Document:

exv10w12

Table of Contents

EXHIBIT 10.12

AMENDED AND RESTATED CREDIT AGREEMENT

Dated

October 30, 2003

among

ARCHSTONE-SMITH OPERATING TRUST,

as Borrower

and

ARCHSTONE-SMITH TRUST,

as Parent

and

JPMORGAN CHASE BANK,

as Administrative Agent

and

BANK OF AMERICA, N.A., and

WELLS FARGO BANK, N.A.

as Syndication Agents

and

BANK ONE, NA and

COMMERZBANK AG, NEW YORK BRANCH

as Documentation Agents

and

the Lenders Party Hereto

J. P. MORGAN SECURITIES INC.,

as Lead Arranger and Sole Bookrunner

 

TABLE OF CONTENTS

									
	1. Definitions
	2. The Loans
		 2.1 Advances
		 2.2 Letters of Credit
		 2.3 Payments
		 2.4 Pro Rata Treatment
		 2.5 Non-Receipt of Funds by the Agent
		 2.6 Sharing of Payments, Etc
		 2.7 Fees
		 2.8 Money Market Borrowings
		 2.9 Reduction of Commitment
		 2.10 Additional Guarantees
	3. Conditions
		 3.1 All Loans
		 3.2 First Loan
		 3.3 Options Available
		 3.4 Designation and Conversion
		 3.5 Special Provisions Applicable to Eurodollar Rate Borrowings and Money Market Loans
		 3.6 Funding Offices; Adjustments Automatic
		 3.7 Funding Sources, Payment Obligations
		 3.8 Mitigation, Non-Discrimination
	4. Representations and Warranties
		 4.1 Organization
		 4.2 Financial Statements
		 4.3 Enforceable Obligations; Authorization
		 4.4 Other Debt
		 4.5 Litigation
		 4.6 Taxes
		 4.7 Regulation U
		 4.8 Securities Act of 1933
		 4.9 No Contractual or Corporate Restrictions
		 4.10 Investment Company Act Not Applicable
		 4.11 Public Utility Holding Company Act Not Applicable
		 4.12 ERISA Not Applicable
	5. Affirmative Covenants
		 5.1 Taxes, Insurance, Existence, Regulations, Property, etc
		 5.2 Financial Statements and Information
		 5.3 Financial Tests
		 5.4 Inspection
		 5.5 Further Assurances
		 5.6 Books and Records
		5.7 Insurance
		 5.8 Notice of Certain Matters
		5.9 Use of Proceeds
		 5.10 Expenses of and Claims Against the Agent and the Lenders
		 5.11 Legal Compliance; Indemnification
		 5.12 Borrower’s Performance
		 5.13 Professional Services
		 5.14 Capital Adequacy
		 5.15 Property Pool
		 5.16 DC Holdings
	6. Negative Covenants
		 6.1 Mergers, Consolidations and Acquisitions of Assets
		 6.2 Redemption
		 6.3 Nature of Business
		 6.4 Transactions with Related Parties
		 6.5 Limiting Agreements
		 6.6 Parent Negative Covenants
	7. Events of Default and Remedies
		 7.1 Events of Default
		 7.2 Remedies Cumulative
		 7.3 Guaranty Proceeds
	8. The Agent
		 8.1 Appointment, Powers and Immunities
		 8.2 Reliance
		 8.3 Defaults
		 8.4 Rights as a Lender
		 8.5 Indemnification
		 8.6 Non-Reliance on Agent and Other Lenders
		 8.7 Failure to Act
		 8.8 Resignation of Agent
		 8.9 No Partnership
	9. Renewal and Extension
		 9.1 Procedure for Renewal and Extension
		 9.2 Conditions to Renewal and Extension
	10. Miscellaneous
		 10.1 No Waiver, Amendments
		 10.2 Notices
		 10.3 Venue
		 10.4 Choice of Law
		 10.5 Survival; Parties Bound; Successors and Assigns
		 10.6 Counterparts
		 10.7 Usury Not Intended; Refund of Any Excess Payments
		 10.8 Captions
		 10.9 Severability
		 10.10 Disclosures
		 10.11 No Novation
		 10.12 Limitation of Liability
		 10.13 Entire Agreement
	EX-4.4 Rights Agreement dated as of 12/1/03
	EX-10.12 Amended and Restated Credit Agreement
	EX-12.1 Computation of Ratio of Earnings
	EX-12.2 Computation of Ratio of Earnings
	EX-21 Subsidiaries of Archstone-Smith
	EX-23.1 Consent of KPMG LLP
	EX-31.1 Certification of CEO pursuant to Sec. 302
	EX-31.2 Certification of CFO pursuant to Sec. 302
	EX-32.1 Certification of CEO pursuant to Sec. 906
	EX-32.2 Certification of CFO pursuant to Sec. 906

