EXECUTION COPY

AMENDED AND RESTATED DEVELOPMENT AGREEMENT AND LAND DISPOSITION AGREEMENT

by and bet~veen the DISTRICT OF COLUMBIA

and

OCC MASTER DEVELOPER, LLC

Dated: December 14, 2007

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TABLE OF CONTENTS

I. Interpretation ............................................................................................................................. 1.1 1.2 1.3 ! .4 1.5 1.6 1.7 Definitions ...................................................................................................................... Governing Law ............................................................................................................. Severability ................................................................................................................... No Oral Modifications or Waivers ............................................................................... Schedules and Exhibits ................................................................................................. Including ....................................................................................................................... No Construction Against Drafter ..................................................................................

2 2 23 23 24 24 24 24 24 24 24 27 27 27 28 28 28 29 29 30 30 31 31 31 31 31 32 32 32 32 33 33 35 35 35 37 40 41 41

II. Transfers ................................................................................................................................. Reliance on Developer and Guarantors ........................................................................ 2.1 Restrictions on Transfer ................................................................................................ 2.2 District .......................................................................................................................... 2.3 IlI. Relationship of Parties ......................................................................................................... Covenants as to Developer ........................................................................................... 3.1 Developer Safety .......................................................................................................... 3.2 Indemnity ...................................................................................................................... 3.3 3.4 Authorized Representatives .......................................................................................... District Liability ............................................................................................................ 3.5 Anti-Deficiency Provision ............................................................................................ 3.6 District Delay ................................................................................................................ 3.7 Limited Recourse to District ......................................................................................... 3.8 IV. Master Plan ........................................................................................................................... General .......................................................................................................................... 4.1 4.2 Master Plan Costs ......................................................................................................... 4.3 Updates to Financial Information ................................................................................. 4.4 District Improvements .................................................................................................. 4.5 B Parcels ....................................................................................................................... V. Financial Consideration to District ...................................................................................... 5.1 5.2 5.3 5.4 5.5 5.6 5.7 5.8 5.9 5.10 5.11 Components of Consideration ...................................................................................... Determination of Net Parcel Value ............................................................................... Intentionally deleted ..................................................................................................... Base Rent ...................................................................................................................... Participating Rent ......................................................................................................... Intentionally deleted ..................................................................................................... For Sale Residential Payments ..................................................................................... Participation in Sales Proceeds ..................................................................................... Contribution for Common Areas .................................................................................. Public Library Fund ...................................................................................................... Real Estate Taxes .......................................................................................................... i

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5.12 5.13 5.14 5.15 6.1 6.2 6.3 6.4 6.5 6.6 7.1 7.2 7.3 7.4 7.5 7.6 7.7 7.8 7.9 7.10 7.11 7.12 7.13 7.14 7.15 7.16 7.17 7.18 7.19 7.20 8.1 8.2 8.3 9. ! 9.2 9.3 9.4 9.5 9.6

B Parcels ....................................................................................................................... Permitted Expenses and Fees ........................................................................................ Site Costs ..................................................................................... :: ............................... Allocation of Costs ....................................................................................................... Guaranty through Zoning Approvals ............................................................................ Guaranty through Plans and Specifications .................................................................. Guaranty of Construction Commencement .................................................................. Additional Guaranty Obligations .................................................................................. Development Guaranty ................................................................................................. Completion and Lease Guaranty .................................................................................. Schedule for Milestone Events ..................................................................................... Adjustment to Certain Dates ......................................................................................... Zoning Approvals ......................................................................................................... Design of Improvements ............................................................................................... Preparation Of Construction Drawings ........................................................................ Timing of Approvals ..................................................................................................... Significant Changes ...................................................................................................... Permits .......................................................................................................................... Construction of Improvements ..................................................................................... Site Preparation ............................................................................................................. District Inspections ....................................................................................................... Construction Manager .................................................................................................. Progress Reports ........................................................................................................... Submissions .................................................................................................................. Audit ............................................................................................................................. Environmental Covenants ............................................................................................. Environmental Indemnification .................................................................................... District Signage ............................................................................................................ Developers Right to Terminate ................................................................................... Performance of Article VII Obligations ....................................................................... LSDBE Commitment .................................................................................................... First Source Commitment ............................................................................................. Community Involvement Plan ...................................................................................... Ground Lease ................................................................................................................ For Sale Covenants ....................................................................................................... Closing Agreement ....................................................................................................... Closing .......................................................................................................................... Closing Agreement ....................................................................................................... Concurrent Activity ...................................................................................................... ii

41 41 42 42 42 42 42 43 44 44 44 44 44 46 46 47 51 51 51 52 52 53 54 55 55 55 56 57 57 58 58 58 58 58 60 60 60 60 61 61 61 63 65

V1. Performance Guaranties ......................................................................................................

VII. 5Iilestone Events and Performance ...................................................................................

VIII. Commitments to Community ...........................................................................................

IX. Preparation and Execution of Documentation ..................................................................

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Other Legal Documents ................................................................................................ 9.7 9.8 Recordation ................................................................................................................... r ................................ Right of First Offer ...................................................................... 9.9 174 License ................................................................................................................... 9.10 X. Representations and Warranties .......................................................................................... 10.1 10.2 ! 0.3 Developer ...................................................................................................................... Restatement ................................................................................................................... District ..........................................................................................................................

66 66 66 69 69 69 72 72 73 73 73 75 75 77 77 77 77 78 78 79 79 79 82 82 82 83 86 86 86 86 86 86 87 87 87 88 89 89 89 90 90 90

XI. Site Pending Escrow Release Date ...................................................................................... Temporary Use of Site .................................................................................................. 11.1 Developers Right to Investigate Site ........................................................................... 11.2 Confidentiality .............................................................................................................. 11.3 11.4 Demolition of Existing Improvements ......................................................................... Removal of Hazardous Materials ................................................................................. 11.5 Soil Characteristics ....................................................................................................... 11.6 Underground Storage Tanks ......................................................................................... 11.7 "As-ls". ......................................................................................................................... 11.8 Title ............................................................................................................................... 11.9 11.10 Notice of Condemnation ............................................................................................... 11. t I Termination ................................................................................................................... XII. Insurance Policies ................................................................................................................ 12.1 12.2 Coverages; Form of Policy ........................................................................................... Casualty ........................................................................................................................

XIII. Events of Default ............................................................................................................... Events of Default .......................................................................................................... 13.1 District Remedies under Various Agreements ............................................................. 13.2 13.3 No Waiver by Delay ..................................................................................................... XIV. Miscellaneous ..................................................................................................................... 14.1 14.2 14.3 14.4 14.5 14.6 14.7 14.8 14.9 14.10 14.11 14.12 14.13 14.14 Binding Effect ............................................................................................................... Duration of this Agreement .......................................................................................... [Intentionally Deleted] .................................................................................................. Approvals by District .................................................................................................... No Public Subsidies ...................................................................................................... [intentionally Deleted] .................................................................................................. Waiver of Jury Trial; Jurisdiction ................................................................................. Notices .......................................................................................................................... Force Majeure ............................................................................................................... Time of Essence ............................................................................................................ Amendments ................................................................................................................. Generally Applicable District Law ............................................................................... No Third Party Beneficiaries ........................................................................................ Waivers .........................................................................................................................

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iii

14.15 14.16 14.17 14.18 14.19 14.20 14.21 14.22 14.23 14.24 14.25 14.26 14.27 14.28 14.29 14.30 14.31

Agents and Representatives .......................................................................................... Further Assurances ....................................................................................................... Exclusivity .................................................................................................................... Exclusivity Period ......................................................................................................... Statement of Stockholders, Managers, Members or Partners ....................................... Separate Books and Accounts ...................................................................................... Conflict of Interests; District Representatives Not Individually Liable ....................... Provisions Not Merged With Deed ............................................................................... Titles of Articles and Sections ...................................................................................... Singular and Plural Usage, Gender ............................................................................... Entire Agreement .......................................................................................................... Counterparts .................................................................................................................. Time of Performance .................................................................................................... Attorneys Fees .............................................................................................................. Rights and Remedies Cumulative ................................................................................. Release .......................................................................................................................... Estoppels .......................................................................................................................

90 90 90 90 91 91 91 91 91 91 92 92 92 92 92 93

Schedules:

Schedule 1: Schedule 2: Schedule 3: Schedule 4: Schedule 5: Schedule 6: Schedule 7: Schedule 8: Schedule 9: Schedule 10: Schedule 11 : Schedule 12: Schedule 13: Schedule 14: Schedule 15: Schedule 16: Schedule 17: Schedule 18: Schedule 19 Schedule 20: Schedule 21 : Schedule 22: Schedule 23: Schedule 24: Schedule 25: Schedule 26:

Key Personnel and Professionals Ownership Percentages Master Plau Description of B Parcels Arbitration Procedures Intentionally Deleted Intentionally Deleted Intentionally Deleted Form of Amended and Restated Development Guaranty Intentionally Deleted Intentionally Deleted List of Design Professionals Intentionally Deleted Intentionally Deleted Intentionally Deleted Copy of First Source Agreement and LSDBE MOU Intentionally Deleted Intentionally Deleted Intentionally Deleted Title Commitment Copy of Legal Sufficiency Memorandum Intentionally Deleted Intentionally Deleted Intentionally Deleted Underground Storage Form Statement of Stockholders, Managers, Members or Partners

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iv

Schedule 27:

Contractors Certificate on Final Completion

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AMENDED AND RESTATED DEVELOPMENT AGREEMENT AND LAND DISPOSITION AGREEMENT

THIS AMENDED AND RESTATED DEVELOPMENT AGREEMENT AND LAND DISPOSITION AGREEMENT ("Agreement") is dated December/.~.? 2007, between (i) the District of Columbia, a municipal corporation ("District"), and 0i) OCC Master Developer, I,LC, a Delaware limited liability company ("Developer"). Recitals 1. District currently owns or by agreement controls the Site and desires to provide for the disposition, ground lease and development of a portion of the Site in accordance with applicable provisions oftbderal and District laws. 2. In November, 2003, District selected !lines Interests Limited Partnership, a Delaware limited partnership ("Hines") and Archstone-Smith Operating Trust, a Maryland real estate investment trust ("Smith," and collectively xvith Hines, "Original Developer"), for the negotiation of an exclusive rights agreement, and District and the Original Developer entered into that certain Exclusive Rights Agreement and Land Disposition Agreement ("Exclusive Rights Agreement") dated May 12, 2005. 3. City Council approved the Exclusive Rights Agreement on June 7, 2005 pursuant to that certain Revised Old Convention Center Site Disposition Approval Resolution of 2005. 4. By that certain Assignment and Assumption of Exclusive Rights Agreement and [,and Disposition Agreement, dated December 15, 2006, Original Developer assigned all of its rights, title, and interests in and to the Exclusive Rights Agreement to Developer and Developer assumed all obligations of the Original Developer thereunder. 5. District and Developer entered into that certain Development Agreement and Land Disposition Agreement, dated December 15, 2006 (together with all Exhibits and Schedules thereto and as amended by that certain First Amendment to Development Agreement and Land Disposition Agree~nent, dated June 29, 2007, the "Original Development Agreement"), which constituted the "Development Agreement" defined in and contemplated by the Exclusive Rights Agreement and which superseded in all respects such Exclusive Rights Agreement. 6. The parties wish to amend and restate the Original Development Agreement in its entirety as set forth in this Agreement (which will supersede the Original Development Agreement).

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Agreement NOW, THEREFORE, in consideration of tire mutual covenants and agreements contained herein, and for other good and valuable consideration the sufficiency of which the parties acknowledge, the parties agree to amend and restate the Original Development Agreement in its entirety as follows: I. Interpretation 1.1 Definitions. When used in this Agreement, the following capitalized terms shall have the meanings indicated: A Parcel(s): each Leased Parcel and each For Sale Residential Parcel. Above-Grade Improvements: the vertical Improvements on the A Parcels, including building shell, and Common Areas, substantially initiated after Pad Completion (it being understood that construction of the Above-Grade Improvements on a portion of the Site may commence prior to Pad Completion). Accounting Principles: GAAP or such other accounting principles for real estate transactions Developer and District may mutually approve. ADU: a residential rental unit located in a Leased Residential Parcel or For Sale Residential Parcel that will be subject to the Affordability Covenants. Affiliate: a person who directly or indirectly through one or more intermediaries (a) is owned or Controlled by a Developer Party, (b) owns or Controls a Developer Party or (c) is under subst,mtially common Control with a Developer Party. Affordability Covenants: affordability covenants that will bind the For-Sale Residential Parcels and Leased Residential Parcels generally on the terms set forth in the Master Plan and such other terms reasonably required by District, all as more particularly set forth in recordable covenants that will mn with the land. Allocable Site Costs: for a given Leased Parcel or a For Sale Residential Parcel, (i) the Site Costs multiplied by (ii) a fraction the numerator of which is the gross square footage of Improvements (exclusive of subgrade parking and service areas) of such Leased Parcel or For Sale Residential Parcel and the denominator of which is the aggregate gross square footage of Improvements of all such Leased Parcels and For Sale Residential Parcels (exclusive of subgyade parking and service areas) or as allocated in such other manner mutually agreed upon by Developer and District in writing. Amortized Capital Expenditures: the amortization of capital expenditures incurred after the Stabilization Date over the useful life (determined in accordance with the Accounting Principles) of the improvements to which such capital expenditures relate (or over the lease term in the case of leasing commissions and tenant improvements), with such amortization to be at the 10 year treasury rate as of the first day of the month in
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which such capital expenditure is incurred plus 200 basis points. Such capital expenditures shall not include any expenditures made out of any Reserve. Annual Base Return: for a given Leased Parcel and a given calendar year (or portion thereof) commencing on or a~er the Stabilization Date, an amount equal to the Total Costs for such Leased Parcel multiplied by the Participation Return Rate for such Leased Parcel; provided that in the case of a partial calendar year, such amount shall further be multiplied by a fraction the numerator of which is the number of days in such partial calendar year and the denominator of which is the number of days in the full calendar year. Approved Architect: any Design Professional listed as "Architect of Record" in Schedule 12. Approved Mortgagee: an Institutional Lender providing Construction Financing (or a take-out thereof) for all or part of the Project. B Parcel Restrictions: as defined in Section 7.14(b). B Parcels: the Parcels so designated in the Master Plan and described on Schedule 4. Base Rent: the base rent payable by each Ground Lessee to District under each Ground Lease, as described in Section 5.4 Beneficial Interest: as defined in Section 5.8.3. Beneficial Interest Sale: as defined in Section 5.8.3. Building COREA: as defined in Section 7.14(b). Business Day: Monday through Friday, inclusive, other than (i) holidays recognized by District or the federal gover~maent and (ii) days on which District or federal government closes for business as a result of severe inclement weather or a declared national emergency which is given legal effect in the District of Columbia. If any item must be accomplished or delivered under this Agreement on a day that is not a Business Day, then it shall be deemed to have been timely accomplished or delivered if accomplished or delivered on the next following Business Day. Any time period that ends on other than a Business Day shall be deemed to have been extended to the next Business Day; p_ro___vide__~d, however, that the foregoing shall in no event extend the Exclusivity Period or any Outside Date. Certificate of Occupancy: a certificate of occupancy or similar document or Permit (whether conditional, unconditional, temporary or permanent) that must be obtained from the appropriate Governmental Authority as a condition to the lawful occupancy of the Improvements, or any phase, component or portion thereof, to be located on the Site.

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City Council: the Council of the District of Columbia. Closing: as defined in Section 9A. Closing Agreement: as defined in Section 9.3. Closing Developer Cost Budget: as defined in Section 5.2.1. Closing Proforma: as defined in Section 5.2.1. Closing Site Cost Budget: as defined in Section 5.2.1. Closing Sales Projection: as defined in Section 5.2.1. Commercially Reasonable Business Efforts: that, as and when required under this Agreement, the Person charged with making such effort is timely and diligently taking, or causing to be taken, in good faith the steps usually and customarily taken by an experienced real estate lessee or owner, as applicable, seeking with reasonable due diligence to lawfully achieve the objective to which the particular effort pertains. Commitmen! Letter: as defined in Section 4.5. Common Areas: all of the on grade streets, alleys, sidewalks, open space, parks, plazas and the remainder of space, land and improvements within the Site but outside the t3 Parcels, all of which are identified in Section 4.1.9 of the Master Plan. Common Areas include Reservation ! 74 so long as the 174 License Agreement remains in effect, but Reservation 174 is excluded from Common Areas upon expiration or earlier termination of the 174 License Agreement. Common Areas shall not include the Interim 13 Parcel Improvements or any areas or Improvements with in the Site aider dedication or acceptance thereof by a Governmental Authority. Common Area Association: as described in Section 5.9. Community Involvement Plan: as described in Section 8.3. Completion: the Substantial Completion of all Improvements, including (i) issuance of Certificates of Occupancy (for office, retail, residential and subgrade parking and concourse only, a partial (or temporary) Certificate of Occupancy, including lobbies and public spaces, to the extent such partial (or temporary) Certificates of Occupancy are generally issued by the Governmental Authorities), (it) issuance by the applicable Approved Architect of a certificate of Substantial Completion in form reasonably approved by District, (iii) a certification by Developer that Substantial Completion has occurred, (iv) confirmation by the District that the streets and rights of way, as shown on the Master Plan, can be used by the public for vehicular and pedestrian purposes as shown on the Master Plan, and (v) copies of the items referenced in clause (i) through (iii) delivered to District. District hereby approves the A1A Forrn G-704 as a form satisfying the requirements of clause (it). Completion of subgrade parking and concourse Improvements and Completion of Common Areas shall be required for
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Completion of the Improvements on each Leased Parcel and For Sale Residential Parcel only to the extent required to obtain a Certificate of Occupancy for the Above-Grade Improvements on each Parcel and to satisfy the terms of (i) through (v) of the definition of "Substantial Completion". Completion Bond: a one hundred percent (100%) completion bond in accordance with the Ground Leases and the For Sale Covenants ensuring the completion of the Improvements (including the parking) under the Construction Contract, with District named as the direct co-obligee with Developers Approved Mortgagees. Completion and Lease Guaranty: as defined in Section 6.6. Construction Commencement: the time at which the applicable Developer Party has (i) executed the Construction Contract with the General Contractor for the construction of the subgrade parking and concourse portion of the Project, (it) given such General Contractor notice to proceed for excavation, sheeting and shoring under the Construction Contract(s) for the subgrade parking and concourse portion of the Project and (iii) obtained all Permits required to commence such excavation, sheeting and shoring; provided, howeve_r, that any B Parcel as to which the District does not exercise its exclusion right under Section 4.5 shall be excluded from the determination of Construction Commencement to the extent provided in the Master Plan and provided any site work prior to the issuance of a Permit for site excavation shall not constitute Construction Commencement, including, but not limited to, installation of fencing and on-site electricity lines, and/or any demolition work by or on behalf of Developer or any Ground Lessee or For Sate Residential Owner. Construction Contract: each contract with a General Contractor for the construction of all or any part of the Improvements (excluding tenant improvements for office or retail), as approved by District pursuant to Section 9.5.1. Construction Documents: all Plans and Specifications, Construction Contracts, Completion Bonds, Performance Bonds, and Permits. Construction Financing: means financing obtained by one or more Developer Parties from Institutional Lender(s) and used solely for (i) Developer Costs and Site Costs (exclusive of the Imputed Development Period Return) and for payment of interest accruing during the construction, sale, and lease-up periods, as applicable or (ii) restoration costs (including payment of interest) following a casualty or condemnation. Consumer Price Index: the Consumer Price lndex for All Urban Consumers (CPI-U) for the U.S. City Average for All Items, 1982-84=100, issued from time to time by the Bureau of Labor Statistics of the United States Department of Labor. Control: means the possession, directly or indirectly, of the power to direct, or cause the direction of, the day-to-day operations or the management and policies of a Person, whether through ownership of voting securities, membership interests or partnership interests, by contract or otherwise, or the power to elect at least fifty percent (50%) of the directors, managers, partners or Persons exercising similar authority with
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respect to the subject Person. The terms "Control," "Controlling," "Controlled by" or "under common Control with" shall have meanings correlative thereto. Cumulative Base Return: for a given Leased Parcel as of the beginning of a calendar year (or portion thereof), (i) the aggregate Annual Base Returns for a!l years prior to such calendar year (or portion) for such Leased Parcel minus (ii) the excess of the aggregate NOI for all years prior to such calendar year (or portion) for such Leased Parcel over the aggregate Participating Rent paid for all years prior to such calendar year (or portion) for such Leased Parcel. To the extent that for any calendar year (or portion thereof) the amount in the foregoing clause (i) is less than the amount in the foregoing clause (ii), the shortfall shall earn a return, which shall be added to the amount in the foregoing clause (i), at the applicable Participation Return Rate for the such Leased Parcel. Demolition Loan: as defined in Section 11.4.4. Design Development Drawings: as defined in Section 7.4.4. Design Professionals: as defined in Section 7.4.1. Developer: as defined in the introductory paragraph. Developer Costs: for a given Parcel that is within the Leased Parcels or is a For Sale Residential Parcel (other than any Common Areas), all commercially reasonable out-of-pocket costs that are not Site Costs and that are incurred by Developer or applicable Developer Parties during the Development Period and actually paid for the acquisition of such Parcel and the design, development, construction, marketing and leasing, ownership, operation, maintenance, repair and restoration of the Developer Improvements on such Parcel through the Stabilization Date, plus the Imputed Development Period Return on all such costs. Subject to the foregoing sentence, Developer Costs shall include: (i) all legal, architectural and other professional fees related to the foregoing (other than any legal fees expressly excluded from Developer Costs or Site Costs, it being understood that legal fees incident to negotiation and formation of Developer and the Developer Parties shall be included), and the all out-ofpocket costs incurred in monitoring Developers satisfaction of the LSDBE Requirements and compliance with the First Source Agreement program; and (ii) the costs of obtaining construction mortgage debt financing to pay Developer Costs or Site Costs (including commitment fees, origination fees, interest rate protection costs, recordation taxes, appraisals, all reasonable attorneys fees and the like), but not payments of principal, interest or other charges in respect of such financing or costs of obtaining, or payments in respect of, any other debt or equity financing. Developer Costs shall exclude (a) Excluded Payments, (b) any costs incurred by Developer in connection with the RFP prior to November 6, 2003, (c) the sum of $1,000,000 paid by Developer to The Related Companies, L.P. prior to the date of this Agreement in connection with the settlement of the Related Suit, (d) any and all costs of any nature whatsoever related to the formation, operation and overhead of any and all Developer Parties and their respective Affiliates, including tax liabilities, franchise taxes, income taxes, excise taxes, and other business
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taxes imposed upon Developers, any other Developer Party (unless expressly included above or in Section 5.13.1 below), (e) any fee or charge in the nature of interest, damages or a penalty incurred as a result of a Developer Party or their Affiligtes failing to timely perform or pay an obligation in connection with the Project (unless such failure is a result of the action or inaction of the District), including but not limited to any fee, charge, damage or increased rent payable or paid pursuant to Section 5.4.5 and (f) and costs or expenses advanced by District pursuant to this Agreement. Developer Costs shall be reduced by any Gross Revenues received prior to the Stabilization Date. The reimbursements and fees to Developer and its Affiliates permitted pursuant to Section 5.13 shall be treated as Developer Costs whether or not paid out-of-pocket. Developer Costs shall be determined without any duplication in such costs so that each is counted only once. Developer Improvements: all improvements to be located on the Site, other than any (i) District Improvements and (ii) Interim B Parcel Improvements. Developer Party: the Original Developer, Developer, each Ground Lessee, each For Sale Residential Owner, and each of the Guarantors. Development Guaranty: as defined in Section 6.5. Development Period: for each Parcel that is within the Leased Parcels or is a For Sale Residential Parcel, the period conmaencing on November 6, 2003 and ending on the Stabilization Date for such Parcel. Development Work Product: as defined in Section 7.4.7. District: as defined in the introductory paragraph. District Consultants: means any construction consultant(s), architect(s), engineer(s), appraiser(s), accountant(s), environmental consultant(s), and other Persons hired, retained, or otherwise engaged by or for the benefit of District, at Districts cost, from time to time and at any time. District Delay: as defined in Section 3.7. District Improvements: if the District exercises its right to exclude any B Parcel (or portion thereof) from the Leased Parcels, the buildings and other improvements within such B Parcel (or portion thereof) that are intended as a permanent use. Districts Percentage: as defined in Section 5.6.1. Districts Share of Excess Refinancing Proceeds: as defined in Section 5.8.10.1. DMPED: the Deputy Mayor for Planning and Economic Development, its designees, successors and assigns, or any other agency or Person under the Mayors

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executive control that the Mayor authorizes or otherwise delegates to administer this Agreement. DOES: the Department of Employment Services. DSLBD: the Department of Small and Local Business Development. Environmental Law: any federal, District, state, or law, statute, code, ordinance, rule, regulation, requirement, permit, license, approval, policy or guidance, resolution, or judicial or administrative decision, order, judgment, injunction, award, decree, writ, or similar item (including without limitation consent decrees) relating to environmental matters, the protection of the environment or the protection of human health and safety from environmental concerns, including without limitation all those relating to or regulating the presence, use, generation, handling, storage, treatment, transportation, decontamination, processing, clean-up, removal, encapsulation, enclosure, abatement, disposal, reporting, licensing, permitting, monitoring, investigation, remediation, or Release (including, without limitation, to ambient air, surface water, ground water, land surface or subsurface strata) of any Hazardous Material, pollutant, contaminant, or other substance or waste, including without limitation: the Comprehensive Environmental Response, Compensation and (i) Liability Act, 42 U.S.C. Section 9601, et seq., the Resource Conservation and Recovery Act, 42 U.S.C. Sections 6901, et seq., the Toxic Substance Control Act, 15 U.S.C. Sections 2601, et seq., the Clean Water Act, 33 U.S.C. Sections 1251 et seq., the Clean Air Act, 42 U.S.C. Sections 7401, et seq., and their District and local counterparts and related regulations; and (ii) any other legal requirement, legal rule, or order regulating, relating to, imposing standards of conduct for, or imposing or allocating any liability concerning any Hazardous Material, pollutant, or contamination. Environmental Liabilities and Costs: any and all Losses (including, without limitation, those related to remedial action, personal injuries, property damage, natural resource damages on or off the Site, and costs reasonably necessary to ensure full value or use of the Site) and causes of action of any nature whatsoever incurred by or asserted against any Indemnified Party in connection with, arising out of, in response to, or in any manner relating to (i) the violation at any time, past, present, or future, of any Environmental Law by the Developer, any Developer Party, or any of their respective agents, officers, employees, representatives, licensees, invitees, affiliates, contractors (including, without limitation, a General Contractor), or subcontractors, or (ii) any past, present, or future Release or threatened Release of any Hazardous Material on, under, about, or from the Site by Developer, any Developer Party, or by any of their agents, officers, employees, representatives, licensees, invitees, affiliates, contractors (including, without limitation, a General Contractor), or subcontractor or any other Person (excluding the Indemnified Parties), or (iii) any past, present, or future condition of pollution, contamination, or presence of Hazardous Material on, under, about, or from the Site by Developer, any Developer Party, or by any of their agents, officers, employees,
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representatives, licensees, invitees, affiliates, contractors (including, without limitation, a General Contractor), or subcontractor or any other Person (excluding the Indemnified Parties), regardless of how or when such violation, Release or threatened Release, or condition occurred, was caused, or discovered. Equity: means the equity funding provided by Developer and its Members which is required for the development and construction of the Project as measured by funding to cover the difference between: (a) the amount of all Construction Financing; and (b) the Total Costs. Escrow Release Conditions: as defined in Section 9.5. Escrow Release Date: the date on which District and the Developer Parties shall meet at a mutually convenient time and place to execute and deliver each Ground Lease, each Memorandum of Ground Lease, the For Sale Deeds, the For Sale Covenants, the Completion and Lease Guaranty and the other documents covered by the Closing Agreement. Escrow Release Developer Cost Budget: as defined in Section 5.2.4. Escrow Release Protorma: as defined in Section 5.2.4. Escrow Release Site Cost Budget: as defined in Section 5.2.4. Escrow Release Sales Projection: as defined in Section 5.2.4. Eurodollar Rate: the rate per annum (rounded upwards, if necessary, to the nearest 1/16th of 1%) equal to the offered quotation for deposits in U.S. Dollars for a ninety (90) day period (or as close to a ninety (90) day period as is possible) which appears on Telerate page 3750 at or about 11:00 a.m. (London time) on the second Business Day preceding the Escrow Release Date. For this purpose, "Telerate page 3750" means the display designated as page 3750 on the Dow Jones Telerate service (or such other service as may be nominated by British Bankers Association as the information vendor for the purpose of displaying British Bankers Association interest settlement rates for U.S. Dollars). Event of Default: as defined in Section 13.1.1. Excess Financing Proceeds: as defined in Section 5.8.5.1. Excess Remediation Costs: as defined in Section 11.4.2. Excluded Payments: fees, compensation, reimbursements, overhead and other payments to Developer or any affiliate of Developer specifically excluded or in excess of the fees and reimbursements specifically authorized in Section 5.13. Exclusion Fee: as defined in Section 4.5.

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Exclusive Rights Agreement: as defined in the Recitals. Extraordinary Force Majeure: a Force Majeure Event that would prevent the planning, approval, development and construction of the Improvements by a first class developer experienced in the development of complex commercial projects in downtown Washington, D.C. Final Completion: following Completion (i) the completion of all punchlist work relating to the Improvements, (ii) the close-out of all Construction Contracts for such Improvements, (iii) the payment of all costs of constructing such Improvements, and receipt by applicable Developer Parties of fully executed and notarized valid releases of liens from a!l General Contractors and first-tier subcontractors with a subcontract value in excess of $1,000,000, (iv) the performance of all other construction related obligations of Developer, Ground Lessees under the Ground Leases or For Sale Residential Owners under the For Sale Covenants, as applicable, in connection with the Improvements; provided that as to (ii), (iii) and (iv) of this definition, Final Completion shall be deemed to be achieved even if (A) liens remain so long as the same have been bonded (or otherwise provided for to the reasonable satisfaction of District), (B) genuine disputes or unresolved issues remain as to costs which remain unpaid, or (C) disputes or claims exist as to warranties with purchasers of units from a For Sale Residential Owner so long as the Developer Party responsible for Final Completion diligently pursues resolution of (A)-(C); (v) delivery of all warranties and guaranties under the Construction Contracts; (vi) the receipt by District of a certification by the applicable Developer Parties of the items in clauses (i) through (v) of this definition, and (vii) the receipt by the applicable Developer Parties and District of a certification from each Genera! Contractor, the form of which is attached hereto as Schedule 271 Final Completion of the subgrade parking, concourse Improvements and Common Areas shall each be determined separately from Final Completion of the Above-Grade Improvements; provided, however that the Outside Date for Final Completion of the Above-Grade Improvements shall not be extended even if Final Completion of the subgrade parking, concourse improvements and Common Areas has not been achieved; and recourse for failure to timely achieve Final Completion of the concourse improvements and Common Areas at or before the time of Final Completion of the Above-Grade Improvements shall be through enforcement of the Completion and Lease Guaranty with respect thereto (the same not to be deemed a breach under any Ground Lease or For Sale Covenants). Financial Statements: in the case of the Smith Guarantor, The Estimated Consolidated Post-Merger Balance Sheet of Archstone-Smith Operating Trust as of October 5, 2007; and in the case of Hines Guarantor, Consolidated Current Value Balance Sheet as of June 30, 2007 and December 31, 2006. First Source Agreement: as defined in Section 8.2. For Sale Covenants: as defined in Section 9.2. For Sale Deed: a special warranty deed, in customary form, for the transfer of each For Sale Residential Parcel by District to Developer.
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For Sale Participation Payment: as defined in Section 5.7.2.

For Sale Residential Owner: a Person granted fee simplex title to a For Sale Residential Parcel pursuant to a For Sale Deed. For Sale Residential Parcel(s): the Parcels designated as Parcels 5 and 6 on page 52 of the Design Guidelines of the Master Plan for development and sale of residential units to individual unit purchasers (whether through a condominium, cooperative or other form of individual unit ownership). Force Majeure Event: any act or event, including, as applicable, an act of God, fire, earthquake, flood, explosion, war, invasion, insurrection, riot, mob violence, sabotage, inability to procure or a general shortage of labor, equipment, facilities, materials or supplies in the open market, failure or unavailability of transportation, strike, lockout, actions of labor unions, a taking by eminent domain, requisition, laws or orders of government or of civil, military or naval authorities or any other cause, whether similar or dissimilar to the foregoing that is not within the reasonable control of Developer Parties, Guarantors or District, as applicable, but specifically excluding shortage or unavailability of funds or financial condition.
GAAP: generally accepted accounting principles consistently applied. General Contractor: as defined in Section 7.9.2. Governing Documents: the documents, as amended from time to time, that govern the formation, ownership and operation of any Person (for example, the articles of organization and operating agreement of a limited liability company, and any other agreement between the members of such company that relate to the formation, ownership and operation of such company). Governmental Authority: any and all federal, District of Columbia, state, county, city, town, other municipal corporation, governmental or quasi-governmental board, agency, authority, department or body having jurisdiction over the Site or the Project.

Governmental Requirement: building, zoning, subdivision, traffic, parking, land use, environmental, occupancy, health, accessibility for disabled and other applicable laws, statutes, codes, ordinances, rules, regulations, requirements, and decrees, of any federal, District of Columbia, state, county, municipal or other governmental or quasi-govermnental authority or agency pertaining (i) to the Improvements, Project or Site, (ii) to the use and operation of the Site for its intended purpose, or (iii) if the context of the applicable sentence of this Agreement establishes this term is being used in connection with a different subject than those described in clauses (i) or (ii), then to the subject matter described in the paragraph of this Agreement in which the term is used. Gross Parcel Value: for each For Sale Residential Parcel, (i) the gross sale proceeds from the sale of all residential units in such For Sale Residential Parcel, less (ii) the Developer Costs related to such For Sale Residential Parcel, less (iii) an amount
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equal to twenty-five percent (25%) of the Total Costs of such For Sale Residential Parcel; and for each Leased Parcel, (a) the NO1 for such Leased Parcel for the first twelve (12) months after Stabilized Occupancy divided by the applicable Land ~Value Return Rate, minus (b) the Developer Costs for such Leased Parcel; all as estimated or determined pursuant to this Agreement. Gross Revenues: for a given Leased Parcel, all income, receipts and revenues of whatever nature and from whatever source received by Developer or Ground Lessees in connection with the ownership or operation of such Leased Parcel, other than the proceeds of any sale, financing (unless and to the extent that District exercises its option to participate in financing proceeds as provided for in Section 5.8), or other capital event. Gross Revenues shall be calculated on a cash and not accrual basis. Ground Lease: as defined in Section 9.1. Ground Lessee: the tenant under any Ground Lease. Guarantors: collectively, the Hines Guarantor and the Smith Guarantor. Hazardous Materials: any substance or material: (i) the presence or suspected presence of which requires or may require investigation, response, clean-up, remediation, or monitoring, or may result in liability, under any Governmental Requirement; or (ii) that is or contains a hazardous substance, waste, extremely hazardous substance, hazardous material, hazardous waste, hazardous constituent, solid waste, special waste, toxic substance, pollutant, contaminant, petroleum or petroleum derived substance or waste, and related materials, including without limitation, any such materials defined, listed, identified under or described in any Environmental Law; or (iii) which is flammable, explosive, radioactive, reactive, toxic, corrosive, infectious, carcinogenic, mutagenic, or otherwise hazardous, or is or becomes regulated under any Environmental Law; or (iv) which is or contains asbestos (whether friable or non-friable), any polychlorinated biphenyls or compounds or equipment containing polychlorinated biphenyls, or medical waste; or (v) without limitation, which is or contains or once contained gasoline, diesel fuel, oil, diesel and gasoline range organics (TPH-DRO / GRO), or any other petroleum products or petroleum hydrocarbons, or additives to petroleum products, or any breakdown products or compounds of any of the foregoing; or (vi) without limitation, radon gas. Hines Group: as defined in Section 2.2.4.

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Hines Guarantor: Hines Real Estate Holdings Limited Partnership, a Texas limited partnership. HUD: United States Department of Housing and Urban Development, its successors and assigns. Improvements: the Developer Improvements, the Common Areas, the Interim B Parcel Improvements, and all other buildings and improvements contemplated by the Master Plan, excluding only the District Improvements. Imputed Development Period Return: an amount calculated on all Site Costs and Developer Costs, from the date actually paid through the Stabilization Date, calculated on the basis of a 365-day year, actual days elapsed, compounding annually, at an annual rate determined as follows: (i) from November 6, 2003 to the Escrow Release Date, seven percent (7%), and (ii) from the Escrow Release Date through the Stabilization Date, the average of (x) nine percent (9%) and (y) the sum of Eurodollar Rate plus 275 basis points. Indemnified Parties: District and its respective agencies, directors, officers and employees. Institutional Investor: means a lender or equity investor in real estate that is not a Prohibited Person but is: (i) a commercial bank, investment bank, investment company, savings and loan association, trust company or national banking association, acting for its own account, (ii) a finance company principally engaged in the origination of commercial mortgage loans or any financing-related subsidiary of a Fortune 500 company (such as AT&T Capital Corporation or General Electric Capital Corporation), (iii) an insurance company, acting for its own account or for special accounts maintained by it or as agent or manager or advisor for other entities covered by any of clauses (i)-(xi) hereof, (iv) a public employees pension or retirement system, (v) a pension, retirement, or profit sharing, or commingled trust or fund for which any bank, trust company, national banking association or investment adviser registered under the Investment Advisors Act of 1940, as amended, is acting as trustee or agent, (vi) a real estate investment trust (or umbrella partnership or other entity of which a real estate investment trust is the majority owner), real estate mortgage investment conduit or securitization trust or similar investment entity, (vii) any federal, state, or District agency regularly making, purchasing or guaranteeing mortgage loans, or any governmental agency supervising the investment of public funds, (viii) a profit-sharing or commingled trust or fund, the majority of equity investors in which are pension funds having in the aggregate no less than $1,000,000,000.00 in assets; (ix) any entity of any kind actively engaged in commercial real estate financing and having total assets (on the date when its interest in this Project, or any portion thereof, is obtained) of at least $1,000,000,000.00, (x) a corporation, other entity or joint venture that is a wholly owned subsidiary or combination of any one or more of the foregoing entities (including, without limitation, any of the foregoing entities described in clauses (i)-(i) when acting as trustee or manager for other lender(s) or investor(s), whether or not such other lender(s) or investor(s) are themselves Institutional Investors) or (xi) such other lender or equity investor which at the time of making the
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investment is of a type which may customarily be utilized as an investor or lender on projects like the portion of the Project upon which such financing is placed. It is understood that Hines and Smith and Affiliates thereof qualify as Institutional Investors (and Institutional Lenders). Institutional Lender: has the same meaning as Institutional investor. Interest Rate: the annual rate equal to (i) the Prime Rate plus (ii) two percent (2%), adjusted on a daily basis, based on such Prime Rate in effect at the time in question, and shall be calculated on the basis of a 365-day year. Interim B Parcel Improvements: if District exercises its option to exclude any B Parcel from the Leased Parcels under Section 4.5, the landscaping and hardscaping within such B Parcel that are intended to integrate such B Parcels within the overall Site as an interim use pending the design, development and construction of any District Improvements. IRR: an annual aggregate rate of return, compounded annually, that takes into account the date of actual payment by Developer of each item of Total Costs and the date of receipt by Developer of each item of revenue, and that is calculated through the date of calculation thereof. Key Personnel: as defined in Section 2.2.2. Key Professionals: as defined in Section 7.4.!. Land Value Return Rate: for a given Leased Parcel, the following percentages next to the use category of such Leased Parcel: Retail 7.8%; Residential Rental 6.6%; Hotel 11.0%; Office 6.9%. Leased Parcel(s): the Parcels to be leased by District to a Ground Lessee as set forth in the Master Plan and which consists generally of the Site less (i) Reservation 174, (ii) any B Parcels which are excluded from the Leased Parcels pursuant to Section 4.5, and (iii) the For Sale Residential Parcels. Leased Residential Parcel: the Parcels designated as Parcel 3 and as Parcel 4 on page 52 of the Design Guidelines of the Master Plan for development and rental of residential units.

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Leased Retail Parcel: the space on the ground level, level 2 and the concourse level of each building that will eventually be dedicated to retail at Closing as set forth in the Master Plan. Legal Documents: each Ground Lease, For Sale Covenants, Affordability Covenants, Closing Agreement, Site COREA, Building COREA, Parcel B Restrictions, 174 License, ROFO, Completion and Lease Guaranty, Common Area Association documentation and any memoranda thereof. Liquidated Damages: as defined in Section 13.2.1. Loan Commitment Letter: means, any letter(s) of commitment for the Construction Financing. Loss or Losses: shall mean any losses, liabilities, damages, deficiencies, demands, claims, judgments, assessments, fines, penalties, monetary sanctions, costs, expenses (including, without limitation, interest, penalties, amounts paid in settlement, and reasonable fees and disbursements of legal counsel, costs of collection, engineering and other consultants, contractors, experts, laboratories, and other expenses), including, without limitation, those related to Remedial Actions, personal injuries, property damage, natural resource damages on or off the Site, and costs reasonably necessary to ensure full value and/or use of the Site, expressly excluding in all instances punitive, consequential, and treble damages. Lot 47 Single Lot Covenant: shall mean the Declaration of Covenants, Conditions and Restrictions Related to the Development of Lot 47 in Square 374 by and among the Ground Lessees of the Leased Residential Parcel and the Leased Retail Parcel, the For Sale Residential Owner and the District. LSDBE: a business that is currently certified by DSLBD as a local, small or disadvantaged business enterprise pursuant to D.C. Code 2-217.01 e_t se_.q. LSDBE MOU: the LSDBE Memorandum of Understanding between the Government of the District of Columbia Office of Local Business Development and Hines Interests Limited Partnership and Archstone-Smith Operating Trust, dated June 8, 2005, as same may be amended from time to time. Master Plan: as defined in Section 4.1, as the same may be amended from time to time. Master Plan Developer Cost Budget: as defined in Section 4.1. Master Plan Proforma: as defined in Section 4.1. Master Plan Site Cost Budget: as defined in Section 4.1. Master Plan Sales Projection: as defined in Section 4.1.

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Mayor: the Mayor of the District Member: any Person with a direct ownership interest irr~ Deve!oper or any Developer Party, whether as a member of a limited liability company, a shareholder in a corporation, a partner in a partnership, a beneficiary under a trust or otherwise. In the case of Developer, the Members shall be the Persons identified in Schedule 2 or their permitted assigns under Article II of this Agreement. Memorandum of Ground Lease: a short form memorandum giving notice of each Ground Lease, to be recorded in the Land Records of the District of Columbia. Milestone Events: as defined in Section 7.1. Net Pared Value: for a given Parcel, (i) the Gross Parcel Value of such Parcel minus (ii) the Allocable Site Costs for such Parcel. NOI: for a given calendar year (or portion thereof) commencing on or after the Stabilization Date, Gross Revenues for such year (or portion) minus the following for such year (or portion): Operating Expenses, payments into Reserves and Amortized Capital Expenditures. Notwithstanding the foregoing, any payments or any release of any fi~nds from any Reserve to a Developer Party (e.g. in connection with a Transfer) shall be included in Gross Revenues for the purposes of the NOI calculation. OAG: the Office of the Attorney General for the District of Columbia. 174 Conditions: as defined in Section 9.10. 174 License: as defined in Section 9.10. Operating Expenses: for a given Leased Parcel, all non-capital costs and expenses actually incurred by a Ground Lessee in connection with its operation of such Leased Parcel and the Developer Improvements thereon, including management, leasing, operation, maintenance, repair and restoration. Operating Expenses shall not include any costs included in Total Costs, rent (other than Base Rent) payable under a Ground Lease, costs of sale, financing or other capital event, payments in respect of any financing (unless and to the extent that District exercises its option to participate in financing proceeds as provided for in Section 5.8), Excluded Payments, payments into or from any Reserves, capital expenditures, costs of maintaining or operating Developers organization, and income, transfer, and similar entity level taxes imposed upon Developer, any fee or charge in the nature of interest, damages or a penalty incurred as a result of a Developer Party or their Affiliates failing to timely perform or pay an obligation in connection with the Project (unless such failure is a result of action or inaction of the District), and costs or expenses advanced by District pursuant to this Agreement. Operating Expenses shall be calculated on a cash and not accrual basis. Original Developer: as defined in the Recitals. Outside Dates: as defined in Section 7.1.
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Pad Completion: means Completion of the shell of the subgrade parking and concourse portion of the Improvements and Project sufficient to provide structural support to the balance of the Improvements, all in accordance with the Plans and Specifications attached to the Construction Contract therefor. Parcel: a parcel of land, or a three-dimensional space consisting of land, air rights and/or improvements, located within the Site, with boundaries generally as described in the Master Plan. Participating Rent: the participating rent payable by Developer to the District under the Ground Lease, as described in Section 5.5. Participation Return Rate: for a given Leased Parcel, the following percentage next to the use category of such Leased Parcel: Retail Residential Rental Hotel Office 9.85% 8.75% 11.00% 9.50%

Performance Bond: a performance bond or bonds in an amount equal to one hundred percent (100%) of all contracted costs of construction of the Improvements under the Construction Contracts naming District and the Developers Approved Mortgagee(s) as co-obligees in accordance with the Ground Leases and the For Sale Covenants. Permits: all demolition, site, building, construction, and other permits, approvals, licenses and!or rights required to be obtained from the District of Columbia government or other of the Goverlmaental Authorities having jurisdiction over the Site (including, without limitation, any utility company) necessary to commence and complete construction of, and operate and maintain, the Improvements in accordance with the Plans and Specifications and this Agreement. Permitted Transfer: as defined in Section 2.2.4.
Person: any individual or entity. Plans and Specifications: District approved plans and specifications for the Improvements sufficient to obtain bids for a fixed price or guaranteed maximum price construction contract for such Improvements, without material allowances, as further described in Section 7.4.2(e). Primary Member: Hines and Smith.

