

Each Member agrees to execute and deliver such additional documents and instruments and to perform such additional acts as may be necessary or appropriate to effectuate, carry out and perform all of the terms, provisions, and conditions of this Agreement and the transactions contemplated hereby at any time.

Section 12.8 REIT Compliance.

Each Member acknowledges that it has been advised that Equity Residential (in the case of ERP Member) and AVB (in the case of AVB Member) are REITs. Each Member agrees that the other Member shall be entitled to exercise any vote, consent, election or other right under this Agreement with a view to maintaining the status of such Parents as REITs. In furtherance of the foregoing, absent a Major Decision to the contrary, substantially all of the Company’s income producing assets, if any, shall consist of “real estate assets, cash and cash items (including

receivables), and Government securities” within the meaning of § 856(c)(4)(A) of the Code and generate only gross income of the Company that satisfies the requirements of § 856(c)(3) of the Code or § 856(c)(2)(B) of the Code. The Company’s activities and assets otherwise shall be limited to the ownership of Archstone Communities LLC.

Section 12.9 Amendments.

All amendments and modifications to this Agreement shall be in writing and, to be effective, shall be Approved by the Members.

Section 12.10 No Waiver.

No delay, failure or waiver by any party to exercise any right or remedy under this Agreement, and no partial or single exercise of any such right or remedy, shall operate to limit, preclude, cancel, waive or otherwise affect such right or remedy, nor shall any single or partial exercise of such right or remedy limit, preclude, impair or waive any further exercise of such right or remedy or the exercise of any other right or remedy.

Section 12.11 Time Periods.

Any time period hereunder which expires on, or any date for performance hereunder which occurs on, a day which is not a Business Day, shall be deemed to be postponed to the next Business Day. The first day of any time period hereunder which runs “from” or “after” a given day shall be deemed to occur on the day subsequent to that given day.

Section 12.12 Notices.

Except as otherwise provided in this Agreement regarding notices by electronic mail or other electronic means to Members and Management Committee Representatives and regarding Member proxies, all notices, consents and other communications hereunder shall be in writing (including telecopy or similar writing) and shall be deemed to have been duly given (a) when delivered by hand or by Federal Express or a similar overnight courier to (or if that day is not a Business Day, or if delivered after 5:00 p.m., New York, New York time on a Business Day, on the first following day that is a Business Day), (b) five (5) days after being deposited in any United States Post Office enclosed in a postage prepaid, registered or certified envelope addressed to, or (c) when successfully transmitted by facsimile to, the Member for whom intended, at the address or facsimile number for such Member set forth in Schedule G attached hereto.

Section 12.13 Dispute Resolution; Mediation.

In the event of any claim, dispute or other matter in controversy between the Members arising under this Agreement, each Member agrees that, prior to commencing any lawsuit relating to such claim, dispute or other matter in controversy, (i) it shall notify the other Member in writing of the claim, dispute or other matter in controversy, including a reasonably detailed explanation of such Member’s understanding of the respective positions of each of the Members with respect to the matters in dispute; (ii) the respective chief executive officers of Equity Residential and AVB or their designees shall meet and confer at a mutually convenient time and

place within twenty (20) Business Days following the request of either Member concerning such claim, dispute or other matter in controversy (such period is referred to herein as the “Discussion Period”); (iii) if the Members are unable during the Discussion Period to reach a final agreement concerning such claim, dispute or other matter in controversy, then, prior to commencing any lawsuit relating to such dispute, the Member that would intend to commence such lawsuit shall deliver a written request to the other Member for non-binding mediation to be administered by the New York, New York office of Judicial Arbitration & Mediation Services, Inc. or its successor (“JAMS”) or any other office of JAMS agreed to by the Members, in accordance with JAMS’s mediation procedures in effect on the date of the Agreement (and if the Members cannot agree on the selection of a mediator, the Member asserting the claim, dispute or controversy shall file a request in writing for the appointment of a mediator with the New York, New York office of JAMS, with a copy of the request being served on the other Member, and the mediation shall be conducted by the appointed mediator). Mediation shall proceed in advance of the commencement of any lawsuit for a period of 60 days from the date that the applicable Member’s request for commencement of the mediation procedure was delivered to the other Member. The parties shall share the mediator’s fee and any filing fees equally. Without limiting any other applicable limitation in this Agreement, in no event shall the procedures and limitations set forth in this Section 12.13 limit or condition the right of any Member to commence a lawsuit against any third party or to file an answer or counterclaim or cross-claim (including, without limitation, as against the other Member) in any lawsuit that has been commenced by any third party. The Members agree that the provisions in this Section 12.13 shall apply to any claim, dispute or controversy asserted by any Member, but once the Members have engaged in the Discussion Period and mediation procedures provided for herein with respect to such claim, dispute or controversy, no Member shall be bound to comply with the Discussion Period and mediation procedures provided for herein with respect to any further claim, dispute or controversy that relates to substantially the same acts, omissions or occurrences with respect to which the Discussion Period and mediation procedures provided for herein have already taken place. The Members agree that the discussions during the Discussion Period or in connection with such mediation procedures are intended to be settlement communications, and accordingly (i) none of the discussions during the Discussion Period or in connection with such mediation procedures, nor any proposals (whether written or oral), correspondence, or documents of any kind generated during the period of and in connection with the Discussion Period or in connection with such mediation procedures, shall be raised, disclosed or admissible in any judicial, arbitration or similar proceeding for any purpose nor shall any such discussions, proposals, correspondence or documents be used as a defense or counter-claim in any action; (ii) such discussions, proposals, correspondence or documents are without prejudice to any of the parties’ rights, defenses and remedies at law, in equity or hereunder; and (iii) neither the preparation, distribution, response to or failure to respond to any such discussions, proposals, correspondence or documents shall constitute an agreement, or the basis on which any party may claim reliance on any agreement, except to the extent that the Members in connection with the discussions during the Discussion Period or in connection with such mediation procedures enter into a written agreement that is intended to be definitive and binding. The foregoing provisions are intended to be broader than the restrictions on admissibility with respect to settlement discussions contained in any applicable state or federal statute or rule of court, including, without limitation, Rule 408 of the Federal Rules of Evidence. If the Members or Management Committee Representatives reach an impasse over a proposed Major Decision or any other

proposed decision requiring the Approval of the Members or the Approval of the Management Committee, at the election of either Member, upon not less than ten (10) Business Days’ notice to the other Member, the Discussion Period and non-binding mediation process provided for in this Section 12.13 shall be commenced, to assist the Members in attempting to resolve the impasse, notwithstanding that no claim, dispute or other controversy with respect to which a Member may seek to commence a lawsuit then exists with respect to such matter.