Table of Contents

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	1. Definitions	 	 	1	 
	2. The Loans	 	 	17	 
	 	 	
2.1 Advances
	 	 	17	 
	 	 	
2.2 Letters of Credit
	 	 	19	 
	 	 	
2.3 Payments
	 	 	23	 
	 	 	
2.4 Pro Rata Treatment
	 	 	25	 
	 	 	
2.5 Non-Receipt of Funds by the Agent
	 	 	26	 
	 	 	
2.6 Sharing of Payments, Etc
	 	 	26	 
	 	 	
2.7 Fees
	 	 	27	 
	 	 	
2.8 Money Market Borrowings
	 	 	28	 
	 	 	
2.9 Reduction of Commitment
	 	 	32	 
	 	 	
2.10 Additional Guarantees
	 	 	32	 
	3. Conditions.	 	 	32	 
	 	 	
3.1 All Loans
	 	 	33	 
	 	 	
3.2 First Loan
	 	 	33	 
	 	 	
3.3 Options Available
	 	 	34	 
	 	 	
3.4 Designation and Conversion
	 	 	34	 
	 	 	
3.5 Special Provisions Applicable to Eurodollar
Rate Borrowings and Money Market Loans
	 	 	35	 
	 	 	
3.6 Funding Offices; Adjustments Automatic
	 	 	37	 
	 	 	
3.7 Funding Sources, Payment Obligations
	 	 	37	 
	 	 	
3.8 Mitigation, Non-Discrimination
	 	 	38	 
	4. Representations and Warranties	 	 	39	 
	 	 	
4.1 Organization
	 	 	39	 
	 	 	
4.2 Financial Statements
	 	 	39	 
	 	 	
4.3 Enforceable Obligations; Authorization
	 	 	39	 
	 	 	
4.4 Other Debt
	 	 	39	 
	 	 	
4.5 Litigation
	 	 	39	 
	 	 	
4.6 Taxes
	 	 	40	 
	 	 	
4.7 Regulation U
	 	 	40	 
	 	 	
4.8 Securities Act of 1933
	 	 	40	 
	 	 	
4.9 No Contractual or Corporate Restrictions
	 	 	40	 
	 	 	
4.10 Investment Company Act Not Applicable
	 	 	40	 
	 	 	
4.11 Public Utility Holding Company Act Not Applicable
	 	 	40	 
	 	 	
4.12 ERISA Not Applicable
	 	 	40	 
	5. Affirmative Covenants	 	 	40	 
	 	 	
5.1 Taxes, Insurance, Existence, Regulations, Property, etc
	 	 	41	 
	 	 	
5.2 Financial Statements and Information
	 	 	41	 

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Table of Contents

	 	 	 	 	 	 	 
	 	 	
