-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GPg/SXpy0a6SpFX12vGC/Fiemi9wV/do59HTNHweCEAOruDdilruM6zPhE7HOzui Wm8t9xOVkpQi+xco6E1Tfg== 0000906345-99-000016.txt : 19991117 0000906345-99-000016.hdr.sgml : 19991117 ACCESSION NUMBER: 0000906345-99-000016 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991115 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CAMDEN PROPERTY TRUST CENTRAL INDEX KEY: 0000906345 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 766088377 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-12110 FILM NUMBER: 99753737 BUSINESS ADDRESS: STREET 1: THREE GREENWAY PLAZA STREET 2: SUITE 1300 CITY: HOUSTON STATE: TX ZIP: 77046 BUSINESS PHONE: 7139643555 MAIL ADDRESS: STREET 1: 3200 SOUTHWEST FREEWAY STREET 2: SUITE 1500 CITY: HOUSTON STATE: TX ZIP: 77027 10-Q 1 CAMDEN PROPERTY TRUXT - DATED 09/30/99 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to _________ Commission file number: 1-12110 CAMDEN PROPERTY TRUST (Exact Name of Registrant as Specified in Its Charter) TEXAS 76-6088377 (State or Other Jurisdiction of (I.R.S. Employer Identification Incorporation or Organization) Number) 3 Greenway Plaza, Suite 1300, Houston, Texas 77046 (Address of Principal Executive Offices) (Zip Code) (713) 354-2500 (Registrant's Telephone Number, Including Area Code) N/A (Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report) Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: As of November 10, 1999, there were 40,213,320 shares of Common Shares of Beneficial Interest, $0.01 par value outstanding. 2 PART I. FINANCIAL INFORMATION Item 1. Financial Statements CAMDEN PROPERTY TRUST CONSOLIDATED BALANCE SHEETS (In thousands)
ASSETS SEPTEMBER 30, DECEMBER 31, 1999 1998 --------------- -------------- (Unaudited) Real estate assets, at cost: Land $ 349,388 $ 321,752 Buildings and improvements 2,070,162 1,917,026 --------------- -------------- 2,419,550 2,238,778 Less: accumulated depreciation (230,431) (167,560) --------------- -------------- Net operating real estate assets 2,189,119 2,071,218 Projects under development, including land 191,408 216,680 Investment in joint ventures 22,397 32,484 --------------- -------------- Total real estate assets 2,402,924 2,320,382 Accounts receivable - affiliates 1,252 831 Notes receivable: Affiliates 1,800 1,800 Other 27,331 Other assets, net 16,406 15,036 Cash and cash equivalents 13,790 5,647 Restricted cash - escrow deposits 5,169 4,286 --------------- -------------- Total assets $ 2,468,672 $ 2,347,982 =============== ============== LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Notes payable: Unsecured $ 739,526 $ 632,923 Secured 345,960 369,645 Accounts payable 18,644 24,180 Accrued real estate taxes 26,731 21,474 Accrued expenses and other liabilities 34,927 28,278 Distributions payable 27,573 25,735 --------------- -------------- Total liabilities 1,193,361 1,102,235 Minority Interests: Preferred units 132,712 Common units 65,539 71,783 --------------- ------------- Total minority interests 198,251 71,783 7.33% Convertible Subordinated Debentures 3,451 3,576 Shareholders' Equity: Preferred shares of beneficial interest 42 42 Common shares of beneficial interest 447 447 Additional paid-in capital 1,303,395 1,299,539 Distributions in excess of net income (123,788) (98,897) Unearned restricted share awards (9,316) (10,039) Less: treasury shares, at cost (97,171) (20,704) --------------- -------------- Total shareholders' equity 1,073,609 1,170,388 --------------- -------------- Total liabilities and shareholders' equity $ 2,468,672 $ 2,347,982 =============== ============== See Notes to Consolidated Financial Statements.
3 CAMDEN PROPERTY TRUST CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except per share amounts)
Three Months Nine Months Ended September 30, Ended September 30, ------------------------- ------------------------- 1999 1998 1999 1998 ----------- ------------ ----------- ------------ REVENUES Rental income $ 86,753 $ 79,802 $ 252,582 $ 219,601 Other property income 6,006 4,973 16,585 13,539 ----------- ---------- ----------- ----------- Total property income 92,759 84,775 269,167 233,140 Equity in income of joint ventures (472) 317 472 1,039 Fee and asset management 1,404 510 3,627 859 Other income 486 947 1,158 1,690 ----------- ---------- ----------- ----------- Total revenues 94,177 86,549 274,424 236,728 ----------- ---------- ----------- ----------- EXPENSES Property operating and maintenance 28,205 25,506 80,344 72,755 Real estate taxes 9,165 8,153 27,669 23,122 General and administrative 2,473 2,013 7,272 5,532 Interest 14,709 13,414 42,227 36,680 Depreciation and amortization 22,703 20,411 65,541 57,388 ----------- ---------- ----------- ----------- Total expenses 77,255 69,497 223,053 195,477 ----------- ---------- ----------- ----------- Income before gain on sale of properties and joint venture interests and minority interests 16,922 17,052 51,371 41,251 Gain on sale of properties and joint venture interests 2,259 2,979 ----------- ---------- ----------- ----------- Income before minority interests 19,181 17,052 54,350 41,251 Minority interests Preferred unit distributions (2,411) (5,392) Minority interest (892) (59) (1,850) (1,043) ----------- ----------- ----------- ----------- Total minority interests (3,303) (59) (7,242) (1,043) ----------- ----------- ----------- ----------- Net income 15,878 16,993 47,108 40,208 Preferred share dividends (2,343) (2,343) (7,029) (7,029) ----------- ----------- ----------- ----------- Net income to common shareholders $ 13,535 $ 14,650 $ 40,079 $ 33,179 =========== =========== =========== =========== Basic earnings per share $ 0.33 $ 0.33 $ 0.96 $ 0.83 Diluted earnings per share $ 0.32 $ 0.31 $ 0.94 $ 0.79 Distributions declared per common share $ 0.520 $ 0.505 $ 1.560 $ 1.515 Weighted average number of common shares outstanding 40,939 44,370 41,668 40,115 Weighted average number of common and common dilutive equivalent shares outstanding 42,025 47,437 44,728 43,116
See Notes to Consolidated Financial Statements. 4 CAMDEN PROPERTY TRUST CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands)
Nine Months Ended September 30, ---------------------------- 1999 1998 ------------ ------------ CASH FLOW FROM OPERATING ACTIVITIES Net income $ 47,108 $ 40,208 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 65,541 57,388 Equity in income of joint ventures, net of cash received 1,963 486 Gain on sale of properties and joint venture interests (2,979) Minority interest 1,850 1,043 Accretion of discount on unsecured notes payable 223 124 Net change in operating accounts 7,464 (3,789) ------------ ------------ Net cash provided by operating activities 121,170 95,460 CASH FLOW FROM INVESTING ACTIVITIES Cash of Oasis at acquisition 7,253 Net proceeds from Third Party Transaction 226,128 Increase in real estate assets (166,990) (271,742) Net proceeds from sale of properties 13,226 42,513 Net proceeds from sale of joint venture interests 5,465 6,841 Increase in investment in joint ventures (2,012) (4,795) Decrease in investment in joint ventures 6,400 1,478 Net (increase) decrease in notes receivable (27,331) 1,750 Net decrease in affiliate notes receivable 5,389 Other (1,488) (1,146) ------------ ------------ Net cash (used in) provided by investing activities (172,730) 13,669 CASH FLOW FROM FINANCING ACTIVITIES Net (decrease) increase in unsecured lines of credit and short-term borrowings (147,000) 113,792 Debt repayments from Third Party Transaction (114,248) Proceeds from notes payable 253,380 50,600 Proceeds from issuance of preferred units, net 132,712 Repayment of notes payable (23,685) (65,001) Distributions to shareholders and minority interests (79,722) (63,055) Repurchase of common shares and units (79,247) (1,616) Other 3,265 (120) ------------ ------------ Net cash provided by (used in) financing activities 59,703 (79,648) ------------ ------------ Net increase in cash and cash equivalents 8,143 29,481 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 5,647 6,468 ------------ ------------ CASH AND CASH EQUIVALENTS, END OF PERIOD $ 13,790 $ 35,949 ============ ============ SUPPLEMENTAL INFORMATION Cash paid for interest, net of interest capitalized $ 35,526 $ 31,767 Interest capitalized $ 12,306 $ 6,385 SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES Acquisition of Oasis (including the Third Party Transaction), net of cash acquired and fair value adjustment from the acquisitions of Oasis and Paragon: Fair value of assets acquired $ 835 $ 783,500 Liabilities assumed 835 495,708 Common shares issued 395,528 Preferred shares issued 104,125 Fair value of minority interest 21,520 Conversion of 7.33% subordinated debentures to common shares, net $ 125 $ 2,242 Value of shares issued under benefit plans, net $ 2,004 $ 6,180 Conversion of operating partnership units to common shares $ 387 $ 9,581 Note payable assumed upon purchase of a property $ 22,424
See Notes to Consolidated Financial Statements. 5 CAMDEN PROPERTY TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. INTERIM UNAUDITED FINANCIAL INFORMATION The accompanying interim unaudited financial information has been prepared according to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted according to such rules and regulations, although management believes that the disclosures are adequate to make the information presented not misleading. In the opinion of management, all adjustments and eliminations, consisting only of normal recurring adjustments, necessary to present fairly the financial position of Camden Property Trust as of September 30, 1999 and the results of operations for the three and nine months ended September 30, 1999 and 1998 and cash flows for the nine months ended September 30, 1999 and 1998 have been included. The results of operations for such interim periods are not necessarily indicative of the results for the full year. BUSINESS We are a Houston-based real estate investment trust ("REIT") and report as a single business segment with activities related to the ownership, development, acquisition, management and disposition of multifamily apartment communities in the Southwest, Southeast, Midwest and Western regions of the United States. At September 30, 1999, we owned interests in, operated or were developing 159 multifamily properties containing 55,785 apartment homes located in nine states. Eight of our multifamily properties containing 3,570 apartment homes were under development at September 30, 1999. Two of our newly developed multifamily properties containing 820 apartment homes were in lease-up at September 30, 1999. We have several additional sites which we intend to develop into multifamily apartment communities. ACQUISITION OF OASIS RESIDENTIAL, INC. On April 8, 1998, we acquired, through a tax-free merger, Oasis Residential, Inc., a publicly traded Las Vegas-based multifamily REIT. The acquisition increased the size of our portfolio from 100 to 152 completed multifamily properties, and from 34,669 to 50,183 apartment homes at the date of acquisition. Each share of Oasis common stock outstanding on April 8, 1998 was exchanged for 0.759 of a Camden common share. Each share of Oasis Series A cumulative convertible preferred stock outstanding on April 8, 1998 was reissued as one Camden Series A cumulative convertible preferred share with terms and conditions comparable to the Oasis preferred stock. We issued 12.4 million common shares and 4.2 million preferred shares in exchange for the outstanding Oasis common and preferred stock, respectively. Approximately $484 million of Oasis debt, at fair value, was assumed in the merger. In connection with the merger with Oasis, on June 30, 1998, we completed a transaction in which Camden USA, Inc., one of our wholly owned subsidiaries, and TMT-Nevada, L.L.C., a Delaware limited liability company, formed Sierra-Nevada Multifamily Investments, LLC. We entered into this transaction to reduce our market risk in the Las Vegas area. TMT-Nevada holds an 80% interest in Sierra-Nevada and Camden USA holds the remaining 20% interest. In this transaction, we transferred to Sierra-Nevada 19 apartment communities containing 5,119 apartment homes for an aggregate of $248 million. Prior to the merger, Oasis owned 100% of each of these communities. In the merger, Camden USA acquired these communities. As a result, after the merger and prior to the Sierra-Nevada transaction, Camden USA owned 100% of each of these 19 properties. These properties are located in Las Vegas, Nevada. This transaction was funded with capital invested by the members of Sierra-Nevada, 6 the assumption of $9.9 million of existing nonrecourse indebtedness, the issuance of 17 nonrecourse cross collateralized and cross defaulted loans totaling $180 million and the issuance of two nonrecourse second lien mortgages totaling $7 million. REAL ESTATE ASSETS AT COST We capitalized $19.2 million and $18.7 million in the nine months ended September 30, 1999 and 1998, respectively, of renovation and improvement costs which we believe extended the economic lives and enhanced the earnings of our multifamily properties. If we had adopted the accounting policy described below as of January 1, 1998, the amounts capitalized for the nine months ended September 30, 1998 would have been $19.8 million. Effective April 1, 1998, we implemented prospectively a new accounting policy where expenditures for floor coverings, appliances and HVAC unit replacements are capitalized and depreciated over their estimated useful lives. Previously, all such replacements had been expensed. We believe that the newly adopted accounting policy is preferable as it is consistent with standards and practices utilized by the majority of our peers and provides a better matching of expenses with the related benefit of the expenditure. The change in accounting principle is inseparable from the effect of the change in accounting estimate and is therefore treated as a change in accounting estimate. See Recent Accounting Pronouncements below for the effect of this change and our adoption of a recent accounting pronouncement on our financial results for the nine months ended September 30, 1998. PROPERTY OPERATING AND MAINTENANCE EXPENSES Property operating and maintenance expenses included normal repairs and maintenance totaling $6.8 million and $18.4 million for the three and nine months ended September 30, 1999, and $6.0 million and $15.7 million for the three and nine months ended September 30, 1998, respectively. COMMON SHARE DIVIDEND DECLARATION In September 1999, we announced that our Board of Trust Managers had declared a dividend in the amount of $0.52 per share for the third quarter of 1999 which was paid on October 15, 1999 to all common shareholders of record as of September 30, 1999. We paid an equivalent amount per unit to holders of common operating partnership units. This distribution to common shareholders and holders of common operating partnership units equates to an annualized dividend rate of $2.08 per share or unit. PREFERRED SHARE DIVIDEND DECLARATION In September 1999, we announced that our Board of Trust Managers had declared a quarterly dividend on our preferred shares in the amount of $0.5625 per share payable November 15, 1999 to all preferred shareholders of record as of September 30, 1999. RECENT ACCOUNTING PRONOUNCEMENTS On March 19, 1998, the Emerging Issues Task Force of the Financial Accounting Standards Board reached a consensus decision on Issue No. 97-11, Accounting for Internal Costs Relating to Real Estate Property Acquisitions, which requires that internal costs of identifying and acquiring operating properties be expensed as incurred for transactions entered into on or after March 20, 1998. Prior to our adoption of this policy, we had been capitalizing such costs. Had we adopted Issue No. 97-11 and the new accounting policy for floor coverings, appliances and HVAC unit replacements as of January 1, 1998, net income to common shareholders would have increased $650,000 or $0.02 per basic and diluted earnings per share for the nine months ended September 30, 1998. 7 EARNINGS PER SHARE The following table presents information necessary to calculate basic and diluted earnings per share for the three and nine months ended September 30, 1999 and 1998:
THREE MONTHS NINE MONTHS ENDED SEPTEMBER 30, ENDED SEPTEMBER 30, ------------------------ ------------------------- 1999 1998 1999 1998 ----------- ----------- ----------- ----------- BASIC EARNINGS PER SHARE: Weighted Average Common Shares Outstanding 40,939 44,370 41,668 40,115 =========== =========== =========== =========== Basic Earnings Per Share $ 0.33 $ 0.33 $ 0.96 $ 0.83 =========== =========== =========== =========== DILUTED EARNINGS PER SHARE: Weighted Average Common Shares Outstanding 40,939 44,370 41,668 40,115 Shares Issuable from Assumed Conversion of: Common Share Options and Awards Granted 452 387 414 414 Minority Interest Units 634 2,680 2,646 2,587 ----------- ----------- ----------- ----------- Weighted Average Common Shares Outstanding, as Adjusted 42,025 47,437 44,728 43,116 =========== =========== =========== =========== Diluted Earnings Per Share $ 0.32 $ 0.31 $ 0.94 $ 0.79 =========== =========== =========== =========== EARNINGS FOR BASIC AND DILUTED COMPUTATION: Net Income $ 15,878 $ 16,993 $ 47,108 $ 40,208 Less: Preferred Share Dividends 2,343 2,343 7,029 7,029 ----------- ----------- ----------- ----------- Net Income to Common Shareholders 13,535 14,650 40,079 33,179 (Basic Earnings Per Share Computation) Minority Interest 59 1,850 1,043 ----------- ----------- ----------- ----------- Net Income to Common Shareholders, as Adjusted (Diluted Earnings Per Share Computation) $ 13,535 $ 14,709 $ 41,929 $ 34,222 =========== =========== =========== ===========
RECLASSIFICATIONS Certain reclassifications have been made to amounts in prior year financial statements to conform with current year presentations. 2. NOTES RECEIVABLE We have entered into agreements with unaffiliated third parties to develop, construct, and manage four multifamily projects. We are providing financing for a portion of each project in the form of four year notes receivable. These notes earn interest at 10% and are secured by liens on the assets and partial guarantees by the third party owners. At September 30, 1999, these notes had principal balances totaling $21.0 million. We anticipate funding up to an aggregate of $41 million in connection with these projects. We earn fees for managing the development, construction and eventual operations of these properties. We have the option to purchase these properties in the future at a price to be determined based upon the property's performance and an agreed valuation model. 8 3. NOTES PAYABLE The following is a summary of our indebtedness: (In millions)
September 30, December 31, 1999 1998 ----------------- ---------------- Senior Unsecured Notes: 6.73% - 7.28% Notes, due 2001-2006 $ 523.0 $ 323.9 6.68% - 7.63% Medium Term Notes, due 2000 - 2009 181.5 127.0 Unsecured Lines of Credit and Short-Term Borrowings 35.0 182.0 --------------- ------------- 739.5 632.9 Secured Notes - Mortgage loans (5.45% - 8.63%), due 2001 - 2028 346.0 369.7 --------------- ------------- Total notes payable $ 1,085.5 $ 1,002.6 =============== =============
In August 1999, we entered into a line of credit with 14 banks for a total commitment of $375 million. This line of credit replaces our three previous lines of credit which totaled $275 million. The new line of credit is scheduled to mature in August 2002. The scheduled interest rate on the line of credit is currently based on a spread over LIBOR or Prime. The scheduled interest rates are subject to change as our credit ratings change. Advances under the line of credit may be priced at the scheduled rates, or we may enter into bid rate loans with participating banks at rates below the scheduled rates. These bid rate loans have terms of six months or less and may not exceed the lesser of $187.5 million or the remaining amount available under the line of credit. The line of credit is subject to customary financial covenants and limitations. During September 1999, we executed three interest rate swap agreements totaling $70 million which are scheduled to mature in October 2000. These swaps are being used as a hedge of interest rate exposure on our $90 million medium term notes issued in October 1998 which mature in October 2000. Currently, the interest rate on the medium term notes is fixed at 7.23%. The interest rates on the swaps are based on the one-month LIBOR rate plus a spread resulting in an effective interest rate on the swaps of 6.58% at September 30, 1999. During the first quarter of 1999, we issued $39.5 million aggregate principal amounts of senior unsecured notes from our $196 million medium-term note shelf registration. These fixed rate notes, due in January 2002 through January 2009, bear interest at a weighted average rate of 7.07%, payable semiannually on January 15 and July 15. The net proceeds were used to reduce indebtedness outstanding under the unsecured lines of credit. In April 1999, we issued $15 million aggregate principal amounts of senior unsecured notes from our $196 million medium-term note shelf registration. These fixed rate notes, due in March 2002, bear interest at a rate of 6.74%, payable semiannually on March 15 and September 15. The net proceeds were used to reduce indebtedness outstanding under the unsecured lines of credit. In April 1999, we issued from our $500 million shelf registration an aggregate principal amount of $200 million of five-year senior unsecured notes. Interest on the notes accrues at an annual rate of 7.0% and is payable semi-annually on April 15 and October 15, commencing on October 15, 1999. The notes are direct, senior unsecured obligations and rank equally with all other unsecured and unsubordinated indebtedness. The notes may be redeemed at any time at our option subject to a make-whole provision. We used the net proceeds of $197.7 million to reduce $171 million of indebtedness under the unsecured lines of credit and for general working capital purposes. 9 At September 30, 1999, the weighted average interest rate on floating rate debt was 6.07%. 4. NET CHANGE IN OPERATING ACCOUNTS The effect of changes in the operating accounts on cash flows from operating activities is as follows: (In thousands)
NINE MONTHS ENDED SEPTEMBER 30, -------------------------- 1999 1998 ----------- ----------- Decrease (increase) in assets: Accounts receivable - affiliates $ (175) $ 1,298 Other assets, net (1,787) 421 Restricted cash - escrow deposits (883) 1,337 Increase (decrease) in liabilities: Accounts payable (6,551) (5,027) Accrued real estate taxes 5,257 5,028 Accrued expenses and other liabilities 11,603 (6,846) ----------- ----------- Net change in operating accounts $ 7,464 $ (3,789) =========== ===========
10 5. PREFERRED UNITS In February 1999, our operating partnership issued $100 million of 8.5% Series B Cumulative Redeemable Perpetual Preferred Units. Distributions on the preferred units are payable quarterly in arrears. The preferred units are redeemable for cash by the operating partnership on or after the fifth anniversary of issuance at par plus the amount of any accumulated and unpaid distributions. The preferred units are convertible after 10 years by the holder into our 8.5% Series B Cumulative Redeemable Perpetual Preferred Shares. The preferred units are subordinate to present and future debt. During the third quarter of 1999, our operating partnership issued $35.5 million of 8.25% Series C Cumulative Redeemable Perpetual Preferred Units. Distributions on the preferred units are payable quarterly in arrears. The preferred units are redeemable for cash by the operating partnership on or after the fifth anniversary of issuance at par plus the amount of any accumulated and unpaid distributions. The preferred units are convertible after 10 years by the holder into our 8.25% Series C Cumulative Redeemable Perpetual Preferred Shares. The preferred units are subordinate to present and future debt. 6. RESTRICTED SHARE AND OPTION AWARDS During the first nine months of 1999, we granted 132,144 restricted shares in lieu of cash compensation to certain key employees and non-employee trust managers. The restricted shares were issued based on the market value of ourcommon shares at the date of grant and have vesting periods of up to five years. We also granted 603,071 options with an exercise price equal to the market value of our common shares on the date of grant. The options become exercisable in equal increments over three years, beginning on the first anniversary of the grant. During the nine month period ended September 30, 1999, previously granted options to purchase 649,119 shares became exercisable and 113,324 restricted shares vested. 7. COMMON SHARE REPURCHASE PROGRAM In March 1999, the Board of Trust Managers authorized us to repurchase up to $50 million of our common shares and units through open market purchase and private transactions. This amount is in addition to the initial $50 million the Board of Trust Managers authorized for repurchase in September 1998. As of 11 September 30, 1999, we had repurchased 3,900,560 common shares and units for a total cost of $100.0 million. Additionally, in October 1999, the Board of Trust Managers authorized us to repurchase up to $100 million of our common shares and units through open market purchases and private transactions. Subsequent to September 30, 1999, we repurchased 722,200 shares and units at a total cost of $19.2 million under the new program. 8. CONVERTIBLE PREFERRED SHARES The 4,165,000 preferred shares issued in conjunction with the Oasis merger pay a cumulative dividend quarterly in arrears in an amount equal to $2.25 per share per annum. The preferred shares generally have no voting rights and have a liquidation preference of $25 per share plus accrued and unpaid distributions. The preferred shares are convertible at the option of the holder at any time into common shares at a conversion price of $32.4638 per common share (equivalent to a conversion rate of 0.7701 per common share for each preferred share), subject to adjustment in certain circumstances. The preferred shares are not redeemable prior to April 30, 2001. 9. CONTINGENCIES Prior to our merger, Oasis had been contacted by certain regulatory agencies with regards to alleged failures to comply with the Fair Housing Amendments Act (the "Fair Housing Act") as it pertained to nine properties (seven of which we currently own) constructed for first occupancy after March 31, 1991. On February 1, 1999, the Justice Department filed a lawsuit against us and several other defendants in the United States District Court for the District of Nevada alleging (1) that the design and construction of these properties violates the Fair Housing Act and (2) that we, through the merger with Oasis, had discriminated in the rental of dwellings to persons because of handicap. The complaint requests an order that (i) declares that the defendants' policies and practices violate the Fair Housing Act; (ii) enjoins us from (a) failing or refusing, to the extent possible, to bring the dwelling units and public use and common use areas at these properties and other covered units that Oasis had designed and/or constructed into compliance with the Fair Housing Act, (b) failing or refusing to take such affirmative steps as may be necessary to restore, as nearly as possible, the alleged victims of the defendants' alleged unlawful practices to positions they would have been in but for the discriminatory conduct and (c) designing or constructing any covered multi-family dwellings in the future that do not contain the accessibility and adaptability features set forth in the Fair Housing Act; and requires us to pay damages, including punitive damages, and a civil penalty. With any acquisition, we plan for and undertake renovations needed to correct deferred maintenance, life/safety and Fair Housing matters. We are currently in the process of determining the extent of the alleged noncompliance on the properties discussed above and the remaining changes that may be necessitated. At this time, we are not able to provide an estimate of costs and expenses associated with the resolution of this matter, however, management does not expect the amount to be material. There can be no assurance that we will be successful in the defense of the Justice Department action. 10. SUBSEQUENT EVENTS In the ordinary course of our business, we issue letters of intent indicating a willingness to negotiate for the purchase or sale of multifamily properties or development land. In accordance with the local real estate market practice, such letters of intent are non-binding, and neither party to the letter of intent is obligated to pursue negotiations unless and until a definitive contract is entered into by the parties. Even if definitive contracts are entered into, the letters of intent and resulting contracts contemplate that such contracts will provide the purchaser with time to evaluate the properties and conduct due diligence and during which periods the purchaser will have the ability to terminate the contracts without penalty or forfeiture of any deposit or earnest money. There can be no assurance that definitive contracts will be entered into with respect to any properties covered by letters of intent or that 12 we will acquire or sell any property as to which we may have entered into a definitive contract. Further, due diligence periods are frequently extended as needed. An acquisition or sale becomes probable at the time that the due diligence period expires and the definitive contract has not been terminated. We are then at risk under an acquisition contract, but only to the extent of any earnest money deposits associated with the contract, and are obligated to sell under a sales contract. We are currently in the due diligence period on contracts for the purchase of land for development. No assurance can be made that we will be able to complete the negotiations or become satisfied with the outcome of the due diligence. We seek to selectively dispose of assets that have a lower projected net operating income growth rate than the overall portfolio, or no longer conform to our operating and investment strategies. The proceeds from these sales may be reinvested in acquisitions or developments, used to retire debt or repurchase shares. 13 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS OVERVIEW The following discussion should be read in conjunction with all of the financial statements and notes appearing elsewhere in this report as well as the audited financial statements appearing in our 1998 Annual Report to Shareholders. Where appropriate, comparisons are made on a dollars per-weighted-average-unit basis in order to adjust for changes in the number of apartment homes owned during each period. The statements contained in this report that are not historical facts are forward-looking statements, and actual results may differ materially from those included in the forward-looking statements. These forward-looking statements involve risks and uncertainties including, but not limited to, the following: changes in general economic conditions, changes in financial markets and interest rates, our failure to qualify as a real estate investment trust ("REIT") and unexpected Year 2000 problems. BUSINESS We are a Houston-based REIT and report as a single business segment with activities related to the ownership, development, acquisition, management and disposition of multifamily apartment communities in the Southwest, Southeast, Midwest and Western regions of the United States. At September 30, 1999, we owned interests in, operated or were developing 159 multifamily properties containing 55,785 apartment homes located in nine states. Eight of our multifamily properties containing 3,570 apartment homes were under development at September 30, 1999. Two of our newly developed multifamily properties containing 820 apartment homes were in lease-up at September 30, 1999. We have several additional sites which we intend to develop into multifamily apartment communities. ACQUISITION OF OASIS RESIDENTIAL, INC. On April 8, 1998, we acquired, through a tax-free merger, Oasis Residential, Inc., a publicly traded Las Vegas-based multifamily REIT. The acquisition increased the size of our portfolio from 100 to 152 completed multifamily properties, and from 34,669 to 50,183 apartment homes at the date of acquisition. Each share of Oasis common stock outstanding on April 8, 1998 was exchanged for 0.759 of a Camden common share. Each share of Oasis Series A cumulative convertible preferred stock outstanding on April 8, 1998 was reissued as one Camden Series A cumulative convertible preferred share with terms and conditions comparable to the Oasis preferred stock. We issued 12.4 million common shares and 4.2 million preferred shares in exchange for the outstanding Oasis common and preferred stock, respectively. Approximately $484 million of Oasis debt, at fair value, was assumed in the merger. In connection with the merger with Oasis, on June 30, 1998, we completed a transaction in which Camden USA, Inc., one of our wholly owned subsidiaries, and TMT-Nevada, L.L.C., a Delaware limited liability company, formed Sierra-Nevada Multifamily Investments, LLC. We entered into this transaction to reduce our market risk in the Las Vegas area. TMT-Nevada holds an 80% interest in Sierra-Nevada and Camden USA holds the remaining 20% interest. In this transaction, we transferred to Sierra-Nevada 19 apartment communities containing 5,119 apartment homes for an aggregate of $248 million. Prior to the merger, Oasis owned 100% of each of these communities. In the merger, Camden USA acquired these communities. As a result, after the merger and prior to the Sierra-Nevada transaction, Camden USA owned 100% of each of these 19 properties. These properties are located in Las Vegas, Nevada. This transaction was funded with capital invested by the members of Sierra-Nevada, the assumption of $9.9 million of existing nonrecourse indebtedness, the 14 issuance of 17 nonrecourse cross collateralized and cross defaulted loans totaling $180 million and the issuance of two nonrecourse second lien mortgages totaling $7 million. PROPERTY PORTFOLIO Our multifamily property portfolio, excluding land held for future development and joint venture properties that we do not manage, is summarized as follows:
September 30,1999 December 31, 1998 ------------------------------- ----------------------------- Apartment Apartment Homes Properties % (a) Homes Properties % (a) ----------- ------------ ------ --------- ------------ ------ Operating Properties Texas Houston 7,502 18 15% 6,345 15 13% Dallas (b) 9,381 26 18 9,381 26 17 Austin 1,745 6 4 1,745 6 4 Other 1,641 5 3 1,641 5 3 ----------- ------------ ------ --------- ------------ ------ Total Texas Operating Properties 20,269 55 40 19,112 52 37 Arizona 2,326 7 5 2,326 7 5 California 1,272 3 3 1,272 3 3 Colorado (b) 1,972 6 3 1,972 6 3 Florida 7,335 17 15 7,261 17 14 Kentucky 1,016 4 2 1,142 5 2 Missouri 3,327 8 7 3,327 8 7 Nevada (b) 11,963 41 14 12,163 41 14 North Carolina (b) 2,735 10 4 2,735 10 4 ----------- ----------- ------ --------- ------------ ------ Total Operating Properties 52,215 151 93 51,310 149 89 ----------- ----------- ------ --------- ------------ ------ Properties Under Development Texas Houston (c) 756 1 1 2,213 5 4 Dallas 620 1 1 600 1 1 ----------- ----------- ------ --------- ------------ ------ Total Texas Development Properties 1,376 2 2 2,813 6 5 Arizona 332 1 1 325 1 1 California 380 1 1 380 1 1 Colorado 558 2 1 558 2 1 Florida (c) 492 1 1 1,150 3 2 Kentucky 432 1 1 432 1 1 ----------- ----------- ------ --------- ------------ ------ Total Properties Under Development 3,570 8 7 5,658 14 11 ----------- ----------- ------ --------- ------------ ------ Total Properties 55,785 159 100% 56,968 163 100% =========== =========== ====== ========= ============ ====== Less: Joint Venture Apartment Homes (b) 6,504 6,704 ----------- ----------- Total Apartment Homes - Owned 100% 49,281 50,264 =========== ===========
(a) Based on number of apartment homes owned 100% (b) The figures include properties held in joint ventures as follows: one property with 708 apartment homes in Dallas and two properties with 556 apartment homes in North Carolina in which we own a 44% interest, the remaining interest is owned by unaffiliated private investors; one property with 321 apartment homes in Colorado in which we own a 50% interest, the remaining interest is owned by an unaffiliated private investor; and 19 properties with 4,919 apartment homes (5,119 apartment homes at December 31, 1998) in Nevada owned through Sierra-Nevada Multifamily Investments, LLC in which we own a 20% interest. (c) The September 30, 1999 amounts exclude one property with 300 apartment homes in Houston which is now classified as land held for future development and one property with 352 apartment homes in Florida which was sold during the year. 15 At September 30, 1999, we had two completed properties under lease-up as follows:
Product Number of % Leased Estimated Type Apartment at 11/10/99 Date of Date of Property and Location Homes Completion Stabilization - ----------------------------------------- ------------ -------------- ------------- -------------- ----------------- The Park at Goose Creek Baytown, TX Affordable 272 77% 3Q99 4Q99 The Park at Holly Springs Houston, TX Garden 548 49% 3Q99 4Q00
At September 30, 1999, we had 8 development properties in various stages of construction as follows:
Product Number of Estimated Estimated Estimated Type Apartment Cost Date of Date of Property and Location Homes ($ millions) Completion Stabilization - ----------------------------------------- ------------------- ------------ -------------- -------------- --------------- In Lease-up The Park at Interlocken Denver, CO Garden 340 $ 34.9 4Q99 1Q00 The Park at Greenway Houston, TX Urban 756 57.5 4Q99 3Q00 The Park at Caley Denver, CO Garden 218 18.3 1Q00 2Q00 The Park at Lee Vista Orlando, FL Garden 492 32.8 1Q00 1Q01 The Park at Oxmoor Louisville, KY Garden 432 22.1 1Q00 1Q01 ---------- ----------- Subtotal 2,238 165.6 ---------- ----------- Under Construction The Park at Arizona Center Phoenix, AZ Urban 332 24.5 1Q00 1Q01 The Park at Farmers Market, Phase I Dallas, TX Urban 620 49.8 4Q00 4Q01 The Park at Crown Valley Mission Viejo, CA Garden 380 42.0 1Q01 3Q01 ---------- ---------- Subtotal 1,332 116.3 ---------- ----------- Total for 8 development properties 3,570 $ 281.9 ========== ===========
We stage our construction to allow leasing and occupancy during the construction period which we believe minimizes the lease-up period following completion of construction. Our accounting policy related to properties in the development and leasing phase is that all operating expenses, excluding depreciation, associated with occupied apartment homes are expensed against revenues generated by those apartment homes as they become occupied. All construction and carrying costs are capitalized and reported on the balance sheet in "Projects under development, including land" until such apartment homes are completed. Upon completion of each building of the project, the total cost of that building and the associated land is transferred to "Land" and "Buildings and improvements" and the assets are depreciated over their estimated useful lives using the straight-line method of depreciation. Upon achieving 90% occupancy, all apartment homes are considered operating and we begin expensing all items that were previously considered as carrying costs. Generally, this occurs within one year of opening the leasing office, with some allowances for larger than average properties. 16 COMPARISON OF THE QUARTER ENDED SEPTEMBER 30, 1999 AND SEPTEMBER 30, 1998 The changes in operating results from period to period are primarily due to the development of five properties totaling 1,759 apartment homes, the acquisition of three properties containing 1,626 apartment homes, the disposition of two properties containing 358 apartment homes and an increase in net operating income generated by the stabilized portfolio. The weighted average number of apartment homes for the third quarter of 1999 increased by 1,986 apartment homes, or 4.5%, from 44,006 to 45,992. Total operating properties were 128 and 125 at September 30, 1999 and 1998, respectively. The 45,992 weighted average apartment homes and the 128 operating properties exclude the impact of our ownership interest in properties owned in joint ventures. The 125 operating properties at September 30, 1998 have been restated to reflect the combination of operations of two adjacent properties in Nevada, Texas and Florida at December 31, 1998. Rental income for the quarter ended September 30, 1999 increased $7.0 million or 8.7% over the quarter ended September 30, 1998. Rental income per apartment home per month increased $25 or 4.1%, from $604 to $629 for the third quarters of 1998 and 1999, respectively. The increase was primarily due to increased revenue growth from the stabilized real estate portfolio and higher average rental rates on two of the three acquired properties and four of the five completed development properties. Additionally, the two disposed properties had average rental rates significantly lower than the portfolio average. Overall average occupancy increased slightly from 93.8% for the quarter ended September 30, 1998 to 94.0% for the quarter ended September 30, 1999. Other property income for the quarter ended September 30, 1999 increased $1.0 million over the quarter ended September 30, 1998. The increase in other property income was due primarily to a $700,000 increase from revenue sources such as telephone, cable and water. Property operating and maintenance expenses increased $2.7 million or 10.6%, from $25.5 million to $28.2 million and increased as a percent of total property income from 30.1% to 30.4% for the quarters ended September 30, 1998 and 1999, respectively. The increase in operating expense was due to a larger number of apartment homes owned and in operation. Our operating expense ratios increased primarily as a result of an increase in repairs and maintenance costs. Real estate taxes increased $1.0 million from $8.2 million to $9.2 million for the third quarters of 1998 and 1999, respectively, which represents an annual increase of $56 per apartment home. The increase was primarily due to increases in the valuations of properties held in our Texas and Florida portfolios and increases in property tax rates. General and administrative expenses increased $460,000 from $2.0 million to $2.5 million, and increased as a percent of revenues from 2.3% to 2.6% for the quarters ended September 30, 1998 and 1999, respectively. The increase is primarily due to increases in salary and payroll related costs. Interest expense increased from $13.4 million to $14.7 million primarily due to interest on debt incurred to repurchase our shares under the common share repurchase program. Interest capitalized was $4.1 million and $2.9 million for the quarters ended September 30, 1999 and 1998, respectively. Depreciation and amortization increased from $20.4 million to $22.7 million. This increase was due primarily to developments, renovations and property acquisitions. Gains on sale of properties and joint venture investments increased $2.3 million due to gains from the disposition of one multifamily property containing 232 units and our joint venture investment in two commercial office buildings. The gains recorded on these dispositions were partially offset by a loss on the 17 sale of a retail/commercial center. These gains do not include a loss on the sale of a 408 unit property held in a joint venture of $738,000 which is included in "Equity in Income of Joint Ventures". COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND SEPTEMBER 30, 1998 The changes in operating results from period to period are primarily due to the Oasis merger, the transfer of 19 properties totaling 5,119 apartment homes into the Sierra-Nevada joint venture, development of five properties aggregating 1,759 apartment homes, the acquisition of five properties containing 2,226 apartment homes, the disposition of eight properties containing 1,752 apartment homes and an increase in net operating income generated by the stabilized portfolio. The weighted average number of apartment homes for the first nine months of 1999 increased by 3,592 apartment homes, or 8.6%, from 41,712 to 45,304. Total operating properties were 128 and 125 at September 30, 1999 and 1998, respectively, and exclude those owned through joint venture investments. The weighted average number of apartment homes of 45,304 and 41,712 exclude the impact of our ownership interest in apartment homes owned in joint ventures throughout the nine month periods. The 125 operating properties at September 30, 1998 have been restated to reflect the combination of operations of two adjacent properties in Nevada, Texas and Florida at December 31, 1998. Rental income increased $33.0 million or 15.0% from $219.6 million to $252.6 million for the nine months ended September 30, 1998 and 1999, respectively. Rental income per apartment home per month increased $34 or 5.8%, from $585 to $619 for the nine months ended September 30, 1998 and 1999, respectively. The increase was primarily due to increased revenue growth from the stabilized real estate portfolio, higher average rental rates on properties added to the portfolio through the Oasis merger, four of the five acquired properties and completion of new development properties. Additionally, seven of the eight disposed properties had average rental rates significantly lower than the portfolio average. Other property income increased $3.0 million from $13.5 million to $16.6 million for the nine months ended September 30, 1998 and 1999, respectively. The increase in other property income was due to a larger number of apartment homes owned and in operation and a $1.9 million increase from revenue sources such as telephone, cable and water. Property operating and maintenance expenses increased $7.6 million, from $72.8 million to $80.3 million, but decreased as a percent of total property income from 31.2 % to 29.8% for the nine months ended September 30, 1998 and 1999, respectively. Our operating expense ratio decreased from the prior year primarily as a result of the impact of our April 1, 1998 adoption of a new accounting policy, whereby expenditures for floor coverings, appliances and HVAC unit replacements are expensed in the first five years of a property's life and capitalized thereafter. Prior to the adoption of this policy, we had been expensing these costs. Had this policy been adopted as of January 1, 1998, the nine months ended September 30, 1998 operating expense ratio would have been 30.7%. Real estate taxes increased $4.5 million from $23.1 million to $27.7 million for the nine months ended September 30, 1998 and 1999, respectively, which represents an annual increase of $75 per apartment home. The increase was primarily due to increases in the valuations of renovated, acquired and developed properties and increases in property tax rates. This increase per apartment home was partially offset by lower property taxes in the portfolio added through the Oasis merger. General and administrative expenses increased $1.7 million from $5.5 million to $7.3 million, and increased as a percent of revenues from 2.3% to 2.6%. The general and administrative expense ratio increase is mainly attributable to the impact of our March 20, 1998 adoption of Issue No. 97-11, Accounting for Internal Costs Relating to Real Estate Property Acquisitions, discussed in Note 1, which is partially offset by efficiencies resulting from operating a larger portfolio. 18 Interest expense increased from $36.7 million to $42.2 million due to increased indebtedness related to the Oasis merger, completed developments, renovations and property acquisitions. Additionally, interest expense increased due to interest on debt incurred to repurchase our shares under the common share repurchase program. Interest capitalized was $6.4 million and $12.3 million for the nine months ended September 30, 1998 and 1999, respectively. Depreciation and amortization increased from $57.4 million to $65.5 million. This increase was due primarily to the Oasis merger, developments, renovations and property acquisitions. Gains on sale of properties and joint venture investments increased $3.0 million due to gains from the disposition of two multifamily properties containing 358 units and our joint venture investment in two commercial office buildings. The gains recorded on these dispositions were partially offset by a loss on the sale of a retail/commercial center. These gains do not include a loss on the sale of a 408 unit property held in a joint venture of $738,000 which is included in "Equity in Income of Joint Ventures". LIQUIDITY AND CAPITAL RESOURCES FINANCIAL STRUCTURE We intend to continue maintaining what management believes to be a conservative capital structure by: (i) using a prudent combination of debt and common and preferred equity; (ii) extending and sequencing the maturity dates of our debt where possible; (iii) managing interest rate exposure using fixed rate debt and hedging, where appropriate; (iv) borrowing on an unsecured basis in order to maintain a substantial number of unencumbered assets; and (v) maintaining conservative coverage ratios. The interest expense coverage ratio, net of capitalized interest, was 3.8 and 3.7 times for the nine months ended September 30, 1999 and 1998, respectively, and 3.7 times and 3.8 times for the quarters ended September 30, 1999 and 1998, respectively. At September 30, 1999 and 1998, 75.7% and 70.6%, respectively, of our properties (based on invested capital) were unencumbered. LIQUIDITY We intend to meet our short-term liquidity requirements through cash flows provided by operations, our unsecured line of credit discussed in the financial flexibility section and other short-term borrowings. We expect that our ability to generate cash will be sufficient to meet our short-term liquidity needs, which include: (i) normal operating expenses; (ii) debt service requirements; (iii) capital expenditures; (iv) property developments; (v) common share repurchases; and (vi) common and preferred distributions. We consider our long-term liquidity requirements to be the repayment of maturing secured debt and borrowings under our unsecured line of credit and funding of acquisitions. We intend to meet our long-term liquidity requirements through the use of common and preferred equity capital, senior unsecured debt and property dispositions. As of September 30, 1999, we had $340 million available under the unsecured line of credit, $75 million available under our 19 universal shelf registration, and $14.5 million available under our medium-term note program. We have significant unencumbered real estate assets which could be sold or used as collateral for financing purposes should other sources of capital not be available. In September 1999, we announced that our Board of Trust Managers had declared a dividend in the amount of $0.52 per share for the third quarter of 1999 which was paid on October 15, 1999 to all common shareholders of record as of September 30, 1999. We paid an equivalent amount per unit to holders of the common operating partnership units. This distribution to common shareholders and holders of common operating partnership units equates to an annualized dividend rate of $2.08 per share or unit. In September 1999, we declared a quarterly dividend on our Series A Cumulative Preferred Shares, which were issued in conjunction with the merger of Oasis. The dividend in the amount of $0.5625 per share is payable November 15, 1999 to all preferred shareholders of record as of September 30, 1999. FINANCIAL FLEXIBILITY We concentrate our growth efforts toward selective development and acquisition opportunities in our current markets, and through the acquisition of existing operating portfolios and development properties in selected new markets. During the nine months ended September 30, 1999, we incurred $154.9 million in development costs and no acquisition costs. We are developing eight additional properties at an aggregate cost of approximately $281.9 million. We fund our developments and acquisitions through a combination of equity capital, partnership units, medium-term notes, construction loans, other debt securities and the unsecured line of credit. We also seek to selectively dispose of assets that have a lower projected net operating income growth rate than the overall portfolio, or no longer conform to our operating and investment strategies. Such sales generate capital for acquisitions and new developments or for debt reduction. In August 1999, we entered into a line of credit with 14 banks for a total commitment of $375 million. This line of credit replaces our three previous lines of credit which totaled $275 million. The new line of credit is scheduled to mature in August 2002. The scheduled interest rate on the line of credit is currently based on a spread over LIBOR or Prime. The scheduled interest rates are subject to change as our credit ratings change. Advances under the line of credit may be priced at the scheduled rates, or we may enter into bid rate loans with participating banks at rates below the scheduled rates. These bid rate loans have terms of six months or less and may not exceed the lesser of $187.5 million or the remaining amount available under the line of credit. The line of credit is subject to customary financial covenants and limitations. As an alternative to our unsecured line of credit, we from time to time borrow using competitively bid unsecured short-term notes with lenders who may or may not be a part of the unsecured line of credit bank group. Such borrowings vary in term and pricing and are typically priced at interest rates below those available under the unsecured line of credit. During the third quarter of 1999, our operating partnership issued $35.5 million of 8.25% Series C Cumulative Redeemable Perpetual Preferred Units. Distributions on the preferred units are payable quarterly in arrears. The preferred units are redeemable for cash by the operating partnership on or after the fifth anniversary of issuance at par plus the amount of any accumulated and unpaid distributions. The preferred units are convertible after 10 years by the holder in to our 8.25% Series C Cumulative Redeemable Perpetual Preferred Shares. The preferred units are subordinate to present and future debt. On February 23, 1999, our operating partnership issued $100 million of 8.5% Series B Cumulative Redeemable Perpetual Preferred Units. Distributions on the preferred units are payable quarterly in arrears. The preferred units are redeemable for cash by the operating partnership on or after the fifth anniversary of issuance at par plus the amount of any accumulated and unpaid distributions. The preferred units are convertible after 10 years by the holder 20 into our 8.5% Series B Cumulative Redeemable Perpetual Preferred Shares. The preferred units are subordinate to present and future debt. During the first quarter of 1999, we issued $39.5 million aggregate principal amounts of senior unsecured notes from our $196 million medium-term note shelf registration. These fixed rate notes, due in January 2002 through January 2009, bear interest at a weighted average rate of 7.07%, payable semiannually on January 15 and July 15. The net proceeds were used to reduce indebtedness outstanding under the unsecured lines of credit. On April 9, 1999, we issued $15 million principal amounts of senior unsecured notes from our $196 million medium-term note shelf registration. These fixed rate notes, due in March 2002, bear interest at a rate of 6.74%, payable semiannually on March 15 and September 15. The net proceeds were used to reduce indebtedness outstanding under the unsecured lines of credit. On April 15, 1999, we issued from our $500 million shelf registration an aggregate principal amount of $200 million of five-year senior unsecured notes. Interest on the notes accrues at an annual rate of 7.0% and is payable semi-annually on April 15 and October 15, commencing on October 15, 1999. The notes are direct, senior unsecured obligations and rank equally with all other unsecured and unsubordinated indebtedness. The notes may be redeemed at any time at our option subject to a make-whole provision. The proceeds from the sale of the notes were $197.7 million, net of issuance costs. We used the net proceeds to reduce $171 million of indebtedness under the unsecured lines of credit and for general working capital purposes. During September 1999, we executed three interest rate swap agreements totaling $70 million which are scheduled to mature in October 2000. These swaps are being used as a hedge of interest rate exposure on our $90 million medium term notes issued in October 1998 which mature in October 2000. Currently, the interest rate on the medium term notes is fixed at 7.23%. The interest rates on the swaps are based on the one-month LIBOR rate plus a spread resulting in an effective interest rate on the swaps of 6.58% at September 30, 1999. At September 30, 1999, the weighted average interest rate on floating rate debt was 6.07%. FUNDS FROM OPERATIONS Management considers FFO to be an appropriate measure of performance of an equity REIT. The National Association of Real Estate Investment Trusts currently defines FFO as net income (computed in accordance with generally accepted accounting principles), excluding gains (or losses) from debt restructuring and sales of property, plus real estate depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Our definition of diluted FFO assumes conversion at the beginning of the period of all dilutive convertible securities, including minority interest, which are convertible into common equity. We believe that in order to facilitate a clear understanding of our consolidated historical operating results, FFO should be examined in conjunction with net income as presented in the consolidated financial statements and data included elsewhere in this report. FFO is not defined by generally accepted accounting principles. FFO should not be considered as an alternative to net income as an indication of our operating performance or to net cash provided by operating activities as a measure of our liquidity. Further, FFO as disclosed by other REITs may not be comparable to our calculation. Our diluted FFO for the three months ended September 30, 1999 increased slightly over the three months ended September 30, 1998. The increase in diluted FFO during the three months ended September 30, 1999 from property acquisitions, developments and improvements in the performance of the stabilized properties was offset by the repurchase of our shares under our common share repurchase program. Our diluted 21 FFO for the nine months ended September 30, 1999 increased $14.4 million over the nine months ended September 30, 1998. This increase in diluted FFO was due to the Oasis merger, property acquisitions, developments and improvements in the performance of the stabilized properties in our portfolio. The calculation of basic and diluted FFO for the three and nine months ended September 30, 1999 and 1998 follows: (In thousands)