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Prime Rate: the prime rate of interest as published or announced in the Money Rates Section of The Wall Street Journal, from time to time or, if such index ceases to be published, any comparable successor thereto from time to time. Programming Payment: as defined in Section 5.9.1. Prohibited Person: means (at the time any such Person becomes an owner in a Developer Party in any relevant tier of ownership thereof or enters into the applicable contract or agreement) any Person that is in any tier of membership, partnership, or ownership that is not more than two (2) tiers removed from Developer or the relevant contract party (exclusive of holders of interests in a public company) and (a) has been convicted of a felony for one or more of the following: (i) fraud, (ii)intentional misappropriation of funds, (iii)bribery, (iv)perjury, (v) conspiracy to commit a crime, (vi) making false statements to a government agency, (vii) improperly influencing a government official, and (viii) extortion; (b) who or which is in default of any contractual obligation to District, beyond any applicable notice and/or cure periods afforded to such Person by District or afforded to such Person pursuant to applicable Laws; (c) is on the Districts list of debarred, suspended or ineligible Persons; or (d) is a Restricted Person. In no event shall Hines or Smith or any Affiliate thereof (or other person hereunder subject to such requirement) be deemed a Prohibited Person unless it otherwise qualifies as a Prohibited Person as of the time it becomes a direct or indirect owner of any portion of the Project or enters into a contract in connection with the Project. In addition, District shall not unreasonably withhold its approval under this Agreement of any Person that is a Prohibited Person solely as a result of subparagraph (a) of this definition. With respect to Institutional Investors, Key Professionals, General Contractors or potential transferees in connection with a Transfer, Developer may rely on written representations from such parties that they are not in violation of subparagraph (a) or subparagraph (b) of this definition, so long as no Developer Party has actual knowledge to the contrary. Project: the implementation of all design, pre-development and development activities contemplated by the Master Plan for the Improvements, and the construction of all Improvements through Final Completion. Project Documents: each Ground Lease, Development Guaranty, Completion and Lease Guaranty, the Closing Agreement, the Master Plan, For Sale Covenants, each For Sale Deed, Affordability Covenants, the Site COREA, the Building COREA, all architectural documents and drawings, and any other documents contemplated by this Agreement or a Project Document.
Public Library Fund: as defined in Section 5.10.

Refinancing: as defined in Section 5.8.5. Related Suit: a suit against District, in an action entitled The Related Companies, L.P.v. Government of the District of Columbia, Civil Action No. 03-7469. Release: any release, spill, emission, leaking, pumping, pouring, emptying, discharge, injection, escape, leaching, dumping, disposal, dispersal, abandonment, or
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migration into or through the environment or out of any portion of the Site, including movement through or in the air, soil, surface water, or ground water (including without limitation the abandonment or cessation of continuous active use of any underground storage tank, barrel, container, and other closed or unclosed receptacle that contains or once contained any Hazardous Materials). Remaining Net Value: for a given Leased Parcel, the Net Parcel Value of such Leased Parcel. Remedial Action: all steps to: (a) clean up, abate, take corrective action, remove, treat or in any other way remediate any Hazardous Materials or contamination; (b) prevent or address the Release or threatened Release of Hazardous Materials; (c) reduce the risk that any Hazardous Materials may migrate or endanger or threaten to endanger human health or welfare or the environment; or (d) perform feasibility or other studies, investigations, monitoring, or care related to any Hazardous Materials. Reservation 174: the portion of the Site owned by the federal government. Reserves: reasonable, market rate reserves established by a Ground Lessee and approved by District (such approval not to be unreasonably withheld) from and after the Stabilization Date for working capital or capital expenditures. Restricted Person: as defined in Section 10.1.14. Return Threshold: where Developer or Ground Lessee is projected to receive an aggregate return for the Leased Parcels of not less than twenty-five basis points (25 bp) less than the blended Land Value Return Rate (based on a weighted average of Total Costs for all Leased Parcels) for such Leased Parcel during the first twelve (12) months after Stabilized Occupancy. RFP: Request for Proposals for a Development Partner prepared by the Office of the Deputy Mayor of Planning and Econo~nic Development and the Office of Planning of District, dated July 2, 2002, as amended. Sale: A sale shall mean any sale, assignment, transfer or conveyance of a Ground Lease to a Person other than a Permitted Transferee or to a leasehold mortgagee as security for a leasehold mortgage. Sale Participation Payment: as defined in Section 5.8.1. Schematic Drawings: as defined in Section 7.4.3. Significant Changes: (i) a change in any material respect in size or design, affecting exterior walls and elevations, building bulk, coverage or floor area ratio or number of floors from the last approved conceptual design, schematic design, design development, construction drawings, Plans and Specifications, or any other drawings described in Section 7.4.2, as applicable, or otherwise previously approved by District; (ii) a change in any material respect in colors, size or design or use of exterior finishing
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materials substantially affecting architectural appearance from those shown and specified in the last District approved conceptual design, schematic design, design development, construction drawings or Plans and Specifications, as applicable, or 6therwise previously approved by District; (iii) a change in any material respect in the functional use and operation of the Improvements from those shown and specified in the District approved Plans and Specifications or otherwise previously approved by District (including, without limitation, any change inconsistent with the Master Plan); (iv) a change in the design and construction of the Project requiring approval of, or any changes required by, any District of Columbia agency, body, commission or officer (other than District and other than those required by Governmental Requirements) only if the change constitutes a "Significant Change" under another subsection of this definition; (v) a change in any material respect in landscape design or plantings from the last District approved conceptual design, schematic design, design development, construction drawings or Plans and Specifications, as applicable, or otherwise previously approved by District; (vi) a change in any material respect in size or quality of exterior pavement, pedestrian malls, plazas, retaining walls, pools and fountains, exterior lighting, public art and other site features related to the development of the Site from the last District approved conceptual design, schematic design, design development, construction drawings or Plans and Specifications, as applicable, or otherwise previously approved by District; (vii) a change in any material respect in the placement or size of service facilities or in the number of elevators, stairs or ramps or changes in general pedestrian or vehicular circulation in, around or through the Improvements from the last District approved conceptual design, schematic design, design development, construction drawings or Plans and Specifications, as applicable, or otherwise previously approved by District; (viii) a change to the Master Plan from that last approved by District (except to the extent that the substance of such change has already been approved by District in another context, i.e., approval of changes to the Plans and Specifications); and (ix) any single change or related group of changes to the Plans and Specifications which result in an increase in any Escrow Release Developer Cost Budget for a Parcel or the Escrow Release Site Cost Budget by 5% or more. Upon the earlier of the date this Agreement terminates in accordance with its terms, subsections (viii) and (ix) of the definition in the preceding sentence shall no longer constitute Significant Changes. Any Significant Changes shall require the prior written approval of the Landlord, which shall not be unreasonably withheld. Site: the area bounded by 9th, H and 1 lth Streets, and New York Avenue, N.W. all in the District of Columbia. Site COREA: as defined in Section 7.14(b). Site Costs: the following commercially reasonable out of pocket costs that are incurred by Developer during the Development Period (subject to the qualification in clause (iv)) and actually paid: (i) costs of satisfying and!or purchasing any Demolition Loan encumbering the Site on the Escrow Release Date, (ii) any costs of demolition of any improvements existing on the Site on the Escrow Release Date, (iii) except as set forth in Section 11.4, costs of Remedial Action, if any, required under applicable law regarding Hazardous Materials existing on the Site as of the Escrow Release Date,
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(iv) costs of the design, development, and construction of Common Areas and any Interim B Parcel Improvements (even if after the Development Period but prior to Final Completion of the Common Areas), (v) the sum of $3,000,000 paid 15y Developer Parties to The Related Companies, L.P. with respect to the Related Suit, and (vi) costs of preparing the Master Plan, plus (vii) the Imputed Development Period Return on all of the costs described in the foregoing clauses (i) through (vi). Site Costs shall exclude Excluded Payments, any costs incurred by Developer in connection with the RFP prior to November 6, 2003, and the sum of $1,000,000 paid by Developer to The Related Companies L.P. prior to the date of this Agreement in connection with the settlement of the Related Suit. Smith Group: as defined in Section 2.2.5. Smith Guarantor: Archstone-Smith Operating Trust, a Maryland rea! estate investment trust. Stabilization Date: for each For Sale Residential Parcel, the date on which the initial sales of all residential units within such For Sale Residential Parcel have been completed; and for each other Parcel, the earlier to occur of (i) the date of Stabilized Occupancy of such Parcel and (ii) the date that is three (3) years after the date of Completion of the Developer Improvements on such Parcel. Stabilized Occupancy: for each Leased Parcel on which the principal use category is hotel, 12 months after the first date on which such hotel shall open for business to the general public; and for each other Leased Parcel, the first date on which execution of leases and the commencement of payment of rent thereunder has occurred with respect to the applicable percentage of leasable space for the principal use category on such Parcel: Retail Residential Rental Office 97.0% 95.0% 97.0%

Substantial Completion: completion of all Improvements (exclusive of occupancy tenant improvements) in accordance with and to the extent required by the certification given by the applicable Approved Architect in AIA Form G-704, with the Plans and Specifications and with all Governmental Requirements to the point where only items of work necessary to complete the Improvements that will not materially interfere with the use and occupancy of the Improvements for their intended purposes and that are otherwise of the scope and nature as this term is commonly understood in the construction industry, including but not limited to, (i) with respect to subgrade parking and concourse Improvements, construction and delivery of the loading dock(s) (if applicable), the parking garage (to the extent applicable), and other portions of such Improvements (with sufficient foundation to support the Above-Grade Improvements) in accordance with the Plans and Specifications such that such work meets all Governmental Requirements necessary for
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issuance by the applicable Governmental Authority of a Certificate of Occupancy, broom-clean and free from debris caused or created by a Developer Party, and its respective agents, employees, contractors, and subcontractors; (ii) completion of the areas referred to in (i) in a manner accessible and usable by the purchasers, subtenants, and retail customers for loading and parking purposes; (iii) solely with respect to the For Sale Residential Parcel and the Leased Residential Parcel, completion of each such buildings ground floor lobby, public areas on the ground floor, elevator cabs, and all other common areas to be used by the purchasers or residential tenants, as applicable, and the rendering of such areas broomclean and free from debris caused or created by Developer, a Ground Lessee or For Sale Residential Owner and its respective agents, employees, contractors, subcontractors, and other tenants; (iv) with respect only to the Leased Residential Parcel, completion of at least two (2) contiguous floors with building standard finishes, fixtures, and accessories of all dwelling units and on such contiguous floors, the completion of all associated mechanical rooms, electrical closets, janitor closets, freight elevator anterooms, the lobby, and the stairways; and (v) with respect only to the For Sale Residential Parcel, completion of at least two (2) contiguous floors with finishes, fixtures and accessories except for those finishes, fixtures and accessories to be completed after contracting for the sale of the units (such as countertops, cabinets and flooring), and on such contiguous floors, the completion of all associated mechanical rooms, electrical closets, janitor closets, freight elevator anterooms, the lobby and stairways. Target Dates: as defined in Section 7.1. Threshold Amount: as defined in Section 5.7.2. Total Costs: for a given Parcel, the sum of (i) the Allocable Site Costs for such Parcel plus (ii) the Developer Costs for such Parcel. Transfer: any sale, transfer, assignment, conveyance, lease, trust, pledge, encumbrance or hypothecations of this Agreement; it being agreed that a Transfer shall expressly also include the following: (a) any direct interest in Developer is sold or transferred to any Person other than any current Member as of the date of this Agreement; or (b) in a single transaction or a series of transactions (including, without limitation, increased capitalization, merger with another entity, combination with another entity, or other amendments, issuance of additional or new stock, partnership interests or membership interests, reclassification thereof or otherwise), whether related or unrelated, stock, membership interests, limited partnership interests or beneficial
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interests at any ownership tier of, or a Controlling interest in, Developer is sold, transferred, diluted, reduced or otherwise affected (whether directly or indirectly); or (c) in a single transaction or series of transactions, whether related or unrelated, any general partnership interest or managing member interest in Developer or in any general partner or managing member of Developer is sold, transferred, diluted, reduced or otherwise affected (whether directly or indirectly) with the result that the present general partners or managing or Controlling members of Developer are no longer general partners or managing or Controlling Members or that the present holders or owners of each such general partner, manager, or managing or Controlling Member no longer Controls such general partners, managers, or managing or Controlling Members; or

(d) in a single transaction or series of transactions, whether related or unrelated, interests in any of the stock, membership interest, partnership interest or beneficial interests in Developer is redistributed among the current stockholders, members, partners or owners, the affect of which is to make Schedule 2 inaccurate; or
(e) any assignment of the economic incidents of ownership of interests (either directly or indirectly) in Developer occurs that, if such assignment were of the Equity or of other Controlling interests in Developer would constitute a Transfer under any of clauses (a) through (d) above; or

(t) an assignment or transfer described in any of clauses (a) through (f) above occurs by operation of law.
Unsold Percentage: as defined in Section 5.8.2. WCCA: the Washington Convention Center Authority.

Zoning Approvals: any zoning, land use, subdivision single lot of record agreements, street dedication agreements or other agreements with the District Department of Transportation, or similar consent or approval of any governmental or quasi-governmental authority (including, to the extent applicable, the Zoning Commission, the Board of Zoning Adjustment, the Commission of Fine Arts and the National Capital Planning Commission) that may be required under applicable law to construct the Improvements in accordance with the Master Plan, and the lapse of any periods for the administrative or judicial appeal thereof, and shall include planned unit development approvals, rezonings, text amendments, variances, special exceptions, but excluding building and related permits required for demolition, excavation, sheeting and shoring or construction. 1.2 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the District of Columbia (without reference to conflicts of laws principles). 1.3 Severability. In the event that one or more of the provisions of this Agreement shall be held to be illegal, invalid or unenforceable, each such provision shall
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be deemed severable and the remaining provisions of this Agreement shall continue in full force and effect, unless this construction would operate as an undue hardship on District or Developer or would constitute a substantial deviation frofia the general intent of the parties as reflected in this Agreement. 1.4 No Oral Modifications or Waivers. No modification of this Agreement shall be valid or effective unless the same is in writing and signed by District, Developer and Guarantors. No purported waiver of any of the provisions of this Agreement shall be valid or effective unless the same is in writing and signed by the party against whom it is sought to be enforced. 1.5 Schedules and Exhibits. All Schedules and Exhibits referenced in this Agreement are incorporated by this reference as if fully set forth in this Agreement. 1.6 Including. The word "including," and variations thereof, shall mean "including without limitation." 1.7 No Construction Against Drafter. This Agreement has been negotiated and prepared by District and Developer and their respective attorneys and, should any provision of this Agreement require judicial interpretation, the court interpreting or construing such provision shall not apply the rule of construction that a document is to be construed more strictly against one party. II. Transfers 2.1 Reliance on Developer and Guarantors. recognizes and acknowledges that: Developer hereby

(a) The development and construction of Improvements on the Site in accordance with the Master Plan and Plans and Specifications is critical to Districts goals. (b) The qualifications and identity of Developer and its respective Members, partners, and of every Person having any interest, directly or indirectly, in Developer (i.e., in any sub-tier Person), regardless of whether or not such Person is an Affiliate or has Control, are of particular concern to District. (c) District is entering into this Agreement with Developer because of the qualifications and identity of Developer and its Members, partners and other owners of interests and in so entering into this Agreement, is willing to accept and rely on the obligations of Developer for the faithful performance of all undertakings and covenants in this Agreement. (d) District is also relying on the qualifications and identity of the Guarantors as set forth in the guaranties of the Guarantors. 2.2 Restrictions on Transfer.

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2.2.1 Except as set forth in Section 2.2.4, Developer agrees that it shall not, directly or indirectly sell, pledge, hypothecate or assign its rights under this Agreement, or otherwise permit a Transfer without the written gpproval of District except as permitted under Section 2.2.4. However, District understands and agrees as follows: (i) various entities organized by the Developer will own the lessees interests in the Ground Leases and initially own fee title to the For Sale Residential Parcels, (ii) whenever this Agreement provides for an act to be done (or not done) or an action to be taken (or not taken) by the Developer, such act shall be deemed done (or not done) or action taken (or not taken) if the same is done (or not done) or taken (or not taken) by any Developer Party, and (iii) any costs expended by any Developer Party with respect to the Project shall be deemed expended by Developer for all purposes of this Agreement, including, but not limited to, the definitions of Developer Cost and Site Costs (and subject to District approval to the extent expressly provided in this Agreement). Developer agrees that the personnel ("Key Personnel") 2.2.2 identified on Schedule 1 shall dedicate to the Project the approximate time set tbrth on Schedule 1 and shall attend the meetings identified on Schedule t during the period from the date hereof through Final Completion (or such shorter period as specified on Schedule 1). Developer may from time to time propose to District new Key Personnel to substitute for the Key Personnel identified on Schedule 1, and such new Key Personnel shall be subject to the approval of District, such approval not to be unreasonably withheld. 2.2.3 Set forth on Schedule 2 are the parties selected by Developer to be the beneficial owners of each Parcel, the percentage of ownership for each such owner in each Parcel, and the identity and percentage of ownership interest of such Person for all tiers until the tier including only individuals. On or before April 1, 2008, Developer shall (i) identify for District each Person who shall execute each Ground Lease as a Ground Lessee, which Person shall, as of the Escrow Release Date, be owned as set forth on Schedule 2 and as otherwise required by this Agreement, and (ii) provide to District for its approval (such approval not to be unreasonably withheld) the Governing Documents of each Ground Lessee and For Sale Residential Owner and such other documents as may be reasonably required by District to show how such Ground Lessee and For Sale Residential Owner, as of the Escrow Release Date, meets the requirements set forth on Schedule 2. Any changes to the information and documentation provided in clauses (i) or (ii) of the preceding sentence shall be subject to Districts prior written approval, and Developer shall provide District with copies of any material changes no later than thirty (30) days prior to the Escrow Release Date. All ownership interests in the Person that shall execute each Ground Lease as Ground Lessee or For Sale Residential Owner, as applicable (other than the ownership interests held by Developer and any LSDBE) shall be held by (A) the Persons as set forth in Schedule 2 and in such percentage and (B) one or more Institutional Investors, provided that Developer shall Control such Person (it being understood that the definition of Control shall not preclude the Institutional Investor having major decision rights), and/or (C) one or more non-Institutional Investors, provided that Developer shall Control such Person, and in the case of this clause (C) if the investor is in the real estate
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business such investor (other than a Member of the Hines Group and Smith or an Affiliate thereof) shall be subject to the approval of District, such approval not to be unreasonably withheld. It is understood that the LSDBEs and others may not enter into the Governing Documents until after Closing but in any event shall enter into the Governing Documents prior to the Escrow Release Date. 2.2.4 The following Transfers of interests in Developer shall be permitted without notice to or approval from District (each, a "Permitted Transfer"): (a) any, direct or indirect, transfer of the Hines interest in Developer to any Person belonging to the Hines Group (or to any Person that is both advised by a Person belonging to the Hines Group and Controlled by the Hines Group) shall be permitted so long as such Person is not a Prohibited Person at the time of such Transfer, and following any such transfer, such Person shall be deemed Hines for all purposes hereunder. For purposes of this Agreement, "Hines Group" shall mean: Hines REIT Operating Partnership, L.P. and all and any (i) partnerships, legal entities, companies, trusts and other Persons (including any fund of which the general partner, that is to say the Person charged with the management thereof, belongs to "Hines Group" as defined herein) of which actual Control is entrusted directly or indirectly to one of the persons designated hereinafter: Gerald D. Hines and/or Jeffrey C. Hines, and their parents, brothers and sisters, in addition to their respective spouses and children (including adopted children), the descendants of any of the above persons, and the trustee of any trust of which the beneficiaries (the designated beneficiaries) are one or more of those same individuals; and (ii) any and all partnerships, legal entities, and other entities under the Control, whether direct or indirect, of (A) the persons designated in paragraph 2.2.4(i) hereinabove, their descendants or their trustees or (B) the Persons to which reference is made in paragraph 2.2.4(iii) hereinbelow; and (iii) any and all partnerships, legal entities, companies, trusts and other entities under the Control, whether direct or indirect, of any current or future employee (but only so long as such Person is an employee) of any partnership, legal entity, company or other Person belonging to the "Hines Group" as this term is defined in paragraphs 2.2.4(i) and (ii) above; and Hines Interests Limited Partnership and any successor to substantially all of the business of Hines Interests Limited Partnership. (b) (i) any direct or indirect transfer of the Smith interest in Developer to any Person belonging to the Smith Group shall be permitted, and following any such transfer, such Person shall be deemed Smith for all purposes hereunder. For purposes of this Agreement, "Smith Group" shall mean all and any partnerships, legal entities, companies, trusts, limited liability companies and other Persons directly or indirectly Controlled by or under common Control with, Smith or the Archstone-Smith Operating Trust or any of their successors and assigns by merger, consolidation, acquisition or other form of reorganization.

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(ii) any direct or indirect transfer of any interest in Smith or the Archstone-Smith Trust. (iii) Transfers of shares of stock, non-managing membership interests, limited partnership interests and other interests in the indirect holders of the beneficial interests in Developer; ~, however, following any such transfer, a Hines controlled entity and a Smith controlled entity shall continue to control Developer. 2.3 District. To the extent permitted by law and without diminishing the 2.3.1 benefits afforded to Developer hereunder, District shall have the fight to assign this Agreement, or delegate any of its rights hereunder, to any agency or instrumentality of District or to any other Person. 2.3.2 Subject to Section 3.4, all rights of District under this Agreement shall be exercised by the Mayor or by such Persons as the Mayor may designate from time to time. 2.3.3 For the purposes of this Agreement, all references to "District" shall mean the District solely in its capacity as a contract party to the Agreement and the documents expressly contemplated to be signed in this Agreement, acting through DMPED, and not any other governmental or quasi-governmental agency of the District of Columbia, such that the acts or omissions of any governmental or quasi-governmental agency of the District of Columbia, other than District solely in its capacity as a contract party to the Agreement and the documents expressly contemplated to be signed in this Agreement (acting through DMPED), shall not constitute the acts or omissions of "District" for the purposes of this Agreement. III. Relationship of Parties 3,1 Covenants as to Developer. 3.1.1 Subject to the terms and conditions of this Agreement, District agrees (i) to permit Developer to undertake and perform the duties referenced in this Agreement, (ii) to enter into or cause to be entered into by another Developer Party, the Ground Leases and (iii) to accept or cause to be accepted by other Developer Parties, the For Sale Deeds. 3.1.2 Developer agrees to perform or cause to be performed the duties and obligations imposed upon or assumed by Developer in this Agreement. 3.1.3 Developer is an independent party and not an agent, partner or joint venturer of or with District. Nothing contained in this Agreement shall be deemed or construed by any Person as creating a relationship of principal and agent or of partnership or joint venture between Developer or any other Developer Party and District. Developer is not authorized to sign on behalf of District.
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3.1.4

[intentionally deleted]

It shall be a condition to Closing thatthe documentation 3.1.5 required as a condition to Closing under Section 9.4.1.13 (and approved by District as herein provided) shall ensure that all Ground Leases, For Sale Covenants and Memoranda of Lease operate as a unified whole (it being understood, however, that except as expressly provided herein, the Ground Leases, the For Sale Covenants and this Agreement shall not be cross-defaulted and shall be separately financeable and marketable). 3.2 Developer Safety. Prior to the Escrow Release Date, Developer and, thereafter, the applicable Developer Parties under the Ground Leases and the For Sale Residential Owner(s) under the For Sale Covenants shall be solely responsible for the health and safety of its Affiliates, employees, consultants, contractors, subcontractors, agents, and business invitees, and for compliance with all Governmental Requirements and requirements relating to same, and under no circumstances shall District be liable for the health and safety of such Developer Parties, Affiliates, employees, consultants, contractors, subcontractors, agents, and business invitees (except in the case of any liability District would have as a Governmental Authority separate from this Agreement). 3.3 Indenmity. Prior to the Escrow Release Date, Developer and, thereafter, the applicable Ground Lessees under the Ground Leases and the For Sale Residential Owner(s) under the For Sale Covenants shall indemnify, defend and hold harmless District, its employees, representatives and officers from any and all Loss, cost, liability, claim or suit in connection with the design of the Improvements, except for (i) the cost of District Consultants engaged by District and (ii) any liability, claim or suit arising from the gross negligence or willful misconduct of District and/or its employees or officers.
3.4 Authorized Representatives. 3.4.1 For the purposes of administering this Agreement, Developer hereby appoints William B. Alsup, III and Alfred G. Neely as its sole and exclusive representatives either of whose authority shall be binding upon Developer, and upon written notice to District each may delegate his authority to another person in writing in which case that persons authority shall be binding upon Developer. Developer shall appoint a single officer or other position to act as its day-to-day single point of communication, which person shall initially be Howard Riker. For the purposes of administering this Agreement, the 3.4.2 DMPED shall be the sole and exclusive agency whose authority shall be binding upon District. The DMPED shall appoint a single officer or other position to act as its dayto-day single point of communication. Each party to this Agreement may change its identified 3.4.3 authorized representative from time to time upon delivery of written notice thereof to the other party.
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3.5 District Liability. Any review, analysis, examination, investigation or approval or consent by District pursuant to the terms of this Agreement or otherwise in connection with the Site is solely for the benefit of District and shall ffot be relied upon or construed by Developer or any other Person as acceptance by District of any responsibility or liability therefor as to completeness or sufficiency thereof for any particular purpose or compliance with Governmental Requirements. In furtherance of the foregoing, the grant of consent or approval by District under this Agreement shall be intended solely to satisfy Districts rights under this Agreement and for no other purposes and shall not be binding upon any particular Governmental Authority having jurisdiction over the Site. 3.6 Anti-Deficiency Provision. 3.6.1 District and Developer acknowledge and agree that the obligations of District to fulfill financial obligations of any kind pursuant to any and all provisions of this Agreement, or any subsequent agreement entered into pursuant to this Agreement or referenced herein to which District is a party, are and shall remain subject to the provisions of(i) the federal Anti-Deficiency Act, 31 U.S.C. 134!, 1342, 1349, 1351, (ii) the D.C. Official Code 47-105, (iii) the District of Columbia Anti-Deficiency Act, D.C. Official Code 47-355.01 - 355.08, as the foregoing statutes may be amended from time to time, and (iv) Section 446 of the District of Columbia Home Rule Act, regardless of whether a particular obligation has been expressly so conditioned. District agrees to exercise all lawful and available authority to satisfy any financial obligations of District that may arise under this Agreement; however, since funds are appropriated annually by Congress on a fiscal year basis, and since funds have not yet been appropriated for the undertakings contemplated herein, Districts legal liability for the payment of any costs shall not arise unless and until appropriations for such costs are approved for the applicable fiscal year by Congress (nor shall such liability arise if, despite Districts compliance with Section 3.6.2, a request for such appropriations is excluded from the budget approved by the City Council and submitted to Congress for the applicable fiscal year). District makes no representation or assurance that Congress will grant the authorizations and appropriations necessary for District to perform its financial obligations under this Agreement. 3.6.2 During the term of this Agreement, the Mayor or other appropriate official shall for each fiscal period include in the budget application submitted to the City Council the amount necessary to fund Districts obligations hereunder for such fiscal period. Notwithstanding the foregoing, no officer, employee, director, member or other natural person or agent of District shall have any personal liability in connection with the breach of the provisions of this Section 3.6.2 or in the event of a default by District under this Section 3.6.2. This Agreement shall not constitute an indebtedness of 3.6.3 District nor shall it constitute an obligation for which District is obligated to levy or pledge any form of taxation or for which District has levied or pledged any form of taxation.

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3.6.4 In accordance with 446 of the Home Rule Act, D.C. Official Code 1-204.46, no District official is authorized to obligate or expend any amount under this Agreement unless such amount is lawfully available antihas been approved and appropriated by Act of Congress. 3.6.5 If any provision of this Agreement would require an expenditure by District in excess of $1,000,000.00 during a 12-month period, such expenditure shall be subject to City Council approval pursuant to D.C. Code 1204.51. 3.7 District Delay. 3.7.1 For purposes of this Section 3.7, "District Delay" shall mean the occurrence of all of the following: (i) (a) with respect to any matter that requires the consent or approval of District under this Agreement, if District unreasonably withholds its consent or approval of such matter (if Districts consent or approval is not to be unreasonably withheld according to this Agreement) or fails to specify in reasonable detail the reason for Districts disapproval or rejection of such matter or (b) if District fails to take any other action required of District under this Agreement by the date such action is required; (ii) Developer shall notify District in writing of the potential District Delay and that District has five (5) Business Days after the date of such notice to cure the potential District Delay; and (iii) District does not cure such potential District Delay within such five (5) Business Day period. If no date is specified in this Agreement for an action required of District, and the failure to take such action will materially and adversely affect Developers ability to achieve a Milestone Event by the applicable Target Date or Outside Date, Developer may by written notice to District specify a date (in no event less than fifteen (15) Business Days from the date of such notice) by which such action must be taken, and such notice shall state clearly that a District Delay shall result if District fails to take such action by such date, and in such event, any failure of District to take such action by such specified date shall constitute a District Delay; provided, however, this sentence shall in no event serve to shorten any specific period of time that the District has under this Agreement in order to render a consent, approval or disapproval of a particular matter under this Agreement. If there shall occur a District Delay, and such District Delay 3.7.2 shall delay or prevent Developer from performing any obligation under this Agreement, then the required date for the performance of such obligation (including any applicable Target Dates or Outside Dates) shall be extended on a day-for-day basis. 3.8 Limited Recourse to District. Subject to the additional limitations on liability in Section 3.6, Districts liability under this Agreement for any and all claims and counterclaims, including without limitation, breach of this Agreement, shall be limited to its interest in the Site and to all sums payable or paid to District under this Agreement.

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IV. Master Plan 4.1 General. Developer has prepared a master plan ("Master Plan") for the development of the Site and the design and construction of the Improvements as described in and contemplated by the Exclusive Rights Agreement, and District has approved the Master Plan. Developer shall comply and perform in accordance with the terms of the Master Plan. The Master Plan is described on Schedule 3. Any changes to the Master Plan shall be subject to Districts and Developers prior written approval, with the Developers approval not being unreasonably withheld, and with the standard for Districts approval set forth in the definition of "Significant Changes". Notwithstanding the foregoing, District shall have the sole authority (without the necessity of obtaining the consent of any Developer Party) to waive any provisions of the Master Plan as they relate to the B Parcels, other than as set forth on Schedule 15. The Master Plan includes a proforma projection of the NOI for the first twelve (12) months after Stabilized Occupancy for each Leased Parcel ("Master Plan Proforma"), a proforma projection of sales proceeds for each For Sale Residential Parcel ("Master Plan Sales Projection"), and a determination of Gross Parcel Value and Net Parcel Value, as well as a budget of all Site Costs ("Master Plan Site Cost Budget") and a budget of all Developer Costs for each Parcel ("Master Plan Developer Cost Budget"). Such projections shall also include projected returns to District and Developer, revenues and expenditures before and after Construction Commencement, and Developers IRR upon sale. Provided, however, the parties acknowledge that Developer and District have approved only the format of the Master Plan Proforma, Master Plan Sales Projection, Master Plan Site Cost Budget and Master Plan Developer Cost Budget, and not any of the substance thereof, and as such none of the financial projections, conclusions or determinations therein shall serve to establish any limits, baseline, or parameters for the determinations to be made under 5.2 of this Agreement, whether by the parties, any arbitrator or otherwise. Matters approved by District pursuant to this Agreement, to the extent the same modify or change the Master Plan, shall be deemed amendments to the Master Plan approved by the District provided that the notice approving the same so states. 4.2 Master Plan Costs. Developer shall pay or cause to be paid all costs incurred by it and the other Developer Parties in connection with the preparation of the Master Plan, including the fees and expenses of all architects, planners, engineers, landscape architects, attorneys and other professionals or consultants. 4.3 Updates to Financial Information. Developer shall submit to District, no less than quarterly, updates to the Master Plan Site Cost Budget, the Master Plan Developer Cost Budget, the Master Plan Proforma and the Master Plan Sales Projections, and the Gross Parcel Value and Net Parcel Value, based upon the best information then known to Developer. 4.4 District Improvements. Any delay on the part of District in connection with the pla~ming, developing, failure to fund construction of, or constructing the District Improvements shall not affect Developers rights and obligations to proceed with the planning, approvals, development and construction of the Improvements as described in this Agreement.
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4.5 B Parcels. District reserves the right to exclude the B Parcels described on Schedule 4 from the Leased Parcels. Developer shall provide District with proposed terms in writing for the potential leasing of the B Parcels~by Developer or a Developer Party no later than March 31, 2008. In the event that Developer and District have not agreed in writing on all of the terms and conditions for the leasing of the B Parcels by June 30, 2008, District shall automatically be deemed to have elected to exclude the B Parcels from the Leased Parcels. V. Financial Consideration to District 5.1 Components of Consideration. Developer or the applicable Developer Party, as described below, shall provide to District the financial consideration in the forms and amounts summarized in this Article V. For purposes of this Agreement, any Developer expenditure that results in an "offset" or "deduction" in accordance with Section 11.4, Schedule 5 or this Article V, from the amounts otherwise payable to District pursuant to this Article V is a component of the formula for determining the value of the property hereby disposed of and is an integral part of the determination of financial consideration owed to District. 5.2 Determination of Net Parcel Value. At least ninety (90) days prior to Closing, Developer shall 5.2.1 submit to District proposed updates to the Master Plan Site Cost Budget, the Master Plan Developer Cost Budget, the Master Plan Proforma and the Master Plan Sales Projections, including proforma returns to District and Developer. Developer and District shall work cooperatively and in good faith to revise such updates to reflect the reasonably anticipated costs and revenues (with a reasonable budget contingency for unanticipated costs). The final updates, as approved by Developer and District, shall be the "Closing Developer Cost Budget", the "Closing Site Cost Budget", the "Closing Proforma" and the "Closing Sales Projection", respectively. 5.2.2 If by the date that is thirty (30) days prior to Closing, Developer and District shall not have approved the Closing Developer Cost Budget, the Closing Site Cost Budget, the Closing Proforma and the Closing Sales Projections, then any issue or issues related thereto, subject to any limitations imposed upon District by Governmental Requirements regarding its use of alternative dispute resolution in this context, shall be submitted to binding expedited arbitration in accordance with the procedure described in Schedule 5. Closing may be delayed to the date that is thirty (30) days from and after the date the decision of the arbitrator is issued. In the event that District cannot legally submit to such binding expedited arbitration, and District and Developer cannot resolve any material dispute regarding the foregoing costs, the parties shall file a civil action in the Superior Court of the District of Columbia and the parties shall jointly request that the Court direct the parties to submit the dispute to the Multi-Door Dispute Resolution Division prior to commencing any discovery authorized under the Superior Court Rules of Civil Procedure. In all events, District and Developer will use best efforts to reach a resolution (judicial or otherwise) as expeditiously as possible and without any procedural delays.
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At Closing, the Gross Parcel Value and Net Parcel Value of 5.2.3 each Parcel that is within the Leased Parcels or that is a For Sale Residential Parcel shall be calculated based upon (i) in the case of each For Sale Regidential Parcel, the gross sales proceeds as set forth in the Closing Sales Projection, (ii) in the case of each Leased Parcel, the NOl for the first twelve (12) months after Stabilized Occupancy for such Leased Parcel as set forth in the Closing Proforma, (iii) the Developer Costs for such Parcel as set forth in the Closing Developer Cost Budget, and (iv) the Site Costs as set forth in the Closing Site Cost Budget. The calculation of Gross Parcel Value and Net Parcel Value described in this Section 5.2.3 shall be final. No earlier than ninety (90) and no later than sixty (60) days 5.2.4 prior to the Escrow Release Date, Developer shall submit to District proposed updates to the Closing Site Cost Budget, the Closing Developer Cost Budget, the Closing Proforma and the Closing Sales Projections, including proforma returns to District and Developer, and reflecting fully negotiated bids (with commercially reasonable allowances) from general contractor(s) and subcontractors to achieve Pad Completion based on the Plans and Specifications. Developer and District shall work cooperatively and in good faith to revise such updates to reflect the reasonably anticipated costs and revenues (with a reasonable budget contingency for unanticipated costs), and shall mutually agree upon the same prior to the Escrow Release Date. The final updates, as approved by Developer and District, shall be the "Escrow Release Developer Cost Budget", the "Escrow Release Site Cost Budget", the "Escrow Release Proforma" and Any disputes regarding such the "Escrow Release Sales Projection", respectively. updates shall not be settled by arbitration. 5.3 5.4 Intentionally deleted. Base Rent

Beginning on the date of the Closing and ending on the day 5.4.1 immediately preceding the Escrow Release Date, Developer shall pay Base Rent per calendar year, prorated for any partial calendar year, for each Leased Parcel equal to three and one-half percent (3.5%) of the Remaining Net Value of such Leased Parcel. Developers obligation to pay Base Rent shall not be conditioned on the execution of any Ground Lease pursuant to the Closing Agreement. Base Rent shall be paid in immediately available funds in equal monthly installments in advance on the first day of each calendar month commencing on the date of Closing and continuing until the Escrow Release Date, prorated for any partial month, at the address District may from time to time designate, without setoff, abatement or deduction of any kind except as set forth in Section 5.1, Section 5.4.2, Section 11.4 or Schedule 5 and thereafter as may be expressly set forth in any Ground Lease. The first installment of Base Rent shall be paid on the date of Closing. 5.4.2 Each Ground Lease shall provide that, beginning on the Escrow Release Date and ending on the last day of the term of the Ground Lease, the Ground Lessee shall pay Base Rent per calendar year, prorated for any partial calendar year, for each Leased Parcel equal to seven percent (7%) of the Remaining Net Value of
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such Leased Parcel. To the extent that one or more District Delays occur prior to the Escrow Release Date and are a proximate cause of an actual delay in achieving the Escrow Release Date by the date provided in the Project schedu[b (in existence and approved by District in writing as of Closing), or to the extent that one or more District Delays occur after the Escrow Release Date and are a proximate cause of an actual delay in achieving Substantial Completion, then the District shall provide a per diem credit against Base Rent for each day of such actual delay, which credit shall be applied at such time as the Escrow Release Date or Substantial Completion, as applicable, is actually achieved. Notwithstanding the foregoing, the same District Delay may not create a Base Rent abatement with respect to both the Escrow Release Date and Substantial Completion. 5.4.3 Notwithstanding Sections 5.4.1 and 5.4.2, aggregate Base Rent for all Leased Parcels per calendar year shall not be less than (i) $1,000,000 (or $500,000 if no use category consists of office use) during the period described in Section 5.4.1 and (ii) $2,000,000 (or $1,000,000 if no use category consists of office use) during the period described in Section 5.4.2. Base Rent shall be allocated among the Leased Parcels as follows: $1,500,000 for the office parcel, $250,000 for the residential rental parcel and $250,000 for the retail parcel or as District and the Developer Parties may otherwise agree. The Guarantors under the Completion and Lease Guaranty shall guaranty, jointly and severally, the payment of all of the above minimum Base Rent (to a maximum of the amounts specified in (i) or (ii) above, as applicable) to the District for the period of sixty (60) months commencing on the Completion of Improvements located on a particular Leased Parcel, such minimum rent as may be increased pursuant to Section 5.4.5 below. Nothing in this Section 5.4.3 shall limit the obligations of the Guarantors under the Completion and Lease Guaranty to guarantee payments described in Section 5.4.5. Notwithstanding Section 5.4.2, beginning immediately after 5.4.4 such calendar year as District may designate (but in no event later than the third ful! calendar year after Final Completion) (such designated year, Stabilized Year"), Base Rent shall be increased by an amount per calendar year equal to fifty percent (50%) of the excess of NOI for such Stabilized Year over the Annual Base Return calculated for such Stabilized Year, provided that in calculating NOI, any free rent or similar concessions payable during or after such Stabilized Year under any space lease shall be amortized at a rate of nine percent (9%) per annum over the initial term of such lease. The adjustment described in this Section 5.4.4 shall be calculated separately with respect to each Leased Parcel. The amount of such adjustment shall be a one-time calculation after the Stabilized Year, but the same amount shall thereafter be added to Base Rent for each calendar year in the term of the applicable Ground Lease. 5.4.5 Notwithstanding any other provisions of this Agreement, if Completion of Improvements on a particular Parcel shall not have occurred by the Outside Date for Completion of all of the Improvements, then for the first six (6) months period following the Outside Date for Completion, and for each six (6) month period or partial period thereafter until Completion of such Improvements, (i) as to a Leased Parcel, Base Rent due under the applicable Ground Lease shall be increased by
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an amount equal to fifty percent (50%) of the Base Rent then in effect and (ii) as to a For Sate Residential Parcel, Developer shall pay or cause to be paid a fee in the initial amount of $250,000 (or $125,000 for each For Sale Residential Parcel which is delayed if there are two For Sale Residential Parcels) which shall be increased by an amount equal to fifty percent (50%) for each six (6) month period or partial period after the first six (6) months; ~, however, (a) the Base Rent under such Ground Lease shall be increased to no more than three hundred percent (300%) of the Base Rent that otherwise would have been due had the Improvements been Completed by the Outside Date and (b) the amount due with respect to a For Sale Residential Parcel shall not exceed $750,000 (or $375,000 for each For Sale Residential Parcel which is delayed, if there are two For Sale Residential Parcels). Developer acknowledges that for the purposes of this Section 5.4.5 only, if the Base Rent for the Ground Lease for retail use in the Master Plan is less than $250,000, the Base Rent shall be deemed to be $250,000 (prorated amongst the portions thereof included in Improvements with other uses to the end that the payment shall be made only with respect to the portion delayed). 5.5 Participating Rent.

5.5.1 Each Ground Lease shall provide that beginning on the Stabilization Date and ending on the last day of the term of the Ground Lease, each Ground Lessee shall pay Participating Rent each year for its Leased Parcel equal to (i) twenty five percent (25%) multiplied by (ii) the excess, if any, of NOI for such year (or portion) over the sum of Cumulative Base Return as of the beginning of such year (or portion) and Annual Base Return calculated for such year (or portion). Participating Rent shall be calculated and paid separately for each Leased Parcel. Each Ground Lessee pay estimated installments of 5.5.2 Participating Rent in arrears on or before the thirtieth (30th) day after the last day of each calendar quarter and shall provide a report to District and detailing the calculation of estimated Participating Rent. Within one hundred twenty (120) days after the end of each calendar year, each Ground Lessee shall (i) provide financial statements that have been audited by a certified public accountant that include a year end reconciliation and detailed calculation of Participating Rent for such calendar year and (ii) deliver to District any underpayment of Participating Rent revealed by such reconciliation. If such year end reconciliation reflects that a Ground Lessee overpaid Participating Rent for such year, then such Ground Lessee may thereafter set off any overpayment of Participating Rent against Rent thereafter due, unless, at Districts election, District elects to refund same to Ground Lessee. 5.5.3 Participating Rent shall be paid in immediately available funds without setoff, abatement or deduction of any kind whatsoever, except as set forth in Section 5.5.2 and the Ground Lease, at the address the District may from time to time designate. 5.6 5.7 Intentionally deleted. For Sale Residential Payments.

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5.7.1

Intentionally deleted.