5.3 Financial Tests
	 	 	42	 
	 	 	
5.4 Inspection
	 	 	42	 
	 	 	
5.5 Further Assurances
	 	 	42	 
	 	 	
5.6 Books and Records
	 	 	42	 
	 	 	
5.7 Insurance
	 	 	42	 
	 	 	
5.8 Notice of Certain Matters
	 	 	42	 
	 	 	
5.9 Use of Proceeds
	 	 	42	 
	 	 	
5.10 Expenses of and Claims Against the Agent and the Lenders
	 	 	43	 
	 	 	
5.11 Legal Compliance; Indemnification
	 	 	43	 
	 	 	
5.12 Borrower’s Performance
	 	 	44	 
	 	 	
5.13 Professional Services
	 	 	45	 
	 	 	
5.14 Capital Adequacy
	 	 	45	 
	 	 	
5.15 Property Pool
	 	 	45	 
	 	 	
5.16 DC Holdings
	 	 	47	 
	6. Negative Covenants	 	 	47	 
	 	 	
6.1 Mergers, Consolidations and Acquisitions of Assets
	 	 	47	 
	 	 	
6.2 Redemption
	 	 	47	 
	 	 	
6.3 Nature of Business
	 	 	47	 
	 	 	
6.4 Transactions with Related Parties
	 	 	48	 
	 	 	
6.5 Limiting Agreements
	 	 	48	 
	 	 	
6.6 Parent Negative Covenants
	 	 	49	 
	7. Events of Default and Remedies	 	 	49	 
	 	 	
7.1 Events of Default
	 	 	49	 
	 	 	
7.2 Remedies Cumulative
	 	 	51	 
	 	 	
7.3 Guaranty Proceeds
	 	 	51	 
	8. The Agent.	 	 	52	 
	 	 	
8.1 Appointment, Powers and Immunities
	 	 	52	 
	 	 	
8.2 Reliance
	 	 	53	 
	 	 	
8.3 Defaults
	 	 	54	 
	 	 	
8.4 Rights as a Lender
	 	 	54	 
	 	 	
8.5 Indemnification
	 	 	54	 
	 	 	
8.6 Non-Reliance on Agent and Other Lenders
	 	 	55	 
	 	 	
8.7 Failure to Act
	 	 	55	 
	 	 	
8.8 Resignation of Agent
	 	 	55	 
	 	 	
8.9 No Partnership
	 	 	56	 
	9. Renewal and Extension	 	 	56	 
	 	 	
9.1 Procedure for Renewal and Extension
	 	 	56	 
	 	 	
9.2 Conditions to Renewal and Extension
	 	 	56	 
	10. Miscellaneous.	 	 	57	 
	 	 	
10.1 No Waiver, Amendments
	 	 	57	 
	 	 	
10.2 Notices
	 	 	57	 
	 	 	
10.3 Venue
	 	 	57	 

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Table of Contents

	 	 	 	 	 	 	 
	 	 	
10.4 Choice of Law
	 	 	58	 
	 	 	
10.5 Survival; Parties Bound; Successors and Assigns
	 	 	58	 
	 	 	
10.6 Counterparts
	 	 	62	 
	 	 	
10.7 Usury Not Intended; Refund of Any Excess Payments
	 	 	62	 
	 	 	
10.8 Captions
	 	 	62	 
	 	 	
10.9 Severability
	 	 	62	 
	 	 	
10.10 Disclosures
	 	 	62	 
	 	 	
10.11 No Novation
	 	 	63	 
	 	 	
10.12 Limitation of Liability
	 	 	63	 
	 	 	
10.13 Entire Agreement
	 	 	63	 

SCHEDULE I: Guarantor

EXHIBITS:

A -  Officer’s Certificate

B -  Request for Loan

C -  Note

C-1- Swing Loan Note

C-2- Master Note

D -  Legal Opinion

E -  Money Market Quote Request

F -  Invitation for Money Market Quotes

G -  Money Market Quote

H -  Designation Agreement

I -  Form of Guaranty

J -  Assignment and Assumption Agreement

K -  Form of Additional Guaranty

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Table of Contents

AMENDED AND RESTATED

CREDIT AGREEMENT

     THIS AMENDED AND RESTATED CREDIT AGREEMENT (the “Agreement”) is made and
entered into as of October 30, 2003, by and among ARCHSTONE-SMITH OPERATING
TRUST, a Maryland real estate investment trust (the “Borrower”),
ARCHSTONE-SMITH TRUST, a Maryland real estate investment trust, and the parent
of the Borrower (the “Parent”), the financial institutions (including JPMC, the
Syndication Agents and the Documentation Agents, the “Lenders”) which are now
or may hereafter become signatories hereto, JPMORGAN CHASE BANK, a New York
banking corporation (“JPMC”), as administrative agent for Lenders (in such
capacity, “Agent”), BANK OF AMERICA, N.A. and WELLS FARGO BANK, N.A., and as
syndication agents for Lenders (in such capacity, “Syndication Agents”), and
BANK ONE, NA and COMMERZBANK AG, NEW YORK BRANCH, as documentation agents for
Lenders (in such capacity, “Documentation Agents”).

     WHEREAS, the Borrower, the Agent and certain of the Lenders entered into a
Credit Agreement dated as of December 20, 2000 (as amended to the date hereof,
the “Original Credit Agreement”); and

     WHEREAS, the Borrower has requested that the Agent and the Lenders amend
and restate the Original Credit Agreement and the Agent and the Lenders have
agreed to do so pursuant to the terms of this Agreement; and

     WHEREAS, the Borrower desires to obtain Loans and obtain Letters of Credit
(as such terms are hereinafter defined) from the Lenders; and

     WHEREAS, subject to and upon the terms and conditions set forth herein,
the Lenders are willing to make Loans and provide for the issuance of Letters
of Credit to the Borrower, as provided for herein;

     NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, the adequacy of which is hereby acknowledged, the
parties hereto hereby agree that the aforementioned recitals are true and
correct and hereby incorporated herein and that the parties hereto hereby agree
as follows:

1. Definitions.

     Unless a particular word or phrase is otherwise defined or the context
otherwise requires, capitalized words and phrases used in Credit Documents have
the meanings provided below.