Section 12.14 Specific Performance.

Because of the unique character of the Membership Interests, the Members and the Company shall be irreparably damaged if this Agreement is not specifically enforced. If any dispute arises concerning the Transfer of all or any part of a Member’s Membership Interest, an injunction may be issued restraining any purported Transfer pending the determination of such controversy. Such remedy shall, however, be cumulative and not exclusive, and shall be in addition to any other remedy which the Members or the Company may have.

Section 12.15 No Third Party Beneficiary.

This Agreement is made solely and specifically among and for the benefit of the parties hereto, and their respective successors and permitted assigns, and no other Person shall have any rights, interest, or claims hereunder or be entitled to any benefits under or on account of this Agreement as a third party beneficiary or otherwise.

Section 12.16 Waiver of Jury Trial.

EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY OR CLAIM WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE CONTEMPLATED TRANSACTIONS. THIS WAIVER MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 12.16) AND EXECUTED BY EACH OF THE PARTIES HERETO). The scope of this waiver is intended to be all-encompassing of any and all disputes that may be filed in any court and that relate to the subject matter herein, including contract claims, tort claims, breach of duty claims and all other common law and statutory claims. In the event of litigation, this Agreement may be filed as a written consent to a trial by the court.

Section 12.17 Cumulative Remedies.

The rights and remedies of any party as set forth in this Agreement are not exclusive and are in addition to any other rights and remedies now or hereafter provided by law or at equity, subject to the provisions of Section 12.13 hereof.

Section 12.18 Exhibits and Schedules.

All Exhibits and Schedules attached hereto are hereby incorporated by reference into, and made a part of, this Agreement.

Section 12.19 Interpretation.

The titles and section headings set forth in this Agreement are for convenience only and shall not be considered as part of agreement of the parties. When the context requires, the plural shall include the singular and the singular the plural, and any gender shall include all other genders. No provision of this Agreement shall be interpreted or construed against any party because such party or its counsel was the drafter thereof.

Section 12.20 Survival.

It is the express intention and agreement of the Members that all covenants, agreements, statement, representations, warranties and indemnities made in this Agreement shall survive the execution and delivery of this Agreement and, where appropriate to facilitate the intent of this Agreement, the dissolution, liquidation and winding up of the Company.

Section 12.21 Attorneys’ Fees.

If any Member seeks to enforce such Member’s rights under this Agreement by legal proceedings or otherwise the non-prevailing party shall be responsible for all costs and expenses in connection therewith, including without limitation, reasonable attorneys’ fees and costs and court costs and witness fees. In this Section 12.21, non-prevailing party shall not be meant to refer to a Member who initiates or accepts a settlement offer with regards to such legal proceeding.

Section 12.22 Confidentiality.

The Members hereby incorporate herein by this reference the terms of the Confidentiality Agreement (as defined in the Buyers Agreement), and agree to be bound thereby as if each Member was directly a party thereto. Each Member shall not disclose or furnish to any third party (other than any third party who is bound by confidentiality obligations reasonably expected to prevent further disclosure) the terms and conditions of this Agreement. Notwithstanding the foregoing, each Member may disclose the terms and conditions of this Agreement to the extent such disclosure is reasonably necessary to comply with applicable law (including any securities law or regulation or the rules of a securities exchange) and with judicial process, and to its affiliates, partners, managers, trustees, directors, officers, employees, accountants, attorneys, advisors and other representatives, each of whom shall be informed of the confidential nature of the terms and conditions of this Agreement and directed to treat such information confidentially in accordance with the terms of this Agreement.

* * *

IN WITNESS WHEREOF, the undersigned Members have executed this Agreement as of the date first hereinabove set forth.

AVB MEMBER:

AVB RESIDUAL PARALLEL II, LLC, a Delaware limited liability company


By:	AvalonBay Communities, Inc.,
	a Maryland corporation,
	its Sole Member


	By:	/s/ Edward M. Schulman
	Name:		Edward M. Schulman
	Title:		Executive Vice President, General Counsel & Secretary



ERP MEMBER:

EQR-PARALLEL RESIDUAL JV 2 MEMBER, LLC, a Delaware limited liability company


By:	ERP Operating Limited Partnership, an Illinois limited partnership, its Member


	By:	Equity Residential, its general partner


		By:		/s/ Scott J. Fenster
		Name:		Scott J. Fenster
		Title:		Senior Vice President

S-1

ARCHSTONE PARALLEL RESIDUAL JV 2, LLC

LIST OF EXHIBITS AND SCHEDULES

Exhibit 1	Form of Funding Notice
Exhibit 2	Form of Parent Guaranty
Schedule A	Organization Chart for the Company
Schedule B	Archstone Subsidiaries
Schedule C	Members, Capital Contributions and Proportionate Shares
Schedule D	Initial Business Plans
Schedule E	Taxes, Allocations, Related Matters
Schedule F	Existing Guaranty Obligations of Members, Parents and Affiliates
Schedule G	Addresses for Notices to the Members
Schedule H	Authorized Documents
Schedule I	Insurance
Schedule J	Allocation of Responsibilities/Functions to Designated Managers
Schedule K	Fees
Schedule L	Office Leases

EXHIBIT 1

FORM OF FUNDING NOTICE

AVB Residual Parallel II, LLC
671 N. Glebe Road
Suite 800
Arlington, VA 22203

EQR-Parallel Residual JV 2 Member, LLC
Two N. Riverside Plaza
Suite 400
Chicago, Illinois 60606

Re: Funding of Capital to Archstone Parallel Residual JV 2, LLC

Gentlemen:

Reference is hereby made to the Limited Liability Company Agreement of Archstone Parallel Residual JV 2, LLC, dated as of February 27, 2013 (the “Limited Liability Company Agreement”). Capitalized terms not otherwise defined have the meanings ascribed to them in the Limited Liability Company Agreement.

Pursuant to Section 3.4 of the Limited Liability Company Agreement, you are advised that the Member has determined that capital is required to fund cash needs of the Company in the aggregate amount of $ .

