Common use of Section 1031 Exchanges Clause in Contracts

Section 1031 Exchanges. In order to facilitate Borrower’s transactions pursuant to Section 1031 of the Code, the Administrative Agent shall from time to time, on behalf of the Banks, accept a pledge of membership interests in a limited liability company 100% owned directly or indirectly by the Borrower as security for a specified amount of the outstanding indebtedness (the “secured indebtedness”), which limited liability company owns property which Borrower desires to sell in connection with a like-kind exchange intended to qualify for treatment under Section 1031 of the Code. Such pledge shall be substantially in the form of the pledge agreement attached hereto as Exhibit J. Administrative Agent acknowledges that the Borrower may assign said membership interests to a qualified intermediary and that, upon such assignment, the qualified intermediary will agree to accept responsibility for repayment of, and is expected to repay, the secured indebtedness as part of such exchange. Each pledge shall be released automatically (i) upon the sale of such membership interests or underlying property in the exchange (other than transfer to a qualified intermediary) and repayment of the secured indebtedness, or (ii) upon any prepayment of the Loans in an amount equal to or greater than the secured indebtedness secured by such pledge and which Borrower has designated as a prepayment of such indebtedness. The Administrative Agent agrees to accept repayment of the secured indebtedness from the proceeds of such sale. The Borrower and EQR shall remain obligated for all Obligations notwithstanding the pledge. Upon receipt from the Internal Revenue Service, the Borrower shall deliver to Administrative Agent a copy of a private letter ruling from the Internal Revenue Service to the Borrower with respect to a proposed Section 1031 exchange employing the proposed structure, it being understood that the Administrative Agent shall not disclose the same (subject to Section 9.15) unless and until the same shall be published or otherwise made generally available by the Internal Revenue Service. Notwithstanding anything contained herein to the contrary, any party hereto (and any of its employees, representatives and other agents) may disclose to any and all Persons, without limitation of any kind, the tax treatment and tax structure of this transaction.