     Absolute Rate Auction shall mean a solicitation of Money Market Quotes
setting forth Money Market Absolute Rates pursuant to Section 2.8.

 

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     Acceptable Credit Rating shall mean a Credit Rating from two of Standard &
Poor’s Rating Services, Moody’s Investors Service, Inc., or Fitch (one of which
must be an S&P Rating or a Moody’s Rating) equal to a Credit Rating from Fitch,
or an S&P Rating of BBB- or better, or a Moody’s Rating of Baa3 or better.

     Accounts, Equipment and Inventory shall have the respective meanings
assigned to them in the Texas Business and Commerce Code in force on the date
the document using such term was executed.

     Administrative Questionnaire means an Administrative Questionnaire in a
form supplied by the Agent.

     Affiliate shall mean any Person controlling, controlled by or under common
control with any other Person. For purposes of this definition, “control”
(including “controlled by” and “under common control with”) means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or otherwise.

     Annual Audited Financial Statements shall mean the annual financial
statements of a Person, including all notes thereto, which statements shall
include a balance sheet as of the end of such fiscal year and an income
statement and a statement of cash flows, all setting forth in comparative form
the corresponding figures from the previous fiscal year, all prepared in
conformity with Generally Accepted Accounting Principles and accompanied by a
report and opinion of independent certified public accountants satisfactory to
the Agent, which shall state that such financial statements, in the opinion of
such accountants, present fairly the financial position of such Person as of
the date thereof and the results of its operations for the period covered
thereby in conformity with Generally Accepted Accounting Principles. Such
statements shall be accompanied by a certificate of such accountants that in
making the appropriate audit and/or investigation in connection with such
report and opinion, such accountants did not become aware of any Default or, if
in the opinion of such accountant any such Default exists, a description of the
nature and status thereof. The Annual Audited Financial Statements shall be
prepared on a consolidated basis in accordance with Generally Accepted
Accounting Principles.

     Applicable Margin shall mean (a) if a Credit Rating is obtained from more
than one agency, and one of the two highest Credit Ratings is an S&P Rating or
a Moody’s Rating, the following percentage based on the corresponding Credit
Rating which is the second highest, or (b) if the one of the two highest Credit
Ratings in clause (a) above is not an S&P Rating or a Moody’s Rating, the
following percentage based on the corresponding S&P Rating or Moody’s Rating
which is the highest, or (c) if only one Credit Rating is obtained, which must
be an S&P Rating or a Moody’s Rating, the following percentage based on the
corresponding S&P Rating or Moody’s Rating:

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APPLICABLE MARGIN

	 	 	 	 	 	 	 	 	 
	APPLICABLE	 	EURODOLLAR RATE	 	BASE RATE
	CREDIT RATING	 	BORROWING	 	BORROWING
	
	 	
	 	

	A/A2 or better
	 	 	0.500	%	 	 	0	 
	A-/A3
	 	 	0.525	%	 	 	0	 
	BBB+/Baa1
	 	 	0.600	%	 	 	0	 
	BBB/Baa2
	 	 	0.700	%	 	 	0	 
	BBB-/Baa3
	 	 	0.900	%	 	 	0	 
	Worse than BBB-/Baa3
	 	 	1.250	%	 	 	.25	%
	or no Credit Rating
	 	 	 	 	 	 	 	 

Each Applicable Margin shall be in effect whenever and for so long as the
corresponding Credit Rating or no Credit Rating is in effect.

     Assignment and Assumption means an assignment and assumption entered into
by a Lender and an assignee (with the consent of any party whose consent is
required by Section 10.5), and accepted by the Agent, in the form of Exhibit J
or any other form approved by the Agent.

     Base Rate shall mean for any day a rate per annum equal to the Applicable
Margin on that day plus the greater on a daily basis of (a) the Prime Rate for
that day, or (b) the Federal Funds Effective Rate for that day plus one-half of
one percent (-1/2%).

     Base Rate Borrowing shall mean that portion of the principal balance of
the Loans at any time bearing interest at the Base Rate.