Each Member is hereby requested to contribute, by wire transfer of immediately available funds to the account designated below, funds in the amount of its Proportionate Share (as set forth below) of such required amount on or before , [insert appropriate time period which shall not be less than as set forth in Article III].

[add description of reason for capital]

	Contributions	Percentage Interest
AVB Member	$	40	%
ERP Member	$	60	%

TOTAL		100	%

Exhibit 1-1

Such funds shall be wire transferred to the following account on or before

, :

[MEMBER]

By:
		Name:
		Title:

Exhibit 1-2

EXHIBIT 2

FORM OF PARENT GUARANTY

(Attached)

Exhibit 2-1

AvalonBay/

Archstone Parallel Residual JV 2, LLC

GUARANTY

THIS GUARANTY (this “Guaranty”), dated as of the 27th day of February, 2013, is made by AVALONBAY COMMUNITIES, INC., a Maryland corporation (“Guarantor”), for the benefit of EQR-PARALLEL RESIDUAL JV 2 MEMBER, LLC, a Delaware limited liability company (“Creditor Member”).

RECITALS

A. Creditor Member and AVB RESIDUAL PARALLEL II, LLC, a Delaware limited liability company (“Guarantor-Affiliated Member”), formed and own the membership interests in Archstone Parallel Residual JV 2, LLC, a Delaware limited liability company (the “Company”), pursuant to that certain Limited Liability Company of the Company dated as of even date herewith (as the same may be amended from time to time, the “Limited Liability Company Agreement”). All capitalized terms which are used but not expressly defined in this Guaranty shall have the same meaning herein as are given to such terms in the Limited Liability Company Agreement.

B. Guarantor has an indirect or direct financial and/or ownership interest in Guarantor-Affiliated Member.

C. In partial consideration of Guarantor-Affiliated Member’s execution of the Limited Liability Company Agreement and as a condition precedent thereto, the Guarantor is required to execute and deliver this Guaranty for the benefit of Creditor Member and its permitted successors and assigns under the Limited Liability Company Agreement (collectively, “Beneficiary”).

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to induce Creditor Member to enter into the Limited Liability Company Agreement, Guarantor hereby agrees as follows:

1. GUARANTY. Guarantor, as primary obligor and not merely as a surety, hereby absolutely and irrevocably guarantees to Beneficiary the punctual payment and performance when due of the Guaranteed Obligations (as hereinafter defined). As used herein, “Guaranteed Obligations” means, collectively, (i) the full and prompt payment of all amounts, capital contributions, sums and charges payable by Guarantor-Affiliated Member under the Limited Liability Company Agreement, including, without limitation, all obligations of Guarantor-Affiliated Member to make Guaranty Equalization Payments and all indemnification obligations of Guarantor-Affiliated Member under the Limited Liability Company Agreement, (ii) the full and punctual performance and observance of all the terms, covenants and conditions provided to be performed, observed and complied with by Guarantor-Affiliated Member under the Limited Liability Company Agreement, or provided to be performed, observed and complied with by Guarantor-Affiliated Member or an affiliate or designee thereof (each, individually and collectively, “Obligor”) under any assumption agreement or other instrument delivered by it pursuant to the Limited Liability Company Agreement, whether in respect of any Office Lease or otherwise, and (iii) the full and prompt payment of all damages, costs and expenses which shall

at any time be recoverable by Creditor Member from Guarantor-Affiliated Member or any other Obligor by virtue of or under the Limited Liability Company Agreement or under any assumption agreement or other instrument delivered by it pursuant to the Limited Liability Company Agreement, including, without limitation, on account of any representations or warranties made by Guarantor-Affiliated Member thereunder. Guarantor further agrees to pay all Enforcement Costs (as hereinafter defined), in addition to all other amounts due hereunder. Any amounts owed under this Guaranty (that are not accruing interest under the Limited Liability Company Agreement) which are not timely made by Guarantor in accordance with the terms of this Guaranty shall bear interest from the date payable at the rate of fifteen percent (15%) per annum until all such amounts are fully paid. Notwithstanding anything to the contrary herein, (x) Guarantor shall have all of the same rights, remedies and defenses as Guarantor-Affiliated Member, including, without limitation, the right to exercise the dispute resolution procedures under and in accordance with the terms of the Limited Liability Company Agreement, and (y) other than the payment of Enforcement Costs, Guarantor shall have no greater liability than Guarantor-Affiliated Member or other Obligor under the Limited Liability Company Agreement or with respect to any assumption agreement or instrument delivered by it pursuant thereto.

2. NATURE OF GUARANTY. This Guaranty is an absolute, irrevocable, present and continuing guaranty of payment and performance and not of collectability. The obligations of Guarantor hereunder are independent of the obligations of Guarantor-Affiliated Member and any other Obligor and, in the event of any default hereunder, a separate action or actions may be brought and prosecuted against Guarantor whether or not Guarantor-Affiliated Member or any other Obligor is joined therein. Beneficiary shall not be required to prosecute collection, enforcement or other remedies against Guarantor-Affiliated Member or any other Obligor or any other guarantor of the Guaranteed Obligations, or to enforce or resort to any collateral for the repayment of the Guaranteed Obligations or other rights and remedies pertaining thereto, before calling on the Guarantor for payment. If for any reason Guarantor-Affiliated Member or any other Obligor shall fail or be unable to pay, punctually and fully, any of the Guaranteed Obligations, Guarantor shall pay such obligations to Beneficiary in full, immediately upon demand. One or more successive actions may be brought against Guarantor, as often as Beneficiary deems advisable, until all of the Guaranteed Obligations are paid and performed in full. Payment or performance by Guarantor of a portion, but not all, of the Guaranteed Obligations shall in no way limit, affect, modify or abridge Guarantor’s liability for any portion of the Guaranteed Obligations which has not been paid and performed. Without limiting the generality of the foregoing, if Creditor Member is awarded a judgment in any suit brought to enforce Guarantor’s covenant to pay or perform a portion of the Guaranteed Obligations, such judgment shall not be deemed to release Guarantor from its covenant to pay and perform the portion of the Guaranteed Obligations that is not the subject of such judgment.