Three Months Nine Months Ended September 30, Ended September 30, ------------------------- ------------------------- 1999 1998 1999 1998 ---------- ---------- ----------- ---------- FUNDS FROM OPERATIONS: Net income to common shareholders $ 13,535 $ 14,650 $ 40,079 $ 33,179 Real estate depreciation 22,315 20,070 64,388 56,364 Real estate depreciation from unconsolidated ventures 797 754 2,423 1,498 Preferred share dividends 2,343 Loss on sale of property held in unconsolidated ventures 738 738 Gain on sale of properties and joint venture interests (2,259) (2,979) ---------- ---------- ----------- ---------- FUNDS FROM OPERATIONS - BASIC 35,126 35,474 104,649 93,384 Preferred share dividends 2,343 2,343 7,029 4,686 Minority interest 892 59 1,850 1,043 Interest on convertible subordinated debentures 63 69 195 249 Amortization of deferred costs on convertible debentures 7 6 19 24 ---------- ---------- ----------- ---------- FUNDS FROM OPERATIONS - DILUTED $ 38,431 $ 37,951 $ 113,742 $ 99,386 ========== ========== =========== ========== WEIGHTED AVERAGE SHARES - BASIC 40,939 44,370 41,668 40,115 Common share options and awards granted 452 387 414 414 Preferred shares 3,207 3,207 3,207 2,150 Minority interest units 2,621 2,680 2,646 2,587 Convertible subordinated debentures 145 156 148 188 ========== ========== =========== ========== WEIGHTED AVERAGE SHARES - DILUTED 47,364 50,800 48,083 45,454 ========== ========== =========== ==========
INFLATION We lease apartments under lease terms generally ranging from six to thirteen months. Management believes that such short-term lease contracts lessen the impact of inflation due to our ability to adjust rental rates to market levels as leases expire. YEAR 2000 CONVERSION We have recognized the need to ensure that our computer equipment and software ("computer systems"), other equipment and operations will not be adversely impacted by the change to the calendar Year 2000. As such, we have taken steps to identify and resolve potential areas of risk by implementing a comprehensive Year 2000 action plan. The plan is divided into four phases: identification, assessment, notification/certification, and testing/contingency plan development; and includes three major elements: computer systems, other equipment and third parties. We are on the fourth phase for our computer systems, other equipment and third party services. We believe that the Year 2000 issue will not pose significant operating problems for our computer systems, since the majority of computer equipment and software products we utilize are already compliant or were converted or modified as part of system upgrades unrelated to the Year 2000 issue. We are in the 22 process of completing a contingency plan which will permit our primary computer systems operations to continue if the on-going testing of such conversions and modifications reveals any Year 2000 issues presently unknown to us. Our estimated total cost of addressing the Year 2000 issues with respect to our own computer systems, other equipment and operations is expected to be minimal since the cost of any computer systems upgrades and conversions to specifically address the Year 2000 issues have been and are expected to be minimal. Additionally, the majority of Year 2000 issues are being addressed by use of internal resources and such future internal costs are expected to be minimal as well. We do not separately track internal cost, which primarily consist of payroll and related costs, incurred on Year 2000 issues. We have not estimated any time or other internal costs that may be incurred by us as a result of the failure of any third parties to become Year 2000 ready or costs to implement any contingency plans. We are communicating with our key third party service providers and vendors, including those who have previously sold equipment to us, to obtain information and compliance certificates, if possible, regarding their state of readiness with respect to the Year 2000 issue. As of November 10, 1999, 99% of key third party service providers have responded with compliance certificates. Failure of certain third parties to remediate Year 2000 issues affecting their respective businesses on a timely basis, or to implement contingency plans sufficient to permit uninterrupted continuation of their businesses in the event of a failure of their systems, could have a material adverse impact on our business and results of operations. Final determination of third party Year 2000 readiness is substantially complete. None of the responses received from third party service providers as of November 10, 1999 have indicated any problem with bringing their services into Year 2000 compliance. We intend to continue to monitor the progress made by third parties, test critical system interfaces and formulate appropriate contingency and business continuation plans to address third party issues identified through our evaluations and assessments. We presently believe that the worst case scenario with respect to the Year 2000 issues is the failure of third party service providers, including utility suppliers and banks, to become Year 2000 compliant. This could result in interruptions in services to our apartment communities for a period of time and could adversely affect our access to credit and money markets which, in turn, could result in loss of normal operating capacity. If our computer systems completely fail, we would be able to continue affected functions either manually or through non-Year 2000 compliant systems. We do not believe that the increased costs associated with such interruptions from both third party service failure and computer system failure could exceed $1 million. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK No material changes have occurred since our Annual Report on Form 10-K for the year ended December 31, 1998. 23 PART II. OTHER INFORMATION Item 1. Legal Proceedings None Item 2. Changes in Securities and Use of Proceeds None Item 3. Defaults Upon Senior Securities None Item 4. Submission of Matters to a Vote of Security Holders None Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K (a) 10.1 Form of Credit Agreement dated August 18, 1999 between Bank of America, N.A. and the registrant 11.1 Statement regarding Computation of Earnings Per Common Share 27.1 Financial Data Schedule (filed only electronically with the Commission) (b) Reports on Form 8-K No reports on Form 8-K have been filed by the registrant during the quarter for which this report is filed. 24 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on our behalf by the undersigned thereunto duly authorized. CAMDEN PROPERTY TRUST /s/ G. Steven Dawson November 12, 1999 - -------------------------------- -------------------------- G. Steven Dawson Date Sr. Vice President of Finance, Chief Financial Officer and Treasurer (Duly Authorized Officer and Principal Financial and Accounting Officer) /s/ Dennis M. Steen November 12, 1999 - -------------------------------- -------------------------- Dennis M. Steen Date Vice President - Controller and Chief Accounting Officer EX-10.1 2 CAMDEN PROPERTY TRUST CREDIT AGREEMENT 25 EXHIBIT 10.1 FORM OF CREDIT AGREEMENT AMONG CAMDEN PROPERTY TRUST AS BORROWER BANK OF AMERICA, N.A. AS ADMINISTRATIVE AGENT AND THE LENDERS NAMED HEREIN AS LENDERS AS ARRANGED BY BANC OF AMERICA SECURITIES LLC AS SOLE LEAD ARRANGER DATED AS OF AUGUST 18, 1999 26 vi TABLE OF CONTENTS
ARTICLE I TERMS DEFINED.....................................................................................................1 SECTION 1.1. DEFINITIONS..........................................................................1 SECTION 1.2. SINGULAR AND PLURAL; GENDER.........................................................23 SECTION 1.3. SUBSTANTIVE DEFINITIONS.............................................................23 SECTION 1.4. MONEY...............................................................................23 SECTION 1.5. CAPTIONS; REFERENCES................................................................23 SECTION 1.6. ACCOUNTING TERMS AND DETERMINATIONS.................................................23 ARTICLE II COMMITMENT.......................................................................................................24 SECTION 2.1. COMMITMENT..........................................................................24 SECTION 2.2. METHOD OF BORROWING.................................................................25 SECTION 2.3 Competitive Bid Loans...............................................................26 SECTION 2.4. FEES................................................................................30 SECTION 2.5. DISBURSEMENT AND PERFORMANCE BY LENDERS.............................................31 ARTICLE III TERMS OF THE CREDIT FACILITIES...................................................................................33 SECTION 3.1. NOTES...............................................................................33 SECTION 3.2. MATURITY; MANDATORY PRINCIPAL REDUCTIONS............................................33 SECTION 3.3. INTEREST RATE.......................................................................33 SECTION 3.4. INTEREST PAYMENTS...................................................................33 SECTION 3.5. CONVERSION OF ADVANCES AND INTEREST RATE ELECTIONS..................................34 SECTION 3.6. REDUCTION OF COMMITMENT AMOUNT; CONSEQUENTIAL LOSS..................................35 SECTION 3.7. SCHEDULES ON NOTES..................................................................36 SECTION 3.8. GENERAL PROVISIONS AS TO PAYMENTS...................................................36 SECTION 3.9. APPLICATION OF PAYMENTS.............................................................37 SECTION 3.10. POST-DEFAULT INTEREST; PAST DUE PRINCIPAL AND INTEREST..............................37 SECTION 3.11. COMPUTATION OF INTEREST AND FEES....................................................37 SECTION 3.12. LENDERS' CAPITAL ADEQUACY............................................................37 SECTION 3.13. REGULATORY CHANGES; INDEMNIFICATION FOR FAILURE TO PAY WHEN DUE.....................38 SECTION 3.14. TAXES...............................................................................39 SECTION 3.15. EXTENSION OPTION....................................................................41 SECTION 3.16. ANNUAL RENEWAL......................................................................42 SECTION 3.17. REPLACEMENT OF A LENDER.............................................................44 ARTICLE IV CONDITIONS TO CLOSING AND ADVANCES...............................................................................44 SECTION 4.1. CONDITIONS TO CLOSING...............................................................44 SECTION 4.2. CONDITIONS TO ALL ADVANCES..........................................................46
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ARTICLE V UNENCUMBERED PROPERTIES POOL AND GUARANTIES......................................................................46 SECTION 5.1. UNENCUMBERED PROPERTIES POOL........................................................46 SECTION 5.2. NEGATIVE PLEDGE AGREEMENTS..........................................................47 SECTION 5.3. ADDITIONAL GUARANTOR SUBSIDIARIES...................................................48 SECTION 5.4. OWNERSHIP OF GUARANTOR SUBSIDIARIES.................................................48 SECTION 5.5. PARTNERSHIP MATTERS.................................................................49 SECTION 5.6. GUARANTY PROCEEDS...................................................................49 ARTICLE VI REPRESENTATIONS AND WARRANTIES...................................................................................50 SECTION 6.1. EXISTENCE AND POWER OF BORROWER.....................................................50 SECTION 6.2. EXISTENCE AND POWER OF GUARANTOR SUBSIDIARIES.......................................50 SECTION 6.3. AUTHORIZATION; CONTRAVENTION........................................................50 SECTION 6.4. ENFORCEABLE OBLIGATIONS.............................................................50 SECTION 6.5. FINANCIAL INFORMATION...............................................................51 SECTION 6.6. LITIGATION..........................................................................51 SECTION 6.7. ERISA...............................................................................52 SECTION 6.8. TAXES AND FILING OF TAX RETURNS.....................................................52 SECTION 6.9. OWNERSHIP OF ASSETS.................................................................52 SECTION 6.10. BUSINESS; COMPLIANCE................................................................53 SECTION 6.11. LICENSES, PERMITS...................................................................53 SECTION 6.12. COMPLIANCE WITH LAW.................................................................53 SECTION 6.13. UTILITIES AND ACCESS................................................................53 SECTION 6.14. FULL DISCLOSURE.....................................................................54 SECTION 6.15. ENVIRONMENTAL MATTERS...............................................................54 SECTION 6.16. PURPOSE OF CREDIT...................................................................55 SECTION 6.17. GOVERNMENTAL REGULATIONS............................................................55 SECTION 6.18. INSURANCE...........................................................................55 SECTION 6.19. SOLVENCY............................................................................55 SECTION 6.20. YEAR 2000 COMPLIANCE................................................................56 ARTICLE VII AFFIRMATIVE COVENANTS............................................................................................56 SECTION 7.1. INFORMATION FROM BORROWER...........................................................56 SECTION 7.2. BUSINESS OF BORROWER; REIT STATUS; NYSE LISTING.....................................58 SECTION 7.3. RIGHT OF INSPECTION; CONFIDENTIALITY................................................58 SECTION 7.4. MAINTENANCE OF INSURANCE............................................................59 SECTION 7.5. MAINTENANCE AND USE.................................................................59 SECTION 7.6. PAYMENT OF TAXES, IMPOSITIONS AND CLAIMS............................................60 SECTION 7.7. COMPLIANCE WITH LAWS AND DOCUMENTS..................................................60 SECTION 7.8. ENVIRONMENTAL LAW COMPLIANCE AND INDEMNITY..........................................60 SECTION 7.9. COVENANT COMPLIANCE.................................................................61 SECTION 7.10. QUANTITY AND QUALITY OF DOCUMENTS...................................................61 SECTION 7.11. USE OF PROCEEDS.....................................................................61
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Section 7.12. Development Funds...................................................................62 SECTION 7.13 YEAR 2000 COMPLIANCE................................................................62 SECTION 7.14. ADDITIONAL DOCUMENTS................................................................62 ARTICLE VIII NEGATIVE COVENANTS...............................................................................................62 SECTION 8.1. MINIMUM NET WORTH...................................................................62 SECTION 8.2. LIABILITIES TO ASSETS RATIOS........................................................62 SECTION 8.3. INTEREST COVERAGE RATIO.............................................................63 SECTION 8.4. FIXED CHARGE COVERAGE RATIO.........................................................63 SECTION 8.5. DEBT LIMITATIONS....................................................................63 SECTION 8.6. LIMITATION ON SALE OR TRANSFER OF ASSETS............................................63 SECTION 8.7. PERMITTED LIENS.....................................................................63 SECTION 8.8. CONSOLIDATIONS, MERGERS, AND MAINTENANCE............................................63 SECTION 8.9. MANAGEMENT OF PROPERTY..............................................................64 SECTION 8.10. INTENTIONALLY DELETED...............................................................64 SECTION 8.11. LIMITATION ON DISTRIBUTIONS.........................................................64 SECTION 8.12. INVESTMENTS.........................................................................64 SECTION 8.13. NEGATIVE PLEDGE.....................................................................65 SECTION 8.14. TRANSACTIONS WITH AFFILIATES........................................................66 SECTION 8.15. EMPLOYEE PLANS......................................................................66 SECTION 8.16. USE VIOLATIONS......................................................................66 SECTION 8.17. EXCEPTIONS TO COVENANTS.............................................................66 SECTION 8.18. FISCAL YEAR AND ACCOUNTING METHODS..................................................67 SECTION 8.19. GOVERNMENTAL REGULATIONS............................................................67 SECTION 8.20. TREASURY STOCK......................................................................67 ARTICLE IX DEFAULTS AND REMEDIES............................................................................................67 SECTION 9.1. EVENTS OF DEFAULT...................................................................67 SECTION 9.2. NOTICE AND CURE.....................................................................70 SECTION 9.3. REMEDIES............................................................................70 SECTION 9.4. RIGHTS OF SET-OFF...................................................................71 SECTION 9.5. REMEDIES CUMULATIVE, CONCURRENT AND NON-EXCLUSIVE...................................72 SECTION 9.6. NO CONDITIONS PRECEDENT TO EXERCISE REMEDIES........................................72 SECTION 9.7. WAIVERS.............................................................................72 SECTION 9.8. DISCONTINUANCE OF PROCEEDINGS.......................................................73 SECTION 9.9. APPLICATION OF PROCEEDS.............................................................73 ARTICLE X AGENTS AND THE LENDERS...........................................................................................73 SECTION 10.1. APPOINTMENT AND AUTHORIZATION OF AGENTS.............................................73 SECTION 10.2. POSSESSION OF INSTRUMENTS BY ADMINISTRATIVE AGENT...................................74 SECTION 10.3. EXPENSES............................................................................75
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SECTION 10.4. DELEGATION OF DUTIES; RELIANCE; CONSULTATION........................................75 -------------------------------------------- SECTION 10.5. LIMITATION OF LIABILITY.............................................................76 ----------------------- SECTION 10.6. DEFAULT.............................................................................77 ------- SECTION 10.7. LENDERS=DECISIONS...................................................................77 ----------------- SECTION 10.8. LIMITATION OF LIABILITY OF LENDERS..................................................78 ---------------------------------- SECTION 10.9. RELATIONSHIP OF LENDERS.............................................................78 ----------------------- SECTION 10.10. DEBTOR-CREDITOR RELATIONSHIP........................................................78 ---------------------------- SECTION 10.11. CREDIT DECISIONS....................................................................78 ---------------- SECTION 10.12. REMOVAL OF ANY AGENT................................................................79 -------------------- SECTION 10.13. RESIGNATION BY ANY AGENT............................................................79 ------------------------ SECTION 10.14. SHARING OF PAYMENTS AND SETOFFS.....................................................80 ------------------------------- SECTION 10.15. NON-ADVANCING LENDERS...............................................................80 --------------------- SECTION 10.16. BENEFIT OF LENDERS..................................................................81 ------------------ SECTION 10.17. ROLES OF AGENTS.....................................................................81 --------------- ARTICLE XI MISCELLANEOUS....................................................................................................81 SECTION 11.1. CONTINUING AGREEMENT................................................................81 SECTION 11.2. NOTICES.............................................................................82 SECTION 11.3. NO WAIVERS..........................................................................82 SECTION 11.4. EXPENSES; DOCUMENTARY TAXES; INDEMNIFICATION........................................82 SECTION 11.5. AMENDMENTS, WAIVERS AND CONSENTS....................................................83 SECTION 11.6. SURVIVAL............................................................................83 SECTION 11.7. PRIOR UNDERSTANDINGS; NO DEFENSES; RELEASE; NO ORAL AGREEMENTS......................83 SECTION 11.8. LIMITATION ON INTEREST..............................................................84 SECTION 11.9. INVALID PROVISIONS..................................................................85 SECTION 11.10. LENDER ASSIGNMENTS AND PARTICIPATIONS...............................................85 SECTION 11.11. BINDING EFFECT......................................................................87 SECTION 11.12. SENIOR DEBT; BORROWER SUBORDINATION.................................................87 SECTION 11.13. NONLIABILITY OF AGENT AND LENDER....................................................88 SECTION 11.14. PAYMENT SET ASIDE...................................................................88 SECTION 11.15. CONSTRUCTION........................................................................88 SECTION 11.16. TIME OF ESSENCE.....................................................................89 SECTION 11.17. INCONSISTENT PROVISIONS.............................................................89 SECTION 11.18. CONSOLIDATED GROUP..................................................................89 SECTION 11.19. SUBMISSION TO JURISDICTION; SERVICE OF PROCESS......................................89 SECTION 11.20. JURY TRIAL WAIVER...................................................................89 SECTION 11.21. APPLICABLE LAW......................................................................90 SECTION 11.22. COUNTERPARTS........................................................................90
30 SCHEDULES AND EXHIBITS SCHEDULE I AGENTS, SOLE LEAD ARRANGER, LENDERS AND BORROWER SCHEDULE II LIBOR MARGIN; VARIABLE RATE MARGIN; FACILITY FEE PERCENTAGE SCHEDULE III ORGANIZATIONAL CHART EXHIBIT A-1 FORM OF NOTE EXHIBIT A-2 FORM OF COMPETITIVE BID NOTE EXHIBIT B ADVANCE REQUEST EXHIBIT C COMPLIANCE CERTIFICATE EXHIBIT D ASSIGNMENT AND ACCEPTANCE EXHIBIT E-1 COMPETITIVE BID QUOTE REQUEST EXHIBIT E-2 INVITATION FOR COMPETITIVE BID QUOTE EXHIBIT E-3 COMPETITIVE BID QUOTE EXHIBIT F FORM OF GUARANTY AGREEMENT EXHIBIT G CONTRIBUTION AGREEMENT 31 CREDIT AGREEMENT THIS CREDIT AGREEMENT is entered into as of the 18th day of August, 1999, by and among CAMDEN PROPERTY TRUST, a Texas real estate investment trust, as borrower, BANK OF AMERICA, N.A., a national banking association, as administrative agent, CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, as syndication agent, FIRST NATIONAL BANK OF CHICAGO, as documentation agent, WELLS FARGO BANK, N.A., as managing agent, and the financial institutions, and other entities designated as "Lenders" on Schedule I hereto, as Schedule I may be modified or supplemented from time to time. PRELIMINARY STATEMENT Camden Property Trust has requested that Agents and Sole Lead Arranger (each as herein defined) arrange a credit facility in an amount equal to Three Hundred Seventy-Five Million and No/100 Dollars ($375,000,000), with the ability to further increase such credit facility up to Four Hundred Million and No/100 Dollars ($400,000,000). Upon and subject to the terms of this Agreement and the other Loan Documents, Agents and the Lenders are willing to fund such credit facility. Accordingly, in consideration of the mutual covenants contained herein, Borrower, the Guarantor Subsidiaries, Agents and the Lenders (each as herein defined) agree as follows: ARTICLE I TERMS DEFINED SECTION 1.1. DEFINITIONS. The following terms, as used herein, have the following meanings: ADJUSTED CONSOLIDATED EBITDA Means, for any period, determined in accordance with GAAP on a consolidated basis for Borrower and its Consolidated Subsidiaries, an amount equal to the sum of consolidated net income before taxes, extraordinary gains or losses, and preferred dividends (as determined in accordance with GAAP), plus depreciation, plus amortization, plus interest expense, each as deducted in determining such consolidated net income before taxes, for such period, as adjusted for (i) any non-recurring items during such period, (ii) any acquisitions and dispositions of Real Estate during such period, and (iii) deduction of the Capital Improvement Reserve for all the Real Estate. ADJUSTED LIBOR RATE means on the applicable Effective Date, with respect to a LIBOR Rate Advance, a rate per annum equal to the SUM OF (a) the quotient of (i) the LIBOR Rate on the applicable Effective Date, divided by (ii) the remainder of 1.00 minus the LIBOR Reserve Requirement, if any, on the applicable Effective Date, plus (b) the LIBOR Margin in effect on such date. 32 ADMINISTRATIVE AGENT means Bank of America, N.A., a national banking association, in its capacity as administrative agent for the Lenders hereunder, or any successor administrative agent pursuant to SECTION 10.12 or SECTION 10.13. ADVANCE means an advance made by the Lenders (including advances under Competitive Bid Notes) to Borrower under the Credit Facility pursuant to the terms and conditions of this Agreement. ADVANCE REQUEST has the meaning set forth in SECTION 2.2(A). AFFILIATE means, as to any Person, any Subsidiary of such Person, or any Person which, directly or indirectly, controls, is controlled by, or is under common control with such Person. For the purposes of this definition, "control" means the possession of the power to direct or cause the direction of management and policies of such Person, whether through the ownership of voting securities or other equity interests, by contract or otherwise. AGENTS means Administrative Agent, Syndication Agent, Documentation Agent and Managing Agent. AGGREGATE LOAN PERCENTAGE means, with respect to each Lender, the fraction, expressed as a percentage, obtained by dividing (a) the sum of the aggregate principal amount outstanding on the date of determination under the Note and the Competitive Bid Note payable to such Lender, by (b) the aggregate principal amount outstanding on the date of determination under all of the Notes and Competitive Bid Notes. AGREEMENT means this Credit Agreement, including the Schedules and Exhibits hereto, together with all renewals, extensions, modifications, amendments, supplements, rearrangements and restatements thereof. APPLICABLE DEBT RATING means at any time the Moody's Rating and the S&P Rating if equivalent, and the lower of the Moody's Rating and the S&P Rating if such ratings are not equivalent. APPLICABLE ENVIRONMENTAL LAWS has the meaning set forth in SECTION 7.8. APPLICABLE LENDING OFFICE means with respect to each Lender, such Lender's domestic lending office (as designated by such Lender) for Variable Rate Advances and Competitive Bid Fixed Rate Loans and such Lender's Eurodollar lending office (as designated by such Lender) for LIBOR Rate Advances and Competitive Bid Advances and Competitive Bid Pricing Loans. APPLICABLE RATE means at any time, (a) with respect to a Variable Rate Advance, a rate per annum equal to the Variable Rate, and (b) with respect to a LIBOR Rate Advance, a rate per annum equal to the Adjusted LIBOR Rate. ASSIGNMENT AND ACCEPTANCE has the meaning set forth in SECTION 11.10. 33 AUTHORIZED OFFICER means, as to Borrower or any other Person, any of its Chairman, Vice-Chairman, Chief Executive Officer, President, Executive Vice President(s), Chief Financial Officer, Chief Accounting Officer, Treasurer or Assistant Treasurer, who is duly authorized by the Board of Directors or other governing board of such Person to execute the Loan Documents or any other documents or certificates to be executed by such Person hereunder or in connection with any Advance or any reporting requirements hereunder. BASE RATE means, on any date of determination, the greater of (a) the rate of interest per annum most recently announced by Administrative Agent as its prime rate in effect at its principal office automatically fluctuating upward and downward until and at the time specified in each such announcement without special notice to Borrower or any other Person, which prime rate may not necessarily represent the lowest or best rate actually charged to a customer or (b) the sum of the Federal Funds Rate plus 100 basis points. BORROWER means Camden Property Trust, a Texas real estate investment trust, and its successors. BORROWER CONTROL GROUP means a management group which includes the President, the Chief Executive Officer, the Chief Financial Officer, and such other officers and Trust Managers approved by the President, the Chief Executive Officer and Chief Financial Officer. BORROWING DATE means the date on which an Advance is made under this Agreement. BUSINESS DAY means (a) for all purposes other than as covered by clause (b) of this definition, any day of the week, other than Saturday, Sunday or other day Administrative Agent or any Lender is required or authorized by law or executive order to close, and (b) with respect to all requests, notices and determinations in connection with LIBOR Rate Advances and Competitive Bid Pricing Loans, a day that is a Business Day described in clause (a) of this definition and that is a day other than a day on which banks are required or authorized to close in the London interbank market. CAMDEN L.P. means Camden Operating L.P.,a Delaware limited partnership, and its successors. CAMDEN USA means Camden USA, Inc., a Delaware corporation, and its successors. CAPITAL EXPENDITURES means expenditures by Borrower or any of its Consolidated Subsidiaries for fixed or capital assets, including without limitation expenditures for maintenance and repairs. 34 CAPITAL IMPROVEMENT RESERVE means with respect to all Real Estate or all the Unencumbered Properties, as indicated, a reserve for Capital Expenditures in an amount equal to the greater of (a) $200 per year multiplied by a number which is the weighted average of the number of apartment units on all Real Estate or all Unencumbered Properties, as the case may be, for the applicable fiscal quarter, or (b) actual Capital Expenditures and reserves for Capital Expenditures for or attributable to all the Real Estate or all the Unencumbered Properties, as the case may be, on the books of Borrower for the applicable quarter. CASH EQUIVALENTS means, as to any Person, (a) securities issued or directly and fully guaranteed or insured by the United States or any agency or instrumentality thereof (PROVIDED that the full faith and credit of the United States is pledged in support thereof) having maturities of not more than six months from the date of acquisition, (b) time deposits and certificates of deposit of any commercial bank organized under the laws of the United States, any State thereof or the District of Columbia having, or which is the principal banking subsidiary of a bank holding company organized under the laws of the United States, any State thereof, or the District of Columbia having, capital, surplus and undivided profits aggregating in excess of $200,000,000 and having a long-term unsecured debt rating of at least "A" or the equivalent thereof from S&P, or "A2" or the equivalent thereof from Moody's, with maturities of not more than six months from the date of acquisition by such Person, (c) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clause (a) above entered into with any bank meeting the qualifications specified in clause (b) above, (d) commercial paper issued by any Person incorporated in the United States rated at least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody's and in each case maturing not more than six months after the date of acquisition by such Person, (e) investments in money market funds substantially all of whose assets are comprised of securities of the types described in clauses (a) through (d) above. CHANGE IN CONTROL means (a) the acquisition by a person (as such term is used in Section 13(d) and Section 14(d)(2) of the Exchange Act) or related persons constituting a group (as such term is used in Rule 13d-5 under the Exchange Act) (other than the Borrower Control Group) of the beneficial ownership of issued and outstanding shares of the voting stock or similar ownership interests of Borrower, the result of which acquisition is that such person or such group possess in excess of 50% of the combined voting power of all the issued and outstanding voting stock or other similar ownership interests of Borrower, or (b) either one of the individuals currently serving, respectively, as (i) the Chairman and Chief Executive Officer of Borrower or (ii) the President and Chief Operating Officer of Borrower, shall no longer be a member of the Board of Trust Managers of Borrower, except in the case that the replacement for such officer becomes a member of the Board of Trust Managers and has been approved by Required Lenders in the manner described in SECTION 9.1(M)(1) such that no Event of Default has occurred thereunder, and in which case this clause (b) shall thereafter apply to such replacement officer of Borrower. CLOSING DATE means the effective date of execution of this Agreement as designated in the first paragraph of this Agreement. CODE means the Internal Revenue Code of 1986, as amended. 35 COMMITMENT means, with respect to each Lender, the amount indicated as the Commitment for such Lender on SCHEDULE I, as such amount (a) may be reduced or increased from time to time as a result of a reduction in the Total Commitment pursuant to SECTION 3.6 or an increase in the Total Commitment pursuant to SECTION 2.1(B), or as otherwise provided herein, or (b) may be adjusted from time to time to account for any assignment of a Lender's interest as provided in SECTION 11.10 of this Agreement, or pursuant to SECTION 3.16 or otherwise. COMMITMENT FEES means the Initial Commitment Fee and any commitment or upfront fees to be paid to any Lenders upon any increase in the Total Commitment as determined at the time of such increase. COMMITMENT PERCENTAGE means, with respect to each Lender, the percentage indicated for such Lender as its Commitment Percentage on SCHEDULE I, as such percentage may be adjusted from time to time as a result of reduction or increase in the Total Commitment as provided herein, or to account for any assignments of a Lender's interest as provided in SECTION 11.10, or pursuant to SECTION 3.16 or otherwise. COMPETITIVE BID ACCEPTANCE NOTICE is defined in SECTION 2.3(F). COMPETITIVE BID ADVANCE means a borrowing hereunder consisting of the aggregate amount of the Competitive Bid Loans made on the same Borrowing Date by some or all of the Lenders to Borrower on the same terms pursuant to Section 2.3. COMPETITIVE BID AUCTION means a solicitation of Competitive Bid Quotes setting forth Competitive Bid Margins and/or Competitive Bid Fixed Rates pursuant to SECTION 2.3. COMPETITIVE BID AUCTION FEE has the meaning set forth in SECTION 2.4(G). COMPETITIVE BID FIXED RATE means a rate per annum equal to the Base Rate plus or minus a margin, or other fixed interest rate, offered by a Lender for a Competitive Bid Fixed Rate Loan. COMPETITIVE BID FIXED RATE LOAN means a Competitive Bid Loan made by a Lender pursuant to SECTION 2.3, which bears interest at a Competitive Bid Fixed Rate selected by Borrower. COMPETITIVE BID LOAN means either a Competitive Bid Pricing Loan or a Competitive Bid Fixed Rate Loan. COMPETITIVE BID MARGIN means the margin above or below, as applicable, the applicable Adjusted LIBOR Rate offered for a Competitive Bid Pricing Loan, expressed as a percentage (rounded to the nearest 1/100 of 1%). 36 COMPETITIVE BID NOTE means a promissory note in substantially the form of EXHIBIT A-2, with appropriate insertions, evidencing Competitive Bid Loans made by a Lender, duly executed and delivered by Borrower and payable to the order of each Lender, each in the principal face amount equal to 50% of the Total Commitment (provided, that, in no event shall the aggregate amount funded under all Competitive Bid Notes ever exceed 50% of the Total Commitment), as such notes may be amended, renewed or extended from time to time, and all notes given in amendment, replacement or restatement thereof, in whole or in part, including without limitation in connection with an assignment of a Lender's interest hereunder or the addition of a new Lender hereunder. COMPETITIVE BID PRICING LOAN means a Competitive Bid Loan made by a Lender pursuant to SECTION 2.3, which bears interest at a Eurodollar Bid Rate selected by Borrower. COMPETITIVE BID QUOTE means a Competitive Bid Quote substantially in the form of EXHIBIT E-3 hereto completed and delivered by a Lender to Administrative Agent in accordance with SECTION 2.3. COMPETITIVE BID QUOTE REQUEST means a Competitive Bid Quote Request substantially in the form of EXHIBIT E-1 hereto completed and delivered by Borrower to Administrative Agent in accordance with SECTION 2.3. COMPLIANCE CERTIFICATE means a certificate to be delivered by Borrower to Administrative Agent as a condition to closing pursuant to SECTION 4.1(E), and quarterly thereafter as required under SECTION 7.1(C), each such Compliance Certificate to be in the form of EXHIBIT C hereto, with appropriate information for the period covered thereby. CONSEQUENTIAL LOSS has the meaning set forth in SECTION 3.6(B). CONSOLIDATED or COMBINED means with reference to any term defined herein, that term as applied to the accounts of the Borrower and its Subsidiaries, consolidated or combined in accordance with GAAP. CONSOLIDATED ASSETS means the aggregate book value of all assets of Borrower and its Consolidated Subsidiaries, after deducting assets classified as intangible assets, all as determined in accordance with GAAP. CONSOLIDATED INTEREST EXPENSE means, for any period, the interest expense (including capitalized interest) that is incurred and required to be shown as such on the financial statements of Borrower and its Subsidiaries, on a consolidated basis, prepared in accordance with GAAP. CONSOLIDATED LIABILITIES means the amount of liabilities shown on the consolidated balance sheet of Borrower and it Consolidated Subsidiaries prepared in accordance with GAAP. CONSOLIDATED NET WORTH means, as of any date, Consolidated Assets minus Consolidated Liabilities. CONSOLIDATED SUBSIDIARY means at any date any Subsidiary of Borrower the accounts of which, in accordance with GAAP, would be consolidated with the accounts of Borrower on the consolidated financial statements of Borrower as of such date. 37 CONTINGENT OBLIGATION of any Person means any obligation, contingent or otherwise, of such Person (a) with respect to any Debt, lease, dividend or other obligation of another Person if the primary purpose or intent of the Person incurring such liability, or the primary effect, thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto, including, without limitation, any obligation to (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt or other obligation (whether arising by virtue of partnership arrangements, by agreements to keep-well, to purchase any Real Estate or other assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions, by "comfort letter" or other similar undertaking of support or otherwise), or (ii) entered into for the purpose of assuring in any other manner the obligee of such Debt or other obligation of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part), (b) creating any exposure, contingent or otherwise, directly or indirectly, under any forward equity type products, derivatives or any other exposure considered or treated as debt by any Ratings Agency, or (c) assuring any creditor or purchaser from such Person against loss, including without limitation, any recourse obligation with respect to loans or other receivables sold with recourse to such Person, provided that the term Contingent Obligation shall not include endorsements for collection or deposit in the ordinary course of business. CONTRIBUTION AGREEMENT means the Contribution Agreement in the form attached hereto as EXHIBIT G, to be dated of even date herewith, executed by and among the Borrower and the Guarantor Subsidiaries as of the Closing Date, and by each other Person that becomes a Guarantor Subsidiary after the Closing Date, which joinder may be by a supplement thereto, or any separate new or replacement Contribution Agreement signed by one or more Guarantor Subsidiaries after the Closing Date, and all amendments, supplements, replacements and restatements thereof. CREDIT FACILITY means the revolving line of credit created pursuant to this Agreement in an amount equal to $375,000,000 as of the Closing Date, subject to increase up to $400,000,000 as provided in SECTION 2.1(B). CREDIT PERIOD means the period commencing on the date of this Agreement and ending on the Termination Date. DEBENTURES means those certain 7.33% Convertible Subordinated Debentures issued by Borrower prior to the date hereof. 38 DEBT of any Person means at any date, without duplication, (a) all indebtedness, obligations and liabilities of such Person which, in accordance with GAAP and practices thereof, would be included in determining liabilities as shown in the liability section of the balance sheet of such Person, including, without limitation, the Obligations and all other indebtedness, obligations and liabilities evidenced by bonds, debentures, notes or other similar instruments, whether recourse or non-recourse and whether secured or unsecured, trade payables, and structured financing transactions of any type, (b) all other indebtedness (including capitalized lease obligations) of such Person on which interest charges are customarily paid or accrued, (c) all obligations for indebtedness in respect of Contingent Obligations of such Person and obligations under interest rate swaps, hedge agreements and other similar agreements, (d) the unfunded or unreimbursed portion of all letters of credit issued for the account of such Person, (e) all obligations to purchase under agreements to acquire, or otherwise to contribute money with respect to Development Properties, and (f) all personal liability of such Person as a general partner or joint venturer of a partnership or joint venture for obligations of such partnership or joint venture of the nature described in (a) through (e) preceding. DEBT OFFERING means the issuance and sale to the general public or as a private placement by the Borrower or any Consolidated Subsidiary subsequent to the Closing Date of any debt securities of Borrower or any Consolidated Subsidiary for cash or the right to receive payment in the future. DEBTOR RELIEF LAWS means any applicable Laws pertaining to liquidation, conservatorship, bankruptcy, moratorium, rearrangement, insolvency, reorganization, receivership, composition, extension or adjustment of debt, or similar Laws, domestic or foreign, affecting the rights or remedies of creditors generally, in effect from time to time. DEFAULT means any condition or event which constitutes an Event of Default or which with the giving of notice or lapse of time or both would, unless cured or waived, become an Event of Default. DEFAULT RATE means the fluctuating per annum rate of interest equal to the lesser of (a) four percent (4.0%) plus the Base Rate, or (b) the Maximum Lawful Rate. DESIGNATED SUCCESSOR AGENT means, at any given time, the Lender (other than Administrative Agent) which has the largest Commitment, or if the Lenders have no further commitment to lend hereunder, the largest Aggregate Loan Percentage; PROVIDED, HOWEVER, if two or more such Lenders have the same Commitment or Aggregate Loan Percentage, as the case may be, at such time, then the Designated Successor Agent shall be such of those Lenders having the same Commitment or Aggregate Loan Percentage, as the case may be, which has the largest net worth; and, PROVIDED FURTHER, that if the Required Lenders object to the newly named Designated Successor Agent, or if any Lender determined to be a Designated Successor Agent declines to serve as successor Administrative Agent in writing delivered to the outgoing Administrative Agent, within seven (7) Business Days after such Designated Successor Agent is determined, then the Lender other than Administrative Agent or such rejected or declining Designated Successor Agent which has the next largest Commitment or Aggregate Loan Percentage, as the case may be, shall be the Designated Successor Agent. For each such Lender that is a member of a bank holding company, its net worth shall be deemed to be the consolidated net worth of its bank holding company. DEVELOPMENT PROPERTIES means Real Estate comprised of multi-family projects under construction, or in pre-construction phases of the development process, but not yet completed. 39 DIDMCA means the Depositary Institutions Deregulation and Monetary Control Act of 1980, Public Law 96-221, as amended, codified at 12 U.S.C. '1735f-7. DISTRIBUTION by any Person, means (a) with respect to any stock of any class issued by such Person or any partnership, joint venture or other beneficial ownership or equity interest of such Person, the retirement, redemption, repurchase, or other acquisition for value of such stock, partnership, joint venture or other equity interest, (b) the declaration or payment (without duplication) of any dividend or other distribution, whether monetary or in kind, on or with respect to any stock, partnership, joint venture or other equity interest of any Person, and (c) any other payment or distribution of assets of a similar nature or in respect of an equity investment. DOCUMENTATION AGENT means First National Bank of Chicago, in its capacity as documentation agent for the Lenders hereunder, or any successor documentation agent pursuant to SECTION 10.12 or SECTION 10.13. EFFECTIVE DATE means the date selected by Borrower to be the first day of the applicable Interest Period related to a LIBOR Rate Advance or a Competitive Bid Pricing Loan. ELIGIBLE ASSIGNEE means (a) a Lender; (b) an Affiliate of a Lender; and (c) any other Person approved by Administrative Agent and, so long as no Default is in existence and no Event of Default has occurred and is continuing, by Borrower (which approval by Borrower and Administrative Agent shall not be unreasonably withheld or delayed); provided, HOWEVER, that none of Borrower nor any Affiliate of Borrower shall qualify as an Eligible Assignee. EMPLOYEE PLAN means at any time an employee benefit plan as defined in Section 3(3) of ERISA that is now or was previously maintained, sponsored or contributed to by Borrower or any Guarantor Subsidiary or any ERISA Affiliate of Borrower or any Guarantor Subsidiary. EQUITY INTERESTS has the meaning set forth in SECTION 8.13. EQUITY OFFERING means the issuance and sale by Borrower or any Consolidated Subsidiary subsequent to the Closing Date of any equity securities of Borrower or any Consolidated Subsidiary. ERISA means the Employee Retirement Income Security Act of 1974, as amended from time to time, together with all regulations issued pursuant thereto. ERISA AFFILIATE means any person that is treated as a single employer with Borrower or any Guarantor Subsidiary under Section 414 of the Code. ERISA REPORTABLE EVENT means a reportable event with respect to a Guaranteed Pension Plan within the meaning of Section 4043 of ERISA and the regulations promulgated thereunder as to which the requirement of notice has not been waived. 