For Sale Residential Owner shall make orcause to be made a 5.7.2 payment to District ("For Sale Participation Payment") in the amount of 25% of the Threshold Amount. "Threshold Amount" means the excess of gross sale proceeds received by the For Sale Residential Owner with respect to the initial sale of all of the units (and for such purposes, any amounts paid to District under the Affordability Covenants in the event of the sale of an ADU in excess of the maximum sales price established therefor as provided in the Affordability Covenant shall not be deemed to have been received by For Sale Residential Owner), or, if earlier, with respect to the sale of the For Sale Residential Parcel in its entirety (including all revenue derived from the sale of a residential unit, commercial unit, upgrades or options, storage units and parking spaces located within the For Sale Residential Parcel or otherwise being sold to owners of units within the For Sale Residential Parcel), over 125% of the Total Costs of such For Sale Residential Parcel. For Sale Residential Owner shall not make, permit or suffer to be made any distribution of the Threshold Amount to any partner, member or other beneficial owner of such For Sale Residential Owner, other than a return of capital (without any return thereon) actually contributed and as confirmed by District until such For Sale Residential Owner commences or causes the payment to District of the For Sale Participation Payment. For Sale Residential Owner shall (i.e., after the Threshold Amount is reached) cause estimated payments of the For Sale Participation Payment to be paid pail passu with any distributions thereafter to any partner, member or other beneficial owner of such For Sale Residential Owner until the For Sale Participation Payment is paid in full; provided that the estimated payments owed to District shall be placed in escrow, which payments shall be released from escrow at the time of final adjustment of Total Costs between the parties and the sale of all the units. Periodic adjustments shall be made in payments, with a final reconciliation upon sale of all units and a final determination of Total Costs. The For Sale Participation Payment attributable to each For Sale Residential Parcel is a one time obligation, and shall not apply to any sale of any portion of the For Sale Residential Parcel after the initial sale of units within such For Sale Residential Parcel or after the sale of the For Sale Residential Parcel in its entirety; provided, however, in order to extinguish the obligation to make a For Sale Participation Payment with respect to a unit, the initial sale of such unit shall be to a Person (i) who satisfies the ADU requirements set forth in the Affordability Covenants, to the extent applicable or (ii) who is otherwise a bona fide third party purchaser (who cannot be an Affiliate of Developer or any other Developer Party or an employee of any of the same if such party pays less than full value), and who has paid ful! value in connection with such purchase. 5.7.3 No less frequently than annually, For Sale Residential Owner shall provide or cause to be provided to District updates to the budgets for Site Costs and Total Costs. "Total Costs," as used in this Section 5.7 for the purpose of calculating the For Sale Participation Payment, shall be based upon Tota! Costs reflected in such budget(s) as updated from time to time. It is understood that payments toward the Sale Participation Payment cannot be finalized until Total Costs are finally determined and all units sold. The parties shall make adjustments among themselves as to estimated payments made pursuant to Section 5.7.2 within thirty (30) days after the
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Total Cost budget(s) is updated from time to time, with a final adjustment between the parties at the time Total Costs are finally determined and all units sold. 5.8 Participation in Sales Proceeds 5.8.1 Each Ground Lease shall provide that each time that a Ground Lessee completes the initial sale of Ground Lessees interest in the Ground Lease that is not a Permitted Transfer and that occurs prior to any Beneficial Interest Sale for which a Sale Participation Payment is due to District pursuant to Section 5.8.3 hereof, then contemporaneous with such initial sale, Ground Lessee shall pay to District an additional payment ("Sale Participation Payment") as described in this Section 5.8. 5.8.2 In the event the initial sale of Ground Lessees interest in a Ground Lease that is not a Permitted Transfer occurs after the effective date of the Ground Lease but subsequent to one or more Beneficial Interest Sales which was subject to Section 5.8.3, even if no Sale Participation Payment was made as a result thereof, then contemporaneous with such initial sale, Ground Lessee shall pay District an amount equal to (a) the Sale Participation Payment multiplied by (b) the Unsold Percentage. "Unsold Percentage" means, as applicable, one hundred percent (100%) less the portion of the Ground Lessees direct interest (expressed as a percentage) and/or the Beneficial Interests the sale of which was subject to Section 5.8.3, even if no Sale Participation Payment was made as a result thereof (i.e., the IRR threshold was not reached). 5.8.3 In the event any Beneficial Interest Sale occurs prior to the earlier of the initial sale or the payment of Sale Participation Payments, if any, with respect to the sale in the aggregate of one hundred percent (100%) of the Beneficial Interests (but after the effective date), then contemporaneous with such Beneficial Interest Sale, Ground Lessee shall pay to District an amount equal to the Sale Participation Payment multiplied by the Beneficial Interest that is the subject of such Beneficial Interest Sale. For the purpose of calculating the Sale Participation Payment pursuant to this Section 5.8.3, the net sales proceeds from the sale shall be calculated by (1) dividing (a) the actual net sales proceeds from such Beneficial Interest Sale by (b) the Beneficial Interest that is the subject of such Beneficial Interest Sale and (2) adding to such quotient the then outstanding principal balance of all secured and unsecured indebtedness owed by Ground Lessee (excluding from such indebtedness any member loans the value of which was included as part of the assets purchased in connection with the Beneficial Interest) which survives the Sale. "Beneficial Interest Sale" means the sale of any interest in the Ground Lessee other than a Permitted Transfer (and not a sale of the Ground Lessees interest in its Ground Lease). "Beneficial Interest" means the interest, expressed as a percentage of the overall ownership interest in Ground Lessee, which is the subject of a Beneficial Interest Sale. 5.8.4 The Sale Participation Payment shall be the amount equal to (i) twenty five percent (25%) multiplied by (ii) the excess of (a) the net sales proceeds from the Sale over (b) the net sales proceeds that would have to be received by such Ground Lessee on the date of such Sale in order to give such Ground Lessee an IRR on
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Total Costs paid with respect to such Leased Parcel equal to fourteen percent (14%) (or, where the principal use of such Leased Parcel is hotel, seventeen percent (17%)), taking into account all other revenues received by such Ground Lessee~in respect of such Leased Parcel through the date of such Sale. For purposes of this Section 5.8.4, the IRR shall be calculated on an "unleveraged" basis, that is, the IRR shall be calculated without taking into account (A) the receipt of proceeds of any indebtedness by a Ground Lessee, or (B) the payment by a Ground Lessee of any principal, interest or other charges in connection with any indebtedness (other than those expressly included in the definitions of Site Costs and/or Developer Costs). For purposes of this Section 5.8.4, the term "net sales proceeds" means the gross proceeds from the sale minus the costs of sale, but such costs shall not include any Excluded Payments or any payoff of financing or any costs associated with such payoff. Subject to Section 5.8.6 hereof and the further provisions of 5.8.5 this Section 5.8.5, payment of the Sale Participation Payment, if any, shall be a condition precedent to the consummation of the initial Sale and any Beneficial Interest Sale. No later than thirty (30) days prior to a Sale or Beneficial Interest Sale where a Sale Participation Payment is due, Ground Lessee shall deliver to District its calculations with respect to the Sale Participation Payment (based on and including calculations of the components thereof in the definition of Sale Participation Payment in Section 5.8.4 hereof.) District and Ground Lessee shall cooperate in good faith to agree upon any Sale Participation Payment within the thirty (30) days prior to the Sale or Beneficial Interest Sale. If the parties are unable to agree, the Sale or Beneficial Interest Sale may be consummated, free and clear of any continuing encumbrance on the interest being transferred or on the Ground Lessees interest hereunder so long as the seller (a) escrows with the settlement agent conducting the sate an amount equal to the greater of (i) Ground Lessees calculation of the amount of the Sales Participation Payment or (ii) Districts calculation of the amount of the Sale Participation Payment or (b) provides credit support for payment of the Sale Participation Payment reasonably acceptable to District. Subject to compliance by Tenant with Section 5.8.5 hereof, 5.8.6 the Sale Participation Payment shall not apply to any Sale or Beneficial Interest Sale after the earlier of (a) a Sale of Ground Lessees interest in the Lease or (b) the Sale in the aggregate of one hundred percent (100%) of the Beneficial Interests. The Sale Participation Payment shall not apply to a Beneficial 5.8.7 Interest Sale if there was a previous sale of the Beneficial Interest that is the subject of such Beneficial Interest Sale, which previous sale was subject to Section 5.8.3, even if no Sale Participation Paymentwas made as a result thereof (i.e., the IRR threshold was not reached). 5.8.8 If the transfer of a Beneficial Interest shall occur pursuant to Section 5.8.3 between a member of the Hines Group and a member of the Smith Group and such transfer is not an "all cash" transfer, the same shall not be deemed a Beneficial Interest Sale subject to the provisions of this Article V unless within thirty (30) days of notice to District of such proposed transfer, District and Ground Lessee are able to
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agree (acting in good faith) on the amount of net sales proceeds that will be used to calculate the Sale Participation Payment pursuant to Section 5.8.4 hereof. 5.8.9 The provisions of this Section 5.8 shall not apply to any Leased Parcel following any foreclosure or sale in lieu of foreclosure of such Leased Parcel. 5.8.10 If a Ground Lessee obtains from time to time any mortgage debt financing with respect to any Leased Parcel (other than any For Sale Residential Parcel) prior to the date on which a Sale Participation Payment is payable with respect to such Leased Parcel pursuant to Section 5.8.1 (a "Refinancing"), District shall have the option to receive a portion of the proceeds of such Refinancing. Each Ground Lessee shall provide the District with prior written notice of any Refinancing, including the material terms thereof and the estimated Excess Refinancing Proceeds, and such notice shall state that Districts option under this Section 5.8.10 shall apply to such Refinancing. District shall exercise such option within thirty (30) days of its receipt of such notice. If and only if District exercises such option, then: 5.8.10.1. District shall receive twenty-five percent (25%) of (I) the excess ("Excess Refinancing Proceeds") of (i) the principal amount of such Refinancing actually disbursed to the Ground Lessee over (ii) the sum of (a) all costs incurred by the Ground Lessee in obtaining and closing on such Refinancing; (b) all amounts paid by the Ground Lessee out of the proceeds of such Refinancing to satisfy and release any other then-outstanding debt financing (including any prepayment penalties and charges); (c) all amounts paid, or to be paid, by the Ground Lessee for capital expenditures out of the proceeds with respect to such Leased Parcel; and (d) any return of equity equal to what the Ground Lessee invested to pay Site Costs and Developer Costs with respect to such Leased Parcel multiplied by (II) the then Unsold Percentage. The amount that District receives under this Section 5.8.10.1 shall be referred to as "Districts Share of Excess Refinancing Proceeds". 5.8.10.2. From the date District receives Districts Share of Excess Refinancing Proceeds until the date that the Sale Participation Payment is no longer applicable with respect to the applicable Leased Parcel, the following shall be treated as an Operating Expense of the applicable Leased Parcel: an amount equal to (A) the interest and principal paid pursuant to a leasehold mortgage granted in connection with the Refinancing that is attributable to a portion of such debt equal to Districts Share of Excess Refinancing Proceeds, multiplied by (B) the then Unsold Percentage at the time of any of the particular payments described in Section 5.8.10.1 divided by the Unsold Percentage at the time of the Refinancing. 5.8.10.3. The Sale Participation Payment for each Leased Parcel shall be reduced by an amount equal to (A) Districts Share of Excess Refinancing Proceeds minus (B) the amount of twenty-five percent (25%)

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of any principal described in Section 5.8.10.1 that has been paid by the Ground Lessee. 5.9 Contribution for Common Areas. The parties shall agree upon pursuant to the Closing Agreement at the Closing the final forms of the documents which provide for (i) the formation of a non-profit association ("Common Area Association") that shall be owned by the owners (or Ground Lessees) from time to time of the Site, that shall include such public participation as District and Developer may determine pursuant to the Master Plan, and that has as its sole purpose the maintenance and programming of the Common Areas, and, under certain circumstances, programming of the streets and sidewalks, (ii) the approval by District of the Governing Documents of the Common Area Association, (iii) the means by which the Common Area Association shall control the Common Areas (which may include a lease or license from District), and (iv) Districts approval of the Common Area Associations annual plan for staffing decisions, program planning and maintenance, to ensure that the Common Areas serve as a one-of-a-kind pedestrian friendly destination with public gathering spaces and performance venues. To promote the programming of the Common Areas, 5.9.1 beginning on the date that is estimated in the Project schedule, as of the Escrow Release Date, to be one year prior to the first occupancy of leasable space within the Improvements under the Ground Lease for the retail component of the Project, and ending on the last day of the term of each Ground Lease, each Ground Lessee shall make or cause to be made its proportionate share of a payment ("Programming Payment") to the Common Area Association each calendar year, prorated for any partial year. The Programming Payment shall be used solely for purposes of funding programming and staffing for programming and similar programming-related costs for the Common Areas (the "Programming Activities"), and not for maintenance or repair of the Common Areas. The Guarantors under the Completion and Lease Guaranty shall guaranty, jointly and severally, the payment of entirety of the Programming Payment for the period of sixty (60) months after commencing on Final Completion of Improvements. 5.9.2 The annual Programming Payment shall initially be the greater of $1,500,000 and the actual reasonably estimated annual cost of providing the Programming Activities, as determined in Section 4.2(e) of the Site COREA. Such amount shall increase (but not decrease) each year to retlect annual increases in the Consumer Price Index. In addition, beginning with the year that is the earlier of (i) the calendar year in which the 20th anniversary of the Stabilization Date for the Retail Ground Lease occurs or (ii) the calendar year in which the 30th anniversary of the Escrow Release Date occurs, and each 20th year thereafter, District shall have the option of invoking an arbitration procedure to be set forth in the Ground Leases under which the annual payment would be increased (but not decreased) to the actual cost as of such year of the Programming Activities, provided that the scope and definition of Programming Activities shall be updated to the then-current reasonable standard for similar public spaces in major cities similar to District. The allocation of the Programming Payment among the Parcels within the Leased Parcels and the For Sale Residential Parcels shall be set forth in the Site COREA.
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5.10 Public Library Fund. In the event that the City Council establishes an enterprise fund (as defined in D.C. Official Code 47-373(1)(B)(i) and 47-373(2)(d) (2001)) for the purpose of maintaining, restoring, constructing and ilrlproving District of Columbia Public Library branch facilities (the "Public Library Fund"), District may dedicate a portion of the yearly Base Rent or Alternative Rent payable under a Ground Lease (as applicable) to such Public Library Fund in accordance with the terms upon which such Public Library Fund is established. 5.11 Real Estate Taxes. Beginning on the date first required by law, the Ground Leases and For Sale Covenants shall provide for payment of all real property taxes and assessments (i) against the Leased Parcels, and (ii) until District shall receive all sums due under this Article V with respect to all For Sale Residential Parcels, against the For Sale Residential Parcels. 5.12 B Parcels. District shall retain the right to develop all or any portion of the B Parcel(s) shown as "B Parcel, Lot 111,460 SF" in the zoning diagram on page 92 of the Design Guidelines of the Master Plan subject to the requirement that until the Completion of the initial District Improvements on each such B Parcel, the development of each such B Parcel shall be in accordance with the Master Plan. All gross floor area of the Site not utilized in connection with the construction of the Developer Improvements and Common Areas (including bonus FAR and transferable development rights) shall, to the maximum extent permitted under the Zoning Regulations of the District of Columbia, be reserved by District and excluded from the demise and conveyances under the Ground Leases and For Sale Deed, and may be transferred or conveyed by District without requiring the consent of, or any notice to, any Developer Party. 5.13 Permitted Expenses and Fees. Developer (or the applicable Ground Lessee or For Sale Residential Owner after the Escrow Release Date) may pay the following reimbursements and fees to Developer, any Person that directly or indirectly owns an interest in any Ground Lessee, and their respective Affiliates: 5.13.1 As Developer Costs or Site Costs, as applicable, the direct cost of staffing for the Project at or below the level of "Project Officer" (such as Howard Riker and Daryl South), customary out-of-pocket expenses incurred in connection with the Project, including travel, and the reasonable cost of operating onsite project, construction and leasing/sales offices related to the Project. Notwithstanding the foregoing, the aggregate amount of such reimbursements shall not exceed 3% of the Adjusted Total Cost. For this purpose, "Adjusted Total Cost" shall mean the Total Cost less (i) the cost of any fees or reimbursements described in this Section 5.13, (ii) taxes payable to District that are included in Total Costs, and (iii) amounts payable to District pursuant to this Article V that are included in Total Costs. 5.13.2 As Developer Costs or Site Costs, as applicable, a central project administration fee of 2% of the Adjusted Total Cost to cover personnel and overhead costs not reimbursed pursuant to Section 5.13.1 (such as Bill Alsup, Ken Hubbard, Ken Miller and AI Neely).
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5.13.3 As an Operating Expense, a property management fee not to exceed three percent (3%) of Gross Revenues plus reimbursement of customary expenses (including non-executive direct property management persbnnel costs). 5.13.4 As Developer Costs or as an Operating Expense, as applicable, leasing commissions in connection with the leasing of any office, retail, residential or other space in the Developer Improvements and sales commissions upon a sale of any unit included within the For Sale Residential Parcel, in amounts not to exceed market rates as reasonably approved by District. 5.14 Site Costs. Notwithstanding any other provision of this Agreement to the contrary (but subject to Section 3.6), District reserves the right to pay for any Site Costs, in which event the costs paid or reimbursed shall no longer constitute Site Costs, and, from and after such payment, shall not be included in Total Costs, and shall not be used to determine Net Parcel Value. The extent to which District shall pay Site Costs in accordance with this Section 5.14 shall be determined by District prior to the Escrow Release Date.
5.15 Allocation of Costs. Costs of the type described in the definitions of Site Costs and/or Developer Costs and allocable to more than one Parcel within the Site shall be allocated among various Parcels within the Site in a manner reasonably selected by Developer prior to Closing and approved by District in writing, which approval shall not be ultreasonably withheld, conditioned or delayed. VI. Performance Guaranties

6.1 Guaranty through Zoning Approvals. As evidence of its commitment to the Project, Developer shall incur and shall have paid in full not less than $8,000,000.00 in Site Costs and Developer Costs through completion of the Zoning Approvals in performing its obligations under this Agreement through completion of Zoning Approvals.
6.2 Guaranty through Plans and Specifications.

6.2.1 If Zoning Approvals shall be achieved, and if based on the Closing Site Cost Budget, the Closing Developer Cost Budget, and the Closing Proforma, the Return Threshold is achieved, then Developer agrees to proceed to Closing subject to the satisfaction of the conditions for Closing, and upon Closing, to cause the Plans and Specifications to be completed prior to the applicable Outside Dates. As evidence of its commitment to the Project, Developer shall incur and have paid in full not less than $20,000,000.00 in Site Costs and Developer Costs in performing its obligations under this Agreement through completion of Plans and Specifications and shall certify the same to District in writing, on the earlier of (i) acceptance of the completed Plans and Specifications by District or (ii) the Outside Date established for Completion of the Plans and Specifications. 6.2.2 If Zoning Approvals shall be achieved, but based on the materials described in Section 6.2.1, the Return Threshold is not achieved, then
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Developer shall so notify District in writing. During the sixty (60) day period following such notice, District and Developer shall each have the option to extend the Target Dates and Outside Dates for Closing and the completion of Plans an~l Specifications for up to a one (1) year period. District and Developer shall each exercise such option by written notice to the other given prior to the applicable Outside Dates (as the same may be extended pursuant to this Section 6.2.2). During such extension period, Developer shall work diligently using Commercially Reasonable Business Efforts and present to District alternative solutions to achieve the Return Threshold, including re-engineering, redesign and changes to the Development Program and!or Master Plan. At any time during such extension period, District may require Developer to submit to District updates to the Closing Site Cost Budget, the Closing Developer Cost Budget, and the Closing Proforma, based upon the best information then known to Developer using Commercially Reasonable Business Efforts. If, based on such materials, the Return Threshold is achieved, then prior to then applicable Outside Dates, Developer shall proceed to Closing and cause the Plans and Specifications to be completed. If District disputes any provision of the proposed updates to the Closing Site Cost Budget, the Closing Developer Cost Budget, or the Closing Proforma, then such dispute shall be settled in accordance with Section 5.2.2. 6.3 Guaranty of Construction Commencement.

If the Escrow Release Conditions have been met or waived by 6.3.1 District and, based on the Escrow Release Site Cost Budget, the Escrow Release Developer Cost Budget, and the Escrow Release Proforma, the Return Threshold is achieved, then prior to the applicable Outside Dates, Developer shall cause Construction Commencement to occur. 6.3.2 If, based on the materials described in Section 6.3.1, the Return Threshold is not achieved, then Developer shall so notify District in writing. During the sixty (60) day period following such notice, District and Developer shall each have the option to extend the Target Dates and Outside Dates for the satisfaction of the Escrow Release Conditions and Construction Commencement for a total of three (3) consecutive one (1) year periods (or for a total of two (2) years if District or the Developer shall have elected the extension described in Section 6.2.2). District and Developer shall each exercise such options by written notice to the other given prior to the applicable Outside Dates (as the same may be extended pursuant to this Section 6.3.2). During such extension periods, Developer shall work diligently using Commercially Reasonable Business Efforts present to District alternative solutions to achieve the Return Threshold, including re-engineering, redesign and changes to the Development Program and/or Master Plan. At any time during such extension periods, but no later than one hundred twenty (120) days before the end of the last such extension period, District may require Developer to submit to District updates to the Escrow Release Site Cost Budget, the Escrow Release Developer Cost Budget, and the Escrow Release Proforma, based upon the best information then known to Developer using Commercially Reasonable Business Efforts. If, based on such materials, the Return Threshold is achieved, then prior to then current Outside Dates, Developer shall cause Construction Commencement to occur. Any disputes regarding such updates to
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the Escrow Release Site Cost Budget, the Escrow Release Developer Cost Budget, and the Escrow Release Proforma, shall not be settled by arbitration, the parties reserving such fights and remedies as may be available to them under applicable law. During each such extension period, Developer shall pay Base Rent as calculated pursuant to Section 5.4.2. 6.4 Additional Guaranty Obligations. Developer acknowledges that large mixed-use projects have 6.4.1 significant lead times prior to opening and that it may be difficult to receive significant, or any, pre-leasing commitments from retailers, renters or tenants in advance of Construction Commencement, and that Developers obligation to proceed with Construction Commencement in accordance with this Agreement is not in any way conditioned or contingent upon pre-leasing any portion of the Improvements. 6.4.2 Developer acknowledges that financing sources may require certain minimum levels of pre-leasing and pre-sales. Prior to the Escrow Release Date Developer and, thereafter, each Ground Lessee and For Sale Residential Owner shall cause the Guarantors to provide such guaranties as may be required to obtain debt and/or equity financing without pre-leasing or pre-sales, and agree that obtaining such financing shall not be a contingency to Construction Commencement. 6.5 Development Guaranty. Guarantors have executed a joint and several guaranty of all obligations of Developer under this Agreement ("Development Guaranty"), in the form contained in Schedule 9. 6.6 Completion and Lease Guaranty. On the Escrow Release Date, Guarantors shall execute a joint and several guaranty of lien free Completion and Final Completion of all Improvements, in a form reasonably acceptable to District and a joint and several guaranty of all obligations of each tenant under its Ground Lease through Final Completion and certain financial obligations thereafter for a period of sixty (60) months following Final Completion ("Completion and Lease Guaranty"). VII. Milestone Events and Performance 7.1 Schedule for Milestone Events. Set forth below are (i) the dates ("Target Dates") by which Developer will endeavor, using Commercially Reasonable Business Efforts, on and prior to the Escrow Release Date to achieve and, after the Escrow Release Date, to coordinate the Ground Lessees and the For Sale Residential Owners to achieve, certain critical events ("Milestone Events"), and (ii) the latest dates ("Outside Dates") by which such Milestone Events must occur (regardless of Force Majeure Events, except to the extent otherwise expressly stated below), time being of the essence. Other than with respect to the initial two (2) Milestone Events, each Target Date (and corresponding Outside Date) shall be determined by the date on which the immediately preceding Milestone Event is actually achieved. The Target Dates and Outside Dates are subject in all cases to Extraordinary Force Majeure.

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Milestone Event 1. Completion of Ground Leases, Completion and Lease Guaranty and For Sale Covenants 2. All Zoning Approvals 3. Closing 4. Completion of Bid documents per Section 7.4.2(d) and completion of negotiation of bids from general contractor(s) and all subcontractors to achieve Pad Completion 5. Escrow Release Date 6. Construction Commencement 7. Completion

Target Date 3 months from the date of this Agreement

13 months after the date of this Agreement (subject to Section 7.2 below) 1 month after all Zoning Approvals 16 months after Milestone #3

3 months after Milestone /4 Same day as Milestone #5 34 months after Milestone #6

8. Final Completion 0f Common Areas 12 months after Milestone #7 and all other Improvements that are for use by general public

Milestone Event 1. Completion of Ground Leases, Completion and Lease Guaranty and For Sale Covenants 2. All Zoning Approvals 3. Closing

Outside Date July 31, 2007

20 months after the date of this Agreement (subject to Section 7.2 below) 3 months after all Zoning Approvals

4. Completion of Bid documents per 20 months after Milestone #3 subject toSection 7.4.2(d) and completion of Force Majeure Events (not to exceed 120 negotiation of bids from general days in the aggregate) contractor(s) and all subcontractors to achieve Pad Completion 5. Escrow Release Date 6 months after Milestone #4, subject to Force Majeure Events (not to exceed 120 days in the aggregate), and subject to an extension of 3 additional months provided that during such 3 month period Developer increases payments of Base Rent under this Agreement to the level required under Section 5.4.2

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-6. Construction Commencement

7. Completion

1 month after Milestone #5

40 months after Milestone46, subject to Force Majeure Events (not to exceed 120 days in the aggregate), and subject to an extension of 12 additional months so tong as Developer is using all Commercially Reasonable Business Efforts to diligently and continuously achieve Completion, and subject to payments of Base Rent being increased as required in Section 5.4.5 24 months after Milestone #7

8. Final Completion of Common Areas and all other Improvements that are for use by general public

7.2 Adjustment to Certain Dates. In the event that Developer has not secured the items listed in Section 7.3.1(i) and 7.3. l(ii) below after using Commercially Reasonable Business Efforts with respect thereto, or if achieving the Zoning Approvals actually requires the adoption and approval of a planned unit development or requires the approval of the District of Columbia Board of Zoning Adjustment, then, with respect to the Milestone Events described in Section 7.1 of this Agreement, an additional six (6) months shall be added to the Target Date and an additional eight (8) months shall be added to the Outside Date for obtaining Zoning Approvals. 7.3 Zoning Approvals. District and Developer shall mutually determine what Zoning 7.3.1 Approvals, if any, are required for the A Parcels and Common Areas in order to construct and use them in accordance with the Master Plan, and Developer acknowledges that the input of District in such determination shall not constitute the provision of legal advice. Developer, at its cost, shall initiate all proceedings reasonably necessary to obtain the Zoning Approvals, and using Commercially Reasonable Business Efforts, shall diligently prosecute the same to completion (including appeals if necessary). Developer shall use diligent and Commercially Reasonable Business Efforts to obtain a final decision with respect to all Zoning Approvals on or before the Target Date therefor set forth in Section 7.1. In order to facilitate Developers efforts in this regard, Developer agrees to use commercially reasonable efforts to secure the following, it being understood that (i) and (ii) below constitute part of the Zoning Approvals: written statements from the Director of the Department of (i) Consumer and Regulatory Affairs to Developer that (a) the Commission of Fine Arts and the National Capital Planning Commission do not have jurisdiction over the plans for development of the Project by Developer and therefore there will not be any referral to the Commission of Fine Arts and National Capital Planning Commission for review m~d (b) it will not be required that the Commission of Fine Arts and National Capital Planning Commission formally review and approve building permits for Improvements on the A Parcels and Common Areas; and
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(ii) A written statement from the Director of the Department of Consumer and Regulatory Affairs that the Improvements on the A Parcels will utilize the rights-of-way for Tenth and I Streets for permitting purposes, and thfit the streets, which are presently closed, will be opened and reused in coordination with the proposed development. 7.3.2 If any Zoning Approval is denied by the applicable Governmental Authority, Developer and District shall modify the Master Plan as promptly as possible so as to facilitate Developer obtaining all Zoning Approvals, and any dates and time periods set forth in the Project Documents that depend upon the issuance of all Zoning Approvals shall be extended by a reasonable period of time, as mutually agreed by District and Developer, to reflect the delay in obtaining such approvals. 7.4 Design of Improvements. 7.4.1 Attached hereto as Schedule 12 is a list of approved architects and other design professionals (as so designated, "Design Professionals"). All other architects and design professionals and consultants selected by Developer or other Developer Parties to be involved in the design of any part of the Improvements (in the role specified on Schedule 12) shall be approved by District in writing, which approval shall not be unreasonably withheld. When so approved, such architects and/or other design professionals or consultants shall be deemed Approved Architects and/or Design Professionals for the purpose of this Agreement. At the request of the District, the agreement (including the scope of work) with any such Design Professional shall be provided to District. The Design Professionals shall be referenced to as the "Key Professionals!. All fees and charges of such Key Professionals shall be included in the applicable budget (i.e., Master Plan Developer Cost Budget, Closing Developer Cost Budget, Escrow Release Date Developer Cost Budget). No Key Professionals may be a Prohibited Person at the time of execution of its contract. 7.4.2 Developer, at its costs, shall cause all Improvements to be designed. All such designs shall be in conformity with the Master Plan, Governmental Requirements and this Agreement. All design documents described in (a)-(e) in the sentence below shall be subject to the written approval of District or its design review committee, if established, subject to the parameters set forth in the definition of Significant Change. The timetable for submission and approval by District of the design documents for all Improvements shall be as follows: (a) Schematic Drawings, as described below -6 months from the date of this Agreement; (b) Design Development Drawings, as described below - 5 months from approval of Schematic Drawings; (c) Construction drawings (80% complete and suitable to obtain Permits), 9 months from approval by District of Design Development Drawings;
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(d) Bid documents (100% architectural drawings and construction drawings), - 2 months after approval by District of construction drawings; (e) Pre-approved for-construction Plans and Specifications - 1 month from District approval of the documents referenced in 7.4.2(d) above. Developer and District shall work cooperatively and in good faith to achieve the submission and approval of the design documents within the timetable outlined above; and to this end, Developer agrees that District shall participate in monthly meetings with Developer during preparation thereof. 7.4.3 For the purpose hereof, "Schematic Drawings" shall adequately describe how the Site is to be developed in order that the proposed development may be adequately evaluated, and which shall include the following (subject to modifications as may be mutually agreed upon) (collectively, the "Schematic Drawings"): (a) Site plans (1"=30) showing location and type of all buildings and structures, location of loading and parking, and location and type of Site amenities and community space, treatment of open space areas, conceptual landscaping design, and location of adjacent buildings, structures, driveways, access roads, street and curb lines, and pedestrian structures; (b) Landscape plan (1"=30) showing the proposed location of plantings, including trees and shrubs; (c) Schematic building plans, inclusive of underground garage facility (1/20"=1 ); (d) Typical floors plans, inclusive of underground garage facility

0/20"=1);
(e) Elevations and Cross Sections of proposed Improvements, inclusive of underground garage facility (1/20"=1 ); (f) A chart showing floor area, floor area ratio, building coverage of the Site, building height, number of parking spaces, area dedicated to pedestrian and recreational uses, and loading docks; and (g) Topographic survey.

7.4.4 For the purposes hereof, "Design Development Drawings" shall include a level of detail generally consistent with sixty percent (60%) complete construction drawings. Such Design Development Drawings shall be in conformity with the Zoning Approvals, the Master Plan and the approved Schematic Drawings. Such Design Development Drawings shall be at the indicated scale or other scale satisfactory to District, and shall include the following:

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(a) Site Plans (1"=30) showing lot lines and dimensions, location and type of all buildings and structures (including building footprint), location of loading and parking, location and type of site amenities and community spacd~ treatment of open space areas, utilities, landscaping, schematic indication of surface drainage, and adjacent buildings, structures, driveways, access roads, street and curb lines, and pedestrian structures (b) A summary chart showing floor area, building coverage of the Site, building height, floor area ratio, and number of parking spaces, area dedicated to pedestrian uses, and loading docks; (c) Lower level, first floor and typical floor plan (1/8" equals 1) showing: (i) (ii) (iii) (iv) (v) (vi) Building entrances Service/loading Lobbies, public areas Elevators, stairs, other circulation Common spaces, toilets, ducts, etc. Structural system;

(d) Front, back and side elevations (1/8" equals 1) showing: (i) (ii) (iii) (iv) (v) (e) Roof lines Proposed building materials Floor to floor dimensions Building heights Elevations of surrounding buildings;

Typical sections of buildings (1/8" equals 1) showing: (i) (ii) (iii) Floor to ceiling dimensions Footings, structural system and floor thickness Relation to existing grades;

(f) (g)

Garage plans; Description and samples of final building materials; and

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(h) All appropriate details, including the location and description of mechanical/electrical and plumbing systems 7.4.5 District approved "for construction" plans and specifications described in Section 7.4.2(e) shall be deemed the "Plans and Specifications". Each set of drawings referenced above shall be in conformity with the Master Plan, Governmental Requirements, and this Agreement and Developer shall not permit or suffer any Significant Changes in any of the foregoing drawings, including the Plans and Specifications, without the written approval of District, which approval shall not be u~easonably withheld (except as otherwise set forth in the definition of "Significant Changes"). 7.4.6 Districts review and approval or disapproval of submissions as heretofore provided shall be final and conclusive. District will not disapprove or require changes subsequently (except by mutual agreement or as required by Governmental Requirements) in, or in a manner which is inconsistent with, matters which it has previously approved. Developer grants and hereby collaterally assigns to the 7.4.7 District all drawings and specifications, including the Plans and Specifications, in connection with the Project and the potential development of the Site, now or hereafter existing (collectively, "Development Work Product"), effective automatically and without further action, provided that Developer shall have a license to use the Development Work Product until any termination of this Agreement pursuant to Article XIII at which time such license shall automatically terminate without further action. Districts rights shall under this Section 7.4.7 be subject to prior or superior rights in favor of any Institutiona! Lender. Developer shall cause all Development Work Product expressly to provide that Developer shall have the right to so assign the Development Work Product to the District and that from and after the effective date of the termination of this Agreement, the District shall have the right to use such Development Work Product and rely thereon to the same extent as Developer. Promptly upon request of the District from time to time, Developer shall execute such assignments and assurances as the District may request to perfect the assignment of the Development Work Product to the District. Developer will indemnify, defend and hold harmless the District from and against any and all costs, claims or liabilities, including mechanics and materialmens liens and, caused by the failure of Developer to fully pay for all Development Work Product or any adverse claim to or lien upon the Development Work Product. Developers obligations pursuant to this Section 7.4.7 shall survive termination of this Agreement and shall not be subject to Liquidated Damages. The Development Work Product shall be assigned to and allocated among appropriate Ground Lessees and For Sale Residential Owners at the Escrow Release Date, at which time the interest of Developer in the Development Work Product shall cease. Accordingly, the Ground Leases and For Sale Covenants shall contain provisions similar to this Section 7.4.7. The Approved Architects agree to make no further use of the Development Work Product, except for such drawings, specifications, and products of service which are
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proprietary to the Approved Architects or their subconsultants or subcontractors being part of their respective stock in trade or which are general in nature (which shall not include the Plans and Specifications). 7.5 Preparation Of Construction Drawings. 7.5.1 The Plans and Specifications shall be signed by the applicable Approved Architect, who shall be licensed to practice architecture in and by the District. A District licensed structural, geotechnical, and/or civil engineer, as applicable, shall review and certify all final foundation and grading designs. In accordance with the applicable standard of care, the Approved Architect shall coordinate the work of its consultants and shall coordinate its services with any other design professionals (such as engineers and landscape architects) performing services on the Site. Upon Developers submission of the Plans and Specifications to District for approval in accordance with Section 7.4, the applicable Approved Architect shall further certify that the Improvements have been designed in accordance with all Governmental Requirements as those Governmental Requirements exist as of the date the Plans and Specifications were sealed by the Approved Architect. Promptly after Final Completion, Developer shall coordinate the delivery by the Ground Lessees and For Sale Residential Owners to District of two (2) complete sets of "as-built" drawings (including all field notations and corrections) for such phase, component, or portion of the Improvements (each in two formats, hard copy and digital), Auto Cad Version :2004 (non-revisable) or more recent or in such other electronic, non-revisable format. For a period of five (5) years from Final Completion, the Ground Leases and For Sale Covenants shal! provide for each Ground Lessee and each For Sale Residential Owner to retain in its records a copy of all design materials with regard to the Improvements, including plans and specifications and contract specifications prepared by it for, or as a basis for, the submission of Plans and Specifications in accordance with Section 7.4.2 or otherwise used by the Ground Lessees or For Sale Residential Owners, as applicable, for the construction of the Improvements. At each such Ground Lessees or For Sale Residential Owners expense, copies of such materials shall be made available to District upon its request during the five (5) year period if such materials are different from the "as-built" drawings delivered to District. 7.6 Timing of Approvals. Developer agrees timely to prepare and submit all applications and related materials relating to the Permits to the appropriate Governmental Authorities. Developer shall diligently pursue such applications using its Commercially Reasonable Business Efforts in order to receive timely and expeditious approval of such applications from all required Governmental Authorities so as to achieve Construction Commencement in accordance with Section 7.1. Developer agrees to provide District a copy of its applications for the Permits and to provide District a copy of such Permits when obtained. 7.7 Significant Changes.

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7.7.1 No Significant Changes to Plans and Specifications or Permits agreements approved by District pursuant to this Agreement shall be made without Districts prior written approval. If on or prior to the Escrow Release Date, Developer and, after the Escrow Release Date, any Ground Lessee or For Sale Residential Owner desires to make any Significant Changes in the Plans and Specifications after the Plans and Specifications have been approved by District in accordance with Section 7.4.5, Developer (on its own behalf on or prior to the Escrow Release Date and as coordinator for all Ground Lessees and For Sale Residential Owners after the Escrow Release Date) shall submit the proposed changes to District for approval. The standard for Districts approval over Significant Changes is set forth in the definition of that term in this Agreement. District shall have no approval over changes to the approved Escrow Release Site Cost Budget and Escrow Release Development Cost Budget, it being understood, however, that District shall continue to have approval over Significant Changes to Plans and Specifications as set forth in the definition thereof. Developer (on its own behalf or as coordinator as aforesaid) shall provide District with reasonable written substantiation of any change to enable District to determine whether such change is a Significant Change. Notwithstanding any other provisions of this Agreement, 7.7.2 District shall grant its approval of those elements of the Plans and Specifications and those changes in the Plans and Specifications which are required by any Governmental Authority; ~, however, that (i) District shall have been afforded a reasonable opportunity to discuss such element of, or change in, the Plans and Specifications with the Governmental Authority requiring such element or change and with the Approved Architect; and (ii) the Approved Architect shall have cooperated with District and such Governmental Authority in seeking such reasonable modifications of the required element or change as District may deem necessary or desirable. Developer and District each agree to use Commercially Reasonable Business Efforts to resolve Districts approval of such elements or changes, and Districts request for reasonable modifications to such required elements or changes, as soon as reasonably possible. Developer shall promptly notify District in writing of any changes requested by the District of Columbia governments building inspectors during the permitting and construction phase. 7.7.3 Districts review and approval or disapproval in accordance with this Agreement of any matter submitted to District shall be final and conclusive. 7.8 Permits. Developer agrees, at its expense, to proceed using Commercially Reasonable Business Efforts to pursue with the appropriate Governmental Authorities all Permits required to develop the Site in accordance with this Amendment. District shall be obligated to cooperate with Developer, in seeking such Permits and other approvals, to the extent necessary to enable Developer to achieve the same. 7.9 Construction of Improvements. 7.9.1 Developer agrees that Construction Commencement shall be achieved by the date required in Section 7.1; and the Ground Leases and For Sale
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Covenants shall provide that the appropriate Developer Parties shall prosecute and diligently pursue the development and construction of the Improvements in accordance with the Master Plan, Construction Documents, and Govemmental~Requirements, and this Agreement, such that Completion shall occur by no later than the dates required in Section 7.1. The covenant to develop and construct contained in the Ground Leases and For Sale Covenants shall run with the land and otherwise remain in effect until Final Completion, at which time such agreements and covenants to develop and construct shall terminate. The Ground Leases and For Sale Covenants shall provide that all Improvements shall be constructed using new first-class quality materials in compliance with all Permits and in a first-class and diligent manner in accordance with the highest industry standards. 7.9.2 District shall have the right to review and approve (a) the identity of each general contractor for the office and residential components of the Project, the Common Areas, and the subgrade parking and concourse Improvements, it being understood that District does not have approval of contractors or contracts for tenant improvement construction or retail improvement construction and (b) the general construction contract(s) for such Improvements (such approval under (a) and (b) not to be unreasonably withheld), including the allocation of costs thereunder between Site Costs and Developer Costs. The District shall have the right to review and approve all Significant Changes with respect to such General Contract(s), such approval not to be unreasonably withheld. Each general contractor so approved by District shall be a "General Contractor". No General Contractor may be a Prohibited Person at the time of entering into the applicable Construction Contract. Developer shall provide to the District copies of all 7.9.3 Construction Contracts entered into by or on behalf of the Ground Lessees and For Sale Residential Owners relating to the construction of the Improvements. Developer shall provide or coordinate the provision of to District copies of such other contracts, engineering studies, investigations and reports relating to the Site and the Improvements, as District shall request. All Plans and Specifications, engineering studies, investigations and reports for the Common Areas and the Interim B Parcel Improvements shall be owned by the applicable Developer Party subject to the provisions of Section 7.4.7. 7.9.4 Developer shall cause the streets and rights of way shown on the Master Plan to be designed, constructed and completed in accordance with all Governmental Requirements. Such agreement with the District of Columbia Department of Transportation shall be subject to Districts approval which shall not be unreasonably withheld. 7.10 Site Preparation. The appropriate Developer Parties, as set forth in the Ground Leases and For Sale Covenants, shall be responsible for all preparation of the A Parcels and Reservation 174 for development in accordance with the Master Plan, Construction Documents, Governmental Requirements and this Agreement, including costs associated with demolition, construction of site improvements, utility relocation and abandonment, relocation and rearrangement of water and sewer lines and hook ups, and
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construction or repair of alley ways and abutting public property necessary for the Improvements. Prior to Escrow Release Date, District will remove any improvements on the Site it wishes to retain (otherwise, the Developer Parties may di~pose of or use the same, as they see fit). All such work, including but not limited to, excavation, backfill, and upgrading of the lighting and drainage, shall be performed under all required Permits and in accordance with all appropriate Governmental Authorities and Governmental Requirements. The Developer Parties shall enter into such agreements as are reasonably necessary with adjacent property owners such as, but not limited to, agreements for underpinning, tiebacks, and the operation of tower cranes, and air space agreements. The B Parcel Restrictions shall contain such agreements as described in the preceding sentence with respect to the B Parcels and Reservation 174, which shall be binding on successors and assigns. The Ground Lessees and For Sale Residential Owners shall be solely responsible, at its sole cost and expense, for providing appropriate construction barriers and construction signs during the period of construction and any subsequent renovation. It is understood that the rights-of-way for 10th and I Streets and associated sidewalks shall be included initially in the A Parcels, and that the Ground Lessees and For Sale Residential Owners shall have exclusive rights to use such rights-of-way for construction and development. 7.11 District Inspections. After the Escrow Release Date, District shall reserve for itself and its representatives in the Ground Leases and For Sale Covenants, the right to enter the Site upon two (2) Business Days advance notice, (i) during customary business hours from time to time for the purpose of performing routine inspections in connection with the development and construction of the Improvements, and (ii) at any time and from time to time after an Event of Default by the applicable Developer Party, which remains uncured or in the case of emergency as determined by District in its sole discretion. If, during such hours, admission to the Site for the purpose aforesaid cannot be obtained, or if at any time by reason of an emergency condition an entry shall be deemed necessary for the protection of the Site or Improvements, whether for the benefit of any Developer Party or not, District, or Districts agents or representatives, may (after exercising reasonable effbrts to provide advance notice to any Developer Party, which in emergencies may be by telephone, email or any other advance method convenient and available under the circumstances) enter the Site or Improvements and accomplish such purpose. Developer Parties understand that District or its representatives will enter the Site from time to time for the sole purpose of undertaking the inspection of the Improvements to determine conformance to the Master Plan, the Construction Documents, and this Agreement. Developer waives any claim that it may have against District, its officers, directors or employees arising out of any such entry upon the Site except for any claim arising from the gross negligence or willful misconduct of District, its officers, directors or employees. Any inspection of the Improvements or access of the Site by District under this Agreement or under any Ground Lease or For Sale Covenants shall not be deemed an approval, warranty or other certification as to the compliance of the Improvements or Site with the any building codes, regulations or standards, including, without limitation, building engineering and structural design, or other Governmental Requirements. District shall use reasonable efforts to minimize disruption or inconvenience to Developer in connection with its exercise of any of its rights described in this Section 7.11. District and its agents, contractors, and representatives
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sha!l have the authority to take such materials and equipment onto the Site as may be necessary for accomplishing the purposes set forth in this Section 7.11. 7,12 Construction Manager. District shall have the fight, at Districts expense, to utilize a construction manager or other consultant to assist District in the review of the materials pursuant to this Article VII and its inspection of the development and construction of the Improvements pursuant to this Article VII. 7.13 Progress Reports. After the Escrow Release Date, and until Final Completion, Developer shall make written reports to District, no less frequently than monthly, as to the progress of the construction of the Improvements, in such form and detail as may reasonably be requested by District, and shall include a reasonable number of construction photographs taken since the last report submitted by Developer. Developer will also contemporaneously submit to District any progress reports (including requisitions) it submits to any Approved Mortgagee. At least monthly Developer shall convene a meeting with District to analyze the progress of construction of the Improvements. Districts staff and Developer shall further communicate and consult informally as frequently as necessary to ensure that any construction issues receive prompt and speedy consideration. Such meetings are intended to facilitate the review process described above and to establish a single point of responsibility for review and approval. Developer shall deliver or cause to be delivered reasonably detailed minutes of each such progress report meeting to District within five (5) Business Days thereafter. 7.14 Submissions. In addition to the other submissions required by this Article 7, Developer shall deliver the following to District: (a) Developer shall prepare and submit to District copies of applications for all Permits no later than the later of the next monthly meeting or five (5) Business Days after filing with the Governmental Authorities. (b) Developer shall deliver to District for its review and approval draft (i) master Declaration of Covenants and Reciprocal Easement Agreement ("Site COREA") for the A Parcels; (ii) agreement for each portion of Improvements in the A Parcels where there exists a primary use and a retail use in the same Improvements (the "Building COREA"); and (iii) a restrictive covenant and easement agreement in favor of the A Parcels and binding upon the B Parcels (the "B Parcel Restrictions") which have been recorded among the land records of the District of Columbia on November 1, 2007 as Instrument No. 2007139044; provided, however, that to the extent that any provisions or components of the Master Plan other than as set forth in the B Parcel Restrictions affect or apply to the B Parcels, District shall have the authority, exercisable in its sole discretion, to waive any such provisions or components without obtaining the consent or approval of any Developer Party. Prior to Closing, District and Developer shall work together in good faith to reach agreement on such documents and the terms upon which District shall agree to be bound by same.