3. ENFORCEMENT COSTS. If: (a) this Guaranty, is placed in the hands of one or more attorneys for collection or is collected through any legal proceeding, (b) one or more attorneys is retained to represent Beneficiary in any bankruptcy, reorganization, receivership or other proceedings affecting creditors’ rights and involving a claim under this Guaranty, or (c) one or more attorneys is retained to represent Beneficiary in any other proceedings whatsoever in connection with this Guaranty, then Guarantor shall pay to Beneficiary upon demand all fees, reasonable costs and expenses incurred by Beneficiary in connection therewith,

including, without limitation, reasonable attorney’s fees, court costs and filing fees (all of which are referred to herein as the “Enforcement Costs”). Beneficiary is only entitled to Enforcement Costs if it is the prevailing party.

4. NO DISCHARGE OR DIMINISHMENT OF GUARANTY. Except as otherwise provided herein and to the extent provided herein, the obligations of Guarantor hereunder are absolute and not subject to termination for any reason other than the satisfaction of the Guaranteed Obligations or expiration of this Guaranty. Guarantor agrees that the liability of the Guarantor hereunder shall not be discharged by, and Guarantor hereby irrevocably consents to: (i) any subsequent change, modification or amendment of the Limited Liability Company Agreement in any of its terms, covenants and conditions; (ii) the renewal or extension of time for the payment or performance of the Guaranteed Obligations; (iii) any transfer, waiver, compromise, settlement, modification, surrender or release of Guarantor-Affiliated Member’s or any other Obligor’s obligations; (iv) any failure or omission to assert or enforce or agreement or election not to assert or enforce, or the stay or enjoining, by order of court, by operation of law or otherwise, of the exercise or enforcement of, any claim or demand or any right, power or remedy (whether arising under the Limited Liability Company Agreement, at law, in equity or otherwise) with respect to the Guaranteed Obligations; (v) any act or event which might otherwise discharge, reduce, limit or modify Guarantor’s obligations under this Guaranty; and (vi) any forbearance, delay or other act or omission of Creditor Member. In addition, the Guaranteed Obligations of the Guarantor hereunder are not subject to counterclaim (other than mandatory or compulsory counterclaims), set-off, abatement, deferment or defense based upon any claim that Guarantor may have against Beneficiary:

(a) unrelated to the transaction giving rise to the Guaranteed Obligations; or

(b) regarding any lack of capacity, lack of authority or any other disability or other defense of Guarantor-Affiliated Member or any other Obligor, including, without limitation, any defense based on or arising out of the lack of validity or enforceability of the Limited Liability Company Agreement or any assumption agreement or other instrument delivered thereunder; or

(c) regarding (i) the release or discharge of Guarantor-Affiliated Member or any other Obligor in any receivership, bankruptcy or other proceedings, (ii) the impairment, limitation, modification or termination of the liabilities of Guarantor-Affiliated Member or any other Obligor to Beneficiary or the estate of Guarantor-Affiliated Member or any other Obligor in bankruptcy, or any remedy for the enforcement of Guarantor-Affiliated Member’s or any other Obligor’s liability under the Limited Liability Company Agreement or any assumption agreement or other instrument delivered thereunder, resulting from the operation of any present or future provision of Title 11 of the United States Code or other statute or from the decision in any court, (iii) the cessation of the liability of Guarantor-Affiliated Member or any other Obligor from any cause other than payment and performance in full of the Guaranteed Obligations, or (iv) any rejection or disaffirmance of the Guaranteed Obligations, or any part thereof, or any security held therefor, in any proceedings in bankruptcy, insolvency or reorganization.

5. DEFENSES WAIVED. Guarantor irrevocably waives acceptance hereof, presentment, demand, protest, to the fullest extent permitted by applicable law, any notice

(including, without limitation, notices of protest, notices of dishonor, notices of any action or inaction, notices of any renewal, extension or modification of the Guaranteed Obligations or any agreement related thereto, and notices of any extension of credit to Guarantor-Affiliated Member or any other Obligor and any right to consent to any thereof) not provided for herein or in the Limited Liability Company Agreement, as well as any requirement that at any time any action be taken by any person against Guarantor-Affiliated Member, any other Obligor or Guarantor. Guarantor further irrevocably waives: (a) any right to require Creditor Member, as a condition of payment or performance, to (i) proceed against Guarantor-Affiliated Member or any other Obligor or other Person, (ii) proceed against or exhaust any security held from Guarantor-Affiliated Member or any other Obligor or other Person, (iii) proceed against or have resort to any balance on the books of Creditor Member owed to Guarantor-Affiliated Member or any other Obligor or other Person, or (iv) pursue any other remedy in the power of Creditor Member whatsoever; (b) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in other respects more burdensome than that of the principal; and (c) the benefit of any statute of limitations affecting Guarantor’s liability hereunder or the enforcement hereof. Until payment of the Guaranteed Obligations by Guarantor-Affiliated Member and any other Obligor, any right of subrogation, contribution, reimbursement or indemnification on the part of Guarantor as against Guarantor-Affiliated Member or any other Obligor shall be in all respects subordinate to all rights and claims of Beneficiary for all other payments or damages which shall be or become due and payable by Guarantor-Affiliated Member or any other Obligor under the provisions of the Limited Liability Company Agreement or any assumption agreement or other instrument delivered thereunder. Beneficiary may compromise or adjust any part of the Guaranteed Obligations, make any other accommodation with Guarantor-Affiliated Member or any other Obligor or exercise any other right or remedy available to it against Guarantor-Affiliated Member or any other Obligor without affecting or impairing in any way the liability of Guarantor under this Guaranty except to the extent the Guaranteed Obligations have been performed.

6. REINSTATEMENT; STAY OF ACCELERATION. If at any time any payment of any portion of the Guaranteed Obligations is rescinded or must otherwise be restored or returned upon the insolvency, bankruptcy, or reorganization of Guarantor-Affiliated Member or any other Obligor or otherwise, Guarantor’s obligations under this Guaranty with respect to that payment shall be reinstated at such time as though the payment had not been made. If acceleration of the time for payment of any of the Guaranteed Obligations is stayed upon the insolvency, bankruptcy or reorganization of Guarantor-Affiliated Member or any other Obligor, all such amounts otherwise subject to acceleration under the terms of any agreement relating to the Guaranteed Obligations shall nonetheless be payable by Guarantor forthwith on demand by the Beneficiary.