     Business Day shall mean a day other than (a) a day when the main office of
the Agent is not open for business, or (b) a day that is a federal banking
holiday in the United States of America.

     Calculation Date shall mean the beginning of the first full calendar
quarter after the Stabilization Date.

     Capital Lease Obligations of any Person means the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination
thereof, which obligations are required to be classified and accounted for as
capital leases on a balance sheet of such Person under Generally Accepted
Accounting Principles, and the amount of such obligations shall be the
capitalized amount thereof determined in accordance with Generally Accepted
Accounting Principles.

     Ceiling Rate shall mean, on any day, the maximum nonusurious rate of
interest permitted for that day by whichever of applicable federal or Texas
laws permits the higher interest rate, stated as a rate per annum. On each
day, if any, that Texas law establishes the

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Ceiling Rate, the Ceiling Rate shall be the “weekly ceiling” (as defined
in Chapter 303 of the Texas Finance Code, as amended (the “Texas Finance
Code”)) for that day. The Agent may from time to time, as to current and
future balances, implement any other ceiling under the Texas Finance Code by
notice to the Borrower, if and to the extent permitted by the Texas Finance
Code. Without notice to the Borrower or any other person or entity, the
Ceiling Rate shall automatically fluctuate upward and downward as and in the
amount by which such maximum nonusurious rate of interest permitted by
applicable law fluctuates.

     Code shall mean the Internal Revenue Code of 1986, as amended, as now or
hereafter in effect, together with all regulations, rulings and interpretations
thereof or thereunder by the Internal Revenue Service.

     Commitment shall mean the commitment of the Lenders to lend funds under
Section 2.1 of this Agreement, other than Swing Loans. The aggregate
Commitment on the date hereof is $600,000,000.00.

     Committed Loan shall mean Loans other than Money Market Loans.

     Construction Interest shall mean Borrower’s interest expense for the
construction of projects, which is capitalized in accordance with Generally
Accepted Accounting Principles.

     Coverage Ratio shall mean the ratio of (a) the Borrower’s EBITDA
(calculated by adding the Parent’s Interest Expense) for the immediately
preceding four (4) calendar quarters, to (b) dividends or other distributions
of any kind or character paid or payable with respect to any Disqualified Stock
plus all of the Borrower’s and the Parent’s Interest Expense, in each case for
the period used to calculate EBITDA.

     Credit Documents shall mean this Agreement, the Notes, any Guaranty, all
instruments, certificates and agreements now or hereafter executed or delivered
to the Agent or the Lenders pursuant to any of the foregoing, and all
amendments, modifications, renewals, extensions, increases and rearrangements
of, and substitutions for, any of the foregoing.

     Credit Rating shall mean the S&P Rating, the Moody’s Rating, or the rating
assigned by Fitch to Borrower’s senior unsecured indebtedness.

     DC Holdings Entities shall mean Metropolitan Acquisition Finance LP, Smith
Property Holdings Cronin’s Landing LP, Smith Property Holdings Crystal towers
LP, Smith Property Holdings One LP, Smith Property Holdings Two LP, Smith
Property Holdings Three LP, Smith Property Holdings Four LP, Smith Property
Holdings Five LP, Smith Property Holdings Six LP, Smith Property Holdings Seven
LP, Smith Property Holdings Alban Towers LLC, First Herndon Associates LP,
Smith Property Holdings One (DC) LP, Smith Property Holdings Two (DC) LP, Smith
Property Holdings Three (DC) LP, Smith Property Holdings Kenmore LP, Smith
Property Holdings Five (DC) LP, Smith Property Holdings Six (DC) LP, Smith
Property Holdings Van Ness LP, Smith Property Holdings Consulate LLC and Smith
Property Holdings Columbia Road, Smith Property

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Holdings Aventura A LLC, Smith Property Holdings Aventura B LLC, Smith
Property Holdings Aventura C LLC, Smith Property Sunset Pointe West LLC, Smith
Property Holdings 4411 Connecticut Avenue LLC, and any Person formed solely for
the purpose of owning Real Property in the District of Columbia.

     Debt to Total Asset Value Ratio shall mean the ratio (expressed as a
percentage) of (a) the sum of the Borrower’s and the Parent’s Indebtedness to
(b) Total Asset Value.

     Designated Lender shall mean a special purpose corporation that (a) shall
have become a party to this Agreement pursuant to Section 10.5(f), and (b) is
not otherwise a Lender.