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(c) At least thirty (30) days but no more than sixty (60) prior to the Escrow Release Date, Developer shall provide to District an updated statement of sources and uses of all funds. " (d) Contemporaneously with delivery of a draw request to an Approved Mortgagee, Developer shall coordinate the delivery by the appropriate Ground Lessees and For Sale Residential Owners of a copy of each such draw request to District. (e) The Ground Leases and For Sale Covenants shall provide that promptly upon receipt, such Developer Party shall deliver, or cause to be delivered to District copies of all notices of default or similar written notices by Approved Mortgagees and notices of violation issued by Governmental Authorities. (f) On or before October 1 of each year following the Escrow Release Date (ending on Final Completion), Developer shall coordinate the delivery to District of an updated proposed Site Costs budget and Developer Costs budget, allocated for each Parcel for the next calendar year. Additionally, on the thirtieth day of each calendar quarter, Developer shall deliver to District quarterly updates (through the immediately preceding quarter) of the Escrow Release Site Cost Budget, Escrow Release Developer Cost Budget and Escrow Release Proforma with a comparative statement showing actual expenditures and, if applicable, projected modifications to proforma calculations. In no event shall District have the right to approve changes in any budget after the Escrow Release Date, it being understood that Districts sole approval right shall be with respect to Significant Changes. 7.15 Audit. 7.15.1 Developer shall cooperate, at Developers sole cost and expense, with District in providing District and its designees reasonable access to Developer Parties books and records for the Project during normal business hours for these purposes. Developer shall, at Developers cost and expense provide any assistance to District which is reasonably necessary in connection therewith, including reasonable incidental copying and instructing its staff to answer questions and copy documents for District or its examiner; provided, however, any copy request by District that shall require a third party copier (i.e., large copy jobs) shall be paid by District at its sole cost and expense. Developer shall maintain its books and records in accordance with GAAP. 7.15.2 If District inspects or audits, or causes the inspection or audit of such books and records, District shall cause the audit or inspection to be completed with reasonable diligence and the results of such inspection or audit, including a copy of the inspection or audit report, to be communicated in writing to Developer and the appropriate Ground Lessee or For Sale Residential Owner within two (2) months thereafter. If such inspection or audit shows any material errors in such books and records, the appropriate Ground Lessee or For Sale Residential Owner pursuant to its Ground Lease or For Sale Covenants shall correct all such errors and inaccuracies and cause all financial statements related thereto to be corrected and re-issued. District shall
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bear its own costs and expenses of any such inspection or audit; provided, however, if calculation of the total relevant costs (i.e., Developer Costs and Site Costs, including Imputed Return) is incorrect by four percent (4%) or more, the Grcmnd Leases and For Sale Residential Covenants shall provide for the appropriate Ground Lessee or For Sale Residential Owner to reimburse District for all of its costs and expenses incurred in conducting such an inspection or audit (but not in excess of an amount equal to the error) within thirty (30) days of Districts notice of its reimbursement request accompanied by reasonably supporting documentation. Any inspection or audit performed pursuant to the terms of this Section 7.15 may be conducted by one or more certified public accountants employed by District or by independent, certified public accountants who are members of the American Institute of Certified Public Accountants that are not engaged on a contingent fee or share of return basis. District may audit the books and records of Ground Lessees or For Sale Residential Owners (including those maintained by Developer) no more frequently than once in any 12-month period. A final audit under this Development Agreement may be conducted at any time within eighteen (18) months following the Stabilization Date. 7.16 Environmental Covenants. The Ground Leases and For Sale Covenants shall provide that from and after Construction Commencement, each such Developer Party shall comply in all respects with all applicable Environmental Laws pertaining to Parcel A and Reservation 174 and to all improvements and appurtenances, including without limitation all uses, activities, and conditions on, under, or about Parcel A and Reservation 174, and shall perform all Remedial Actions and other remediationrelated activities (whether due to existing or future contamination or conditions) as may be required pursuant to any Environmenta! Law, provided, however, the foregoing shall not affect the inclusion of certain remediation costs in Site Costs pursuant to Section 11.4.2. 7.17 Environmental Indemnification. 7.17.1 Subject to Section 11.4, the Ground Leases and For Sale Covenants shall provide that each Ground Lessee and For Sale Residentia! Owner shall promptly indemnify, defend and hold harmless the Indemnified Parties from and against any and all Environmental Liabilities and Costs, known or unknown, and the Ground Leases and For Sale Covenants shall provide that each Ground Lessee and For Sale Residential Owner shall expressly assume any and all Environmental Liabilities and Costs, known or unknown. 7.17.2 Developer hereby covenants not to sue and forever releases and discharges all its present, former and future parent, subsidiary and related entities and all its and their respective present, former and future officers, directors, agents and employees, and each of its and their heirs, personal representatives, successors and assigns, of and from any and all Environmental Liabilities and Costs. The provisions of this Section 7.17 shall survive termination of this Agreement. Similar provisions shall be inserted in the Ground Lease and For Sale Covenants.

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7.18 District Signage. At all times during the development of the Site, there shall be in place at the Site at least one sign identifying District in a manner reasonably satisfactory to District, and identifying the Project "as a development undertaken in cooperation with District and shall so identify the Project on all other signs placed on the Site (the same being a Developer Cost). These signs shall be designed in accordance with the terms of this Agreement and erected within ninety (90) days after the Escrow Release Date. Notwithstanding the foregoing, Developer must additionally comply with all Governmental Requirements regarding the installation of signage at the Property. 7.19 Developers Right to Terminate. If, after the Escrow Release Date, (a) Developer discovers a below-grade condition on the site (i.e. a pre-historic burial ground), and the incremental cost of addressing or remediating such condition exceeds Thirty Million and no!100 dollars ($30,000,000.00) (as mutually determined by District and Developer), or (ii) Developer discovers that the actual cost of addressing or remediating any below-grade condition on the Site that existed as of the Escrow Release Date exceeds Developers budgeted costs (as set forth in the Escrow Release Site Cost Budget and Escrow Release Developer Cost Budget) for addressing or remediating such condition by more than Thirty Million and no/100 dollars ($30,000,000.00), then Developer shall have the right to terminate this Agreement. From and after the date that Developer terminates this Agreement pursuant to this Section 7.19 and returns such possession and control to District in accordance with the preceding sentence, the parties shall have no further obligations or liabilities under this Agreement. 7.20 Performance of Article VII Obligations. It is understood that after the Escrow Release Date, Developers obligations with respect to the matters covered in this Article VII shall be that of coordination of the matters herein described for the Ground Lessees and the For Sale Residential Owners (so as to provide a single coordinating point for District). VIII. Commitments to Community 8.1 LSDBE Commitment. 8.1.1 MOU. 8.1.2 In addition to its obligations under the MOU, Developer agrees to cause one or more LSDBEs (other than Developer) to (i) at the time the LSDBE is admitted as an owner in Ground Lessee or For Sale Residential Owner, own a beneficial own.ership interest in each Parcel that is within the Leased Parcels or is a For Sale Residential Parcel, that is not less than twenty percent (20%) of the aggregate beneficial ownership interests in such Parcel that are owned by Developer, each Primary Member and any LSDBEs (it being understood that any such LSDBE may have investors as non-managing members or limited partners with fights typical of institutional investors)(collectively, together with the obligations under the LSDBE MOU, the "LSDBE Requirements"). The beneficial ownership described in the
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foregoing clause (i) shall be determined with reference to the capital and profits of the Person that owns the applicable Parcel, and the terms of ownership, including the returns payable in respect such beneficial ownership interest, shallbe pari passu with the terms of ownership by Developer or its Affiliates owning the beneficial interests in such Person, other than the LSDBEs (other than investment by Developer or its Affiliates as an Institutional Investor or Institutional Lender). In the event that the LSDBE Requirements are not satisfied as 8.1.3 of the scheduled Target Date (or the corresponding Outside Date) for the Escrow Release Date (as determined by Section 7.1), District agrees to extend the Target Date (and the corresponding Outside Date) for the Escrow Release Date for a period not to exceed one hundred eighty (180) days so long as Developer has satisfied all of the other Escrow Release Conditions and is using Commercially Reasonable Business Efforts to satisfy the LSDBE Requirements. After such one hundred and eighty (180) day period, and provided all of the other Escrow Release Conditions remain satisfied, District shall permit Developer to proceed to the Escrow Release Date notwithstanding that the LSDBE Requirements are not satisfied, in which event the Ground Lessees (and Guarantors under the Completion and Lease Guaranty) shall be jointly and severally liable for a payment of $200,000 to District, and for an additional $200,000 payment for each additional 30 day period that the LSDBE Requirements remain unsatisfied beyond the Escrow Release Date (any of such payments under this Section 8.1 being "LSDBE Payments"). 8.1.4 If any LSDBE defaults in the payment of the capital required hereby, beyond all notice and cure periods in the applicable Governing Documents (a "LSDBE Default") then Developer and its Affiliates shall use "best efforts" to remove the defaulting LSDBEs from the applicable ownership structure and find one or more replacement LSDBEs to make the investment that was to have been made by the defaulting LSDBE (provided, however, Developers use of "best efforts" shall not require Developer to pay the defaulting LSDBE more than the fair market value of the ownership interest of the defaulting LSDBE). In lieu of removing the defaulting LSDBEs, the Developer and its Affiliates may use "best efforts" to limit the defaulting LSDBEs ability to make any further investments and to find one or more additiona! LSDBEs to make the investment that was to have been made by the defaulting LSDBE. If Developer cannot cure the LSDBE Default within 180 days of the occurrence of same, then the Ground Lessees and For Sale Residential Owners shall be jointly and severally liable for a LSDBE Payment in the amount of $200,000 in the aggregate, and shall be jointly and severally liable for an additional $200,000 payment in the aggregate for each additional thirty (30) day period that the LSDBE Requirements remain unsatisfied. For the purposes of clarity, for any thirty (30) day period during which any or all Developer Party or Parties does not satisfy the LSDBE requirement, only $200,000 in the aggregate shall be due as an LSDBE Payment; provided, however, that after Pad Completion, the Ground Lessees and For Sale Residential Owners shall no longer be joint and severally liable but rather each Ground Lessee and For Sale Residential Owner shall be liable for its pro rata share of the LSDBE Payments solely as to an LSDBE Default with respect to such Ground Lessee or For Sale Residential Owner, which pro rata share is set forth in the Ground Leases and For Sale Covenants.
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Any successor to a defaulting LSDBE during the period the LSDBE Requirements are in effect shall be an LSDBE at the time of admission and shall be subject to Districts prior approval, which approval shall not be unreasonably withheld, conditional or delayed. 8.1.5 In no event shall any LSDBE Payments be included in Total Costs or Developer Costs. Notwithstanding anything in this Section 8.1 to the contrary, 8.1.6 until Pad Completion, it shall be an Event of Default under this Agreement and after Pad Completion, it shall be an Event of Default under the applicable Ground Lease or For Sale Covenant: (i) if at any time the LSDBE Requirements are not satisfied and Developer is not using Commercially Reasonable Business Efforts to satisfy such LSDBE Requirements, or is not using "best efforts" if required to do so under Section 8.1.4, (ii) or if, for any reason, the LSDBE Requirements are not satisfied within one (1) year of the scheduled Outside Date for the Escrow Release Date (as determined by Section 7.1), irrespective of any Commercially Reasonable Business Efforts or best efforts" being used by any Developer Party. 8.1.7 It is understood that the transfer Restrictions in the Ground Leases and For Sale Covenants shall allow the LSDBEs to transfer their respective interests at the time a transfer is permitted by the respective Developer Party to a third party under the applicable Ground Lease or For Sale Covenants, and the LSDBE Requirements shall expire with respect to such Ground Lease or For Sale Covenant on the date any such transfer is permitted. The LSDBE Requirements shall be obligations of the Developer Lessees and For Sale Residential Owners only as of and after the Escrow Release Date, and accordingly, shall be incorporated in the Ground Leases and For Sale Covenants. 8.2 First Source Commitment. Developer has executed and delivered to District the First Source Agreement with DOES in a form approved by District and attached as Schedule 16 hereto ("First Source Agreement"). As provided in the First Source Agreement, Developer shall be relieved of liability thereunder upon assignment to and assumption by the Ground Lessees and For Sale Residential Owners. 8.3 Community Involvement Plan. Developer has prepared, a specific plan and program for providing the community that is impacted by the Project with information about, and input into, the Project as it is designed, developed, constructed and operated ("Community Involvement Plan"), a copy of such Community Involvement Plan being included in the Master Plan. Prior to the Escrow Release Date, Developer shall comply with the terms of the Community Involvement Plan and thereat~er shall coordinate compliance by the Ground Lessees and For Sale Residential Owners. IX. Preparation and Execution of Documentation 9.1 Ground Lease. Within the time flame stated in the chart set forth in Section 7.1, Developer and District shall negotiate in good faith the form of a ground
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lease ("Ground Lease") between District and Developer. Notwithstanding references in this Agreement to a single Ground Lease, Developer and District agree that each use category shall be subject to a separate Ground Lease and Memorandum of Lease (all such separate Ground Leases are herein called the "Ground Leases"), separately assignable and financeable, provided that in no event shall less than all of such separate Ground Leases and Memoranda of Lease be executed and delivered on the Escrow Release Date. Each such Ground Lease shall not be cross-defaulted except as expressly provided herein. 9.2 For Sale Covenants. Within the time frame stated in the chart set forth in Section 7.1, Developer and District shall negotiate in good faith the form of use covenants and restrictions ("For Sale Covenants"). The For Sale Covenants shall include such terms as may be required or contemplated by this Agreement. In addition, the For Sale Covenants shall provide that the For Sale Residential Owner(s) shall use Commercially Reasonable Business Efforts to obtain presales for residential units. 9.3 Closing Agreement. No later than Closing, Developer and District shall negotiate in good faith the form of closing agreement ("Closing Agreement"). The Closing Agreement shall be executed at the Closing. 9.4 Closing. Closing ("Closing") shall occur prior to the Outside Date for Closing, subject to the satisfaction of the conditions set forth in Sections 9.4.1 and 9.4.2. 9.4.1 Districts obligation to proceed to Closing shall be conditioned on the satisfaction of each of the following conditions, any of which may be waived by District in writing: 9.4.1.1. There shall exist no uncured Event of Default on the part of Developer or Guarantors of any of their material obligations under this Agreement or the Development Guaranty. 9.4.1.2. All representations and warranties of Developer and Guarantors under this Agreement and the Development Guaranty shall be correct in all material respects as of the date of Closing. 9.4.1.3. 9.4.1.4. Intentionally Deleted. Intentionally Deleted.

9.4.1.5. There shall have occurred no material adverse change in financial condition of either Developer or any Guarantor from the date of the Financial Statements. 9.4.1.6. There shall exist no order of any court that is binding upon District and that prohibits District from consummating Closing under this Agreement.

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9.4.1.7. All Zoning Approvals, including with respect to Parcel A, Reservation 174 (if same remains in the Project) and the Common Areas shall have been obtained. " 9.4.1.8. The Gross Parcel Value and Net Parcel Value of each Parcel shall have been calculated pursuant to Section 5.2.3. 9.4.1.9. Developer shall have timely performed all of its obligations under Article VII. 9.4.1.10. Developer and Guarantors shall have delivered to District their respective Governing Documents, certified as correct and complete. 9.4.1.11. Intentionally Deleted. 9.4.1.12. District shall have approved the Closing Developer Cost Budget, Closing Site Cost Budget, Closing Proforma and Closing Sales Projections and the allocation of costs described in Section 5.13 of this Agreement. 9.4.1.13. District and Developer shall have agreed upon the form and substance of each Ground Lease, the For Sale Covenants, the For Sale Deed, Affordability Covenants, Closing Agreement, Site COREA, Building COREA, Parcel B Restrictions, 174 License, ROFO, Completion and Lease Guaranty, Common Area Association documentation, Lot 47 Single Lot Covenant and any memoranda thereof. Developers obligation to proceed to Closing shall be 9.4.2 conditioned on the satisfaction of each of the fol!owing conditions, any of which may be waived by Developer in writing: 9.4.2.1. Title to the Leased Parcels shall be in substantially the same condition as set forth on Schedule 20. 9.4.2.2. All representations and warranties of District under this Agreement shall be correct in all material respects as of the date of Closing. 9.4.2.3. There shall exist no uncured default on the part of District of any of its material obligations under this Agreement. 9.4.2.4. There shall exist no order of any court that is binding upon Developer or any Guarantor and that prohibits Developer or such Guarantor(s) from consummating Closing under this Agreement. 9.4.2.5. All Zoning Approvals shall have been obtained.
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9.4.2.6. The Gross Parcel Value and the Net Parcel Value of each Parcel shall have been calculated pursuant to Section 5.2.3. 9.4.2.7. District shall deliver to Developer and Guarantors the legal sufficiency memorandum of OAG described in Section 9.4.3.6 below. 9.4.2.8. Developer shall have approved the Closing Developer Cost Budget, Closing Site Cost Budget, Closing Proforrna and Closing Sales Projections and the allocation of costs described in Section 5.15 of this Agreement. 9.4.2.9. District and Developer shall have agreed upon the form and substance of the agreements referenced in Section 9.4.1.13 and any memoranda thereof. 9.4.3 At Closing, District and Developer shall proceed as follows:

9.4.3.1. District and Developer shall execute and deliver to each other the Closing Agreement. 9.4.3.2. District and Developer shall agree upon pursuant to the Closing Agreement: (i) the final agreed-upon form of each of the Ground Leases, the Memorandum of Ground Lease, the For Sale Deed, the For Sale Covenants and Affordability Covenants, (ii) the Completion and Lease Guaranty and (iii) the other agreements described in Section 9.4.1.13. 9.4.3.3. Developer and Guarantors shall execute and deliver to District a certificate certifying that the conditions set forth in Sections 9.4.1.1 through 9.4.1.10 have been satisfied. 9.4.3.4. Developer and Guarantors shall provide copies of their respective Governing Documents, certified as correct and complete. 9.4.3.5. Intentionally Deleted.

District shall deliver to Developer and 9.4.3.6. Guarantors the legal sufficiency memorandum of OAG in substantially the form attached hereto as Schedule 21, addressing the Closing Agreement and the form of the Project Documents that are agreed upon at Closing. 9.4.3.7. Developer, Guarantors and District shall execute and deliver such other documents as may be necessary or customary. 9.5 Closing Agreement. The final form of each of the Ground Lease, each Memorandum of Ground Lease, the For Sale Deed, and the For Sale Covenants, the Completion and Lease Guaranty, the Site COREA, the Building COREA, the Affordability Covenants, the 174 License (and memorandum thereof), the Common Area
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Association documentation and the Lot 47 Single Lot Covenant shall be agreed upon pursuant to the Closing Agreement. The Closing Agreement shall provide that the final form of each of the foregoing shall be executed by District and Developer upon the satisfaction of all of the following conditions ("Escrow Release Conditions"): 9.5.1 District (or such design review committee as District shall approve) shall have approved the Construction Documents for all Improvements, such approval not to be unreasonably withheld (except as set forth in the definition of "Significant Changes") so long as such Construction Documents are consistent with design documents previously approved. 9.5.2 Developer shall have obtained all Permits required for any Remedial Action and Construction Commencement, and all other Permits required for the prosecution and completion of construction of the Improvements shall be obtainable as a matter-of-fight so long as such Improvements are constructed in accordance with Construction Documents approved by District. 9.5.3 Developer shall have certified and demonstrated to District (i) the availability of sufficient funds to pay all costs set forth on the Escrow Release Site Cost Budget and Escrow Release Developer Cost Budget (and delivered to District a copy of each Loan Commitment Letter, if any, evidencing any Approved Mortgagees intent to provide Construction Financing in connection with any portion of the Project, and (ii) that Developer shall have incurred and paid at least $20,000,000 in Equity toward Site Costs and Development Costs, and (iii) that there have been no Significant Changes that have not been approved by District to the Constructions Documents. 9.5.4 District and Developer shall have approved the Escrow Release Developer Cost Budget, Escrow Release Site Cost Budget, Escrow Release Proforma and Escrow Release Sales Projection pursuant to Section 5.2.4. The applicable Developer Party shall have entered into the 9.5.5 Construction Contract for the below-grade concourse and parking Improvements and shall have given notice to proceed to the General Contractor thereunder for excavation, sheeting and shoring, and any Performance Bonds and Completion Bonds required by District under this Agreement for the Construction Contract for subgrade parking and concourse Improvements shall have been provided to District. 9.5.6 Developer and Guarantors shall have delivered to District their certificate that Construction Commencement will occur on the Escrow Release Date. Developer shall have paid to District all amounts that are then 9.5.7 due and payable under this Agreement and each Ground Lease, and there shall exist no material default on the part of Developer or Guarantors under any Project Document as of the Escrow Release Date. 9.5.8 Section 7.14(c). Developer shall have made the submission described under

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9.5.9 Developer shall have furnished or caused to be furnished to District certificates of insurance or duplicate originals of insurance policies required of Developer under Article 12 below with respect to the subgrade parking and concourse Improvements. 9.5.10 Developer shall have provided the Governing Documents and organization chart (each of which shall be satisfactory to District in its reasonable discretion) for each Developer Party and satisfactory evidence of the applicable Developer Partys authority to acquire and perform its obligations under this Agreement. 9.5.11 Developer shall have delivered, for each Developer Party and each of their respective Members, original good standing or equivalent certificates, each recently issued by the appropriate governmental body of the jurisdiction of incorporation or formation of such Person, and if required in order to do business in District as a foreign corporation or limited liability company, original certificates of qualification to do business as a foreign entity, for such Person, each recently issued by the appropriate governmental body of District. 9.5.12 There shall have occurred no material adverse change in the financial condition of either Developer or any Guarantor from the date of the Financial Statements. 9.5.13 All Construction Contracts for the Project to achieve Pad Completion (and, if requested by Developer, the Construction Contracts for any other Improvements) shall have been approved by District in writing. 9.5.14 There shall exist no uncured default on the part of Developer or Guarantors of any of their material obligations under the Completion and Lease Guaranty upon its execution. 9.5.15 All representations and warranties of Guarantors under the Completion and Lease Guaranty shall be correct in all material respects upon its execution. 9.5.16 Developer and Guarantor shall have caused their respective legal counsel to deliver to District such legal opinions as are reasonably satisfactory to District. 9.5.17 There shall have been no modifications, changes or additions to any of the documents referenced in Section 9.4.l.13 except as approved by District in writing. 9.6 Concurrent Activity. Concurrently with the execution of the Closing Documents, 9.6.1 District shall deliver to Developer and Guarantors the legal sufficiency memorandum of OAG in substantially the form attached hereto as Schedule 21, addressing the executed Project Documents being executed on the Escrow Release Date.
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Concurrently with the execution of the Closing Documents, 9.6.2 Developer shall pay or cause to be paid each payment of Base Rent due under the Ground Leases, and District and the applicable Developer Parties shall execute the Memorandum of Development Agreement in the form attached hereto as Schedule 22, the COREA and the documents referenced in Section 9.4.1.13 to the extent not theretofore executed pursuant to the terms hereof. 9.7 Other Legal Documents. Within the time frame stated in the chart set forth in Section 7.1, Developer and District shall negotiate in good faith the form of Completion and Lease Guaranty, For Sale Deed and Affordability Covenants; and by Closing, Developer and District shall negotiate in good faith the form of the Memorandum of Ground Lease, the Site COREA, the Building COREA, the Parcel B Restrictions, the 174 License and the Common Area Association documentation, all in conformance with the terms of this Agreement, as applicable. The Completion and Lease Guaranty, Ground Leases and For Sale Covenants shall include terms that are consistent with the Development Guaranty and this Development Agreement. The Ground Leases and For Sale Covenants shall include the failure to achieve Milestone Event No. 7 by the applicable Outside Date as an Event of Default (with cure rights commensurate with those under Section 13.1.2(ii)). Remedies for failure to meet Milestone Event No. 8 by the applicable Outside Date shall be as set forth in the definition of Final Completion and in the Completion and Lease Guaranty. District and Developer will work together diligently and in good faith to prepare, negotiate and complete the documents required for the first Milestone Event set forth in Section 7.1 and the other documents listed in this Section 9.7 in order to satisfy the applicable Target Dates and Outside Dates set forth in the chart in Section 7.1. 9.8 Reeordation. Following their execution, the Memorandum of Development Agreement, each Memorandum of Ground Lease, the For Sale Deed and the For Sale Covenants, the Site COREA, the Building COREA, the Parcel B Restrictions, Affordability Covenants, the Lot 47 Single Lot Covenant, the memorandum of the 174 License, and the memorandum of the ROFO shall be promptly recorded by Developer in the Land Records of the District of Columbia prior to any security instrument. Provided, however, prior to the Escrow Release Date, Developer shall present to District a form of memorandum of For Sale Covenants to be recorded in lieu of the full document, such form to be subject to Districts approval. 9.9 Right of First Offer. Ninety (90) days prior to the Closing, Developer shall deliver to District for its review and approval (and negotiation) a form of an agreement (the "ROFO"), to be executed an in effect at the Closing, that contains the following terms: 9.9.1 If District has excluded from this Agreement any B Parcel as described in Section 4.5 of this Agreement, and, at any time prior to the date that is the earliest of (i) either a Ground Lease or the For Sale Covenants shall terminate or expire by its respective terms, (ii) a Person belonging to the Hines Group or a Person belonging to the Smith Group shall no longer "Control" the initial tenant under a Ground Lease or (iii) the date that is five (5) years after Completion, District shall
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determine to (i) allow all or substantially all of any subdivided or other legally transferable portion of the B Parcel to be used for private office, residential, retail or hotel uses that are not normally considered ancillary to a civic, cultural, governmental or other public use, and (ii) sell, lease or otherwise transfer such B Parcel for such use, then so long as neither Developer nor any Developer Party is in default beyond any applicable cure period, under the Development Agreement, any Ground Lease or any For Sale Covenants, Developer or its designee (which, unless District shall otherwise approve, must be a party which meets the qualifications for Permitted Transfer) shall have a priority right to enter into such sale, lease or transfer transaction, generally as follows: 9.9.2 District shall notify Developer that District desires to sell, lease or transfer such B Parcel and may designate in such notice the terms and requirements, if any, of the District with respect thereto ("Transaction Notice"). During the thirty (30) day period following Developers receipt of the Transaction Notice ("Response Period"), Developer may notify District of the terms ("Developers Terms") on which it is willing to purchase, lease or take transfer of such B Parcel ("Terms Notice"); provided that, whether such Terms Notice shall offer to purchase or lease or take by other transfer (or impose such other requirements) shall be determined by Districts Transaction Notice. If Developer fails to provide a Terms Notice within the 9.9.3 Response Period, District may market and sell, lease or transfer such B Parcel to such Person and on such terms as District may determine during the one (1) year following the expiration of the Response Period in accordance with the terms and requirements, if any, specified in its Transaction Notice. If District shall not have sold, leased or transferred such B Parcel, or entered into a contract (which has been approved by City Council) to sell, lease or transfer such B Parcel, within such one (1) year period, then District shall initiate the process described in Section 9.9.2 prior to entering into any sale, lease or transfer or contract to sell, lease or transfer such B Parcel to any Person. 9.9.4 If Developer provides a Terms Notice, then during the thirty (30) day period ("Negotiation Period") following Developers Terms Notice, Developer and District shall negotiate in good faith the terms upon which District would sell, lease or transfer, as applicable, such B Parcel to Developer or its designee (which must be a party which meets the qualifications for Permitted Transfer). District shall use good faith efforts to obtain City Councils approval of the terms agreed upon by Developer and District in writing during the six (6) month period after the terms of the right of first offer have been reached. If by expiration of the Negotiation Period, District and Developer shall not have agreed in writing on all terms of the sale, lease or transfer of such B Parcel to Developer or the parties shall so agree but City Council shall not thereafter approve the terms, District may market and sell, lease or transfer such B Parcel to any Person on such terms as District may determine. Notwithstanding the foregoing, if (i) District elects to proceed with a transaction in which the net present value of the consideration payable to District is less than 95% of the net present value of the Developers Terms or on terms different in any material respect from the Developers Terms as specified in the Transaction Notice (Developers Terms, for this
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purpose, means the last written offer which is captioned OFFER" in twelve point type made by Developer with respect to the purchase of such B Parcel or, if rejected by City Council, the terms of the offer so rejected by City Council), then Developer (on its own behalf or on behalf of a nominee as aforesaid) shall have the fight, within thirty (30) days of written notice from District, to purchase, lease or obtain such B Parcel at such lower consideration and on all of the other terms and conditions of such transaction set forth in the Developers Terms, and (ii) if District shall not have sold, leased or transferred such B Parcel, or entered into a contract to sell, lease or transfer such B Parcel, within one (1) year of expiration of the Negotiation Period, then District shall initiate the process described in Section 9.9.2 prior to entering into any sale, lease or transfer or contract to sell, lease or transfer such B Parcel to any Person. 9.9.5 Notwithstanding the foregoing, if District and Developer shall agree upon terms as provided in Section 9.9.4 above and City Council fails to approve such agreement within the aforementioned six (6) month period or City Council denies such approval, then District shall not be obligated thereafter to offer to sell, lease or transfer the portion of the B Parcel that was the subject of the terms, and this Section 9.9 thereafter shall not be binding upon such portion of the B Parcel, unless and to the extent District determines within the five (5) year period referenced in Section 9.9.1 above to sell, lease or transfer such portion of the B Parcel for a different use in which case the provisions of this Section 9.9 shall apply to any proposed sale, leases or transfer of the portion of the B Parcel for such different use. 9.9.6 Notwithstanding the foregoing, the rights of Developer described in this Section 9.9 (i) shall not restrict any transfer or lease to any governmental or quasi-governmental authority, or in connection with any transaction that involves material assets or liabilities not limited to a B Parcel, (ii) shall terminate as to any B Parcel upon the initial sale, lease or transfer by District of its interest in such B Parcel (but such sale shall not release District for any previous non-compliance with this Section 9.9) and shall not be binding upon any transferee of such B Parcel, (iii) shall not apply to any space lease for a portion of the District Improvements, (iv) shall not apply to any partial commercial use that is normally considered ancillary to a civic, cultural, governmental or other public use, (v) shall not apply to any sale, lease or transfer to a Person intending to own and occupy substantially all of the space to be constructed on such Parcel, and (vi) shall not apply to an exchange by District of a B Parcel for a parcel of land that is outside the Site (an "Exchanged Parcel"), if at the time of such exchange, District, acting through the individual serving as the Deputy Mayor for Planning and Economic Development, certifies to Developer that District (as of such date) intends to construct or cause or permit to be constructed on the Exchanged Parcel a hotel. In the event of a transfer, lease or exchange of a B Parcel 9.9.7 described in this Section 9.9, the development of such B Parcel shall be in accordance with the Master Plan (provided that District may waive the applicability of the Master Plan to the B Parcels except as set forth in the B Parcel Restrictions). District agrees that in the case of any sale, lease or transfer to a Person for use described in section 9.9.5 (v), District shall recommend to such Person that such Person engage Developer
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to act as development manager for the development of the B Parcel (or applicable portion thereof) on market terms and conditions. 9.9.8 The foregoing agreement and respective rights of Developer shall be subject to all Governmental Requirements governing the sale, lease or transfer of District real property, including without limitation City Council approval, as applicable. 9.9.9 A memorandum of the agreement setting forth the terms in this Section 9.9 shall be recorded in the Land Records of the District of Columbia on or about the Escrow Release Date. The Developer may assign its rights under such agreement to any Affiliate of Developer. 9.10 1"/4 License. No later than Closing, the Parties shall negotiate a form of license with respect to Reservation 174 (the "174 License"), so that Developer Parties may integrate and use such Reservation 174 for the purposes set forth in the Master Plan. Notwithstanding the foregoing, the parties understand that a condition precedent to entering into the 174 License (and to construction, maintenance and programming of Reservation 174 as part of the Common Area) is an agreement between District and the National Park Service either (i) conveying Reservation 174 to District or (ii) amending the Transfer of Jurisdiction plats. If any such agreement with the National Park Service and the 174 License is not negotiated and completed prior to the later of Closing or April 15, 2008 (the "174 Conditions"), Reservation 174 shall not be deemed part of Common Area or the Project for the purposes of this Agreement or any agreement entered into pursuant hereto. Furthermore, Developer shall be obligated to complete the Schematic Drawings for Reservation 174 but shall not be obligated to proceed further with design of Improvements on Reservation 174 unless the 174 Conditions are met. Costs incurred with respect to Reservation 174 prior to elimination of the same from the Project shall constitute Site Costs and!or Developer Costs, as applicable. X. Representations and Warranties

10.1 Developer. Developer hereby represents and warrants to District as follows:

(i) Developer is a limited liability company duly organized, 10.1.1 validly existing and in good standing under the laws of the State of Delaware, (ii) Developer is duly qualified to conduct business in the District of Columbia, and (iii) Developer has the power and authority to conduct the business in which it is currently engaged. 10.1.2 Developer (i) has the power and authority to execute, deliver and perform its obligations under this Agreement, and (ii) has taken all necessary action to authorize the execution, delivery and performance of this Agreement. 10.1.3 No cons,e.ot, or authorization of, or filing with, any Person (including any Governmental Autfiority), Which has not been obtained, is required in connection with the execution, delivery and performance of this Agreement by
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Developer, except for (i) the Zoning Approvals and (ii) permits and approvals from Governmental Authorities required to construct the Improvements. 10.1.4 "lqais Agreement has been duly executed and delivered by Developer, and constitutes the legal, valid and binding obligation of Developer, enforceable against Developer in accordance with its terms. 10.1.5 The execution, delivery and performance by Developer of this Agreement will not violate any Governmental Requirement or result in a breach of any contractual obligation to which Developer is a party. 10.1.6 Developers execution, delivery and performance of this Agreement and the transactions contemplated hereby shall not: (i) to the best of Developers knowledge, violate any judgment, order, injunction, decree, regulation or ruling of any court or Governmental Authority with proper jurisdiction that is binding on Developer; or (ii) result in a breach or default under any provision of the organizational documents of Developer. 10.1.7 No litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to the best knowledge of Developer, threatened by or against Developer which, if adversely determined, individually or in the aggregate, could reasonably be expected to have a material adverse effect on Developer and its ability to perform its obligations under this Agreement; 10.1.8 No agent, broker or other Person acting pursuant to express or implied authority of Developer is entitled to any commission or finders fee in connection with the transactions contemplated by this Agreement or will be entitled to make any claim against District for a commission or finders fee. Developer has not dealt with any agent or broker in connection with the acquisition or ground leasing of the Site. 10.1.9 The Site will be acquired, and/or leased and used by Developer and the other Developer Parties for the purpose of constructing the Project in accordance with the Master Plan and this Agreement, and not for any other purpose. 10.1.10 By Developers execution of this Agreement, each initial Member of Developer has represented to Developer with respect to itself only that there are no actions, suits, arbitrations or investigations, pending against it which might adversely affect Developers ability to enter into or perform its obligations under this Agreement or such Members ability to enter into or perform its obligations under Developers Governing Documents, including Developers operating agreement. 10.1.11 Developer has been formed for the sole purpose of entering into this Agreement, and other related agreements for the development, financing, construction, leasing, subleasing, management, and operation of the Improvements on the Site.
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10.1.12 In no event shall Developer, or any of its employees, contractors, subcontractors, agents, servants, beneficial owner of Developer, or any Member, partner, or principal of any beneficial owner of Develop6i- assert for its own benefit, or attempt to assert, an exemption (including from sales taxes) or immunity available to District, if any, under Government Requirements on the basis of the Districts involvement in the transaction contemplated by this Agreement. 10.1.13 The Financial Statements are complete and accurate as of the dates thereof. There has been no material adverse change in the financial condition of any Guarantor since the date of such Financial Statements. 10.1.14 Neither Developer nor any Person controlling Developer or owning directly or indirectly any interest of ten percent (10%) or greater in Developer has engaged in any dealings or transactions (i) in contravention of the applicable antimoney laundering laws or regulations or orders, including without limitation, money laundering prohibitions, if any, set forth in the Bank Secrecy Act (12 U.S.C. Sections 1818(s), 1829(b) and 1951-1959 and 31 U.S.C. Sections 5311-5330), the USA Patriot Act of 2001, Pub. L. No. 107-56, and the sanction regulations promulgated pursuant thereto by U.S. Treasury Department Office of Foreign Assets Control, (collectively, together with regulations promulgated with respect thereto, the "AntiMoney Laundering Acts"), (ii) in contravention of Executive Order No. 13224 dated September 24, 2001 issued by the President of the United States (Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism), as may be amended or supplemented from time to time ("Anti-Terrorism Order"), (iii) in contravention of the provisions set forth in 31 C.F.R. Part 103, the Trading with the Enemy Act, 50 U.S.C. Appx. Section 1 et seq. or the International Emergency Economics Powers Act, 50 U.S.C. Section 1701 et seq. (together with the Anti-Money Laundering Acts, the "Terrorist Acts") or (iv) is named in the Annex to the Anti-Terrorism Order or any terrorist list published and maintained by the Federal Bureau of Investigation and/or the U.S. Department of Homeland Security, as may exist from time to time. Neither Developer nor any Person controlling Developer or owning directly or indirectly any interest of ten percent (10%) or greater in Developer (a) is conducting any business or engaging in any transaction with any person appearing on the list maintained by the U.S. Treasury Departments Office of Foreign Assets Control located at 31 C.F.R., Chapter V, Appendix A, or is named in the Annex to the Anti-Terrorism Order or any terrorist list published and maintained by the Federal Bureau of Investigation and/or the U.S. Department of Homeland Security, as may exist from time to time, or (b) is a Person described in section 1 of the AntiTerrorism Order (a "Restricted Person"). Developer shall not be in breach of this Section 10.1.14 as a result of the act or omission of any Person who is not otherwise an Affiliate of Developer and whose only connection to Developer is ownership of less than five percent (5%) in a company that itself has a direct or indirect interest in the Developer and is traded on a U.S. national exchange unless such Person has the power to direct the management or operations of Developer, in which case there shall be no threshold percentage applicable to such inquiry, or unless Developer has actual knowledge that such Person is listed on one of the aforementioned lists or has or is in
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violation of the Terrorist Acts, or the Anti-Terrorism Order or their respective regulations. 10.1.15 Beneficial ownership of each Parcel that is within the Leased Parcels or is a For Sale Residential Parcel shall be in accordance with the percentages set forth on Schedule 2. 10.1.16 Developer is comprised of the following entities shown on Schedule 2. 10.1.17 As of the date hereof, Developer has incurred not less than $7,000,000 in Developer Costs and Site Costs. 10.1.18 The conditions set forth in Sections 8.6.1.1, 8.6.1.6 and 8.6.2 of the Exclusive Rights Agreement have been satisfied (other than Section 8.6.2.8 and 8.6.2.9). 10.2 Restatement. The foregoing representations and warranties set forth in Section 10.1 (and those of District pursuant to Section 10.3) shall be updated and restated as of Closing and, again, as of the Escrow Release Date. Developer and District shall disclose in writing to the other any change to the representations and warranties in Section 10.1 or 10.3 after the party giving such representation and warranty becomes aware thereof. 10.3 District. District hereby represents and warrants to Developer as follows: 10.3.1 District (i) has the power and authority to execute, deliver and perform its obligations under this Agreement, and (ii) subject to Section 3.6 has taken all necessary action to authorize the execution, delivery and performance of this Agreement. 10.3.2 No consent or authorization of, or filing with, any Person (including any governmental authority), which has not been obtained, is required in connection with the execution and delivery of this Agreement by District. 10.3.3 This Agreement has been duly executed and delivered by District, and constitutes the legal, valid and binding obligation of District, enforceable against it in accordance with its terms. 10.3.4 The execution, delivery and performance by District of this Agreement will not violate any Governmental Requirement or result in a breach of any contractual obligation to which District is a party. 10.3.5 Districts execution, delivery and performance of this Agreement and the transactions contemplated hereby shall not: (i) to the best of Districts knowledge, violate any judgment, order, injunction, decree, regulation or ruling of any court or Governmental Authority with proper jurisdiction that is binding
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on District; or (ii) result in a breach or default under any provision of the organizational documents of District.
10.3.6 No litigation, investigation or proceeding of or before any arbitrator or Governmental authority is pending or, to the best knowledge of District, threatened by or against District which, if adversely determined, individually or in the aggregate, could reasonably be expected to have a material adverse effect on Districts ability to perform its obligations under this Agreement.

10.3.7 Except as otherwise set forth in this Agreement, and subject to Section 3.6.1, no consent or authorization of, or filing with, any Person (including any governmental authority), which has not been obtained, is required in connection with the performance of this Agreement by District.
10.3.8 No agent, broker or other Person acting pursuant to express or implied authority of District is entitled to any commission or finders fee in connection with the transactions contemplated by this Agreement or will be entitled to make any claim against Developer for a commission or finders fee. District has not dealt with any agent or broker in connection with the acquisition or ground leasing of the Site. 10.3.9 The underground storage tank removed from the Site in connection with demolition of the old Convention Center was removed in accordance with all Governmental Requirements. XI. Site Pending Escrow Release Date