40 EURODOLLAR BID RATE means, with respect to a Competitive Bid Pricing Loan made by a given Lender for the relevant Interest Period, the sum of (a) the Adjusted LIBOR Rate (less the LIBOR Margin), and (b) the Competitive Bid Margin offered by such Lender and accepted by Borrower pursuant to SECTION 2.3. EVENT OF DEFAULT has the meaning set forth in SECTION 9.1. EXCESS OUTSTANDINGS means the amount (if any) by which the then outstanding aggregate principal balances of all the Notes and the Competitive Bid Notes exceed the Maximum Available Amount, as determined on any date during the term of this Agreement. EXCHANGE ACT shall mean the Securities Exchange Act of 1934, as amended. EXTENSION FEE has the meaning set forth in SECTION 3.15(E). EXTENSION OPTION has the meaning set forth in SECTION 3.15. FACILITY FEE means the non-refundable annual fee equal to the product of (a) the applicable percentage in effect based on the Applicable Debt Rating as shown in SCHEDULE II, times (b) the Total Commitment, irrespective of usage, calculated and payable as provided in SECTION 2.4(B). FEDERAL FUNDS RATE means, for any day, the rate per annum (rounded upwards if necessary, to the nearest 1/100th of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day, provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate quoted to Administrative Agent on such day on such transactions from three Federal funds brokers of recognized standing. FEE LETTERS means the various letter agreements to be executed by and among Borrower, Administrative Agent and each Lender setting forth various fees payable by Borrower to such Lender relating to the Credit Facility and all amendments, modifications and supplements thereto and any restatements or replacements thereof. FISCAL YEAR means any fiscal year of Borrower commencing on January 1 and ending on December 31. FIXED CHARGES means with respect to Borrower and its Consolidated Subsidiaries for any period, the sum of all interest expense incurred (including capitalized interest), and all scheduled principal payments (excluding balloon payments) made or to have been made during such period, plus any Distributions made during such period with respect to any stock or other similar ownership interests other than common stock (or ownership interests equivalent to common stock). 41 FUNDS FROM OPERATIONS means the term "Funds from Operations" as such term is defined by the National Association of Real Estate Investment Trusts, as such term may be modified, revised or redefined from time to time by said association, or if said association no longer exists or no longer promulgates a definition for such term, then such other meaning as is selected by Administrative Agent in its reasonable determination. GAAP means principles that are (a) consistent with the principles promulgated or adopted by the Financial Accounting Standards Board and its predecessors, as in effect from time to time and (b) consistently applied with past financial statements of the Borrower or any of its Subsidiaries adopting the same principles; PROVIDED that a certified public account would, insofar as the use of such accounting principles is pertinent, be in a position to deliver an unqualified opinion (other than a qualification regarding changes in generally accepted accounting principles) as to financial statements in which such principles have been properly applied. GENERAL PARTNER means CPT-GP, Inc., a Delaware corporation, the sole general partner of Camden L.P., and its successors. GOVERNMENTAL AUTHORITY means any government, any state or other political subdivision thereof, any court, any governmental body, agency or instrumentality, or any Person exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, or any arbitration authority. 42 GROSS ASSET VALUE means on any date of determination, the sum of the following: (a) all cash and Cash Equivalents of Borrower and the Consolidated Subsidiaries, including without limitation restricted cash and escrow deposits (as shown on Borrower's consolidated balance sheet), plus (b) the aggregate value of all Development Properties, determined at cost, until the earlier of, for each Development Property, (i) the first fiscal quarter in which construction of such Development Property was completed for the entire fiscal quarter or (ii) the first fiscal quarter in which the occupancy rate for the average number of units (computed on a weighted average basis) in such Development Property is at least 65%, plus (c) the quotient obtained by dividing (i) Adjusted Consolidated EBITDA as of the last day of the immediately preceding calendar quarter, and then annualized, adjusted to exclude in the calculation thereof any income from Development Properties included under preceding clause (b), by (ii) the Implied Capitalization Rate, plus (d) the book value determined in accordance with GAAP (all as are shown on Borrower's consolidated balance sheet) of (i) all undeveloped Real Estate, (ii) Investments of Borrower and its Consolidated Subsidiaries in joint ventures and partnerships, (iii) notes, mortgages and other evidences of indebtedness held by Borrower or any Consolidated Subsidiary, and (iv) accounts receivable of Borrower and its Consolidated Subsidiaries. In computing Gross Asset Value, once the aggregate of all Investments by Borrower and its Consolidated Subsidiaries in any joint ventures and partnerships (other than as a guarantor) exceeds two and one-half percent (2.5%) of Gross Asset Value, then all such Investments shall be treated on a pro rata basis such that Borrower shall be credited with a pro rata share of income and investment and will be charged with a pro rata share of the applicable expense and liability, with respect to such Investments, as if such Investments were reflected on a consolidated basis. The pro rata treatment of such Investments shall continue only so long as the aggregate amount of such Investments is greater than two and one-half percent (2.5%) of Gross Asset Value. GROSS ASSET VALUE OF UNENCUMBERED PROPERTIES means on any date of determination the sum of the following, provided that such values shall be determined and included with respect only to Property that qualifies as an Unencumbered Property and is in the Pool at such date: (a) the aggregate value of all Development Properties, determined at cost, until the earlier of (i) the first fiscal quarter in which construction of such Development Property was completed for the entire fiscal quarter or (ii) the first fiscal quarter in which the occupancy rate for the average number of units (computed on a weighted average basis) in such Development Property is at least 65%, and (b) the quotient obtained by dividing (i) Unencumbered Adjusted NOI for the immediately preceding calendar quarter, and then annualized, adjusted to exclude in the calculation thereof any income from Development Properties included under preceding clause (a), by (ii) the Implied Capitalization Rate. GROUND-LEASED QUALIFYING PROPERTIES means the following three (3) properties in which the interest of Borrower or the respective Guarantor Subsidiary is or may become a leasehold interest pursuant to a ground lease approved by Administrative Agent: (a) property in Corpus Christi, Nueces County, Texas, containing 7.494 and 4.841 acres, respectively, subject to ground leases from Texas A&M University to Borrower as lessee, consisting of two tracts, and commonly known as Miramar Apartments; (b) property in Louisville, Kentucky, commonly known as the Park at Oxmoor; and (c) property in Phoenix, Maricopa County, Arizona, subject to a future ground lease from the City of Phoenix, to Camden USA, as lessee, commonly known as The Park at Arizona Center, in each case only so long as the applicable ground lease remains in effect and Borrower or Camden USA, as applicable, is not in default thereunder. GUARANTEED PENSION PLAN means any employee pension benefit plan within the meaning of Section 3(2) of ERISA maintained or contributed to by the Borrower or any ERISA Affiliate the benefits of which are guaranteed on termination in full or in part by the PBGC pursuant to Title IV of ERISA, other than a Multiemployer Plan. GUARANTOR SUBSIDIARIES means initially Camden USA and Camden L.P., and each Consolidated Subsidiary of Borrower that becomes a Guarantor Subsidiary after the date hereof pursuant to SECTION 5.3(A) or otherwise, and their respective successors and assigns. GUARANTY AGREEMENT means the Guaranty Agreement of even date herewith executed by each of Camden USA and Camden L.P. and each Guaranty Agreement executed by a Guarantor Subsidiary subsequent to the date hereof pursuant to Section 5.3 or otherwise, in favor of Administrative Agent, for the ratable benefit of the Lenders (subject, however, to the provisions in favor of Senior Debt holders included in SECTION 5.6), guaranteeing full payment and performance of the Obligations, as it may be amended, modified, supplemented, replaced or restated from time to time, each such Guaranty Agreement to be substantially in the form attached hereto as EXHIBIT F. GUARANTY PROCEEDS has the meaning set forth in SECTION 5.6. 43 IMPLIED CAPITALIZATION RATE means a capitalization rate per annum equal to nine percent (9.0%), as such rate may be adjusted by Administrative Agent at any time and from time to time in its reasonable discretion based on a national index set by Korpacz Real Estate Investor Survey for multi-family properties; provided that (i) after the first adjustment of the Implied Capitalization Rate (which may be made by Administrative Agent at any time), such subsequent adjustments shall not be made by Administrative Agent more than once in any twelve (12) month period; (ii) no annual adjustment will increase the then effective Implied Capitalization Rate by more than one-quarter percent (.25%) per annum; and (iii) in no event shall the Implied Capitalization Rate at any time be less than 9.0%. IMPOSITIONS means all real estate and personal property taxes; charges for any easement, license or agreement maintained for the benefit of any of the real property of Borrower or any Guarantor Subsidiary, or any part thereof; and all other taxes, charges and assessments and any interest, costs or penalties with respect thereto, general and special, ordinary and extraordinary, foreseen and unforeseen, of any kind and nature whatsoever, which at any time prior to or after the execution hereof may be assessed, levied or imposed upon any of the Real Estate, or any part thereof, or the ownership, use, sale, occupancy or enjoyment thereof, in each case which, if not timely paid or otherwise discharged, would materially and adversely affect (a) such ownership, use, sale, occupancy or enjoyment, or (b) the financial condition of Borrower or any Consolidated Subsidiary. IMPROVEMENTS means all improvements now or at any time hereafter located on any of the Real Estate (or any designated part thereof). INITIAL COMMITMENT FEE has the meaning set forth in SECTION 2.4(A). INITIAL UNENCUMBERED PROPERTIES means those Unencumbered Properties comprising the Pool on the Closing Date, as set forth in the initial Compliance Certificate attached hereto as SCHEDULE C. INTEREST ADJUSTMENT DATE means the earlier of either the last day of an Interest Period or the Termination Date. 44 INTEREST PERIOD means, with respect to a LIBOR Rate Advance, or Competitive Bid Pricing Loan, a period selected by Borrower of seven (7) days, fourteen (14) days or of one month, two months, three months, four months, five months, six months or twelve months, commencing on the Effective Date of such LIBOR Rate Advance or the Borrowing Date with respect to a Competitive Bid Loan; provided that (a) any Interest Period related to, and ending on a date later than, the Termination Date, shall be deemed to end on the Termination Date; (b) if any Interest Period would otherwise end on a day that is not a Business Day, such Interest Period shall end on the next succeeding Business Day, except that if the next Business Day would fall in the next calendar month, the Interest Period shall end on the immediately preceding Business Day; (c) any Interest Period that begins on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period shall end on the last Business Day of such calendar month; and (d) with respect to a Competitive Bid Pricing Loan, an Interest Period shall not be seven (7) days or twelve months. INVESTMENTS means with respect to any Person, all shares of capital stock, evidences of Debt and other securities issued by any other Person, all loans, advances, or extensions of credit to, or contributions to the capital of, any other Person, all purchases of the securities or business or integral part of the business of any other Person and commitments and binding options to make such purchases, all interests in real property, and all other investments; PROVIDED, HOWEVER, that the term "Investment" shall not include (i) equipment, inventory and other tangible personal property acquired in the ordinary course of business, or (ii) current trade and customer accounts receivable for services rendered in the ordinary course of business and payable in accordance with customary trade terms. In determining the aggregate amount of Investments outstanding at any particular time: (a) the amount of any investment represented as a guaranty shall be taken at not less than the principal amount of the obligations guaranteed and still outstanding, but without duplication if such Investment is included elsewhere in this definition; (b) there shall be included as an Investment all interest accrued with respect to Debt constituting an Investment unless and until such interest is paid; (c) there shall be deducted in respect of each such Investment any amount received as a return of capital (but only by repurchase, redemption, retirement, repayment, liquidating dividend or liquidating distribution); (d) there shall not be deducted in respect of any Investment any amounts received as earnings on such Investment, whether as dividends, interest or otherwise, except that accrued interest included as provided in the foregoing clause (b) may be deducted when paid; and (e) there shall not be deducted from the aggregate amount of Investment any decrease in the value thereof. INVITATION FOR COMPETITIVE BID QUOTES means an Invitation for Competitive Bid Quotes substantially in the form of EXHIBIT E-2 hereto, completed and delivered by Administrative Agent to the Lenders in accordance with SECTION 2.3(C). LAWS means all constitutions, treaties, statutes, laws, ordinances, codes, regulations, rules, orders, decisions, writs, injunctions, or decrees of the United States of America or any other Governmental Authority, now in effect and hereafter amended, issued, promulgated, or otherwise coming into effect. LEGAL REQUIREMENTS means (a) any and all present and future judicial decisions, laws, permits, licenses or certificates, of any Governmental Authority in any way applicable to Borrower or any Consolidated Subsidiary, (b) the presently or subsequently effective bylaws and articles or certificate of incorporation, partnership agreement and any other form of business association agreement of Borrower or any Consolidated Subsidiary, (c) any and all covenants, conditions or restrictions applicable to the Real Estate or the ownership, use or occupancy thereof, and (d) any and all leases or contracts (written or oral) of any nature that relate in any way to any Property or any portion thereof, or to which Borrower or any Consolidated Subsidiary may be bound, and in each case which, if violated, would materially and adversely affect (i) the present or potential ownership, use, sale, occupancy or possession of the Property or any material part thereof, by Borrower or any Consolidated Subsidiary, or (ii) the financial condition of Borrower or any Consolidated Subsidiary. 45 LENDERS means the financial institutions and other entities listed as a "Lender" on SCHEDULE I attached hereto, as SCHEDULE I may be modified, amended or supplemented from time to time. LIBOR MARGIN means the applicable margin based on the Applicable Debt Rating described in, and determined pursuant to, SCHEDULE II. LIBOR RATE means, with respect to a LIBOR Rate Advance for the Interest Period applicable thereto, the rate of interest determined by Administrative Agent at which deposits in dollars for the relevant Interest Period are offered based on information presented on the Telerate Screen as of 11:00 A.M. (London time) on the day which is two (2) Business Days prior to the first day of such Interest Period; PROVIDED, that if at least two such offered rates appear on the Telerate Screen in respect of such Interest Period, the arithmetic mean of all such rates (as determined by Administrative Agent) will be the rate used; PROVIDED, FURTHER, that if the Telerate System ceases to provide LIBOR quotations, such rate shall be the average rate of interest determined by Administrative Agent (rounded upward to the nearest .01%) at which deposits in Dollars are offered for the relevant Interest Period by Administrative Agent (or its successor) to banks with combined capital and surplus in excess of $500,000,000 in the London interbank market as of 11:00 A.M. (London time) on the applicable Effective Date. LIBOR RATE ADVANCE means an Advance under the Credit Facility (including Competitive Bid Pricing Loans) which bears interest computed with reference to the LIBOR Rate. LIBOR RATE PRINCIPAL means any portion or portions of the outstanding principal balance of the Notes which bears interest at an applicable LIBOR Rate at the time in question. LIBOR RESERVE REQUIREMENT means, on any day, that percentage (expressed as a decimal fraction) which is in effect on such date, as provided by the Federal Reserve System for determining the maximum reserve requirements generally applicable to financial institutions regulated by the Federal Reserve Board comparable in size and type to Administrative Agent (including, without limitation, basic supplemental, marginal and emergency reserves) under Regulation D with respect to "Eurocurrency liabilities" as currently defined in Regulation D, or under any similar or successor regulation with respect to Eurocurrency liabilities or Eurocurrency funding (or, if reserves for Eurocurrency liabilities are not separately stated in such regulations, the other applicable category of liabilities which includes deposits by reference to which the interest rate on a LIBOR Rate Advance is determined). Each determination by Administrative Agent of the LIBOR Reserve Requirement, shall, in the absence of manifest error, be conclusive and binding. LIEN means with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset. For the purposes of this Agreement, a Person shall be deemed to own subject to a Lien any asset which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such asset. 46 LITIGATION means any proceeding, claim, suit, action, arbitration, mediation, case or investigation by, before or involving any Governmental Authority. LOAN DOCUMENTS means this Agreement, the Notes, the Competitive Bid Notes, the Guaranty Agreements, the Contribution Agreement, the Fee Letters, and all other agreements, statements, certificates, documents or instruments evidencing, securing or pertaining to the Credit Facility or the Notes or otherwise executed and/or delivered from time to time pursuant to or in connection with this Agreement, as the same may be supplemented, modified, amended, renewed, extended, rearranged, restated or replaced from time to time. MANAGING AGENT means Wells Fargo Bank, N.A., in its capacity as managing agent for the Lenders hereunder. MARGIN REGULATIONS mean Regulations T, U and X of the Board of Governors of the Federal Reserve System, as in effect from time to time. MARGIN STOCK means "margin stock" as defined in Regulation U. MATERIAL ADVERSE EFFECT means an effect resulting from any circumstance or event of whatever nature (including the filing of, or any adverse determination in, any Litigation) which does, or could reasonably be expected to, (i) impair the validity or enforceability of any Loan Document, (ii) materially and adversely affect the condition (financial or otherwise), operations, business, management or assets of Borrower or the Guarantor Subsidiaries, (iii) materially impair the ability of Borrower and the Guarantor Subsidiaries, taken as a whole, to fulfill any material part of the Obligations, or (iv) cause a Default or an Event of Default. MAXIMUM AVAILABLE AMOUNT means the maximum aggregate principal balances of the Notes and all Competitive Bid Notes that may be outstanding at the time in question without resulting in a breach of the requirements and covenants of this Agreement, including without limitation those set forth in SECTION 5.1 and SECTION 8.2. MAXIMUM LAWFUL RATE means the maximum rate (or, if the context so permits or requires, an amount calculated at such rate) of interest which, at the time in question would not cause the interest charged on the Credit Facility at such time to exceed the maximum amount which Lenders would be allowed to contract for, charge, take, reserve, or receive under applicable federal or state law after taking into account, to the extent required by applicable law, any and all relevant payments, fees or charges under the Loan Documents. For purposes of determining the Maximum Rate under the applicable Laws of the State of Texas, the applicable rate ceiling shall be the "weekly ceiling" from time to time in effect under Chapter 1D of the Texas Credit Title, as amended or supplemented; provided that to the extent permitted by applicable Laws and subject to any notice or other requirements under applicable Laws, Administrative Agent may from time to time change the rate ceiling. If under applicable law there is no legal limitation on the amount or rate of interest that may be charged on amounts outstanding under the Credit Facility, there shall be no Maximum Lawful Rate, notwithstanding any reference thereto herein or in any of the Loan Documents. 47 MINIMUM NOTICE REQUIREMENT has the meaning set forth in SECTION 3.5(B). MOODY'S means Moody's Investors Service, Inc., or, if Moody's no longer publishes ratings, such other ratings agency reasonably acceptable to Administrative Agent MOODY'S RATING means the most recently announced rating from time to time of Moody's assigned to any class of long-term senior, unsecured liability securities issued by Borrower, as to which no letter of credit, guaranty, or third party credit support is in place, regardless of whether all or any part of such liability has been issued at the time such rating was issued. NON-RECOURSE INDEBTEDNESS means Debt of Borrower or any Consolidated Subsidiary which is secured by one or more parcels of Real Estate and related personal property or interests therein and is not a general obligation of the Borrower or any Consolidated Subsidiary, the holder of such Debt having recourse solely to the Real Estate securing such Debt, the Improvements thereon, related personal property and leases thereon, and the rents and profits thereof securing such Debt. NON-U.S. LENDER has the meaning set forth in SECTION 3.14(D). NOTES means the promissory notes substantially in the form of EXHIBIT A-1 hereto with appropriate insertions evidencing Advances under the Credit Facility other than Competitive Bid Advances, executed by Borrower, payable to the order of each Lender, each in the principal face amount of the respective Lender's Commitment, as such notes may be amended, renewed or extended from time to time, and all notes given in amendment, replacement or restatement thereof, in whole or in part, including without limitation in connection with an assignment of a Lender's interest hereunder or the addition of a new Lender hereunder. 48 OBLIGATIONS means all present and future indebtedness, obligations and liabilities, or any part thereof, of Borrower or any Guarantor Subsidiary now or hereafter existing or arising under or in connection with this Agreement, the Notes, the Competitive Bid Notes or any other of the Loan Documents (specifically including, without limitation, the principal amount outstanding under the Notes and Competitive Bid Notes), together with: (a) all interest accrued thereon; (b) all reasonable costs, expenses, and attorneys= fees of counsel to Administrative Agent and of counsel to any Lender (subject to any limitations set forth in SECTION 11.4) incurred in the documentation of any amendments, waivers or extensions of the Loan Documents or administration, enforcement or collection thereof (specifically including, without limitation, any of the foregoing incurred in connection with any bankruptcy or other insolvency proceedings of Borrower or any Guarantor Subsidiary or any other Consolidated Subsidiary); (c) the reimbursement and payment of all sums which might be advanced by Administrative Agent or any Lender to pay or satisfy amounts required to be paid by Borrower or any Guarantor Subsidiary under this Agreement or under any other Loan Document; (d) all liability which Borrower or any Guarantor Subsidiary may incur with respect to any interest rate swap or hedge agreements between Borrower or any Guarantor Subsidiary and any Lender pertaining to the Advances under the Credit Facility; and (e) all costs, charges, reasonable commissions, reasonable attorneys= fees and expenses owing and to become owing in connection with the documentation, administration, enforcement and collection of the foregoing obligations and indebtedness, and those owing or to become owing in connection with the repossession, operation, maintenance, preservation or foreclosure of any collateral that may ever be given for the obligations and indebtedness hereunder; regardless of whether such indebtedness, obligations and liabilities are direct, indirect, fixed, contingent, liquidated, unliquidated, joint, several or joint and several. The Obligations shall include all renewals, extensions, modifications, rearrangements and replacements of any of the above-described obligations and indebtedness. PARTICIPANT has the meaning set forth in SECTION 11.10(D). PBGC means the Pension Benefit Guaranty Corporation, or its successors. PENSION PLAN means any Employee Plan that is now or was previously covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code. PERMITTED LIENS means (a) Liens granted to Administrative Agent to secure the Obligations, (b) pledges or deposits made to secure payment of worker's compensation (or to participate in any fund in connection with worker's compensation insurance), unemployment insurance, pensions or social security programs, (c) encumbrances consisting of zoning restrictions, easements, or other restrictions on the use of real property, provided that such items do not materially impair the use of such property for the purposes intended and none of which is violated in any material respect by existing or proposed structures or land use, (d) Liens for taxes, assessments and governmental charges not yet due and payable or that are being contested in good faith by appropriate proceedings diligently conducted, and for which reserves in accordance with GAAP or otherwise reasonably acceptable to Administrative Agent have been provided, or Liens imposed by mandatory provisions of law such as for materialmen's, mechanics=, warehousemen's and other similar Liens arising in the ordinary course of business, securing payment of any liability whose payment is not yet due, (e) Liens on Property where Borrower is insured against such Liens by title insurance, (f) Liens securing assessments or charges payable to a property owner association or similar entity, which assessments are not yet due and payable or that are being contested in good faith by appropriate proceedings diligently conducted, and for which reserves in accordance with GAAP or otherwise reasonably acceptable to Administrative Agent have been provided, (g) Liens securing assessment bonds, so long as Borrower is not in default under the terms thereof, or (h) Liens filed by mechanics and materialmen which are being diligently contested in good faith, for which appropriate reserves have been established on the books of Borrower or the appropriate Subsidiary as required by GAAP, and which, if reasonably requested by Administrative Agent, have been bonded or insured around in full in form and by a surety commonly accepted in the industry. PERSON means an individual, a corporation, a limited liability company, a partnership, a joint venture, an association, a trust or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. POOL means collectively all Unencumbered Properties meeting all requirements of ARTICLE V at the time in question. 49 POOL VIOLATION means a violation of any provision in Article V or any other covenants in this Agreement related to the Pool or the Unencumbered Properties taken as a whole which would occur if an Unencumbered Property were excluded from the Pool because there existed a condition related thereto which violates a particular representation, warranty or covenant contained in this Agreement. PROPERTY means, collectively, the Real Estate, the Improvements, and all other real or personal property and assets, and any interests therein, owned at any time by Borrower or any of its Consolidated Subsidiaries. RATINGS AGENCY means S&P or Moody's, or any other ratings agency replacing either of S&P or Moody's as provided in the definitions thereof. REAL ESTATE means all real property and Improvements at any time owned or leased (as lessee or sublessee) by Borrower or any of its Consolidated Subsidiaries. REGISTER has the meaning set forth in SECTION 11.10(B). REGULATION U means Regulation U of the Board of Governors of the Federal Reserve System, as in effect from time to time and shall include any successor or other regulation or official interpretation of the Board of Governors relating to the extension of credit by banks for the purpose of purchasing or carrying margin stocks that is applicable to member banks of the Federal Reserve System. REGULATORY CHANGE shall mean the adoption of any applicable law, rule or regulation, or any change in any applicable law, rule or regulation, or any change in the interpretation or administration thereof by any Governmental Authority charged with the administration thereof. RENEWAL FEE has the meaning set forth in SECTION 3.16(IV). REPRESENTATIVES has the meaning set forth in SECTION 10.4. REQUIRED LENDERS means: (a) All Lenders in order to make any amendment or modification to (i) change the definitions of Commitment, Commitment Percentage or Aggregate Loan Percentage, (ii) extend the due date for, decrease the amount or rate of calculation of, or waive the late or non-payment of, any scheduled payment or mandatory prepayment of principal or interest on any of the Notes or the Competitive Bid Notes or under this Agreement or any fees payable to the Lenders under the Loan Documents, except, in each case, any adjustments or reductions expressly contemplated hereby or in any Loan Document, (iii) increase the amount of the Total Commitment except as provided in SECTION 2.1(B), (iv) reinstate any of the Notes and other indebtedness pursuant to the provisions in SECTION 9.3, (v) release Borrower or, except as otherwise provided in this Agreement, any Guarantor Subsidiary from its liability for payment of the Obligations, or (vi) change this paragraph (a) of this definition. 50 (b) Except as provided in paragraph (a) above, Lenders whose Commitments at the time in question in the aggregate equal or exceed 66-2/3% of the Total Commitment; PROVIDED, HOWEVER, that if the Termination Date has occurred, or the Lenders have no commitment to lend hereunder, or an Event of Default is in existence, then it shall mean the Lenders holding Notes and Competitive Bid Notes with an aggregate unpaid principal balance equal to or greater than 66-2/3% of the aggregate unpaid principal balance of all the Notes and all the Competitive Bid Notes at the time in question. RIGHTS means rights, remedies, powers, privileges and benefits. S&P means Standard & Poor's Rating Group, a division of McGraw Hill, Inc., a New York corporation, or if S&P no longer publishes ratings, then such other ratings agency reasonably acceptable to Administrative Agent. S&P RATING means the most recently announced rating from time to time of S&P assigned to any class of long-term senior, unsecured liability securities issued by Borrower, as to which no letter of credit, guaranty, or third party credit support is in place, regardless of whether all or any part of such liability has been issued at the time such rating was issued. SEC means the federal Securities and Exchange Commission, and its successors. SECURED INDEBTEDNESS means Debt of Borrower and its Consolidated Subsidiaries that is directly or indirectly secured by a Lien on any Real Estate, including (without duplication) all Contingent Obligations associated with such Debt. SECURED RECOURSE DEBT means all Secured Indebtedness that is not Non-Recourse Indebtedness. SOLE LEAD ARRANGER means Banc of America Securities LLC, and its successors. SENIOR DEBT has the meaning set forth in SECTION 5.6. SUBSIDIARY means, for any Person, any corporation, partnership, association, trust or other business entity (a) of which more than fifty percent (50%) of the outstanding capital stock or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions (including that of a general partner) is at the time directly or indirectly owned by, or the management is otherwise controlled by, such Person and any Subsidiaries of such Person, or (b) the accounts of which would be consolidated with the accounts of Borrower on Borrower's consolidated financial statements prepared in accordance with GAAP. The term Subsidiary shall include Subsidiaries of Subsidiaries (and so on). Unless otherwise qualified, references to "Subsidiary" or "Subsidiaries" herein shall refer to those of Borrower and its Subsidiaries. 51 SYNDICATION AGENT means Chase Bank of Texas, National Association, in its capacity as syndication agent for the Lenders hereunder, or any successor syndication agent pursuant to SECTION 10.12 or SECTION 10.13. TARGET MONTHLY AMORTIZATION means the hypothetical monthly payment of principal and interest which would be required for each month if Total Unsecured Debt, as of the date of determination of the Target Monthly Amortization, was amortized in level payments of principal and interest over twenty-five (25) years at an interest rate per annum equal to the greater of (a) eight and one-quarter (8.25%), or (b) one and three quarters percent (1.75%) plus the rate of interest per annum on U.S. Treasury Notes having a maturity of seven (7) years in the "this week" column under the heading "Treasury Constant Maturities," of the FEDERAL RESERVE statistical release FORM H.15 which has been most recently published (or, if for any reason that published rate as of a date not more than ten (10) days prior to such date is not available, another rate determined by Administrative Agent to be comparable, in its discretion reasonably exercised, shall be used for this purpose). TAXES means all taxes, assessments, filing or other fees, levies, imposts, duties, deductions, withholdings, stamp taxes, interest equalization taxes, capital transaction taxes, foreign exchange taxes or other charges of any nature whatsoever, from time to time or at any time imposed by law or any federal, state or local governmental agency. "Tax" means any one of the foregoing. TELERATE SCREEN means the display designated as Screen 3750 (as to Dollars) on the Telerate System or such other screen on the Telerate System as shall display the London interbank offered rates for deposits in U.S. dollars quoted by selected banks. TERMINATION DATE means August 18, 2001, as the same may be extended from time to time in accordance with this Agreement. TOTAL COMMITMENT means, at any time, the sum of the Commitments of all of the Lenders. TOTAL CONSOLIDATED DEBT at any time of determination means the sum of (a) consolidated Debt of Borrower and its Consolidated Subsidiaries which would be reflected on the consolidated balance sheet of Borrower prepared in accordance with GAAP if such balance sheet were prepared as of such date of determination, plus (b) the unfunded obligations of Borrower or any Consolidated Subsidiary under outstanding letters of credit, plus (c) the amount of any Contingent Obligations that are reasonably quantifiable by Borrower (as confirmed by Administrative Agent) and which do not duplicate any amounts otherwise included under this definition of Total Consolidated Debt. TOTAL UNSECURED DEBT means Total Consolidated Debt excluding all Secured Indebtedness, which includes, without limitation, the aggregate outstanding principal balance of the Notes and the Competitive Bid Notes. 52 UCC means the Uniform Commercial Code in effect under the laws of the State of Texas, as amended, or, if stated with reference to another jurisdiction, the Uniform Commercial Code as adopted in the relevant jurisdiction. UNENCUMBERED ADJUSTED NOI means for any period the aggregate net operating income from all the Unencumbered Properties in the Pool (as calculated by Borrower in a manner reasonably acceptable to Administrative Agent), as adjusted (a) for any non-recurring items during such period, (b) for any dispositions or acquisitions of Unencumbered Properties during such period, and (c) to include in expenses property supervision expenses and the Capital Improvement Reserve for the Unencumbered Properties for such period. UNENCUMBERED PROPERTIES means the Ground-Leased Qualifying Properties and other Real Estate that is owned one hundred percent (100%) in fee simple by the Borrower or a Guarantor Subsidiary, and which in each case satisfies all of the following conditions: (a) each Unencumbered Property shall be free and clear of all Liens other than Permitted Liens; (b) no Unencumbered Property shall have any material environmental, structural, title, survey or other defects that would give rise to a materially adverse effect as to the value, use of, or ability to develop, lease, sell or refinance such property; and (c) each Unencumbered Property shall consist solely of Real Estate located in the United States of America (i) that is a Development Property, or (ii) is fully operational as a multi-family residential apartment community (specifically excluding, without limitation, assisted living facilities, low income housing or any federally subsidized housing facility) and with respect to which all necessary valid certificates of occupancy for all improvements thereon have been issued and are in full force and effect. VARIABLE RATE means a fluctuating rate of interest equal to the Base Rate plus the Variable Rate Margin. VARIABLE RATE ADVANCE shall mean an Advance under the Credit Facility which bears interest computed with reference to the Variable Rate. VARIABLE RATE MARGIN means the applicable margin based on the Applicable Debt Rating of Borrower as described in, and determined pursuant to, SCHEDULE II. VOTING INTERESTS means stock or similar ownership interests, of any class or classes (however designated) the holders of which are at the time entitled, as such holders, (a) to vote for the election of a majority of the directors (or persons performing similar functions) of the corporation, association, partnership, limited liability company, trust or other business entity involved, or (b) to control, manage, or conduct the business of the corporation, partnership, limited liability company, association, trust or other business entity involved. 53 WORK means the furnishing of labor, materials, components, furniture, furnishings, fixtures, appliances, machinery, equipment, tools, power, water, fuel, lubricants, supplies, goods and/or services with respect to any part of the Property. SECTION 1.2. SINGULAR AND PLURAL; GENDER. Each term defined in the singular form in SECTION 1.1 shall mean the plural thereof when the plural form of such term is used in this Agreement, and each term defined in the plural form in SECTION 1.1 shall mean the singular thereof when the singular form of such term is used in this Agreement. Words of any gender shall include each other gender where appropriate. SECTION 1.3. SUBSTANTIVE DEFINITIONS. The terms, provisions and agreements set forth in the definitions contained in SECTION 1.1 shall be substantive terms of this Agreement and fully binding on the parties hereto. SECTION 1.4. MONEY. Unless stipulated otherwise, all references herein or in any of the Loan Documents to "Dollars," "$," "money," "payments" or other similar financial or monetary terms are references to lawful money of the United States of America. SECTION 1.5. CAPTIONS; REFERENCES. The captions in this Agreement and in the table of contents hereof are for convenience of reference only and shall not define, affect or limit any of the terms or provisions hereof. All references herein to Articles and Sections are, unless specified otherwise, references to articles and sections of this Agreement. Unless specifically indicated otherwise, all references herein to an "Exhibit," "Annex" or "Schedule" are references to exhibits, annexes or schedules attached hereto, all of which are incorporated herein and made a part hereof for all purposes, the same as if set forth fully herein, it being understood that if any exhibit, annex or schedule attached hereto which is to be executed and delivered contains blanks, the same shall be completed correctly and in accordance with this Agreement prior to or at the time of the execution and delivery thereof. The words "herein," "hereof," "hereunder" and other similar compounds of the word "here" when used in this Agreement shall refer to the entire Agreement and not to any particular provision or section unless specifically indicated otherwise. SECTION 1.6. ACCOUNTING TERMS AND DETERMINATIONS. Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared in accordance with GAAP. ARTICLE II COMMITMENT SECTION 2.1. COMMITMENT. Subject to and upon the terms, covenants and conditions of this Agreement: 54 (a) ADVANCES. Each Lender severally agrees to make in the manner set forth in SECTION 2.2, its pro rata part (based on its Commitment Percentage) of one or more Advances under the Credit Facility (excluding Competitive Bid Loans) for the acquisition and development of multi-family properties, working capital and general corporate purposes, which, subject to the terms hereby and the other Loan Documents, Borrower may borrow, repay, and reborrow under this Agreement; PROVIDED that, (i) each such Advance must occur on a Business Day and no later than the Business Day immediately preceding the Termination Date, (ii) each such Advance must be in an amount not less than the limitations provided in SECTION 2.2, and (iii) on any date of determination, the outstanding principal balance of the Credit Facility (including the outstanding balance of all Competitive Bid Loans) shall never exceed the lesser of (A) the Maximum Available Amount, or (B) the Total Commitment. Except as provided in SECTION 2.3 hereof, in no event shall any Lender be required to make any Advances in excess of its Commitment Percentage of the amount required to be advanced by the Lenders under the above provisions of this SECTION 2.1 or which would cause any Lender to have made Advances (excluding under Competitive Bid Loans) in excess of such Lender's Commitment. The amount outstanding under the Credit Facility set forth on the books and records of Administrative Agent maintained in the ordinary course of business shall be presumptive evidence of the principal amount thereof owing and unpaid from time to time, but the failure to record any such amount shall not limit or affect the Obligations. (b) INCREASE IN TOTAL COMMITMENT. So long as no Default or Event of Default shall have occurred and be continuing, Borrower shall have the right from time to time upon not less than ten (10) days prior written notice to Administrative Agent to increase the Total Commitment to an amount up to but not exceeding $400,000,000, by the addition of one or more new Lenders hereunder and/or by an increase in any one or more of the then existing Lender's Commitments hereunder (as previously identified and approved by Borrower and Administrative Agent) (provided that in no event shall any Lender be obligated at any time to increase its Commitment, nor shall any Lender be entitled to an increase in its Commitment, in connection with any increase in the Total Commitment under this SECTION 2.1(B), any such increase to be allocated to existing or new Lenders in such amounts as Borrower and Sole Lead Arranger determine in their sole and absolute discretion with the concurrence only of Administrative Agent); subject to and upon the following terms and conditions: (1) No Event of Default shall have occurred and be continuing, and no Default shall be in existence at the time Borrower elects to increase the Total Commitment as provided herein or on the effective date of such increase. (2) Any new Lender pursuant to this SECTION 2.1(B) shall be an Eligible Assignee and shall be subject to the consent of Administrative Agent, which consent shall not be unreasonably withheld. 55 (3) This Agreement will be amended to reflect the addition of any new Lender hereunder, and Administrative Agent will deliver an updated SCHEDULE I to Borrower and each of the Lenders, reflecting the revised Total Commitment and the Commitment and Commitment Percentage of each of the Lenders (including any new Lender(s)) upon such increase. (4) The outstanding Advances under the Notes will be reallocated on the effective date of such increase among the Lenders in accordance with their revised Commitment Percentages (and Borrower shall pay any and all costs required pursuant to SECTION 3.6(B) in connection with such reallocation as if such reallocation were a prepayment) (provided, that, any such reallocation shall be applied to the extent possible to avoid any Consequential Loss), and Borrower will deliver a Note to each new Lender in the amount of its Commitment and, if applicable, to any existing Lender in the amount of its increased Commitment, and Borrower shall deliver new Competitive Bid Notes to all Lenders, each in the principal face amount equal to 50% of the Total Commitment as increased. (5) From and after the effective date of any increase in the Total Commitment pursuant to this SECTION 2.1(B), all references herein to the Total Commitment and, to the extent applicable, the Commitments and Commitment Percentages of each Lender, shall mean such amounts as increased or adjusted hereunder. (6) Borrower shall pay to Administrative Agent for the account of the applicable Lenders any Commitment Fees to be paid in connection with any such increase. SECTION 2.2. METHOD OF BORROWING UNDER CREDIT FACILITY. Subject to the terms and conditions of this Agreement, Borrower shall be entitled to obtain Advances (other than Competitive Bid Advances) under the Credit Facility from Lenders pursuant to SECTION 2.1 in the following manner: (a) REQUEST FOR ADVANCE. Borrower shall request an Advance by delivering to Administrative Agent an irrevocable written request (an "ADVANCE REQUEST") in the form of EXHIBIT B, duly executed by Borrower not later than 11:00 a.m. (Dallas time), (i) at least one (1) Business Day before each Variable Rate Advance and (ii) at least three (3) Business Days before each LIBOR Rate Advance, of its intention to borrow, specifying (A) the date of such Advance, which shall be a Business Day, (B) the amount of such Advance, which shall be in an aggregate principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof with respect to LIBOR Rate Advances and $1,000,000 or a whole multiple of $100,000 in excess thereof with respect to Variable Rate Advances, (C) whether such Advance is to be a LIBOR Rate Advance or Variable Rate Advance, and (D) in the case of a LIBOR Rate Advance, the duration of the Interest Period applicable thereto. Notices received after 11:00 a.m. (Dallas time), shall be deemed received on the next Business Day. 56 (b) NOTICE TO LENDERS. Administrative Agent shall promptly notify Lenders of each Advance Request received from Borrower. Each Lender shall, not later than 11:00 (a.m.) Dallas, Texas time, on the requested Borrowing Date for any such Advance, deliver to Administrative Agent, at its address set forth herein, such Lender's Commitment Percentage of such Advance, in immediately available funds in accordance with Administrative Agent's instructions. Prior to 2:00 p.m., Dallas, Texas time, on the date of any Advance hereunder Administrative Agent shall, subject to satisfaction of the conditions set forth in ARTICLE IV, disburse the amounts made available to Administrative Agent by the Lenders by (i) transferring such amounts by wire transfer pursuant to Borrower's instructions, or (ii) in the absence of such instructions, crediting such amounts to the account of Borrower maintained with Administrative Agent. All Advances under the Credit Facility shall be made by each Lender according to its Commitment Percentage. (c) Absent contrary written notice from a Lender, Administrative Agent may assume that each Lender has made its Commitment Percentage of the requested Advance available to Administrative Agent on the applicable Borrowing Date, and Administrative Agent may, in reliance upon such assumption (but is not required to), make available to Borrower a corresponding amount. If a Lender fails to make its Commitment Percentage of any requested Advance available to Administrative Agent on the applicable Borrowing Date, Administrative Agent shall seek to recover the applicable amount on demand (i) from that Lender, together with interest at the Federal Funds Rate, for the period commencing on the date the amount was made available to Borrower by Administrative Agent and ending on (but excluding) the date Administrative Agent recovers the amount from that Lender, or (ii) if that Lender fails to pay its amount upon demand, then from Borrower, together with interest at an annual interest rate equal to the rate applicable to the requested Advance for the period commencing on the Borrowing Date and ending on (but excluding) the date Administrative Agent recovers the amount from Borrower. No Lender is responsible for the failure of any other Lender to make its Commitment Percentage of any Advance. SECTION 2.3 COMPETITIVE BID LOANS (a) COMPETITIVE BID ADVANCES. In addition to Advances pursuant to SECTIONS 2.1 AND 2.2, but subject to all of the terms and conditions of this Agreement (including, without limitation, the limitation set forth in SECTION 2.1 as to the maximum aggregate principal amount of all outstanding Advances under the Credit Facility), so long as the Applicable Debt Rating is not less than BBB-/Baa3, Borrower may, in accordance with this SECTION 2.3, prior to the Termination Date from time to time, request the Lenders to make offers to make Competitive Bid Advances to Borrower. Each Lender may, but shall have no obligation to, make such offers and Borrower may, but shall have no obligation to, accept any such offers in the manner set forth in this SECTION 2.3. Competitive Bid Advances shall be evidenced by the Competitive Bid Notes. In no event shall the aggregate amount of Competitive Bid Loans outstanding at any time exceed an amount equal to fifty percent (50%) of the Total Commitment. (b) COMPETITIVE BID QUOTE REQUEST. When Borrower wishes to request offers to make Competitive Bid Loans under this SECTION 2.3, Borrower shall transmit to Administrative Agent by telecopy a Competitive Bid Quote Request (in form as attached hereto as EXHIBIT E-1) to be received no later than 11:00 a.m., Dallas time, at least five (5) Business Days prior to the Borrowing Date proposed therein in the case of a Competitive Bid Pricing Loan and three (3) Business Days prior to the Borrowing Date proposed therein in the case of a Competitive Bid Fixed Rate Loan, specifying in accordance with all of the terms of this Agreement: 57 (i) the proposed Borrowing Date for the proposed Competitive Bid Advance; (ii) the aggregate principal amount of such Competitive Bid Advance (which must be at least $10,000,000 or a larger multiple of $1,000,000); (iii) the Interest Period applicable thereto in the case of a Competitive Bid Pricing Loan (provided that the seven (7) day and the twelve (12) month Interest Period options shall not be available in the case for Competitive Bid Pricing Loans) or the term in the case of Competitive Bid Fixed Rate Loan (which term must be not shorter than fourteen (14) days and not longer than six (6) months), and in the case of any Competitive Bid Loan such Interest Period or term, as the case may be, shall not extend past the Termination Date; (iv) whether such request is for a Competitive Bid Pricing Loan or a Competitive Bid Fixed Rate Loan; and (v) whether a Competitive Bid Auction Fee is due in connection with such Competitive Bid Quote Request and, if so, an agreement to pay same. Borrower may request offers to make Competitive Bid Loans for more than one Interest Period and term and for both Competitive Bid Pricing Loans and Competitive Bid Fixed Rate Loans in a single Competitive Bid Quote Request. No Competitive Bid Quote Request shall be given within five (5) Business Days (or upon reasonable prior notice to the Lenders, such other number of days as Borrower and Administrative Agent may agree) of any other Competitive Bid Quote Request. Each Competitive Bid Quote Request shall be in a minimum amount of $10,000,000 or a larger multiple of $1,000,000. Borrower shall not be entitled to have more than four (4) Competitive Bid Loans outstanding at any time. A Competitive Bid Quote Request that does not conform substantially to the format of EXHIBIT E-1 hereto, or for which any Competitive Bid Auction Fee, if applicable, is not timely paid, shall be rejected, and Administrative Agent shall promptly notify Borrower of such rejection by telecopy. (c) INVITATION FOR COMPETITIVE BID QUOTES. Promptly upon receipt of a Competitive Bid Quote Request that is not rejected pursuant to SECTION 2.3(B), Administrative Agent shall send to each of the Lenders by telecopy an Invitation for Competitive Bid Quotes (in form as attached hereto as EXHIBIT E-2) which shall constitute an invitation by Borrower to each Lender to submit Competitive Bid Quotes (in form as attached hereto as EXHIBIT E-3) offering to make the Competitive Bid Loans to which such Competitive Bid Quote Request relates in accordance with this SECTION 2.3. (d) SUBMISSION AND CONTENTS OF COMPETITIVE BID QUOTES. 