     Designated Lender Notes shall mean promissory notes of the Borrower,
substantially in the form of Exhibit C hereto, evidencing the obligation of the
Borrower to repay Money Market Loans made by Designated Lenders, and Designated
Lender Note means any one of such promissory notes issued under Section
10.5(f).

     Designating Lender shall have the meaning set forth in Section 10.5(f).

     Designation Agreement shall mean a designation agreement in substantially
the form of Exhibit H attached hereto, entered into by a Lender and a
Designated Lender and accepted by the Agent.

     Disqualified Stock shall mean any of the Borrower’s capital stock which by
its terms (or by the terms of any security into which it is convertible or for
which it is exchangeable or exercisable) (a) matures or is subject to mandatory
redemption, pursuant to a sinking fund obligation or otherwise, (b) is
convertible into or exchangeable or exercisable for Indebtedness or
Disqualified Stock, (c) is redeemable at the option of the holder of such
stock, or (d) otherwise requires any payments by Borrower, in each case on or
before the Maturity Date.

     EBITDA means an amount derived from (a) net income (including all net cash
gains and losses on dispositions of Real Property in accordance with Generally
Accepted Accounting Principles), including (without duplication) the Equity
Percentage of EBITDA for the Borrower’s Unconsolidated Affiliates, plus (b) to
the extent included in the determination of net income, depreciation,
amortization, Interest Expense, income taxes, deferred taxes and other non-cash
charges, minority interest, extraordinary losses, prepayment penalties and
make-whole costs paid in connection with prepayment of Indebtednesss, and
payments made on Borrower’s preferred stock, minus (c) to the extent included
in the determination of net income, any extraordinary gains, in each case, as
determined on a consolidated basis in accordance with Generally Accepted
Accounting Principles.

     Equity Percentage shall mean the aggregate ownership interest of Borrower
in each Unconsolidated Affiliate, which shall be calculated as Borrower’s
economic ownership interest in such Person, reflecting Borrower’s share of
income and expenses of such Person.

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     Eurodollar Business Day shall mean a Business Day on which transactions in
United States dollar deposits between banks may be carried on in the London
interbank dollar market.

     Eurodollar Interbank Rate shall mean, for each Interest Period, the rate
of interest per annum, rounded, if necessary, to the next highest whole
multiple of one-sixteenth percent (1/16%), quoted by Agent at or before 11:00
a.m., London time (or as soon thereafter as practicable), on the date two (2)
Eurodollar Business Days before the first day of such Interest Period, to be
the arithmetic average of the prevailing rates per annum at the time of
determination and in accordance with the then existing practice in the London
interbank dollar market, for the offering to Agent by one or more prime banks
selected by Agent in its sole discretion, in the London interbank dollar
market, of deposits in United States dollars for delivery on the first day of
such Interest Period and having a maturity equal to the length of such Interest
Period and in an amount equal (or as nearly equal as may be) to the Eurodollar
Rate Borrowing to which such Interest Period relates. Each determination by
Agent of the Eurodollar Interbank Rate shall be prima facie evidence thereof.

     Eurodollar Rate shall mean for any day a rate per annum equal to the sum
of the Applicable Margin for that day plus the Eurodollar Interbank Rate in
effect on the first day of the Interest Period for the applicable Eurodollar
Rate Borrowing. Each Eurodollar Rate is subject to adjustments for reserves,
insurance assessments and other matters as provided for in Section 3.5 hereof.

     Eurodollar Rate Borrowing shall mean that portion of the principal balance
of the Loans at any time bearing interest at a Eurodollar Rate.

     Eurodollar Reserve Requirement shall mean, on any day, the cost incurred
by a Lender as a reserve requirement (including, without limitation, basic,
supplemental, marginal and emergency reserves) applicable to “Eurocurrency
liabilities,” as currently defined in Regulation D, all as specified by any
Governmental Authority, including but not limited to those imposed under
Regulation D, because of that Lender making a Eurodollar Rate Borrowing or a
Money Market LIBOR Loan available to the Borrower.

     Event of Default shall mean any of the events specified as an event of
default in Section 7 of this Agreement, and Default shall mean any of such
events, whether or not any requirement for notice, grace or cure has been
satisfied.

     Federal Funds Effective Rate shall to the extent necessary be determined
by the Agent separately for each day and shall for each such day be a rate per
annum 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, as published for each such day (or if any such day is not a
Business Day, for the next immediately preceding Business Day) by the Federal
Reserve Bank of New York, or if the weighted average of such rates is not so
published for any such day which is a Business Day, the average of the
quotations for any such day on such transactions received by the Agent from
three Federal funds brokers of recognized standing selected by the Agent.