11.1 Temporary Use of Site. Developer acknowledges that prior to the Escrow Release Date, District reserves the following fights: (i) to use the Site for such purpose or purposes as District may determine, including without limitation parking (collectively, "Temporary Uses"), and (ii) to enter into leases, licenses and other agreements affecting all or any portion of the Site (collectively, "Temporary Agreements"). District agrees that it shall terminate (and cause to be removed from the Site) all Temporary Uses and Temporary Agreements on or before the Escrow Release Date, provided, however, District shall have received not less than one hundred twenty (120) days written notice from Developer of the estimated Escrow Release Date. Notwithstanding anything herein contained to the contrary, all Temporary Uses must be terminated (and shall have abandoned the Site) within 120 days after notice from Developer. The foregoing shall be an Escrow Release Condition, and if such termination of the Temporary Uses and abandonment of the Site by such Temporary Uses is not achieved by the Target Date for Escrow Release Date, the same shall be extended (with an adjustment of all Target Dates and Outside Dates to accord with the period of extension of the Target Date for the Escrow Release Date). 11.2 Developers Right to Investigate Site.
11.2.1 Developer hereby acknowledges that, prior to the date of this Agreement, it has had the right to perform feasibility studies on the Site using experts of its own choosing and to access the Site for the purposes of performing any and all
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feasibility studies in accordance with the Exclusive Rights Agreement or otherwise. Prior to the Escrow Release Date, District shall permit Developer, its agents, employees and contractors, to continue to have access to the Site at reasonable times and upon reasonable notice to District for the purpose of performing additional feasibility studies; provided, however, that Developer shall not have the right to object to any condition that may be discovered or to terminate this Agreement as a result of such additional feasibility studies except as expressly provided herein to the contrary in Section 7.19. Developer shall notify District, in writing, at least two (2) Business Days in advance of beginning of any such feasibility studies. To the extent Developer has actual knowledge thereof, such notification shall state in reasonable detail the scope of the feasibility studies to be undertaken by or on behalf of Developer at the Site, and the identity of each Person performing such feasibility studies. Developer agrees that such feasibility studies shall not unreasonably interfere with the use of the Site by District, WCCA or its tenants or licensees, require the closing of any access route to the Site or violate any Governmental Requirements. Developer shall promptly provide to District a copy of all results or reports of any study, investigation or other due diligence activity related to the Site. 11.2.2 Developer shall pay for all feasibility studies of the Site, for labor performed on the Site and for all materials furnished to the Site in connection with any feasibility studies done on the Site by or for Developer. Developer agrees, and will require its agents, consultants, employees and contractors to agree, to comply with all Governmental Requirements pertaining to such feasibility studies performed in, at, or under the Site by or for Developer, including, but not limited to, all Environmental Laws, and all applicable Governmental Requirements. In the event Developer desires to conduct any physically intrusive due diligence such as sampling of soils or drilling wells, Developer shall request Districts prior consent thereto, which consent shall not be unreasonably withheld. 11.2.3 Prior to entry onto the Site, Developer shall provide District with a certificate of insurance evidencing that Developer maintains a commercial general liability policy that names District as an additional insured, in such reasonable amounts as District shall approve, such approval not to be unreasonably withheld. At Districts option, Developer and its agents, employees and contractors shall be accompanied by a representative of District during any such entry. 11.2.4 Developer hereby indemnifies and holds District, its employees, agents, representatives, tenants, licensees and invitees harmless and shall defend District (with counsel reasonably satisfactory to District) from and against any and all direct, out-of-pocket Losses, costs, liabilities, damages, expenses, mechanics liens, claims, fines, penalties, settlements and judgments (including, without limitation, reasonable attorneys fees and court costs) incurred or suffered by or asserted against District in connection with or arising from Developers, any Developer Partys or their respective agents, employees or contractors feasibility studies, remediations, USTrelated activities, and any other acts or omissions of Developer, any Developer Party or their respective agents, employees or contractors at, under, or about the Site except to the extent the same are incurred or suffered by District as a result of the gross
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negligence or willfu! misconduct of District or any of its employees, agents or contractors. In no event shall District have any liability to Developer for any damages, including without limitation, direct or indirect losses or consequential or punitive damages. Any access to the Site by Developer pursuant to this Article 11 shall additionally be subject to all of Developers insurance obligations contained in this Agreement and in Article 12 below and to Developers obligation to restore the Site to its condition as existed prior to the date of such access. All such obligations shall survive the termination of this Agreement. 11.2.5 Developers obligations pursuant to this Section 11.2 shall survive the Escrow Release Date or earlier termination of this Agreement. 11.3 Confidentiality. Developer covenants and agrees that Developer shall prior to the Escrow Release Date keep confidential all information obtained by Developer in accordance with Section 11.2 (which for purposes of this provision shall be deemed to include information obtained by Developer under the ERA); provided, however, that Developer may disclose such information to its attorneys, consultants, title company, potential investors and potential lenders or if required by any Governmental Requirements or pursuant to a subpoena or request for information pursuant to the Freedom of Information Act, then so long as Developer directs such parties to maintain such information as confidential. In the event that such Persons fail to so keep such information confidential, Developer shall be liable for all Losses, costs, liabilities, damages, expenses, mechanics liens, claims, settlements, and judgments (including, without limitation, reasonable attorneys fees and court costs) incurred or suffered by District in connection with or arising directly from such breach of this covenant by such Persons. If Developer is required by law or in any civil or criminal legal proceeding or any regulatory proceeding or similar process, to disclose any part of the confidential information, then Developer shall give District prompt written notice of such request so that District may seek an appropriate protective order and/or waive the compliance with the provisions of this Section 11.3; provided, however, that if Developer is nonetheless, in the written opinion of its counse!, which shall be provided to District, compelled to disclose confidential information in connection with any such proceeding or else stand liable for contempt or suffer other censure or penalty, then Developer may disclosure such information in connection with such proceeding without liability under this Agreement. The obligations of Developer under this Section 11.3 shall survive termination of this Agreement for a period of one (1) year, provided that such obligations shall not survive the Escrow Release Date if the Escrow Release Conditions have been satisfied. The obligation of confidentiality under this Section 11.3 shall exclude all information in the public domain for any reason other than a breach by Developer of its obligations under this Section 11.3. 11.4 Demolition of Existing Improvements. 11.4.1 District has caused the existing improvements on the Site to be demolished. The scope of such demolition includes the following: (i) demolition of all above-grade structures, (ii) removal of any Hazardous Materials contained in the above-grade structures, and (iii) demolition of slabs and foundations on the Site, which
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Site was left at grade that is the same elevation as the top of slab on grade (and includes demolition of the foundations with the piles to be cut off below footing). Such demolition did not include demolition or removal of any other below-grade structures, or removal of any Hazardous Materials (including petroleum) on the Site that are not contained in any above-grade structures on or prior to the Escrow Release Date except the removal of an underground storage tank, which was accomplished by District in accordance with applicable Governmental Requirements. !1.4.2 Developer has caused a Phase II environmental site assessment ("Phase II Assessment") of the Site to be conducted. Developer, shall take or cause to be taken all appropriate Remedial Action in accordance with all Governmental Requirements with respect to Hazardous Materials currently located on the Site. Such Remedial Action shall be performed as part of the excavation of the Site and wil! be included in Developers construction schedule, and the costs of which are included in the Master Plan Development Budget as Site Costs. Prior to the commencement of any Remedial Action, the name and qualifications of an environmental consultant proposed by Developer to oversee such Remedial Action and with which Developer shall contract shall be submitted and approved by District, such approval not to be unreasonably withheld. 11.4.3 If, as a result of the presence of Hazardous Materials, the cost of remediatior~, or removing, transporting and disposing of soils and other materials from the Site are in excess of the cost of removing, transporting and disposing of such soils in the absence of any such Hazardous Materials, then (i) the appropriate Ground Lessee and For Sale Residential Owners pursuant to their respective Ground Leases and For Sale Covenants shall have the fight to offset such incremental cost (together with interest at the Imputed Development Period Return prior to the Stabilization Date and thereafter at the blended Participation Return Rate, based on a weighted average of Total Costs of each Leased Parcel and For Sale Residential Parcel) against the amounts payable to the District pursuant to Sections 5.3 and 5.6.1, and (ii) to the extent of the amounts payable by Developer, Developer shall have the right to offset such incremental cost against the next payment(s) of Base Rent and For Sale Participation Payment otherwise payable. Any amounts so offset by Developer pursuant to the foregoing clauses (i) or (ii) shall thereupon cease to be Site Costs. If the District and the appropriate Developer Parties, each acting reasonably and in good faith, agree that the remediation and/or removal of Hazardous Materials from the Site is reasonably expected to delay achievement of any Target Date and Outside Date, then the affected Target Date(s) and Outside Date(s) will be extended by the estimated period of such delay. 11.4.4 District has permitted WCCA to obtain a loan ("Demolition Loan"), which is secured by a mortgage or deed of trust on the Site, to pay costs in connection with the demolition described in Section 11.4.1, grading, the development of a surface parking lot and other amenities on the Site, and related costs. On or before the Escrow Release Date, Developer and District shall cooperate to cause the payment of any portion of the principal amount of such Demolition Loan that remains outstanding. In the event that the Developer pays any amount of the Demolition Loan
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prior to termination of the WCCA Lease and in accordance with all applicable laws, such payment shall be a Site Cost. To the extent that including the principal amount of such Demolition Loan as a Site Cost would, but for the minimum Base Rent described in Section 5.4.3, cause Base Rent to be reduced below such minimum, Developer shall have the right to offset such portion of the Demolition Loan (together with interest at the Imputed Development Period Return prior to the Stabilization Date and thereafter at the blended Participation Return Rate, based on a weighted average of Total Costs of each Leased Parcel) against the next payment(s) of Base Rent otherwise payable. Notwithstanding anything to the contrary in this Section 11.4.4, any amounts offset from Site Costs by Developer shall thereupon cease to be Site Costs. 11.5 Removal of Hazardous Materials. District shall not first introduce Hazardous Materials (including petroleum) to the Site after July 1, 2004 and prior to the Escrow Release Date (and for this purpose paving materials shall not be considered a hazardous substance). Prior to the Escrow Release Date, Developer and, thereafter, the applicable Ground Lessees and For Sale Residential Owners shall have the option (but not the obligation) to offset any out-of-pocket costs incurred by any such party as a result of the breach of the foregoing covenant (together with interest at the Imputed Development Period Return prior to the Stabilization Date and thereafter at the blended Participation Return Rate, based on a weighted average of Total Costs of each Leased Parcel) against the next payment(s) of Base Rent or For Sale Participation Payment otherwise payable. 11.6 Soil Characteristics. District hereby acknowledges to Developer that, to the best of its knowledge, the soil on the Site has been described by the Soil Conservation Service of the United States Department of Agriculture in the Soil Survey of the District of Columbia and as shown on the Soil Maps as "urban land." Developer acknowledges that, for further soil information, Developer may contact a soil testing laboratory, the D.C. Department of Environmental Services, or the Soil Conservation Service. 11.7 Underground Storage Tanks. Developer hereby acknowledges receipt, prior to entering into this Agreement, of a disclosure by District in the form attached to this Agreement as Schedule 25 attached to this Agreement and incorporated in this Agreement by this reference as to whether District is aware of any underground storage tanks located on the Site or the removal of any underground storage tanks during the time District has owned the Site. Developer acknowledges that such disclosure has been provided in compliance with the District of Columbia Underground Storage Tank Management Act of 1990, as amended. District has removed a single underground storage tank in accordance with all Governmental Requirements. 11.8 "As-ls". DISTRICT FOR ITSELF AND EACH OF THE DEVELOPER PARTIES SHALL CONVEY THE FOR SALE RESIDENTIAL PARCELS, THE LEASE PARCELS AND/OR GROUND LEASE TO DEVELOPER, GROUND LESSEES AND FOR SALE RESIDENTIAL OWNERS, AS APPLICABLE, IN "AS IS" CONDITION AND, EXCEPT FOR THE EXPRESS REPRESENTATIONS OF DISTRICT EXPRESSLY SET FORTH IN THIS AGREEMENT, DISTRICT
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MAKES NO REPRESENTATIONS OR WARRANTIES, EITHER EXPRESS OR IMPLIED, AS TO THE CONDITION OF THE SITE OR ANY IMPROVEMENTS THEREON, AS TO THE SUITABILITY OR FITNESS OF THE SITE OR ANY IMPROVEMENTS THEREON, AS TO ANY ENVIRONMENTAL LAW, OTHER LAW OR ANY OTHER MATTER AFFECTING THE USE, VALUE, OCCUPANCY OR ENJOYMENT OF THE SITE, OR AS TO ANY OTHER MATTER WHATSOEVER. DISTRICT SHALL HAVE NO RESPONSIBILITY TO PREPARE THE SITE IN ANY WAY FOR DEVELOPMENT AT ANY TIME. DEVELOPER FOR ITSELF AND EACH OF THE DEVELOPER PARTIES ACKNOWLEDGES THAT, EXCEPT FOR THE EXPRESS REPRESENTATIONS OF DISTRICT SET FORTH IN THIS AGREEMENT, NEITHER DISTRICT NOR ANY EMPLOYEE, REPRESENTATIVE OR AGENT OF DISTRICT HAS MADE ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE SITE OR ANY IMPROVEMENTS THEREON. THE PROVISIONS HEREOF SHALL SURVIVE TERMINATION OF THIS AGREEMENT AND SHALL NOT BE DEEMED MERGED INTO ANY DEED OF CONVEYANCE OR GROUND LEASE, OR OTHERWISE EXTINGUISHED THEREBY. 11.9 Title. Developer for itself and each Developer Party hereby acknowledges that title to the Site has been investigated by Developer and subject to the next succeeding sentence is deemed acceptable, effective as of the date of this Agreement. At the Escrow Release Date, District shall lease the Leased Parcels and convey title to the For Sale Residential Parcels "AS IS" and subject to (i) all encumbrances identified in Schedule B of the Title Commitment attached to this Agreement as Schedule20 (except Schedule B- Section I Items 9-11, !5-17 and 19 (subject to Section 9.10 hereof) and Schedule B- Section II Items 1-3) and (ii) in a form and substance reasonably acceptable to the Developer, a covenant recorded against the A Parcels providing that 10th and I Streets as depicted in the Master Plan are constructed by the Developer and made available for public use to the extent provided in the Master Plan. During the term of this Agreement, District agrees not to take any action that would cause additional encumbrances, rights of way or easements to change the status of title to the Site existing as of the date of this Agreement, except as required by Governmental Requirements or any Governmental Authority or as expressly permitted in this Agreement. Notwithstanding the foregoing, District reserves the right to subdivide the Site so as to create separate assessment and taxation and/or record lots for Parcel B, and District agrees to cooperate with Developer to create separate assessment and taxation lots for each of the Leased Parcels and the For Sale Residential Parcels, at no liability or out-of pocket cost to District. 11.10 Notice of Condenmation. If, prior to Escrow Release Date, any condemnation or eminent domain proceedings shall be commenced by any competent public authority against the Site (excluding the B Parcels), District shall promptly give Developer written notice thereof. If the proposed condemnation shall physically or economically affect a particular Parcel within the Project in any material respect, either party may elect to terminate this Agreement with respect to such Parcel within thirty (30) days of the conclusion of any such proceedings; provided such termination shall not preclude Developer from making any claims for damages against the condemning
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authority as if this Agreement remained in effect. If Developer or District does not elect to terminate, then this Agreement shall continue in full force and effect and the parties shall cooperate with one another in good faith to make such revisior~ to the Project, the schedule (including the Target Dates and Outside Dates) and the economics as shall be reasonably required as a result of the condemnation. Any condemnation after the Escrow Release Date shall be governed by the terms of the Ground Leases. 11.11 Termination. If Developer elects to terminate this Agreement pursuant to Section 11.10, then the parties shall be released fiom any further liability or obligation under this Agreement, except as otherwise provided in this Agreement. Any condemnation proceeds actually received by District with respect to the Site shall be retained by District, and no Developer Party shall have any right thereto. XII. Insurance Policies 12.1 Coverages; Form of Policy. The Ground Leases and the For Sale Covenants shall require the Ground Lessees and the For Sale Residential Owner to maintain or to cause to be maintained the following insurance policies and comply with the following obligations (such policies and compliance, collectively, the "Required Insurance"): 12.1.1 Property insurance loss to the Improvements covered by "special form" property insurance policy as available in the insurance market at the date of this Agreement (and against such additional risks of loss as may be customarily covered by such policies after the date of this Agreement), or any equivalent to a "special form" property insurance policy that has been reasonably approved by District (collectively, the "Property Insurance Policy"). The Property Insurance Policy shall cover at least the following perils: building collapse, fire, flood, impact of vehicles and aircraft, lightning, malicious mischief, terrorism, vandalism, water damage, and windstorm. The Property Insurance Policy shall also cover such other insurable perils as, under good insurance practices, other commercial property owners from time to time insure against for property and buildings similar to the Improvements in height, location, nature, type of construction, and use. Each Property Insurance Policy shall cover: (i) additional expense of demolition and increased cost of construction, including, without limitation, increased costs that arise from any changes in laws or other Governmental Requirements with respect to such restoration in a minimum amount of $10,000,000 for each Parcel; (ii) at least 100% of the replacement cost value of the applicable Improvements; (iii) all tenant improvements and betterments that any Ground Lease requires the Ground Lessee to insure (the "Insured Leasehold Property") and (iv) loss of rent insurance on an actual loss sustained basis coveting twelve months. Any Property Insurance Policy shall contain an agreed amount endorsement or a coinsurance waiver and replacement cost value endorsement without reduction for depreciation and shall in no event be less than the replacement cost of the Improvements. 12.1.2 If any of the Improvements are located in an area designated as "flood prone" or a "special flood hazard area" under the regulations for the National
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Flood Insurance Act of 1968 and the Flood Disaster Protection Act of 1973, at least the maximum coverage for the Improvements available under the federal flood insurance plan. Regardless of the flood zone, the minimum amount of coverage required by this subsection for loss caused by floods shall not be that required by an Approved Mortgage. Any insurance required pursuant to the terms of this subsection being hereinafter sometimes referred to as "Flood Insurance." 12.1.3 At all times during which structural construction, repairs or alterations are being made with respect to the Improvements, builders risk insurance for not less than the full completed project insurable value of the Improvements, covering the same risks and otherwise complying with the same requirements as the Property Insurance Policy, to such limits and with such coverage extensions as District may reasonably require (the "Builders Risk Insurance"). Any Builders Risk Insurance shall be written on a "completed value" form (100% nonreporting) or its equivalent and shall include an endorsement granting permission to occupy. Builders Risk Insurance shall cover: (a) the same perils that the Property Insurance Policy must cover; (b) loss of materials, equipment, machinery, and supplies whether on-site, in transit, or stored offsite, or of any temporary structures, hoists, sidewalks, retaining walls, and underground property; (c) soft costs, plans, specifications, blueprints and models; and (d) demolition and increased cost of construction, including increased costs arising from changes in laws or other Governmental Requirements at the time of restoration of the Improvements and coverage for operation of building laws or other Governmental Requirements, all subject to a sublimit satisfactory to District on an actual loss sustained basis. 12.1.4 The following insurance for personal injury, bodily injury, death, accident and property damage (collectively, the "Liability Insurance"): (i) public liability insurance, including commercial genera! liability insurance; (ii) owned (if any), hired, and non-owned automobile liability insurance; and (iii) umbrella liability insurance. Liability Insurance shall be in the so called "occurrence" form and shall provide coverage of at least $10,000,000 per occurrence and $10,000,000 in the annual aggregate. Liability Insurance shall include coverage for liability arising from premises and operations, elevators, escalators, independent contractors, contractual liability and products and completed operations. The Ground Leases and For Sale Covenants shall provide for $50,000,000 of such coverage during initial construction through Completion. 12.1.5 Workers compensation and disability insurance as required by Laws and in accordance with all applicable Governmental Requirements. 12.1.6 Such other types and amounts of insurance for the Project and its operations as District shall from time to time reasonably require, consistent with insurance commonly maintained for comparable properties (including increases in dollar amounts).

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12.1.7 All insurance required under Sections 12.1.1, 12.1.2, !2.1.3 and 12.1.4 shall name District as an "Additional Insured" by an endorsement reasonably satisfactory to District. ~ 12.1.8 Completion Bonds and Performance Bonds, in form and substance and from sureties acceptable to District in its reasonable discretion at least thirty (30) days prior to the Escrow Release Date for the Construction Contract for the below grade parking and concourse Improvements (and for the above-grade Improvements, in the reasonable discretion of District, at least sixty (60) days prior to Pad Completion, as set forth in the Ground Leases and the For Sale Covenants). 12.1.9 All Required Insurance shall be from insurer(s) authorized to do business in the District of Columbia and reasonably satisfactory to District with: (a) a claims paying ability of not less than "A" (or the equivalent) by S&P and one other rating agency satisfactory to District; or (b) "A:VII" or better financial strength rating by AM Best. Each such Developer Party shall pay or cause to be paid the insurance premiums for all required insurance when due and payable. Each such Developer Party shall deliver to District, immediately upon issuance, certificates of insurance (or copies of the insurance policies if requested by District) for all Required Insurance. At least 10 days before any policy expires (time being of the essence), each such Developer Party shall deliver evidence of renewal to the District. If at any time District has not timely received satisfactory written evidence that any such Developer Party maintains and has paid for all required insurance, then without limiting Districts rights or remedies hereunder or under any of the other Project Document, District may (but shall have absolutely no obligation to) obtain such insurance and pay the premium therefor, and any such Developer Party shall, on demand, reimburse District, for all expenses incurred in connection therewith, that such amounts shall bear interest at the Interest Rate from the date such cost or expense was incurred through the date of payment to District. 12.1.10 Each such Developer Party may provide any Required Insurance under a blanket policy or policies covering the applicable portions of the Site and other property and assets not part of the Site, provided that any such blanket policy otherwise complies with the requirements for Required Insurance. 12.1.11 In each insurance policy (or an endorsement thereto), the carrier shall agree not to cancel, terminate, or nonrenew such policy without giving District thirty (30) days prior written notice (ten (10) days notice for nonpayment of premium). The Property Insurance Policy shall provide that as to Districts interest, such policy shall remain valid and shall insure District regardless of any: (a) named insureds act, failure to act, negligence, or violation of warranties, declarations, or conditions; (b) occupancy or use of the Improvement for purposes more hazardous than those permitted; or (c) Districts exercise of any of their respective rights or remedies hereunder or under any other Project Document, but only if such coverage is commercially available in the District of Columbia with respect to coverage for ground lessees from an insurance carrier licensed to do business in the District of Columbia and does not result in a significant increase in the costs for the relevant insurance policy.
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12.2 Casualty. As further set forth in the Ground Leases, as of the Escrow Release Date, risk of loss with respect to the Site is that of Developer and the other Developer Parties. XIII. Events of Default 13.1 Events of Default. 13.1.1 Each of the following shall constitute an "Event of Default" on the part of Developer under this Agreement: 13.1.1.1. On or prior to the Escrow Release Date, Developer shall fail to pay or cause to be paid any amount required to be paid by it under this Agreement to the District; 13.1.1.2. Except as otherwise provided in Section 13.1.1.6 - 13.1.1.8, Developer shall fail to perform any obligation, covenant or agreement required to be performed by it under this Agreement, other than the obligation to pay any amount under Section 13.1.1.1; 13.1.1.3. Any of Milestone Events Nos. 1-6 shall not have been achieved by the applicable Outside Date; 13.1.1.4. Any representation or warranty of Developer made in this Agreement or by Guarantor under the Development Guaranty, shall fail to be correct in any material respect on the date made or deemed remade; 13.1.1.5. Prior to Pad Completion, a default under any Ground Lease or For Sale Covenants and the failure to cure such default after notice and opportunity to cure as provided therein and the prior or contemporaneous termination of all Ground Leases (and For Sale Covenants) as a result thereof; 13.1.1.6. If on or prior to the Escrow Release Date, Developer fails to pay or cause to be paid any insurance premiums, as and when the same become due and payable; 13.1.1.7. If Developer makes any Transfer in violation of the terms of this Agreement at any time to a Prohibited Person or without Landlords prior written consent, if required hereunder; 13.1.1.8. If Developer files a voluntary petition in bankruptcy or is adjudicated a bankrupt or insolvent, or files any petition or answer seeking any reorganization, arrangement, composition, readjustment, postponement, composition, reduction, liquidation, dissolution or similar relief under the present or any future federal, state, or District bankruptcy or insolvency statute or law, or makes any assignment for the benefit of creditors, or seeks or consents to or acquiesces in the appointment of any bankruptcy or insolvency
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trustee, receiver or liquidator of Developer or of all or any substantial part of a Developers properties or of the Site or any portion thereof, or if this Agreement or any estate or interest of Developer under this Agreement ~becomes subject to any attachment, judgment, lien, charge or encumbrance whatsoever (other than permitted mortgages and subleases pursuant to this Agreement), and if such condition or event is not discharged of record within thirty (30) days; or if (i) any proceeding is filed against Developer seeking any reorganization, arrangement, composition, readjustment, postponement, composition, reduction, liquidation, dissolution or similar relief under the present or any future federal, state, or District bankruptcy act or any other present or future federal, state, District, or other bankruptcy or insolvency statute or law and if such proceeding is not dismissed within sixty (60) days after written notice from District to Developer of an intention to terminate this Agreement for failure to remove the condition in question, or (ii) within thirty (30) days after the appointment, without the consent or acquiescence of Developer, of any trustee, receiver or liquidator of Developer or of all or substantially all of its properties or of the site or any portion thereof, such appointment is not vacated or stayed on appeal or otherwise; 13.1.2 Upon (i) the occurrence of any Event of Default specified in Section 13.1.1.1, and the failure of Developer to cure such Event of Default within thirty (30) days of receipt of written notice of such Event of Default from District, (ii) the occurrence of any Event of Default specified in Section 13.1.1.2, and the failure of Developer to cure such Event of Default within thirty (30) days of receipt of written notice of such Event of Default from District (and if such Event of Default cannot reasonably be cured within such thirty (30) day period, then within such additional period of time as may be reasonably necessary to cure such Event of Default, provided that Developer commences such cure in the initial thirty (30) days and thereafter diligently pursues and completes such cure), (iii) the occurrence of any Event of Default specified in Section 13.1.1.4 or Section t3.1.1.7 and, if such Event of Default is capable of cure, the failure of Developer to cure such Event of Default within five (5) days of receipt of written notice of such Event of Default from District, (iv) the occurrence of any Event of Default specified in Section 13.1.1.6 and, if such Event of Default is capable of cure, the failure of Developer to cure such Event of Default within three (3) days of receipt of written notice of such Event of Default from District or (v) the occurrence of any Event of Default specified in 13.1.1.3, 13.1.1.5 or 13.1.1.8 without any such right to cure or notice, District shall have the remedies set forth in Section 13.2.1, 13.2.2 and 13.2.3. 13.2 District Remedies under Various Agreements. 13.2.1 Upon the occurrence of any Event of Default under this Agreement prior to the Escrow Release Date, and, only to the extent applicable, the giving of any notice and the lapse of any cure period described in Section 13.1.2 without such Event of Default having been cured, Districts sole and exclusive remedy shall be to terminate this Agreement by written notice to Developer, in which event, and notwithstanding any other provision of this Agreement, Developer shall pay to District, as its sole and exclusive remedy hereunder, liquidated, agreed-upon damages in the
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amounts set forth in this Section 13.2.1 ("Liquidated Damages"), in lieu of any other damages that might otherwise be available under applicable law and in full compensation for any other rights and claims hereunder by reason of such Event of Default. Upon payment of the applicable required amount of Liquidated Damages, all obligations and liabilities of District and Developer under this Agreement shall thereupon terminate (except those obligations that expressly survive termination of this Agreement), and Developer and District agree that actual damages would be difficult, if not impossible, to ascertain with any accuracy, and that the Liquidated Damages represent the parties effort to approximate any such potential damage. Prior to the achievement of the first Milestone Event set forth in Section 7.1, the required amount of Liquidated Damages shall be $25,000,000.00 less all Site Costs and Developer Costs previously paid by Developer, and after the achievement of the first Milestone Event set forth in Section 7.1, the required amount of Liquidated Damages shall be $40,000,000.00 less all Site Costs and Developer Costs paid by Developer. Notwithstanding the foregoing, the foregoing Liquidated Damages shall not apply to or limit any obligations under this Agreement that expressly survive termination of this Agreement. Guarantors shall be jointly and severally liable for payment of said Liquidated Damages to District under the Development Guaranty if not otherwise paid by Developer. 13.2.2 Upon the occurrence of any Event of Default under this Agreement on or after the Escrow Release Date, and only to the extent applicable, the giving of any notice and the lapse of any cure period described in Section 13.1.2 without such Event of Default being cured, the District may, as its sole remedy, terminate this Agreement; provided that nothing herein shall restrict the rights of District to pursue its rights under the Development Guaranty for default by Developer under this Agreement. Districts right to terminate this Agreement for failure by Developer to achieve any of the Milestone Events by the applicable Outside Date pursuant to Section 13.1.1.3 shall be extinguished upon, and shall not survive, the actual achievement of the Milestone Event if not previously exercised by District. 13.2.3 In addition to and not in limitation of or as an alternative to any of the foregoing, District shall be entitled to execute upon its security interests granted pursuant to Section 7.4.7. 13.2.4 Subject to the further provisions of this Section 13.2.4, it is understood that on and after the Escrow Release Date but prior to Pad Completion, the Ground Leases, the For Sale Covenants and this Agreement shall be cross-defaulted, as shall be provided in all such documentation; and District, as its sole and exclusive remedy, shall have the right prior to Pad Completion to terminate all (but not less than all) of the Ground Leases and For Sale Covenants and this Agreement for uncured defaults under one or more Ground Leases and For Sale Covenants and this Agreement; provided that nothing herein shall restrict the rights of District to pursue its rights under the Development Guaranty and the Completion and Lease Guaranty for defaults by any Ground Lessees or For Sale Owners or Developer in obligations respectively guaranteed thereby. Upon and following Pad Completion, the Ground Leases and For Sale Covenants shall not be cross-defaulted with this Agreement or with any other
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Ground Leases or For Sale Covenants. Termination prior to Pad Completion and during the cross-default period under the Ground Leases and For Sale Covenants shall be permitted only for defaults in payments due to the District;, failure to pursue construction with all due diligence and any Transfer that is not a Permitted Transfer. Notwithstanding the foregoing, certain of the vertical improvements may be commenced prior to Pad Completion (i.e., on a portion of the subgrade parking and concourse level which is completed before other portions). In such event, the Ground Lease or For Sale Covenants under which such vertical improvements shall commence prior to total Pad Completion shall be released from the cross-default provisions as described in this Section 13.2.4. 13.2.5 Although the same shall not constitute a default hereunder, upon or following Pad Completion, termination of any Ground Lease or For Sale Covenants shall result in the termination of the obligations of Developer under this Agreement with respect to the Ground Lease or For Sale Covenants so terminated. 13.2.6 In addition, upon and following Pad Completion, each Ground Lessee and For Sale Residential Owner shall have the right and obligation to perform the obligations of the Developer hereunder with respect to its Ground Lease and For Sale Covenants if this Agreement is terminated. 13.2.7 In the event District exercises the termination remedy set forth in any Ground Lease or For Sale Covenants, District shall have the right under such Ground Lease or For Sale Covenants to re-enter the applicable portions of the Site, including the affected For Sale Residential Parcels and to take possession of the applicable portions of the Site and terminate (and revest in District) the estate conveyed in the For Sale Deed(s) and the Ground Leases. Real property taxes, owners association dues and assessments, water and sewer charges, rent and interest on any outstanding indebtedness to be taken subject to, if any, shall be adjusted as of the date of re-entry. Any real property taxes or assessments which have been paid or are payable on the applicable Parcels shall be apportioned between District and the appropriate Ground Lessee or For Sale Residential Owner as of the date District re-enters the applicable Parcel(s) so that District shall bear that portion of such charges which accrue on and after such re-entry, but the foregoing shall not affect or impair Districts tax exempt status. If re-entry occurs before the tax rate is fixed for the then current year, the apportionment of real estate taxes shall be upon the basis of the rate for the preceding year applied to the latest assessed valuation. Subsequent to re-entry, when the tax rate is fixed for the year in which re-entry occurs, Developer and District agree to adjust the proration of taxes, and, if necessary, to refund or pay (as the case may be) such sums as shall be necessary to effect such adjustment. Developer shall pay (and Guarantor shall guaranty under the Development Guaranty) the District of Columbia deed transfer tax (if any), the cost of preparation of any termination declaration, and all recording taxes and charges. t3.2.8 If, under the Terrorist Acts or Anti-Terrorism Order, as may be supplemented by additional legislation, orders or regulations, it shall become a violation of law to do business with Developer during the term of this Agreement, same
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shall be an Event of Default under this Agreement, and District shall be entitled to exercise all rights and remedies required by the Terrorist Acts or Anti-Terrorism Order, including without limitation, the termination of this Agreement. " 13.3 No Waiver by Delay. Notwithstanding anything to the contrary contained in this Agreement, any delay by any party to this Agreement in instituting or prosecuting any actions or proceedings with respect to a default by any other party under this Agreement or otherwise asserting its rights or pursuing its remedies under this Section 13 or any other right or remedy available under law or in equity, shall not operate as a waiver of such rights or to deprive such party of, or limit, such rights in any way (it being the intent of this provision that no party shall not be constrained by waiver, laches, or otherwise in the exercise of such remedies). The receipt by District of any amounts due and payable by Developer to District, with knowledge of any breach of this Agreement by Deve!oper or of any default on the part of Developer in the observance or performance of any of the conditions or covenants of this Agreement, shall not be deemed to be a waiver of any provision of this Agreement. The receipt by District of any sums of money or any other consideration under this Agreement paid by Developer after the termination, in any mamaer, of this Agreement, shall not reinstate, continue, or extend this Agreement, unless so agreed to in writing and signed by District. One or more waivers by District or Developer shall not be construed as a waiver of a subsequent breach of the same covenant, term, or condition of this Agreement. Curing a default or breach of this Agreement does not require a waiver from the non-defaulting party. If any default or breach persists or is repeated, no failure on the part of District or of Developer to enforce any covenant or provision in this Agreement or to exercise any fight or remedy provided for in this Agreement, nor any waiver of any right hereunder by District or Developer, unless made expressly in writing, shall discharge or invalidate such covenant or provision or affect the right of District or Developer to enforce the same in the event of any subsequent breach or default. XIV. Miscellaneous 14.1 Binding Effect. This Agreement shall be binding upon and inure to the benefit of District, Developer and Guarantors and their permitted successors and assigns. 14.2 Duration of this Agreement. Unless sooner terminated, this Agreement shall terminate in its entirety upon Final Completion; provided that the rights and obligations set forth in Sections 7.4.7, 7.17, 11.2, 11.3 and 13.2 shall survive (for the period, if any, therein set forth). 14.3 [Intentionally Deleted]. 14.4 Approvals by District. Where this Agreement provides for Districts approval of or consent to any matter, unless otherwise expressly indicated: (i) such approval or consent must be in writing in order to be effective and binding upon District, (ii) such approval or consent shall not be unreasonably withheld and (iii) any disapproval must be in writing and must specify in reasonable detail the reason for such disapproval.
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District shall have thirty (30) calendar days from its receipt of a written request by Developer (accompanied by all information reasonably necessary to consider such request) to respond to all requests for approvals or consents (including, but not limited to approvals for design documents under Section 7.4.2 of this Agreement) or such consent or approval shall be deemed approved so long as the notice clearly states that such approval or consent shall be so deemed approved if no response is provided within such thirty (30) day period, and Developer and District shall work cooperatively and in .good faith to reach agreement prior to the expiration of the thirty (30) day period. If, however, failure to reach agreement on such submission within such thirty (30) day period will, in Developers reasonable judgment, jeopardize achievement of a Milestone Event by the applicable Target Date or Outside Date, Developer, in the notice requesting such approval or consent, may specify a date fifteen (15) calendar days from the date of such notice by which the District shall respond. If District does not approve the relevant submission within such fifteen (15) day period, Developer and District shall work cooperatively and in good faith to reach agreement prior to the expiration of the thirty (30) day period. Districts failure to agree to any submission or to approve any request for approval or consent shall not be deemed a District Delay so long as (i) District specifies in reasonable detail in writing the reason for such disapproval or disagreement, and (ii) if Districts consent is not to be unreasonably withheld in accordance with this Agreement, such approval or consent is not unreasonably withheld. Where this Agreement provides for Developer to satisfy an obligation or take an action by a specific date, District reserves the right, in its sole discretion, to extend such date. Where this Agreement provides that any party shall not unreasonably withhold its approval of or consent to any matter, such party shall not unreasonably condition its approval of or consent to such matter. 14.5 No Public Subsidies. Developer acknowledges and agrees that except for the transfer of the Leased Parcels and For Sale Residential Parcels as contemplated by this Agreement, no subsidy or incentive will be required by Developer from District in connection with its development of the Site pursuant to the Master Plan (including performance of all obligations of Developer under this Agreement) and construction of the Improvements. Nothing set forth in this Section 14.5 shall be deemed to prohibit or restrict Developer from (i) applying for tax exempt financing in accordance with the usual rules and procedures of District or (ii) applying for or receiving any subsidy or incentive that is generally available to be applied for as a matter-of-right for the Site and other properties in the District of Columbia that are similarly situated. 14.6 [Intentionally Deleted]. 14.7 Waiver of Jury Trial; Jurisdiction. District and Developer each hereby waives any right to jury trial in connection with any suit, action, proceeding or claim relating to this Agreement or to the transactions contemplated by this Agreement. Any suit, action, proceeding or claim relating to this Agreement or the transactions contemplated by this Agreement shall be brought exclusively in the United States District Court for the District of Columbia or the Superior Court for the District of Columbia, and District and Developer agree that such courts are the most convenient forum for

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resolution of any such action and further agree to submit to the jurisdiction of such courts and waive any right to object to venue in such courts. 14.8 Notices. Notices and other communications required or permitted under this Agreement shall be in writing and delivered by hand against receipt or sent by recognized overnight delivery service, by certified or registered mail, postage prepaid, with return receipt requested or by telecopy. All notices shall be addressed as follov~s: If to District: Deputy Mayor for Planning and Economic Development 1350 Pennsylvania Avenue, N.W. Washington, D.C. 20005 Attention: Deputy Mayor for Planning & Economic Development Telecopy: 202/727-6703 Office of the Attorney General for the District of Columbia 441 Fourth Street, N.W., Sixth Floor North Washington, D.C. 20001 Attention: Deputy of Commercial Division Telecopy: 202/727-6014 c/o Hines Interests Limited Partnership 555 13th Street, N.W. Suite 1020 East Washington, D.C. 20004 Attention: William B. Alsup, III Telecopy: 202/347-2802 e/o Archstone-Smith Operating Trust 2345 Crystal Drive, Suite 1100 Arlington, VA 22202 Attention Alfied G. Neely Telecopy: (703) 892-4031 Archstone-Smith Operating Trust 9200 East Panorama Circle Suite 400 Englewood, CO 80112 Attention: General Counsel Telecopy: (303) 858-3092 Baker Botts L.L.P. One Shell Plaza, 910 Louisiana Houston, TX 77002 Attention: Marley Lott Telecopy: 713/229-1522

with a copy to:

If to Developer:

with a copy to:

with a copy to:

with a copy to:

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with a copy to:

Friedlander, Misler, Sloan, Kletzkin and Ochsman, PLLC 1101 17th Street, NW Suite 700 ~ Washington, DC 20036 Attention: David Astrove Telecopy: 202/857-8343

or to such other addresses as may be designated by proper notice. Notices shall be deemed to be effective upon receipt (or refusal thereof) if personally delivered, sent by recognized overnight delivery service, or sent by certified or registered mail, postage prepaid, with return receipt requested, or upon electronically verified transmission, if such delivery is by telecopy. 14.9 Force Majeure. Developer and District shall be delayed from performing any obligation under this Agreement (i) only to the extent that the performance is actually prevented or delayed, retarded or hindered by a Force Majeure Event, and (ii) the party seeking to claim a Force Majeure Event promptly notifies the other of the existence of such Force Majeure Event. Notwithstanding the foregoing, except as otherwise expressly set forth in this Agreement, the occurrence of a Force Majeure Event shall not excuse (a) Developer from any obligation to pay any amount required under this Agreement on the date such payment is otherwise required under this Agreement (taking into account all of the terms of this Agreement, including those providing that certain events (for example, the Escrow Release Date) may be delayed as a result of Force Majeure with the effect that the date on which an amount is required to be paid may be similarly delayed), or (b) the requirement to achieve each Milestone Event by the applicable Outside Date (except as otherwise expressly set forth in the chart set forth in Section 7.1, and then subject to the limitations expressed therein). Notwithstanding the foregoing, in the case of any delay in obtaining Permits being a Force Majeure Event, Developer must have filed complete applications for such Permits by the Outside Dates (subject to Force Majeure and the other delays described in this Section 14.9), and hired an expediter to monitor and expedite the Permit process. Developer must have taken commercially reasonable actions to minimize the delay caused by any Force Majeure Event. It shall be the responsibility of claiming a Force Majeure Event to reasonably demonstrate that the delay was caused specifically by a delay of a critical path item of such obligation. 14.10 Time of Essence. Time is of the essence with respect to the performance by District and Developer of their respective obligations under this Agreement. 14.11 Amendments. This Agreement may be amended or modified only in a writing executed by Developer and the Mayor or his designee. The Mayor shall have the authority to approve on behalf of District such amendments or modifications as the Mayor shall determine to be in the best interests of District, except as pertains to the B Parcel(s).

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14.12 Generally Applicable District Law. Developer acknowledges that (i) nothing set forth in this Agreement exempts the Project from generally applicable laws and regulations in effect from time to time in the District of Columbia, and (ii) execution of this Agreement by District is not binding upon, and does not affect the jurisdiction of or the exercise of police power by, independent agencies of the District of Columbia, including without limitation the Zoning Commission and Board of Zoning Adjustment. 14.13 No Third Party Beneficiaries. There are no third party beneficiaries to this Agreement, intended or otherwise. Other than the parties to this Agreement and their permitted assignees, no Person shall have any right, remedy or claim under or as a result of this Agreement. 14.14 Waivers. No provision of this Agreement may be waived except by written waiver executed by whichever of District or Developer has the fight to enforce such provision. The Mayor shall have the authority to waive on behalf of District any provision of this Agreement where the Mayor shall determine such waiver to be in the best interests of District. 14.15 Agents and Representatives. No Person other than the parties to this Agreement, and the permitted assignees of such parties, shall have any liability or obligation under this Agreement. Without limiting the generality of the foregoing, (i) Developer and Guarantors agree that no employee, official, consultant, contractor, agent or attorney engaged by District in connection with this Agreement or the transactions contemplated by this Agreement shall have any liability or obligation to Developer or Guarantors under this Agreement, and (ii) District agrees that no consultant, contractor, agent or attorney engaged by Developer or Guarantors in connection with this Agreement or the transactions contemplated by this Agreement shall have any liability or obligation to District under this Agreement. 14.16 Further Assurances. Each of the parties to this Agreement shall execute such further assurances as any other party may reasonably require to confirm and perfect the transaction described in this Agreement. 14.17 Exclusivity. District agrees that during the Exclusivity Period, District shall negotiate exclusively with Developer with respect to (i) the preparation of the Master Plan for the Site in accordance with this Agreement, (ii) the disposition of the Site, and (iii) the development and construction of all Improvements. 14.18 Exclusivity Period. The "Exclusivity Period" shall commence on the date of execution of this Agreement by District, and shall terminate on the earliest to occur of any of the following events: 14.18.1 Notice from District to Developer that it is terminating this Agreement at any time after an Event of Default has occurred and is continuing with respect to which District has given any notice expressly required under this Agreement and Developer has failed to cure such Event of Default before the expiration of any cure period expressly provided for in this Agreement;
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!4.18.2 Notice from District to Developer that it is terminating this Agreement after the failure to achieve any Milestone Event (other than No. 7 but subject to extension only as referenced in the description of No. 7 il~ Section 7.1 alone) by the Outside Date required under this Agreement, provided such Milestone Event has not been achieved prior to the giving of such notice; 14.18.3 Consummation of Closing; and 14.18.4 Upon the occurrence of such other events as may be specifically provided for in this Agreement. 14.19 Statement of Stockholders, Managers, Members or Partners. Developer shall, at such time or times as District may request, furnish District with a complete statement, certified by the president or other executive officer, manager, managing member or general partner of Developer, to the best of its knowledge, setting forth all of the stockholders, managers, Members or partners through the tiers set forth in Schedule 26. Such lists shall in any event have been furnished to District immediately prior to the execution of this Agreement as a condition precedent thereto, and annually thereafter upon the request of District. 14.20 Separate Books and Accounts. Developer and the Developer Parties shall keep books and accounts of its respective operations and transactions relating to the Site and Improvements separate and distinct from any other property or business enterprise owned or operated by any other Developer Party or any other Person. 14.21 Conflict of Interests; District Representatives Not Individually Liable. No director, member, official, or employee of District (or Developer) shall be personally liable to Developer or any successor (or District of any successor). 14.22 Provisions Not Merged With Deed. None of the provisions of this Agreement are intended to or shall be merged by reason of the For Sale Deed transferring title to the For Sale Residential Parcel from District to Developer or any other Developer Party, and except as otherwise expressly provided in this Agreement, the For Sale Deed shall not be deemed to have extinguished such provisions nor to have otherwise affected or impaired the provisions and covenants of the Agreement. 14.23 Titles of Articles and Sections. Titles and captions of the several parts, articles and sections of this Agreement are inserted for convenient reference only and shall be disregarded in construing or interpreting Agreement provisions. 14.24 Singular and Plural Usage, Gender. Whenever the sense of this Agreement so requires, the use in this Agreement of the singular number shall be deemed to include the plural; the masculine gender shall be deemed to include the feminine or neuter gender; and the neuter gender shall be deemed to include the masculine or feminine gender. 14.25 Entire Agreement. This Agreement constitutes the entire agreement and understanding between the parties hereto and supersedes all prior agreements and
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understandings related to the subject matter of this Agreement (including the Exclusive Rights Agreement). All Exhibits are incorporated in this Agreement by reference, whether or not so stated. In the event of any conflict between the Exhibits and this Agreement, the Exhibits shall control. 14.26 Counterparts. This Agreement may be executed in several original or telefaxed counterparts, which shall be treated as originals for all purposes, and all so executed shall constitute one agreement, binding on all of the parties hereto, notwithstanding that all the parties may not be signatories to the original or the same counterpart. Any such original or telefaxed counterpart shall be admissible into evidence as an original of this Agreement against the Person which executed it; provided, however, that a full and complete set of any such original or telefaxed signature pages or copies thereof evidencing the intended execution of this Agreement by all parties must be produced if this Agreement is to be considered binding upon all parties. 14.27 Time of Performance. All dates for performance (including cure) shall expire at 5:00 p.m. (Eastern time) on the performance or cure date. If the final date of any period which is set out in any provision of this Agreement falls on a Saturday, Sunday or legal holiday under the laws of the United States, or the laws of the District of Columbia, or on a day when courts, banks, the New York Stock Exchange or District or federal government offices are generally closed in the Washington metropolitan area because of executive order, inclement weather, acts of terrorism or widespread power or other utility outages that cause District or Developer, as the case may be, to be unable to perform hereunder, such period shall be extended to the next day that is not a Saturday, Sunday or legal holiday or subject to the foregoing events. 14.28 Attorneys Fees. In the event that either party brings a legal action to enforce rights under this Agreement, the prevailing party in any such proceeding will be entitled to recover its reasonable attorneys fees and costs of the proceeding, subject to Section 3.6. 14.29 Rights and Remedies Cumulative. Except as otherwise expressly provided in Section 13.2.1, the rights and remedies of District under this Agreement, whether provided by law, in equity, or by this Agreement, shall be cumulative, and the exercise by District of any one or more of such remedies shall not preclude the exercise of any other remedies for the same such default or breach. 14.30 Release. As additional consideration for Districts entry into this Agreement, Developer does hereby release and forever discharge District and its respective agents, servants, employees, directors, officers, attorneys, parents, Affiliates, subsidiaries, successors and assigns and all persons, firms, corporations, and organizations, if any, acting on their behalf (collectively, the "District Released Parties"), of and from all damage, loss, claims, demands, liabilities, obligations, actions and causes of action whatsoever which Developer may now have or claim to have against the District Released Parties as of the effective date of this Agreement, whether presently known or unknown, of every nature and extent whatsoever on account of or in any way touching, relating to, concerning, arising out of or founded upon Districts treatment of
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Districts responses to Districts Request for Proposal, the ERA, the Site, any documents executed in connection therewith (other than this Agreement) or any hearings held, notices given, or decisions made in connection therewith, of any kind heretofore sustained, or that may arise as a consequence of the dealings between the parties up to and including the effective date of this Agreement except as expressly provided herein to the contrary. The agreement and covenant on the part of Developer under this Section 14.30 is contractual and not a mere recital, and the parties to this Agreement acknowledge and agree that no liability whatsoever is admitted on the part of any party. 14.31 Estoppels. The parties hereto shall, from time to time, within fifteen (15) Business Days of request in writing of any other party, without additional consideration, execute and deliver (x) an estoppel certificate consisting of statements, if true (and if not true, setting forth the true state of facts as the party delivering the estoppel certificate views them), that (i) this Agreement is in full force and effect; (ii) this Agreement has not been modified or amended (or if it has, a list of the amendments); (iii) the party requesting the estoppel certificate is not then in default; (iv) the parties have fully performed all of their respective obligations thereunder; and (v) such other statements as reasonably may be required by any party or any other appropriate party such as their respective partners, Institutional Investors and Institutional Lenders (and prospective partners, Institutional Investors and Institutional Lenders). [signatures on following page]

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IN WITNESS WHEREOF, District and Developer have executed this Agreement as of the date first written above. District: DISTRICT OF COLUMBIA

Name: Neil O. Albert Title: Deputy Mayor

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IN WITNESS WHEREOF, District and Developer have executed this Agreement as of the date first written above. District:
DISTRICT OF COLUMBIA

By: Title:

Developer: OCC MASTER DEVELOPER, LLC By: Archstone-Smith Operating Trust, a Maryland real estate investment trust

Title:

By:

Hines OCC MD Associates Limited Partnership By: Hines Interests Limited Partnership, a Delaware limited partnership By: Hines Holdings, Inc.

Title:

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JOINDER OF GUARANTORS For the purpose of evidencing their consent and agreement to be bound to the provisions in this Agreement applicable to the Guarantors, Hines Real Estate Holdings Limited Partnership, a Texas limited partnership ("Hines Guarantor"), and ArchstoneSmith Operating Trust, a Maryland real estate investment trust ("Smith Guarantor," and collectively with Hines Guarantor, the "Guarantors") hereby execute this Joinder of Guarantors on and as of the date of the Agreement. Guarantors:

HINES REAL ESTATE HOLDINGS LIMITED PARTNERSHIP

By: JCH Investments, Inc., its sole general partner

Title: Date:

ARCHSTONE-SMITH OPERATING TRUST

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Schedule 1 Key Personnel and Professionals

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DRAFT I21~,0t07 SCHEDULE I DEVELOPER KEY PERSONNEL PARTICIPATION Hines/Archstone-Smith Former Convention Center Site Senior Respective Role & Individual Area of Responsibility Gerald Hines. Chrmn. Vision and strategic direction: Making sure that retail and public spaces have center stage in the development of an identity for the Project Master Plan Aachitecture and Design Retail Program Public Space Professional Associates Bill Aisup. SVP Managing Principal. with overall Project responsibility: Negotiation of Documents viith District Professional Associates Selection and Contract Negotiation Partnership Documentation Retail Program LSDBE Program Community Outreach Public Space Programming For Sale Housing Development Retail Development Rental Development Office Development Parking and Infrastructure Anticipated Minimum Time Commitment Strategic Advice and Counseling, as Needed Availability for Specified Meetings

Com_~ Hines

.,

Design Phases: 50% t]a, Advice and Counseling, as Needed

Weekly Project Meetings District Meetings Design Coordination Meetings Use Team Meetings Common Areas Meetings Sub-grade Meetings Hines Peer Review Meetings Advisor)" Group Meetings Public Presentations

Page

Senior individual Ken Hubbard, EVP

Respective Role & Area of Responsibili~ Overall Project responsibility for Hines Integration of Uses Retail Program Professional Associates Selection Negotiation of Documents with District Partnership Documentation Economic Viability of Each Land Use Sustainable Design Project Officer, with detailed day-to-day Project responsibilities: Negotiation of Documents ,nith District Professional Associates Selection and Contract Negotiation Partnership Documentation Integration of Uses Retail Program LSDBE Program Community Outreach Public Space Programming For Sale Housing Development Retail Development Office Development parking and Infrastructure

Anticipated Minimum Time Commitment Advice and Participation, as Required

Availability for Specified MeetingA Full Team Design Review Meetings Hines Peer Review Meetings

Howard Riker, VP

75%, or More as Required

Weekly Project Meetings District Meetings Design Coordination Meetings Use Team Meetings Common Areas Meetings Sub-grade Meetings Hines Peer Review Meetings Advisory Group Meetings Public Presentations

Com~

Senior lndividu___~ Mike Greene, V?