7. INFORMATION. Guarantor assumes all responsibility for being and keeping itself informed of Guarantor-Affiliated Member’s or any other Obligor’s financial condition and assets, and of all other circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations and the nature, scope and extent of the risks that Guarantor assumes and incurs under this Guaranty, and agrees that Beneficiary does not have any duty to advise Guarantor of any information known to it regarding those circumstances or risks.

8. SURVIVAL. This Guaranty shall remain in full force and effect as to any Guaranteed Obligation for so long as such Guaranteed Obligation survives under the terms and conditions of the Limited Liability Company Agreement.

9. SEVERABILITY. The provisions of this Guaranty are severable, and in any action or proceeding involving any state corporate, partnership or limited liability company law, or any state, federal or foreign bankruptcy, insolvency, reorganization or other law affecting the rights of creditors generally, if the obligations of Guarantor under this Guaranty would otherwise be held or determined to be avoidable, invalid or unenforceable on account of the amount of Guarantor’s liability under this Guaranty, then, notwithstanding any other provision of this Guaranty to the contrary, the amount of such liability shall, without any further action by Guarantor or Beneficiary, be automatically limited and reduced to the highest amount that is valid and enforceable as determined in such action or proceeding. This Section with respect to the maximum liability of Guarantor is intended solely to preserve the rights of Beneficiary, to the maximum extent not subject to avoidance under applicable law, and neither Guarantor nor any other person or entity shall have any right or claim under this Section with respect to such maximum liability, except to the extent necessary so that the obligations of Guarantor hereunder shall not be rendered voidable under applicable law.

10. REPRESENTATIONS BY GUARANTOR. Guarantor represents that: (a) it is duly organized, validly existing and in good standing under the laws where it is organized and has all requisite authority to conduct its business in each jurisdiction in which its business is conducted; (b) the execution and delivery of this Guaranty and the performance of the obligations it imposes (i) are within its powers; (ii) have been duly authorized by all necessary action of its governing body; and (iii) do not violate any law, conflict with the terms of its articles or agreement of incorporation or organization, its by-laws or any agreement by which it is bound or require the consent or approval of any governmental authority or any third party; and (c) this Guaranty is a valid and binding agreement, enforceable according to its terms, except as such enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally.

11. NOTICES. All notices, requests and other communications to any party under this Guaranty must be in writing (including facsimile transmission or similar writing) and must be given to Beneficiary at the address for Beneficiary set forth in the Limited Liability Company Agreement, to Guarantor-Affiliated Member at the address for Guarantor-Affiliated Member set forth in the Limited Liability Company Agreement, and to Guarantor at the address for Guarantor-Affiliated Member set forth in the Limited Liability Company Agreement, or in each case as otherwise specified in a notice by one party to the other in accordance with the Limited Liability Company Agreement. Each notice, request or other communication shall be effective in accordance with the Limited Liability Company Agreement.

12. MISCELLANEOUS. No provision of this Guaranty may be amended, supplemented or modified, or any of its terms and provisions waived, except by a written instrument executed by Beneficiary and Guarantor. No failure on the part of the Beneficiary to exercise, and no delay in exercising, any right under this Guaranty waives that right; nor does any single or partial exercise of any right under this Guaranty preclude any other or further exercise of that or any other right. The remedies provided in this Guaranty are cumulative and

not exclusive of any remedies provided by law. This Guaranty binds Guarantor, and its successors and assigns, and benefits Beneficiary, and its respective successors and assigns. The use of headings does not limit the provisions of this Guaranty.

13. ASSIGNMENT OF GUARANTY. Notwithstanding anything to the contrary contained in this Guaranty, Guarantor shall not assign, transfer or otherwise delegate its obligations under this Guaranty without first obtaining Beneficiary’s prior written consent, which shall be granted or withheld in Beneficiary’s sole and absolute discretion. No transfer of interests in Guarantor or merger involving Guarantor that is permitted under the Limited Liability Company Agreement shall be deemed to be an assignment that requires Beneficiary’s consent hereunder.

14. GOVERNING LAW. THIS GUARANTY IS TO BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF DELAWARE.

15. CONSENT TO JURISDICTION. GUARANTOR AND BENEFICIARY HEREBY CONSENT AND AGREE TO THE EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR STATE COURT SITTING IN THE STATE OF DELAWARE IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY AND GUARANTOR IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY OBJECTION IT MAY NOW OR LATER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH A COURT IS AN INCONVENIENT FORUM.

16. WAIVER OF JURY TRIAL. GUARANTOR AND BENEFICIARY ACKNOWLEDGE AND AGREE THAT ANY CONTROVERSY OR CLAIM WHICH MAY ARISE UNDER THIS GUARANTY IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE CONTEMPLATED TRANSACTIONS. THIS WAIVER MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 16) AND EXECUTED BY EACH OF GUARANTOR AND BENEFICIARY). THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER HEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. IN THE EVENT OF LITIGATION, THIS GUARANTY MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the date first above written.

	GUARANTOR:

	AVALONBAY COMMUNITIES, INC.,
	a Maryland corporation


	By:
	Name:	Edward M. Schulman
	Title:	Executive Vice President, General Counsel & Secretary

[Signature Page — Archstone Parallel Residual JV 2, LLC (AvalonBay)]

ERPOP/

Archstone Parallel Residual JV 2, LLC

GUARANTY

THIS GUARANTY (this “Guaranty”), dated as of the 27th day of February, 2013, is made by ERP OPERATING LIMITED PARTNERSHIP, an Illinois limited partnership (“Guarantor”), for the benefit of AVB RESIDUAL PARALLEL II, LLC, a Delaware limited liability company (“Creditor Member”).

RECITALS

A. Creditor Member and EQR-PARALLEL RESIDUAL JV 2 MEMBER, LLC, a Delaware limited liability company (“Guarantor-Affiliated Member”), formed and own the membership interests in Archstone Parallel Residual JV 2, LLC, a Delaware limited liability company (the “Company”), pursuant to that certain Limited Liability Company of the Company dated as of even date herewith (as the same may be amended from time to time, the “Limited Liability Company Agreement”). All capitalized terms which are used but not expressly defined in this Guaranty shall have the same meaning herein as are given to such terms in the Limited Liability Company Agreement.