58 (i) Each Lender may, in its sole discretion, submit a Competitive Bid Quote containing an offer or offers to make Competitive Bid Loans in response to any Invitation for Competitive Bid Quotes. Each Competitive Bid Quote must comply with the requirements of this SECTION 2.3 and must be submitted to Administrative Agent by telecopy at its offices specified in or pursuant to SECTION 11.2 not later than 10:00 a.m., Dallas time, at least three (3) Business Days prior to the proposed Borrowing Date in the case of a Competitive Bid Pricing Loan and two (2) Business Days prior to the proposed Borrowing Date in the case of a Competitive Bid Fixed Rate Loan (or upon reasonable prior notice to the Lenders, such other time and date as Borrower and Administrative Agent may agree). Any Competitive Bid Quote so made shall be irrevocable except with the written consent of Borrower. (ii) Each Competitive Bid Quote shall in any case specify: (1) the proposed Borrowing Date, which shall be the same as that set forth in the applicable Invitation for Competitive Bid Quotes; (2) the principal amount of the Competitive Bid Loan for which each such offer is being made, (x) which principal amount may be greater than, less than or equal to the Commitment of the quoting Lender, but in no case greater than an amount which would cause the then outstanding Advances under the Credit Facility and the outstanding balances of all Competitive Bid Loans to exceed the Total Commitment or the Maximum Available Amount, (y) which principal amount must be at least $5,000,000 and an integral multiple of $1,000,000, and (z) which principal amount may not exceed the principal amount of Competitive Bid Loans for which offers were requested; (3) whether the quote is for a Competitive Bid Pricing Loan or a Competitive Bid Fixed Rate Loan if quotes are being requested for both types of Advances in the same Competitive Bid Quote Request; (4) the Competitive Bid Margin offered for each such Competitive Bid Pricing Loan; (5) the minimum or maximum amount, if any, of each Competitive Bid Loan which may be accepted by Borrower; (6) the applicable Interest Period or term of each Competitive Bid Loan; and (7) the identity of the quoting Lender. (iii) Administrative Agent shall reject any Competitive Bid Quote that: (1) is not substantially in the form of EXHIBIT E-3 hereto or does not specify all of the information required by SECTION 2.3(D)(ii); (2) contains qualifying, conditional or similar language, other than any such language contained in EXHIBIT E-3 hereto; (3) proposes terms other than or in addition to those set forth in the applicable Invitation for Competitive Bid Quotes, except as contemplated by SECTION 2.3(D)(II); or (4) arrives after the time set forth in SECTION 2.3(D)(I). (iv) If any Competitive Bid Quote shall be rejected pursuant to SECTION 2.3(D)(III), then Administrative Agent shall notify the applicable Lender of such rejection as soon as practicable. (v) If Administrative Agent, in its capacity as a Lender, elects to submit a Competitive Bid Quote for any Competitive Bid Quote Request, it shall submit its Competitive Bid Quote directly to Borrower at least one-half hour earlier than the latest time at which the Lenders are required to submit a Competitive Bid Quote under this SECTION 2.3(D). 59 (e) NOTICE TO BORROWER. Administrative Agent shall promptly notify Borrower of (1) the terms of any Competitive Bid Quote submitted by a Lender that is in accordance with this SECTION 2.3 and (2) if not disregarded by Administrative Agent in accordance with the immediately succeeding sentence, of any Competitive Bid Quote that is in accordance with this SECTION 2.3 which amends, modifies or is otherwise inconsistent with a previous Competitive Bid Quote submitted by such Lender with respect to the same Competitive Bid Quote Request. Any such subsequent Competitive Bid Quote shall be disregarded by Administrative Agent unless such subsequent Competitive Bid Quote specifically states that it is submitted solely to correct a manifest error in such former Competitive Bid Quote. Administrative Agent's notice to Borrower shall specify the aggregate principal amount of Competitive Bid Loans for which offers have been received for each Interest Period and/or term specified in the related Competitive Bid Quote Request and the respective principal amounts and Competitive Bid Margins and/or fixed interest rates so offered. (f) ACCEPTANCE AND NOTICE BY BORROWER. Subject to the receipt of the notice from Administrative Agent referred to in this SECTION 2.3, not later than 11:00 a.m. (Dallas time) at least three (3) Business Days prior to the proposed Borrowing Date in the case of a Competitive Bid Pricing Loan and two (2) Business Days prior to the proposed Borrowing Date in the case of a Competitive Bid Fixed Rate Loan, Borrower shall notify Administrative Agent of Borrower's acceptance or rejection of each offer received by it pursuant to this SECTION 2.3 using the form attached hereto as EXHIBIT E-4; PROVIDED, HOWEVER, that the failure by Borrower to give such notice to Administrative Agent shall be deemed to be a rejection by Borrower of all such offers. In the case of acceptance, such notice (a "COMPETITIVE BID ACCEPTANCE NOTICE") shall specify the aggregate principal amount of offers for each Interest Period or term that are accepted. Borrower may accept or reject any Competitive Bid Quote in whole or in part (subject to the terms of this SECTION 2.3); PROVIDED THAT: (i) the aggregate principal amount of each Competitive Bid Advance may not exceed the applicable amount set forth in the related Competitive Bid Quote Request; (ii) acceptance of offers may only be made on the basis of ascending Competitive Bid Margins or fixed interest rates with respect to comparable Interest Periods or terms (provided, that, Borrower may, in its sole discretion, select between Competitive Bid Margins and fixed interest rates); and (iii) Borrower may not accept any offer of the type described in this SECTION 2.3 that otherwise fails to comply with the requirements of this Agreement for the purpose of obtaining a Competitive Bid Loan under this Agreement. 60 (g) ALLOCATION BY ADMINISTRATIVE AGENT. If offers are made by two or more Lenders with the same Competitive Bid Margins or the same fixed interest rate for a greater aggregate principal amount than the amount in respect of which offers are permitted to be accepted for the related Interest Period or term, as the case may be, the principal amount of Competitive Bid Loans in respect of which such offers are accepted shall be allocated by Administrative Agent among such Lenders as nearly as possible (in such multiples as Administrative Agent may deem appropriate) in proportion to the aggregate principal amount of such offers; PROVIDED, HOWEVER, that Administrative Agent shall endeavor to allocate each Competitive Bid Advance so that no Lender shall be allocated a portion of any Competitive Bid Advance which is less than $5,000,000. Allocations by Administrative Agent of the amounts of Competitive Bid Loans shall be conclusive in the absence of manifest error. Administrative Agent shall promptly, but in any event on the same Business Day, notify each Lender of its receipt of a Competitive Bid Acceptance Notice and the aggregate principal amount of each Competitive Bid Advance allocated to that participating Lender. (h) FUNDING OF COMPETITIVE BID LOANS. If Borrower accepts one or more offers made by any Lender or Lenders pursuant to SECTION 2.3(F), each such Lender shall, not later than 11:00 a.m. (Dallas, Texas time) on the applicable Borrowing Date, make the funds under its applicable Competitive Bid Loan available to Borrower by wire transfer of the full amount of such funds to Administrative Agent pursuant to Administrative Agent's wire transfer instructions (or as otherwise directed by Administrative Agent) in funds that are available for immediate use by Administrative Agent. The amount so received by Administrative Agent shall, subject to the terms and conditions of this Agreement, be made available to Borrower on the applicable Borrowing Date by depositing same, in immediately available funds, not later than 2:00 p.m. (Dallas, Texas time) in an account that Borrower maintains with Administrative Agent. (i) COMMITMENT TO LEND NOT REDUCED. The agreement of a Lender to make a Competitive Bid Loan hereunder shall not reduce such Lender's obligation to fund other Advances under the Credit Facility to the extent of such Lender's Commitment, it being expressly acknowledged and agreed that the agreement to make a Competitive Bid Loan is optional on the part of such Lender and in addition to its Commitment. The amount of Competitive Bid Loans shall not reduce the Commitment of any Lender. SECTION 2.4. FEES. (a) COMMITMENT FEES. In consideration for the commitment of each Lender to make Advances under the Credit Facility upon the terms and conditions set forth in this Agreement and the reserving of sufficient funds by each Lender from which to make disbursement of the Advances under the Credit Facility, Borrower shall pay to the Administrative Agent, for the benefit and account of each Lender, on the Closing Date, a one-time non-refundable commitment fee (the "INITIAL COMMITMENT FEE") in the amount for each Lender determined in accordance with each Lender's Fee Letter. The Initial Commitment Fee has been earned in full. Upon the addition of a new Lender or the increase of an existing Lender's Commitment in connection with an increase in the Total Commitment under SECTION 2.1(B), Borrower shall pay to Administrative Agent, for the account of the applicable Lenders, any Commitment Fees agreed to in connection with any such addition or increase. 61 (b) FACILITY FEE. Throughout the Credit Period, Borrower shall pay to Administrative Agent the Facility Fee for the account of each Lender in accordance with each Lender's Commitment Percentage, such annual fee to be due and payable in quarterly installments in advance, with the first payment thereof to be due on the Closing Date for the period from the Closing Date through September 30, 1999 (prorated for such period), and subsequent payments to be made on the first day of each fiscal quarter for that ensuing quarter, commencing on October 1, 1999, and continuing on the first day of each calendar quarter thereafter, with a final payment of such Facility Fee being due and payable on the Termination Date. In the event of any increase in the Total Commitment during any fiscal quarter, Borrower shall promptly upon the effectiveness of such increase pay to Administrative Agent for the account of those Lenders entitled to same, the increased Facility Fee for the number of days remaining in such quarter after the effective date of such increase. (c) EXTENSION FEE. Borrower shall pay the Extension Fee to Administrative Agent (for the benefit of the Lenders) in the amount and manner set forth in SECTION 3.15(D) at the time Borrower delivers to Administrative Agent notice of its election to exercise the Extension Option. (d) RENEWAL FEE. Borrower shall pay to Administrative Agent, for the benefit of the Lenders participating in any renewal of the Credit Facility provided for in SECTION 3.16, the Renewal Fee for each such renewal in the amount and manner set forth in SECTION 3.16. (e) COMPETITIVE BID AUCTION FEE. In consideration for Administrative Agent's services in administering the auctions for all Competitive Bid Loans, Borrower shall pay to Administrative Agent a fee (a "COMPETITIVE BID AUCTION FEE") in the amount of $2,500 for each Competitive Bid Auction in excess of two such auctions in each calendar month, with such Competitive Bid Auction Fee to be paid at the time of submission by Borrower of each Competitive Bid Quote Request after the second Competitive Bid Auction in the applicable calendar month, which fee shall be non-refundable (even if Borrower cancels the proposed Competitive Bid Auction or no offers are made by the Lenders). SECTION 2.5. DISBURSEMENT AND PERFORMANCE BY LENDERS. (a) If Borrower fails to pay or perform any of the Obligations when due and there exists any Event of Default which is continuing, or Borrower has requested Administrative Agent to make an Advance to pay such Obligation, refrain from making an Advance or take any action, Administrative Agent, in Borrower's name or in its own name, shall have the right but not the obligation, to pay or perform such Obligation, including (i) payment to any Governmental Authority of taxes, assessments and other charges with respect to any of the Property; (ii) payment to insurers to maintain insurance; (iii) payment to the holder of any unpermitted lien or encumbrance against the Unencumbered Properties to remove same; (iv) performing any other Obligation including payment to any third party Administrative Agent deems necessary or advisable in connection with any Work or expenses incident to the Property or the Credit Facility; and (v) taking any action and paying any amounts Administrative Agent deems necessary or advisable to protect and preserve Borrower's title to the Property, or any security that may at any time be given for the Obligations. Borrower hereby assigns and pledges the proceeds of the Credit Facility to Administrative Agent and the Lenders for such purpose. No such action, payment or disbursement or failure to act, pay or disburse, shall cure or waive any Default or Event of Default or waive any right or remedy of Administrative Agent or the Lenders. 62 (b) Any funds of the Lenders paid or used for any of the purposes referred to in SECTION 2.5(A) shall constitute an Advance and be a part of the Obligations, even if in excess of the Total Commitment, and the Lenders= obligation to make future Advances shall be correspondingly reduced. Administrative Agent and the Lenders may rely on any statement, invoice, claim or notice without inquiry into the validity or accuracy thereof, and without liability for the sufficiency or adequacy of any such action or payment except for the gross negligence or willful misconduct of Administrative Agent or the Lenders. Upon making any such payment the Lenders shall be subrogated to all rights of the Person receiving such payment. The amount and nature of any such expense or expenditure and the time when paid shall be presumptively established by the statement of Administrative Agent of the amount and nature thereof. (c) All costs, expenses and disbursements incurred by Administrative Agent or the Lenders under this SECTION 2.5, in connection with any Default or Event of Default, to protect or preserve the Property, or which are reimbursable by Borrower under any provision of this Agreement or any Loan Document shall be a part of the Obligations, even if in excess of the Total Commitment. Except as provided otherwise in the Loan Documents, if incurred before the Termination Date, such costs, expenses and disbursements shall be paid or reimbursed to Lenders upon demand and shall bear interest until paid (i) from the date incurred or paid until the date ten (10) days after demand, at the per annum rate equal to the lesser of the Maximum Lawful Rate or the Variable Rate, provided that if at any time the Variable Rate would exceed the Maximum Lawful Rate then the Variable Rate shall be limited to the Maximum Lawful Rate, but, to the extent permitted by applicable Laws, any subsequent reductions in the Variable Rate shall not reduce the Variable Rate below the Maximum Lawful Rate until the total amount of interest accrued at the Maximum Lawful Rate equals the amount of interest which would have accrued if the Variable Rate had not been limited by the Maximum Lawful Rate, and (ii) from and after the date ten (10) days after demand, at the per annum rate equal to the lesser of the Maximum Lawful Rate or the Default Rate. Except as provided otherwise in the Loan Documents, if incurred after the Termination Date, all such costs and expenses shall be reimbursed by Borrower to Lenders upon demand by Administrative Agent and shall bear interest until paid at the per annum rate equal to the lesser of the Maximum Lawful Rate or the Default Rate. ARTICLE III TERMS OF THE CREDIT FACILITIES SECTION 3.1. NOTES. All Advances under the Credit Facility other than Competitive Bid Advances shall be evidenced by the Notes, and each Lender shall receive an original executed Note in an amount equal to such Lender's Commitment. Competitive Bid Advances shall be evidenced by the Competitive Bid Notes, and each Lender shall receive an original executed Competitive Bid Note in an amount equal to 50% of the Total Commitment. 63 SECTION 3.2. MATURITY; MANDATORY PRINCIPAL REDUCTIONS. (a) All outstanding principal of the Notes, together with all accrued but unpaid interest and other amounts owed with respect thereto, shall be due and payable in full on the Termination Date. All outstanding principal of any Competitive Bid Note shall be due and payable on the last day of the applicable Interest Period or maturity date for such Competitive Bid Loan and in any event on or prior to the Termination Date (b) Within five (5) Business Days after the determination of the existence of any Excess Outstandings, Borrower shall reduce the outstanding principal amount of the Credit Facility by an amount not less than the Excess Outstandings. Borrower shall pay to Administrative Agent on demand the amount of any Consequential Loss, if any, that may be due in connection therewith pursuant to SECTION 3.6(B); provided any principal reductions shall be applied first to Variable Rate Advances or Advances that will not result in Consequential Loss. SECTION 3.3. INTEREST RATE. Interest on the Notes shall accrue at a rate per annum equal to the lesser of (a) the Applicable Rate as selected by Borrower pursuant to this Agreement, subject, however, to the provisions of SECTION 11.8, or (b) the Maximum Lawful Rate; PROVIDED, HOWEVER, if at any time the Applicable Rate exceeds the Maximum Lawful Rate, resulting in the charging of interest hereunder to be limited to the Maximum Lawful Rate, then any subsequent reduction in the Applicable Rate shall not reduce the rate of interest below the Maximum Lawful Rate until the total amount of interest accrued on the indebtedness evidenced by the Notes equals the amount of interest which would have accrued on such indebtedness if the Applicable Rate had at all times been in effect. Without notice to Borrower or any other Person, the Variable Rate and the Maximum Lawful Rate shall each automatically fluctuate upward and downward as and in the amount by which the Base Rate and Maximum Lawful Rate, respectively, fluctuate, subject always to limitations contained in this Agreement. In addition, the Adjusted LIBOR Rate and the Variable Rate with regard to Advances under the Credit Facility shall fluctuate upward and downward as and in the amount by which the LIBOR Margin or the Variable Rate Margin fluctuates, subject always to limitations contained in this Agreement, any such changes in the LIBOR Margin or the Variable Rate Margin, to occur as provided in SCHEDULE II. SECTION 3.4. INTEREST PAYMENTS. (a) Interest on the Notes shall be due and payable as it accrues on (a) the tenth (10th ) day of each calendar month commencing on September 10, 1999, and continuing on the tenth (10th) day of each month thereafter until the Termination Date (except that interest on seven and fourteen day LIBOR Rate Advances shall only be payable on the last day of the applicable Interest Period), and (b) at the end of each Interest Period as to any LIBOR Rate Portion then expiring, and on demand after the Termination Date so long as any principal of any Note remains unpaid. (b) Interest on the Competitive Bid Notes shall be due and payable as it accrues on the tenth (10th ) day of each calendar month on which any Competitive Bid Loan is outstanding under a Competitive Bid Note, on the last day of the respective Interest Period in the case of Competitive Bid Pricing Loan, and on the respective maturity date in the case of a Competitive Bid Fixed Rate Loan, with all accrued unpaid interest on all Competitive Bid Notes due and payable on the Termination Date. 64 SECTION 3.5. CONVERSION OF ADVANCES AND INTEREST RATE ELECTIONS. (a) CONVERSION TO VARIABLE RATE. Borrower may, on any Interest Adjustment Date (other than the Termination Date), convert amounts of any LIBOR Rate Advances into Variable Rate Advances with interest accruing thereon with reference to the Variable Rate, as provided in SECTION 3.3. (b) SELECTION OF LIBOR RATE PRICING. Upon at least three (3) Business Days= prior written notice from Borrower to Administrative Agent ("MINIMUM NOTICE REQUIREMENT"), and subject to the conditions provided in this Agreement, Borrower may, on any date prior to the Termination Date, convert amounts of not less than Five Million and No/100 Dollars ($5,000,000.00) in the aggregate on the same date, or any whole multiple of One Million and No/100 Dollars ($1,000,000.00) in excess thereof of any Variable Rate Advances into LIBOR Rate Advances, as applicable, with interest accruing thereon with reference to the Adjusted LIBOR Rate, for the Interest Period selected in such notice. Each notice of Adjusted LIBOR Rate election by Borrower (whether in connection with an initial funding or a conversion of an existing funding) shall include (i) the amount of the proposed aggregate LIBOR Rate Advances, (ii) the Interest Period selected by Borrower, and (iii) the Effective Date, and is subject to the following conditions: (1) the Interest Period shall be limited to a period commencing on the Effective Date and ending on a date that is 7 days, 14 days, or one, two, three, four, five, six or twelve months later, as elected by Borrower in its notice to Administrative Agent; (2) Borrower's written notice of an election shall be received by Administrative Agent in time to satisfy the Minimum Notice Requirement; (3) the last day of the Interest Period will not be subsequent in time to the Termination Date, (4) in the case of a continuation of a LIBOR Rate Advance, the Interest Period applicable after such continuation shall commence on the last day of the preceding Interest Period; (5) no LIBOR Rate election shall be made if Administrative Agent reasonably determines by reason of circumstances affecting the interbank Eurodollar market that either adequate or reasonable means do not exist for ascertaining the Adjusted LIBOR Rate for any Interest Period, or it becomes impracticable for Administrative Agent or any Lender to obtain funds by purchasing U.S. dollars in the interbank Eurodollar market, or if Administrative Agent or any Lender reasonably determines that the Adjusted LIBOR Rate will not adequately or fairly reflect the costs to such Lender of maintaining the applicable LIBOR Rate Advances, at such rate, or if as a result of any Regulatory Change, it shall become unlawful or impossible for Lenders to maintain any such LIBOR Rate election; (6) there shall never be more than seven (7) LIBOR Rate Advances, in the aggregate, in effect at any one time under the Credit Facility (with no more than two (2) of these being for an Interest Period of 7 days); and (7) no LIBOR Rate election shall be made after the occurrence and during the continuance of a Default or Event of Default. 65 (c) ELECTION AND CONVERSION TO VARIABLE RATE. To the extent Borrower has not made an effective election under and in accordance with SECTION 3.5(A) OR (B) above (including without limitation at the expiration of an Interest Period), the Applicable Rate shall be the Variable Rate. If Borrower has failed to make such election at the end of an Interest Period, the Lenders shall be deemed to have made a Variable Rate Advance in the amount, and in replacement, of the LIBOR Rate Advance then maturing. SECTION 3.6. REDUCTION OF COMMITMENT AMOUNT; CONSEQUENTIAL LOSS. (a) Borrower may, from time to time if an Event of Default is not then continuing, fully or partially, reduce the Total Commitment, provided that (i) notice of such reduction must be received by Administrative Agent by 10:00 a.m. Dallas, Texas, time on the fifth (5th) Business Day preceding the effective date of such reduction, (ii) each such reduction in the Commitment must be in a minimum amount of $20,000,000.00 or any whole multiple of $1,000,000.00 in excess thereof, (iii) Borrower shall not be entitled to an increase in the Total Commitment pursuant to SECTION 2.1(B) or otherwise once it has been so reduced, (iv) if the sum of the aggregate outstanding principal balance of the Credit Facility (including amounts outstanding under Competitive Bid Notes), exceeds the Total Commitment as so reduced, Borrower shall make a mandatory principal prepayment in at least the amount of such excess, together with any Consequential Loss arising as a result thereof (provided, any such prepayment shall be applied first to Advances that will not result in Consequential Loss), and (v) in no event shall Borrower be entitled to so reduce the Total Commitment below $100,000,000.00, unless Borrower has elected to terminate the Credit Facility in full. (b) If Borrower shall prepay any LIBOR Rate Advance or a Competitive Bid Pricing Loan prior to the expiration of its applicable Interest Period or if Borrower shall fail to obtain an Advance or convert any amounts after delivering and pursuant to an election satisfying the Minimum Notice Requirement, Borrower shall pay to Lenders or the applicable Lender of such Competitive Bid Loan an amount (the "CONSEQUENTIAL LOSS") equal to any actual loss, expense or reduction in yield that any such Lender reasonably incurs as a result of such event. Any Consequential Loss required to be paid by Borrower pursuant to this SECTION 3.6 or any other provisions of this Agreement or of the other Loan Documents in connection with the prepayment of any LIBOR Rate Advances or Competitive Bid Loans shall be due and payable whether such prepayment is being made voluntarily or involuntarily, including, without limitation, as a result of an acceleration of sums due under LIBOR Rate Advances or Competitive Bid Loans or any part thereof due to an Event of Default. A Lender (through the Administrative Agent) must request compensation under this SECTION 3.6(B) as promptly as practicable after it obtains knowledge of the event which entitles it to such compensation, but in any event within 180 days after it obtains such knowledge and pursuant to a certificate which sets forth the amount such Lender is entitled to receive pursuant to this SECTION 3.6(B) and the basis for determining such amount, which certificate shall be presumptively correct as to the matters set forth therein in the absence of manifest error. Any amounts received by Administrative Agent from Borrower pursuant hereto shall be disbursed by Administrative Agent in immediately available funds to the Lenders requesting such amounts. 66 SECTION 3.7. SCHEDULES ON NOTES. Each Lender is hereby authorized to record the date and amount of the initial principal balance of its Note and its Competitive Bid Note and the date and the amount of each advance and repayment of principal on such notes, and to attach any such recording as a schedule to the applicable note whereupon such schedule shall constitute a part of such note for all purposes. Any such recording shall constitute PRIMA FACIE evidence of the accuracy of the information so recorded; PROVIDED that the absence or inaccuracy of any such schedule or notation thereon shall not limit or otherwise affect the liability of Borrower for the repayment of all amounts outstanding under the Notes and the Competitive Bid Notes, together with interest thereon. SECTION 3.8. GENERAL PROVISIONS AS TO PAYMENTS. All payments and indemnities required to be made by Borrower under any of the Loan Documents shall be joint and several obligations of Borrower and each Guarantor Subsidiary. Borrower shall make each payment of principal and interest on the Credit Facility and all fees payable hereunder or under any other Loan Document not later than 12:00 noon (Dallas time) on the date when due, in Federal or other funds immediately available in Dallas, Texas, to Administrative Agent at Administrative Agent's Dallas address for payments set forth in SCHEDULE I, without setoff, counterclaim or reduction. Administrative Agent will promptly (and if such payment is received by Administrative Agent by 12:00 noon (Dallas, Texas time), and otherwise if reasonably possible, on the same Business Day, and in any event not later than the next Business Day after receipt of such payment) distribute to each Lender a payment on the applicable Note or Competitive Bid Note, in accordance with such Lender's pro rata share of each such payment received by Administrative Agent. For purposes of calculating accrued interest on the Credit Facility, any payment received by Administrative Agent as aforesaid by 12:00 noon (Dallas, Texas time) on any Business Day shall be deemed made on such day; otherwise, such payment shall be deemed made on the next Business Day after receipt by Administrative Agent. Whenever any payment of principal or interest on the Credit Facility, or any fees under the Loan Documents, shall be due on a day which is not a Business Day, the date for payment thereof shall be extended to the next succeeding Business Day. If the date for any payment of principal is extended pursuant to the preceding or operation of law or otherwise, interest thereon shall be payable for such extended time. If Administrative Agent shall fail to deliver to any Lender such Lender's pro rata portion of any principal, interest or fees received by Administrative Agent as required by this Agreement, then in addition to its pro rata portion of such payment, such Lender shall be entitled to receive from Administrative Agent interest on the amount which has failed to be timely paid at the Federal Funds Rate, for the period commencing on the date Administrative Agent was required to deliver such payment and ending on (but excluding) the date such payment is made. 67 SECTION 3.9. APPLICATION OF PAYMENTS. (a) So long as no Event of Default has occurred and is continuing, all payments (including prepayments) received by Administrative Agent or Lenders hereunder from or on behalf of Borrower shall be applied first to pay any unpaid fees owing to Administrative Agent, Sole Lead Arranger or the Lenders under SECTION 2.4 or otherwise, then to pay any accrued interest then due and payable first on the Notes and then on the Competitive Bid Notes, then to repay the principal amount first of the Notes and then of the Competitive Bid Notes, (in inverse order of maturity, in the case of partial prepayments), and then to pay any other Obligations in the manner and order determined by Administrative Agent in its sole discretion. Notwithstanding the foregoing, so long as no Event of Default has occurred and is continuing and after application of any payment to accrued interest, Administrative Agent shall apply the payment to that portion of the principal amount of the Notes or Competitive Bid Notes as is designated by Borrower in a written notice delivered to Administrative Agent simultaneously with the payment; PROVIDED, HOWEVER, that Administrative Agent shall not assist Borrower with any determination of the portion of the principal amount of the Notes or Competitive Bid Notes to which the payment will be applied. (b) After the occurrence and during the continuance of an Event of Default, all payments (including prepayments) received by Administrative Agent or any Lender hereunder from or on behalf of Borrower shall be applied to the Obligations in the manner and order determined by the Required Lenders as provided in SECTION 9.9 hereof (subject to the terms and provisions of ARTICLE X hereof). SECTION 3.10. POST-DEFAULT INTEREST; PAST DUE PRINCIPAL AND INTEREST. After maturity of the Notes or the occurrence of an Event of Default, the outstanding principal balance of the Notes and the Competitive Bid Notes shall, at the option of the Required Lenders, bear interest at the Default Rate. Any past due principal of and, to the extent permitted by law, past due interest on the Notes and the Competitive Bid Notes shall bear interest, payable as it accrues on demand, for each day until paid at the Default Rate. Such interest shall continue to accrue at the Default Rate notwithstanding the entry of a judgment with respect to any of the Obligations, except as otherwise provided by applicable law. SECTION 3.11. COMPUTATION OF INTEREST AND FEES. All interest payable on the Notes and the Competitive Bid Notes, and the amount of all fees payable hereunder (except as otherwise specifically provided for in the Fee Letters or in SECTION 2.4), shall be computed based on the number of days elapsed and, with respect to LIBOR Rate Portions, 360 days per year, and, in all other instances, 365 days per year, subject to the provisions hereof limiting interest to the maximum permitted by applicable law. SECTION 3.12. LENDERS= CAPITAL ADEQUACY. If any present or future law, governmental rule, regulation, policy, guideline or directive (whether or not having the force of law) or the interpretation thereof by a court or Governmental Authority with appropriate jurisdiction affects the amount of capital required or expected to be maintained by any Lender or any corporation controlling such Lender and such Lender reasonably determines that as a consequence of its obligations under the Credit Facility the rate of return on it capital has been reduced to a level below that which it otherwise would have achieved (taking into consideration its policies with respect to capital adequacy) then such Lender may notify Borrower of such fact, and commencing ninety (90) days following such notice, Borrower shall pay to such Lender or Administrative Agent (for such Lender) from time to time on demand, as an additional fee payable hereunder, such amount as Lender shall determine in good faith and certify in a notice to Borrower in reasonable detail to be an amount that will adequately compensate such Lender in light of these circumstances for such loss. Each Lender shall allocate such cost increases among its customers in good faith and on an equitable basis. SECTION 3.13. REGULATORY CHANGES; INDEMNIFICATION FOR FAILURE TO PAY WHEN DUE. 68 (a) If, on or after the Closing Date, any Regulatory Change shall make it unlawful, impracticable or impossible for any Lender (or its Eurodollar lending office) to make, maintain or fund LIBOR Rate Advances or Competitive Bid Pricing Loans, as applicable, and such Lender shall so notify Administrative Agent, Administrative Agent shall forthwith give notice thereof to the other applicable Lenders and Borrower, whereupon until such Lender notifies Borrower and Administrative Agent that the circumstances giving rise to such suspension no longer exist, the obligation of such Lender to maintain or fund LIBOR Rate Portions or the funding under a Competitive Bid Note, as the case may be, shall be suspended. If such Lender shall determine that it may not lawfully continue to maintain and fund any of its outstanding LIBOR Rate Advances or amounts under a Competitive Bid Note, to maturity and shall so specify in such notice, Borrower shall immediately prepay in full the then outstanding principal amount of such Lender's portion of the LIBOR Rate Advances or Competitive Bid Notes, as the case may be, together with accrued interest thereon. Concurrently with prepaying such portion of the LIBOR Rate Advances, Borrower shall borrow a Variable Rate Advance in an equal principal amount from such Lender (on which interest and principal shall be payable contemporaneously with the related LIBOR Rate Advances of the other Lenders), and such Lender shall make such Variable Rate Advance. If a Lender shall be unable to make, maintain or fund LIBOR Rate Advances or Competitive Bid Pricing Loans, as above provided for more than sixty (60) days, and the other Lenders are not similarly restricted, Borrower shall be entitled to designate an Eligible Assignee acceptable to Administrative Agent to purchase the interest of the Lender which is unable to fund LIBOR Rate Advances or make Competitive Bid Pricing Loans, as the case may be, and such Lender shall sell its interest to such Eligible Assignee within ten (10) Business Days of Borrower's request. Any such purchase shall be in accordance with and subject to the provisions of SECTION 11.10. (b) Borrower shall promptly indemnify (i) Administrative Agent and the Lenders against any actual loss or expense which Administrative Agent or the Lenders may, as a consequence of Borrower's failure to make a payment on the date such payment is due hereunder, or the payment, prepayment or conversion of any LIBOR Rate Advances or amounts due under Competitive Bid Notes hereunder on a day other than an Interest Adjustment Date or, in the case of Competitive Bid Notes, the last day of the applicable Interest Period or term of such notes, reasonably sustain or incur in liquidating or employing deposits from third parties acquired to effect, fund or maintain any such LIBOR Rate Advances or Competitive Bid Notes or any part thereof, including, without limitation, any Consequential Loss; and (ii) the Lenders against and reimburse the Lenders for increased costs to Lenders, as a Result of any Regulatory Change, in the maintaining of any LIBOR Rate Advances or Competitive Bid Loans (Administrative Agent shall give Borrower written notice of such costs within ninety (90) days of its or any Lender's implementation and/or compliance with any such Regulatory Change, and such costs shall be reimbursed to such Lender prior to the earlier of (A) the Termination Date, or (B) ten (10) days following written notice thereof from Administrative Agent to Borrower). All payments made pursuant to this paragraph shall be made free and clear, without reduction for, or account of, any present or future taxes or other levies of any nature, excluding net income and franchise taxes. SECTION 3.14. TAXES. 69 (a) NO DEDUCTION FOR TAXES. Except as provided in SECTION 3.14(D), any and all payments by Borrower hereunder or under the Notes or the Competitive Bid Notes shall be made free and clear of and without deduction for any and all present or future Taxes, excluding, (i) in the case of each Lender and the Agents, income and franchise taxes imposed by the jurisdiction under the laws of which such Lender or Administrative Agent (as the case may be) is organized or is or should be qualified to do business or any political subdivision thereof and (ii) in the case of each Lender, income and franchise taxes imposed by the jurisdiction of such Lender's Applicable Lending Office or any political subdivision thereof. If Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder or under any Note or any Competitive Bid Note to any Lender or any Agent, (i) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this SECTION 3.14) such Lender or Agent (as the case may be) receives an amount equal to the amount such party would have received had no such deductions been made, (ii) Borrower shall make such deductions, (iii) Borrower shall pay the full amount deducted to the relevant taxing authority or other authority in accordance with applicable law, and (iv) Borrower shall deliver to Administrative Agent evidence of such payment to the relevant taxing authority or other authority in the manner provided in SECTION 3.14(C); PROVIDED that Borrower shall not be required to increase any payment by any amount which such Lender shall be entitled to have repaid by the taxing authority upon filing of the appropriate documents. (b) INDEMNIFICATION. Borrower shall indemnify each Lender and Administrative Agent for the full amount of Taxes (including, without limitation, any Taxes imposed by any jurisdiction on amounts payable under this SECTION 3.14) paid by any Lender or Administrative Agent (as the case may be), except for the Lender's income or franchise Taxes of Administrative Agent or any Lender and withholding therefor as required by the applicable taxing authority, and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally asserted. Such indemnification shall be made within thirty (30) days from the date any Lender or Administrative Agent (as the case may be) makes written demand therefor. Each Lender and Administrative Agent agree to notify Borrower of any event occurring after the Closing Date entitling such Lender or Administrative Agent to indemnification under this Section as promptly as practicable; provided, that except as otherwise limited by the next sentence, the failure of any Lender or Administrative Agent to give such notice shall not result in any liability to such Lender or Administrative Agent or release Borrower from any of its obligations hereunder. Each Lender and Administrative Agent, as applicable, shall only be entitled to indemnification under this SECTION 3.14 for Taxes paid during the ninety (90) day period ending on the date Borrower receives the notice described in the immediately preceding sentence; PROVIDED, that from and after such notice, such Lender or Administrative Agent shall be entitled to compensation for Taxes occurring after such notice until such time as such Taxes cease to exist. (c) TAX PAYMENT RECEIPT. Within thirty (30) days after the date of any payment of Taxes, Borrower shall furnish to Administrative Agent the original or a certified copy of a receipt evidencing payment thereof or other evidence of payment satisfactory to Administrative Agent. 70 (d) TAX FORMS. Each Lender or Participant that is not a corporation or partnership created or organized in or under the laws of the United States, any estate that is subject to federal income taxation regardless of the source of its income, or any trust which is subject to the supervision of a court within the United States and the control of a United States fiduciary as described in section 7701 (a) (30) of the Internal Revenue Code (a ANON-U.S. LENDER@) shall deliver to Borrower and Administrative Agent (or, in the case of a Participant, to the Lender from which the related participation shall have been purchased ) on or before the date on which it becomes a party to this Agreement (or, in the case of a Participant, on or before the date on which such Participant purchases the related participation) either: (i) (x) two duly completed and signed copies of either Internal Revenue Service Form 1001 (relating to such Non-U.S. Lender and entitling it to a complete exemption from withholding of U.S. Taxes on all amounts to be received by such Non-U.S. Lender pursuant to this Agreement and the other Loan Documents) or Form 4224 (relating to all amounts to be received by such Non-U.S. Lender pursuant to this Agreement and the other Loan Documents), or successor and related applicable forms, as the case may be, or (y) two duly completed and signed copies of Internal Revenue Service Form W-8 or W-9, or successor and related applicable forms, as the case may be; or (ii) in the case of a Non-U.S. Lender that is not a "bank" within the meaning of Section 881 (c) (3) (A) of the Code and that does not comply with the requirements of clause (a) hereof, (x) a statement in a form as shall be reasonably requested by Borrower from time to time to the effect that such Non-U.S. Lender is eligible for a complete exemption from withholding of U.S. Taxes under Code Section 87(b) or 881(c), and (y) two duly completed and signed copies of Internal Revenue Service Form W-8 or successor and related applicable forms. 71 Further, each Non-U.S. Lender agrees to deliver to Borrower and Administrative Agent, and if applicable, the assigning Lender (or, in the case of a Participant, to the Lender from which the related participation shall have been purchased) two further duly completed and signed copies of such Forms 1001, 4224, W-8 or W-9, as the case may be, or successor and related applicable forms, on or before the date that any such form expires or becomes obsolete and promptly after the occurrence of any event requiring a change from the most recent form(s) previously delivered by it to Borrower (or, in the case of a Participant, to the Lender from which the related participation shall have been purchased) in accordance with applicable United States laws and regulations; UNLESS, in any such case, any change in law or regulations has occurred subsequent to the date such Lender became a party to this Agreement ( or in the case of a Participant, the date on which such Participant purchased the related participation) which renders all such forms inapplicable or which would prevent such Lender (or Participant) from properly completing and executing any such form with respect to it and such Lender promptly notifies Borrower and Administrative Agent (or, in the case of a Participant, the Lender from which the related participation shall have been purchased) if it is no longer able to deliver, or if it is required to withdraw or cancel, any form or statement previously delivered by it pursuant to this SECTION 3.14. A Non-U.S. Lender shall not be required to deliver any form or statement pursuant to the immediately preceding sentences in this SECTION 3.14 that such Non-U.S. Lender is not legally able to deliver, it being understood and agreed that Borrower shall withhold or deduct such amount from any payments made to any Non-U.S. Lender that Borrower reasonably determines is required by law and that payments resulting from a failure to comply with this SECTION 3.14 shall not be subject to payment or indemnity by Borrower and Guarantors pursuant to this SECTION 3.14. SECTION 3.15. EXTENSION OPTION. Borrower shall have the option (the "EXTENSION OPTION") to extend the Credit Facility by extending the Termination Date for a one-year period from and after the initial Termination Date of August 18, 2001, or any previously extended Termination Date pursuant to SECTION 3.16, such Extension Option being exercisable only once as provided below, and subject to satisfaction of each of the following conditions: (a) Administrative Agent shall have received written notice of the Borrower's election to exercise the Extension Option at least thirty (30) but no more than ninety (90) days before the Termination Date (as then in effect). (b) There shall exist no Default or Event of Default at the time Borrower elects to exercise the Extension Option or at the Termination Date (as then in effect). (c) Borrower and each Guarantor Subsidiary shall have executed and delivered to Administrative Agent a modification and extension agreement, confirming that the entity documents for Borrower and Guarantor Subsidiaries previously delivered to Administrative Agent are still in force and effect, without modification, and such other documents as are reasonably requested by Administrative Agent to properly document the extension. (d) Borrower shall pay to Administrative Agent, for the benefit of the Lenders in accordance with the respective Commitment Percentages of the Lenders as of the effective date of the extension, an additional non-refundable commitment fee in the amount of .15% of the Total Commitment (the "EXTENSION FEE") in consideration of the commitment of the Lenders to continue to make Advances to Borrower until the new extended Termination Date, which Extension Fee shall be due and payable at the time Borrower delivers its written notice of election to extend pursuant to SECTION 3.15(A). As of the date of Borrower's delivery of written notice regarding the Extension Option, the Extension Fee will have been earned in full and be a bona fide commitment fee intended as reasonable compensation to Lenders for the commitment to make Advances until the extended Termination Date. (e) Borrower shall pay to Administrative Agent all reasonable costs and expenses, including reasonable attorneys= fees, incurred in connection with such extension and the documentation thereof. (f) During the extended term, all terms and conditions of the Loan Documents (including but not limited to interest rates and payments) pertaining to the Credit Facility shall continue to apply; PROVIDED, HOWEVER, that the term "Termination Date" and all references to such term in this Agreement and the other Loan Documents shall mean and refer to the extended Termination Date which shall be one year from the Termination Date as then in effect. 72 All references in this Agreement or any other Loan Document to the exercise of the Extension Option shall be deemed to refer to satisfaction of all conditions set forth above. SECTION 3.16. ANNUAL RENEWAL. In addition to Borrower's right to exercise the Extension Option in SECTION 3.15, Borrower shall be entitled from time to time to request one-year extensions of the then current Termination Date by delivering written notice of such request under this SECTION 3.16 to Administrative Agent (which notice Administrative Agent shall immediately forward to all Lenders) at least 60 but no more than 120 days prior to each anniversary of the Closing Date prior to the Termination Date (including any prior extensions thereof). For example, if the Closing Date is August 18, 1999, Borrower, 60-120 days prior to August 18, 2000, may request that the Termination Date be extended to August 18, 2002 and may continue to do so each year so that the Credit Facility continues to have at least one year remaining on its term (plus the right to exercise the Extension Option). Each Lender shall have the right, in its sole and absolute discretion, to accept or reject such request by written notice to Administrative Agent delivered within 30 days after delivery to Lenders of Borrower's notice requesting the extension under this SECTION 3.16 (provided that the failure of any Lender to respond within such 30-day period shall be deemed a rejection by such Lender of such request). Administrative Agent shall give notice to Borrower on or before the last day of such thirty (30) day period as to which Lenders have accepted or rejected (or deemed to have rejected) such request, provided that the failure of Administrative Agent to so notify Borrower shall be deemed a notice that all the Lenders have rejected such request. In the event that some but not all of the Lenders have so accepted Borrower's request to extend, then Borrower may elect to either (a) cancel such request to extend the Credit Facility, or (b) so long as the Lenders whose Commitments in the aggregate equal or exceed 80% of the Total Commitment have agreed to extend, reduce the Total Commitment by the aggregate amount of the Commitments of the non-extending Lenders, and proceed with the extension with just the Lenders who have accepted Borrower's request to extend (provided that the Total Commitment shall not be reduced to an amount less than 80% of the Total Commitment at the time Borrower made the request for extension); or (c) replace some or all of the Commitments of the non-extending Lenders with one or more Eligible Assignees, as assignees of the non-extending Lenders. Any extension of the Credit Facility under this SECTION 3.16 shall be subject to satisfaction of the following terms and conditions: (i) There shall exist no Default or Event of Default at the time Borrower requests an extension under this SECTION 3.16 or at the effective date of such extension. (ii) Borrower and each Guarantor Subsidiary shall have executed and delivered to Administrative Agent a modification and extension agreement, and such other agreements, documents or amendments to the Loan Documents as are reasonably requested by Administrative Agent to properly document the extension, and any modifications or amendments to this Agreement or the other Loan Documents that may have been agreed to by Borrower, Administrative Agent and the Lenders agreeing to extend under this SECTION 3.16, as a term or condition of the extension, all in form and content reasonably satisfactory to Administrative Agent. 73 (iii) Borrower shall pay to Administrative Agent, for the benefit of the Lenders in accordance with the respective Commitment Percentages of the Lenders as of the effective date of the extension, an additional non-refundable renewal commitment fee in an amount mutually satisfactory to Borrower and Administrative Agent (the "RENEWAL FEE") in consideration of the commitment of those Lenders agreeing to extend and to continue to make Advances to Borrower until the extended Termination Date, which Renewal Fee shall be due and payable on the effective date of the applicable extension under this SECTION 3.16, as of which time the Renewal Fee will have been earned in full and be a bona fide commitment fee intended as reasonable compensation to Lenders for the commitment to make Advances until the extended Termination Date. (iv) Borrower shall pay to Administrative Agent all reasonable costs and expenses, including reasonable attorneys= fees, incurred in connection with such extension and the documentation thereof. (v) During each extended term of the Credit Facility under this SECTION 3.16, all terms and conditions of the Loan Documents (including but not limited to interest rates and payments) pertaining to the Credit Facility shall continue to apply, subject to any modifications and amendments agreed to by Borrower, Administrative Agent and the extending Lenders as a condition to or otherwise in connection with the applicable extension; PROVIDED, HOWEVER, that the term "Termination Date" and all references to such term in this Agreement and the other Loan Documents shall mean and refer to the extended Termination Date, which shall be one year from the Termination Date as then in effect. (vi) Any extension accomplished in the manner provided in clause (b) or clause (c) of this SECTION 3.16 shall be evidenced, if appropriate, by an amendment to this Agreement reflecting the addition of any Lender hereunder, and Administrative Agent will deliver an updated SCHEDULE I to Borrower and each of the Lenders, reflecting the Total Commitment and the Commitment and Commitment Percentage of each of the Lenders (including any new Lender(s)). The outstanding Advances under the Notes will be reallocated on the effective date of such extension among the Lenders in accordance with their revised Commitment Percentages, and Borrower will deliver a Note to each new Lender in the amount of its Commitment and, if applicable, to any existing Lender in the amount of any increase in its Commitment agreed to by such Lender. In addition, Borrower will issue to Lenders new Competitive Bid Notes, if necessary, to reflect any decrease in the maximum amount of Competitive Bid Loans which can be requested by Borrower. 