Respective Role & Area of Responsibility Direct Involvement, with special emphasis on Design and Construction: Architectural/Engineering Contracts lmegration of Uses Retail Program Plans and Specifications Contract Bid & Award Construction Management LSDBE Program For Sale Housing Development Retail Development Office Development Pa~king and hff~astmctu~e Sustainable Design

Anticipated Minimum Time Commitment 75%, or More as Required

Availability Specified Meetings Weekly Project Meetings District Meetings Design Coordination Meetings Use Team Meetings Common Areas Meetings Sub-grade Meetings Hines Peer Review Meetings Advisory Group Meetings Public Presentations

Page 3

 Company Senior Individual Respective Role & Area of Responsibi|irv Direct Involvement, with emphasis on Design and Construction: ArchitecturallEngineering Contracts Integration of Uses Plans and Specifications Contract Bid & Award Mixed-Use Best Practices U.S. Mixed-Use Experience Sustainable Desig~ Direct Invo|0ement, with emphasis on MEP Design and Construction: Architectural/Engineering Contracts Integration of Uses Plans and Specifications Contract Bid & Award Mixed-Use Best Practices U.S. Mixed-Use Experience Sustainable Design

Anticipated Minimum Time Commitment

Availability for Specified MeetinR;s Design Coordination Meetings

David Wick, VP

Design Phases: 2x Per Month Advice and Counsel, as Required

Thomas Bay, VP

Design Phases: 2x Per Month Advice and Counsel, as Reqaired

Design Coordination Meetings

Page 4

 Com.p_~_~ Senior Individual David Robinson, VP Respective Role & Area of Re~ponsibilit3, Direct Involvement, with emphasis on Electrical Design and Construction: Architectural/Engineering Contracts Integration of Uses Plans and Specifications Contract Bid & Award Mixed-Use Best Practices U.S. Mixed-Use Experience Sustainable Design

Anticipated Minimum Time Commitment Design Phases: 2x Per Month Advice and Counsel, as Required

Availabili& for Specified Meetings Design Coordination Meetings

Archstone-Smith

AI Neely, EVP and Chief Development Officer

Managing Principal, with overall Project responsibility: Negotiation of Documents with District Professiona! Associates Selection and Conuact Negotiation Partnership Documentation Integration of Uses Retail Program LSDBE Program Community Outreach Public Space Programming For Sale Housing Development Retail Development Rental Housing Development Office Development Parking and infrastructure

Advice and Participation, Full Team Design As Required Review Meetings

Page 5

Senmr Individual Ken Miller, SVP

Respective Role & Area of Responsibili~ Direcl Involvement: Integration of Uses Retail Program Rental Housing Development Professional Associates Selection Negotiation of DocumentS with District Partnership Documentation Economic Viability of Each Land Use

Anticipated Minhnum Time Commitment Design Phases: 20% Advice and Participation, as Required

Availability. for Specified Meetings Design Coordination Meetings Full Team Review Meetings

Daryl South, VP

Direct Involvement: integration of Uses Retail Program Public Space Programming Rental Housing Development For Sale Housing Development Retail Development Parking and InfrasVmcture Project Officer, with detailed day-to-day Project responsibility: Negotiation of Documents with District Professional Associates Selection and Contract Negotiation Partnership Documentation Integration of Uses Retail Program LSDBE Program Community Out~each Public Space Programming Rental Housing Development For Sale Housing Development Retail Development Parking and Infrastructure

Design Phases: 20% Advice and Participation, as Required

Weekly Project Meetings Design Coordination Meetings Use Team Meetings Common Areas Meetings Public Presentations

Rafael Muniz, VP

75% or More, as Required

Weekly Project Meetings District Meetings Design Coordination Meetings Use Team Meetings Common Areas Meetings Sub-grade Meetings Hines Peer Review Meetings Advisory Group Meetings Public Presentations

Page 6

 Com~

Senior Individual Herb Lawhom, VP

Respective Role & Area of Responsibility Direct Involvement, with special emphasis on Design and Construction; Architectural/Engineering Contracts Integration of Uses Retail Program Plans and Specifications Contract Bid & Award Construction Management LSDBE Program Retail Development Residential Rental Development Parking and Infrastructure Sustainable Design Direct Involvement, with special emphasis on Design and Construction: Architectural/Engineering Contracts Integration of Uses Retail Program Plans and Specifications Contract Bid & Award Conslruction Management LSDBE Program Retail Development Residential Rental Development Parking and Infrastructure Sustainable Design

Minimum Time Commitment 25%, or More as Required

Availability for Specified MeetinG Weekly Project Meetings District Meetings Design Coordination Meetings Use Team Meetings Common Areas Meeting5 Sub-grade Meetings Hines Peer Review Meetings Advisory Group Meetings Public Presentations

Paul Nazelrod, VP

75%, or More as Required

Weekly Project Meetings District Meetings Design Coordination Meetings Use Team Meetings Common Areas Meetings Sub-grade Meetings Hines Peer Review Meetings Advisory Group Meetings Public Presentations

P~e7

Schedule 2

Ownership Percentages

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2-1

12/10/2007 SCHEDULE 2

OWNERSHIP PERCENTAGES Hines/Archstone-S mith Old Convention Center Site Redevelopment

Land Use Residential Rental (Leasehold)

Member Hines Entity A-S Entity LSDBEPartner Hines Entity A-S Entity LSDgEPartner Hines Entity A-S Entity LSDBE Partner Hines Entity A-S Entity LSDBE Partner

% Ownership (I) 38.75% GP 38.75% MGP 22,50% LP (2) 1 O0.0O% 38,75% MGP 38.75% LP 22.50% LP (2) I oo,oo% 38.75% MGP 38.75% MGP 22.50% LP (2) 100.00% 38.75% MGP 38.75% GP 22,50% LP (2) 100.00%
38.75% 38.75% 22.50% 100.O0%

Residential For Sale (Fee)

Retail (Leasehold)

Office (Leasehold}

All Buildings Combined

Hines Entily A-S Entity LSDBE Partner

Notes: (I) Developer partner ownership percentages are estimates and therefore subject Io change; however, Hines and Archstone-Smith always will have equal ownership percentages. (2) LSDBE Partner tbr residential rental, residential for-sale, retail,and office uses anticipated to include: Neighborhood Development Company (4.4%), Bundy Development Corporation (4.4%), The Jarvis Company (4.4%), A-I Construction and Consulting (4.4%), and Triden Development Corporation (2,4%). LSDBE Partner Equity in the aggregate will not be less than 20.0%. Mayhood entity also anticipated to be a limited partner (2.5%),

Schedule 3 Master Plan The Final Master Plan consists of the following: (i) (ii) (iii) (iv) Correspondence, dated 10/06/06, to Konrad Schlater from William B. Alsup, III Final Master Plan Submission, dated 10/04/06; Master Plan Design Guidelines, dated 09/18/06; and Financial Analyses, dated 09/22/06.

Items (iii) and (iv) are referenced in Item (ii) as exhibits.

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4-1

Schedule 4 Description of B Parcels ~

A shown as "B Parcel, Lot 111,460 SF" in the zoning diagram on page 92 of the Design Guidelines of the Master Plan

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4-1

Schedule 5 Arbitration Procedure The following outline shall govern any arbitration irfitiated pursuant to Section 5.2.2: of the Development Agreement: 1. Either Developer or District may commence arbitration by written notice ("Arbitration Notice") to the other specifically identifying the issue or issues under Section 5.2.2 of the Development Agreement (each, an "Issue") to be determined by arbitration pursuant to the Development Agreement, which notice shall be delivered pursuant to the terms of the Development Agreement. 2. Within three (3) Business Days following the Arbitration Notice, Developer and District shall meet to appoint the arbitrator ("Arbitrator") at the offices of the DMPED. Any proposed, potential or actual Arbitrator must be an individual (i) who has experience in valuation of major real estate development projects in downtown Washington, D.C. and (ii) who is not, and during the five years preceding the date of the Arbitration Notice has not, been an employee of either Developer, any Developer Party or District (or any of their respective Affiliates) or engaged by Developer, any Developer Party or District (or any of their respective Affiliates) in any capacity. 3. Developer and District shall each bring to such meeting a list of five (5) Arbitrators that it proposes be appointed. At such meeting, such lists shall be exchanged and if there is one or more Arbitrators that is on both lists, District at such meeting shall select the Arbitrator from among the commonly listed Arbitrators. If no Arbitrator is on both lists, Developer and District within six (6) Business Days thereafter, meeting at the offices of the DMPED, shall each prepare a new list of five (5) Arbitrators, at least two (2) of whom shall not have originally been proposed on the proponents original list (though they may have been proposed on the original list of the other party). District, at such meeting, shall select the Arbitrator from among the commonly listed arbitrators. If still no Arbitrator is on both lists, then District at the meeting shall select an Arbitrator from either of Developers lists. Any Arbitrator selected by District under this paragraph 3 shall be the Arbitrator for the purposes of this Schedule 5 and Section 5.2.2 of the Development Agreement. 4. The Arbitrator shall impose such procedure as the Arbitrator determines to be necessary or appropriate to resolve each Issue, provided that all information, materials, and testimony provided by either Developer or District to the Arbitrator shall be provided to the other. At the conclusion of such procedure, but in no event later than the date that is twenty (20) Business Days after selection of the Arbitrator, Developer and District shall each submit to the Arbitrator in a sealed writing its proposed resolution of each Issue. Within fifteen days after the Arbitrators receipt of such proposed resolution, the Arbitrator shall select, for each Issue, one of the proposed resolutions so submitted. 5. The fees and expenses of the Arbitrator shall be paid by Developer and shall not constitute either a Site Cost or Developer Cost, but Developer shall have the right to
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offset 50% of the fees and expenses so paid against the next Base Rent otherwise due and payable under the Ground Lease.

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Schedule 6 Intentionally Deleted

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6-1

Schedule 7 Intentionally Deleted

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7-1

Schedule 8 Intentionally Deleted

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Schedule 9 Form of Amended and Restated Development Guaranty

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9-1

EXECUTION COPY AMENDED AND RESTATED DEVELOPMENT GUARANTY This AMENDED AND RESTATED DEVELOPMENT GUARANTY (this "Guaranty") is made as of December l ~ 2 O O 7 ~ by HINES REAL ESTATE HOLDINGS LIMITED PARTNERSHIP, a Texas limited partnership, whose principal address is Williams Tower, 2800 Post Oak Boulevard, Houston, Texas 77056-6118 ("Hines Guarantor"), and ARCHSTONE-SMITH OPERATING TRUST, a Maryland real estate investment trust, whose principal address is 9200 East Panorama Circle, Suite 400, Englewood, Colorado 80112 ("Archstone Guarantor" together with Hines Guarantor, collectively, jointly and severally, "Guarantors" and each a "Guarantor") in favor of the DISTRICT OF COLUMBIA, a municipal corporation (the "District"). RECITALS A. Hines Interests Limited Partnership, a Delaware limited partnership ("Hines") and Archstone Guarantor (Archstone Guarantor together with Hines, collectively, the "Origina! Developer") entered into that certain Exclusive Rights Agreement and Land Disposition Agreement with District on May 12, 2005 (the "ERA"). B. In accordance with the ERA, District and OCC Master Developer, LLC, successor in interest by assignment to Original Developer (Developer"), entered into that certain Deve!opment Agreement and Land Disposition Agreement, dated December 15, 2006 (together with all Exhibits and Schedules thereto, as amended by the Amended and Restated Development dated as of December __, 2007, the "Development Agreement") whereby Developer agreed, among other things, to cause the Improvements to be designed and completed in accordance with the Development Agreement and the Master Plan. C. To induce District to enter into the ERA and the Development Agreement, Guarantors agreed to guaranty all obligations of Developer under the Development Agreement and such other obligations as more particularly set forth in the Development Guaranty dated December 15, 2006 by the Hines Guarantor and the Archstone Guarantor in favor of the District (the "Original Guaranty"). D. Pursuant to their agreements in the ERA and the Development Agreement, Guarantors executed and delivered the Original Guaranty in favor of District. E. Each Guarantor has a substantial direct or indirect economic and ownership interest in Developer, as set forth in Exhibit A attached hereto (the "Schedule of Ownership Interests"), and will derive substantial benefit from District entering into or approving, as the case may be, the agreements, contracts and transactions described above. F. The parties wish to amend and restate the Original Guaranty in its entirety as set forth in this Guaranty (which will supersede the Original Guaranty). NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration the sufficiency of which the
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parties acknowledge, the parties agree to amend and restate the Original Guaranty in its entirety as follows: 1. Incorporation of Recitals. The foregoing Recitals ar~ incorporated in this Guaranty and made a part hereof by this reference to the same extent as if set forth herein in full. 2. Representations, Warranties and Covenants of Guarantors.

2.1 Hines Guarantor and Archstone Guarantor each hereby represents and warrants to District that it owns, directly or indirectly, the membership interests in Developer as set forth in the Schedule of Ownership interests. 2.2 that: (a) the making and performance of this Guaranty by such Guarantor will not result in any breach of any term, condition or provision of, or constitute a default under, any contract, agreement or other instrument to which such Guarantor is or was a party or by which it is bound, or result in a breach of any regulation, order, writ, injunction or decree of any court or any commission, board or other administrative agency entered in any proceeding to which such Guarantor is or was a party or by which it is bound; (b) the Financial Statements and other financial information presented to District by such Guarantor in connection with the transaction contemplated by the Development Agreement were true, accurate, and complete in all material respects as of the date of such presentation to District; (c) neither District nor any other Person has made any representation, warranty or statement to Guarantor in order to induce Guarantor to execute this Guaranty; (d) Guarantor is duly formed, validly existing and in good standing in State of its formation (and, in the event that Guarantor is performing any of the Guaranteed Obligations, Guarantor will promptly become qualified to do business in the District of Columbia to the extent required); (e) Guarantor has duly authorized and executed this Guaranty; (f) this Guaranty is a legal and binding obligation of each Guarantor and is enforceable in accordance with its terms, except as limited by bankruptcy, insolvency or other similar laws of general application relating to the enforcement of creditors rights; (g) no consent, approval, authorization or order of any court or Governmental Authority or other Person is required for the execution, delivery and performance by Guarantor of, or compliance by Guarantor with, this Guaranty or the consummation of the transactions contemplated hereby, other than those which have been obtained by Guarantor; (h) there is no action, suit, proceeding or investigation pending or, to each Guarantors knowledge, threatened against Guarantor in any court or by or before any other Governmental Authority, or labor controversy affecting Guarantor or any of its properties, businesses, assets or Solely with respect to itself, each Guarantor warrants and represents to District

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revenues, which would reasonably be expected to (x) materially and adversely affect the ability of Guarantor to carry out the transactions contemplated by this Guaranty, (y) materially and adversely affect the value of its assets, or (z) impair Guarantors ability to. pay its obligations in.a timely manner; and (i) Guarantor has filed (or has obtained effective extensions for filing) all federal, state and local tax returns required to be filed and has paid or made adequate provision for the payment of all federal, state and local taxes, charges and assessments payable by such Guarantor. 2.3 Guarantors hereby covenant that (a) there will be no material adverse changes to the financial condition of either Guarantor set forth in the Financial Statements at any time prior to the Escrow Release Date and (b) no Guarantor shall transfer any assets with intent to delay, hinder or defraud District in connection with Districts pursuit of its fights under this Guaranty for the term hereof. 3. Guaranteed Obligations.

3.1 Each Guarantor hereby absolutely, irrevocably and unconditionally, and jointly and severally, guarantees to District (a) the full and complete performance, prior to the expiration of all applicable cure periods, of any and all of Developers agreements, obligations and covenants as set forth in the Development Agreement, including without limitation, the payment of all amounts required of Developer and performance of all obligations of Developer set forth therein, including, without limitation, the satisfaction of all indemnification obligations of Developer under the Development Agreement for the benefit of District and the payment of any Liquidated Damages; and (b) the truth, accuracy and completeness of all of Developers, representations and warranties as set forth in the Development Agreement. The obligations of Guarantor set forth in this Section 3.1 shall be collectively referred to in this Guaranty as the "Guaranteed Obligations". 3.2 It is hereby expressly understood and agreed that except as subsequently approved in a written agreement executed by District, all payment and performance obligations of Guarantors shall run concurrently with the Developers payment and performance obligations under the Development Agreement, with no additional rights to cure or to perform Developers obligations. Notwithstanding anything in the Guaranty to the contrary, the cure by a Guarantor of any default under and within the time frames set forth in the Development Agreement shall operate as a cure of such default by Developer. 3.3 Notwithstanding anything in this Guaranty to the contrary, prior to the Escrow Release Date only, Guarantors monetary liability under this Guaranty shall not exceed the aggregate amount of (a) Liquidated Damages and (b) any loss, cost, liability and expense incurred by District arising out of or in connection with (i) the enforcement of this Guaranty (including, without limitation, reasonable attorneys fees), (ii) any liabilities or obligations of Developer that expressly survive termination of the Development Agreement, or (iii) any and all out-of pocket costs and expenses incurred by District in connection with the negotiation of and analyses regarding the Exclusive Rights Agreement, Development Agreement or the transactions described therein, including but not limited to reasonable attorneys fees, the costs of any

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consultants employed by District and any other third party costs (with such amount under this Section 3.3(iii) not to exceed $2,000,000.00). 4. No Right of Subrogation.

4.1 Guarantors hereby acknowledge that they will not be entitled to reimbursement or distribution from Developer or any Ground Lessee or any other Developer Party on account of any sums paid by them pursuant to this Guaranty. 4.2 Guarantors hereby acknowledge and agree that Guarantors shall not have any fight of subrogation by reason of payments or performance in compliance with the terms of this Guaranty, any such right being hereby expressly waived and relinquished. 4.3 For so long as the Guaranteed Obligations or any obligations under this Guaranty are not fully performed, each Guarantor waives and releases any claim (within the meaning of 11 U.S.C. 101) which such Guarantor may have against another Guarantor, Developer or any other Developer Party arising from a payment made by such Guarantor under this Guaranty and agrees not to assert or take advantage of any subrogation rights of such Guarantor or any right of such Guarantor to proceed against another Guarantor, Developer or any other Developer Party for reimbursement. 4.4 It is expressly understood that the waivers and agreements of Guarantors set forth in this Section 4 constitute additional and cumulative benefits given to District for its security and as an inducement for it to enter into the Development Agreement with Developer. 4.5 Notwithstanding the terms of this Section 4, (a) a Performing Guarantor shall have the limited contribution rights described in Section 9.2, subject to the terms and conditions contained therein, and (b) nothing in this Guaranty shall limit Guarantors right to recover sums from distributions otherwise payable to the owners of interests in Developer or Developer Parties. 5. Financial Statements.

5.1 At least sixty (60) days prior to (a) Closing and (b) the Escrow Release Date, each Guarantor shall deliver to District copies of updated unaudited or audited financial statements (certified by such Guarantor as being true, correct and complete, together with a certified statement that there has been no material adverse change in the financial condition of such Guarantor since the date of the previous financial statements delivered to District) and unaudited balance sheets, profit and loss statements, cashflows, other financial reports and other financial information of such Guarantor as District may reasonably request. 5.2 Within one hundred twenty (120) days following the end of each calendar year, each Guarantor shall provide District with audited financial statements and a statement of change, if any, in such Guarantors net worth.

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6.

No Discharge of Obligations.

6.1 Except in the event of a written amendment to this Quaranty signed by tl~e Guarantors and District, if applicable, and then only to the extent expressly provided therein, to the fullest extent permitted by law, none of the Guaranteed Obligations and no right against Guarantors shall be in any way discharged, impaired or otherwise affected by: a. The modification, amendment or waiver, by change order, directive or otherwise, or any extension of time for performance of, or other modification in or of the Development Agreement, the Ground Leases or any other Project Document. b. The release or waiver of or delay or forbearance in the enforcement of any right or remedy by District against Developer, any Guarantor, or any other Person under the Deve!opment Agreement, the Ground Leases or any other Project Document, including this Guaranty, or the compromise or settlement by any of the above parties of any amount or matter in dispute relating to any of the forgoing agreements. c. The exercise by District, any mortgage lender or any other party of any of their respective fights and remedies under any Project Documents, any mortgage loan documents, or any other agreement relating to the construction, Completion and/or Final Completion of the Improvements. d. The approval, disapproval, inspection, review or failure to inspect or review by District of the progress, status, or quality of construction or any costs, expenses, financing, contracts, or other matters relating thereto, in connection with the construction, Completion and/or Final Completion of the Improvements, or otherwise. e. The release or discharge of Developer, any Guarantor, or any other Person from any obligation in any receivership, bankruptcy, winding-up or other creditor proceeding. f. Any act or omission, whether negligent or otherwise, of District or its agents, employees, consultants or any other Person acting for the benefit of District. 6.2 It is expressly agreed by Guarantors that, to the fullest extent permitted by law, none of the events set forth in Section 6.1 shall release or discharge the obligations of Guarantors hereunder, whether or not such event may otherwise be deemed a legal or equitable discharge of a guarantor or surety. 6.3 Each Guarantor agrees that neither District nor any other party shall have any duty to disclose to such Guarantor any information they receive regarding the financial status of Hines, Archstone Guarantor, Developer, Original Developer, any Ground Lessee, any For Sale Residential Owner, or any General Contractor, subcontractor, materialman involved in the development or construction of the Improvements, or any information relating to the Site, whether such information indicates that the risk or obligations of Guarantor have or may increase. Each Guarantor assumes full responsibility for keeping informed of such matters.

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6.4 No change in the composition of District, Developer or any other Person shall in any way affect, impair or diminish the liability of Guarantors hereunder, and District shall have no obligation to inquire into the powers of any of them to perform the Guaranteed Obligations.. 6.5 This Guaranty is being delivered free of any conditions and no representations have been made to Guarantors affecting or limiting the liability of Guarantors hereunder. The obligations of Guarantors hereunder are independent of any obligations which Guarantors may have to District, directly or indirectly, under the Development Agreement, a Ground Lease, another Project Document or any other obligation whatsoever. 7. Nature of Guaranty.

7.1 This Guaranty is absolute, inevocable and continuing in nature and relates to any Guaranteed Obligations now existing or hereafter arising. This Guaranty is a guaranty of prompt and punctual payment and performance and is not a guaranty of collection. Each Guarantor shall be liable for the performance of the Guaranteed Obligations as a primary obligor. 7.2 The liability of Guarantors under this Guaranty is independent of the obligations of Original Developer and Developer or any other Person, and a separate action or separate actions may be brought or prosecuted against either or both of Guarantors whether or not any action is brought or prosecuted against the other Guarantor, Developer or any other Person, or whether the other Guarantor, Developer or any other Person is joined in any such action or actions. 7.3 The liability of each Guarantor hereunder is independent of, and not in consideration of or contingent upon the liability of any other Person under any similar instrument and the release of, or cancellation by, any signer of a similar instrument shall not act to release or otherwise affect the liability of either Guarantor unless such Guarantor is independently and specifically released in writing by District. 7.4 To the fullest extent permitted by law, this Guaranty shall be construed as a continuing, absolute and, subject to the provisions of Section 15 below, unconditional guaranty of payment and performance (and not of collection), without regard to: a. the legality, validity or enforceability of any of the Project Documents and of the obligations of Developer evidenced thereby; b. any defense, setoffor counterclaim that may at any time be available to Developer or any other Person against, and any right ofsetoffat any time held by, District; c. any other circumstances whatsoever (with or without notice to or knowledge of either Guarantor or any other guarantor), whether or not similar to any of the foregoing, that constitutes, or might be construed to constitute, an equitable or legal discharge of Developer or any other Person, in bankruptcy or in any other instance; or d. the exercise by District of any right or remedy or failure of District to exercise any right or remedy under the Completion/Lease Guaranty or any other Project Document.

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8.

Relationship to Other Agreements.

8.1 Nothing herein shall in any way modify or limit the effec~ of terms or conditions set forth in any other document, instrument or agreement executed by Guarantors in connection with the Guaranteed Obligations, but each and every term and condition hereof shall be in addition thereto. 8.2 In no event will either Guarantors liability hereunder be reduced as a result of any evidence that the cost to perform the Guaranteed Obligations exceeds the enhancement in value to the property resulting from performance of the Guaranteed Obligations. 9. Subordination of Indebtedness and Obligations.

9.1 Each Guarantor agrees that any fights of such Guarantor, whether now existing or later arising, to receive payment on account of any indebtedness (including interest) or other obligations or liabilities owed to such Guarantor by the other Guarantor, Developer, or any other Developer Party, as applicable, shall at all times be subordinate to the time of payment and in all other respects to the full and prior indefeasible performance of all obligations owed to District under the Project Documents. 9.2 Subject to and in accordance with Section 4.5 above, Guarantors shall not be entitled to enforce or receive payment of any sums hereby subordinated until all such obligations owed to District under this Guaranty have been paid and performed in full; provided, however, in the event that a Guarantor has satisfied or is satisfying a particular Guaranteed Obligation (a "Performing Guarantor"), the Performing Guarantor may (a) at any time accept contribution from the other Guarantor for payments due District under this Guaranty and (b) may pursue an action for contribution against the other Guarantor (the "Non-Performing Guarantor") (but not against any other Developer Party) for the Non-Performing Guarantors share of the particular Guaranteed Obligation so long as, with respect to the remedy set forth in Section 9.2(b_), (i) prior to the Escrow Release Date, following the payment in full of Liquidated Damages to District and thereat~er, all payments then currently payable, have been paid to District, and (ii) the Performing Guarantor has commenced and is diligently pursuing a cure of any Guaranteed Obligations that are of a continuing nature. The failure of any Non-Performing Guarantor to perform or satisfy the Guaranteed Obligations or any other obligations shall not be a defense to the obligations of the Performing Guarantor under this Guaranty. 10. Statute of Limitations and Other Laws. 10.1 Guarantors acknowledge that pursuant to D.C. Official Code 12-301, as same may be amended from time to time, District shall not be subject to any statute of limitations with respect to any claim against a Guarantor under this Guaranty. 10.2 Until the Guaranteed Obligations shall have been irrevocably paid and performed in full, each Guarantor expressly waives, to the fullest extent permitted by law, the benefit of any and all laws providing for exemption of property from execution or for valuation and appraisal upon foreclosure, and any and al! rights and benefits, if any, arising under the laws of the District of Columbia.
HOU03: I 126778.4::ODMAkPCDOCS\HOU03\I 126778VI

11. Rights and Remedies. 11.1 The occurrence of any of the following shall be a default under this Guaranty (each a "Default"): (a) any failure by Guarantors in the performance of the Guaranteed Obligations; (b) prior to the Escrow Release Date, (i) the dissolution or insolvency of any Guarantor; (ii) the inability of any Guarantor to pay its debts as they mature; (iii) an assignment by any Guarantor for the benefit of creditors; (iv) the institution of any proceeding by or against any Guarantor in bankruptcy or for a reorganization or an arrangement with creditors, or for the appointment of a receiver, trustee or custodian for such Guarantor or its properties; or (v) the determination by District in good faith that a material adverse change has occurred in the financial condition of any Guarantor, including without limitation, the entry of a significant judgment against any Guarantor, the issuance of a writ or order of attachment, levy or garnishment in any significant amount against any Guarantor; (c) the falsity in any material respect of, or any material omission in, any representation made to District by any Guarantor; or (d) any other breach or default by either Guarantor of any obligations owed to District under the terms hereof. 11.2 In the event of a Default, District shall have such rights and remedies available to it as permitted by law and in equity and may enforce this Guaranty independently of any other remedy or security District at any time may have or hold in connection with the Guaranteed Obligations, and it shall not be necessary for District to marshal assets in favor of Developer, any Guarantor or any other Person or to proceed upon or against and/or exhaust any security or remedy before proceeding to enforce this Guaranty. Additionally, each Guarantor agrees that upon any Default, District may, without the consent of or notice to Guarantor: (a) complete the performance of Developers obligations under the Development Agreement; (b) exercise its rights under the Development Agreement, including but not limited to under 13.2.2 and 13.2.4 thereof and/or (c) take or refrain from taking such other action to enforce the provisions of this Guaranty as it may from time to time determine in its sole discretion. 11.3 Each Guarantor absolutely, irrevocably and unconditionally, and jointly and severally, agrees to the fullest extent permitted by law, to indemnify, defend and hold harmless District from any and all loss, cost, liability and expense arising out of or in connection with (a) the guaranties set forth in Section 3.1, (b) a Default, and (c) the enforcement of this Guaranty by District (including, without limitation, reasonable attorneys fees). 11.4 Each Guarantor shall, immediately upon demand therefor, reimburse District for any and all expenditures incurred by District under this Section 11_, plus interest thereon at the rate of fifteen percent (15%) per annum until all sums are paid to District. 11.5 Upon the occurrence of any Event of Default under the Development Agreement or a Default hereunder, District may file a separate action or actions against one or more Guarantors, whether action is brought or prosecuted with respect to any security or against any other Person, or whether any other Person is joined in any such action or actions. Each Guarantor agrees that District and Developer or the other Person may deal with each other in connection with the Guaranteed Obligations or otherwise, or alter any contracts or agreements now or hereafter existing between them, in any manner whatsoever, all without in any way altering or affecting the security of this Guaranty.
HOU03:1126778.4::ODMA\PCDOCS\HOU03\1126778~4

11.6 Districts rights under this Guaranty shall be reinstated and revived, and the enforceability of this Guaranty shall continue, with respect to any amount at any time paid on account of the Guaranteed Obligations which thereafter shall be required to be restored or returned by District upon the bankruptcy, insolvency or reorganization of Developer, or any other Person, or for any other reason, all as though such amount had not been paid. 11.7 Subject to Section 15 below, the rights of District created or granted in this Guaranty and the enforceability of this Guaranty at all times shall remain effective even though the Guaranteed Obligations, including any part thereof or any other security or guaranty therefor, may be or hereafter may become invalid or, subject to Section 15 below, may be unenforceable as against Developer or the other Person, or in the event any Person shall have any personal liability with respect thereto. 12. Waiver. 12.1 Each Guarantor expressly waives, to the fullest extent permitted by law, any and all defenses now or hereafter arising or asserted by reason of: (a) any disability or other defense of Developer or any other Person with respect to the Guaranteed Obligations (other than indefeasible payment in full of the Guaranteed Obligations and full performance of the Guaranteed Obligations to the satisfaction of District), except as set forth in Section 15.; (b) the unenforceability or invalidity of any security or guaranty for the Guaranteed Obligations or the lack of perfection or continuing perfection or failure of priority of any security for the Guaranteed Obligations; (c) the cessation for any cause whatsoever of the liability, in whole or in part, of Developer or any other Person (other than by reason of the timely and full payment and performance of all Guaranteed Obligations), except as set forth in Section 15; (d) any failure of District to marsha! assets in favor of Developer or any other Person; (e) any failure of District to give notice of sale or other disposition of any collateral (now or hereafter securing the obligations of any Person) to Developer or any other Person, as applicable, or any defect in any notice that may be given in connection with any sale or disposition of collateral; (f) any failure of District to comply with applicable Governmental Requirements in connection with the sale or other disposition of any collateral or other security for any obligation owed to District, including any failure of District to conduct a commercially reasonable sale or other disposition of any collateral or other security for any obligation owed to District; (g) subject to Section 15 below, any act or omission of District, or others, that directly or indirectly results in or aids the discharge or release of Developer or any other Person, or the Guaranteed Obligations or any security or guaranty therefor by operation of law or otherwise (other than by reason of the timely and full payment and performance of all Guaranteed Obligations);
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(h) any applicable Governmental Requirement which provides that the obligation of a surety or guarantor must neither be larger in amount nor in other respects more burdensome than that of the principal or which reduces a suretys or guarantors obligation in proportion to the principal obligation, including, without limitation, all rights and benefits under the laws of the District of Columbia purporting to reduce a Guarantors obligation in proportion to the obligation of the principal; (i) any failure of District to file or enforce a claim in any bankruptcy or other proceeding with respect to any person; (j) the election by District in any bankruptcy proceeding of any person, of the application or non-application of Section 1111 (b)(2) of the United States Bankruptcy Code; (k) any agreement or stipulation with respect to the provision of adequate protection in any bankruptcy proceeding of any person; (I) the avoidance of any lien in favor of District for any reason; (m) any bankruptcy, insolvency, reorganization, arrangement, readjustment of debt, liquidation or dissolution proceeding commenced by or against any Person, including any discharge of, or bar or stay against collecting, all or any of the Guaranteed Obligations (or any interest thereon) in or as a result of any such proceedings; (n) all rights or defenses Guarantors may have by reason of protection afforded to the principal with respect to the Guaranteed Obligations or to any other guarantors obligations under its guaranty, in either case, pursuant to the antideficiency laws or other laws of the District of Columbia or other states limiting or discharging the principals obligations; (o) the right to require District to proceed under any other remedy District may have under any Project Document before proceeding against Guarantors; or (p) the act or omission, whether pursuant to contract, such as the exercise of a contractual remedy, or otherwise, of any mortgage lender or any other Person acting on behalf of such mortgage lender. 12.2 Each Guarantor expressly waives all setoffs and counterclaims and all presentments, demands for payment or performance, notices of nonpayment or nonperformance, protests, notices of protest, notices of dishonor and al! other notices or demands of any kind or nature whatsoever with respect to the Guaranteed Obligations, and all notices of acceptance of this Guaranty or of the existence, creation or incurring of new, or additional obligations by Developer for which Guarantor shall be automatically responsible and liable hereunder and waives all surety and guarantor defenses, all to the fullest extent permitted by law, and thus, such Guarantor acknowledges that it may essentially have no control over its ultimate responsibility for Developers obligations guaranteed hereunder. 13. Cumulative Rights.

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10

13.1 The exercise by District of any fight or remedy hereunder or under any other Project Document or the Development Agreement, or at law or in equity, shall not preclude the concurrent or subsequent exercise of any other right or remedy. Distrbzt shall have all fights, remedies and recourses afforded to District by reason of this Guaranty, the Development Agreement or any Project Document or by law or equity or otherwise, and the same (a) shall be cumulative and concurrent, (b) may be pursued separately, successively or concurrently against Guarantors or others obligated for the Guaranteed Obligations, or any part thereof, or against any one or more of them, at the sole and absolute discretion of District, (c) may be exercised as often as occasion therefor shall arise, it being agreed by each Guarantor that the exercise of, discontinuance of the exercise of or failure to exercise any of such rights, remedies, or recourses shall in no event be construed as a waiver or release thereof or of any other right, remedy, or recourse, and (d) are intended to be, and shall be, nonexclusive. 13.2 No waiver of any default on the part of either Guarantor or of any breach of any of the provisions of this Guaranty or of any other document shal! be considered a waiver of any other or subsequent default or breach, and no delay or omission in exercising or enforcing the rights and powers granted herein or in any other document shall be construed as a waiver of such rights and powers, and no exercise or enforcement of any rights or powers hereunder or under any other document shall be held to exhaust such rights and powers, and every such fight and power may be exercised from time to time. 13.3 The granting of any consent, approval or waiver by District shall be limited to the specific instance and purpose therefor and shall not constitute consent or approval in any other instance or for any other purpose. No notice to or demand on either Guarantor in any case shall of itself entitle such Guarantor to any other or fiarther notice or demand in similar or other circumstances. 14. Consents. 14.1 Each Guarantor acknowledges that the Guaranteed Obligations involve the guaranty of obligations of a Person other than such Guarantor and, in full recognition of that fact, each Guarantor consents and agrees that District may, at any time and from time to time, without notice or demand, and without affecting the enforceability or continuing effectiveness hereof: (a) supplement, modify, amend, extend, renew, accelerate or otherwise change the time for payment or performance or the terms of the Project Documents or the Development Agreement; (b) supplement, modify, amend or waive, or enter into or give any agreement, approval or consent with respect to, the Project Documents or the Development Agreement or any part thereof, or any additional security or guaranties, or any condition, covenant, default, remedy, right, representation or term thereof or thereunder; (c) accept new or additional instruments, documents or agreements in exchange for or relative to any of the Project Documents or the Development Agreement or any part thereof or performance pursuant thereto;

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11

(d) accept partial payments on, or performance of, the obligations owed to District and apply any and all payments or recoveries from Developer or any other Person to such of the obligations owed to District as District may elect in its sole discretion; (e) receive and hold additional security or guaranties for the obligations owed to District or any part thereof; (t) release, reconvey, terminate, waive, abandon, fail to perfect, subordinate, exchange, substitute, transfer and/or enforce any security or guaranties, and apply any security and direct the order or manner of sale thereof as District may elect in its sole and absolute discretion may determine; (g) release any Person from any personal liability with respect to the obligations owed to District or any party thereof; (h) settle, release on terms satisfactory to District, as the case may be, or by operation of applicable law or otherwise liquidate or enforce any obligations owed to District and any security or guaranty in any mariner, consent to the transfer of any security and bid and purchase at any sale (other than by reason of the timely and full payment and performance of all obligations owed to District); (i) consent to the merger, change of any other restructuring or termination of the legal existence of Developer or any other Person and correspondingly restructure the obligations owed to District, and any such merger, change, restructuring or termination shall not affect the liability of such Guarantor or the continuing effectiveness hereof, or the enforceability thereof with respect to all or any part of the obligations owed to District; (j) otherwise deal with Developer or any other Person as District may elect in its sole discretion. 14.2 Each Guarantor expressly agrees that until the Guaranteed Obligations are paid and performed in full and each and every term, covenant and condition of this Guaranty is fully performed, each Guarantor shall not, to the fullest extent permitted by law, be released by or because of: (a) Any act or event which might otherwise discharge, reduce, limit or modify such Guarantors obligations under this Guaranty; (b) Any waiver, extension, modification, forbearance, delay, or other act or omission of District, or Districts failure to proceed promptly or otherwise as against Developer or any other Person, or any security; (c) Any action, omission or circumstance which might increase the likelihood that such Guarantor may be called upon to perform under this Guaranty or which might affect the rights or remedies of such Guarantor as against Developer or any other Person;

!tOU03:1126778.4::ODMAkPCDOCS~HOU03\1126778\4

12

(d) Any dealings occurring at any time between Developer or any other Person, on the one hand, and District, on the other hand, whether relating to the Project Documents, the Development Agreement or otherwise; or .~ (e) 12. 14.3 Each Guarantor waives all rights and defenses arising out of an election of remedies by District, even though that election of remedies may have destroyed such Guarantors rights of subrogation and reimbursement against Developer or any other Person, and even though that election of remedies by District has destroyed such Guarantors rights of contribution against another guarantor of any of the Guaranteed Obligations. 14.4 No provision of this Guaranty shall be construed as limiting the generality of any of the covenants and waivers set forth in Sections 12 and 1__4, unless expressly provided in Section 15. 14.5 Each Guarantor hereby expressly, to the fullest extent permitted by law, waives and surrenders any defense to its liability under this Guaranty based upon any of the acts, omissions, agreements, waivers or matters set forth in this Section 14. It is the purpose and intent of this Guaranty that the obligations of each Guarantor under it shall be absolute and unconditional under any and all circumstances. 15. Limited Defenses. Subject to the terms of this Section 15, Guarantor shall have the fight to assert a defense to performance hereunder, provided that Guarantor shall bear the risk that a final, non-appealable ruling, finding or judgment shall not be rendered in favor of the position of Guarantor. Any such defense so asserted by Guarantor must arise from events or circumstances that occur prior to an Event of Default under the Development Agreement or a Default under this Guaranty and such defense to performance must be based on (a) the terms of the Development Agreement (i.e., a District Delay, Force Majeure, but only to the extent permitted by the express terms of the Development Agreement, or Extraordinary Force Majeure) or (b) the acts of District under the Development Agreement that prevent or materially interfere with Developers performance under the Development Agreement. Notwithstanding the preceding sentences of this Section 15, in no event shall Guarantor assert a defense directly or indirectly based on a defense personal to Developer, including without limitation, the release or equitable or legal discharge of Developer or any other Person from any obligation in connection with any receivership, bankruptcy, winding-up or other creditor proceeding or legal authority or capacity of Developer to perform. 16. No Amendment. Neither this Guaranty nor any provision hereof may be modified, amended, waived, terminated or changed orally, but only by an agreement in writing signed by District and the Guarantors to be bound by such agreement. 17. Successors and Assi~n~. This Guaranty shall be binding upon and inure to the benefit of the heirs, administrators, legal representatives, successors and assigns of the parties hereto. Any matter, item, act or event which Guarantor has agreed to waive under Section

HOU03:1126778.4::ODMA~PCDOCS\HOU03\! 126778\4

13

18. Irrevocable Survival. This Guaranty shall be irrevocable by the Guarantors until all Guaranteed Obligations have been completely and indefeasibly paid and all obligations and undertakings of Developer and of the undersigned hereunder have been completely performed.. 19. Unenforceabilit. If any term or provision of this Guaranty shall be determined to be illegal, invalid, or unenforceable, this Guaranty and all other terms and provisions hereof shall nevertheless remain effective and shall be enforced to the fullest extent permitted by law. 20. Entire Agreement. This Guaranty constitutes the entire agreement with respect to the subject matter hereof, and supersedes all prior discussions, negotiations, commitments, representations, agreements and understandings between the parties. 21. WAIVER OF JURY TRIAL; JURISDICTION. EACH GUARANTOR HEREBY WAIVES ANY RIGHT TO JURY TRIAL IN CONNECTION WITH ANY SUIT, ACTION, PROCEEDING OR CLAIM RELATING TO THIS GUARANTY, THE PROJECT DOCUMENTS OR TO THE TRANSACTIONS CONTEMPLATED BY THIS GUARANTY OR THE PROJECT DOCUMENTS. ANY SUIT, ACTION, PROCEEDING OR CLAIM RELATING TO THIS GUARANTY SHALL BE BROUGHT EXCLUSIVELY IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA OR THE SUPERIOR COURT FOR THE DISTRICT OF COLUMBIA, AND EACH GUARANTOR AGREES THAT SUCH COURTS ARE THE MOST CONVENIENT FORUM FOR RESOLUTION OF ANY SUCH ACTION AND FURTHER AGREES TO SUBMIT TO THE JURISDICTION OF SUCH COURTS AND WAIVE ANY RIGHT TO OBJECT TO VENUE IN SUCH COURTS. INITIAL HERE INITIAL HERE

22. Notice. Any notice which may or is required to be given hereunder shall be deemed given three days after being deposited, registered or certified, return receipt requested, in the United States mail, addressed to the recipient at the address set forth after recipients name below, or at such different addresses as it shall have theretofore given written notice of hereunder: HINES GUARANTOR: c/o Hines Interests Limited Partnership 555 13th Street NW Suite 1020 East Washington, DC 20004 Attention: William B. Alsup, III Telecopy: (202) 347-2802

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!4

ARCHSTONE GUARANTOR:

c/o Archstone-Smith Operating Trust 9200 East Panorama Circle Suite 400 Englewood, Colorado 80112 Attn: General Counsel Telecopy: (303) 858-3092 c/o Archstone-Smith Operating Trust 2345 Crystal Drive, Suite 1100 Arlington, VA 22202 Attention Alfred G. Neely Telecopy: (703) 892-4031 Baker Botts L.L.P. One Shell Plaza, 910 Louisiana Houston, Texas 77002-4995 Attention: Marley Lott Tetecopy: (713) 229-7766 Friedlander, Misler, Sloan, Kletzkin and Ochsman, PLLC 1101 17th Street, NW, Suite 700 Washington, DC 20036 Attention: David Astrove Telecopy: (202) 857-8343 Deputy Mayor for Planning and Economic Development 1350 Pennsylvania Ave., NW Washington, DC 20005 Attention: Deputy Mayor for Planning & Economic Development Telecopy: (202) 727-6703 Office of the Attorney General for the District of Columbia 441 Fourth Street, NW, Sixth Floor North Washington, DC 20001 Attention: Deputy of Commercial Division Telecopy: (202) 727-6014 Powell Goldstein LLP 901 New York Avenue, NW Third Floor Washington, DC 20001-4413

with a copy to:

with a copy to:

with a copy to:

DISTRICT:

with a copy to:

with a copy to:

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15

Attention: Ronald S. Gart, Esq. Facsimile: (202) 624-7222 23. Counterparts. This Guaranty may be executed in counterparts, each of which shall be deemed to be an original. In proving this Guaranty it shall not be necessary to produce or account for more than one counterpart. 24. Patriot Act. 24.1 Neither Guarantor nor any Person controlling Guarantor or owning directly or indirectly any interest of ten percent (10%) or greater in Guarantor has engaged in any dealings or transactions (i) in contravention of the applicable anti-money laundering laws or regulations or orders, including without limitation, money laundering prohibitions, if any, set forth in the Bank Secrecy Act (12 U.S.C. Sections 1818(s), 1829(b) and 1951-1959 and 31 U.S.C. Sections 5311-5330), the USA Patriot Act of 2001, Pub. L. No. 107-56, and the sanction regulations promulgated pursuant thereto by U.S. Treasury Department Office of Foreign Assets Contro!, (collectively, together with regulations promulgated with respect thereto, the "Anti-Money Laundering Acts"), (ii) in contravention of Executive Order No. 13224 dated September 24, 2001 issued by the President of the United States (Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism), as may be amended or supplemented from time to time ("Anti-Terrorism Order"), (iii) in contravention of the provisions set forth in 31 C.F.R. Part 103, the Trading with the Enemy Act, 50 U.S.C. Appx. Section 1 et seq. or the International Emergency Economics Powers Act, 50 U.S.C. Section 1701 et seq. (together with the Anti-Money Laundering Acts, the "Terrorist Acts") or (iv) is named in the Annex to the Anti-Terrorism Order or any terrorist list published and maintained by the Federal Bureau of Investigation and/or the U.S. Department of Homeland Security, as may exist from time to time. 24.2 Neither Guarantor nor any Person controlling Guarantor or owning directly or indirectly any interest of ten percent (10%) or greater in Guarantor (a) is conducting any business or engaging in any transaction with any person appearing on the list maintained by the U.S. Treasury Departments Office of Foreign Assets Control located at 31 C.F.R., Chapter V, Appendix A, or is named in the Annex to the Anti-Terrorism Order or any terrorist list published and maintained by the Federal Bureau of Investigation and/or the U.S. Department of Homeland Security, as may exist from time to time, or (b) is a Person described in section 1 of the AntiTerrorism Order (a "Restricted Person"). 24.3 Guarantor shall not be in breach of this Section 24 as a result of the act or omission of any Person who is not otherwise an Affiliate of Guarantor and whose only connection to Guarantor is ownership of less than five percent (5%) in a company that itself has a direct or indirect interest in the Guarantor and is traded on a U.S. national exchange unless such Person has the power to direct the management or operations of Guarantor, in which case there shall be no threshold percentage applicable to such inquiry, or unless Guarantor has actual knowledge that such Person is listed on one of the aforementioned lists or has or is in violation of the Terrorist Acts, or the Anti-Terrorism Order or their respective regulations. 25. Definitions. Any capitalized term not defined in this Guaranty shall have the
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16

meaning therefor set forth in the Development Agreement.