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Table of Contents

     Fee shall mean, collectively, the fee described in Section 2.7.

     Fitch shall mean Fitch, Inc.

     Fixed Charge Coverage Ratio shall mean the ratio of (a) the Borrower’s
EBITDA (calculated by adding the Parent’s Interest Expense) for the immediately
preceding four (4) calendar quarters, less Unit Capital Expenditures, to (b)
dividends of any kind or character or other proceeds paid or payable with
respect to any Disqualified Stock, plus all of the Borrower’s and the Parent’s
Interest Expense, plus all of the principal payable and principal paid on the
Borrower’s and the Parent’s Indebtedness (but not including prepayment
penalties and make-whole costs not included in the calculation of EBITDA) other
than (i) any final scheduled principal payment on any Indebtedness which pays
such Indebtedness in full, to the extent the amount of such scheduled principal
payment is greater than the scheduled principal payment immediately preceding
such final scheduled principal payment and (ii) scheduled principal payments on
the Borrower’s and the Parent’s Indebtedness incurred prior to October 30, 2003
which has a rating from Standard & Poor’s Rating Services, Moody’s Investor
Service, Inc. or Fitch which is the equivalent of BBB-/Baa3 or better at the
time of issuance, in each case for the period used to calculate EBITDA.

     Funding Loss shall mean, with respect to (a) Borrower’s payment or
prepayment of principal of a Eurodollar Rate Borrowing or a Money Market Loan
on a day other than the last day of the applicable Interest Period; (b)
Borrower’s failure to borrow a Eurodollar Rate Borrowing or a Money Market Loan
on the date specified by Borrower; (c) Borrower’s failure to make any
prepayment of the Loans (other than Base Rate Borrowings) on the date specified
by Borrower, or (d) any cessation of a Eurodollar Rate to apply to the Loans or
any part thereof pursuant to Section 3.5, in each case whether voluntary or
involuntary, any direct loss, expense, penalty, premium or liability incurred
by any Lender (including but not limited to any loss or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired
by a Lender to fund or maintain a Loan).

     Generally Accepted Accounting Principles shall mean, as to a particular
Person, such accounting practice as, in the opinion of the independent
accountants of recognized national standing regularly retained by such Person
and acceptable to the Agent, conforms at the time to generally accepted
accounting principles, consistently applied. Generally Accepted Accounting
Principles means those principles and practices (a) which are recognized as
such by the Financial Accounting Standards Board, (b) which are applied for all
periods after the date hereof in a manner consistent with the manner in which
such principles and practices were applied to the most recent audited financial
statements of the relevant Person furnished to the Lenders or where a change
therein has been concurred in by such Person’s independent auditors, and (c)
which are consistently applied for all periods after the date hereof so as to
reflect properly the financial condition, and results of operations and changes
in financial position, of such Person. If there is a change in such accounting
practice as to the Borrower that could affect the Borrower’s ability to comply
with the terms of this Agreement, the parties hereto agree to review and
discuss such

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changes in accounting practice and the terms of this Agreement for a
period of no more than thirty (30) days with a view to amending this Agreement
so that the financial measures of the Borrower’s operating performance and
financial condition are substantially the same after such change as they were
immediately before such change.

     Governmental Authority shall mean any foreign governmental authority, the
United States of America, any State of the United States and any political
subdivision of any of the foregoing, and any agency, department, commission,
board, bureau, court or other tribunal having jurisdiction over the Agent, any
Lender or the Borrower or their respective Property.

     Guarantor shall mean each Subsidiary of Borrower that executes a Guaranty
as required by Section 5.15 hereof. Guarantor as of the date hereof is the
Persons listed on Schedule I attached hereto.

     Guaranty (whether one or more) shall mean a Guaranty in the form of
Exhibit I attached hereto and made a part hereof.

     Hedging Agreements shall mean any interest rate protection agreement,
foreign currency exchange agreement, commodity price protection agreement or
other interest or currency exchange rate or commodity price hedging agreement.

     Historical Value shall mean the purchase price of Real Property (including
improvements) and ordinary related purchase transaction costs, plus the cost of
subsequent capital improvements made by the Borrower, less any provision for
losses, all determined in accordance with Generally Accepted Accounting
Principles. If the Real Property is purchased as a part of a group of
properties, the Historical Value shall be calculated based upon a reasonable
allocation of the aggregate purchase price by the Borrower, and consistent with
Generally Accepted Accounting Principles.