74 SECTION 3.17. REPLACEMENT OF A LENDER. If Borrower is required pursuant to SECTION 3.12 OR 3.14 to make any additional payment to any Lender (any Lender so affected an "AFFECTED LENDER"), Borrower may elect, if such amounts continue to be charged, to replace such Affected Lender as a Lender under this Agreement, provided that no Default or Event of Default shall have occurred and be continuing at the time of such replacement, and provided further that, concurrently with such replacement, (a) an Eligible Assignee shall agree, as of such date, to purchase for cash the Advances and other Obligations due to the Affected Lender pursuant to an Assignment and Acceptance and to become a Lender for all purposes under this Agreement and to assume all obligations of the Affected Lender to be terminated as of such date, and (b) Borrower shall pay to such Affected Lender in same day funds on the day of such replacement all interest, fees and other amounts then accrued but unpaid to such Affected Lender by Borrower hereunder to and including the date of termination, including without limitation payments due to such Affected Lender under SECTIONS 3.12 AND 3.14. ARTICLE IV CONDITIONS TO CLOSING AND ADVANCES SECTION 4.1. CONDITIONS TO CLOSING. The obligation of the Lenders to fund the first Advance under the Credit Facility after the Closing Date, or of any Lender to fund a Competitive Bid Loan, whichever is first, as provided herein is subject to the satisfaction of the following conditions and requirements: (a) receipt by Administrative Agent of (i) this Agreement, properly executed by Borrower and each Guarantor Subsidiary as of the Closing Date, and (ii) evidence acceptable to Administrative Agent that Borrower has paid all fees and expenses required to be paid by Borrower as of the date of such Advance; (b) receipt by each Lender of its Note and Competitive Bid Note, properly executed by Borrower, together with its portion of the Initial Commitment Fee; (c) receipt by Administrative Agent of a Guaranty Agreement executed by each Guarantor Subsidiary as of the Closing Date; (d) receipt by Administrative Agent of the Contribution Agreement in form and substance satisfactory to Administrative Agent, executed by Borrower and each Guarantor Subsidiary as of the Closing Date; (e) receipt by Administrative Agent of (i) the audited annual financial statements for Borrower and its Consolidated Subsidiaries dated December 31, 1998, (ii) the unaudited financial statements of Borrower and its Consolidated Subsidiaries, dated June 30, 1999, and (ii) a Compliance Certificate effective as of the last day of the fiscal quarter immediately preceding the Closing Date (with any material changes since the end of such fiscal quarter being noted therein), executed by Borrower, in the form attached hereto as EXHIBIT C. (f) receipt by Administrative Agent of an opinion of legal counsel for Borrower, each Guarantor Subsidiary and General Partner, opining as to the due organization and existence of Borrower, each Guarantor Subsidiary and General Partner, the due authorization and execution of each of the Loan Documents and the enforceability of each of the Loan Documents, and such other matters as Administrative Agent may request, in form and substance reasonably satisfactory to Administrative Agent; 75 (g) receipt by Administrative Agent of all resolutions, certificates or documents it may reasonably request relating to the formation, existence and good standing of Borrower, each Guarantor Subsidiary and General Partner on the Closing Date, corporate authority for the execution and validity of this Agreement and the other Loan Documents, and any other matters relevant to this Agreement, all in form and substance satisfactory to Administrative Agent, which resolutions, certificates and documents shall include, without limitation, (i) the certificates of incorporation and bylaws, trust agreement, partnership agreement or other appropriate organizational documents for Borrower, each Guarantor Subsidiary and General Partner, (ii) resolutions of the Board of Trust Managers of Borrower and the Board of Directors of Camden USA and General Partner, and any required partner resolutions or consents of Camden L.P. authorizing the execution of the Loan Documents on behalf of Borrower, each Guarantor Subsidiary and General Partner, (iii) certificates of incumbency for the officers of Borrower, each Guarantor Subsidiary and General Partner, and (iv) certificates of corporate or limited partnership existence and good standing issued by the state of organization of (and to the extent provided by the state of organization with regard to) Borrower, each Guarantor Subsidiary and General Partner, and, as requested by Administrative Agent, from the appropriate Governmental Authority of each state in which Borrower, each Guarantor Subsidiary and General Partner is required by applicable law to be qualified; (h) receipt by Administrative Agent of filing officer certificates (or commercial reports similar thereto, if satisfactory to Administrative Agent) under Section 9-407(2) of the UCC, releases or partial releases of liens or financing statements, and/or other evidence satisfactory to Administrative Agent that there are no Liens against the Unencumbered Properties, except Permitted Liens; (i) satisfaction of all conditions contained in SECTION 4.2 if an Advance is being made; (j) receipt by Administrative Agent of copies of certificates of insurance for each insurance policy maintained by Borrower or any Consolidated Subsidiary with respect to the Property; (k) receipt by Administrative Agent of an organizational chart showing Borrower and all of its Subsidiaries and detailing ownership of the equity interests in each Subsidiary, and all joint ventures and partnerships in which Borrower or any Consolidated Subsidiary has an interest, and in which States Borrower and each such Subsidiary are incorporated or organized, as in effect on the last day of the fiscal quarter preceding the Closing Date (with any material changes thereto being noted thereon), being attached hereto as SCHEDULE III; and (l) receipt by Administrative Agent and/or Lenders of all other documents, instruments, certificates and information to be delivered on or before the Closing Date pursuant to the terms of this Agreement and the other Loan Documents. 76 All the documents, instruments, certificates, information, evidences and opinions referred to in this SECTION 4.1 shall be delivered to Administrative Agent no later than the Closing Date, and Lenders shall not be bound by or obligated hereunder until Administrative Agent has received all such items. SECTION 4.2. CONDITIONS TO ALL ADVANCES. The obligation of Lenders to fund any Advance as provided herein is subject to the satisfaction of the following conditions and requirements: (a) timely receipt by Administrative Agent of an Advance Request in the case of an Advance under the Notes; (b) immediately before and after giving effect to such Advance, no Default shall have occurred and be continuing and the making of such Advance shall not cause a Default; (c) the representations and warranties contained in this Agreement and in the other Loan Documents shall be true and correct in all material respects on and as of the date of such Advance, except that all representations and warranties that speak as of a particular date shall only be required on the date of each such Advance to be true and correct in all material respects as of the date to which such representation or warranty speaks and not as of any subsequent date; and (d) such other information and documentation as Administrative Agent shall reasonably deem necessary or desirable in connection with the funding of such Advance. ARTICLE V UNENCUMBERED PROPERTIES POOL AND GUARANTIES SECTION 5.1. UNENCUMBERED PROPERTIES POOL. As of any date during the term of this Agreement, and until all of the Obligations have been paid in full and the Lenders have no commitment to lend hereunder, Borrower and the Guarantor Subsidiaries must own and maintain the Pool in accordance with the following parameters: (a) For each of the Unencumbered Properties in the Pool, Borrower shall have received from a third-party independent environmental consultant, and delivered to Administrative Agent upon Administrative Agent's request, a written environmental assessment in form and in substance acceptable to Administrative Agent that does not disclose any material environmental conditions or risks related to such Unencumbered Property or any violation of Applicable Environmental Laws (or if there exists a material environmental condition, risk or violation, describes the remedial actions being taken); PROVIDED, HOWEVER, that Administrative Agent shall have given Borrower thirty (30) days= prior written notice identifying any project that Administrative Agent determines must be excluded as an Unencumbered Property in the Pool due to a material environmental condition before such exclusion shall become effective. 77 (b) The Pool must have no more than an aggregate of $200,000 in Liens described in subsection (h) of the definition of the term "Permitted Liens" set forth in ARTICLE I, PROVIDED, HOWEVER, that in the event the Pool has more than an aggregate of $200,000 in said Liens, Borrower shall designate in writing to Administrative Agent which project or projects with said Liens shall be excluded from the Pool so that this requirement is once again satisfied, and FURTHER PROVIDED, that such exclusion shall terminate upon reduction of said Liens below an aggregate of $200,000 and notice by Borrower to Administrative Agent thereof. (c) Collectively, the Unencumbered Properties in the Pool, other than the Development Properties, must have an aggregate occupancy level based on bona fide tenant leases requiring current rent payments of at least eighty-five percent (85%), where the occupancy level is the weighted average of the occupancy level for the prior fiscal quarter. (d) The Gross Asset Value of Unencumbered Properties shall be equal to or greater than two hundred percent (200%) of Total Unsecured Debt. (e) No more than ten percent (10%) of the Gross Asset Value of Unencumbered Properties shall be attributable to Development Properties. (f) The ratio of (i) Unencumbered Adjusted NOI for the immediately preceding fiscal quarter, and then annualized, to (ii) that portion of Consolidated Interest Expense attributable solely to Total Unsecured Debt for the immediately preceding calendar quarter, and then annualized, shall not at any time be less than or equal to 2.00 to 1.00. (g) Total Unsecured Debt shall not at any time exceed an amount equal to the maximum hypothetical principal loan amount on which the Target Monthly Amortization can be calculated with the result that Unencumbered Adjusted NOI for the immediately preceding fiscal quarter, and then annualized, for Unencumbered Properties in the Pool, excluding Development Properties and other Unencumbered Properties that have not been completed and stabilized, would not be less than one hundred fifty percent (150%) of the Target Monthly Amortization for such fiscal quarter and then annualized. SECTION 5.2. NEGATIVE PLEDGE AGREEMENTS. Borrower shall not, and shall not permit any of its Consolidated Subsidiaries to, (a) grant or suffer to exist any Lien against any of the Unencumbered Properties in the Pool if such Lien would be in violation of this ARTICLE V or SECTION 8.7, (b) enter into any negative pledge agreements with any other Person such that Borrower shall be prohibited at any time from granting, or causing any Consolidated Subsidiaries to grant, to Administrative Agent, for the benefit of the Lenders, a first priority lien and security interest in any of the Unencumbered Properties as security for the Obligations, or (c) enter into any negative pledge agreements with respect to the Equity Interests of any Guarantor Subsidiary in violation of SECTION 8.13, or grant any Lien with respect to the Equity Interests of any Guarantor Subsidiary. 78 SECTION 5.3. ADDITIONAL GUARANTOR SUBSIDIARIES. Contemporaneously with the execution of this Agreement, Borrower has caused each of Camden USA and Camden L.P. to execute and deliver to Administrative Agent for the benefit of Lenders a Guaranty Agreement. Borrower will promptly notify Administrative Agent of the formation of any material new Consolidated Subsidiary and all assets owned or to be owned by such Consolidated Subsidiary (and, in any event, will disclose with the quarterly financial information provided to Administrative Agent, all Consolidated Subsidiaries formed during the fiscal quarter then ending). In the event that any Consolidated Subsidiary, whether newly formed or pre-existing, is a material Consolidated Subsidiary or owns or becomes the owner of any material Unencumbered Property (including any Unencumbered Property which is necessary to enable Borrower to satisfy any representation or covenant contained in this Agreement) or that Borrower desires to include in the Pool, the Borrower shall cause each such Consolidated Subsidiary, as soon as practically possible, to execute and deliver to Administrative Agent for the benefit of Lenders a Guaranty Agreement (substantially in the form of EXHIBIT F) and a Contribution Agreement in the form of EXHIBIT G (or supplement thereto). Contemporaneously with the delivery of any such Guaranty AGREEMENT, Borrower shall cause to be delivered to Administrative Agent appropriate certifications, governmental and corporate certificates, resolutions, incumbency certificates, legal opinions and other documents, reasonably deemed necessary or appropriate by Administrative Agent relating to the formation, existence and good standing of such Consolidated Subsidiary, the corporate authority of such Consolidated Subsidiary for the execution and validity of such Guaranty Agreement, and otherwise to evidence the legal, binding, and enforceable effect of each such Guaranty Agreement. Borrower and all existing and future Guarantor Subsidiaries acknowledge and agree that the provisions of this SECTION 5.3 are a material inducement to the Lenders entering into this Agreement and making Advances hereunder, and that this Agreement and Advances hereunder constitutes good and valuable consideration for the execution and delivery of any and all Guaranty Agreements as contemplated herein. SECTION 5.4. OWNERSHIP OF GUARANTOR SUBSIDIARIES. At all times, Borrower must have the necessary control of each of the Guarantor Subsidiaries so that Borrower, without the consent of any other Person, may (i) transfer, by dividend or otherwise, cash and capital from any Guarantor Subsidiary to Borrower and (ii) transfer, sell or convey, or grant a Lien on any and all of the assets, real or personal, of each Guarantor Subsidiary. Without limiting the foregoing, Borrower shall at all times directly or indirectly own (A) 100% of the Voting Interest of General Partner and not less than 66.7% of the limited partnership Voting Interests in Camden L.P., and (B) not less than 51% of all of the stock or other equity or ownership interests of Camden USA and each other Guarantor Subsidiary. SECTION 5.5. PARTNERSHIP MATTERS. Borrower shall not, without the prior written consent of Administrative Agent, consent to or permit General Partner to consent to any amendment, supplement, or other modification of the Third Amended and Restated Agreement of Limited Partnership of Camden L.P. dated as of April 15, 1997, as amended, supplemented, restated or replaced from time to time, that would (i) replace General Partner as the general partner of Camden L.P. (other than with an Affiliate of Borrower), (ii) impair General Partner's ability to fully manage and control the day-to-day operations of Camden L.P., or (iii) detrimentally or otherwise materially alter General Partner's rights or benefits under such partnership agreement. 79 SECTION 5.6. GUARANTY PROCEEDS. (a) Notwithstanding anything to the contrary contained in this Agreement or any Guaranty Agreement, Administrative Agent and the Lenders covenant and agree with Borrower that any funds, payments, claims, or distributions actually received by Administrative Agent and the Lenders as a result of, or pursuant to any Guaranty Agreement ("GUARANTY PROCEEDS"), shall be made available for distribution equally and ratably among the holders of the Obligations and the trustee or trustees of any senior, unsecured, non-subordinated Debt of Borrower issued in offerings registered under the Securities Act of 1933 or exempt from registration pursuant to Rule 144A of Section 4 thereof and holders of borrowed money incurred by Borrower (the "SENIOR DEBT") which is outstanding on the date Administrative Agent and the Lenders receive such Guaranty Proceeds. This SECTION 5.6 shall not apply to any payments, funds, claims or distributions received by Administrative Agent or any Lender directly or indirectly from Borrower or any other Person other than from a Guarantor Subsidiary pursuant to a Guaranty Agreement, but shall apply solely to Guaranty Proceeds. Borrower has been supplied a copy of each Guaranty Agreement and specifically understands and agrees with Administrative Agent and Lenders that, to the extent Guaranty Proceeds are distributed to holders of the Senior Debt, each Guarantor Subsidiary has agreed that the Obligation shall not be deemed reduced by any such distribution, and each Guarantor Subsidiary will continue to make payments pursuant to its Guaranty Agreement until such time as the Obligation has been paid in full after taking into effect any distributions of Guaranty Proceeds to holders of Senior Debt. (b) Nothing herein contained shall be deemed to limit, modify, or alter the rights of Administrative Agent and the Lenders under any Guaranty Agreement. Nothing herein contained shall be deemed to subordinate the Obligations to the Debentures or the Senior Debt or any other Debt of Borrower and its Consolidated Subsidiaries, nor give to any holder of any such Debt any rights of subrogation. (c) Nothing contained in this Agreement or any Guaranty Agreement shall be deemed for the benefit of any holders of the Senior Debt or any other Debt (other than the Obligations) nor shall anything be construed to impose on Administrative Agent or the Lenders any fiduciary duties, obligations or responsibilities to the holders of any such Debt. This SECTION 5.6 and each Guaranty Agreement is for the sole benefit of Administrative Agent and the Lenders and their respective successors and assigns. ARTICLE VI REPRESENTATIONS AND WARRANTIES Borrower and each Guarantor Subsidiary represent and warrant to Agents and Lenders that: 80 SECTION 6.1. EXISTENCE AND POWER OF BORROWER. Borrower is a trust duly created and validly existing under the laws of the State of Texas, and qualifies in all respects as a Areal estate investment trust@ under Section 856(a) of the Code. Borrower (a) is or will be qualified to do business and in good standing under the laws of each state where such qualification is necessary for Borrower to conduct its business; and (b) has all powers and all governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted and as contemplated to be conducted, except where the failure to have any such item would not have a material adverse effect on Borrower's business and financial condition. SECTION 6.2. EXISTENCE AND POWER OF GUARANTOR SUBSIDIARIES. Each Guarantor Subsidiary and General Partner (a) is a corporation or partnership, as appropriate, duly created, validly existing and in good standing under the laws of the state, province or country under which it is organized, and is or will be qualified and in good standing as a foreign corporation or partnership, as appropriate, under the laws of each state where such qualification is necessary for such Guarantor Subsidiary or General Partner to conduct its business; and (b) has all corporate or partnership, as appropriate, powers and all governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted and as contemplated to be conducted, except where the failure to have any such item would not have a material adverse effect on such Guarantor Subsidiary's business and financial condition. SECTION 6.3. AUTHORIZATION; CONTRAVENTION. The execution, delivery and performance of this Agreement, the Notes, the Competitive Bid Notes, the Guaranty Agreements, the Contribution Agreement and the other Loan Documents by Borrower and each Guarantor Subsidiary as appropriate, are within Borrower's or such Guarantor Subsidiary's corporate, partnership or trust, as appropriate, powers, have been duly authorized by all necessary corporate, partnership or trust, as appropriate, action, require no action by or in respect of, or filing with, any governmental body, agency or official and do not contravene, or constitute a default under, any provision of applicable law or regulation or of the certificate of incorporation, bylaws, partnership agreement or trust agreement, as appropriate, of Borrower or any such Guarantor Subsidiary or of any agreement, judgment, injunction, order, decree or other instrument binding upon Borrower or any such Guarantor Subsidiary or result in the creation or imposition of any Lien on any asset of Borrower or any such Guarantor Subsidiary. SECTION 6.4. ENFORCEABLE OBLIGATIONS. This Agreement, the Notes, and the other Loan Documents each constitutes a valid and binding agreement of Borrower to the extent Borrower is a party thereto, enforceable in accordance with its terms except as (a) the enforceability thereof may be limited by bankruptcy, insolvency, fraudulent transfer or similar laws affecting creditors rights generally, and (b) the availability of equitable remedies may be limited by equitable principles of general applicability. The Guaranty Agreements and the other Loan Documents each constitutes a valid and binding agreement of each Guarantor Subsidiary to the extent such Guarantor Subsidiary is a party thereto, enforceable in accordance with its terms except as (a) the enforceability thereof may be limited by bankruptcy, insolvency, fraudulent transfer or similar laws affecting creditors rights generally, and (b) the availability of equitable remedies may be limited by equitable principles of general applicability. SECTION 6.5. FINANCIAL INFORMATION. 81 (a) The current financial statements of Borrower and each Guarantor Subsidiary and all of the other financial reports and information of Borrower and each Guarantor Subsidiary that have been delivered to Administrative Agent or Lenders are true and correct in all material respects as of the date of such current financial statements and other reports and information. (b) Except as disclosed in writing to Lenders prior to the execution and delivery of this Agreement, since December 31, 1998, there has been no material adverse change in the business, financial position or results of operations of Borrower or any Guarantor Subsidiary; and, there exists no condition, event or occurrence that, individually or in the aggregate, could reasonably be expected to result in a material adverse change in the business, financial position or results of operations of Borrower or any Guarantor Subsidiary. SECTION 6.6. LITIGATION. There is no pending or, to Borrower's knowledge, threatened Litigation involving or affecting the Property, Borrower, or its Consolidated Subsidiaries in which there is a reasonable possibility of an adverse decision which could have a Material Adverse Effect, or involving or affecting the validity, enforceability, or priority of any of the Loan Documents. If any Litigation is threatened or commenced (a) that seeks to enjoin, prevent or declare invalid or unlawful Borrower's renovation, occupancy, use or operation of the Improvements; (b) that endangers, questions or attacks the title to any part of the Real Estate or the validity, enforceability, or priority of any Loan Document; (c) that seeks to levy upon or seize any part of the Real Estate; (d) for any condemnation or taking of any part of or interest in the Real Estate; (e) regarding any claimed damage, default, or diminution or offset against Rent; or (f) with respect to any claimed personal injury, death or property damage on or about the Property, and if an adverse decision therein could constitute a Material Adverse Effect, then Borrower shall promptly and vigorously contest such Litigation in good faith, resist the entry of any temporary or permanent injunction, and seek the stay of any such injunction that may be entered. After the occurrence and during the continuance of an Event of Default, Administrative Agent may (but shall not be obligated to) commence, appear in, or defend any such Litigation, compromise or discharge adverse claims made with respect to the Property, purchase tax titles, remove prior liens or security interests, and pay all necessary expenses, including attorneys= fees, incurred in connection with such Litigation, which Borrower shall reimburse to Administrative Agent on demand and which shall be part of the Obligations, even if in excess of the Total Commitment. SECTION 6.7. ERISA. (a) Each Employee Plan has been maintained and administered in substantial compliance with the applicable requirements of the Code and ERISA. No circumstances exist with respect to any Employee Plan that could have a material adverse effect on Borrower and its Consolidated Subsidiaries taken as a whole. 82 (b) With respect to each Pension Plan, (i) no accumulated funding deficiency (within the meaning of Section 412(a) of the Code), whether waived or unwaived, exists; (ii) the present value of accrued benefits (based on the most recent actuarial valuation prepared for each such plan, if any, in accordance with ongoing assumptions) does not exceed the current value of plan assets allocable to such benefits by a material amount; (iii) no reportable event (within the meaning of Section 4043 of ERISA) other than purchases and sales of securities from a plan trustee as reported in the audited financial statements of such plan has occurred; (iv) no uncorrected prohibited transactions (within the meaning of Section 4975 of the Code) exist which could have a material adverse effect on Borrower and its Consolidated Subsidiaries taken as a whole; (v) to the extent such plan is covered by PBGC, no material liability to the PBGC exists and no circumstances exist that could reasonably be expected to result in any such liability; and (vi) no material withdrawal liability (within the meaning of Section 4201(a) of ERISA) exists and no circumstances exist that could reasonably be expected to result in any such liability. (c) As of the date hereof, neither Borrower nor any Consolidated Subsidiary has any obligation under any Employee Plan to provide post-employment health care benefits to any of its current or former employees, except as may be required by Section 4980B of the Code. SECTION 6.8. TAXES AND FILING OF TAX RETURNS. Borrower and each Consolidated Subsidiary have filed all material tax returns required to have been filed and has paid all Taxes shown to be due and payable on such returns, including interest and penalties, and all other Taxes which are payable by such party, to the extent the same have become due and payable other than Taxes with respect to which a failure to pay would not have a Material Adverse Effect or which are being contested as permitted by SECTION 7.6. All Tax liabilities of Borrower and each Consolidated Subsidiary are adequately provided for. No income tax liability of Borrower or any Consolidated Subsidiary has been asserted by the Internal Revenue Service for Taxes in excess of those already paid, the payment of which would have a Material Adverse Effect. SECTION 6.9. OWNERSHIP OF ASSETS. On the Closing Date and all times during the Credit Period: (a) except for Permitted Liens, there is no Lien on any of the Unencumbered Properties, and the execution, delivery, performance or observance of the Loan Documents will not require or result in the creation of any Lien on any such property; (b) Borrower or one of its Consolidated Subsidiaries owns full legal and equitable title, in fee simple absolute (except with respect to the Ground-Leased Qualified Properties), to all Property in the Pool, and, except to the extent defects are being contested or otherwise corrected by actions taken by Borrower in good faith, all other Real Estate; (c) substantially all of the Property, in Administrative Agent's determination, is, and at all times shall be, owned directly (and in fee simple absolute with respect to Real Estate other than the Ground-Leased Qualifying Properties) by Borrower or one of the Guarantor Subsidiaries; and (d) Real Estate which is owned by Borrower or one of the Guarantor Subsidiaries that is not encumbered by any Liens securing Secured Indebtedness shall at all times represent and comprise at least 95% of the aggregate value of all Real Estate that is not encumbered by Liens securing Secured Indebtedness, as confirmed by Administrative Agent in its reasonable discretion. SECTION 6.10. BUSINESS; COMPLIANCE. Borrower and each Consolidated Subsidiary have performed and abided by all obligations required to be performed by them under any license, permit, order, authorization, grant, contract, agreement, or regulation to which they are a party or by which they or any of their assets are bound and which, if Borrower or such Consolidated Subsidiary were to fail to perform or abide by, such failure would have a Material Adverse Effect. 83 SECTION 6.11. LICENSES, PERMITS. Borrower and each Consolidated Subsidiary possess such valid franchises, licenses, permits, consents, authorizations, exemptions and orders of Governmental Authorities, as are necessary to carry on their business as now being conducted, other than violations which would not (either individually or collectively) have a Material Adverse Effect, and, if related to any Unencumbered Properties, would not cause a Pool Violation. SECTION 6.12. COMPLIANCE WITH LAW. The business and operations of Borrower and each Guarantor Subsidiary have been and are being conducted in accordance with all applicable Laws, other than violations which would not (either individually or collectively) have a Material Adverse Effect, and, if such violation is related to any Unencumbered Properties, would not cause a Pool Violation. Each of Borrower and its Consolidated Subsidiaries (a) has complied and will comply, with all Legal Requirements relating to or affecting the Property, the Credit Facility (including all reporting requirements applicable to the Lenders) or Borrower or its Consolidated Subsidiaries except where the failure to so comply would not cause a Material Adverse Effect, and, if such failure is related to any Unencumbered Properties, would not cause a Pool Violation; and (b) has no knowledge of, and has received no notice of, any material violation of any Legal Requirement relating to or affecting any of the Property, Borrower or any of its Consolidated Subsidiaries, unless such non-compliance would not have a Material Adverse Effect and, if such non-compliance is related to any Unencumbered Properties, would not cause a Pool Violation. The Property, and the intended use, occupancy, or operation thereof, complies and will comply with all applicable Legal Requirements unless such non-compliance would not have a Material Adverse Effect and would not, if such non-compliance is related to an Unencumbered Property, cause a Pool Violation. No part of the Property constitutes (or will constitute) a nonconforming use under any zoning Law or similar Legal Requirement, unless such nonconforming use would not cause a Material Adverse Effect or, if such nonconforming use is related to an Unencumbered Property, would not cause a Pool Violation. SECTION 6.13. UTILITIES AND ACCESS. With respect to all Real Estate: (a) all utility and municipal services required for the renovation, occupancy, use and operation of the Improvements are available for use and are or will be available in sufficient amounts for the intended use of the Improvements; (b) all binding agreements, allocations or commitment letters, required to ensure the provision of such services have been obtained or will be available from the applicable utility companies and/or Governmental Authorities providing such services; (c) all public and private roads necessary for the intended occupancy, use and operation of the Improvements are completed and available for vehicular ingress to and egress from the Real Estate and have been publicly dedicated and accepted for maintenance by all applicable Governmental Authorities; (d) all necessary or required utility, private roadway, parking, access (including curb cuts), easements, covenants and permits have been granted or issued; and (e) all impact, connection or other requisite fees therefor have been paid, unless the failure to have any of the above would not result in a Material Adverse Effect, and, if such failure is related to any Unencumbered Properties, would not cause a Pool Violation. 84 SECTION 6.14. FULL DISCLOSURE. All information heretofore furnished by Borrower or any Guarantor Subsidiary (or any other party on Borrower's or any Guarantor Subsidiary's behalf) to Agents and Lenders for purposes of or in connection with this Agreement or any transaction contemplated hereby is, and all such information hereafter furnished by Borrower or any Guarantor Subsidiary to Agents and any Lender will be, true and accurate in every material respect and shall be, to the best of the knowledge and belief of the party furnishing such information, without material omission. Borrower and each Guarantor Subsidiary have, to the best of their knowledge, disclosed to Administrative Agent in writing any and all facts which might reasonably be expected to materially and adversely affect the business, operations, prospects or condition, financial or otherwise, of Borrower or any Guarantor Subsidiary, or the ability of Borrower or any Guarantor Subsidiary to perform its obligations under this Agreement or the other Loan Documents. SECTION 6.15. ENVIRONMENTAL MATTERS. With respect to all Real Estate, (i) no portion of the Real Estate is contaminated by any substance or material presently identified to be toxic or hazardous according to any Applicable Environmental Law, including, without limitation, any asbestos, polychlorinated biphenyl, radioactive substance, methane, volatile hydrocarbons, industrial solvents or any other material or substance which has in the past or could foreseeably at the present time or at any time in the future cause or constitute a material health, safety or other environmental hazard to any Person or property, unless such contamination would not have a Material Adverse Effect, and, if such contamination affects any Unencumbered Properties, would not cause a Pool Violation, (ii) neither Borrower nor any Consolidated Subsidiary nor, to the knowledge of Borrower, any other Person has caused or suffered to occur a discharge, spillage, uncontrolled loss, seepage or filtration of oil or petroleum or chemical liquids or solids, liquid or gaseous products or hazardous waste, or hazardous substance at, upon, under or within any portion of the Real Estate or any contiguous real estate which in either circumstance could cause a Material Adverse Effect or, if related to any Unencumbered Properties, could result in a Pool Violation, and either (A) would be a violation of Applicable Environmental Law or (B) has not been remediated so as to cure any violation of Applicable Environmental Law (such remediation having been accomplished without increasing the potential environmental liability of Borrower or any Consolidated Subsidiary or any Agent or Lender), (iii) neither Borrower nor any Consolidated Subsidiary nor, to the knowledge of Borrower, any other Person, has been or is involved in operations at or near any portion of the Real Estate which could lead to the imposition of liability under any Applicable Environmental Law on Borrower, any Consolidated Subsidiary or any operator of such Real Estate which could have a Material Adverse Effect, or, if related to any Unencumbered Properties, could result in a Pool Violation, (iv) neither Borrower, any Consolidated Subsidiary nor any other Person has permitted any tenant or occupant of any portion of the Real Estate, to engage in any activity that could lead to the imposition of liability under any Applicable Environmental Law on such tenant or occupant, Borrower, any Consolidated Subsidiary or any operator of any of such property which could have a Material Adverse Effect, or, if related to any Unencumbered Properties, could result in a Pool Violation, or (v) to the knowledge of Borrower and the Guarantor Subsidiaries, no part of the Real Estate is contaminated by any substance or material presently identified to be toxic or hazardous according to any Applicable Environmental Law if such contamination could have a Material Adverse Effect, or, if related to any Unencumbered Properties, could result in a Pool Violation. 85 SECTION 6.16. PURPOSE OF CREDIT. Borrower will use the proceeds of the Credit Facility for the purposes stated in SECTION 2.1(A) hereof. No part of the proceeds of the Credit Facility will be used, directly or indirectly, for a purpose which violates any Laws. Borrower will not, directly or indirectly, use any of the proceeds of the Credit Facility for the purpose of purchasing or carrying, or retiring any Debt which was originally incurred to purchase or carry, any "margin stock@ as defined in the Margin Regulations, or to purchase or carry any Asecurity that is publicly-held" within the meaning of Regulation T of the Board of Governors of the Federal Reserve System, or otherwise take or permit any action to the extent any of the foregoing would involve a violation of such Margin Regulations or any other regulation of such Board of Governors. The Credit Facility is not secured, directly or indirectly, in whole or in part, by collateral that includes any "margin stock" within the meaning of the Margin Regulations. Borrower will not engage principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying any "margin stock" within the meaning of the Margin Regulations. SECTION 6.17. GOVERNMENTAL REGULATIONS. Neither Borrower nor any Consolidated Subsidiary is subject to regulation under the Investment Advisers Act of 1940, as amended. Neither Borrower nor any Consolidated Subsidiary is subject to regulation under the Investment Company Act of 1940, as amended, the Public Utility Holding Company Act of 1935, as amended, any Margin Regulations or any other law, rule or regulation which regulates the incurrence of Debt. SECTION 6.18. INSURANCE. Borrower and each Consolidated Subsidiary maintain with financially sound, responsible and reputable insurance companies or associations (or, as to workers= compensation or similar insurance, with an insurance fund or by self-insurance authorized by the jurisdictions in which it operates) insurance concerning its properties and business against such casualties and contingencies and of such types and in such amounts (and with co-insurance and deductibles) as is customary for the same or similar businesses, including without limitation, with respect to all the Unencumbered Properties. SECTION 6.19. SOLVENCY. On a consolidated basis as of the Closing Date (a) the aggregate fair market value of Borrower's and the Guarantor Subsidiaries= assets exceeds their liabilities (whether contingent, subordinated, unmatured, unliquidated, or otherwise), (b) Borrower and the Guarantor Subsidiaries have sufficient cash flow to enable them to pay their Debts as they mature, and (c) each of Borrower and the Guarantor Subsidiaries has a reasonable amount of capital to conduct its respective businesses as presently contemplated. 86 SECTION 6.20. YEAR 2000 COMPLIANCE. Borrower has (a) initiated a review and assessment of all areas within its and each of its Consolidated Subsidiaries= business and operations (including those affected by suppliers, vendors and customers) that could be adversely affected by the "Year 2000 Problem" (that is, the risk that computer applications used by the Borrower or any of its Consolidated Subsidiaries (or suppliers, vendors or customers) may be unable to recognize and perform properly date-sensitive functions involving certain dates prior to and any date after December 31, 1999), (b) developed a plan and timeline for addressing the Year 2000 Problem on a timely basis, and (c) to date, implemented that plan in accordance with that timetable. Based on the foregoing, Borrower believes that all mission critical computer applications that are material to Borrower and its Consolidated Subsidiaries= business and operations are reasonably expected on a timely basis to be able to perform properly date-sensitive functions for all dates before and after January 1, 2000 (that is, to be "Year 2000 compliant"), except to the extent that a failure to do so could not reasonably be expected to have a Material Adverse Effect. ARTICLE VII AFFIRMATIVE COVENANTS Borrower and each Guarantor Subsidiary covenant and agree that, so long as this Agreement or any commitment of the Lenders to make Advances hereunder remains in effect, or any of the Obligations remain unpaid: SECTION 7.1. INFORMATION FROM BORROWER. Borrower will deliver, or cause to be delivered, to Administrative Agent on behalf of Lenders: (a) As soon as available and in any event within one hundred (100) days after the end of each Fiscal Year of Borrower, a consolidated balance sheet of Borrower and its Consolidated Subsidiaries as of the end of such Fiscal Year and the related statements of income and cash flow for such Fiscal Year, setting forth in each case in comparative form the figures for the previous Fiscal Year, all reported by Borrower in accordance with GAAP and audited by Deloitte & Touche, L.L.P. (or its successors) or other independent public accountants reasonably acceptable to Administrative Agent (the financial statements required by this clause (a) may be included in the reports delivered pursuant to clause (d) below). (b) As soon as available and in any event within fifty (50) days after the end of each fiscal quarter, a consolidated cash flow statement and a consolidated balance sheet and related statement of income of Borrower and its Subsidiaries as of the end of such quarter and year-to-date, all certified by the chief financial officer, the chief accounting officer or Treasurer of Borrower as to fairness of presentation and as to whether such financial statements fairly reflect the financial condition of Borrower and its Subsidiaries as of the date of delivery thereof, subject to year-end adjustments (the financial statements required by this clause (b) may be included in the reports delivered pursuant to clause (d) below). Such financial statements shall be prepared in conformity with GAAP, except that certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP may be condensed or omitted provided that the disclosures made are adequate to make the information presented not misleading, and GAAP shall be applied on a basis consistent with the financial statements referred to in SECTION 7.1(A). 87 (c) Simultaneously with the delivery of each set of financial statements referred to in SECTIONS 7.1(A) AND (B), a Compliance Certificate executed by an Authorized Officer of Borrower, in the form as attached hereto as EXHIBIT C, (i) setting forth, among other things, in reasonable detail the calculations required to establish whether Borrower was in compliance with the requirements of ARTICLE V and ARTICLE VIII on the date of such financial statements, and (ii) stating, to the best of such Authorized Officer's knowledge and belief, whether or not such financial statements fairly reflect the financial condition of Borrower and its Consolidated Subsidiaries and results of Borrower's and its Consolidated Subsidiaries= operations as of the date of the delivery of such financial statements. (d) Promptly after the filing thereof, a true, correct and complete copy of each Form 10-K and Form 10-Q and each other report filed by or on behalf of Borrower with the SEC. (e) Immediately upon obtaining knowledge of the occurrence of any Default, a certificate of an Authorized Officer of Borrower setting forth the details thereof and the action which Borrower or any applicable Guarantor Subsidiary is taking or proposes to take with respect thereto. (f) Prompt notification of (i) any material adverse change in the financial condition of Borrower or any Guarantor Subsidiary, including without limitation the occurrence of any Litigation which could reasonably be expected to have a Material Adverse Effect; (ii) the occurrence of any acceleration of the maturity of any indebtedness owing by Borrower or any Guarantor Subsidiary, or any default under any indenture, mortgage, agreement, contract or other instrument to which Borrower or any Guarantor Subsidiary is a party or by which Borrower or any Guarantor Subsidiary or any properties of Borrower or any Guarantor Subsidiary are bound, if such default or acceleration might have a Material Adverse Effect; (iii) the existence of any Default or Event of Default; (iv) any material default by Borrower or any of its Consolidated Subsidiaries under any Legal Requirement, or any default by Borrower or any of its Consolidated Subsidiaries in the performance of any obligation which constitutes a Material Adverse Effect; (v) any actual or threatened (but only if such threat is communicated to Borrower in writing) condemnation or other taking of any material portion of any Unencumbered Property, any negotiations with respect thereto, or any loss of or substantial damage to any portion of the Unencumbered Property, if any of the foregoing could result in a Pool Violation; and (vi) any cancellation, adverse alteration or non-renewal of any insurance coverage required by this Agreement with respect to any Real Estate or other Property, including any Unencumbered Property, unless such insurance can be, and is being, replaced within a reasonable period of time after any such event. (g) Prompt notification, and in any event within five (5) Business Days of the occurrence, of any change in the Moody's Rating or the S&P Rating. Borrower shall promptly upon the receipt of notice thereof, also notify Administrative Agent of any change in the definition of the term "Funds from Operations" as promulgated by the National Association of Real Estate Investment Trusts. (h) From time to time such additional information regarding the financial position or business of Borrower and its Consolidated Subsidiaries as Administrative Agent, at the request of any Lender, may reasonably request, including, without limitation, financial projections of Borrower and its Consolidated Subsidiaries and information (including current certificates of insurance) concerning the insurance being maintained by Borrower and any Consolidated Subsidiary. 88 SECTION 7.2. BUSINESS OF BORROWER; REIT STATUS; NYSE LISTING. The primary business of Borrower and its Consolidated Subsidiaries is, and Borrower and each Guarantor Subsidiary covenant that their primary business shall remain, the acquisition, ownership, development and operation of residential multi-family properties and in related activities, such business to be conducted by Borrower as a real estate investment trust. Borrower shall at all times maintain its qualification as a real estate investment trust under Section 856 of the Code, and the regulations of the United States Treasury Department promulgated thereunder. Borrower shall at all times maintain its eligibility for and listing on the New York Stock Exchange. SECTION 7.3. RIGHT OF INSPECTION; CONFIDENTIALITY. Borrower and each Guarantor Subsidiary will permit Administrative Agent or any Lender, or any officer, employee or agent of any Administrative Agent or any Lender, to visit and inspect any of the Property of Borrower or any Consolidated Subsidiary, examine the books of record and accounts of Borrower or any Consolidated Subsidiary, take copies and extracts therefrom, and discuss the affairs, finances and accounts of Borrower or any Consolidated Subsidiary with the respective officers, accountants and auditors of Borrower or any Guarantor Subsidiary, all at such reasonable times and as often as Administrative Agent or any Lender may reasonably require, all at the expense of Borrower. Borrower will cooperate and assist, and will cause its Consolidated Subsidiaries to cooperate and assist, in such inspections, including furnishing all plans, shop drawings and specifications in Borrower's possession or the possession of its Consolidated Subsidiaries relating to the Improvements. Each Lender covenants and agrees to preserve the confidentiality of any financial data and other information concerning Borrower, any Affiliate of Borrower or related to Borrower's, or any Borrower's Affiliate=s businesses or operations, except to the extent such Lender is required to disclose such information pursuant to any applicable law, rule, regulation or order of any Governmental Authority; provided that (i) any information contained in any annual report, or any Form 10-K, Form 10-Q or Form 8-K reports (if any) which have been delivered to the SEC, or any other annual or quarterly reports to the stockholders of Borrower subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, proxy material delivered to the stockholders of any Borrower or any report delivered to the SEC, or any other information that is in the public domain or has become publicly known, shall not in any event be deemed confidential, and (ii) each Lender may make any information received by it available (A) to a transferee of or Participant in any interest in the Credit Facility or the Notes, provided that such transferee or participant agrees in writing to be bound by the provisions of this SECTION 7.3, (B) to any accountants or other professionals engaged by such Lender, provided that each such accountant or professional agrees to be bound by the provisions of this SECTION 7.3, or (C) in connection with the enforcement of any of the Loan Documents or any litigation in connection therewith. 89 SECTION 7.4. MAINTENANCE OF INSURANCE. Borrower and each Consolidated Subsidiary will at all times maintain or cause to be maintained, with financially sound and reputable insurance companies having an A.M. Best Rating of B+ or better, insurance with respect to all the Property owned by Borrower and its Consolidated Subsidiaries covering its respective risks as are customarily carried by businesses similarly situated including, without limitation, the following: (a) worker's compensation insurance; (b) comprehensive general public liability and property damage insurance in respect of all activities in which Borrower or such Consolidated Subsidiary might incur personal liability for the death or injury of an employee or third person, or damage to or destruction of another's property; (c) insurance against loss or damage by fire, lightning, hail, tornado, explosion and other similar risk; and (d) comprehensive automobile liability insurance. Borrower and each Consolidated Subsidiary shall maintain coverage with respect to the foregoing risks in at least such coverage amounts as are customarily carried by businesses similarly situated. SECTION 7.5. MAINTENANCE AND USE. Borrower will keep, and will cause its Consolidated Subsidiaries to keep, the Real Estate in first class order, repair, operating condition and appearance, causing all necessary repairs, renewals, replacements, additions and improvements to be promptly made, and will not allow any of the Real Estate to be misused, abused or wasted or to deteriorate. Borrower will not and will not allow its Consolidated Subsidiaries to, without the prior written consent of Administrative Agent, (a) remove from any Unencumbered Property any fixtures or personal property except such as is worn or obsolete or is replaced by Borrower or one of its Consolidated Subsidiaries by an article of equal suitability and value, owned by Borrower or one of its Consolidated Subsidiaries, free and clear of any Lien except Permitted Liens or any other liens permitted under this Agreement; (b) make any structural alteration to any Unencumbered Property after completion of the Improvements thereon if such alteration impairs the value thereof or any other alteration thereto which impairs the value thereof; (c) initiate or permit any zoning reclassification of any Unencumbered Property, seek any variance under existing zoning ordinances, or use or permit the use of any Unencumbered Property in a manner that is a nonconforming use under applicable zoning ordinances or other Legal Requirements, except for any such actions taken in the ordinary course of Borrower's business and which would not result in a Pool Violation; (d) impose any easement, restrictive covenant or encumbrance upon any Unencumbered Property, execute or file any subdivision plat or condominium declaration affecting any Unencumbered Property, or consent to the annexation of any Unencumbered Property to any municipality, other than in the ordinary course of business or which would not result in a Pool Violation; (e) perform, or consent to, any drilling or exploration for or extraction, removal or production of any mineral, hydrocarbon, gas, natural element, compound or substance (including sand and gravel) from the surface or subsurface of any Unencumbered Property, or (f) use or occupy or allow the use or occupancy of any Unencumbered Property in any manner that violates any Legal Requirement, constitutes a public or private nuisance, or makes void, voidable or cancelable, or increases the premium of, any insurance, if the taking of any such action could result in a Pool Violation. 