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17

IN WITNESS WHEREOF the Guarantors have executed this Guaranty as of the day and year first above written. Hines Guarantor: HINES REAL ESTATE HOLDINGS LIMITED PARTNERSHIP, a Texas limited partnership By:.JCH Investments, Inc., its general partner By:. Name: Title: Archstone Guarantor: [SEAL]

ARCHSTONE-SMITH OPERATING TRUST, a Maryland real estate investment trust By: Name: Title: [SEAL]

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18

EXHIBIT A SCHEDULE OF OWNERSHIP INTERESTS,~

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19

Schedule 10 Intentionally Deleted

HOU03:1127065.12::ODMA\PCDOCS~HOU03\1127065\12

10-1

Schedule 11 Intentionally Deleted

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11-1

Schedule 12 List of Design Professionals

HOU03:1127065.12::ODMA~CDOCSkHOU03\1127065\12

!2-1

DRAFT 12/10/07 SCHEDULE 12 LIST OF DESIGN PROFESSIONALS

1. Foster and Partners

Design Architect - Common Areas Design Architect- Office Uses Design Architect - For-Sale Residential Uses Architect of Record - Common Areas Architect - Subgrade Architect - Residential Rental Uses Architect of Record - For-Sale Residential Uses Architect of Record - Office Uses Architect of Record - Retail Uses Landscape Architect Structural Engineer

2. Shalom Baranes Associates

3. Gustafson, Guthrie, Nichol Lee + Papa & Associates 4. Smislova, Kehnemui & Associates Thorton Thomasetti 5. TOLK, Inc. John J. Christie Metropolitan Engineering, Inc./ Shapiro/OBrien 6. To be determined 7. Bernard F. Locraft Civil Engineers AMT, LLC

Mechanical, Electrical & Plumbing Engineer

Retail Designer Surveyor

Civil Engineer 8. Delon Hampton and Associates Jackson & Tull Chartered Engineers SC Myers & Associates Insight LLC Volkert & Associates 9. Colonial Parking Parking Garage Consultant

10. William McDonough Partners BVM Engineering OPX

Sustainability Consultant

Schedule 13 Intentionally Deleted

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13-1

Schedule 14 Intentionally Deleted

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14-1

Schedule 15 Intentionally Deleted

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15-1

Schedule 16 Copy of First Source Agreement and LSDBE MOU

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16-1

FIRST SOURCE EMPLOYMENT AGREEMENT

Contract Number:.
Contract Amount:

Project Name: Project Address:

Former Convention Center Site Redevelopment (the "Site") 900 Ninth Street. N.W.. Washin~on. D.C. 20001 Ward:2 _ (No) No

Nonprofit Organization: (Yes)

This First Source Employment Agreement (the "Agreement"), is made this 80 day of June, 2005, in accordance with D.C. Law 14-24, D.C. Law 5-93, and Mayors Order 83-265 for recruitment, referral, and placement of District of Columbia residents ("D.C. Law9, is between (i) the District of Columbia Department of Employment Services, hereinafter referred to as DOES, and (ii) Hines Interests Limited Partnership ("/tines") and-Archstone-Smith Operating Trust ("Smith"), hereinafter, Hines and Smith, collectively, and together with their respective successors and assigns, referred tO as EMPLOYER. Under this Employment Agreement, the EMPLOYER will use DOES as its first source for recnfitment, referral, and placement of its new hires or employees for all new jobs created by the development, construction, and Operations (as defined in Section I.M. below) of the Improvements at the Project and will hire, in accordance with D.C. Law, 51% qualified District of Columbia residents for all new jobs created. In addition, 51% of apprentices employed in connection with the development and construction of the Improvements at the Project shall be District residents registered in programs approved by the District 0fColumbia Apprenticeship Council. Further, the Employer will encourage, to the extent allowable and practicable, preference fust for residents in Ward 2 and then other residents of the District of Columbia. The Distrit:t of Columbia Office of the Deputy Mayor for Planning and Economic Development and Employer have entered into the Exclusive Rights Agreement and Land Disposition Agreement, dated as of May 12, 2005 (the "LDA). The LDA governs the arrangements between the District and the Employer for the development at the Site. The Project, as used in this Agreement, means the redevelopment of the Former Convention Center Site located at Square 374, Lot 848 (but excluding Reservation 174) which land is bounded by 9~, H and 11t~ Slreets, and New York Avenue, N.W. in Washington, D.C. It is contemplated that the Improvements will include the Leased Parcels and the For Sale Residential Parcels. The parties intend that the Leased Parcels will include retail, rental residential, for-sale residential, offioe, and, possibly hotel, common area and public parking uses: The For Sale Residential Parcels will be sold by the District to the Developer for for-sale residential use. The Developer has also agreed in the LDA that it may own (either in fee or by leasehold estate) some or all of the Common Areas and the Public Parking, as identified in the LDA. The Common Areas will probably include streets, sidewalks, public spaces and plazas, and, along with the Public Parking, .will be treated as "Improvements" under this Agreement to the extent, and so long as, the Developer holds an ownership interest in them. If at any point, the District does not transfer a

real properly interest (e.g. by ground lease or sale) in one or more portions of the Site to the Developer, whether retaining ownership of such interest or transferring such interest to a third party, then this Agreement will no longer apply to such portions; provided, however, that, in the event that the Devdoper is hired by the District (or such third party) to manage the construction of or operate any improvements on such portions of the Site, the Developer will agree to enter into a separate First Source Agreement, in form and substance materially similar to this Agreement, with respect to any preconstrucfiort, construction and operations activities conducted or managed by Developer on such portions of the Site. All capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the LDA. I. GENERAL TERMS A. The EMPLOYER will use DOES as its first source for the recruitment, referral and placement of employees involved with the development, construction, and Operations of the Improvements at the Project. During development, construction and Operations of the Improvements at the Project, the EMPLOYER shall require all conlractors and subcontractors, with contracts totaling. $100,000 or more, to enter into a First Source Employment Agreement with DOES relating to this Project. DOES. will provide recruitment, referral and placement services to the EMPLOYER subject to the limitations set out in this Agreement. DOES participation in this Agreement will be carried out by the Office of the Director, with the Department of Employment Services, which is responsible for referral and placement of employees, or such other offices or divisions designated by DOES. This Agreement shall take effect when fully-executed by the Employer and a duly authorized officer of the District of Columbia. The Start Date shall be memorialized by a certificate executed by all parties to this Agreement. This Agreement shall be fully effective for the duration of construction contracts relating to the construction of the Improvements at the Project and any extensions or modifications to such construction contracts. Subsequent to completion of the construction of the Improvements at the Project, the Agreement shall apply to Operations as defined in Section LM below. This Agreement shall not be construed as an approval of the EMPLOYERS bid package, bond application, lease agreement, zoning application, loan, o~: construction contracts/subcontracts.

B.

C. D.

E.

F.

G.

DOES and the EMPLOYER. agree that for purposes of this Agreement, new hires and jobs created (both union and nonunion) relating to this Project include all EMPLOYERS job openings and vacancies in jobs relating to this Project in the Washington Standard Metropolitan Statistical Area,. including internal promotions, terminations, and expansions of the EMPLOYERS workforce, to the extent such workforce is comprised of jobs created by the Project. For purposes of this Agreement, apprentices as defined in D.C. Law 2- ! 56 are included. The EMPLOYER shall register an apprenticeship program with the D.C. Apprenticeship Council for construction or renovation contracts or subcontracts totaling $500,000 or more~ relating to the Improvements at the Project. This includes any conslxuction or renovation contract or subcontract signed as the result of, but is not limited to, a loan, bond, grant, Exclusive Right Agreement, street or alley closing, or a leasing agreement of real property for one (1) year or more.

It.

J.

All contractors who contract with the Government of the District of Columbia to perform information technology work with a single contract or cumulative contracts of at least $500,000, within any twelve (12) month period, shall be required to register an apprenticeship program with the District of Columbia Apprenticeship Council. The term "information technology work" shall include, but is not limited to, the occupations of computer progralnmer, .programmer analyst, desktop specialist, technical support specialist, database specialist, network support specialist, and any other related occupations as the District of Columbia Apprenticeship Council may designate by regulation. If, at any time, DOES ceases to exist, or terminates the First Source Program, this Agreement shall automatically terminate unless EMPLOYER is notified in writing by the District of Columbia within 60 days of a successor department to fulfill DOESs responsibilities described hereunder. To the extent this Agreement applies to Operations, it shall apply only (i) to Operations that occur during the Operations Period, (ii) to Operations that relate to Improvements owned or leased by the Employer (or its successors and assigns), other than those on For Sale Residential Parcels, and (iii) to contracts for Operations involving the Employer as a party in excess of $100,000 that relate to such Improvements. The term "Operations" means any of the following: (i) the property management (including any hotel management) of the Improvements, (ii) the activities of any Parking Operator/Lessee and/or the security company (i.e., manned security) operating at the Improvements, (iii) any construction contracts governing or arising out of tenant construction at the Improvements, and (iv) any leases relating to fit-down and fast food restaurants. The Operations Period, as used in this Agreement, means, with respect to each set of Improvements on a particular Parcel, the period beginning upon Completion of -3-

K.

L.

M.

that set of Improvements and ending on the fifth anniversary of such Completion date. Prior to the end of the Operations Period on any given Parcel, the parties shall negotiate in good faith a new Agreement or an extension of this Agreement for a period not to exceed five years from the end of the applicable Operations Period. II. RECRUITMENT A. Not later than 45 days after the Start Date, the EqvIPLOYER will complete the attached Employment Plan, which will indicate the number of new jobs projected, salary range, hiring dates, and tmion requirements. The EMPLOYER will notify DOES of its specific need for new employees as soon as that need is identified. Notification of specific needs, as set forth in Section ILA. must be given to DOES at least three (3) business days (Monday - Friday) before using any other referral source, and shall include, at a minimum, the number of employees needed by job title, qualification, hiring date, rate of pay, hours of work, duration of employment, and work to be performed. In the event labor is needed urgently, the EMPLOYER may hire immediately; however, DOES must be notified as soon as practical within 24 hours. Job openings to be filled by internal promotion from the EMPLOYERS current workforce need not be referred to DOES for placement and referral. The EMPLOYER will submit to DOES, prior to entering into the Development Agreement (as provided in the LDA), the names of all current employees, including apprentices, trainees, and laid-off workers who will be employed for work in connection with the Project.

B.

C. D.

DOES will screen and refer applicants according to the qualifications supplied by the EMPLOYER. IV. PLACEMENT A. DOES will notify the EMPLOYER, prior to the anticipated hiring dates, of the number of applicants DOES will refer. DOES will make every reasonable effort to refer at least two qualified applicants for each job opening. The EMPLOYER will make all decisions on hiring new employees but will use good faith reasonable efforts to select its new hires or employee~ from among the qualified persons referred by DOES.

B.

C.

In the event DOES is unable to refer the qualified personnel requested, within three O) business days (Monday - Friday) from the date of notification, the EMPLOYER will be free to directly fill remaining positions for which no qualified applicants have been refened. Notwithstanding the foregoing, the EMPLOYER will still be required to hire, consistent with D.C. Law, 51% District residents for the new jobs created by the development, construction and Operation of the Improvements at the Project. After the EMPLOYER has selected its employees, DOES will not be respons~le for the employees actions and th~ EMPLOYER hereby releases DOES, and the Government of the District of Columbia, the District of Columbia Municipal Corporation, and the officers and employees of the District of Columbia from any liability for employees actions.

D.

V. TRAINING DOES and the EMPLOYER may agree to develop skills training and on-the-job training programs; the training specifications and cost for such training will be mutually agreed upon by the EMPLOYF~ and DOES and set forth in a separate Training Agreement. VL CONTROLLING.REGULATIONS AND LAWS A. B. To the extent this Agreement is in conflict with any labor laws or governmental regulations, the laws or regulations shall prevail. DOES will make every effort to work within the terms of all collective bargaining agreements to which the EMPLOYER, its contractors, or subcontractors are a

party.
C. The EMPLOYER willprovide DOES with written documentation that the EMPLOYER has provided the representative of any involved collective bargaining unit with a copy of this Agreement and has requested comments or objections. If the representative has any comments or objections, the EMPLOYER will promptly provide them to DOES. In the event the LDA is materially modified from the form agreed to by ODMPED and the Developeron May 12, 2005, or if any material amendment to the LDA affects the substance or terminology of this Agreement, the parties shall work together in good faith to revise this Agreement in accordance with such modified terms. In the event of a conflict between the terms of this Agreement and the LDA, the terms of this Agreement shall govern. VII. EXEMICIIONS

-5-

A. B. C. D.

Contracts, subcontracts or other forms of government-assistance less than $100,000. Employment openings the contractor will fill with individuals already employed by the company. Job openings to be filled by laid-off workers according to formally established recall procedures and rosters. Suppliers located outside of the Washington Standard Metropolitan Statistical Area and who will perform no work in the Washington Standard Metropolitan Statistical Area.

VIII. AGREEMENT MODIFICATIONS, RENEWAL, MONITORING, AND PENALTIES A. DOES hereby consents to the assigranent of all of the rights and obligations of the EMPLOYER under this Agreement to the limited liability company or partnership (or companies or partnerships) to be created by EMPLOYER that will own and. operate the Project, provided that (i) any such assignment is in accordance with and permitted by Section 2.1.1 of the LDA and (ii) any such assignee agrees in writing to undertake all obligations and liabilities of EMPLOYER set forth under this Agreement, as the same may be amended in the future. DOES also consents to the transfer of any interests in the EMPLOYER that are permitted under Article II of the IDA. Upon a permitted assignment (or assignments) of its entire interest in the Site, EMPLOYER shall be released from all obligations and liabilities under this Agreement that are .imposed upon EMPLOYER or would accrue at any time after the day such Subject to Section VIII.A, if,-during the term of this Agreement, the EMPLOYER should transfer ownership of all or a portion of its busines~ concerns affected by this Agreement to any other party by lease, sale, assignment, merger, or otherwise, the EMPLOYER as a condition of transfer shall: 1. 2. Notify the party(ies) taking ownership of the existence of the EMPLOYERS Agreement. Notify the part~ies) taking ownership that full compliance with this Agreement is required pursuant to D.C. Law to avoid potential monetary penalties. EMPLOYER shall, additionally, advise DOF~ within seven (7) businessdays of the transfer. This advice will include the name of the part~ies)

B.

3.

taking ownership and the name and telephone of that partys representati~,e(s). C. For any permitted partial transfer of EMPLOYERs interest in the real property of the Project (that is performed in accordance with the foregoing Sections Villa and VI!I.B), this Agreement shall be bifurcated, and accordingly amended, such that it shall apply to the permitted transferee to the extent of such Wansferees ownership of such real property (and EMPLOYER shall be released from liability hereunder to the extent of the real property transferred), but EMPLOYER shall not be released from this Agreement insofar as it applies to that pordon of the real property retained by EMPLOYER. DOES shall monitor EMPLOYERS performance under this Agreement. The EMPLOYER will cooperate in DOES monitoring effort, and during the development and construction of the Improvements at the Project, will submit a Contract Compliance Form to DOES monthly in a mutually-agreeable format. Atter the first year of Operations, EMPLOYER shall submit the Contract Compliance Form to DOES on a quarterly basis. To assist DOES in the conduct of the monitoring review, the EMPLOYER will make available payroll and. employment records for the review period indicated. If additional relevant information is needed by DOES during the monitoring review, the EMPLOYER:will make commercially-reasonable efforts to provide the requested information to DOES after EMPLOYER receives a request from DOES for such.information in writing. In this context, the term "commerciallyreasonable" shall mean that EMPLOYER shall .provide the additional relevant information to DOES if the information is in the possession of EMPLOYER at the time of such request. With the submission of the final Contract Compliance Form to the District, the EMPLOYER shall: 1. Document in a report to the C~ntracting OlIieer its compliance with the requirement, in accordance with D.C. Law, that 51% of the new employees hired by the Project were District residents; or Submit a request to the Contracting Otfieer for a waiver of compliance with the requirement, in accordance with D.C. Law, that 51% of the new employees hired by the Project were not District residents and include the following documentations: a. Material supporting a good faith effort to comply;, b. Referrals provided by DOES and other referral sources; and c. Advertisement of job openings listed with DOES and other referral sources. _

D.

E. F.

G.

2.

-7-

The Co.ntracting Officer may waive the requirement, in accordance with D.C. Law, that 51% of the new employees hired by the project be District residenls, if the Contracting Officer finds that: 1. 2. A good faith effort to comply is demonstrated by the contractor; The EMPLOYER is located outside the Washington Standard Metropolitan Statistical Area and none of the contract work is performed inside the Washington Standard Metropolitan Statistical Area; The Washington Standard Metropolitan Statistical Area includes the District of Columbia, the Virginia Cities of Alexandria, Falls Church, Manasas, Manasas Park, .Fairfax, and Fredericksburg;, the Virginia Counties of Fairfax, Arlington, Prince William, Loundon, Stafford, Clarke, Warren, Fauquier, Culpeper, Spotsylvania, and King George; the Maryland Counties of Montgomery, Prince Georges, Charles, Frederick, and Calvert; and the West Virginia Counties of Berkeley and Jefferson. The EMPLOYER enters into a special workforce development training or placement arrangement with DOES; or DOES certifies that insufficient numbers of District residents in the labor market possess the skills required by the positions created as a result of the construction of the Project.

3. 4.

Willful, material breach of the First Source Employment Agreement by the EMPLOYER, or failure to submit the Contract Compliance Report, or del~erate submission of falsified data during the development, construction or Operations of the Improvements at the Project may be enforced by the Contracting Officer through imposition of penalties, including monetary fines of 5% of the total amount of the direct and indirect labor costs of an EMPLOYER contract found to be in violation, calculated pursuant to established procedures customarily followed by DOE8 or the District of Columbia in similar circumstances. J. Nonprofit organizations are exempted from the requirement, in accordance with D.C. Law, that 51% of the new employee~ hind on the project be District residents. The EMPLOYER and DOES, or such other agent as DOES may designate, may mutually agree to modify this Agreement; provided that any such modification shall be in writing and signed by all parties to this Agreement, as the same maybe amend~ from time to time. EMPLOYER agrees to put the following enforcement mechanisms in place during the development, construction and Operation of the Improvements at the Proje~t: -

K.

L.

!.

EMPLOYER shall initiate an educational program to advise contractors of the Project requirements and proper methods and means ofc0mpliauce. All conWacts shal! contain language that shall require all applicable contractors and subcontractors to execute a First Source Agreement with DOES. EMPLOYER shall require all contractors to submit Monthly Compliance Forms to EMPLOYER at the same time that they submit their payment requisitions. EMPLOYER shall employ and maintain an aggressive contract tracking and monitoring program, and develop a means of dealing with inconsistent, incorrect and/or tardy reports. All contracts subject to a First Source Agreement shall contain language granting the EMPLOYER the fight to have additional retainage withheld in the event of noncompliance. EMPLOYER shall ensure that all applicable contractors shall comply with the requirements of entering into a First Source Agreement with DO.ES and are aware of the resources available at DOES. During Operations, any property manager hired by EMPLOYER shall require qualified vendors to enter into a First .Source Agreement with DOES. If the EMPLOYER transfers any portion of the Common Areas to a third party other than the District or agency of the Dislarict, such third party shall be required to enter into a First Source Agreement with DOES. EMPLOYER shall (i) incorporate into its standard form commercial lease a provision identifying DOES as a referral resource for potential employees, (ii) inform its retail tenants of the resources available a! DOES, and (iii) provide DOES with contact information for such retail tenants.

2.

3.

4.

5.

6.

7.

8.

9.

-9-

Department of Employment Services

EMPLOYER: Hines Interests Limited Partnership By: Hin/~!iloldings, Inc., its general ~lS~er By:

Ya: ~~-.f~-" ~ ame:

~,.~/~.~ -_ _

Susan O. Gilbert Executive Assistant Address:

William B. Alsup, III Senior Vice President 555 Thirteenth Street, N.W. Suite 1020-East Washington, D.C. 20004

Telephone: (202) 347-6337 EMPLOYER: By: Archstone-Smith Operating Trust By:

Title: Address:

Executive Vice President 9200 East Panorama Circle Fourth Floor Englewood, CO 80112

Telephone: (303) 708-6975

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EMPLOYMENT PLAN NAME OF FIRM Hines Interests Limited Partnership and Archstone-Smith Operating Trust ADDRESS c/o Hines, 555 Thirteenth Street, N.W., Suite 1020 East, Washington, D.C. 20004 TELEPHONE NUMBER (202) 347-6337 FEDERAL ID. NO. CONTACT PERSON William B. Alsup, III E-mail Bill_aisup@hines.com TITLE Senior Vice President TYPE OF BUSINESS Real Estate

ORIGINATING DISTRICT AGENCY CONTRACTING OFFICER TYPE OF PROJECT PROJECTED START DATE TELEPHONE NUMBER FUNDING AMOUNT PROJECT DURATION

NEW JOB CREATION PROJECTIONS (Attach additional sheets, as needed.) Please indicate the new position(s) your firm will create as a result of this project.
JOB

UNION
# OF JOBS SALARY IvtEMBERSHIP PROJECTED

TITLE A B C D

F/T and P/T

RANGE

REQUIRED

HIRE DATE

E ~G H J

CURRENT ~MPLOYEES: Please list the names and social security numbers of all current employees including apprentices and trainees who will be employed on the project. Attach additional sheets as needed. NAME OF EMPLOYEE

.GEHBUS/279659.2

Dated this

day of

20

Signed:

Department of Employment Services ~ ~~~ By: Name: Susan 0. Gilbert

Title: ExecUtive Assistant

EMPLOYER: Hines Interests Limited Partnership By: Hines Holdings, Inc., its general partner By: William B. Alsup, III Senior Vice President Address: 555 TMrteenth Street, N.W. Suite 1020-East Washington, D.C. 20004 Telephone: (202) 347-6337 EMPLOYER: By:. Archstone-Smith Operating Trust By:

Name:

Title: Address: 9200 East Panorama Circle Fourth Floor Englewood, CO 80112

Telephone: (303) 708-6975

LSDBE MEMORANDUM OF UNDERSTANDING between the GOVERNMENT OF THE DISTRICT OF COLUMBIA OFFICE OF LOCAL BUSINESS DEVELOPMENT and THE DEVELOPER

Hines Interests Limited Partnership and Arehstone-Smith Operating Trust (collectively, "Developer:), in accordance with D.C. Laws 1-95 and 12-268, as amended, D.C. Official Code 2-217.01 et seq. and 2-1205.01 et seq. (2001) (collectively, the "Act"), and in consideration of the agreements made between the District t~f Columbia and the Developer for the purpose of redeveloping the land located at Square 374, Lot 848 (other than Reservation 174) which land is bounded by 9Ih, H and 11th Streets, and New York Avenue, N.W. in Washington, D.C. and has an address of 900 Ninth Slreet, NW, Washington, D.C. 20001 (the "Site"), does hereby covenant and agree with the District of Columbia (the "District") to utilize Local, Small and Disadvantaged Business Enterprises ("LSDBEs") certified pursuant to applicable law by the D.C. Local Business Opportunity Commission to achieve, at a minimum, a goal of 35% LSDBE participation in Preeonstruction/Construetion Costs and Operational Costs (as those terms are defined below) of the Project (defined below) and perform such other related obligations described herein, in accordance with the terms and conditions of this LSDBE Memorandum of Understanding ("MOU"). All capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the LDA (defined below). RECITALS R-1. The District of Columbia Office of the Deputy Mayor for Planning and Economic Development ("ODlVl~ED") and Developer have entered into the Exclusive Rights Agreement and Land Disposition Agreement, dated as of May 12, 2005 (the "LDA9. The LDA governs the arrangements between the District and the Developer for the preparation of a master plan for redeveloping the Site, the implementation of all design, pre-developmenL development and demolition activities contemplated by such master plan, and the construction of all Improvements to be located at the redeveloped Site (collectively, the "Project"). R-2. Pursuant to the LDA, the Developer has agreed to develop those elements of the Site referred to as the Leased Parcels and the For Sale Residential Parcels in the LDA. The Leased Parcel components of the Project inetude retail, rental residential, office, and hotel uses on the Site. The For Sale Residential Parcels will be sold by the District to the Developer for for-sale residential use. The Developer has also agreed in the LDA that it may own some or all ofthe Common Areas and the Pubtie Parking, as identified in the LDA. The Common Areas will probably include streets, sidewalks, public spaces and plazas, and will be coveted by this MOU, along with the Public Parking, to the extent, and so long as, they are owned by the Developer. Accordingly, the Developer has agreed to enter into an MOU with the District of Columbia Office_ of Local Business Development ("OLBD~), and both parties hereto desire to enter into this MOLl with the other. If at any point, the District does not transfer a real property interest (e.g. by ground lease or sale) in one or more portions of the Site to the Developer, whether retaining ownership of such interest or transferring such interest to a third party, then this MOU will no longer apply to such portions; provided, however, that, iu the event that the Developer is hired by the District (or such third party) to manage the construction of any improvements on such portions of the Site, the Devdoper will agree to enter into a separate LSDBE Memorandum

of Understanding, in form and subslance materially similar to this MOU, with respect to any preeonstruction, construction and operations activities conducted or managed by Developer on such portions of the Site. R-3. As part ofthe process of negotiating the LDA with the District, the Developer has agreed to the terms as set forth in this MOU, which terms set forth obligations to OLBD and the LSDBE community that OLBD has determined are of substantially greater be~efit than the LSDBE obligations originally proposed by the Developer in its original proposal. AGREEMENT: Now, therefore, in eousideration of the mutual covenants and agreements set forth in this !v[OU, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows: 1. DEF!NITIONS Hotel Manager: means the entity or entities hired by the Developer to provide hotel management services, to the Project, to the extent a hotel is !neluded in the Project. Operational Costs: means, during the Operational Phase with respect to each Leased Parcel, costs associated with contracts involving the Developer or Hotel Manager and any unaffiliated third party and relating to property management, parking, and construction contracts in ~onnection with tenant construction. Operational Costs shall not include any costs of operating the Project if performed by the Developer, Hotel Manager or an affiliate. Operational Phase: for each Leased Parcel, the period beginning on thedate of Completion for such Leased Parcel .and ending on the fifth anniversary of the date that such Leased Parcel achieves Completion. PreconstructionlConstruction Costs: the total of all hard and soft costs incurred, or caused to be incurred, by the Developer for work performed for all Parcels in the Project that are subject to this MOU during the Preconstruction/Conslruction Phase. The term Preconstruction/Construction Costs shall include professional/technical services relating to construction, construction management and construction trade subcontracting. The term Preconstrucfion/Construction Costs shall exclude (i) any hard or soft costs incurred, or caused to be incurred, by the Developer on Parcels that are excluded from the Leased Parcels from and atter the date such exclusion is deemed effective pursuant to the LDA, and (i0 any fees or costs set forth on Attachment D attached hereto, which Attachment may be amended.from time to time with the prior approval of the Director (which approv.al shall not be unreasonably withheld, conditioned or delayed, and shall be subject to the same approval process as set forth in Section II.G below). PreconstructionlConsU, uction Phase: that portion of the Project that commences on the date that the LDA is fully executed by the Developer and a duly authorized officer of the District of Columbia and ends, (x) with respect to the Leased Parcels, on the date that the Operational Phase commences for each such Parcel or (y) with respect to any For Sale
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Residential Parcel, on the date of the conveyance of title of such Parcel from the District to the Developer (or to any permitted successor or assign of Developer); provided, however, that, for any Parcel (other than a For Sale Residential Parcel) that is excluded (as described in the LDA) from the Leased Parcels, the Preconstruction/Consl~ction Phase shall end as of the date such exclusion is deemed effective pursuant to the LDA. II. COMMITMENTS A. Developer hereby agrees, that, (i) during the Preconstruction/Construction Phase, it will achieve, at a minimum, the goal of utilizing LSDBE contractors pursuant to LSDBE contracts worth an aggregate value equal to no less than 35% of the Preconstruction/Constmction Costs, and (ii) during the Operational Phase, it will achieve, at a minimum, the goal of utilizing LSDBE contractors pursuant to LSDBE contacts worth an .aggregate value equal to no less than 35% of the Operational Costs (collectively, as the same may be adjusted pursuant to the terms of this MOU, the "35% Goal"). The Developer shall use the resources of OLBD, including the Local Business Opportunity Commissions Directory of Certified Local, Small and Disadvantaged Business Enterprises, and periodic updates, as the primary referra! sources for LSDBEs. The primary contact for such referrals shall be the Director of the Office of Local Business Development (the "Director"). The Developer shall designate one or more representatives (the "Representatives") vcho shall be duly authorized to negotiate, sign, and implement this MOO on behalf of Developer, and the Developer shall provide the name(s) of the Representatives to OLBD promptly upon their selection together with reasonably satisfactoD" evidence of their authority to act as Representatives. The Representatives shall meet with OLBD officials no later than the commencement of the planning process to develop the Master Plan for the purpose of exploring ways for Developer to achieve the 35% Goal. The Developer agrees to use LSDBEs for certain goods and services as may be required by the Developer to conduct its daily operations relating to the Precenstruction/Construction Phase and understands that such efforts will aeeme toward the 35% Goal_ Not later than 60 days after the date upon which the LDA has been fully executed by the parties thereto, the Developer agrees to submit a local business plan to OLBD for approval (which approval shall not be unreasonably withheld, conditioned or delayed), that shall reflee[, a plan for implementing the 35% Goal. The foregoing local business plan shall be in substantially the form of Attachment ~ and, once approved by OLBD, shall be incorporated in and made a part of this MOU by amendment. The parties hereto shall use diligent, good faith efforts to amend this MOU in accordance with the foregoing within 30 days after Developers submission of the aforementioned 10eal business plan.

B.

C.

D.

E.

Not later than 90 days after Pre-Closing, and not prior to the amendment to this MOO required under Section II.E above, the Developer will submit to OLBD for approval a more detailed, extensive local business plan (based on the plan previously submitted and approved pursuant to Section II.E.) that will achieve the 35% Goal (as amended f~orn time to time in accordance with this MOU, the "LSDB.E 35% Goal Guideline") and that will list all of the then-known projected procurement items, quantifies and estimated costs, bid opening and closing dates, and start-up and completion dates. This plan should indicate whether any items will be bid without restriction in the open market, or limited to LSDBEs certified by the Local Business Opportunity Commission. The LSDBE 35% Goal Guideline shall exclude the trades and costs identified on Attachment D. The parties hereto shall use diligent, good faith efforts to develop an approved LSDBE 35% Goal Guideline in accordance with this Section II.F within 30 days after Developers submission thereof. From and after Pre-Closing, Developer shall periodically submit refinements to the LSDBE 35% Goal Guideline (and within 10 business days of any request by OLBD) applicable to any Parcels subject to this MOU. The LSDBE 35% Goal Guideline shall be further updated by Developer not later than 30 days prior to Closing and, again, 30 days prior to the Escrow Release Date, and upon any renewals or extensions of this MOU .and at other times as reasonably required by Director (any such update, a "Guideline Update"). For any Guideline Update that reflects either (i) a material modification to the last-approved LSDBE 35% Goal Guideline or (h) fails to implement or maintain a plan for the achievement of the 35% Goal, such Guideline Update shall be submitted to the Director for approval (which approval shall not be unreasonably withheld, conditioned or delayed) pursuant to Sections IL G and N below. Except as described in II.F above, Developer shall not materially modify the LSDBE 35% Goal Guideline without (i) providing 30. days prior notice of any requested material modification to the Director and (ii) obtaining approval for such material modification from the Director (which approval shall not be unreasonably withheld, conditioned or delayed). If the Director has not provided approval, or disapproval (accompanied by a reasonable, written explanation of such disapproval) within 30 days of the hotice by the Developer to the Dkector of such modification, the modification will be deemed approved by the Director. The Developer and Director hereby agree that, in the event of any disapproval by the Director, Developer and Director will work diligently and in good faith to produce a revised document within 30 days that is approved by the Director, and that failure to obtain such approval may subject the Developer to sanctions pursuant to Section III of this MOU. The Developer shall submit quarterly LSDBE contracting and subcontracting reports, in the form of Attachment B, to OLBD no later than forty-five (45) days aflter the end of each calendar quarter after the commencement of the Preconstruction/Construction Phase; the quarterly report periods shall begin on January 1, April 1, July 1, and October 1. These reports should include detailed

G.

H.

documentation of outreach efforts to LSDBEs in order for OLBD to review all efforts being made by Developer to meet the 35% Goal. i. The Representatives of Developer shall meet quarterly with OLBD staff on a mutually agreeable schedule to discuss. LSDBE participation during all phases of the Project. The Developer fitrther agrees to include in the terms of its contractual agreements with the general/prime contractor(s) and/or construction manager (any such general contractor or construction manager, the "General Contractor"), language that requires the General Contractor to achieve the 35% Goal in (1) its own contracting with respect to the Project, and (2) engaging subcontractors to perform work on the Project, and the General Contractor will require that any of its contractors include in all lower-tier contracts a provision requiring such lowertier subcontractors to achieve the 35% Goal. Developer shall take responsibility for training the General Contractor and any subcontractors to ensure that they understand the economic development commitments made by Developer. Developer shall employ and maintain an aggressive contract tracking and monitoring program, along with a prescribed and detailed means of dealing with inconsistent, incorrect and/or tardy reports. To the extent that Developer - experiences or discovers non-compliance with this MOU, Developer shall have the right to require that additional retainage be withheld from non-complying contractors (including the General Contractor) until complete and correct documentation reflecting bona fide efforts to achieve the 35% Goal is submitted. Contractors shall be advised that any and all non-compliance with this MOU may negatively impact all future opportunities with the Developer or the General Contractor, as applicable. K. The Developer will publish or cause to be published, a reasonable period prior to any bid opening, a public notice in a newspaper of general circulation in the Distiict of Columbia and in one or more other newspapers serving the District of Columbia local business community, to inform the business community as a whole of the overall Project including a general description of projected phases and anticipated time tables. For purposes of this MOU, Developer agrees to cause the following to occur with respect to the General Contractor and to require that the General Contractor cause the following to occur with respect to its contractors and subcontractors: 1. Each contractor subject to this MOU will publish a public notice in a newspaper of general circulation in the District of Columbia, and in other newspapers serving the District of Columbia local business-community, designed to inform the business community as ~i whole of specific contracting and subcontracting procurement opportunities.

J.

L.

__

-5-

2.

Each contractor subject to this MOU will publish public notices in a newspaper of general circulation in the District of Columbia and in one or more other newspapers setting the District of Columbia local business community, soliciting bids for products or services being sought, and will allow a reasonable time for all bidders to respond to the invitation for bid. Each contractor subject to tiffs MOU will contact OLDB to obtain a current listing of all LSDBEs qualified to bid on procurements as they arise. Each contractor subject to this MOU will negotiate with each bidder prequalified by the Developer and the General Contractor, including LSDBEs, to obtain such bidders best and final price as understood in the marketplace. The General Contractor will not require that LSDBEs provide bonding on contracts with a dollar value less than $100,000, provided that in lieu of bonding the General Contractor may accept a job specific certificate of The General Contractor will design and include in all contracts and sub~ntracts a process for dispute settlement. This process shall incorporate an opportunity for th~ presentation of documentation involving the work performed and invoices regarding requests for payments. Included in such contracts shall be .a provision for selecting a mutually agreed upon mediator or provisions for arbitration in accordance with the rules of the American Arbitration Association. Each contractor subject to this MOU shall strictly adhere to their contractual obligations to pay all subcontractors in accordance with the contractually agreed upon schedule for payments. In the event that there is a delay in payment to the General Contractor, the General Contractor is to immediately notify any affected subcontractor and advise as to the date on which payment can be expected. The General Contractor commits to pay all subcontractors, including LSDBEs, in accordance with the temas of the relevant subcontract, within thirty (30) days following the General Contractors receipt of a payment, which includes funds for such subcontractors, from the Developer. The Developer agrees to require the General Contractor to establish a procedure for giving notice to the subcontractors of the Developers payment to the General Contractor.

3.

4.

5.

6.

7.

8.

-~.v

In order to encourage the Develope~. to develop creative, cost competitive ways in which to meet its 35% Goal, OLBD will give credit for new opportunities created by the Developer in areas not traditionally made available 1o LSDBEs and for the

expansion of opportunities in existing areas (such opportunities, "Creative Opportunities"). In the event that Developer believes them are no LSDBEs in the District of Columbia that are able to manufacture, construct, distribute, install, or otherwise supply the goods and services required for the Project, or a particular component or phase of the Project, at reasonable prices and terms, and the Developer provides reasonably satisfactory evidence to OLBD that it has made bona fide efforts to identify and hire qualified LSDBEs for such goods and sea"vices, the Developer may request from the Director that (i) such goods and service.s be excluded from the 35% Goal Guideline, or (ii) that a reduction be made in the total dollars allocated for LSDBE participation for the Project. If the Director approves any such request (which approval shall not be unreasonably withheld, conditioned or delayed), the parties hereto shall accordingly modify the 35% Goal and the LSDBE 35% Goal Guideline. Ill. SANCTIONS A. At the end of the Operational Phase, the Developez shall notify the Director in writing that such Operational Phase has been completed, and provide any documentation evidencing Develppers attainment of(or failure to attain) the 35% Goal and compliance with the terms of this MOU that may be reasonably requested by the Director. if, within 60 days after the Directors receipt of such documentation, the Director, in his or her reasonable discretion, determines that the D~veloper has not achieved the 35% Goal, after considering all Creative Opportunities, then the Director shall promptly inform the Developer in writing of such determination and indicate the amount of the shortfall as calculated below (the "Shortfall Amouni"). Upon rec*ipt of the Directors notice, Developer shall inform the Director in writing of its election to either (i) enter into an extension of this MOU for a period not to ~xce~ 5 years pursuant to which Developer shall achieve LSDBE paltieipation in Operational Costs equal to the Shortfall Amount (which extension shall provide that failure to comply with its terms shall produce a default yielding liquidated damages from the Developer in the sum of the thencalculated Shortfall Amount) or (ii) deposit funds in an amount equal to the Shortfall Amount into escrow pursuant to an escrow agreeauent mat~aially similar to the escrow agreement attached hereto as Attachment C (the "Escrow Agreement"). The Shortfall Amount shall be calcutated as follows: (a) for either or both of the Preconstruction/Construction Phase or the Operational Phase, as applicable, the difference between the dollar value of the portion of the 35% Goal attributable to such phase(s) pursuant to the 35% Goal Guideline and all amounts paid to LSBDEs under contracts to fund-~ith~r Preconstruction/Constluction Costs or Operational Costs, as applicable (after taking into account all Creative .Opportunities), during such phase(s) (b) times 5%. The Escrow Agreement shall provide that, promptly upon Developers payment of the Shortfall Amount into escrow, the Director and the Developer will work diligently and in good faith to mutually agree on the most appropriate manner for expending such funds at the Project for the benefit of the LSDBE community.

-7-

B.

The parties hereto understand and agree that the means of achieving the 35% Goal may vary according to the types of goods and services contracted for and the current availability of Certified LSDBEs. If the Developer determines that it is not on track to meet its 35% Goal Guideline on the dates set forth in Section iI.F above, the Representatives and the Director of OLBD shall meet and discuss the possibilities for adjusting goals and strategies to extend the time of performance based on facts and circumstances.

IV.

MISCELLANEOUS A. Successors and Assigns. 1. OLBD hereby consents to the a~ignment of all of the rights and obligations of the Developer under this MOU to the limited liability company or limited partnership (or companies or partnerships) to be created by Developer that will receive assignment of all or a pordon of D~welopers rights to own and operate the Site, as the same is to be redeveloped through the Project, provided that (i) any such assignment is in accordance with and permitted by Section 2.1.1 of the LDA and (ii) any such assignee agrees in writing to undertake all obligations and liabilities of Developer set forth under this Agreement, as the same may be amended in the future. OLBD also consents to the transfer of any interests in the Developer that are permitted under Article II of the LDA. Upon a permittM assignment of its entire interest in the Site, Developer shall be released from all obligations and liabilities under this MOU that are imposed upon Developer or would accrue at any time after the day such permitted assignment occurs. For any partial transfer of Developers interest as permitted under Section IV.A.1 above in the Site (that is performed in sccordanee with the foregoing paragraph), this MOU shall he bifurcated, and accordingly amended, such that it shall apply, on a pro rata basis, to the permitted transferee to the extent of such transferees ownership of such real properly (and Developer shall be relca~d from liability hereunder to the extent of the real properly transferred), but Developer shall not be released from its obligations under this MOU, on a pro rata basis, insofar as this MOU applies to that portion of the real property retained by Developer.

2.

B.

Entire Agreement It is expressly understood that this MOU is not the exclusive agreement between the parties governing the commitments of Developer to contra~t with..tmd hire LSDBEs for the Project. Any additional obligations set forth in the LDA (or any other agreement entered into pursuant to the LDA) shall not be limited or affected in any way by the terms and conditions set forth herein. Relationship to LDA. In the event of.any conflict between the terms of this MOU and the LDA relating to the subject matter addressed h~rcin, this MOU shall govern. In the event that the LDA is materially modified from the form agreed to

C.

by ODMPED and the Developer on May 12, 2005, and if any material amendment to the LDA affects the terminology or substance of this MOU, the parties shall work together in good faith to revise this MOU in accordance with such modified terms.

-9-

IN WITNESS WHEREOF the parties hereto have executed this MOO as of the dates set forth I~low.

DATE THIS

~4~

DAYOF ~U/O~ DE~LOP~ ~ ~STS L~I~D PARt.HIP

,20 O~

OFFICE OF LOC~ BUS~ESS DE~LOP~ _

By: Se~or Vice President DE.OPt: BF ~hstone-Smith ~m~g T~t By:. Title:
Execut:~ve Vice President

-10-

GOVERNMENT OF THE DISTRICT ~)F cOLUTC/B|A OFFICE OF LOCAL BUSINESS DEVELOPMENT

ATTACHMENT A CONTRACTING AND SUB-CONTRACTING PLAN

IRB CLIENT/PRIVATE DEVELOPER: Hines Interests Limited Partnership and Archstone-Smith Operating Trust

ADDRESS: c~o ltines~ 555 Thirteenth Street, N.W., Suite 1020-East, Washington, D.C, 20004

TELEPHONE: (202} 347-6337 TOTAL ESTIMATED CONTRACT AMOUNT: $

FAX: (202) 347-2802

TOTAL ESTIMATED AMOUNT TO BE SUB-CONTRACTED TOTAL ESTIMATED LSDBE PARTICIPATION $ PERCENTAGE OF LSDBE CONTRACT AMOUNT (%) NAME OF LSDBE L/A/SON: Howard Riker (Hines) and Robert Williams (L.S. Caldweli & Assodates) ADDRESS: Hines (See Above); L.S. C:tldwell: 8811 Coles~llle Road, Suite 1, Sliver Spring, MD 20910 TELEPHONE: Hines (See Above); L.S. Caldwell: (301) 587-7600 FAX: Hines (See Above)~.I2S. Caldweil:

(30~) SS~7-003S

NAME OF GENERAI~RIME CONTRACTOR AND/OR CONSTRUCTION MANAGER: ADDRESS:

TELEPHONE:
FORM LBOC- 00! A

FAX:

GOVERNMENT OF THE DISTRICT OF COLUMBIA OFFI(~E OF LOCAL BUSINESS DEVELOPMENT

ATTACHMENT B

INDUSTRIAL REVENUE BOND AND PRIVATE DEVELOPMENT PROJECT QUARTERLY LOCAL, SMALL A1TD DISADVANTAGE BUSINESS ENTERPRISES EXPEI~IDITURE REPORT FORM QUARTER: Fourth Quarter, 200_ DATE PREPARED: __

PROJECT NAMe: Former Convention Center Site Redevelopment ADDRESS: 900 Ninth Street, N.W., Washing~on, D.C. 20001 PROJECT CONTACT: Howard Rlker/Robert Williams TELEPHONE: (202) 347-6337/(301) 58~/-7600 FAX: (~02) 347-2802/(301) 587-0035 ANTICIPATED PROJECT COMPLETION DATE:

PART A.
QUARTER 1 3 4 TOTAL TOTAL AMT. EXPENDED TO DATE

EXPENDITURE SUMMARY
TOTAL AMOUITI" EXPi~IDED wrrH LSDBES TO DATE I~DBES (%) OF EXpE~ID~D AMT. TO DATE TOTAL AMOU~T F~X PI~qDED IBIS QUARTER TOTAL AMOUITI" EXP. W/LSDEE~ THIS QUARTER LSDBES ~%) P~R(~3~TAGE Tills QUAI~FR

PART i~.