B. Guarantor has an indirect or direct financial and/or ownership interest in Guarantor-Affiliated Member.

(a) unrelated to the transaction giving rise to the Guaranteed Obligations; or

5. DEFENSES WAIVED. Guarantor irrevocably waives acceptance hereof, presentment, demand, protest, to the fullest extent permitted by applicable law, any notice

14. GOVERNING LAW. THIS GUARANTY IS TO BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF DELAWARE.

IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the date first above written.

	GUARANTOR:

	ERP OPERATING LIMITED PARTNERSHIP, an Illinois limited partnership


	By:	Equity Residential, a Maryland real estate investment trust its General Partner



		By:
		Name:
		Title:

[Signature Page — Archstone Parallel Residual JV 2, LLC (ERPOP)]

SCHEDULE A

ORGANIZATION CHART FOR THE COMPANY

(Final organization chart to be attached following the closing,
pursuant to the terms of the limited liability company agreement)

Schedule A-1

SCHEDULE B

ARCHSTONE SUBSIDIARIES

1. Archstone Communities, LLC

Schedule B-1

SCHEDULE C

MEMBERS, CAPITAL CONTRIBUTIONS, AND PROPORTIONATE SHARES
(As of February 27, 2013)

Member Name and Address	Capital Contribution	Proportionate Share
AVB Residual Parallel II, LLC 671 N. Glebe Road Suite 800 Arlington, VA 22203		40	%
EQR-Parallel Residual JV 2 Member, LLC Two N. Riverside Plaza Suite 400 Chicago, Illinois 60606		60	%
TOTALS	$	100	%

Schedule C-1

SCHEDULE D

INITIAL BUSINESS PLANS

(To be attached following the closing, pursuant to
the terms of the limited liability company agreement)

Schedule D-1

SCHEDULE E

TAXES; ALLOCATIONS; RELATED MATTERS

A. Target Allocations.

After application of Section B of this Schedule E, any remaining items of Profits and Losses shall be allocated among the Members and to their Capital Accounts so as to cause the balance of each Member’s Economic Capital Account to be as nearly equal to such Member’s Target Balance as possible.

B. Regulatory Allocations and other Allocation Rules.

Notwithstanding anything in the Agreement to the contrary, the following special allocations shall be made as follows, and, as appropriate, in the following order:

(1) Items of Company loss and deduction otherwise allocable to an Member hereunder that would cause such Member (hereinafter, a “Restricted Holder”) to have a deficit balance in his or her or its Adjusted Capital Account, or would increase the deficit balance in his or her or its Adjusted Capital Account, as of the end of the Fiscal Year to which such items relate shall not be allocated to such Restricted Holder.

(2) If there is a net decrease in Company Minimum Gain for any Fiscal Year (except as a result of conversion or refinancing of Company indebtedness, certain capital contributions or revaluation of the Company’s property as further outlined in Treasury Regulation Sections 1.704-2(d)(4), (f)(2) or (f)(3)), each Member shall be specially allocated items of Company income and gain for such year (and, if necessary, subsequent years) in an amount equal to that Member’s share of the net decrease in Company Minimum Gain. The items to be so allocated shall be determined in accordance with Treasury Regulations Section 1.704-2(f). This Section B(2) is intended to comply with the minimum gain chargeback requirement in said Section of the Treasury Regulations and shall be interpreted consistently therewith. Allocations pursuant to this Section B(2) shall be made in proportion to the respective amounts required to be allocated to each Member pursuant hereto.

(3) If there is a net decrease in Minimum Gain Attributable to Member Nonrecourse Debt during any Fiscal Year (other than due to the conversion, refinancing or other change in the debt instrument causing it to become partially or wholly nonrecourse, certain capital contributions, or certain reevaluations of the Company’s property as further outlined in Treasury Regulations Section 1.704-2(i)(4)), each Member shall be specially allocated items of Company income and gain for such year (and, if necessary, subsequent years) in an amount equal to that Member’s share of the net decrease in the Minimum Gain Attributable to Member Nonrecourse Debt. The items to be so allocated shall be determined in accordance with Treasury Regulations Section 1.704-2(i)(4) and (j)(2). This Section B(3) is intended to comply with the minimum gain chargeback requirement with respect to Member Nonrecourse Debt contained in said Section of the Treasury Regulations and shall be interpreted consistently therewith. Allocations pursuant to this Section B(3) shall be made in proportion to the respective amounts required to be allocated to each Member pursuant hereto.

Schedule E-1

(4) In the event an Member unexpectedly receives any adjustments, allocations or distributions described in Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5), or (6), and such Member has an Adjusted Capital Account Deficit, items of Company income and gain shall be specially allocated to such Member in an amount and manner sufficient to eliminate the Adjusted Capital Account Deficit as quickly as possible. This Section B(4) is intended to constitute a “qualified income offset” under Treasury Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.

(5) Nonrecourse Deductions for any Fiscal Year or other applicable period shall be allocated to the Members in accordance with their Proportionate Share, but only as permitted by the Treasury Regulations.

(6) Member Nonrecourse Deductions for any Fiscal Year or other applicable period shall be specially allocated to the Member that bears the economic risk of loss for the debt (i.e., the Member Nonrecourse Debt) in respect of which such Member Nonrecourse Deductions are attributable (as determined under Treasury Regulations Section 1.704-2(b)(4) and (i)(1)).

(7) Allocations to Members whose interests vary during a year by reason of transfer, redemption, admission, capital contributions, or otherwise, shall be made as determined by the Management Committee in accordance with permissible methods under Section 706 of the Code.

C. Tax Allocations.

(1) Subject to Section C(2), items of income, gain, loss, deduction and credit to be allocated for income tax purposes (collectively, “Tax Items”) shall be allocated among the Members on the same basis as their respective book items, as provided in Sections A and B.

(2) If any Company property is subject to Section 704(c) of the Code or is reflected in the Capital Accounts of the Members and on the books of the Company at a value that differs from the adjusted tax basis of such property, then the Tax Items with respect to such property shall, in accordance with the requirements of Treasury Regulations Section 1.704-1(b)(4)(i), be shared among the Members in a manner that takes account of the variation between the adjusted tax basis of the applicable property and its value in the same manner as variations between the adjusted tax basis and fair market value of property contributed to the Company are taken into account in determining the Members’ share of Tax Items under Section 704(c) of the Code. The Management Committee is authorized to choose any reasonable method permitted by the Treasury Regulations pursuant to Section 704(c) of the Code, including the “remedial allocation” method, the “curative” method and the “traditional” method.