90 SECTION 7.6. PAYMENT OF TAXES, IMPOSITIONS AND CLAIMS. Borrower and each Guarantor Subsidiary shall pay, and shall cause all the Consolidated Subsidiaries to pay, (a) all Taxes imposed upon it or any of its assets or with respect to any of its franchises, business, income or profits, and all Impositions not later than the due date thereof, or before any material penalty or interest may accrue thereon and (b) all material claims (including, without limitation, claims for labor, services, materials and supplies) for sums which have become due and payable and which by law have or might become a Lien on any of its assets; provided, however, payment of Taxes, Impositions or claims shall not be required if and for so long as (i) the amount, applicability or validity thereof is currently being contested in good faith by appropriate action promptly initiated and diligently conducted in accordance with good business practices and no material part of the property or assets of Borrower or any Consolidated Subsidiary are subject to levy or execution, (ii) Borrower or such Consolidated Subsidiary as required in accordance with GAAP, shall have set aside on its books reserves (segregated to the extent required by GAAP) deemed by it to be adequate with respect thereto, and (iii) if material, Borrower or such Consolidated Subsidiary has notified Administrative Agent of such circumstances, in detail satisfactory to Administrative Agent, and, provided further, that Borrower or such Consolidated Subsidiary shall pay any such Tax, Imposition or claim if such contest is not successful and in any event prior to the commencement of any action to realize upon or foreclose any Lien against any Unencumbered Property. SECTION 7.7. COMPLIANCE WITH LAWS AND DOCUMENTS. Borrower shall at all times comply, and cause each of its Consolidated Subsidiaries to comply, with all Legal Requirements, the articles of incorporation and bylaws, trust agreement, partnership agreement or other organizational documents of Borrower and each of the Consolidated Subsidiaries, and any other agreement to which Borrower, or any Consolidated Subsidiary of Borrower is a party, unless its failure to so comply alone or in the aggregate would not have a Material Adverse Effect. 91 SECTION 7.8. ENVIRONMENTAL LAW COMPLIANCE AND INDEMNITY. Each of Borrower and the Guarantor Subsidiaries agrees to promptly pay and discharge when due all debts, claims, liabilities and obligations with respect to any clean-up measures necessary for Borrower or any Consolidated Subsidiary to comply with Applicable Environmental Laws affecting Borrower or any Consolidated Subsidiary. Borrower and the Guarantor Subsidiaries hereby, jointly and severally, indemnify and agree to defend and hold Administrative Agent and each Lender and their respective successors and assigns harmless from and against any and all claims, demands, causes of action, loss, damage, liabilities, costs and expenses (including reasonable attorneys' fees and court costs) of any and every kind or character, known or unknown, fixed or contingent, asserted against or incurred by Administrative Agent or any Lender at any time and from time to time including, without limitation, those asserted or arising subsequent to the payment or other satisfaction of the Notes, by reason of, arising out of or related in any way to the failure of Borrower or any Consolidated Subsidiary to comply with any Applicable Environmental Law or Agent's and Lenders= entering into this Agreement and the transactions herein contemplated, INCLUDING MATTERS WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF THE NEGLIGENCE (SOLE, COMPARATIVE, CONTINGENT OR OTHERWISE) OF ADMINISTRATIVE AGENT OR ANY LENDER OR FOR WHICH ADMINISTRATIVE AGENT OR ANY LENDER MAY HAVE STRICT LIABILITY, BUT EXCLUDING MATTERS ARISING OUT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF ADMINISTRATIVE AGENT OR ANY LENDER. It shall not be a defense to the covenant of Borrower and the Guarantor Subsidiaries to indemnify that the act, omission, event or circumstance did not constitute a violation of any Applicable Environmental Law at the time of its existence or occurrence. The terms "HAZARDOUS SUBSTANCE" and "RELEASE" shall have the meanings specified in the Superfund Amendments and Reauthorization Act of 1986 ("SARA"), and the terms "SOLID WASTE" and "DISPOSED" shall have the meanings specified in the Resource Conservation and Recovery Act of 1976 ("RCRA"); provided, to the extent that any other applicable laws of the United States of America or political subdivision thereof establish a meaning for "hazardous substance," "release," "solid waste," or "disposed" which is broader than that specified in either SARA or RCRA, such broader meaning shall apply. As used in this Agreement, "APPLICABLE ENVIRONMENTAL LAW" shall mean and include the singular, and "APPLICABLE ENVIRONMENTAL LAWS" shall mean and include the collective aggregate of the following: Any law, statute, ordinance, rule, regulation, order or determination of any governmental authority or any board of fire underwriters (or other body exercising similar functions), or any restrictive covenant or deed restriction (recorded or otherwise) affecting Borrower or any Consolidated Subsidiary pertaining to health, safety or the environment, including, without limitation, all applicable flood disaster laws and health, safety and environmental laws and regulations pertaining to health, safety or the environment, including without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, the Resource Conservation and Recovery Act of 1976, the Superfund Amendments and Reauthorization Act of 1986, the Occupational Safety and Health Act, the Texas Water Code, the Texas Solid Waste Disposal Act, the Texas Workers= Compensation Laws, and any federal, state or municipal laws, ordinances, regulations or law which may now or hereafter require removal of asbestos or other hazardous wastes from any of the Property or impose any liability on Administrative Agent or any Lender related to asbestos or other hazardous wastes in any of the Property. The provisions of this SECTION 7.8 shall survive the repayment of the Obligations. In the event of the transfer of the Notes or any portion thereof, each Lender or any prior holder of the Notes and any Participants shall continue to be benefitted by this indemnity and agreement with respect to the period of such holding of the Notes. SECTION 7.9. COVENANT COMPLIANCE. Borrower and each Guarantor Subsidiary shall perform and comply with all covenants, obligations and agreements contained in this Agreement and in the other Loan Documents. SECTION 7.10. QUANTITY AND QUALITY OF DOCUMENTS. All certificates, opinions, reports and documents to be delivered from time to time hereunder shall be in such number of counterparts as Administrative Agent may reasonably request and in form reasonably acceptable to Administrative Agent, and counterpart signature pages to any such documents may be attached to and shall, together with all counterparts, constitute one and the same document. SECTION 7.11. USE OF PROCEEDS. Borrower and each Guarantor Subsidiary will use the proceeds of the Credit Facility solely for the purposes represented in this Agreement and shall not use such proceeds, directly or indirectly, for the purpose, whether immediate, incidental or ultimate, of purchasing or carrying any Margin Stock in violation of any Legal Requirements, and none of such proceeds will be used in violation of any other Legal Requirements. SECTION 7.12. DEVELOPMENT FUNDS. Borrower shall at all times have identifiable and available sources of funds to complete construction and development of all Development Properties, in amounts sufficient to cover all such construction and development costs. SECTION 7.13 YEAR 2000 COMPLIANCE. Borrower will promptly notify Administrative Agent in the event Borrower discovers or determines that any computer application (including those of its suppliers and vendors) that is material to the business and operation of Borrower and its Consolidated Subsidiaries, will not be Year 2000 compliant, except to the extent that such failure could not reasonably be expected to have a Material Adverse Effect. 92 SECTION 7.14. ADDITIONAL DOCUMENTS. Within ten (10) Business Days after request by Administrative Agent, Borrower and each Guarantor Subsidiary agree that they will execute and deliver or cause to be executed and delivered to Administrative Agent such other and further instruments, documents or certificates as in the reasonable judgment of Administrative Agent may be required to better effectuate the transactions contemplated herein or to create, evidence, preserve or maintain the Lenders= rights hereunder or under the other Loan Documents, and Borrower and each Guarantor Subsidiary shall do all such additional acts, give such assurances and execute such instruments as Administrative Agent may reasonably require to vest more completely in and assure to Lenders their rights under this Agreement and the other Loan Documents. ARTICLE VIII NEGATIVE COVENANTS Borrower and each Guarantor Subsidiary covenant and agree that without the prior written consent of the Required Lenders, so long as Lenders= commitment to make Advances under the Credit Facility remains in effect, or any of the Obligations remain unpaid: SECTION 8.1. MINIMUM NET WORTH. Consolidated Net Worth shall not at any time be less than the sum of (a) One Billion One Hundred Twenty-One Million One Hundred Seventy-Two Thousand Three Hundred and No/100 Dollars ($1,121,172,300), as adjusted for accumulated depreciation deducted in determining Consolidated Net Worth for the period after December 31, 1998, and for any completed mergers or acquisitions by Borrower or its Consolidated Subsidiaries occurring after the Closing Date, plus (b) an amount equal to ninety percent (90%) of the amount of any proceeds (less reasonable and customary transaction costs) received by Borrower or any Consolidated Subsidiary from any Equity Offering or Debt Offering. SECTION 8.2. LIABILITIES TO ASSETS RATIOS. (a) The ratio of (i) Total Consolidated Debt excluding the Debentures, to (ii) Gross Asset Value, shall not at any time be greater than .50 to 1.0. (b) The ratio of (i) Secured Indebtedness to (ii) Gross Asset Value shall not at any time be greater than .30 to 1.0. (c) The ratio of (i) Secured Recourse Debt to (ii) all Secured Indebtedness, shall not at any time be greater than .50 to 1.0. (d) On a loan-by-loan basis, Borrower and its Consolidated Subsidiaries shall not incur Secured Recourse Debt that exceeds 75% of the current appraised value (or cost if a current appraisal is not available or the current appraised value is otherwise uncertain) of the Real Estate securing such loan. SECTION 8.3. INTEREST COVERAGE RATIO. The ratio of (i) Adjusted Consolidated EBITDA for the immediately preceding fiscal quarter, and then annualized, to (ii) Consolidated Interest Expense for the immediately preceding fiscal quarter, and then annualized, shall not at any time be less than 2.00 to 1.00. 93 SECTION 8.4. FIXED CHARGE COVERAGE RATIO. The ratio of (a) Adjusted Consolidated EBITDA for the immediately preceding fiscal quarter, and then annualized, to (b) Fixed Charges for the immediately preceding calendar quarter, and then annualized, shall not at any time be less than or equal to 1.75 to 1.00. SECTION 8.5. DEBT LIMITATIONS. Neither Borrower nor any Consolidated Subsidiary shall incur any Debt, the occurrence of which would cause a violation or breach of any covenant or term of this Agreement, including without limitation those contained in SECTION 5.1 or SECTION 8.2. SECTION 8.6. LIMITATION ON SALE OR TRANSFER OF ASSETS. Neither Borrower nor any Consolidated Subsidiary shall sell, assign, convey, exchange, lease, transfer or otherwise dispose of any of its Property, except (a) for leasing and sales in the ordinary course of its business, (b) transfers of assets by a Consolidated Subsidiary to Borrower or to another Guarantor Subsidiary, or between Borrower and any Guarantor Subsidiary or between Guarantor Subsidiaries, and (c) transfers of assets by a Consolidated Subsidiary to another Consolidated Subsidiary. SECTION 8.7. PERMITTED LIENS. Borrower shall not , and Borrower shall not permit any of its Consolidated Subsidiaries to, create, incur, assume or suffer to exist any Lien upon any of the Property, except for (a) Permitted Liens, (b) capitalized leases with respect to computer and other office equipment or inventory and purchase money liens with respect to personal property so long as (i) the Debt secured by any such Lien does not exceed the purchase price of such personal property (ii) any such Lien encumbers only the personal property so purchased and the proceeds upon sale, disposition, loss or destruction thereof is used to pay the Debt secured thereby, and (iii) such Lien, after giving effect to the Debt secured thereby, does not give rise to an Event of Default, and (c) Liens on Property securing Secured Indebtedness to the extent such Liens and Secured Indebtedness does not result in a violation of the terms and covenants hereof. 94 SECTION 8.8. CONSOLIDATIONS, MERGERS, AND MAINTENANCE. Borrower shall not, and Borrower shall not permit any of its Consolidated Subsidiaries to: (a) consolidate or merge with or into any other Person except for (i) mergers of any Guarantor Subsidiary into Borrower (with Borrower as the survivor of any such merger) or another Guarantor Subsidiary, (ii) a consolidation or merger by any Consolidated Subsidiary of Borrower that is not a Guarantor Subsidiary with a Guarantor Subsidiary or with another Person in which Borrower remains the direct or indirect owner of all of the outstanding capital stock and other equity securities of the continuing or surviving entity, or (iii) a merger or consolidation with another Person if (A) such Person is organized under the laws of United States of America or one of its States, (B) Borrower or a Guarantor Subsidiary is the surviving entity, (C) each of the Moody's Rating and the S&P Rating are reaffirmed to be the same or higher after such transaction, or if not reaffirming, the Applicable Debt Rating does not fall below the Applicable Debt Rating as of the Closing Date, being BBB (by S&P) and Baa2 (by Moody's), and (D) Borrower continues to be in compliance with all financial and other covenants contained in this Agreement, and no Change in Control or Default or Event of Default results (including a change in management prohibited by SECTION 9.1(M)) or would result from such transaction; or (b) other than in connection with a consolidation or merger permitted in clause (a) immediately above terminate, or fail to maintain, its corporate existence or qualification, as applicable, in the state of its incorporation and any other applicable jurisdiction where the business of such Consolidated Subsidiary requires such qualification (provided that nothing herein shall permit the dissolution of Borrower or the failure of Borrower to maintain its trust existence and qualification to do business as elsewhere required in this Agreement), or (c) terminate, or fail to maintain, its good standing and qualification to transact business in all jurisdictions where the failure to maintain its good standing or qualification to transact business could have a material adverse effect on its financial condition or operations. SECTION 8.9. MANAGEMENT OF PROPERTY. No material change shall be made in the manner in which the Property is being leased, managed and operated without the prior written consent of Administrative Agent. SECTION 8.10. INTENTIONALLY DELETED. SECTION 8.11. LIMITATION ON DISTRIBUTIONS. Unless necessary to comply with SECTION 7.2 with respect to Borrower's qualification as a real estate investment trust, or solely as a result of a conversion of convertible debentures, Borrower shall not, directly or indirectly, declare or pay any Distribution with respect to any class of stock of Borrower unless, immediately after giving effect to such proposed Distribution, the aggregate of all Distributions made during any Fiscal Year would not exceed ninety-five percent (95%) of Funds from Operations for Borrower and its Consolidated Subsidiaries attributable to such period. SECTION 8.12. INVESTMENTS. Borrower shall not, and shall not permit any of its Consolidated Subsidiaries to, make any Investments, other than Investments in the following: (a) Unimproved Real Estate (excluding Development Properties), to the extent only that the cost thereof, when added to the aggregate cost of all unimproved Real Estate (excluding Development Properties) then owned by Borrower and its Consolidated Subsidiaries, would not exceed five percent (5.0%) of Gross Asset Value. (b) Ownership interests in partnerships, joint ventures or similar entities accounted for on an equity basis (determined in accordance with GAAP), to the extent only that the aggregate amount of such Investments does not exceed five percent (5%) of Gross Asset Value. Once the aggregate of all Investments by Borrower and its Consolidated Subsidiaries in such joint ventures and partnerships (other than as a guarantor) exceeds two and one-half percent (2.5%) of Gross Asset Value, then all such Investments shall be treated on a pro rata basis such that Borrower shall be credited with a pro rata share of income and investment and will be charged with a pro rata share of the applicable expense and liability, with respect to such Investments, as if such Investments were reflected on a consolidated basis. The pro rata treatment of such Investments shall continue only so long as the aggregate amount of such Investments is greater than two and one-half percent (2.5%) of Gross Asset Value. 95 (c) The stock or other beneficial or equity ownership interests of any Persons other than Consolidated Subsidiaries and Affiliates, to the extent only that the aggregate amount of such Investments does not exceed five percent (5%) of Gross Asset Value. (d) The stock or other beneficial or equity ownership interests of any Affiliates other than Consolidated Subsidiaries, to the extent only that the aggregate amount of such Investments does not exceed five percent (5%) of Gross Asset Value. (e) Property that is not multi-family projects, or other assets, so long as the aggregate undepreciated book value (as determined in accordance with GAAP) of such non-multi-family projects and other assets does not exceed seven and one-half percent (7.5%) of Gross Asset Value. (f) Development Properties to the extent only that the aggregate amount of such Investments does not exceed fifteen percent (15%) of Gross Asset Value. (g) Notes, mortgages and accounts receivable evidencing indebtedness payable to Borrower and its Consolidated Subsidiaries, to the extent only that the aggregate amount of such Investments does not exceed ten percent (10%) of Gross Asset Value. In addition to the limitations set forth above, in no event shall the aggregate value of all the Investments permitted under SECTION 8.12(A) through (G) above exceed twenty percent (20%) of Gross Asset Value at any time. The value of the Investments for the purpose of this section shall be the aggregate undepreciated book value thereof, as determined in accordance with GAAP. SECTION 8.13. NEGATIVE PLEDGE. Borrower and each Consolidated Subsidiary shall not (a) enter into any negative pledge agreements with any other Person such that Borrower or any of Guarantor Subsidiaries shall be prohibited from granting to Administrative Agent, for the benefit of Lenders, as security for the Obligations, a first priority security interest in all the stock or other equity interests of Borrower in any of such Guarantor Subsidiaries ("EQUITY INTERESTS"); or (b) grant any Liens with respect to any Equity Interests. SECTION 8.14. TRANSACTIONS WITH AFFILIATES. Neither Borrower nor any Consolidated Subsidiary shall engage in any transaction with an Affiliate of Borrower unless such transaction is (a) between Borrower and any Consolidated Subsidiary or between Guarantor Subsidiaries or (b) is generally as favorable to Borrower or such Consolidated Subsidiary as could be obtained in an arm's length transaction with an unaffiliated Person in accordance with prevailing industry customs and practices. SECTION 8.15. EMPLOYEE PLANS. 96 (a) Neither Borrower nor any Guarantor Subsidiary shall, nor shall any such Person cause any member of its Controlled Group (as that term is defined in the Code) to, fail to maintain and administer any Employee Plan in accordance with the applicable requirements of the Code and ERISA. Neither Borrower nor any Guarantor Subsidiary shall permit or suffer to exist any circumstances with respect to any Employee Plan that could have a material adverse effect on Borrower or such Guarantor Subsidiary. (b) With respect to any Pension Plan, neither Borrower nor any Guarantor Subsidiary shall (i) permit any accumulated funding deficiency (within the meaning of Section 412(a) of the Code), whether waived or unwaived, to exist; (ii) permit the present value of accrued benefits (based on the most recent actuarial valuation prepared for each such plan, if any, in accordance with ongoing actuarial assumptions) to exceed the current value of plan assets allocable to such benefits by a material amount; (iii) permit any reportable event (within the meaning of Section 4043 of ERISA) to occur, other than purchases and sales of securities from a plan trustee as reported in the audited financial statements of such plan; (iv) permit a prohibited transaction (within the meaning of Section 4975 of the Code) to occur which has or could have a material adverse effect on Borrower or any Guarantor Subsidiary; (v) incur any material liability to the PBGC; or (vi) incur any material withdrawal liability (within the meaning of Section 4201(a) of ERISA). (c) Neither Borrower nor any Guarantor Subsidiary shall incur a material obligation to provide post-employment health care benefits to any of its current or former employees, except as may be required by Section 4980B of the Code or otherwise required by law. SECTION 8.16. USE VIOLATIONS. Neither Borrower nor any Guarantor Subsidiary shall use, maintain, operate or occupy, or allow the use, maintenance, operation or occupancy of, any of its properties in any manner that (a) violates any Legal Requirement, (b) may be dangerous unless safeguarded as required by law, (c) constitutes a public or private nuisance, (d) makes void, voidable or cancelable any insurance then in force with respect thereto or (e) makes void, voidable, or cancelable any governmental permit, unless the occurrence of any such event would not have a Material Adverse Effect on Borrower or any Guarantor Subsidiary. SECTION 8.17. EXCEPTIONS TO COVENANTS. Neither Borrower nor any Guarantor Subsidiary shall take or permit to be taken any action or fail to take any action which is permitted by any of the covenants contained in this Agreement if such action or omission would result in the breach of any other covenant contained in this Agreement. SECTION 8.18. FISCAL YEAR AND ACCOUNTING METHODS. Neither Borrower nor any Guarantor Subsidiary will change its Fiscal Year or its method of accounting (other than changes as are concurred with by Borrower's independent public accountants as being required by GAAP). SECTION 8.19. GOVERNMENTAL REGULATIONS. Neither Borrower nor any Guarantor Subsidiary will conduct its business in such a way that it will become subject to regulation under the Investment Advisers Act of 1940, as amended. Neither Borrower nor any Guarantor Subsidiary will conduct its business in such a way that it will become subject to regulation under the Investment Company Act of 1940, as amended, or the Public Utility Holding Company Act of 1935, as amended, or any other laws, rules or regulations which regulate the incurrence of Debt. 97 SECTION 8.20. TREASURY STOCK. Borrower shall not purchase any of its stock or beneficial interests or other equity securities during the continuance of an Event of Default. ARTICLE IX DEFAULTS AND REMEDIES SECTION 9.1. EVENTS OF DEFAULT. The term "EVENT OF DEFAULT" as used in this Agreement, shall mean any one of the following: (a) FAILURE TO PAY OBLIGATIONS. The failure of Borrower to pay any principal of any Advance (including under any Note or any Competitive Bid Note), any installment thereof, any interest thereon, or any fees or other amount required to be paid to Administrative Agent or the Lenders hereunder or under the Notes or the other Loan Documents when due and payable, whether at scheduled maturity or any other payment date, upon acceleration, or otherwise. (b) NONPERFORMANCE OF PARTICULAR COVENANTS. Borrower shall fail to observe or perform any covenant contained in ARTICLE V, SECTIONS 7.1, 7.2, AND 7.LL and ARTICLE VIII (other than SECTIONS 8.9 AND 8.12). (c) NONPERFORMANCE OF OTHER COVENANTS. The failure of Borrower (and, if applicable, any of the Guarantor Subsidiaries or other Consolidated Subsidiaries) to timely and properly observe, keep or perform any covenant, agreement or condition required herein or any other Loan Document, other than an Event of Default specifically addressed in another subsection of this SECTION 9.1, and the continuation of such failure for ten (10) days after written notice thereof has been given to Borrower by Administrative Agent, of if such default is of such a nature that it cannot reasonably be completely remedied within said ten (10) day period, such additional period of time as may be reasonably necessary to cure same, provided Borrower commences such cure within such ten (10) day period and diligently prosecutes same, until completion, but in no event shall such extended period exceed thirty (30) days. (d) REPRESENTATIONS AND WARRANTIES. Any statement, representation or warranty made by or on behalf of Borrower or any Guarantor Subsidiary herein or any other Loan Document, or in any financial statement or any other writing heretofore or hereafter delivered to Administrative Agent or any Lender in connection with the Obligations is false, fraudulent, misleading or erroneous in any material respect and the defect causing such representation or warranty to be incorrect when made or deemed made (but only if such defect is of such a nature that it can be cured within the following cure period and is not as a result of fraud or intentional misrepresentation) is not removed within thirty (30) days after written notice thereof from Administrative Agent to Borrower. (e) BANKRUPTCY OR INSOLVENCY. Borrower or Guarantor Subsidiary or any other Consolidated Subsidiary of Borrower: 98 (i) (A) executes an assignment for the benefit of creditors, or takes any action in furtherance thereof; (B) admits in writing its inability to pay, or fails to pay, its debts generally as they become due; (C) as a debtor, files a petition, case, proceeding or other action pursuant to, or voluntarily seeks the benefit of any Debtor Relief Law, or takes any action in furtherance thereof; or (D) seeks the appointment of a receiver, trustee, custodian or liquidator of any part of the Property; or (ii) suffers the filing of a petition, case, proceeding or other action against it as a debtor under any Debtor Relief Law or seeking appointment of a receiver, trustee, custodian or liquidator of any part of the Property, and (A) admits, acquiesces in or fails to contest diligently the material allegations thereof; (B) the petition, case, proceeding or other action results in entry of any order for relief or order granting relief sought against it; (C) in a proceeding under the Title 11 of the United States Code, the case is converted from one chapter to another; or (D) fails to have the petition, case, proceeding or other action permanently dismissed or discharged on or before the earlier of trial thereon or ninety (90) days next following the date of its filing; or (iii) conceals, removes, or permits to be concealed or removed, any part of its Property, with intent to hinder, delay or defraud its creditors or any of them, or makes or suffers a transfer of any of its Property which may be fraudulent under any bankruptcy, fraudulent conveyance or similar Law; or suffers or permits, while insolvent, any creditor to obtain a lien (other than as described in subparagraph (iv) below) upon any of its Property through legal proceedings which are not vacated and such lien discharged prior to enforcement of such lien and in any event within ninety (90) days from the date thereof; or (iv) fails to have discharged within a period of thirty (30) days any attachment sequestration, or similar writ levied upon any of its Property; or (v) fails to pay any final money judgment in excess of $500,000 against it within thirty (30) days after the entry of such judgment. (f) LIQUIDATION. The liquidation, termination, dissolution, merger, or consolidation of Borrower, any Guarantor Subsidiary or any other Consolidated Subsidiary of Borrower, other than a merger or consolidation, permitted under the terms and conditions of SECTION 8.8. (g) MATERIAL ADVERSE CHANGE. Any circumstance or event of whatever nature (including the filing of, or any adverse determination or development in, any Litigation) occurs which (a) impairs the validity or enforceability of any Loan Document with respect to a material term, (b) materially and adversely affects or changes the condition (financial or otherwise), operations, business, management or assets of Borrower and the Guarantor Subsidiaries, taken as a whole, or (c) impairs the ability of Borrower to make any payment of principal or interest due on the Notes or any Competitive Bid Note or to fulfill any other material Obligation. 99 (h) ENFORCEABILITY; PRIORITY. Any Loan Document shall for any reason cease to be in full force and effect, be declared null and void or unenforceable in whole or in part cease to have the priority required herein, or the validity or enforceability thereof, in whole or in part shall be challenged or denied but, in the case of a challenge by a party other than Borrower or any of its Consolidated Subsidiaries, only if Administrative Agent reasonably determines that such challenge is serious. (i) EMPLOYEE PLAN ASSETS; REPORTABLE EVENT. The characterization of the assets of Borrower or any of its Consolidated Subsidiaries as assets of an Employee Plan if such plan owns stock in Borrower or any of its Consolidated Subsidiaries; or with respect to any Guaranteed Pension Plan, an ERISA Reportable Event shall have occurred and Administrative Agent shall have determined in its discretion that such event could reasonably be expected to result in liability of Borrower or any Consolidated Subsidiary to the PBGC. (j) OTHER LOAN DOCUMENTS. A default or event of default occurs under any Loan Document other than this Agreement and the same is not remedied within the applicable period of grace (if any) provided in such Loan Document. (k) OTHER DEBT. In respect of any borrowed Debt (OTHER THAN the Obligations) of Borrower or any Consolidated Subsidiary individually or collectively in an amount equal to or greater than at least $5,000,000, (a) any default or other event or condition occurs or exists beyond the applicable grace or cure period, the effect of which is to cause or to permit any holder of such Debt to cause, whether or not it elects to cause, any of that Debt to become due before its stated maturity or regularly scheduled payment dates, or (b) any of such Debt is declared to be due and payable or required to be prepaid by Borrower or any Consolidated Subsidiary before its stated maturity. (l) GUARANTOR DENIAL. Any Guarantor Subsidiary denies that it has any liability or obligation under its Guaranty Agreement, or shall notify Administrative Agent or any of the Lenders of its intention to attempt to cancel or terminate its Guaranty Agreement, or shall fail to observe or comply with any term, covenant, condition or agreement under its Guaranty Agreement or pertaining to such Guarantor Subsidiary hereunder. 100 (m) MANAGEMENT; CONTROL. (1) Two or more of the individuals currently serving as officers of Borrower in the respective capacities of Chairman and Chief Executive Officer, President and Chief Operating Officer, and Chief Financial Officer, shall cease to serve in such capacity and to be actively involved in the management of Borrower (regardless of whether such withdrawal or cessation to serve is simultaneous); PROVIDED, HOWEVER, (i) that in the event that such circumstances described in this subsection (1) have occurred as a result of the termination or resignation of any of such Persons or for any other reason not covered by clause (ii) following, the same shall not constitute an Event of Default so long as within six (6) months from the date of such termination, resignation or other event, Borrower shall have replaced each such individual with an individual approved by Required Lenders in their sole discretion, (ii) in the event that such circumstances described in this subsection (m) have occurred as a result of the death, disability or mental incapacity of such Persons, the same shall not constitute an Event of Default so long as within six (6) months from the date of such death, disability or mental incapacitation, Borrower shall have replaced each such individual with an individual approved by Required Lenders in their reasonable discretion, and (iii) in the event that any such officer or officers are so replaced and approved by Required Lenders, then the provisions of this subsection (m) shall apply with respect to such new officer or officers; or (2) without the prior written approval of the Required Lenders there shall be any other material change in the management of Borrower, or the day-to-day leasing, management and operation of the Real Estate; or (3) a Change in Control occurs. It is understood and agreed by Borrower and each Guarantor Subsidiary that any of the foregoing "Events of Default" shall constitute a default under each of the Notes and Competitive Bid Notes, and that such "Events of Default" are cumulative and in addition to any default or events of default contained in any of the other Loan Documents, and that in the event of any discrepancy or inconsistency between any Event of Default hereunder and any default or event of default contained in any other Loan Document, the description of the Event of Default stated herein shall control. SECTION 9.2. NOTICE AND CURE. If any Loan Document provides for Administrative Agent to give to Borrower any notice regarding a Default or an Event of Default, and if Administrative Agent fails to give such notice to Borrower as provided, the sole and exclusive remedy of Borrower for such failure (unless such failure was a result of the gross negligence or willful misconduct of Administrative Agent or any Lender) shall be to seek appropriate equitable relief to enforce the agreement to give such notice and to have any acceleration of the maturity of the Obligations postponed or revoked pending or upon the curing of such Default to Administrative Agent's satisfaction in the manner and during the period of time permitted by such agreement, if any, and Borrower waives any and all right to damages and any other relief. 101 SECTION 9.3. REMEDIES. Upon the occurrence of an Event of Default, Administrative Agent may, and at the direction and election of the Required Lenders shall, acting by or through any of its agents, trustees or other Persons, without notice (unless expressly provided for herein), demand or presentment (including, without limitation, notice of default, notice of intent to accelerate or of acceleration) all of which are hereby waived, and in addition to any other provision of this Agreement or any other Loan Document, exercise any or all of the following rights, remedies and recourses: Terminate the Lenders= commitment to make Advances hereunder and declare the unpaid principal balance of each of the Notes, and each of the Competitive Notes, and the accrued and unpaid interest thereon, and any other accrued but unpaid portion of the Obligations to be immediately due and payable, without notice (expressly including, but not limited to, notice of default, notice of intent to accelerate or of acceleration), except any notice that is expressly required by the terms of this Agreement, presentment, protest, demand or action of any nature whatsoever, each of which hereby is expressly waived by Borrower and each of its Consolidated Subsidiaries, whereupon the same shall become immediately due and payable, and reduce any claim to judgment. Notwithstanding the foregoing or anything to the contrary contained herein or in any other Loan Document, upon the occurrence of an Event of Default described in SECTION 9.1(E)(I)(C) or 9.1(E)(II) the entire unpaid principal balance of the Notes and the Competitive Bid Notes, and all accrued, unpaid interest thereon shall automatically be accelerated and immediately be due and payable in full and the Lenders= Commitment automatically terminated, without notice (expressly including, but not limited to, notice of default, intent to accelerate or of acceleration), presentment, protest, demand or action of any nature whatsoever, each of which hereby is expressly waived by Borrower; PROVIDED, however, that if accelerated automatically pursuant to this sentence, the Notes and the Competitive Bid Notes and all such indebtedness may be reinstated at the option and upon the written approval of the Required Lenders. SECTION 9.4. RIGHTS OF SET-OFF. (a) Each of Borrower and the Guarantor Subsidiaries hereby expressly grants to Administrative Agent and the Lenders the right of setoff against all deposits and other sums at any time held or credited by or due from Administrative Agent or any Lender to Borrower or any Guarantor Subsidiary, in accordance with the provisions of this SECTION 9.4. The rights of Administrative Agent and each Lender under this SECTION 9.4 are in addition to other rights and remedies (including, without limitation, other rights of setoff under law or equity) that Administrative Agent and each Lender may have under law or by agreement. (b) Upon the occurrence and during the continuance of any Event of Default, each Lender is hereby authorized at any time and from time to time, to the fullest extent permitted by law, at its option, without notice or demand and without liability, to set off and apply any and all deposits (general or special, time or demand, provisional or final, excepting, however, any fiduciary or escrow accounts established by Borrower or any Guarantor Subsidiary into which only funds of unrelated third-parties are deposited, and provided that Borrower or such Guarantor Subsidiary has informed such Lender and Administrative Agent of the nature of such accounts) at any time held, and other indebtedness at any time owing, by any Lender to or for the credit or the account of Borrower or any Guarantor Subsidiary against any and all of the Obligations now or hereafter existing under this Agreement, the Notes and the other Loan Documents, in such order and manner as such Lender may determine, subject, however, to the agreements contained in SECTION 10.14 hereof, regardless of whether such Lender shall have made any demand under this Agreement or the Notes or the Competitive Bid Notes and although such obligations may be unmatured. (c) Borrower and each Guarantor Subsidiary agree, to the fullest extent it may effectively do so under applicable law, that each Lender and any holder of a participation in any of the Notes (with the appropriate consent of such Lender) may exercise rights of setoff or counterclaim and other rights with respect to such participation as fully as if such holder of a participation were a direct creditor of Borrower or such Guarantor Subsidiary in the amount of such participation. 102 SECTION 9.5. REMEDIES CUMULATIVE, CONCURRENT AND NON-EXCLUSIVE. Administrative Agent and the Lenders shall have all rights, remedies and recourses granted in the Loan Documents, and available at law or equity, and same (a) shall be cumulative and concurrent, (b) may be pursued separately, successively or concurrently against Borrower or any Guarantor Subsidiary, or any others obligated under any of the Notes or Competitive Bid Notes, or against any one or more of them, at the sole discretion of Lenders, (c) may be exercised as often as the occasion therefor shall arise, it being agreed by Borrower and each Guarantor Subsidiary that the exercise or failure to exercise any of same 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, non-exclusive. SECTION 9.6. NO CONDITIONS PRECEDENT TO EXERCISE REMEDIES. Borrower and each other Person hereafter obligated for payment or fulfillment of all or any part of the Obligations shall not, except as otherwise provided by applicable law, be relieved of such obligation by reason of (a) the release, regardless of consideration, of any Person obligated with respect to the Obligations, and (b) any other act or occurrence, save and except the complete payment of the Obligations. Borrower and each Guarantor Subsidiary waive any right to require Lenders to proceed against any other Person, or pursue any other remedy in Lenders' power. All dealings between Borrower, any Guarantor Subsidiary, Administrative Agent and any Lender, whether or not resulting in the creation of the Obligations, shall conclusively be presumed to have been had or consummated upon reliance upon this Agreement. Borrower and each Guarantor Subsidiary authorize Lenders, without notice or demand and without any reservation of rights against Borrower or any Guarantor Subsidiary and without affecting liability hereunder or on the Obligations, from time to time, to renew, extend for any period, accelerate, modify, compromise, settle, or release the obligation of any other Person that may be obligated with respect to any or all of the Obligations. SECTION 9.7. WAIVERS. To the full extent permitted by law, Borrower and each Guarantor Subsidiary hereby irrevocably and unconditionally waive and release (a) except as specifically provided for herein, all notices of any Default or Event of Default or of the election by Administrative Agent or the Lenders to exercise any right, remedy or recourse provided for under the Loan Documents, (b) any right to a marshaling of assets with respect to the Notes or any Debt of Borrower or any Guarantor Subsidiary, and (c) except as specifically provided for herein, any and all right to receive demand, grace, notice, presentment for payment, protest, notice of intention to accelerate the Obligations or notice of acceleration of the Obligations. SECTION 9.8. DISCONTINUANCE OF PROCEEDINGS. In case Administrative Agent shall have proceeded to invoke any right, remedy or recourse permitted under the Loan Documents and shall thereafter elect to discontinue or abandon same for any reason, Administrative Agent shall have the unqualified right to do so and, in such event, Borrower, each Guarantor Subsidiary, Administrative Agent and the Lenders shall be restored to their respective former positions with respect to the Obligations, the Loan Documents, and otherwise, and the rights, remedies, recourses and powers of Administrative Agent and Lenders shall continue as if same had never been invoked. SECTION 9.9. APPLICATION OF PROCEEDS. All payments on the Notes or the Competitive Bid Notes received by Administrative Agent or any Lender during the existence of an Event of Default, shall be applied as determined by the Required Lenders (provided that, as among themselves, Lenders agree that any such proceeds shall be applied as contemplated by ARTICLE X hereof); and all payments received by a Lender on its Competitive Bid Note during the existence of an Event of Default shall be applied as determined by the applicable Lender. 103 ARTICLE X AGENTS AND THE LENDERS SECTION 10.1. APPOINTMENT AND AUTHORIZATION OF AGENTS. (a) Each Lender hereby irrevocably appoints and authorizes Administrative Agent as its nominee and agent, in its name and on its behalf: (i) to act as nominee for and on behalf of such Lender in and under all Loan Documents; (ii) to arrange the means whereby the funds of the Lenders are to be made available to Borrower under the Loan Documents; (iii) to take such action as may be requested by any Lender under the Loan Documents (when such Lender is entitled to make such request under the Loan Documents and after such requesting Lender has obtained the concurrence of such other Lenders as may be required under the Loan Documents); (iv) to receive all documents and items to be furnished to Lenders under the Loan Documents; (v) to promptly distribute to each Lender the material information, requests, documents and items received from Borrower or the Guarantor Subsidiaries under the Loan Documents, including, without limitation, the documents delivered by Borrower to Administrative Agent pursuant to SECTION 7.1 hereof; (vi) to promptly distribute to each Lender such Lender's Commitment Percentage (subject to the last paragraph of SECTION 10.6) of each payment or prepayment in accordance with the terms of the Loan Documents; and (vii) to deliver to the appropriate Persons requests, demands, approvals and consents received from the Lenders. (b) The obligations of each Agent and the Sole Lead Arranger hereunder are only those expressly set forth herein. Each Lender and Borrower and each Guarantor agree that no Agent nor the Sole Lead Arranger is a fiduciary for Lenders or for Borrower or the Guarantor Subsidiaries but simply is acting in the capacity described herein to alleviate administrative burdens for both Borrower and Lenders and that no Agent has duties or responsibilities to the Lenders, Borrower or of the Borrower's counsel or any Guarantor Subsidiaries except those expressly set forth herein. Without limiting the generality of the foregoing, Administrative Agent shall not be required to take any action or exercise any right or remedy with respect to any Default or Event of Default, except if requested by the Required Lenders. Notwithstanding the administrative authority delegated to Administrative Agent, Administrative Agent shall not cause or permit any modification of the Loan Documents or take other action relating to the Credit Facility specifically requiring the consent or approval of the Required Lenders without such consent or approval. Action taken by Administrative Agent including, without limitation, any exercise of remedies or initiation of suit or other legal proceedings made in accordance with the instructions of the Required Lenders or as otherwise permitted by this Article X, shall be binding upon each of the Lenders. Each Lender specifically acknowledges that it has reviewed and approved the voting and other provisions of this Agreement and the other Loan Documents setting forth the relative rights and obligations among the Lenders and agrees to be bound by such provisions, and acknowledges that Administrative Agent (and counsel for the Lenders, as a group) are acting on behalf of all the Lenders. (c) Each Agent, in its capacity as a Lender, shall have the same Rights under the Loan Documents as any other Lender and may exercise the same as though it were not acting as an Agent, and any resignation by any Agent hereunder shall not impair or otherwise affect any Rights which it has or may have in its capacity as an individual Lender. 104 (d) Each Agent and Sole Lead Arranger may now or hereafter be engaged in one or more loan, letter of credit, leasing, or other financing transactions with Borrower or any Guarantor Subsidiary, act as trustee or depositary for Borrower or any Guarantor Subsidiary or otherwise be engaged in other transactions with Borrower, any Guarantor Subsidiary and/or their Affiliates (collectively, the "OTHER ACTIVITIES") not the subject of the Loan Documents. Without limiting the Rights of the Lenders specifically set forth in the Loan Documents, no Agent nor Sole Lead Arranger shall be responsible to account to the Lenders for such other activities, and no Lender shall have any interest in any other activities, any present or future guaranties by or for the account of Borrower or any Guarantor Subsidiary which are not contemplated or included in the Loan Documents, any present or future offset exercised by any Agent or Sole Lead Arranger in respect of such other activities, any present or future property taken as security for any such other activities, or any property now or hereafter in the possession or control of any Agent or Sole Lead Arranger which may be or become security for the Obligations by reason of the general description of indebtedness secured or of property contained in any other agreements, documents or instruments related to any such other activities; provided that, if any payments in respect of such guaranties, such property or the proceeds thereof or any offset shall be applied to reduction of the Obligations, then each Lender shall be entitled to share in such application pursuant to the terms of this Agreement. SECTION 10.2. POSSESSION OF INSTRUMENTS BY ADMINISTRATIVE AGENT. Administrative Agent shall exercise all rights and remedies under the Loan Documents and take all actions with respect thereto in accordance with the request or direction of the Required Lenders, or otherwise as and to the extent provided herein or in the other Loan Documents; PROVIDED, HOWEVER, that Administrative Agent may take such actions in its name without the joinder of the Lenders, and Borrower, the Guarantor Subsidiaries and all third parties, including Borrower and Guarantor Subsidiaries, shall be entitled to rely on the actions taken by Administrative Agent with respect to the execution by Administrative Agent of any and all agreements, financing statements, affidavits, notices or any other type of document or instrument pertaining thereto, including, without limitation, in connection with the exercise of any rights or remedies of the Lenders under the Loan Documents, and the same shall be binding upon all the Lenders as to any third party relying on such actions of Administrative Agent. Administrative Agent shall also be the named secured party or beneficiary under any document hereafter given as security for the Credit Facility and shall take and maintain any and all documents, instruments and agreements pertaining to or evidencing any security for the Obligations, as agent for and on behalf of all Lenders, and the grant to Administrative Agent of any Lien under any Loan Document shall be for the ratable benefit of all Lenders. SECTION 10.3. EXPENSES. Each Lender shall pay its Commitment Percentage of any expenses (including, without limitation, court costs, reasonable attorneys= fees and other costs of collection) incurred by Administrative Agent in connection with any of the Loan Documents if Administrative Agent does not receive reimbursement therefor from other sources within thirty (30) days after incurred; PROVIDED that, and subject to the terms and conditions of SECTION 11.4, each Lender shall be entitled to receive its Commitment Percentage of any reimbursement for such expenses, or part thereof, which Administrative Agent subsequently receives from such other sources. 105 SECTION 10.4. DELEGATION OF DUTIES; RELIANCE; CONSULTATION. The Lenders may perform any of their duties or exercise any of their Rights under the Loan Documents by or through Administrative Agent, and the Lenders, Administrative Agent and Sole Lead Arranger may perform any of their duties or exercise any of their Rights under the Loan Documents by or through their respective officers, directors, employees, attorneys, agents, or other representatives (collectively, "REPRESENTATIVES"). Administrative Agent, Sole Lead Arranger, the Lenders, and their respective Representatives shall (a) be entitled to rely upon (and shall be protected in relying upon) any writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telecopy, telegram, telex or teletype message, statement, order or other documents or conversation believed by any of them to be genuine and correct and to have been signed or made by the proper Person and, with respect to legal matters, upon opinion of counsel selected by Administrative Agent, Sole Lead Arranger or such Lender, (b) be entitled to deem and treat each Lender as the owner and holder of its Commitment for all purposes until, subject to SECTION 11.10, written notice of the assignment or transfer thereof shall have been given to and received by Administrative Agent (and, any request, authorization, consent or approval of any Lender shall be conclusive and binding on each subsequent holder, assignee, or transferee of such Lender's Commitment (or any part thereof) or Participant therein until such notice is given and received), and (c) other than in connection with Borrower's failure to pay required principal or interest under the Obligations, not be deemed to have notice of the occurrence of a Default or an Event of Default unless notified thereof by another Lender or Borrower. Administrative Agent may consult with legal counsel, independent public accountants, consultants, appraisers and other experts selected by Administrative Agent, and shall not be liable for any action taken or omitted to be taken by Administrative Agent in good faith in accordance with the advice of such counsel, accountants or experts. Any such counsel, accountants or other experts shall be engaged to represent and render services to all the Lenders as a group, unless otherwise specified by Administrative Agent. SECTION 10.5. LIMITATION OF LIABILITY. (a) Neither Administrative Agent, Sole Lead Arranger, nor any of their Representatives shall be liable for any action taken or omitted to be taken by it or them under the Loan Documents in good faith and believed by it or them to be within the discretion or power conferred upon it or them by the Loan Documents or be responsible for the consequences of any error of judgment or negligence, except for gross negligence or willful misconduct, and neither Administrative Agent, Sole Lead Arranger nor any of its Representatives has a fiduciary relationship with any Lender by virtue of the Loan Documents (provided that nothing herein shall negate the obligation of Administrative Agent to account for funds received by it for the account of any Lender). 