LOCAL, SMALL AND DISADVA1TIAGE BUSINESS ENTERPRISE EXPEDITURE VERIFICATION

LSDBE CERT. NUMBER DATE OF AWARD DATE OF PA ~1F,l~r. DI~Ts4~IPTION OF GOODS/SF~VI~E~ AMOUNT OF EXPI~ID1TURE

I~AME O1~" LOCAL, SMALL A~D DISADVANTAGE BUS. EI~rgRPRISE

Attachment C to MOU

ESCROW AGREEMENT This Escrow Agreement (the "Agreement") is made and entered into as of__ 200_ among (i) the DISTRICT OF COLUMBIA, acting by and through its OFFICE OF LOCAL BUSINESS DEVELOPMENT ("OLBD"), (ii) (a) [HINES INTERESTS LIMITED PARTNERSHIP and (b) ARCHSTONE-SMITH OPERATING TRUST] [or applicable Parcel owner] (collectively, and together with their successors and assigns, the "Developer"), and (iii) , as escrow agent ("F_,scrow Agent"). A. OLBD and Developer entered into the LSDBE Memorandum of Understanding dated as of June 8, 2005 (the "Memo~mdum of Understanding"), for the purpose of establishing agreement regarding the use of certified Local, Small and Disadvantaged Business Enterprises in the District of Columbia. B. Pursuant to the Memorandum of Understanding, Developer is subject to sanctions if il fails to meet the 35% Goal. If sanctions are imposed, Developer may be required to place funds equal to the Shortfall Amount into escrow while OLBD and Developer determine the most appropriate manner for expending such funds for the benefit of the LSDBE community. C. This Agreement is being executed and delivered in connection with the foregoing transactions as contemplated by the Memorandum of Understanding. NOW, THEREFORE, in consideration of the representations, warranties, covenants and agreements herein contained and in the Memorandum of Understanding, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto agree as follows: 1. Definitions. All capitalized terms used but not otherwise defined in this Agreement shall have the meanings given to them in lhe Memorandum of Understanding. 2. A_p_p0.!ntment of Escrow Agent. Developer hereby designates, and OLBD approves, the appointment of Escrow Agent to serve as escrow, agent with respect to the funds (equal to the Shortfall Amount) deposited in accordance with Section 3 hereunder (such funds, the "E~row Funds"). Escrow Agent accepts its appointment as Escrow Agent hereunder and agrees to act strictly in accordance with the terms and conditions set forth herein, until the complete release of the Escrow Funds and termination of this Agreement in accordance with the provisions of Section 5 below. OLBD and Developer hereby authorize the Escrow Agent to take such actions on tb. eir behalf under the provisions of this Agreement and to exercise such powers and to perform such duties hereunder as are specifically delegated to or required ofth~ Escrow Agent by the terms hereof and such other powers as are reasonably incidental thereto. 3. Escrow Funds. Within ninety (90) days after the Developers eleetion to pay the Shortfall Amount pursuant to the Memorandum of Understanding, Developer shall .ii

__

deliver the Escrow Funds to the Escrow Agent, and Escrow Agent shall invest the Escrow Funds into the Escrow Account, pursuant to Section 4, within 5 business days thereatler. 4. Investment of the Escrow Deposit. The Escrow Funds shall be invested in the name of Escrow Agent in a separate federally-insured interest beating account (the "Escrow Account") at a commercial bank mutually acceptable to the Developer and OLBD. Interest earned on any part of the Escrow Funds (i) fast, shall be applied to any fees of the Escrow Agent payable under this Agreement in accordance with Paragraph 13, and (ii) second, shall be added to and included as part of the Escrow Funds, and such interest shall be allocated, for income tax purposes, to Developer. 5. Disbursement, Application and Termination. Promptly upon the Developers payment of the Escrow Funds into the Escrow Account, the Developer and OLBD will work diligently and in good faith to mutually agree on the most appropriate manner for expending the Escrow Funds at the Project for the benefit of the LSDB13 community. Upon reaching such agreement, OLBD and Developer shall produce a plan for implementing the agreed upon expenditure of the Escrow Funds and submit such plan to Escrow Agent. Escrow Agent then shall disburse the Escrow Funds in accordance with said plan, as mutually agreed upon by OLBD and the Developer pursuant to Section III.A of the Memorandum of Understanding. Upon disbursement of the last of the Escrow Funds, this Agreement shall terminate and be of no further force and effect.

7. Representations and Warranties. Developer represents and warrants to OLBD and Escrow Agent that (i) the execution and delivery of this Agreement by Developer, and the consummation and performance by Developer of the transactions contemplated hereby, have been duly and validly authorized by Developer;, (ii) Developer has the power and authority to execute and deliver this Agreement and perform its obligations hereunder; and Off) this Agreement has been duly executed and delivered by Developer and constitutes the legal, valid and binding obligation of Developer, enforceable against Developer in accordance with its terms (except as enforceability may be limited by applicable bankruptcy, insolvency, moratorium or similar laws affecting creditors rights generally or by principles governing the availability of equitable remedies). OLBD represents to Developer and the Escrow Agent that the District of Columbia has caused its duly authorized representative to enter into this Agreement on its behalf. 8. Obligations of the Escrow Agent.

(a) It is agreed that the duties and obligations of the Escrow Agem are those expressly provided herein. The Escrow Agent shall not have any liability under, oi duty to inquire into, the terms and provisions Of any agreement, other than this Agreement. The Escrow Agents duties are ministerial in nature and the Escrow Agent shall not incur any liability whatsoever so long as it has acted in good faith except for any liability arising out of its gross negligence. (b) In the event either OLBD or Developer disputes the right o f the other party to expend any portion of the Escrow Funds (or the right or obligation of the Escrow

Agent to disburse any of the Escrow Funds), the Escrow Agent shall continue to hold such portion of the Escrow Funds in the Escrow Account until such time as the dispute is resolved by (a) mutual agreement oftbe parties or (b) a final judgment or a court order issued by a court of competent jurisdiction. (c) The Escrow Agent may consult with counsel of its choice, including without limitation, in-house counsel, and shall not be liable for any action taken, suffered or omitted by it in ac, ordance with the advice of such counsel. The Escrow Agent shall not be bound by any modification, amendment, termination, cancellation, rescission or ~ppression of this Agreement unless the same shall be in writing and signed bythe parties and, if its rights or dudes as Escrow Agent hereunder are affected thereby, by the Escrow Agent as (d) In the event that the Escrow Agent shall be uncertain as to its duties or rights hereunder or shall receive instructions, claims or demands from any party hereto which, in its opinion, conflict with any of the provisions of this Agreement, its sole obligation shall be to keep safely the Escrow Funds until it shall be directed oth~vise in writing by the parties hereto or by a final judgment or a court order issued by a court of competent jurisdiction. (e) The Escrow Agent shall not incur any liability for following the instructions herein contained or expressly provided for, or other written instructions given jointly by the p.arties hereto. (f) The Escrow Agent shall not have any responsibility for the genuineness or validity ofany document or other item deposited with it and any liability for action in accordance with any written instructions given to it hereunder and believed by it to be signed by the proper parties. (g) The Escrow Agent shall not be required to institute legal proceedings of any kind and shall not be required to initiate or defend any legal proceedings that may arise in respect of the subject matter of these instructions. 9. Liabilitx. The Escrow Agent shall not be responsible or liable in any manner whatsoever for the performance of or by OLBD or Developer of their respective obligations under this Agr~menL nor shall the Escrow Agent b, responsible or liable in any manner whatsoever for the failure of the other parties to this Agreement or of any third party to honor any of the provisions of this Agreement. 10. ~ignation or Replacement of Escrow Agent. The Escrow Agent may resign and be discharged from its duties hereunder by giving written notice of its resignation to the parties hereto, specifying a date (not less than thirty 00) calendar days afro:the date such notice is received by both OLBD and Developer), wben such resignation will take effect. Upon the effective date of such resignation, Escrow Agent shall deliver all Escrow Funds then rgmaining in e~row to such person or entity as OLBD and Developer jointly designate in writing. Upon such delivery of the Escrow Funds and the assumption by the replacement escrow ag~at (or other recipient) of.Escrow Agents duties under this Agrezment, the Escrow Agent shall be relieved of all further obligations, duties, and liabilities thereailer accruing or arising

under this Agreement. OLBD and Developer shall have the right at any time to substitut~ a new escrow agent in place of the Escrow Agent by giving joint notice thereof to the Escrow Agent, in which event the Escrow Agent shall immediately upon demand therefore pay over all of the Escrow Funds then remaining in the Escrow Account to such person or persons as OLBD and Developer jointly direct in writing..

12. Construction of the Instruments by Escrow Agent. In accepting the terms hereof, it is ag~zl and understood between the parties hereto that the Escrow Agent will not be called upon to construe any contract or instnancnt in connection herewith and shall bc required to act in respect of the deposits herein made only as directed herein. 13. Fees of Escrow Agent. The fees of the Escrow Agent shall be $ per year. Such fees, and any other expenses of Escrow Agent payable under this Agreement, shall be paid (i) flint, to the extent available, ~om intere_~t camcd on any part ofth~ Escrow Funds, and (ii) second, by Deve|oper. 14. Governing Law. This Agreement shall b~ construed in accordance with, and governed by, the laws of the District of Columbia. Each party to this Agreement shall have the right to enforce specifically the terms and provisions of this Agreement in any court of the United States located in the District of Columbia or in District of Columbia Superior Court, this being in addition 1o any other remedy to which they are entitled at law or in equity or under this Agreement. In addition, each of the parties hereto (a) consents to submit such party to the personal jmisdiction of any Federal court located in the District of Columbia or any District of Columbia state court in the event any dispute arises out of this Agreement or any of the transactions contemplated hereby, (b) agrees that such party will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court and (c) agrees that such patty will not bring any action relating to this Agreement or any of the transactions contemplated hereby in any court other than a court oftbe United States located in the District of Columbia or a District of Columbia Superior CourL It is further agreed that any breaching or defaulting pany hereunder shall pay to the other parties hereto such out of pocket costs and expenses, including legal and accounting fees, as are reasonably incuned in pursuit of such parties remedies hereunder. 15. Notices. Any notice, statement, request, demand, waiver, consent, approval or other communication which is required or permitted hereunder shall be in writing and shall be deemed given only if delivered personally or sent by facsimile (with confirmation of transmission), by recognized courier service (with receipt acknowledged) or by registered or certified mail, postage prepaid, as follows: (a) If.to OLI~D, to: Office of Local Business Development 441 Fourth Street, N.W. Washington, DC 20001 Attn: Director of Office of Local Business Development -

Tel: Fax:

(b)

If to the Developer to:

with a copy to: Hines Interests Limited Partnership and Arehstone-Smith Operating Trust c!o Hines 555 13~h Street, N.W., Suite 1020-East Washington, D.C. 20004 Tel: Fax: (c) If to the Escrow Agent, to:

or such other address as the addressee may have specified in a notice duly given to the sender as provided herein. Such notice, request, demand, waiver, consent, approval or other communication shall be deemed to have been given as of the date so delivered personally or by courier, or if sent by facsimile, when receipt of transmission has been received, or five (5) business days atter deposited in the mail. 16. Contents of Agreement, Parties in Interest Assignments etc. This Agreement and, as to Developer and OLBD only, the Memorandum o.fUnderstanding~ set forth the entire understanding of the parties hereto with respect to the subject matter hereof, This Agreement shall not be amended exeept by written instnunent duly executed by OLBD and Developer and acknowledged and accepted by the Escrow Agent; Developer shall not be entitled to assign its fights hereunder unless the assignee first agrees in writing to be bound by and assume all of the obligations of Developer hereunder and under the Memorandum of Understanding. OLBD may assign this Agreement or any of its fights and obligations hereunder to another agency or department of the District of Columbia. All of the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respeetive heirs, representatives, successors and assigns of the parties hereto. It is specifically understood and agreed that this Agreement is not intended to limit or alter, and does not in any way limit or alter, any obligations of Developer, or rights of OLBD, pursuant to the Memorandum of Understanding. 17. Coo_oeration. Subject to the terms and conditions hereof, each of the parties hereto shall use its best efforts to take, or cause to be !aken, such action to e.xeeute and deliver, or cause to be executed and delivered, such additional documents and instruments and to

do, or cause to be done, all things reasonably necessary, proper or advisable under the provisions of this Agreement and under applicable law to consummate and make effective the transactions contemplated by this Agreement. 18. Counterparts. This Agreement may be executed in aOy number of counterparts and any parts hereto may execute any such counterpart, each of which when executed-and delivered shall be deemed to be an original and all of which countorparts taken together shall constitute but one and the same instrument. This Agreement shall become binding when one or more counterparts taken together shall have been executed and dolivered by the parties. It shall not be necessary in making proof of this Agreement or any counterpart hereof to produce or account for any of the other counterparts. (signature page follows)

IN WITNESS WHEREOF, the parties hereto have duly execut~ this Escrow Agr*ement as 9f the dato first written. DISTRICT OF COLUMBIA, acting by. and through its OFFICE OF LOCAL BUSINESS DEVELOPMENT

By:. Name: Title: DEVELOPER: HINES INTERF~TS LIMITED PARTNERSFIP BY: Hines Holdings, Inc., its general partner

By:.. Name: Title: DEVELOPER: ARCHSTONE~MITH OPERATING TRUST

By:. Name: Title: ESCROW AGENT

By:.. Name: Title:

Attachment D Eligible Costs Exclusions District Fees and Taxes Deed Recordation Fees Tranzfer Taxes Real Estate Taxes Downtown D.C. Business Improvement Taxes Mortgage Recording Taxes Building Permit Fees District-Required Inspections Bonding/Warranty Requirements Other Recordation/Review Fees District Payments Initial Payments Base Rent Related Companies Payment Finance/Construction Warranties/Letters of Credit/Guarantie~Deposits Builders Risk Insurance Title Insurance Utilily Connection Fees Imputed Development Period Return/Debt Service/Principal Repayment Loan/Equity Application/Commitment Fees Escrow Agent Fees Bank Fees Contingencies Marketing. Tenant Leasing Broker Commissions For-Sale Housing Buyer Broker Commissions Developer Leasing Agent Developer For-Sale.Housing Sales Agent Tenant Allowances (To the Extent Developer not a Party to Tenant Construction ContracO Fee~/G~ Developer Fees Developer Direct Salaries, Benefits, and Burden Developer Overhead, including Corporate Allocations, Rent, Phone, Postage, and Delivery Property Manager (If art Affiliate of Owner)/~!otel Manager Fees _

Property Manager (If an Affiliate of Owner)/Hotel Manager Direct Salaries, Benefits, and Burden Legal Development Agreement Ground Lease For Sale Covenants Escrow Agreement Agreements between Primary Members Agreements with Key Professionals Master Plan Litigation Zoning & Land Use Georgetown Fees and Georgetown Additional Payment (if applicable) Operating Deficits (Prior to Stabilization)

Schedule 17 Intentionally Deleted

HOU03:1127065.12::ODMAkPCDOCSkHOU03\I 127065\12

17-1

Schedule 18 Intentionally Deleted

HOU03:1127065. t 2::ODMA\PCDOCS\HOU03\ I 127065\ 12

18-1

Schedule 19 Intentionally Deleted

HOU03 : 1127065,12::ODM A\PCDOCSkHOU03\I 127065\12

20-1

Schedule 20 Title Commitment

HOU03:1127065.12::ODMAkPCDOCSLHOU03\1127065\12

20-1

COMMONWEALTH LAND TITLE INSURANCE COMPANY COMMITMENT FOR TITLE INSURANCE SCHEDULE "A" ] September 25, 2007 @ 8:00 A.M. Old Washington Convention Center Square. 3.7.4, Was~! n~on_! D;~.C... ................................... Inquiries should be directed to: [i Baker Botts LLP ]. .........................................................................................................................................

1.

LandAmerica Commercial Services 1015 15th Street, N.W., Suite 300 Washington, D.C. 20005 phone: 202-216-9238 fax: 202-216-9238 Attn: Phil Gardner (direct: 202-312-5132) pgardner@landam.com Policy or Policies to be issued: (A) ALTA Owner Policy: 1992 Amount: To Be Determined with ALTA 13 Leasehold Endorsement Proposed INSURED: (B) ALTA Loan Policy: 1992 To Be Determined Amount: To Be Determined

with ALTA 13.1 Leasehold Loan Endorsement Proposed INSURED: 2. To Be Determined

The estate or interest in the land described or referred to in the Commitment and covered herein is Fee Simple and Leasehold as leasehold estate is defined in paragraph 1-c. of the ALTA Leasehold Endorsement Form (ALTA Form 13) attached hereto and made part hereof. Title to said estate or interest in said land is at the effective date hereof vested in: The District of Columbia, a municipal corporation: Noted for Informational _Purposes: Site control of the old Washington Convention Center was transferred to the Washington Convention Center Authority by Resolution 15-3 71, dated December 16, 2003, and made by the Council of the District of Columbia (Parcels 1 through 4)

3.

4.

The land referred to in this Commitment is situate in the District of Columbia and is described as follows: See attached Exhibit "A"

Countersigned:

~ ~~-~
Authorized Officer or Authorized Signatory l/arid Only If Schedule B and Cover Are Attached

COMMONWEALTH LAND TITLE INSURANCE COMPANY COMMITMENT FOR TITLE INSURANCE Commitment No. 06-001726 Amended IV

Schedule B --- Section I

The following are the requirements to be complied with: 1. 2. 3. Pay the agreed amounts for the interests(s) to be insured. Pay us the premiums, fees and charges for the policy. Instruments satisfactory to create the estate or interest to be insured must be properly executed, delivered and duly filed for record. A. B. Deed and/or Lease from the current owner to the Proposed Insured. Deed of Trust from the Proposed Insured, securing indebtedness and obligations in favor of the Proposed Insured Lender.

Note: A properly completed, executed and acknowledged Combined Real Property Deed Recordation Tax and Real Property Transfer Tax Return ("FP-7C") must accompany each deed and deed of trust submitted for recordation. Note: As of October 1, 2006, the Office of the Recorder of Deeds will assess the following charges in connection with transfers submitted for recordation, unless an exemption can be established: (1) Transfer Tax (deeds only) calculated at the rate of: (a) 1.45% of consideration on all commercial properties and residential properties conveyed for consideration of $400,000 or greater; or (b) 1.1% of consideration on all economic interest deeds (regardless of amount) and deeds of residential property conveyed for consideration less than $400,000. NOTE: Transfer tax is also payable on new leases or assignments of existing leases with original terms including renewals of 30 years or more. Calculations vary. Please consult with the underwriter. (2) Recordation Tax (deeds and deeds of trust) calculated at the rate of: (a) 1.45% of consideration on deeds of all commercial properties and residential properties conveyed for consideration of $400,000 or greater;

COMMONWEALTH LAND TITLE INSURANCE COMPANY COMMITMENT FOR TITLE INSURANCE Commitment No. 06-001726 Amended IV ]I (b) 1.45% of consideration for all deeds of trust, regardless of type of property or amount; and (c) 1.1% of consideration on all economic interest deeds (regardless of amount) and deeds of residential property conveyed for consideration less than $400,000. NOTE 1 : Recordation tax is also payable on new leases or assignments of existing leases with original terms including renewals of 30 years or more. Calculations vary. Please consult with the underwriter. NOTE 2: All security interest instruments (including purchase money) that qualify for exemptions pursuant to DC Code 42-1102 (including, but not limited to residential Class I Property) will continue to be exempt from recordation taxes. 4. The Company must be advised in writing of the name of any party not referred to in this Commitment who will acquire an interest in the land, or who will either obtain or make a loan or mortgage encumbering the land. The Company may then make additional requirements, or take additional exceptions to coverage on Schedule B, Section All real property taxes and assessments, general and special, must be paid through September 30, 2007. (Note: The property is currently exempt from taxation) Payment of all business improvement district taxes ("BID" Taxes) for the 2005-2007 Fiscal Year. The property referred to herein is situate within the boundaries of the Downtown Business Improvement District ("Downtown BID"). (Note: The property is currently exempt from BID taxes) Intentionally Deleted. A plat or survey must be submitted which has been made in accordance with "Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys"jointly established and adopted by ALTA and ACSM in 2005, and which meets the accuracy requirements of the appropriate classification ofcadastral survey. Matters disclosed by the survey which in the Companys judgment constitute defects in title to the property will be shown as exceptions to coverage under the proposed policy, replacing the general survey exception currently shown on this Commitment in Schedule B, Section If, Paragraph 2D. Release of the property to be conveyed from the lien of the Leasehold Deed of Trust, Assignment of Rents and Security Agreement dated July 1, 2004 from Washington Convention Center Authority to TRSTE, Inc., Trustee, and recorded July 26, 2004 as

5. 6.

7. 8.

9.

COMMONWEALTH LAND TITLE INSURANCE COMPANY COMMITMENT FOR TITLE INSURANCE

~Commitment No
Instrument Number 2004102817. 10.

06-001726 Amended IV I[

Release of the property to be conveyed from the Agreement of Owner of Fee Interest dated July 1,2004 from The District of Columbia to TRSTE, Inc., Trustee, and recorded July 26, 2004 as Instrument Number 2004102818. Release of the proper to be conveyed from the Uniform Commercial Code Financing Statement naming Washington Convention Center Authority and The District of Columbia as Debtors and Wachovia Bank, National Association as Secured Party, recorded in the Land Record July 26, 2004 as Instrument Number 2004102819 and in the Chattel Records July 26, 2004 as Instrument Number 2004102820. Intentionally Deleted. Intentionally Deleted. Evidence must be submitted of the termination, proper abandonment, or other disposition of the following Agreement(s) Relating to the Occupation of Sub-Surface Public Space(s) (Vaults) recorded among the Land Records of the District of Columbia: a. August 21, 1969 as Instrument No. 16467 in Liber 13024 at Folio 455 (re: Former Lot 32 in Square 373)(Satisfied by Instrument No. 2007035248, recorded March 13, 2007); b. August 28, 1969 as Instrument No. 17010 in Liber 13026 at Folio 515 (re: Former Lot 800 in Square 374) (Satisfied by Instrument No. 2007035249, recorded March 13, 2007); c. September 2, 1969 as Instrument No. 17260 in Liber 13027 at Folio 523 (re: Former Lot 826 in Square 373) (Satisfied by Instrument No. 2007035250, recorded March 13, 2007); September 10, 1969 as Instrument No. 18078 in Liber 13031 at Folio 59 (re: Former d. Lot 829 in Square 374) (Satisfied by Instrument No. 2007035251, recorded March 13, 2007); e. September 17, 1969 as Instrument No. 18656 in Liber 13033 at Folio 261 (re: Former Lot 842 in Square 373) (Satisfied by Instrument No. 2007035252, recorded March 13, 2007); f. October 3, 1969 as Instrument No. 20076 in Liber 13039 at Folio 74 (re: Former Lot 10 in Square 344) (Satisfied by Instrument No. 2007035253, recorded March 13, 2007); g. December 8, 1969 as Instrument No. 24739 in Liber 13057 at Folio 584 (re: Former Lot 827 in Square 373) (Satisfied by Instrument No. 2007035254, recorded March 13, 2007); h. December 8, 1969 as Instrument No. 24794 in Liber 13058 at Folio 38 (re: Former Lot 33 in Square 373) (Satisfied by Instrument No. 2007035255, recorded March

11.

12. 13. 14.

COMMONWEALTH LAND TITLE INSLrRANCE COMPANY COMMITMENT FOR TITLE INSURANCE Commitment No. 06-001726 Amended IV

i. j. k. I. m.

13, 2007); December 15, 1969 as Instrument No. 25243 in Liber 13060 at Folio 348 (re: Former Lot 836 in Square 374) (Satisfied by Instrument No. 2007035256, recorded March 13, 2007); December 18, 1969 as Instrument No. 25581 in Liber 13061 at Folio 575 (re: Former Lot 834 in Square 374) (Satisfied by Instrument No. 2007035257, recorded March 13, 2007); January 7, 1970 as Instrument No. 243 in Liber 13066 at Folio 15 (re: Former Lot 839 in Square 374) (Satisfied by Instrument No. 2007035258, recorded March 13, 2007); January 8, 1970 as Instrument No. 324 in Liber 13066 at Folio 226 (re: Former Lot 829 in Square 373) (Satisfied by Instrument No. 2007035259, recorded March 13, 2007); June 5, 1970 as Instrument No. 9845 in Liber 13107 at folio 622 (re: Former Lot 845 in Square 374) (Satisfied by Instrument No. 20070352460 recorded March 13, 2007).

t 5.

There are several pending civil actions which must be monitored to assure that no judgment is entered against Washington Convention Center Authority prior to the closing of this transaction. Execution, delivery and recordation of Termination of Lease Agreement between The District of Columbia and Washington Convention Center Authority dated as of July 1, 2004 and recorded July 26, 2004 as Instrument No. 2004102816.

16.

17.

With regard to the District of Columbia, a Municipal corporation, the following is required: a. Copy of the resolution in the Council of the District of Columbia, or Legal Opinion from the Office of the Attorney General which is sufficient in the Companys judgment to establish that the sale and conveyance of the property referred to in this Commitment has been duly authorized; b. Copy of the Delegation of Authority signed by the Mayor of the District of Columbia which will evidence of the identity and authority of the person or persons who will execute, acknowledge and deliver the deed or other conveyance of the property on behalf of the District of Columbia, in favor of the Proposed Insured.
NOTE: Requirements set forth in #17 a & b have been satisfied.

COMMONWEALTH LAND TITLE INSURANCE COMPANY COMMITMENT FOR TITLE INSURANCE .... Commitment No. 18. 19. Intentionally Deleted. Title company must be provided with a copy of a passes and approved Congressional Bill conveying that parcel of land known as Reservation 174 to The District of Columbia. Note: The District of Columbia for assessment and taxation purposes wilt need to assign Lot and Square numbers to Reservation 174 upon conveyance to The District. (End of Schedule B- Section I) 06-001726 Amended IV

COMMONWEALTH LAND TITLE 1NSLrRANCE COMPANY COMMITMENT FOR TITLE INSURANCE Commitment No. 06-001726 Amended IV ] Schedule B -- Section II Schedule B of the policy or policies to be issued will contain exceptions to the following matters unless the same are disposed of to the satisfaction of the Company: 1. Defects, liens, encumbrances, adverse claims or other matters, if any, created, first appearing in the public records or attaching subsequent to the effective date hereof but prior to the date the proposed Insured acquires for value of record the estate or interest or mortgage thereon covered by this Commitment. Standard Exceptions: Rights or claims of parties in possession not shown by the public records. A. Easements or claims of easements, not shown by the public records. B. Any lien or right to a lien, for services, labor, or material heretofore or hereafter C. furnished, imposed by law and not shown by the public records. D. Encroachments, overlaps, boundary line disputes, or other matters which would be disclosed by an accurate survey or inspection of the premises. NOTE: Upon receipt of a satisfactory owners affidavit and the ALTA/ACSM survey as noted in Schedule B - Section I hereof, exceptions A-D above will not be appear in the final policies, or will be modified as required based on the facts disclosed in the affidavits and/or survey. 3. 4. 5. Real Estate Taxes subsequent to September 30, 2007, a lien not yet due and payable. Intentionally Deleted. Terms, conditions, easements, restrictions and other criteria contained on the Plat of Subdivision recorded July 2, 2007 in Book 202, at Page 25 in the Office of the Surveyor for the District of Columbia. Terms, provisions, conditions, covenants, reservations and restrictions contained in the Declaration of Easement, Setbacks and Covenant (North/South Alley), dated October 31, 2007, and recorded November 1, 2007 as Instrument No. 2007139042. (Affects Lots 44 and 45, Square 374) Terms, provisions, conditions, covenants, reservations and restrictions contained in the Combined Lot Development Covenant, dated October 31, 2007, and recorded November 1, 2007 as Instrument No. 2007139043. (Affects Lots 45, 46, and 47, Square 374)

2.

6.

7.

COMMONWEALTH LAND TITLE ENSURANCE COMPANY COMMITMENT FOR TITLE INSURANCE Commitment No. 06-001726 Amended IV ]]

8.

Terms, provisions, conditions, covenants, reservations and restrictions contained in the Declaration of Restrictions, Easements and Covenants (Parcel B), dated October 31, 2007, and recorded November 1, 2007 as Instrument No. 2007139044.

(End of Schedule B- Section

Exhibit "A" Legal Description

"

All those certain lots or parcels of land together with all improvements thereon located and being in the City of Washington in the District of Columbia and being more particularly described as follows: Lots 44, 45, 46, 47, and 849 in Square 374 in a subdivision made by The District of Columbia, a Municipal Corporation as per plat recorded July 2, 2007 in Book 202 at Page 25 in the Office of the Surveyor for the District of Columbia.
Previously identified as the following Parcels:

PARCEL 1 : (Lot 46 in Square 3 74) All of Original Lots numbered One, (1), Two (2), Three (3), Four (4), Five (5), Six (6), Seven (7), Eight (8), Nine (9) and Ten (10) in Square numbered Three Hundred Forty-four (344); PARCEL 2: (Lots 44 and 45 in Square 374) All of Original Lots numbered One (1), Two (2), Three (3), Four (4), Five (5), Six (6), Seven (7), Eight (8), Nine (9), Ten (10), Eleven (! 1) and Twelve (12) in Square numbered Three Hundred Seventy-three (373);

PARCEL 3:, (Lot 47 in Square 374) All of Original Lots numbered One (1), Two (2), Three (3), Four (4), Five (5), Six (6), Seven (7), Eight (8), Nine (9), Ten (10), Eleven (11), Twelve (12), Thirteen (13), Fourteen (14), Fifteen (15), Sixteen (16), Seventeen (I 7), Eighteen (18), Nineteen (I 9) and Twenty (20) in Square numbered Three Hundred Seventy-four (374);
PARCEL 4: (Lot 489 in Square 374) All of 10t~ Street closed, I Street closed and alleys closed as set forth on plat entitled "Closing of Streets & Alleys" recorded in the Office of the Surveyor for the District of Columbia in Liber 168 at Folio 11.

(End of Exhibit "A")

ALTA 13 Leasehold Owners Endorsement (10-13-01)

Attached to Policy Number: 06-001726 Issued by COMMONWEALTH LAND TITLE INSURANCE COMPANY I. As used in this endorsement, the following terms shall mean: a. "Evicted" or "Eviction": (a) the lawful deprivation, in whole or in part, of the right of possession insured by this policy, contrary to the terms of the Lease or (b) the lawful prevention of the use of the land or the Tenant Leasehold Improvements for the purposes permitted by the Lease, in either case, as a result of a matter covered by this policy. b. "Lease": the lease agreement described in Schedule A. c. "Leasehold Estate": the right of possession for the Lease Term. d. "Lease Term": the duration of the Leasehold Estate, including any renewal or extended term ira valid option to renew or extend is contained in the Lease. e. "Personal Property": chattels located on the land and property which, because of their character and manner of affixation to the land, can be severed from the land without causing appreciable damage to themselves or to the land to which they are affixed. t: "Remaining Lease Term": the portion of the Lease Term remaining after the insured has been Evicted as a result of a matter covered by this policy. g. "Tenant Leasehold Improvements": Those improvements, including landscaping, required or permitted to be built on the land by the Lease that have been built at the insureds expense or in which the insured has an interest greater than the right to possession during the Lease Term. 2. The provisions of subsection (b) of Section 7 of the Conditions and Stipulations shall not apply to any Leasehold Estate covered by this policy. 3. Valuation of Estate or Interest Insured If, in computing loss or damage, it becomes necessary to value the estates or interests of the insured as the result of a covered matter that results in an Eviction, then that value shall consist of the value for the Remaining Lease Term of the Leasehold Estate and any Tenant Leasehold Improvements existing on the date of the Eviction. The insured claimant shall have the right to have the Leasehold Estate and the Tenant Leasehold Improvements valued either as a whole or separately. In either event, this determination of value shall take into account rent no longer required to be paid for the Remaining Lease Tenn. 4. Additional items of loss covered by this endorsement: If the insured is Evicted, the following items of loss, if applicable, shall be included in computing loss or damage incurred by the insured, but not to the extent that the same are included in the valuation of the estates or interests insured by this policy.

a. The reasonable cost of removing and relocating any Personal Property that the insured has the right to remove and relocate, situated on the land at the time of Eviction, the cost of transportation of that Personal Property for the initial one hundred miles incurred in connection with the relocation, and the reasonable cost of repairing the Personal Property damaged by reason of the removal and relocation. b. Rent or damages for use and occupancy of the land prior to the Eviction which the insured as owner of the Leasehold Estate is obligated to pay to any person having paramount title to that of the lessor in the Lease. c. The amount of rent that, by the terms of the Lease, the insured must continue to pay to the lessor after Eviction with respect to the portion of the Leasehold Estate and Tenant Leasehold Improvements from which the insured has been Evicted. d. The fair market value, at the time of the Eviction, of the estate or interest of the insured in any lease or sublease made by the insured as lessor of all or part of the Leasehold Estate or the Tenant Leasehold Improvements. e. Damages that the insured is obligated to pay to lessees or sublessees on account of the breach of any lease or sublease made by the insured as lessor of all or part of the Leasehold Estate or the Tenant Leasehold Improvements caused by the Eviction f. Reasonable costs incurred by the insured to secure a replacement leasehold equivalent to the Leasehold Estate. g. If Tenant Leasehold Improvements are not substantially completed at the time of Eviction, the actual cost incurred by the insured, less the salvage value, for the Tenant Leasehold Improvements up to the time of Eviction. Those costs include costs incurred to obtain land use, zoning, building and occupancy permits, architectural and engineering fees, construction management fees, costs of environmental testing and reviews, landscaping costs and fees, costs and interest on loans for the acquisition and construction. This endorsement is made a part of the policy and is subject to all of the terms and provisions thereof and of any prior endorsements thereto. Except to the extent expressly stated, it neither modifies any of the terms and provisions of the policy and any prior endorsements, nor does it extend the effective date of the policy and any prior endorsements, nor does it increase the face amount thereof. COMMONWEALTH LAND TITLE INSURANCE COMPAN~__~ ,,~~__~/7 B Y:

Schedule 21 Copy of Legal Sufficiency Memorandum

HOU03:1127065.12::ODMAhCDOCSkHOU03\ 1127065\ 12

21-1

GOVERNMENT OF THE DISTRICT OF COLUMBIA

OFFICE OF THE ATTORNEY GENERAL

ATTORNEY GENERAL

MEMORANDUM TO: Deputy Mayor for Planning and Economic Development FROM: Attorney General for the District of Columbia
DATE:

SUBJECT:

[Project Document ("Agreement") - analysis of Districts representations and warranties]

I.

Brief Summary

[Project document summary] Upon review, we have determined that the [applicable Project Document] is legally sufficient. An analysis of the specific representations and warranties made by the District as provided in the [applicable Project Document] is set forth below. II. Analysis of Districts Representations and Warranties

The Districts representations and warranties are set forth in Section __.3 of the [applicable Project Document]. They are: " .3.1 The District (i) has the power and authority to execute, deliver and perform its obligations under this Agreement, and (ii) subject to Section __ [Anti-Deficiency limitations], has taken all necessary action to authorize the execution, delivery and performance of this Agreement." This representation is correct; provided, however, that any future Project Documents must be reviewed and approved for legal sufficiency prior to execution and the Escrow Release Date is achieved within the time period authorized by Res. 16-166. "10.3.2 No consent or authorization of, or ffling with, any Person (including any governmental authority), which has not been obtained, is required in connection with the execution and delivery of this Agreement by the District."

This representation is correct, provided the Escrow Release Date is achieved within the time period authorized by Res. 16-166. "__.3.3 This Agreement has been duly executed and delivered by the District, and constitutes the legal, valid and binding obligation of the District, enforceable against it in accordance with its terms." This representation is correct, subject only to achievement of the Escrow Release Date within the time period authorized by Res. 16-166, as to all terms and conditions in the Agreement. "__.3.4 The execution, delivery and performance by the District of this Agreement will not violate any Governmental Requirement or result in a breach of any contractual obligation to which the District is a party." This representation is fact-dependent; however, this Office has been provided no evidence, and has no other reason to believe, that this representation is not correct. " .3.5 Districts execution, delivery and performance of this Agreement and the transactions contemplated hereby shall not: (i) to the best of Districts knowledge, violate any judgment, order, injunction, decree, regulation or ruling of any court or Governmental Authority with proper jurisdiction that is binding on District; or (ii) result in a breach or default under any provision of the organizational documents of District." This representation is fact-dependent; however, this Office has been provided no evidence, and has no other reason to believe, that this representation is not correct. "__.3.6 No litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to the best knowledge of the District, threatened by or against the District which, if adversely determined, individually or in the aggregate, could reasonably be expected to have a material adverse effect on the Districts ability to perform its obligations under this Agreement." As of the date of this memorandum, this representation correct. "__.3.7 Except as otherwise set forth in this Agreement, and subject to Section __ [Anti-Deficiency limitations] of the Agreement, no consent or authorization of, or filing with, any Person (including any governmental authority), which has not been obtained, is required in connection with the performance of this Agreement by the District." This representation is correct; provided, however, that any future Project Documents must be reviewed and approved for legal sufficiency prior to execution and the Escrow Release Date is achieved within the time period authorized by Res. 16-166.

"__.3.8 No agent, broker or other Person acting pursuant to express or implied authority of District is entitled to any commission or fmders fee in connection with the transactions contemplated by this Agreement or will be entitled to make any claim against Developer for a commission or finders fee. District has not dealt witl~ any agent or broker in connection with the acquisition or ground leasing of the Site." This representation is fact-dependent; however, this Office has been provided no evidence, and has no other reason to believe, that this representation is not correct. "__.3.9 The underground storage tank removed from the Site in connection with demolition of the old Convention Center was removed in accordance with all Governmental Requirements." This representation is fact-dependent; however, this Office has been provided no evidence, and has no other reason to believe, that this representation is not correct. III. Analysis of Anti-Deficiency Issues

You have asked this Office to determine whether the Agreements terms setting forth the consideration for the disposition violate the Anti-Deficiency Acts (defined below). It is our view that the terms, as set forth in the attached Agreement, do not. The District of Columbia is subject to two anti-deficiency acts: (i) the federal Anti-Deficiency Act, 31 U.S.C. 1341, 1342, 1349, 1350, 1351 (2004)(the "Federal ADA"), and D.C. Official Code 47-105 (2001) and (ii) the District of Columbia Anti-Deficiency Act, D.C. Official Code 47-355.01 - 355.08 (Supp. 2004) (the "DC ADA" and together with the Federal ADA, the "AntiDeficiency Acts"). Generally, the Anti-Deficiency Acts are intended to prevent federal and District of Columbia employees from (i) (a) m~ing or authorizing an expenditure or obligation that exceeds an amount available in an appropriation or fund for such expenditure or obligation, or (b) involving either government in a contract or obligation for the payment of money before an appropriation is made unless authorized by law; and (ii) accepting voluntary services for either government or employing personal services exceeding that authorized by law in the absence of an agreement setting forth the cost and method of payment, if any, of such services. In the attached Agreement: 1. The District does not make or expressly authorize any expenditure or obligation of public funds. Certain obligations and liabilities associated with the predevelopment and development of the Site, which generate costs that will accrue over time, are to be paid by the Developer, and are to be deducted from the value of the land in the manner determined by the parties to the Agreement. In addition, the Agreement contains various formulae for determining the amount of financial consideration to be paid to the District, which formulae require the aforementioned determination of land value in order to produce a dollar value for the amount of financial consideration owing to the District in various circumstances. In effect, the Deve!oper is entitled to benefit from the added value that it creates through its predevelopment and development activities (and expenditures related thereto) that would otherwise inure to the benefit of the District. One consequence of entitling the Developer to so benefit is that the rent owing to the

District under the ground lease decreases, but the decrease in land value (and, as a result, rental payments) is part of the consideration for the transfer of the Property under the terms and conditions imposed by the Agreement. All expenditures of the Developer described in this Paragraph 1 are obligations of private, not public, funds, and to that extenI, such payment obligations are not subject to the Anti-Deficiency Acts. 2. To the extent that the Agreement confers upon the District any right to take an action or purports to obligate the District to perform any act that would or may require any expenditure of public funds for a particular purpose in the future, whether through the procurement of goods, services, real property, or otherwise, the Districts ability to exercise such right, or be bound by such obligation, shall be subject to a prior appropriation to make such payment. For purposes of this analysis, the term "expenditure," insofar as it applies to the District, means a payment of monies, whether directly from funds held in the possession of the District of Columbia or indirectly through funds in the actual or constructive control of the District of Columbia, and such term shall not include the expenditures of the Developer described in the foregoing Paragraph 1. [Note: permitted offsets against Rent provided in the Ground Leases as well as permitted offsets against Garage Revenue pursuant to the Site COREA also do not constitute District "expenditures" inasmuch as such offsets do not involve the payment of District funds. The analysis set forth in this paragraph will be augmented to reflect this conclusion in the OAG Legal Sufficiency Memoranda specifically relating to the Ground Leases, Building COREA and Site COREA.] 3. The District does not acquire or accept services pursuant to the Agreement. Services cannot be acquired in the absence of an agreement for payment of costs stemming for such services. In reaching these conclusions, we have not relied on the operation of the anti-deficiency limitation in Section __ of the Agreement except insofar as that provision applies to asserted obligations, rights or liabilities described in the foregoing Paragraph 2, which are only legally sufficient to the extent they are qualified by Section __ of the Agreement. Notwithstanding anything to the contrary herein or in the Agreement, no provision of the Agreement can be construed as a legally-binding obligation in advance or anticipation of an appropriation.

This Office acknowledges and understands that the Office of the Deputy Mayor for Planning and Economic Development intends to provide copies of this Memorandum to the Developer and the Guarantors, in accordance with the Agreement.

cc:

Deputy Mayor for Planning and Economic Development (EOM) Director of Development (EOM) Project Manager (EOM)

/ Prolaw No. 120357

Schedule 22 Intentionally Deleted

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22-1

Schedule 23 Intentionally Deleted

HOU03:1127065.12::ODMA\PCDOCS~HOU03\] 127065\12

23-1

Schedule 24 Intentionally Deleted

HOU03:! 127065.12::ODMAX.PCDOCS\HOU03\1127065\12

24-1

Schedule 25 Underground Storage Form

HOU03:1127065.12 ::ODMAkPCDOCS~HOU03\I 127065\12

25-1

D.C. DEPARTMENT OH HEALT] ! ENVIRONMENTAL HEALTH ADMINIS~I RATION UNDERGROUND STORAGE TANK REAL ESTA TE TRANSFER DISCLOSURE FORM (FOR USE WITH ALL PROPERTIES OTHER THAN SIN( ILE FAMILY HOMES) The Underground Storage Tank (UST) Management Act of 1990, as amended, and implementing regulations, require that sellers of real property in the District of Colun bia inform prospective purchasers in writing, prior to entering into a contract for sale, of the existence or vmoval of any USTs of which the seller has knowledge. If the sale is of commercial properly, seller is a so required to inform prospective purchasers of any prior use of the properly of which seller has actual knowledge which suggests the existence of tanks on the property, (For example, if seller knows ther~ was formerly a gas station at the site, he is required to disclose this fact.) Sellers of individual condom nium or cooperative units are not subject to the disclosure requirements. Sellers of single family homes hould use the appropriate form or provide disclosure in the sales conlract. Sellers Name: The District of Columbia Address of property to be sold: Land bounded by 9t~ H and 11t~ Stri .~t~ NW and New York Arena.e, NW Washingtorl DC ~other than Rese~ation 174) I) To the best of your knowledge, are there any underground storage tm &s (USTs) located on or under the above-referenced real property? Yvs No x 2) Ifyes, how many USTs are located on the properly? a) What is the capacity of the tanks? or abandoned b) Are they presently in service c) If in service, for what purpose are they used? d) If abandoned, have you complied with all requirements of the D.C.I. ST Regu!ations pertaining to closure of USTs? Yes Dont know 3) Have you removed any USTs during the period of time you have owl bed the above-referenced property? Yes x No 4) If Yes, how many USTs did you remove? ~ When? May 2 4. 2005 t~_d May 24. 1999 a) What were their capacities? One 2,000 gallon tanlq three 275 gallo b tanks b) Have you complied with all requirements ofth~ DIE UST Regulatior perlaining to closure crUSTs? Yes x No ~ Dont know __ 5) Do you know of any prior uses of the property which suggest that U~ Fs may be or haw been used on the property? Yes x No ~ lfyes, please describ~ the former use Amoco removed tank in 19,8(I.,!

[SIGNATLrR~S ON FOLLOWING P,

Seller: District of Columbia By: Title:

Date:

PURCHASER ACKNOWLEDGES THAT PURCHASER HAS RECE WED TIlE ABOVE DISCLOSURES PRIOR TO SIGNING A CONTRACT FOR PURCI-I! ,SE. Purchaser: OCC Master Developer, LLC By: Archstone-Smith Operating Trttst, a Maryland real estate investment trust >nte:

By: Title:

By:

Hines Interests Limited Partnership, a Delaware limited patmership By: Hines Holdings, inc.

By: Name: Title:

Information pertaining to USTs and UST removals of which the D.C. 0vemment has received notification, is on file with the D.C. Department of Health, Environmen :al Health Administration, Underground Storage Tank Division, 9_ 100 MLK, Jr. Avenue, S.E., W~ ~h., D.C., Phone (202) 645-6080.

::ODMALPCDOCS\WStt~08128\ I

Schedule 26 Statement of Stockholders, Managers, Members or Po~tners

HOU03:1127065,12::ODMAkPCDOCSkHOU03\1127065\12

26-1

~ OCC Master Developer~ LLC (a Delaware limited liability company) Member / ~Hines OCC MD Associates Limited Partnership/ (a Texas limited partnership)

Member~ ~ Archstone-Smith Operating ~ms~ (a Maryland real estate investment trust)

~o,, ,~t~o~ L~d,~~p,,/ ~o~ C~o~p

(a D=laware limited partnorship)

~ Hin~ R~al F~,tate Holdings Limited ,Partnership / Hines Holdings, Inc. (a Texas corporation) (a Texas limited partnership)

Gerald D. Hines Jeffrey C. Hines shareholders

HOU03:10B1485.3

Genera1 Partner and Limited Partner Hines Group

Schedule 27 Contractors Certificate On Final Completion ,~ In consideration of the final payment to the Contractor in connection with the Application for Final Payment, the Contractor does hereby certify, represent, and warranty to the Owner and to Lender as follows: 1. The Project has been constructed in accordance with the plans, specifications and other Contract Documents and in accordance with all applicable laws, ordinances, rules, regulations, and requirements of all governmental authorities and in compliance with any and al! public covenants, conditions, and restrictions affecting the real property upon which the Project has been constructed (the "Property"). 2. The Project, to the best of the Contractors knowledge, information, and belief, is ready for occupancy and all certificates necessary to permit the occupancy of the Project, including Certificate of Occupancy, have been obtained from the appropriate governmental authorities. 3. All warranties and guarantees required by the Contract Documents are in place, and copies of all manufacturers or other warranties have been delivered to the Owner or the Owners representative. 4. The as-built plans and specifications have been updated accurately to show all Change Orders, Bulletins, and Field Conditions, and one full record set of as-built plans has been delivered to the Owner. 5. The Contract has no knowledge or information of any pending claim, action or proceeding before any court, agency, or other tribunal relating to the construction of the Work. 6. There are no claims of Contractor, any Subcontractor, or any materialman with respect to the Project Property. [Contractor Name] By: Its duly authorized officer Note: As modified to allow exceptions under definition of Final Completion.

HOU03:112706S.12::ODMA~PCDOCS~lqOU03\I ~27065\~2Schedule 27-1