(3) Pursuant to Treasury Regulations Section 1.752-3, each Member’s interest in Company profits, for purposes of determining such Member’s shares of excess “nonrecourse liabilities” for such purpose shall be that Member’s Proportionate Share.

(4) Any payment of foreign tax that may be creditable against any Member’s United States federal income tax liability shall be allocated to the Members in a manner reasonably determined by the Management Committee and in accordance with Treasury Regulation 1.704-1(b)(4)(viii). Other tax credits shall be allocated to the Members in a manner reasonably determined by the Management Committee.

Schedule E-2

(5) The Members are aware of the income tax consequences of the allocations made by this Agreement and shall report their shares of Profits and Losses and other items of Company, gross income, gain, loss and deduction for income tax purposes consistently with this Agreement.

D. Tax Classification.

It is the intent of the Members that the Company shall always be operated in a manner consistent with its treatment as a “partnership” for federal, state and local income and franchise tax purposes. In accordance therewith, (a) no Member shall file any election with any taxing authority to have the Company treated otherwise, and (b) each Member hereby represents, covenants, and warrants that it shall not maintain a position inconsistent with such treatment. The Management Committee shall, except as otherwise required by applicable law, (i) not cause or permit the Company to elect (A) to be excluded from the provisions of Subchapter K of the Code, or (B) to be treated as a corporation or an association taxable as a corporation for any tax purposes; (ii) cause the Company to make any election reasonably determined to be necessary or appropriate in order to ensure the treatment of the Company as a partnership for all tax purposes; (iii) cause the Company to file any required tax returns in a manner consistent with its treatment as a partnership for tax purposes; and (iv) not take any action or cause any officer or agent or representative of the Company to take any action that would be inconsistent with the treatment of the Company as a partnership for such purposes.

E. [Reserved.]

F. Additional Tax Matters.

(1) The Tax Matters Member shall be the sole signatory to any federal, state, local and foreign tax on behalf of the Company, except to the extent any other Person is required by law to also sign such returns.

(2) The Tax Matters Partner shall take no action in such capacity without the authorization or consent of the other Members, other than (after reasonable notice to the other Member) such action as the Tax Matters Partner may be required to take by applicable law. The Tax Matters Partner shall comply with the responsibilities outlined in Sections 6222 through 6232 of the Code.

(3) The Tax Matters Partner shall not enter into any extension of the period of limitations for making assessments on behalf of the Members without first obtaining the written consent of each Member.

(4) The Tax Matters Partner shall not bind the Company to a settlement agreement without obtaining the written concurrence of the other Members. For purposes of this Section F(4), the term “settlement agreement” shall include a settlement agreement at either an administrative or judicial level. Any Member that enters into a settlement agreement with respect to any Company items (within the meaning of Section 6231(a)(3) of the Code) shall notify the other Members of such settlement agreement and its terms within ninety (90) calendar days after the date of settlement.

Schedule E-3

(5) The provisions of this Section F shall survive the termination of the Company or the termination of any Member’s interest in the Company and shall remain binding on the Members (with respect to the period of time during which such Person is a Member) for a period of time necessary to resolve with the Internal Revenue Service or the United States Department of the Treasury any and all matters regarding the United States federal income taxation of the Company.

(6) The Tax Matters Partner, in its capacity as the Tax Matters Partner, shall be reimbursed by the Company for any third party out-of-pocket costs and expenses reasonably incurred by it in the performance of its duties as Tax Matters Partner. No Member shall be reimbursed by the Company for any costs and expenses incurred by such Member in pursuing on its own behalf any of its rights to file petitions, seek judicial review, etc. under this Section F or in participating in Company-level administrative or judicial tax proceedings unless the other Member, in its sole discretion, agrees to such reimbursement.

(7) During any Company income tax audit or other income tax controversy with any governmental agency, the Tax Matters Partner shall keep the Members informed of all material facts and developments on a reasonably prompt basis. Prompt notice shall be given to the Members upon receipt of advice that the Internal Revenue Service or other taxing authority intends to examine any income tax return, or records or books of the Company.

(8) The cost of any adjustments to all Members and the cost of any resulting audits or adjustments of Members shall be borne solely by the Members without reimbursement by the Company.

Schedule E-4

SCHEDULE F

EXISTING GUARANTY OBLIGATIONS OF
MEMBERS, PARENTS AND AFFILIATES

(To be attached following the closing, pursuant to
the terms of the limited liability company agreement)

Schedule F-1

SCHEDULE G

ADDRESSES FOR NOTICES TO THE MEMBERS

If to AVB Member, to:

AvalonBay Communities, Inc.
671 N. Glebe Road, Suite 800
Arlington, VA 22203

Facsimile No.: (703) 329-4830

Attention: Kevin P. O’Shea

with a copy (which shall not constitute notice) to:

AvalonBay Communities, Inc.
671 N. Glebe Road, Suite 800
Arlington, VA 22203

Facsimile No.: (703) 329-4830

Attention: Edward M. Schulman

and to:

Goodwin Procter LLP

Exchange Place

Boston, Massachusetts 02109

Facsimile No.: (617) 523-1231

Attention: Craig C. Todaro

If to EQR Member, to:

Equity Residential

Two N. Riverside Plaza, Suite 400

Chicago, Illinois 60606

Facsimile No.: (312) 526-9252

Attention: Mark Parrell, EVP and Chief Financial Officer

with copies (which shall not constitute notice) to:

Equity Residential

Two N. Riverside Plaza, Suite 400

Chicago, Illinois 60606

Facsimile No.: (312) 526-0680

Attention: Bruce Strohm, EVP and General Counsel

Schedule G-1

and to:

Hogan Lovells US LLP

555 13th Street, NW

Washington, DC 20004

Facsimile No.: (202) 637-5910

Attention: J. Warren Gorrell, Jr.