106 (b) Unless indemnified to its satisfaction against loss, cost, liability, and expense, Administrative Agent shall not be compelled to do any act under the Loan Documents or to take any action toward the execution or enforcement of the powers thereby created or to prosecute or defend any suit in respect of the Loan Documents. If Administrative Agent requests instructions from the Lenders with respect to any act or action (including, but not limited to, any failure to act) in connection with any Loan Document, Administrative Agent shall be entitled (but shall not be required) to refrain (without incurring any liability to any Person by so refraining) from such act or action unless and until it has received such instructions. In no event, however, shall Administrative Agent or any of its Representatives be required to take any action which it or they reasonably determine could incur for it or them criminal or civil liability. (c) Neither Administrative Agent, Sole Lead Arranger nor any of their Representatives shall be responsible in any manner to any Lender or any Participant for, and each Lender represents and warrants that it has not relied upon Administrative Agent, Sole Lead Arranger or their Representatives in respect of, (i) the creditworthiness of Borrower or any Guarantor Subsidiary and the risks involved to such Lender, (ii) the effectiveness, enforceability, genuineness, validity, or the due execution of any Loan Document, (iii) any representation, warranty, document, certificate, report, or statement made therein or furnished thereunder or in connection therewith, (iv) the existence, priority, or perfection of any Lien or negative pledge granted or purported to be granted under any Loan Document, (v) the observation of or compliance with any of the terms, covenants, or conditions of any Loan Document on the part of Borrower or any Guarantor Subsidiary, or (vi) the relative Rights of the Lenders as among themselves. Each Lender jointly and severally agrees to indemnify Administrative Agent and Sole Lead Arranger and hold them harmless from and against (but limited to such Lender's Commitment Percentage of) any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, reasonable expenses, and reasonable disbursements of any kind or nature whatsoever (including counsel fees and disbursements) which may be imposed on, asserted against, or incurred by Administrative Agent or Sole Lead Arranger in any way relating to or arising out of the Loan Documents or any action taken or omitted by Administrative Agent or Sole Lead Arranger under the Loan Documents; PROVIDED THAT, ALTHOUGH ADMINISTRATIVE AGENT AND SOLE LEAD ARRANGER SHALL HAVE THE RIGHT TO BE INDEMNIFIED FOR THEIR NEGLIGENCE [SOLE, COMPARATIVE, CONTINGENT OR OTHERWISE], ADMINISTRATIVE AGENT AND SOLE LEAD ARRANGER SHALL NOT HAVE THE RIGHT TO BE INDEMNIFIED HEREUNDER FOR THEIR OWN FRAUD, GROSS NEGLIGENCE, OR WILLFUL MISCONDUCT. 107 SECTION 10.6. DEFAULT. Upon the occurrence and continuance of a Default or an Event of Default, Administrative Agent shall make a recommendation to the Lenders of any actions to be taken, and each Lender agrees to promptly confer with the other Lenders in order that the Lenders can consider such course of action or any other actions to be taken for the enforcement of the Rights of the Lenders; provided that Administrative Agent shall be entitled (but not obligated) to proceed to take any actions necessary in its reasonable judgment to preserve Rights, pending agreement by the Lenders on the course of action to be taken. If the Required Lenders cannot agree on a course of action to be taken within sixty (60) days following Administrative Agent's initial recommendation, Administrative Agent shall thereafter take such action as Administrative Agent deems advisable to enforce the Rights of the Lenders; PROVIDED, that if, after Administrative Agent has begun taking such action, the Required Lenders agree on a course of action contrary to that undertaken by Administrative Agent, then Administrative Agent shall change its course of action so as to follow the course of action agreed upon by the Required Lenders. Any action directed or approved by the Required Lenders, including without limitation, any exercise of remedies or initiation of suit or other legal proceedings, shall be binding upon each Lender. In actions with respect to any property of Borrower or any Subsidiary of Borrower, Administrative Agent is acting for the account of each Lender to the extent of each Lender's Commitment Percentage. Any and all agreements to subordinate (whether made heretofore or hereafter) other indebtedness or obligations of Borrower or any Subsidiary to the Obligations shall be construed as being for the benefit of each Lender to the extent of its respective Commitment Percentage. If Administrative Agent acquires any security for the Obligations or any guaranty of the Obligations, the same shall be held for the benefit of each Lender in proportion to such Lender's respective Commitment Percentage. Lenders agree, among themselves, that unless otherwise agreed to by Administrative Agent and the Required Lenders, all monies collected or received by Administrative Agent after the occurrence and during the continuance of an Event of Default in respect of any security that may be given for the Obligations, directly or indirectly, or by exercise of Rights, judgment on the Notes any other means shall be applied first to the payment of unpaid, past due fees hereunder, and then to either interest or principal of the Obligations as recommended by Administrative Agent and approved by the Required Lenders (except that any amounts to be applied to interest or principal shall be distributed to Lenders based on their Aggregate Loan Percentage until the Credit Facility (including the Competitive Bid Loans) is paid in full). SECTION 10.7. LENDERS= DECISIONS. The Lenders agree as among themselves that any decisions or elections to be made by the Lenders (and not Administrative Agent) under this Agreement and the other Loan Documents shall be made by the Required Lenders, except in the case, if any, where unanimity or a specific different number or percentage of the Lenders is expressly required under this Agreement or any other Loan Documents (use of the terms "Lenders" in any of the Loan Documents, without an express provision for different voting rights other than as set forth in the definition of Required Lenders, does not imply that unanimous consent is thereby required). Administrative Agent may, at its election, request any determination, vote, consent or approval by the Lenders in writing or orally (by telephone or in person). In addition, if any request by Administrative Agent for the Lenders= determination or approval hereunder is made in writing and such writing contains written notice to the Lenders requesting a response within ten (10) Business Days, or longer, from the date the Lenders are deemed to have received notice as herein provided (and setting forth the actual date of the last day of the Lender reply period), then the Lenders shall use reasonable efforts to reply within the applicable reply period, provided, that if any such Lender does not reply within the applicable reply period, such Lender shall be deemed not to have approved of or consented to or concurred with such recommendation or determination. SECTION 10.8. LIMITATION OF LIABILITY OF LENDERS. To the extent permitted by law, (a) neither any Lender nor any Participant shall incur any liability to any other Lender or Participant except for acts or omissions in bad faith, and (b) neither any Agent, Sole Lead Arranger nor any Lender or Participant shall incur any liability to Borrower, any Guarantor Subsidiary or any other Person for any act or omission of any other Lender or any Participant. SECTION 10.9. RELATIONSHIP OF LENDERS. Nothing herein shall be construed as creating a partnership or venture among any Agents, among any Agent and the Lenders, or among the Lenders. 108 SECTION 10.10. DEBTOR-CREDITOR RELATIONSHIP. Each Lender has and shall maintain a direct creditor-debtor relationship with Borrower and will have direct recourse, singly or in the aggregate, against Borrower and the Guarantor Subsidiaries, subject to the terms and conditions of the Loan Documents. Notwithstanding the foregoing, any right, remedy, action, omission or waiver respecting this Agreement, the Notes, the Guaranty Agreements and the other Loan Documents shall only be exercised, made, taken, or permitted by Administrative Agent, acting upon the direction of the Required Lenders, as the agent for all Lenders; PROVIDED, HOWEVER, that if the Required Lenders have elected and directed Administrative Agent to institute suit against Borrower or any Guarantor Subsidiary for payment of any past due amounts under the Notes, any Competitive Bid Note or any other Obligations for which Lenders have recourse against Borrower or any Guarantor Subsidiary, or in the event of any bankruptcy proceedings or other legal proceedings relating to this Agreement against Borrower or any Guarantor Subsidiary, each Lender shall be entitled, at its option, to bring or join in such proceedings in its own name (subject, however, to the terms of this Agreement). SECTION 10.11. CREDIT DECISIONS. Each Lender acknowledges that it has, independently and without reliance upon any Agent, Sole Lead Arranger or any other Lender, and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement and each of the other Loan Documents to which it is a party or to which any Agent is a party for its benefit. Each Lender also acknowledges that it will, independently and without reliance upon any Agent, Sole Lead Arranger or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking any action under this Agreement or with respect to either Credit Facility. SECTION 10.12. REMOVAL OF ANY AGENT. Lenders, acting by written notice to Administrative Agent from and agreed to by the Required Lenders other than Administrative Agent, may remove for cause Administrative Agent, as the agent under the Credit Facility, and appoint one of the other Lenders as Administrative Agent's successor, which successor Administrative Agent shall be subject to Borrower's reasonable consent so long as no Event of Default has occurred and is continuing. Upon the appointment of a successor Administrative Agent, the removed Administrative Agent and the successor Administrative Agent shall execute such documents as the Lenders may reasonably request to reflect such appointment of a successor Administrative Agent and shall notify Borrower of the change in such agent. The successor Administrative Agent shall be vested with all rights, powers and privileges and be bound to all duties, obligations and responsibilities of the Administrative Agent so removed in and under this Agreement and the other Loan Documents; PROVIDED, HOWEVER, that until such time as Borrower is notified in writing signed by both the removed and successor Administrative Agent as to the appointment of the successor Administrative Agent, Borrower and the Guarantor Subsidiaries shall be entitled to rely on any decision, approval or other act by the removed Administrative Agent as binding on Lenders, and, may pay to Administrative Agent any amounts due or owing by Borrower under the Loan Documents. 109 SECTION 10.13. RESIGNATION BY ANY AGENT. An Agent's status as an Agent under this Agreement shall automatically terminate fifteen (15) days after the closing or liquidation of such Agent or fifteen (15) days after such Agent is adjudicated insolvent. Additionally, any Agent may resign its position as an Agent at any time by giving at least thirty (30) days written notice thereof to Borrower and the other Lenders. Upon any such occurrence causing a termination of the Administrative Agent or the delivery of such notice of resignation from such Agent, the Required Lenders and Borrower shall select a successor for the Administrative Agent. If the Required Lenders and Borrower cannot agree upon the choice of the successor Administrative Agent within ten (10) days after the occurrence causing a termination in the case of a termination of such Administrative Agent, or ten (10) days prior to the effective resignation date set forth in such Administrative Agent's resignation notice in the case of a resignation by such Administrative Agent, then the Designated Successor Agent shall become the Administrative Agent's successor. Borrower shall be entitled to participate in the selection of the replacement Administrative Agent only if no Default has occurred and is continuing and no Event of Default has occurred. If any Agent other than the Administrative Agent shall resign or be terminated, Administrative Agent and, so long as no Event of Default has occurred and is continuing, Borrower may select a successor for any other Agent. Upon any such termination or resignation, (a) the successor Agent shall automatically be vested with all rights, powers and privileges and be bound to all duties, obligations and responsibilities of the Agent being replaced in and under this Agreement and the other Loan Documents and shall thereafter be deemed the "Administrative Agent", "Syndication Agent", "Documentation Agent", "Managing Agent" or other designated Agent, for all purposes under the Loan Documents and (b) such terminating or resigning Agent shall act only in a custodial capacity for the holding by it of any funds theretofore received from Borrower and any such funds shall be held in trust for the benefit of Lenders or Borrower, as the case may be. Additionally, upon the successor Agent becoming an Agent as provided in this SECTION 10.13, the terminating or resigning Agent and the new Agent shall execute such documents as any Lender may reasonably request to reflect such succession. All costs incurred in connection with the execution of such documents shall be paid by the Lenders in proportion to each Lender's Commitment Percentage. Sole Lead Arranger may resign its position at any time by giving at least ten (10) days written notice thereof to Borrower and Administrative Agent. 110 SECTION 10.14. SHARING OF PAYMENTS AND SETOFFS. Each Lender agrees that if it should receive any amount (whether by voluntary payment, by realization upon any collateral, by the exercise of the right of setoff or banker's lien, by counterclaim or cross action, by the enforcement of any right under the Loan Documents or otherwise) which is applicable to the payment of the principal of or interest on the Credit Facility, of a sum which with respect to the related sum or sums received by the other Lenders exceeds such Lender's Commitment Percentage, then such Lender receiving such excess payment shall purchase without recourse or warranty from the other Lenders an interest in the indebtedness of Borrower to such Lenders in such amount as shall result in a proportional participation by all of the Lenders in such amount; provided that if all or any portion of such excess amount is thereafter recovered from such Lender, such purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest. This SECTION 10.14 shall not impair the right of any Lender to exercise any right of setoff or counterclaim it may have with respect to any funds in an account pledged to such Lender to secure only indebtedness other than the Obligations, and to apply the amount received or subject to such exercise to the payment of such other indebtedness, it being expressly agreed by all Lenders, however, that until the Obligations are paid and satisfied in full, any and all amounts received by any Lender from offset of any account of Borrower or any Guarantor Subsidiary that either (a) constitutes collateral for the Credit Facility (if any) or (b) contains funds exclusively derived from or related to any collateral for the Credit Facility, shall be applied to the Obligations, and not to any other indebtedness of Borrower or any Guarantor Subsidiary to such Lender. SECTION 10.15. NON-ADVANCING LENDERS. In the event that a Lender shall fail or refuse to advance its Commitment Percentage of any Advance under the Credit Facility, or any Lender shall fail or refuse to advance its Commitment Percentage of any payment or reimbursement by Lenders as required hereunder, or of any amount to be funded pursuant to SECTION 10.3, when it is obligated to do so, Administrative Agent shall notify, in the case of the failure or refusal to make an Advance under the Credit Facility, the Lenders, or any of them, may elect, each at its sole option and discretion (without any obligation whatsoever to do so), to advance such non-advancing Lender's portion, pro rata in accordance with the proportion that the Commitment Percentage of each Lender electing to make such advance bears to the Commitment Percentages of all Lenders electing to make such advance. Upon making any such advance, and notwithstanding anything to the contrary expressed or implied herein or in the Notes or any other Loan Document, all subsequent payments made on the Credit Facility, and all proceeds realized from the sale of any collateral securing the Credit Facility (if any) or from the exercise of right of setoff or other remedies under this Agreement or the other Loan Documents, shall be applied, in the manner described below, only to the Lenders, other than the non-advancing Lender (and the non-advancing Lender shall not be entitled to receive the same), until the amounts advanced by such advancing Lenders, on behalf of the non-advancing Lender (together with the interest earned thereon pursuant to this Agreement and the applicable Notes), have been repaid in full. As among Lenders other than the non-advancing Lender, Lenders that advanced funds on behalf of the non-advancing Lender shall receive the portion the non-advancing Lender would have been entitled to receive had it advanced (together with the interest earned thereon pursuant to this Agreement and the applicable Notes), to be applied pro rata in accordance with the amounts advanced by each such advancing Lender, until the amounts advanced by such Lenders on behalf of the non-advancing Lender (together with the interest earned thereon pursuant to this Agreement and the applicable Notes), have been repaid in full; any Lender that advanced only on its own behalf based on its Commitment Percentage shall be repaid based on such Commitment Percentage or its Aggregate Loan Percentage, as applicable. In addition, any Lenders that advance funds on behalf of a non-advancing Lender pursuant to this SECTION 10.15 shall (i) receive a proportionate share (based on the amounts so advanced by such Lenders) of the amount the non-advancing Lender would have been entitled to receive of any distribution of any collateral that may ever be given to secure the Credit Facility in the event the same is distributed among Lenders, and (ii) have a claim against such non-advancing Lender for the amounts so advanced and shall be entitled to all rights and remedies at law or in equity to recover any unpaid amounts. A non-advancing Lender shall not be entitled to vote on any matters under this Agreement or related to the Credit Facility (and its interest shall be excluded for purposes of determining the requisite percentage or number of Lenders for a vote or otherwise in the determination of the "Required Lenders" for any purpose hereunder) so long as such Lender remains a non-advancing Lender. 111 SECTION 10.16. BENEFIT OF LENDERS. All terms, conditions and agreements set forth in this ARTICLE X, specifically including, without limitation, the provisions of SECTION 10.14 are for the sole and exclusive benefit of the Lenders, and neither Borrower, any Guarantor Subsidiary nor any other Person shall be entitled to rely on or seek the benefit of such provisions; PROVIDED, HOWEVER, that Borrower and the Guarantor Subsidiaries shall be entitled to rely on any decision, approval or other act by Administrative Agent as binding the Lenders. SECTION 10.17. ROLES OF AGENTS. Neither Syndication Agent, Documentation Agent, Managing Agent nor any other agent other than Administrative Agent shall have any duties or obligations, nor shall Syndication Agent, Documentation Agent, Managing Agent or any such other agent take any action as an Agent, under this Agreement or the other Loan Documents, other than as may be specifically designated in writing by Administrative Agent. Any action to be taken by Agents under this Agreement or the other Loan Documents, shall be taken solely by Administrative Agent. ARTICLE XI MISCELLANEOUS SECTION 11.1. CONTINUING AGREEMENT. This is a continuing Agreement and all the rights, powers and remedies of the Administrative Agent and the Lenders hereunder, and all agreements and obligations of Borrower, the Guarantor Subsidiaries, the Administrative Agent and the Lenders hereunder, shall continue to exist until the Notes and the Competitive Bid Notes have been paid in full, the commitment of Lenders to make Advances hereunder has been terminated, and all other Obligations have been paid in full. 112 SECTION 11.2. NOTICES. All notices, requests and other communications to any party hereunder shall be in writing (including bank wire, telecopy or similar writing), except for any telephone notices as specifically provided for herein, may be personally served or sent by telecopier, mail or the express mail service of the United States Postal Service, Federal Express or other equivalent overnight or expedited delivery service, and (a) if given by personal service or telecopier (confirmed by telephone), it shall be deemed to have been given upon receipt; (b) if sent by telecopier without telephone confirmation, it shall be deemed to have been given twenty-four (24) hours after being given; (c) if sent by mail, it shall be deemed to have been given upon the earlier of (i) actual receipt, or (ii) three (3) Business Days after deposit in a depository of the United States Postal Service, first class mail, postage prepaid; (d) if sent by Federal Express, the express mail service of the United States Postal Service or other equivalent overnight or expedited delivery service, it shall be deemed given upon the earlier of (i) actual receipt or (ii) twenty-four (24) hours after delivery to such overnight or expedited delivery service, delivery charges prepaid, and properly addressed to Administrative Agent, Borrower, the applicable Guarantor Subsidiary or the applicable Lender; provided that notices to Administrative Agent under ARTICLE III and ARTICLE IV shall not be effective until received. For purposes hereof, the address of the parties to this Agreement shall be as set forth in SCHEDULE I attached hereto. Any party may, by proper written notice hereunder to the other parties, change the address to which notices shall thereafter be sent to it. Notwithstanding anything to the contrary implied or expressed herein, the notice requirements herein (including the method, timing or deemed giving of any notice) is not intended to and shall not be deemed to increase the number of days or to modify the method of notice or to otherwise supplement or affect the requirements for any notice required or sent pursuant to any Legal Requirement (including, without limitation, any applicable statutory or law requirement), or otherwise given hereunder, that is not required under this Agreement or the other Loan Documents. The provisions of this SECTION 11.2 shall control over any conflicting contractual notice provisions contained in the Loan Documents. SECTION 11.3. NO WAIVERS. No failure or delay by any Agent or any Lender in exercising any right, power or privilege hereunder or under the Notes or any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law or in any of the other Loan Documents. SECTION 11.4. EXPENSES; DOCUMENTARY TAXES; INDEMNIFICATION. Borrower and the Guarantor Subsidiaries, jointly and severally, agree to pay (a) all expenses of Administrative Agent and Sole Lead Arranger and the reasonable fees and disbursements of legal counsel for Administrative Agent, in connection with the negotiation, documentation and closing of the Credit Facility, and thereafter all reasonable expenses of Administrative Agent, Sole Lead Arranger and the Lenders in connection with any waiver, approval, or consent hereunder or under the other Loan Documents or any amendment, supplement or replacement of any of the Loan Documents, or any Default or alleged Default hereunder; and (b) if a Default or an Event of Default occurs, all out-of-pocket expenses incurred by Administrative Agent, Sole Lead Arranger or the Lenders, including reasonable fees and disbursements of legal counsel in connection with such Event of Default and collection and other enforcement proceedings resulting therefrom (including, without limitation, any bankruptcy or other insolvency proceedings), fees of auditors and consultants incurred in connection therewith and investigation expenses incurred by Administrative Agent, Sole Lead Arranger and the Lenders in connection therewith. Borrower and the Guarantor Subsidiaries, jointly and severally, indemnify Administrative Agent, Sole Lead Arranger and each Lender and hold Administrative Agent, Sole Lead Arranger and each Lender harmless from and against any and all liabilities, losses, damages, costs and expenses of any kind (including, without limitation, the reasonable fees and disbursements of counsel for Administrative Agent, Sole Lead Arranger and the Lenders in connection with any investigative, administrative or judicial proceeding, whether or not Agents, Sole Lead Arranger or Lenders shall be designated a party thereto) which may be incurred by Administrative Agent, Sole Lead Arranger or any Lender relating to or arising out of this Agreement or any actual or proposed use of proceeds of the Notes or the Competitive Bid Notes; PROVIDED THAT NEITHER ADMINISTRATIVE AGENT, SOLE LEAD ARRANGER NOR ANY LENDER SHALL HAVE THE RIGHT TO BE INDEMNIFIED HEREUNDER FOR ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, IT BEING THE INTENTION HEREBY THAT ADMINISTRATIVE AGENT, SOLE LEAD ARRANGER AND EACH LENDER SHALL BE INDEMNIFIED FOR THE CONSEQUENCES OF ITS NEGLIGENCE (SOLE, CONTRIBUTORY, CONTINGENT OR OTHERWISE) WHETHER WHOLE OR IN PART. 113 SECTION 11.5. AMENDMENTS, WAIVERS AND CONSENTS. Any provision of this Agreement, the Notes or the other Loan Documents may be amended or waived, or the Lenders may give approvals or consents hereunder, if, but only if, such amendment, in writing and is signed by Borrower and by the Required Lenders or by Administrative Agent on behalf of the Required Lenders. SECTION 11.6. SURVIVAL. The obligations of Borrower and the rights of Administrative Agent and the Lenders under the Loan Documents shall continue until all Obligations have been paid in full and as provided in SECTION 11.14. All representations, warranties and covenants (including, without limitation, indemnities) made by Borrower herein or in any other Loan Document shall survive the delivery of the Loan Documents to Administrative Agent and the Lenders, the making of Advances, and the termination of the commitment of the Lender's to lend hereunder, and, with respect to indemnities herein (and any other provisions in any Loan Document specified to survive), shall survive the payment in full of the Obligations and the release or termination of the Loan Documents, any bankruptcy or other debtor relief proceeding, and any other event whatsoever. No investigation at any time made by or on behalf of Administrative Agent or the Lenders shall diminish the right of Administrative Agent and the Lenders to rely on all representations and warranties made by Borrower under any Loan Document. SECTION 11.7. PRIOR UNDERSTANDINGS; NO DEFENSES; RELEASE; NO ORAL AGREEMENTS. This Agreement supersedes all other prior understandings and agreements, whether written or not, between the parties hereto relating specifically to the transactions provided for herein. Borrower and each Guarantor Subsidiary, for themselves and for all Consolidated Subsidiaries, confirm that there are no existing defenses, claims, counterclaims or rights of offset against Administrative Agent or any Lender in connection with the negotiation, preparation, execution, performance or any other matters related to this Agreement or any of the other Loan Documents and any of the transactions contemplated thereby, and Borrower and each Guarantor Subsidiary, for themselves and for all Consolidated Subsidiaries, hereby expressly release and discharge Administrative Agent and each Lender, and the Representatives of Administrative Agent and each Lender, from any and all such claims, known or unknown. Borrower and each Guarantor Subsidiary further confirm that neither Administrative Agent nor any Lender has made any agreements with, or commitments or representations to, Borrower or any Guarantor Subsidiary or any other Consolidated Subsidiary (either in writing or orally) other than as expressly stated herein or in the other Loan Documents. THIS WRITTEN LOAN AGREEMENT, TOGETHER WITH THE OTHER WRITTEN LOAN DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENT OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. To the fullest extent applicable, Borrower, each Guarantor Subsidiary, Administrative Agent and each Lender acknowledge and agree that this Agreement and each of the other Loan Documents shall be subject to Section 26.02 of the Texas Business and Commerce Code. 114 SECTION 11.8. LIMITATION ON INTEREST. It is expressly stipulated and agreed to be the intent of Borrower, Administrative Agent and the Lenders at all times to comply with the applicable law governing the maximum rate or amount of interest payable on or in connection with the Notes, the Competitive Bid Notes and the Credit Facility. If the applicable law is ever judicially interpreted so as to render usurious any amount called for under the Notes or the Competitive Bid Notes, this Agreement or under any of the other Loan Documents, or contracted for, charged, taken, reserved or received with respect to any of the Notes, the Competitive Bid Notes, this Agreement or any other Loan Document, or if acceleration of the maturity of the Notes or any Competitive Bid Note, any prepayment by Borrower, or any other circumstance whatsoever, results in any Lender having been paid any interest in excess of that permitted by applicable law, then it is the express intent of Borrower, Administrative Agent and all the Lenders that all excess amounts theretofore collected by Lenders be credited on the balance of the Notes (or, if the Notes have been or would thereby be paid in full, credited to the Competitive Bid Notes, and if the Competitive Bid Notes have been paid in full, refunded to Borrower), and the provisions of the Notes, any Competitive Bid Notes and the other applicable Loan Documents immediately be deemed reformed and the amounts thereafter collectible hereunder and thereunder reduced, without the necessity of the execution of any new document, so as to comply with the applicable law, but so as to permit the recovery of the fullest amount otherwise called for hereunder and thereunder. The right to accelerate the maturity of the Notes or any Competitive Bid Note does not include the right to accelerate any interest which has not otherwise accrued on the date of such acceleration, and Lenders do not intend to collect any unearned interest in the event of acceleration. All sums paid or agreed to be paid to Administrative Agent or the Lenders for the use, forbearance or detention of the indebtedness evidenced hereby or by the Notes or any Competitive Bid Note shall, to the extent permitted by applicable law, be amortized, prorated, allocated and spread throughout the full term of such indebtedness until payment in full so that the rate or amount of interest on account of such indebtedness does not exceed the Maximum Lawful Rate or maximum amount of interest permitted under applicable law. The term "APPLICABLE LAW" as used herein shall mean the laws of the State which govern this Agreement, or DIDMCA or any other applicable United States federal law to the extent that it permits Lenders to contract for, charge, take, reserve or receive a greater amount of interest than under laws of the state which govern this Agreement. The provisions of this SECTION 11.8 shall control all agreements between Borrower, Administrative Agent or the Lenders. SECTION 11.9. INVALID PROVISIONS. If any provision of the Loan Documents is held to be illegal, invalid, or unenforceable under present or future laws effective during the term thereof, such provision shall be fully severable, the Loan Documents shall be construed and enforced as if such illegal, invalid, or unenforceable provision had never comprised a part thereof, and the remaining provisions thereof shall remain in full force and effect and shall not be affected by the illegal, invalid, or unenforceable provision or by its severance therefrom. Furthermore, in lieu of such illegal, invalid, or unenforceable provision there shall be added automatically as a part of the Loan Documents a provision as similar in terms to such illegal, invalid, or unenforceable provision as may be possible and be legal, valid and enforceable. 115 SECTION 11.10. LENDER ASSIGNMENTS AND PARTICIPATIONS. (a) Lenders may assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Note, its Competitive Bid Note and its Commitment); PROVIDED, HOWEVER, that (i) each such assignment shall be to an Eligible Assignee; (ii) except in the case of an assignment to another Lender or an Affiliate of any Lender, or an assignment of all of a Lender's rights and obligations under this Agreement, any such partial assignment shall be in an amount at least equal to Ten Million and No/100 Dollars ($10,000,000.00) in Commitment amount, unless Administrative Agent otherwise consents to a lesser amount; (iii) each such assignment by a Lender shall be of a constant, and not varying, percentage of all of its rights and obligations under this Agreement and the applicable Note and Competitive Bid Note; and (iv) the parties to such assignment shall execute and deliver to Administrative Agent for its acceptance, with a copy to Borrower, an Assignment and Acceptance in the form of EXHIBIT D hereto, together with any Note subject to such assignment and a processing fee of $3,500, and payment of all legal fees and expenses incurred by Administrative Agent with respect to such Assignment. Upon execution, delivery, and acceptance of such Assignment and Acceptance, the assignee thereunder shall be a party hereto and, to the extent of such assignment, have the obligations, rights, and benefits of a Lender hereunder and the assigning Lender shall, to the extent of such assignment, relinquish its rights and be released from its obligations under this Agreement. Upon the consummation of any assignment pursuant to this Section, the assignor, Administrative Agent and Borrower shall make appropriate arrangements so that, if required, a new Note and any new Competitive Bid Notes are issued to the assignor and the assignee. If the assignee is not incorporated under the laws of the United States of America or a state thereof, it shall deliver to Borrower and Administrative Agent certification as to exemption from deduction or withholding of Taxes in accordance with SECTION 3.14. (b) Administrative Agent shall maintain a copy of each Assignment and Acceptance delivered to and accepted by it and a register for the recordation of the names and addresses of the Lenders and the Commitments and Commitment Percentages and Aggregate Loan Percentages of each Lender from time to time (the "REGISTER"). The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and Borrower, Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by Borrower or any Lender at any reasonable time and from time to time upon reasonable prior notice. 116 (c) Upon its receipt of an Assignment and Acceptance executed by the parties thereto, together with the Note and any Competitive Bid Note(s) subject to such assignment, and payment of the processing fee, Administrative Agent shall, if such Assignment and Acceptance has been completed and is in substantially the form of EXHIBIT D hereto, (i) accept such Assignment and Acceptance, (ii) record the information contained therein in the Register and (iii) give prompt notice thereof to the parties thereto, and Borrower shall promptly execute and deliver one or more new Notes and Competitive Bid Notes payable to the assignee (and to the assigning Lender in the case of less than a full assignment of such Lender's interest in the Credit Facility), in the appropriate amount(s) of any such Note(s) and Competitive Bid Notes to be substantially in the form of EXHIBIT A-1 and A-2 as applicable, with the addition of a provision indicating that each such Note and any Competitive Bid Note is in renewal and replacement of the applicable prior Note or Competitive Bid Note. (d) Each Lender may sell participations to one or more Persons in all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and its Note, any such purchaser of such a participation interest a "PARTICIPANT"); PROVIDED, HOWEVER, that (i) such Lender's obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) prior to an Event of Default which has occurred and is continuing, such Participant (unless it is an Affiliate of a Lender) shall be approved by Borrower, such approval not to be unreasonably withheld or delayed by Borrower and such approval to be deemed given by Borrower if no objection is received by the selling Lender from Borrower within two (2) Business Days after notice of such proposed participation has been provided by the selling Lender to Borrower, (iv) the Participant shall be entitled to the benefit of the yield protection provisions contained in ARTICLE III, (v) any such participation shall be in an amount at least equal to Ten Million and No/100 Dollars ($10,000,000) in Commitment Amount, and (vi) Borrower shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement, and such Lender shall retain the sole right to enforce the obligations of Borrower relating to its Note and Competitive Bid Note and to approve any amendment, modification, or waiver of any provision of this Agreement (other than amendments, modifications, or waivers decreasing the amount of principal of or the rate at which interest is payable on such notes, extending any scheduled principal payment date or date fixed for the payment of interest on such notes or extending the Termination Date other than as provided for herein or releasing Borrower or any Guarantor Subsidiary from liability). (e) Notwithstanding any other provision set forth in this Agreement, any Lender may at any time assign and pledge all or any portion of its Note or its Competitive Bid Note or any amount outstanding thereunder to any Federal Reserve Bank as collateral security pursuant to Regulation A and any Operating Circular issued by such Federal Reserve Bank; provided that any foreclosure or similar action pursuant to such assignment or pledge shall be subject to the provisions of this SECTION 11.10 concerning assignments. Additionally, any Lender may, with the consent of Administrative Agent, pledge all or any portion of its Note and Competitive Bid Note to any trustee for, or any other representative of, holders of obligations owed by such Lender, as security for such obligations; provided that any foreclosure or similar action by such trustee shall be subject to the provisions of this SECTION 11.10 concerning assignments. No such assignment shall release the assigning Lender from its obligations hereunder. 117 (f) Any Lender may furnish any information concerning Borrower or any of the Subsidiaries in the possession of such Lender from time to time to assignees and Participants (including prospective assignees and participants), subject, however, to the provisions of SECTION 7.3; PROVIDED that, until Borrower has approved (or deemed to have approved) or disapproved a prospective assignee or Participant pursuant to this Agreement (if such approval is indicated by this Agreement at such time), any Lender may provide to such prospective assignee or Participant only information available to the public. SECTION 11.11. BINDING EFFECT. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns; PROVIDED THAT none of Borrower nor any Guarantor Subsidiary or other Consolidated Subsidiary shall, directly or indirectly, assign or transfer, or attempt to assign or transfer, any of its rights, duties or obligations under this Agreement without the express prior written consent of all of the Lenders. SECTION 11.12. SENIOR DEBT; BORROWER SUBORDINATION. The indebtedness of Borrower and the Guarantor Subsidiaries hereunder and under the Notes and all of the Obligations is intended to be and shall be senior to any subordinated indebtedness of Borrower or any Guarantor Subsidiary (the foregoing shall not in any way imply Lenders' consent to any such subordinate debt which is not otherwise permitted by this Agreement). The Notes and any other amounts advanced to or on behalf of Borrower or any other Person pursuant to the terms of this Agreement or any other Loan Document, shall never be in a position subordinate to any Debt of Borrower or any Guarantor Subsidiary owing to any other Person, except with the knowledge and written consent of the Lenders. If Borrower or any Guarantor Subsidiary is now or hereafter becomes indebted to Borrower or any other Guarantor Subsidiary, (a) such indebtedness and all interest thereon shall, at all times, be subordinate in all respects to the Obligations and to all liens, security interests and rights now or hereafter existing to secure the Obligations; and (b) Borrower or any other Guarantor Subsidiary holding such inter-company indebtedness shall not be entitled after the occurrence of a Default to enforce or receive payment, directly or indirectly, of any such indebtedness until the Obligations have been fully and finally paid and performed. 118 SECTION 11.13. NONLIABILITY OF AGENT AND LENDER. The relationship between Borrower and the Guarantor Subsidiaries, on the one hand, and that of Administrative Agent and the Lenders, on the other, shall be solely that of debtor and creditor. Neither Administrative Agent nor any Lender shall have any fiduciary responsibility to Borrower, the Guarantor Subsidiaries or any other Subsidiary of Borrower. Borrower agrees that neither Administrative Agent nor any Lender shall have liability to Borrower or any Guarantor Subsidiary or other Subsidiary of Borrower (whether sounding in tort, contract or otherwise) for losses suffered by Borrower or any Guarantor Subsidiary or other Subsidiary in connection with, arising out of, or in any way related to, the transactions contemplated and the relationship established by the Loan Documents, or any act, omission or event occurring in connection therewith, unless it is determined by a court of competent jurisdiction in a final and non-appealable order that such losses resulted from the gross negligence or willful misconduct of the party from which recovery is sought. Neither Administrative Agent nor any Lender shall have any liability with respect to, and Borrower, each Guarantor Subsidiary and each other Subsidiary hereby waives, releases and agrees not to sue for, any special, indirect or punitive damages suffered by Borrower or any Subsidiary in connection with, arising out of, or in any way related to the Loan Documents or the transactions contemplated thereby. SECTION 11.14. PAYMENT SET ASIDE. To the extent that Borrower or any other Person pays the Obligations or any part thereof to Administrative Agent or the Lenders, or Administrative Agent or the Lenders enforce any of their Rights under any Loan Document, and such payment or enforcement or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside, and/or required to be repaid to Borrower or such other Person, its estate, a trustee, receiver, or any other Person under any Law, then to the extent of such repayment, the Obligations or part thereof originally intended to be satisfied, together with all Loan Documents (including all the terms thereof and all of Agent's and Lenders= rights thereunder), notwithstanding any prior termination and/or delivery of the Loan Documents to Borrower (it being agreed that the provisions of this Section shall survive any such termination and/or delivery), shall be revived and continued in effect as if such payment had not been made or such enforcement had not occurred. Administrative Agent shall be entitled to retain the Loan Documents in its possession for one (1) year after the date on which all Obligations have been paid in full; provided, that such retention or non-retention of such documents after payment in full of all Obligations shall not impair the revival provisions in this Section or the survival provisions in SECTION 11.6. SECTION 11.15. CONSTRUCTION. The parties hereto acknowledge and agree that neither this Agreement nor any other Loan Document shall be construed more favorably in favor of one than the other based upon which party drafted the same, it being acknowledged that all parties hereto contributed substantially to the negotiations and preparation of this Agreement and the other Loan Documents. SECTION 11.16. TIME OF ESSENCE. Time shall be of the essence in this Agreement. SECTION 11.17. INCONSISTENT PROVISIONS. In the event of any conflict or inconsistency between the terms of this Agreement and the terms of the other Loan Documents, the terms of this Agreement shall control. SECTION 11.18. CONSOLIDATED GROUP. Borrower and the Guarantor Subsidiaries are engaged in the businesses set forth in SECTION 7.2 of this Agreement. These operations require financing on a basis such that the credit supplied can be made available from time to time to Borrower and the Guarantor Subsidiaries, as required for the continued successful operation of Borrower and the Guarantor Subsidiaries. Borrower and the Guarantor Subsidiaries have requested that Lenders make the Credit Facility available primarily for the purposes of financing the operations of Borrower and the Guarantor Subsidiaries. Borrower and the Guarantor Subsidiaries expect to derive benefit (and the boards of directors or other governing body of each of Borrower and the Guarantor Subsidiaries may reasonably be expected to derive benefit), directly or indirectly, from the Credit Facility established by Lenders, both in their separate capacities and as members of the group of companies, since the successful operation and condition of Borrower and each Guarantor Subsidiary is dependent on the continued successful performance of the functions of the group as a whole. 119 SECTION 11.19. SUBMISSION TO JURISDICTION; SERVICE OF PROCESS. (a) Any legal action or proceeding with respect to this Agreement or the Notes or any other Loan Document may be brought in the courts of the State of Texas or of the United States of America for the Southern District of Texas, and, by execution and delivery of this Agreement, Borrower and each Guarantor Subsidiary hereby accepts for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts. The parties hereto hereby irrevocably waive any objection, including, without limitation, any objection to the laying of venue or based on the grounds of FORUM NON CONVENIENS, which any of them may now or hereafter have to the bringing of any such action or proceeding in such respective jurisdictions. (b) Borrower and each Guarantor Subsidiary irrevocably consent to the service of process of any of the aforesaid courts in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to Borrower or such Guarantor Subsidiary at its address provided herein. (c) Nothing contained in this SECTION 11.19 shall affect the right of any Agent, any Lender or any holder of a Note to serve process in any other manner permitted by law or commence legal proceedings or otherwise proceed against Borrower in any other jurisdiction. SECTION 11.20. JURY TRIAL WAIVER. BORROWER, EACH GUARANTOR SUBSIDIARY, ADMINISTRATIVE AGENT AND EACH LENDER EACH HEREBY WAIVE ANY RIGHT TO A JURY TRIAL WITH RESPECT TO ANY MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES, THE COMPETITIVE BID NOTES, OR THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. SECTION 11.21. APPLICABLE LAW. THIS AGREEMENT, THE NOTES AND ALL THE OTHER LOAN DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS, EXCEPT TO THE EXTENT THAT UNITED STATES FEDERAL LAW APPLIES PURSUANT TO SECTION 11.8 OR OTHERWISE. SECTION 11.22. COUNTERPARTS. This Agreement and all amendments hereto, and all the other Loan Documents may be executed in any number of original counterparts, each of which when so executed and delivered shall be an original, and all of which, collectively, shall constitute one and the same agreement, it being understood and agreed that the signature pages may be detached from one or more counterparts and combined with the signature pages from any other counterpart in order that one or more fully executed originals may be assembled. 120 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers effective as of the Closing Date. BORROWER: Borrower's Tax ID No.: CAMDEN PROPERTY TRUST, a Texas real estate 76-6088377 investment trust By: G. Steven Dawson Senior Vice President and Chief Financial Officer GUARANTOR SUBSIDIARIES: CAMDEN USA, INC., a Delaware corporation By: Name: Title: CAMDEN OPERATING, L.P., a Delaware limited partnership By: CPT-GP, INC., a Delaware corporation, General Partner By: Name: Title: ADMINISTRATIVE AGENT AND LENDER: BANK OF AMERICA, N.A. By: Cynthia C. Sanford Senior Vice President 121 SYNDICATION AGENT AND LENDER: CHASE BANK OF TEXAS, NATIONAL ASSOCIATION By: Name: Title: DOCUMENTATION AGENT AND LENDER: FIRST NATIONAL BANK OF CHICAGO By: Name: Title: MANAGING AGENT AND LENDER: WELLS FARGO BANK, N.A. By: Name: Title: SOLE LEAD ARRANGER: BANC OF AMERICA SECURITIES LLC By: Name: Title: 122 CO-AGENTS AND LENDERS: COMMERZBANK AG NEW YORK BRANCH By: Name: Title: By: Name: Title: FIRST UNION NATIONAL BANK By: Name: Title: LENDERS: BANK AUSTRIA CREDITANSTALT CORPORATE FINANCE,INC. By: Name: Title: By: Name: Title: GUARANTY FEDERAL BANK, F.S.B. By: Name: Title: 123 SOUTHTRUST BANK, N.A. By: Name: Title: COMERICA BANK By: Name: Title: COMPASS BANK By: Name: Title: LASALLE BANK N.A. By: Name: Title: MELLON BANK, N.A. By: Name: Title: PNC BANK, NATIONAL ASSOCIATION By: Name: Title: 124 SCHEDULE I AGENTS, LENDERS AND BORROWER I. AGENTS, ARRANGER AND LENDERS A. ADMINISTRATIVE AGENT AND LENDER BANK OF AMERICA, N.A. 901 Main Street, 51st Floor Dallas, Texas 75202 Attention: Real Estate Loan Administration/ Pat Silva Tel: (214) 209-0281 Fax: (214) 209-1571 with copy to BANK OF AMERICA, N.A. 700 Louisiana, 5th Floor Houston, Texas 77002 Attn: Cynthia C. Sanford Tel: (713) 247-7093 Fax: (713) 247-6124 B. SOLE LEAD ARRANGER BANC OF AMERICA SECURITIES LLC 100 North Tryon Street, 11th Floor Mail Code NC1-007-11-07 Charlotte, North Carolina 28255 Attn: Cynthia Stanford Tel: (704) 386-8305 Fax: (704) 386-0255 C. SYNDICATION AGENT AND LENDER CHASE BANK OF TEXAS, NATIONAL ASSOCIATION 707 Travis, 6th Floor North Houston, Texas 75252-8047 Attn: Susan M. Tate Tel: (713) 216-1511 Fax: (713) 216-7713 D. DOCUMENTATION AGENT AND LENDER FIRST NATIONAL BANK OF CHICAGO One First National Plaza Chicago, Illinois 60670 Mail Code IL1-0315 Attention: Todd Popovich Tel: (602) 221-2375 Fax: (602) 221-4435 125 E. MANAGING AGENT AND LENDER WELLS FARGO BANK, N.A. 1000 Louisiana, 4th Floor Houston, Texas 70002 Attention: Steve May Tel: (713) 319-1424 Fax: (713) 739-1077 F. CO-AGENT AND LENDER COMMERZBANK AG, NEW YORK AND GRAND CAYMAN BRANCHES 2 World Financial Center New York, New York 10281 Attention: Lisa C. Miller Tel: (212) 266-7583 Fax: (212) 266-7565 G. CO-AGENT AND LENDER FIRST UNION NATIONAL BANK 301 South College Street, 6th Floor Charlotte, North Carolina 28288 Attention: Rex E. Rudy Tel: (704) 383-6505 Fax: (704) 383-6205 H. LENDERS BANK AUSTRIA CREDITANSTALT CORPORATE FINANCE, INC. Two Ravinia Drive, Suite 1680 Atlanta, Georgia 30346 Attention: Richard Varalla Tel: (770) 390-1850 Fax: (770) 390-1851 GUARANTY FEDERAL BANK, F.S.B. 8333 Douglas Avenue, Suite 1000 Dallas, Texas 75225 Attention: Roger Davis Tel: (214) 360-2849 Fax: (214) 360-1661 SOUTHTRUST BANK, N.A. 420 North 20th Street, 11th Floor Birmingham, Alabama 35203 Attention: Samuel L. Boroughs Tel: (205) 254-5039 Fax: (205) 254-8270 126 COMERICA BANK 500 Woodward Avenue, MC 3256 Detroit, Michigan 48226 Attention: Leslie A. Vogel Tel: (313) 222-9290 Fax: (313) 222-9295 COMPASS BANK 24 Greenway Plaza, Suite 1400 Houston, Texas 77046 Attention: Denise M. Traylor Tel: (713) 993-8569 Fax: (713) 993-8524 LASALLE BANK N. A. 135 South LaSalle Steet, Suite 1225 Chicago, Illinois 60603-3499 Attention: Klay Schmeisser Tel: (312) 904-0647 Fax: (312) 904-6691 MELLON BANK, N.A. One Mellon Bank Center, Room 5325 Pittsburgh, Pennsylvania 15258 Attention: James McDunn Tel: (412) 234-5344 Fax: (412) 234-8657 PNC BANK, NATIONAL ASSOCIATION One PNC Plaza, 19th Floor 249 Fifth Avenue, Mail Code P1-POPP-19-2 Pittsburgh, Pennsylvania 15222-2707 Attention: Theron D. Imbrie Tel: (412) 762-4464 Fax: (412) 762-6500 127 COMMITMENT AMOUNTS AND PERCENTAGES
COMMITMENT LENDER COMMITMENT PERCENTAGE Bank of America, N.A. $35,000,000 9.33333333333333333333% Chase Bank of Texas, National Association. $35,000,000 9.33333333333333333333% First National Bank of Chicago $35,000,000 9.33333333333333333333% Wells Fargo Bank, National Association $35,000,000 9.33333333333333333333% Commerzbank AG, New York and Grand Cayman $30,000,000 8.0000000000000000000% Branches First Union National Bank $30,000,000 8.0000000000000000000% Bank Austria Creditanstalt Corporate $25,000,000 6.666666666666666666% Finance, Inc. Guaranty Federal Bank, F.S.B. $25,000,000 6.666666666666666666% SouthTrust Bank, N.A. $25,000,000 6.666666666666666666% Comerca Bank $20,000,000 5.333333333333333333% Compass Bank $20,000,000 5.333333333333333333% LaSalle Bank N.A. $20,000,000 5.333333333333333333% Mellon Bank, N.A. $20,000,000 5.333333333333333333% PNC Bank, National Assocation $20,000,000 5.333333333333333333% - -------------------------------------------------------------------------------------------------------------------- Total $375,000,000 100% - --------------------------------------------------------------------------------------------------------------------
II. BORROWER CAMDEN PROPERTY TRUST 3 Greenway Plaza Suite 1300 Houston, Texas 77046 Attn: Mr. G. Steven Dawson Fax No.: (713) 354-2710 128 SCHEDULE II
LIBOR MARGIN; VARIABLE RATE MARGIN; FACILITY FEE PERCENTAGE TIERS Applicable Debt Rating1 LIBOR Variable Facility S&P/Moody's Margin Rate Fee Margin Percentage I A/A2 or Higher 65 bps 0 bps 15 bps II A-/A3 75 bps 0 bps 15 bps III BBB+/Baa1 90 bps 0 bps 20 bps IV BBB/Baa22 100 bps 0 bps 20 bps V BBB-/Baa3 110 bps 0 bps 25 bps VI Less than BBB-/Baa3 160 bps 50 bps 30 bps _____________________________ 1. As defined in Section 1.1, the Applicable Debt Rating is the lower of the Moody's Rating or the S&P Rating at the time in question. 2. Current Applicable Debt Rating on the Closing Date.
129 EXHIBIT A-1 REVOLVING PROMISSORY NOTE $____________________ Dallas, Texas ______________, 1999 FOR VALUE RECEIVED, CAMDEN PROPERTY TRUST, a Texas real estate investment trust ("MAKER"), hereby promises to pay to the order of , a ___________________ ("LENDER"), in care of Administrative Agent, at its banking house in the City of Dallas, Dallas County, Texas, or at such other address given to Maker by Administrative Agent, the principal sum of and ___/100 Dollars ($ . ), or so much thereof as may be advanced and outstanding, together with interest, as hereinafter described. This Note has been executed and delivered pursuant to the terms of that certain Credit Agreement (as the same may be modified, amended, supplemented, extended or restated from time to time, the "CREDIT AGREEMENT") dated the date hereof, executed by and among Maker, Bank of America, N.A., as Administrative Agent ("ADMINISTRATIVE AGENT"), Chase Bank of Texas, National Association, as Syndication Agent, First National Bank of Chicago, as Documentation Agent, Wells Fargo Bank, N.A, as Managing Agent, and the Lenders (which includes the payee of this Note), and is one of the notes defined therein as a "NOTE", the terms and provisions of the Credit Agreement related to this Note being incorporated herein by reference for all purposes. Each capitalized term used but not defined herein shall have the meaning given to such term in the Credit Agreement. The terms of the Credit Agreement shall govern in the case of any inconsistency between such terms and the terms hereof. Payment and performance of this Note is guaranteed by the Guarantor Subsidiaries pursuant to each Guaranty Agreement. Any holder hereof shall be entitled to all benefits and remedies and security set forth in the Credit Agreement, the Guaranty Agreements and all the other Loan Documents. 1. INTEREST AND PAYMENT. (a) MATURITY. The principal of this Note and all accrued but unpaid interest hereon shall be due and payable in full on the Termination Date as in effect under the Credit Agreement. (b) ACCRUAL OF INTEREST. Subject to Paragraph 1(f) below, interest on this Note shall accrue at a rate per annum equal to the lesser of (i) at Maker's option, the Variable Rate or the Adjusted LIBOR Rate, subject, however, to the provisions of the Credit Agreement, or (ii) the Maximum Lawful Rate; provided, however, that as to any portion of the outstanding principal balance hereof that is not subject to an effective election of or conversion to the Adjusted LIBOR Rate in accordance with the terms of the Credit Agreement, interest on such portion of this Note shall accrue interest at the lesser of (i) the Variable Rate or (ii) the Maximum Lawful Rate. Interest on this Note shall be calculated at a daily rate equal to 1/360 of the annual percentage rate which this Note bears, subject to the provisions hereof limiting interest to the Maximum Lawful Rate. Without notice to Maker or any other Person, the Variable Rate and the Maximum Lawful Rate shall each automatically fluctuate upward and downward as and in the amount by which the Base Rate and the Maximum Lawful Rate, respectively, fluctuate, subject always to limitations contained in this Note and the Credit Agreement. (c) AGREEMENTS CONCERNING PRICING ELECTION. Reference should be made to the provisions of SECTION 3.5 of the Credit Agreement concerning the terms, manner and agreements related to the interest rate elections available to Maker under this Note. (d) INTEREST PAYMENTS. Accrued interest hereon shall be due and payable as is provided in ARTICLE III of the Credit Agreement, which provides, in part, for (i) monthly payments of interest on the tenth (10th ) day of each calendar month, commencing on _________ ___, 199__, and continuing thereafter on the tenth (10th) day of each month during the Credit Period, and (ii) to the extent applicable, payment on the last day of each Interest Period. 130 (e) COSTS DUE TO REGULATORY CHANGES. Maker shall indemnify Lender against and reimburse Lender for costs to Lender, as a result of any Regulatory Change, in the maintaining of any LIBOR Rate Advance as provided in the Credit Agreement. (f) DEFAULT RATE. After maturity of this Note or the occurrence of an Event of Default, the outstanding principal balance of this Note shall, at the option of the Lenders, bear interest at the Default Rate. Any past due principal, and to the extent permitted by law, past due interest on this Note shall bear interest, payable as it accrues on demand, for each day until paid at the Default Rate. Such interest shall continue to accrue at the Default Rate notwithstanding the entry of a judgment with respect to any of the Obligations or any other event, unless otherwise provided by law. (g) MAXIMUM LAWFUL RATE ADJUSTMENTS. If at any time the Applicable Rate shall be limited to the Maximum Lawful Rate, any subsequent reductions in the Applicable Rate shall not reduce the rate of interest on this Note below the Maximum Lawful Rate until the total amount of interest accrued equals the amount of interest which would have accrued if the Applicable Rate had at all times been in effect. In the event that at maturity (stated or by acceleration), or at the final payment of the Credit Facility, the total amount of interest paid or accrued on the Credit Facility is less than the amount of interest which would have accrued if the Applicable Rate had at all times been in effect with respect thereto, then at such time, to the extent permitted by law, Maker shall pay to Administrative Agent, for the ratable benefit of the Lenders, an amount equal to the difference between (a) the lesser of the amount of interest which would have accrued if the Applicable Rate had at all times been in effect and the amount of interest which would have accrued if the Maximum Lawful Rate had at all times been in effect, and (b) the amount of interest actually paid on the Credit Facility. 2. DEFAULT. The occurrence of a Default or an Event of Default, under and as defined in the Credit Agreement, shall constitute, respectively, a Default or an Event of Default under this Note. 3. REMEDIES. (a) ALL REMEDIES AVAILABLE. Upon the occurrence of an Event of Default, the holder hereof, acting by and through Administrative Agent in accordance with the terms of Articles IX and X of the Credit Agreement, shall have the right to declare the entire unpaid principal balance of, and all accrued unpaid interest on, this Note at once due and payable (and upon such declaration, the same shall be at once due and payable), to foreclose any liens and security interests securing payment hereof (if any), to offset against this Note any sum or sums owed by it to Maker, and to exercise any of its other rights, powers and remedies under this Note, under the Credit Agreement or any other Loan Document, or at law or in equity. (b) NO WAIVER. Neither the failure by the holder hereof to exercise, nor delay by the holder hereof in exercising, the right to accelerate the maturity of this Note or any other right, power or remedy upon any Default or Event of Default shall be construed as a waiver of such Default or Event of Default or as a waiver of the right to exercise any such right, power or remedy at any time. No single or partial exercise by the holder hereof of any right, power or remedy shall exhaust the same or shall preclude any other or further exercise thereof, and every such right, power or remedy may be exercised at any time and from time to time. All rights and remedies provided for in this Note and in any other Loan Document are cumulative of each other and of any and all other rights and remedies existing at law or in equity, and the holder hereof shall, in addition to the rights and remedies provided herein or in any other Loan Document, be entitled to avail itself of all such other rights and remedies as may now or hereafter exist at law or in equity for the collection of the indebtedness owing hereunder, and the resort to any right or remedy provided for hereunder or under any such other Loan Document or provided for by law or in equity shall not prevent the concurrent or subsequent employment of any other appropriate rights or remedies. Without limiting the generality of the foregoing provisions, the acceptance by the holder hereof from time to time of any payment under this Note which is past due or which is less than the payment in full of all amounts due and payable at the time of such payment, shall not (i) constitute a waiver of or impair or extinguish the rights of the holder hereof to accelerate the maturity of this Note or to exercise any other right, power or remedy at the time or at any subsequent time, or nullify any prior exercise of any such right, power or remedy, or (ii) constitute a waiver of the requirement of punctual payment and performance, or a novation in any respect. 131 4. USURY SAVINGS PROVISIONS. (a) GENERAL LIMITATION. Notwithstanding anything herein or in any other Loan Document, expressed or implied, to the contrary, in no event shall any interest rate charged hereunder or under any of the other Loan Documents, or any interest contracted for, collected or received by Lender or any holder hereof, exceed the Maximum Lawful Rate or the maximum amount permitted under law. (b) INTENT OF PARTIES. It is expressly stipulated and agreed to be the intent of Maker and Lender at all times to comply with the applicable law governing the maximum rate or amount of interest payable on or in connection with this Note. If the applicable law is ever judicially interpreted so as to render usurious any amount called for under this Note or under any of the other Loan Documents, or contracted for, charged, taken, reserved or received with respect to this Note, or if acceleration of the maturity of this Note, any prepayment by Maker, or any other circumstance whatsoever, results in Lender having been paid any interest in excess of that permitted by applicable law, then it is the express intent of Maker and Lender that all excess amounts theretofore collected by Lender be credited on the principal balance of this Note (or, if this Note has been or would thereby be paid in full, refunded to Maker), and the provisions of this Note and the other applicable Loan Documents immediately be deemed reformed and the amounts thereafter collectible hereunder and thereunder reduced, without the necessity of the execution of any new document, so as to comply with the applicable law, but so as to permit the recovery of the fullest amount otherwise called for hereunder and thereunder. The right to accelerate the maturity of this Note does not include the right to accelerate any interest which has not otherwise accrued on the date of such acceleration, and Lender does not intend to collect any unearned interest in the event of acceleration. All sums paid or agreed to be paid to Lender for the use, forbearance or detention of the indebtedness evidenced hereby or by any other Loan Document shall, to the extent permitted by applicable law, be amortized, prorated, allocated and spread throughout the full term of such indebtedness until payment in full so that the rate or amount of interest on account of such indebtedness does not exceed the Maximum Lawful Rate. The term "APPLICABLE LAW" as used herein shall mean the laws of the State of Texas, or DIDMCA or any other applicable United States federal law to the extent that it permits Lender to contract for, charge, take, reserve or receive a greater amount of interest than under the laws of the state which governs the Credit Agreement. The provisions of this paragraph shall control all agreements between Maker and Lender. 5. GENERAL PROVISIONS. (a) BUSINESS DAYS. Whenever any payment shall be due under this Note on a day which is not a Business Day, the date on which such payment is due shall be extended to the next succeeding Business Day, and such extension of time shall be included in the computation of the amount of interest then payable. (b) MANNER OF PAYMENT. The manner in which payments are to be made on this Note shall be governed by the provisions hereof and the Credit Agreement, including without limitation ARTICLE III of the Credit Agreement. (c) PREPAYMENTS. Voluntary prepayments may be made on this Note subject to and in accordance with SECTION 3.6 of the Credit Agreement. A principal payment may be required on this Note from time to time subject to and in accordance with SECTION 3.2(B) of the Credit Agreement. (d) APPLICATION OF PAYMENTS. All payments made on this Note shall be applied in accordance with SECTIONS 3.6, 3.9 and 9.9 of the Credit Agreement, as applicable. Nothing herein shall limit or impair any rights of any holder hereof to apply as provided in the Loan Documents any past due payments or other collections after default. Except to the extent specific provisions are set forth in this Note or another Loan Document with respect to application of payments, all payments received by the holder hereof shall be applied, to the extent thereof, to the indebtedness owing by Maker to the holder hereof in such order and manner as the Lenders shall deem appropriate, any instructions from Maker or anyone else to the contrary notwithstanding. (e) COSTS OF COLLECTION. If any holder of this Note retains an attorney in connection with any default or at maturity or to collect, enforce or defend this Note or any other Loan Document in any lawsuit or in any probate, reorganization, bankruptcy or other proceeding, or if Maker sues any holder of this Note in connection with this Note or any other Loan Document and does not prevail, then Maker agrees to pay to each such holder, in addition to principal 132 and interest, all costs and expenses incurred by such holder in trying to collect this Note or in any such suit or proceeding, including reasonable attorneys= fees. (f) WAIVERS AND ACKNOWLEDGMENTS. Maker and all sureties, endorsers, guarantors and any other party now or hereafter liable for the payment of this Note in whole or in part, hereby severally (i) waive demand, presentment for payment, notice of dishonor and of nonpayment, protest, notice of protest, notice of intent to accelerate, notice of acceleration and all other notice (except only for any notice that is specifically required by the terms of the Credit Agreement or any other Loan Document), filing of suit and diligence in collecting this Note or enforcing any security herefor; (ii) agree to any substitution, subordination, exchange or release of any party primarily or secondarily liable hereon or any security that may ever be given; (iii) agree that the holder hereof shall not be required first to institute suit or exhaust its remedies against Maker or others liable or to become liable hereon or to enforce its rights against them or any security herefor; (iv) consent to any extension or postponement of time of payment of this Note for any period or periods of time and to any partial payments, before or after maturity, and to any other indulgences with respect hereto, without notice thereof to any of them; and (v) submit (and waive all rights to object) to personal jurisdiction in the State of Texas, and venue in Harris County, Texas, for the enforcement of any and all obligations under the Loan Documents. (g) AMENDMENTS IN WRITING. This Note may not be changed, amended or modified except in a writing expressly intended for such purpose and executed by the party against whom enforcement of the change, amendment or modification is sought. (h) NOTICES. Any notice required or which any party desires to give under this Note shall be given and effective as provided in SECTION 11.2 of the Credit Agreement. (i) ASSIGNMENTS/PARTICIPATIONS. Maker acknowledges and agrees that the holder of this Note may, at any time and from time to time, assign all or a portion of its interest in the Credit Facility or transfer to any Person a participation interest in the Credit Facility, subject to and in accordance with the terms and conditions of the Credit Agreement, including SECTION 11.10 thereof. (j) SUCCESSORS AND ASSIGNS. All of the covenants, stipulations, promises and agreements contained in this Note by or on behalf of Maker shall bind its successors and assigns and shall be for the benefit of Lender and any holder hereof, and its successors and assigns, whether so expressed or not, subject, however, to the provisions of SECTION 11.10 of the Credit Agreement. (k) TIME OF THE ESSENCE. Time shall be of the essence in this Note with respect to all of Maker's obligations hereunder. (l) GOVERNING LAW. THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY TEXAS LAW, EXCEPT TO THE EXTENT THAT UNITED STATES FEDERAL LAW APPLIES PURSUANT TO SECTION 11.8 OF THE CREDIT AGREEMENT OR OTHERWISE. (m) INTEGRATION. THIS NOTE AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. IN WITNESS WHEREOF, Maker has duly executed this Note as of the date first above written. 133 MAKER: CAMDEN PROPERTY TRUST, a Texas real estate investment trust By: ___________________________________________ Name: _________________________________________ Title: ________________________________________ 134 EXHIBIT A-2 $187,500,000 Dallas, Texas ____________ (Date) COMPETITIVE BID NOTE FOR VALUE RECEIVED, CAMDEN PROPERTY TRUST, a Texas real estate investment trust ("MAKER") hereby promises to pay to the order of ("LENDER") the aggregate unpaid principal amount of all Competitive Bid Loans made by Lender to Maker pursuant to each Competitive Bid Acceptance Notice, in immediately available funds at the main Dallas, Texas office of Bank of America, N.A., a national banking association, as Administrative Agent under the Credit Agreement (hereinafter defined), together with interest on the unpaid principal amount hereof at the rates and on the dates included in each Competitive Bid Acceptance Notice. Maker shall pay the principal of and accrued and unpaid interest on each Competitive Bid Loan as indicated in each Competitive Bid Acceptance Notice and SECTION 2.3 of the Credit Agreement. This Note is being executed and delivered pursuant to the terms of that certain Credit Agreement (as the same may be modified, amended, supplemented, extended or restated from time to time, the "CREDIT AGREEMENT"), dated _________ __, 1999, executed by and among Maker, Bank of America, N.A., as administrative agent ("ADMINISTRATIVE AGENT"), Chase Bank of Texas, National Association, as Syndication Agent, First National Bank of Chicago, as Documentation Agent, Wells Fargo Bank, N.A., as Managing Agent, and the Lenders (which includes the payee of this Note), and is one of the notes defined therein as a "COMPETITIVE BID NOTE", the terms and provisions of the Credit Agreement related to this Note being incorporated herein by reference for all purposes. Each capitalized term used but not defined herein shall have the meaning given to such term in the Credit Agreement. The terms of the Credit Agreement shall govern in the case of any inconsistency between such terms and the terms hereof. Lender may from time to time submit to Maker a Competitive Bid Quote pursuant to SECTION 2.3 of the Credit Agreement. In the event that Maker accepts all or a portion of the offer reflected in any such Competitive Bid Quote pursuant to the terms of a Competitive Bid Acceptance Notice , this Note shall evidence the indebtedness created by the applicable Competitive Bid Loan and Maker's obligations to pay same in accordance with the terms of the respective Competitive Bid Acceptance Notice and the Credit Agreement. Lender shall, and is hereby authorized to, record on each Schedule attached hereto for each Competitive Bid Loan made by Lender, or to otherwise record in accordance with its usual practice, the date and amount of each Competitive Bid Loan made by Lender and the date and amount of each principal and/or interest payment thereon, provided that Lender's failure to do so shall not absolve Maker of its obligations hereunder or under any other Loan Document or in any way affect Maker's obligations to pay all principal of and accrued interest on each Competitive Bid Loan. Payment and performance of this Note is guaranteed pursuant to each Guaranty Agreement. Any holder shall be entitled to all benefits and remedies set forth in the Credit Agreement, the Guaranty Agreements and all the other Loan Documents. DEFAULT. The occurrence of a Default or an Event of Default, under and as defined in the Credit Agreement, shall constitute, respectively, a Default or an Event of Default under this Note. REMEDIES. (a) ALL REMEDIES AVAILABLE. Upon the occurrence of an Event of Default, the holder hereof, acting by and through Administrative Agent in accordance with the terms of Articles IX and X of the Credit Agreement, shall have the right to declare the entire unpaid principal balance of, and all accrued unpaid interest on, this Note at once due and payable (and upon such declaration, the same shall be at once due and payable), to foreclose any liens and security interests securing payment hereof (if any), to offset against this Note any sum or sums owed by it to Maker, and to exercise any of its other rights, powers and 135 remedies under this Note, under the Credit Agreement or any other Loan Document, or at law or in equity. (b) NO WAIVER. Neither the failure by the holder hereof to exercise, nor delay by the holder hereof in exercising, the right to accelerate the maturity of this Note or any other right, power or remedy upon any Default or Event of Default shall be construed as a waiver of such Default or Event of Default or as a waiver of the right to exercise any such right, power or remedy at any time. No single or partial exercise by the holder hereof of any right, power or remedy shall exhaust the same or shall preclude any other or further exercise thereof, and every such right, power or remedy may be exercised at any time and from time to time. All rights and remedies provided for in this Note and in any other Loan Document are cumulative of each other and of any and all other rights and remedies existing at law or in equity, and the holder hereof shall, in addition to the rights and remedies provided herein or in any other Loan Document, be entitled to avail itself of all such other rights and remedies as may now or hereafter exist at law or in equity for the collection of the indebtedness owing hereunder, and the resort to any right or remedy provided for hereunder or under any such other Loan Document or provided for by law or in equity shall not prevent the concurrent or subsequent employment of any other appropriate rights or remedies. Without limiting the generality of the foregoing provisions, the acceptance by the holder hereof from time to time of any payment under this Note which is past due or which is less than the payment in full of all amounts due and payable at the time of such payment, shall not (i) constitute a waiver of or impair or extinguish the rights of the holder hereof to accelerate the maturity of this Note or to exercise any other right, power or remedy at the time or at any subsequent time, or nullify any prior exercise of any such right, power or remedy, or (ii) constitute a waiver of the requirement of punctual payment and performance, or a novation in any respect. USURY SAVINGS PROVISIONS. (a) GENERAL LIMITATION. Notwithstanding anything herein or in any other Loan Document, expressed or implied, to the contrary, in no event shall any interest rate charged hereunder or under any of the other Loan Documents, or any interest contracted for, collected or received by Lender or any holder hereof, exceed the Maximum Lawful Rate or the maximum amount permitted under law. (b) INTENT OF PARTIES. It is expressly stipulated and agreed to be the intent of Maker and Lender at all times to comply with the applicable law governing the maximum rate or amount of interest payable on or in connection with this Note. If the applicable law is ever judicially interpreted so as to render usurious any amount called for under this Note or under any of the other Loan Documents, or contracted for, charged, taken, reserved or received with respect to this Note, or if acceleration of the maturity of this Note, any prepayment by Maker, or any other circumstance whatsoever, results in Lender having been paid any interest in excess of that permitted by applicable law, then it is the express intent of Maker and Lender that all excess amounts theretofore collected by Lender be credited on the principal balance of this Note (or, if this Note has been or would thereby be paid in full, refunded to Maker), and the provisions of this Note and the other applicable Loan Documents immediately be deemed reformed and the amounts thereafter collectible hereunder and thereunder reduced, without the necessity of the execution of any new document, so as to comply with the applicable law, but so as to permit the recovery of the fullest amount otherwise called for hereunder and thereunder. The right to accelerate the maturity of this Note does not include the right to accelerate any interest which has not otherwise accrued on the date of such acceleration, and Lender does not intend to collect any unearned interest in the event of acceleration. All sums paid or agreed to be paid to Lender for the use, forbearance or detention of the indebtedness evidenced hereby or by any other Loan Document shall, to the extent permitted by applicable law, be amortized, prorated, allocated and spread throughout the full term of such indebtedness until payment in full so that the rate or amount of interest on account of such indebtedness does not exceed the Maximum Lawful Rate. The term "APPLICABLE LAW" as used herein shall mean the laws of the State of Texas, or DIDMCA or any other applicable United States federal law to the extent that it permits Lender to contract for, charge, take, reserve or receive a greater amount of interest than under the laws of the state which governs the Credit Agreement. The provisions of this paragraph shall control all agreements between Maker and Lender. COSTS OF COLLECTION. If any holder of this Note retains an attorney in connection with any default or at maturity or to collect, enforce or defend this Note or any other Loan Document in any lawsuit or in any probate, 136 reorganization, bankruptcy or other proceeding, or if Maker sues any holder of this Note in connection with this Note or any other Loan Document and does not prevail, then Maker agrees to pay to each such holder, in addition to principal and interest, all costs and expenses incurred by such holder in trying to collect this Note or in any such suit or proceeding, including reasonable attorneys= fees. AMENDMENTS IN WRITING. This Note may not be changed, amended or modified except in a writing expressly intended for such purpose and executed by the party against whom enforcement of the change, amendment or modification is sought. ASSIGNMENTS/PARTICIPATIONS. Maker acknowledges and agrees that the holder of this Note may, at any time and from time to time, assign all or a portion of its interest in the Credit Facility or transfer to any Person a participation interest in the Credit Facility, subject to and in accordance with the terms and conditions of the Credit Agreement, including SECTION 11.10 thereof. SUCCESSORS AND ASSIGNS. All of the covenants, stipulations, promises and agreements contained in this Note by or on behalf of Maker shall bind its successors and assigns and shall be for the benefit of Lender and any holder hereof, and its successors and assigns, whether so expressed or not, subject, however, to the provisions of SECTION 11.10 of the Credit Agreement. THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY TEXAS LAW, EXCEPT TO THE EXTENT THAT UNITED STATES FEDERAL LAW APPLIES PURSUANT TO SECTION 11.8 OF THE CREDIT AGREEMENT OR OTHERWISE. Time shall be of the essence in this Note with respect to all of Maker's obligations hereunder. THIS NOTE AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. IN WITNESS WHEREOF, Maker has duly executed this Note as of the date first above written. MAKER: CAMDEN PROPERTY TRUST, a Texas real estate investment trust By: _____________________________________ Name: ___________________________________ Title: __________________________________ 137 SCHEDULE [I] TO COMPETITIVE BID NOTE OF CAMDEN PROPERTY TRUST, PAYABLE TO [LENDER] DATED ____________, _______ ___ Competitive Bid Pricing Loan/___ Competitive Bid Fixed Rate Loan (check one) Made on ______________, _______. Principal Amount $_____________
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138 EXHIBIT B REQUEST FOR ADVANCE This Request for Advance is being delivered by Camden Property Trust ("BORROWER") pursuant to that certain Credit Agreement (the "CREDIT AGREEMENT"), dated as of , 1999 executed by Borrower, Bank of America, N.A., as Administrative Agent, Chase Bank of Texas, National Association, as Syndication Agent, First National Bank of Chicago , as Documentation Agent, Wells Fargo Bank, N.A., as Managing Agent, and the Lenders, as therein defined. Unless defined herein or indicated otherwise, each capitalized term used herein shall have the meaning given to such term in the Credit Agreement. 1. Borrower hereby requests an Advance under the Credit Facility in an amount equal to $________ . Borrower requests that the proceeds of such Advance be wired to ___________________________ or deposited in ______________________________. Borrower represents and warrants to Lenders that the Advance herein requested does not exceed the amount which Borrower is entitled to receive pursuant to Section 2.1 (or any other provisions) of the Credit Agreement. 2. The aggregate Advance herein requested consists of: ___(a) An Advance for the purposes set forth in Section 2.1(a) of the Credit Agreement in the amount of $__________. Such Advance is to be used for _______________________________________________________ _____________________________________. 3. ___(a) Borrower requests that of the Advance requested hereby, $____________ bear the Applicable LIBOR Rate. With respect to the LIBOR Rate Advance, the Interest Period shall be months, with the Effective Date being _______________________________. 4. Borrower hereby certifies, represents and warrants to Administrative Agent and the Lenders that: (a) This Request for Advance has been duly authorized by all necessary action on the part of Borrower. (b) The representations and warranties contained in the Credit Agreement and the other Loan Documents remain true and correct on and as of the date hereof with the same force and effect as though made on the date hereof (except with respect to those representations and warranties which are made as of a particular date). (c) No Default or Event of Default has occurred and is continuing, and the making of the Advance requested hereby shall not constitute a Default or Event of Default. (d) The proceeds of the Advance herein requested will not be used in violation of any provision of the Credit Agreement or any other Loan Document. 5. Borrower acknowledges and agrees that the making of the Advance requested hereby shall not (a) constitute a waiver of any condition precedent to the obligation of the Lenders to make further Advances or (b) preclude the Lenders from thereafter declaring the failure of Borrower to satisfy all such conditions precedent to be a Default. [1. Attached hereto is a true and correct schedule showing the Maximum Available Amount after giving effect to the Advance requested hereby.] EXECUTED as of ______________________, _______. BORROWER: CAMDEN PROPERTY TRUST, a Texas real estate investment trust By: _____________________________________ Name: ___________________________________ Title: __________________________________ 139 EXHIBIT C CERTIFICATE OF COMPLIANCE This Certificate is being delivered pursuant to that certain Credit Agreement dated as of , 1999 (the "CREDIT AGREEMENT"), among Camden Property Trust ("BORROWER), Bank of America, N.A., as administrative agent (AADMINISTRATIVE AGENT"), Chase Bank of Texas, National Association, as syndication agent, First National Bank of Chicago, as documentation agent, Wells Fargo Bank, N.A., as managing agent, and the lenders (the "LENDERS") named in the Credit Agreement. All terms used but not defined herein shall have the meanings set forth in the Credit Agreement. This Certificate is submitted on a quarterly basis on or before the fiftieth (50th) day following the end of Borrower's fiscal quarter for the period ended , . The undersigned hereby further certifies to the following as of the date set forth below: 1. The representations and warranties of Borrower and the Guarantor Subsidiaries under the Credit Agreement are true and complete in all material respects as of the date hereof (except with respect to those representations and warranties which are made as of a particular date). 2. No event has occurred which constitutes a Default or Event of Default. 3. As of __________________, _____ (being the last day of Borrower's most recently ended fiscal quarter), Borrower and its Consolidated Subsidiaries are in compliance with the financial covenants contained in SECTIONS 5.1, 8.1, 8.2, 8.3 AND 8.4 of the Credit Agreement, and the following information is true, accurate and complete as of such date: A. Pertinent Information 1. Gross Asset Value of Unencumbered Properties is $______. 2. Total Unsecured Debt is $__________. 3. Unencumbered Adjusted NOI is $_________. 4. Consolidated Interest Expense attributable solely to Total Unsecured Debt is $______. 5. Total Consolidated Debt excluding Debentures is $______. 6. Gross Asset Value is $________. 7. Secured Indebtedness is $________. 8. Secured Recourse Debt is $________. 9. Adjusted Consolidated EBITDA is $________. 10. Fixed Charges are $_________. 140 11. Attached hereto is a list of the Unencumbered Properties showing total units, occupancy rate, Unencumbered Adjusted NOI, and Gross Asset Value among other information. B. Covenants 1. The aggregate amount of Liens described in subsection (h) of the definition of Permitted Liens that the Pool has is $__________. 2. The aggregate occupancy level of the Unencumbered Properties in the Pool, other than the Development Properties, based on bona fide tenant leases requiring current rent payments is ______%. 3. The Gross Asset Value of Unencumbered Properties is ______% of the Total Unsecured Debt. 4. The percent of Gross Asset Value of Unencumbered Properties attributable to Development Properties is ______%. 5. The ratio of (a) Unencumbered Adjusted NOI to (b) the portion of the Consolidated Interest Expense attributable solely to Total Unsecured Debt is ____ to 1.00. 6. The Total Unsecured Debt is $_________, and the Target Monthly Amortization is $__________________(annualized). 7. The Consolidated Net Worth is $_______. 8. The ratio of (a) Total Consolidated Debt excluding Debentures to (b) Gross Asset Value is _____ to 1.0. 9. The ratio of (a) Secured Indebtedness to (b) Gross Asset Value is ____ to 1.0. 10. The ratio of (a) Secured Recourse Debt to (b) Secured Indebtedness is ____ to 1.0. 11. The ratio of (a) Adjusted Consolidated EBITDA to (b) Consolidated Interest Expense is ____ to 1.00. 12. The ratio of (a) Adjusted Consolidated EBITDA to (b) Fixed Charges is ____ to 1.00. 4. I hereby certify that I am the duly elected Chief Financial Officer (or other duly Authorized Officer permitted under the Credit Agreement) of Borrower. I hereby further certify, in my capacity as the Chief Financial Officer (or such other Authorized Officer as indicated below) of Borrower, that the information set forth herein and on the attachments hereto is true and correct in all material respects to the best of my knowledge and prepared in accordance with GAAP. 5. If this Certificate is being delivered in connection with the fiscal year-end financial statements of Borrower, I hereby certify that, to the best of my knowledge and belief, the financial statements of Borrower being delivered herewith fairly reflect the financial condition of Borrower and its Consolidated Subsidiaries and the results of Borrower's and its Consolidated Subsidiaries= operations as of the date of delivery of such financial statements. IN WITNESS WHEREOF, I have executed this Certificate as of the ______ day of _________________, _______. 141 __________________________________ Title: ___________________________ EXHIBIT D ASSIGNMENT AND ACCEPTANCE This ASSIGNMENT AND ACCEPTANCE is made and entered into effective as of the __ day of ____________, _____, by and between ________________ ("ASSIGNOR"), and ________________ ("ASSIGNEE"). R E C I T A L S: I. Pursuant to the terms and provisions of that certain Credit Agreement (as amended from time to time, the "CREDIT AGREEMENT") dated as of __________ __, 1999, executed by and among Camden Property Trust, a Texas real estate investment trust ("BORROWER"), Bank of America, N.A., a national banking association, as administrative agent ("ADMINISTRATIVE AGENT"), Chase Bank of Texas, National Association, as Syndication Agent, First National Bank of Chicago, as Documentation Agent, Wells Fargo Bank, N.A., as Managing Agent, and the lenders (collectively, the >Lenders@) from time to time party to the Credit Agreement, a revolving credit facility (the "CREDIT FACILITY") was made available to Borrower. Each capitalized term defined in the Credit Agreement and used herein without definition shall have the same meaning assigned to such term in the Credit Agreement. II. Assignor has a Commitment under the Credit Facility in the amount of $________, and owns and holds a ____ % Commitment Percentage in the Credit Facility, and, therefore, has an interest the Credit Agreement, and all of the other Loan Documents, as one of the Lenders thereunder, as more particularly set forth therein. III. Assignor desires to assign to Assignee a _____________ percent (_________%) interest in all of Assignor's right, title and interest in, to and under the Credit Facility, and a proportionate interest in the Credit Agreement and all of the other Loan Documents. NOW, THEREFORE, for and in consideration of Ten and No/100 Dollars ($10.00), and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and confessed, Assignor and Assignee hereby covenant and agree as follows: 1. Assignor has SOLD, ASSIGNED, TRANSFERRED and CONVEYED, and by these presents does hereby SELL, ASSIGN, TRANSFER and CONVEY, unto Assignee as of the Assignment Date (hereinafter defined) a __________ percent ( %) interest in all of Assignor's rights, interests and obligations as a Lender under the Credit Agreement and all of the other Loan Documents (the "ASSIGNED INTEREST"). 2. Assignee hereby assumes all obligations of Assignor with respect to the Assigned Interest. 3. Assignor hereby represents and warrants to Assignee that Assignor (a) is the legal and beneficial owner of the Assigned Interest and (b) is legally authorized to enter into this Assignment and Acceptance. 4. Assignee hereby confirms and acknowledges that, except as specifically set forth herein, Assignor: (i) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with any Loan Document, or the execution, legality, validity, enforceability, genuineness, sufficiency or value of any Loan Document or any other instrument or document furnished pursuant thereto, other than that Assignor is the legal and beneficial owner of the Assigned Interest and that such interest is free and clear of any adverse claim; (ii) makes no representation or warranty and assumes no responsibility with respect to the value or condition of, or title to, any of the Property, or the financial condition of Borrower or any of the Guarantor Subsidiaries; and (iii) makes no representation or warranty and assumes no responsibility with respect to the performance or observance by Borrower of any of its obligations under any Loan Document 142 or any other instrument or document furnished pursuant thereto. 5. Assignor hereby requests that Administrative Agent exchange Assignor's Note and Competitive Bid Note, respectively, as follows: NOTE Note Payable to Amount of THE ORDER OF: NOTE [Assignor] $____________ [Assignee] $____________ COMPETITIVE BID NOTE [Assignor] $____________ [Assignee] $____________ 6. Assignee hereby represents and warrants that Assignee (a) is legally authorized to enter into this Assignment and Acceptance, and (b) is an Eligible Assignee. 7. Assignee hereby: (i) appoints Administrative Agent as the Administrative Agent under the Credit Agreement and the other Loan Documents and authorizes Administrative Agent to take such action as agent on its behalf and to exercise such powers under the Credit Agreement and the other Loan Documents as are delegated to Administrative Agent by the terms thereof; (ii) confirms that it has received a copy of the Credit Agreement and other Loan Documents, together with copies of such financial statements of Borrower and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance; (iii) agrees that it will, independently and without reliance upon Assignor, any other Lender, Administrative Agent or any other Person, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, subject to and in accordance with ARTICLE X of the Credit Agreement; (iv) agrees with Assignor for the benefit of Administrative Agent, each other Lender and 143 Borrower and any other Person that it will perform all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender thereunder, and that it shall be liable directly to Assignor, Administrative Agent, Borrower, each other Lender or any other Person for the performance of such obligations; and (v) agrees not to disclose any financial information of the Borrower or other confidential information regarding the Credit Facility as and to the extent provided in SECTION 7.3 of the Credit Agreement. 8. The effective date of this Assignment and Acceptance shall be ________ __, ____ (the "ASSIGNMENT Date"), determined in accordance with SECTION 11.10(C) of the Credit Agreement. Following the execution of this Assignment and Acceptance, each party hereto and each Person consenting hereto shall deliver its duly executed counterpart hereof to Administrative Agent for acceptance and recording in the Register by Administrative Agent. 9. As of the Assignment Date, (i) Assignee shall be a "Lender" under the Loan Documents and, to the extent provided in this Assignment and Acceptance and subject to the terms of ARTICLE X of the Credit Agreement, shall have the rights and obligations of a Lender thereunder, and (ii) Assignor shall, with respect only to the Assigned Interest, relinquish its rights and be released from its obligations under the Loan Documents, subject to SECTION 11.10 of the Credit Agreement. 10. In accordance with SECTION 11.10 (A) (IV) of the Credit Agreement, Assignor and Assignee agree to pay Administrative Agent a processing fee in the sum of $3,500.00, together with any legal fees of Administrative Agent incurred in connection with this Assignment. 11. Upon acceptance and recording of this Assignment and Acceptance, from and after the Assignment Date, Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to Assignee. 12. If Assignee is organized under the laws of a jurisdiction outside the United States, it hereby represents that it has delivered to Assignor and Administrative Agent completed and signed copies of any forms that may be required by the United States Internal Revenue Service in order to certify Assignee's exemption from United States withholding taxes with respect to any payment or distributions made or to be made to Assignee with respect to the Credit Facilities or under the Credit Agreement or such other documents as are necessary to indicate that all such payments or distributions are subject to such taxes at a rate reduced by an applicable tax treaty. 13. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF. 144 14. This Assignment and Acceptance may be executed in any number of counterparts which shall together constitute but one and the same agreement. [REMAINDER OF PAGE LEFT BLANK - SIGNATURES TO FOLLOW] 145 IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment and Acceptance as of the date first above written. ASSIGNOR: _______________________________________ By: __________________________________ Name: ________________________________ Title: _______________________________ ASSIGNEE: Address of Assignee: _______________________________________ By: __________________________________ Fax No.: ___________________ Name: ________________________________ Title: _______________________________ ACKNOWLEDGED and ACCEPTED as of the _____ day of _________, ____. ADMINISTRATIVE AGENT: BANK OF AMERICA, N.A., as Administrative Agent By: _________________________ Name: _______________________ Title: _______________________ BORROWER: CAMDEN PROPERTY TRUST, a Texas real estate investment trust By: _________________________ Name: _______________________ Title: ______________________ 146 EXHIBIT E-1 COMPETITIVE BID QUOTE REQUEST (SECTION 2.3(B)) ______________________, _________ (Date) To: Bank of America, N.A.., as administrative agent (the "ADMINISTRATIVE AGENT") From: Camden Property Trust ("BORROWER") Re: Credit Agreement (as the same may be modified, amended, supplemented, extended or restated from time to time, the "CREDIT AGREEMENT") dated _________ __, 1999, executed by and among Borrower, Administrative Agent, Chase Bank of Texas, National Association, as Syndication Agent, First National Bank of Chicago, as Documentation Agent, Wells Fargo Bank, N.A., as Managing Agent, and the Lenders. 1. Capitalized terms used herein have the meanings assigned to them in the Credit Agreement. 2. We hereby give notice pursuant to SECTION 2.3(B) of the Credit Agreement that we request Competitive Bid Quotes for the following proposed Competitive Bid Advance(s): A. _________ Competitive Bid Pricing Loan [check if applicable] Borrowing Date: __________________, ________ PRINCIPAL AMOUNT1 INTEREST PERIOD2 B. _________ Competitive Bid Fixed Rate Loan [check if applicable] Borrowing Date: _______________, _______ PRINCIPAL AMOUNT1 TERM3 3. Competitive Bid Quotes for a Competitive Bid Pricing Loan should offer a Competitive Bid Margin. Competitive Bid Quotes for a Competitive Bid Fixed Rate Loan should offer a fixed rate of interest for the term. 1 Amount must be at least US $10,000,000 and an integral multiple of US $1,000,000. 2 Fourteen days or one, two, three, four, five or six months subject to the definition of Interest Period. 3 Not longer than six months. 147 4. Upon acceptance by the undersigned of any or all of the Competitive Bid Advances offered by any of the Lenders in response to this request, the undersigned shall be deemed to affirm as of the Borrowing Date thereof the representations and warranties made in ARTICLE VI of the Credit Agreement and that all conditions specified in SECTION 4.2 of the Credit Agreement have been satisfied. CAMDEN PROPERTY TRUST, a Texas real estate investment trust By: _____________________________________ Name: ___________________________________ Title: __________________________________ 148 EXHIBIT E-2 INVITATION FOR COMPETITIVE BID QUOTES (SECTION 2.3(C)) _____________________________ (Date) To: Each of the Lenders party to the Credit Agreement referred to below Re: Invitation for Competitive Bid Quotes to Camden Property Trust ("BORROWER") Pursuant to SECTION 2.3 of that certain Credit Agreement (as the same may be modified, amended, supplemented, extended or restated from time to time, the "CREDIT AGREEMENT") dated ________ __, 1999, executed by and among Borrower, Bank of America, N.A., as Administrative Agent, Chase Bank of Texas, National Association, as Syndication Agent, First National Bank of Chicago, as Documentation Agent, Wells Fargo Bank, N.A., as Managing Agent, and the Lenders, (defined therein) we are pleased on behalf of the Borrower to invite you to submit Competitive Bid Quotes to the Borrower for the following proposed Competitive Bid Advance(s): A. _____ Competitive Bid Pricing Loan [check if applicable] Borrowing Date: ________________, __________ PRINCIPAL AMOUNT INTEREST PERIOD B. _____ Competitive Bid Fixed Rate Loan [check if applicable] Borrower Date: __________________, __________ PRINCIPAL AMOUNT TERM Such Competitive Bid Quotes should offer a Competitive Bid Margin or a fixed interest rate, as applicable. Your Competitive Bid Quote must comply with SECTION 2.3(D) of the Credit Agreement and the foregoing. Capitalized terms used herein have the meanings assigned to them in the Credit Agreement Please respond to this invitation by no later than [____ P.M.] [____ __.M.] (Dallas, Texas time) on ______________, _________. BANK OF AMERICA, N.A., as Administrative Agent By: _____________________________________ Name: ___________________________________ Title: __________________________________ 149 EXHIBIT E-3 COMPETITIVE BID QUOTE (SECTION 2.3(D)) To: Bank of America, N.A., as Administrative Agent Re: Competitive Bid Quote to Camden Property Trust ("BORROWER") In response to your invitation on behalf of the Borrower dated _________ we hereby make the following Competitive Bid Quote pursuant to SECTION 2.3(D) of the Credit Agreement hereinafter referred to and on the following terms: 1. Quoting Lender: 2. Person to contact at Quoting Lender: 3. Borrowing Date: ___________________________ 1/ 4. A. We hereby offer to make COMPETITIVE BID PRICING LOAN(S) in the following principal amounts, for the following Interest Periods and at the following rates: --------------------------- ------------- -------------------- Principal Interest Competitive AMOUNT1/ PERIOD1/ BID MARGIN1/ --------------------------- ------------- -------------------- --------------------------- ------------- -------------------- B. We hereby offer to make COMPETITIVE BID FIXED RATE LOAN(S) in the following principal amounts, for the following term at the following rates: ------------------------- ---------------- ------------------- Principal Term/Maturity AMOUNT2/ DATE1/ INTEREST RATE1/ -------------------------- ---------------- ------------------- -------------------------- ---------------- ------------------- We understand and agree that the offer(s) set forth above, subject to the satisfaction of the applicable conditions set forth in that certain Credit Agreement (as the same may be modified, amended, supplemented, extended or restated from time to time, the "CREDIT AGREEMENT") dated _________ __, 1999, executed by and among Borrower, Administrative Agent, Chase Bank of Texas, National Association, as Syndication Agent, First National Bank of Chicago, as Documentation Agent, Wells Fargo Bank, N.A., as Managing Agent, and the Lenders, irrevocably obligates us to make the Competitive Bid Loan(s) for which any offer(s) are accepted, in whole or in part. Capitalized terms used herein and not otherwise defined herein shall have their meanings as defined in the Credit Agreement. Very truly yours, [NAME OF LENDER] By: _____________________________________ Name: ___________________________________ Title: __________________________________ 150 - -------- 1/ As specified in the related Invitation For Competitive Bid Quotes. 1/ Principal amount bid for each Interest Period or term may not exceed the principal amount requested. Bids must be made for at least $5,000,000 and an integral multiple of $1,000,000. 1/ Fourteen days, one, two, three, four, five or six months, as specified in the related Invitation for Competitive Bid Quotes. 1/ Competitive Bid Margin over or under the Applicable LIBOR Rate (excluding the LIBOR Margin) determined for the applicable Interest Period. Specify percentage (rounded to the nearest 1/100 of 1%) and specify whether "PLUS" or "MINUS". 1/ Any period of days up to six months. 1/ Specify fixed per annum interest rate. EX-11.1 3 STATEMENT REGARDING COMPUTATION OF EARNINGS 151 EXHIBIT 11.1 CAMDEN PROPERTY TRUST COMPUTATION OF EARNINGS PER COMMON SHARE (In thousands, except per share amounts)
Three Months Six Months Ended June 30, Ended June 30, ---------------------- ---------------------- 1999 1998 1999 1998 ---------- ---------- ---------- ---------- BASIC EARNINGS PER SHARE: Weighted Average Common Shares Outstanding 40,939 44,370 41,668 40,115 ========== ========== ========== ========== Basic Earnings Per Share $ 0.33 $ 0.33 $ 0.96 $ 0.83 ========== ========== ========== ========== DILUTED EARNINGS PER SHARE: Weighted Average Common Shares Outstanding 40,939 44,370 41,668 40,115 Shares Issuable from Assumed Conversion of: Common Share Options and Awards Granted 452 387 414 414 Minority Interest Units 634 2,680 2,646 2,587 ---------- ---------- ---------- ---------- Weighted Average Common Shares Outstanding, as Adjusted 42,025 47,437 44,728 43,116 ========== ========== ========== ========== Diluted Earnings Per Share $ 0.32 $ 0.31 $ 0.94 $ 0.79 ========== ========== ========== ========== EARNINGS FOR BASIC AND DILUTED COMPUTATION: Net Income $ 15,878 $ 16,993 $ 47,108 $ 40,208 Less: Preferred Share Dividends 2,343 2,343 7,029 7,029 ---------- ---------- ---------- ---------- Net Income to Common Shareholders 13,535 14,650 40,079 33,179 (Basic Earnings Per Share Computation) Minority Interest 59 1,850 1,043 ---------- ---------- ---------- ---------- Net Income to Common Shareholders, as Adjusted (Diluted Earnings Per Share Calculation) $ 13,535 $ 14,709 $ 41,929 $ 34,222 ========== ========== ========== ==========
EX-27 4 FINANCIAL DATA SCHEDULE
5 1,000 9-MOS DEC-31-1999 SEP-30-1999 18,959 0 0 0 0 0 2,633,355 230,431 2,468,672 0 1,085,486 0 42 447 1,073,120 2,468,672 0 274,424 0 108,013 65,541 0 42,227 0 0 0 0 0 0 47,108 0.96 0.94
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