Bruce W. Gilchrist

and to:

Morrison & Foerster LLP
2000 Pennsylvania Avenue, NW
Washington, DC 20006
Facsimile No.: (202) 785-7522
Attention: David P. Slotkin

and to:

Morrison & Foerster LLP
555 West Fifth Street

Los Angeles, CA 90013-1024

Facsimile: (213) 892-5454

Attention: Thomas R. Fileti

Schedule G-2

SCHEDULE H

AUTHORIZED DOCUMENTS

1. Trademark Assignment Agreement and other documentation by which Subsidiary Entities will Transfer trademark assets to Archstone Trademark JV, LLC

2. Assignment of Lease from Archstone Communities, LLC to AvalonBay Communities, Inc. relating to premises in Austin, TX

3. Archstone Identified Systems Agreement

4. Documents on attached list if any

Schedule H-1

SCHEDULE I

INSURANCE

(Unless attached hereto, to be attached following the closing,
pursuant to the terms of the limited liability company agreement)

Schedule I-1

SCHEDULE J

ALLOCATION OF RESPONSIBILITIES/

FUNCTIONS TO DESIGNATED MANAGERS

(Attached)

Schedule J-1

Archstone Acquisition

AVB/EQR - Transition Issues/Wind-Down List

Updated February 25, 2013

		Follow	Owner
Area/Issue	Items to be considered—as applicable	Properties	EQR	AVB

Risk Management (GL, WC, property)	Manage claims for preclose period and parking lot coverage and claims	X	X	X

Corporate Maintenance	File doing business qualifications where needed; file annual statements with applicable Secretary of State; maintain minute book, member list and organizational documents	N	X

Legal	Manage litigation claims for preclose period (includes and not limited to property, employment)	N	X

Office Leases	Includes lease terms or sublets, sale of office furniture, etc.	N	X

Benefit Plans	401(k) - administration for wind-down, transition and parking lot JV	N		X

	COBRA - administration for wind-down, transition and parking lot JV	N	X

Federal, State and franchise tax	Manage oversight of 2012 and 2013 stub period tax returns - to be prepared by ASN	N	X

See more detail below for services	Manage historical audits/litigation/issues	N	X

	2013 and future tax returns for parking lot JV and tax protection JV	N	X

Books and Records, JV-Level Reporting	maintain accounting and contractual records; “umbrella” quarterly and annual reporting for parking lot JV	N		X

Germany Operational oversight	Management oversight of ASN European business, including fund team, DeWag, legal, financing and accounting	Y	X

Manage JV Parking lot accounting	Germany - accounting, reporting, tax returns	N	X

	SWIB - accounting, reporting, tax returns	Y		X

	Development - National Gateway, Harlem	Y		X

	Transition accounting - payroll and other compensation, cash receipts/disbursements, etc.	N		X

	Other - liabilities (coordination with legal, risk, etc.), consolidation, etc.	N		X

Cash management/oversight See further detail below	Provide oversight over cash receipts post-close (collect and distribute)	Y		X

(lead admin members handle cash management for JVs they handle (i.e. AVB - SWIB)	Provide oversight of disbursements (A/P and wire transfers) post-close	Y		X

	Provide cash forecasts and funding requirements post-close	Y		X

	Maintain/wind-down bank accounts	Y		X

Payroll and HR related items	Employment claims/issues for termed/former employees/ employee verification - pkg lot and disposed only	Y		X

	Filing of 2012 ASN W-2s (to be done by ASN)	N		X

	Filing of 2013 ASN W-2s (to be done by ASN)	N		X

	Escheatment of Payroll	N		X

Real Estate tax claims	Management of appeals/questions/issues regarding disposed and parking lot assets	Y		X

		Follow	Owner
Area/Issue	Items to be considered—as applicable	Properties	EQR	AVB
Accounts payable related items	Sales and use taxes - filing requirements to go with property (to be done by ASN) - pkg lot and disposed (if not done by ASN) only	Y		X

	2013 1099’s (to be done by ASN) - pkg lot and disposed (if not done by ASN) only	Y		X

	A/P historical vendor questions - questions will follow the property - pkg lot and disposed only	Y		X

	Manage any vendor rebates	Y		X

	Escheatment of Accounts payable preclose period	Y		X

Collections of resident accounts	Collections of resident accounts (follow the property) pkg lot and disposed only	X		X

More detail on tax services -

***management/oversight of, and assistance as needed with, the completion of tax return compliance obligations by the Archstone personnel for the 2012 tax year and short period ending with our closing in 2013

· negotiation and approval of services and expenses contracted with vendors/consultants

· regular communication and decision-making related to notices and assessments from taxing authorities

· provision of support for audits

· tax related services relative to the tax protection joint venture and Germany

· general consulting relative to transition and integration matters (ie. Software/IT, Data migration, historical files and storage, etc.).

Further detail re Cash Management/Bank Accounts:

THE GENERAL RESIDUAL JV BANK ACCOUNT WILL COME UNDER THE “CASH MANAGEMENT” OVERSIGHT TO BE PROVIDED BY AVB, WITH 2 CHECK SIGNERS FROM EACH OF AVB & EQR. THERE WILL BE SOME ADDITIONAL DETAIL TO BE WORKED OUT ON WIRE AUTHORIZATION PROTOCOL WHERE MUTUAL APPROVAL NECESSARY FOR WIRES OF A CERTAIN SIZE (OTHER THAN REPETITIVE PAYMENTS AFTER APPROVAL OF INITIAL WIRE).

SCHEDULE K

FEES

(To be attached following the closing, pursuant to
the terms of the limited liability company agreement)

Schedule K-1

SCHEDULE L

OFFICE LEASES

1. Office Lease dated May 12, 2011, executed by and between Archstone Communities, LLC, a Delaware limited liability company (“Archstone Communities”), and The Commons At Cliff Creek, Ltd., for a property located at 11149 Research Boulevard, Austin, Texas.

2. Office Lease dated May , 1999, executed by and between Archstone Communities and CarrAmerica Development, Inc., for a property located at 9200 East Panorama Circle, Suite 210, Englewood, Colorado.

3. Lease dated June , 2008, executed by and between Archstone Communities and Tishman Speyer Archstone-Smith South Market, L.L.C., for a property located at 333 Third Street, Suite 210, San Francisco, California.

4. Lease dated January 4, 2011, executed by and between Archstone Communities and Koll/Per Mission Courtyard, LLC, for a property located at 5030 Camino de La Siesta, Suite 104, San Diego, California.

5. Lease dated March , 2008, executed by and between Archstone Communities and PSAI Old Oakland Associates, LLC, for a property located at 807 Broadway, Suite 210, Oakland, California.

Schedule L-1