     Indebtedness shall mean and include, without duplication (1) all
obligations for borrowed money, (2) all obligations evidenced by bonds,
debentures, notes or other similar agreements, (3) all obligations to pay the
deferred purchase price of Property or services, except accrued expenses and
trade accounts payable arising in the ordinary course of business (unless
included in (6) below), (4) all guaranties and endorsements and other
contingent obligations in respect of, or any obligations to purchase or
otherwise acquire, Indebtedness of others (provided that, where the guarantor
is not the sole owner of the Person whose Indebtedness is guaranteed, and where
the guaranty is of that portion of the Indebtedness remaining unpaid after the
collection of the collateral for the Indebtedness, the amount guaranteed that
is less than twenty-five percent (25%) of the Historical Value of said related
collateral will not be included in the calculation of Indebtedness), (5) all
Indebtedness secured by any Lien existing on any interest of the Person with
respect to which Indebtedness is being determined in Property owned subject to
such Lien whether or not the Indebtedness secured thereby shall have been
assumed, (6) accounts payable, dividends of any kind or character or other
proceeds payable with respect to any stock and accrued expenses which in the
aggregate are in excess of five percent (5%) of the undepreciated value of the
assets of the Borrower, (7) payments received in consideration

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for sale of Borrower’s stock when the amount of the stock so sold is
determined, and the date of delivery is, more than one (1) month after receipt
of such payment and only to the extent that the obligation to deliver stock is
not payable solely in stock of the Borrower, (8) all obligations under Hedging
Agreements (calculated on a mark-to-market basis as of the reporting date)
other than Hedging Agreements related to interest rates on identified
outstanding borrowed money Indebtedness, and (9) all Capital Lease Obligations
of such Person. Indebtedness shall be calculated on a consolidated basis in
accordance with Generally Accepted Accounting Principles, including (without
duplication) the Equity Percentage of Indebtedness for the Borrower’s
Unconsolidated Affiliates.

     Interest Expense shall mean all of a Person’s paid, accrued or capitalized
interest expense on such Person’s Indebtedness (whether direct, indirect or
contingent, and including, without limitation, interest on all convertible
debt), but excluding Construction Interest.

     Interest Options shall mean the Base Rate and the Eurodollar Rate, and
“Interest Option” means either of them.

     Interest Payment Dates shall mean (a) the first (1st) day of each calendar
month and the Maturity Date, for Base Rate Borrowings and Eurodollar Rate
Borrowings; and (b) for Money Market Loans, the last day of each Interest
Period and the maturity date of the Money Market Loans

     Interest Period shall mean:

		
	 	     (1) For each Eurodollar Rate Borrowing, a period commencing on the
date such Eurodollar Rate Borrowing was made and ending on the
numerically corresponding day which is, subject to availability, (a) one
(1), two (2), three (3) or six (6) months thereafter, or (b) seven (7),
fourteen (14) or twenty-one (21) days thereafter for no more than four
(4) time periods (provided that the first Eurodollar Rate Borrowing under
this Agreement with an Interest Period of seven (7) days shall not count
against the four time maximum) each calendar year in connection with
payments of the Loans because of debt and/or equity sales by the
Borrower, changes in the Lender Commitments, sales of major assets by the
Borrower, or other similar reasons specifically approved by the Agent;
provided that, (v) any Interest Period which would otherwise end on a day
which is not a Eurodollar Business Day shall be extended to the next
succeeding Eurodollar Business Day, unless such Eurodollar Business Day
falls in another calendar month, in which case such Interest Period shall
end on the next preceding Eurodollar Business Day; (w) any Interest
Period which begins on the last Eurodollar Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in
the calendar month at the end of such Interest Period) shall end on the
last Eurodollar Business Day of the appropriate calendar month; (x) no
Interest Period shall ever extend beyond the Maturity Date; and (y)
Interest Periods shall be selected by Borrower in such a manner that the
Interest Period with respect to any portion of the Loans which shall
become due shall not extend beyond such due date .

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	 	     (2) For each Money Market LIBOR Loan, the period commencing on the
date such Money Market LIBOR Loan was made and ending one (1), two (2),
three (3) or six (6) months thereafter, as the Borrower may elect in the
applicable Notice of Money Market Borrowing in accordance with Section
2.8; provided that such Interest Period shall be limited as provided in
clauses (1)(v) through (y) above.

		
	 	     (3) With respect to each Money Market Absolute Rate Loan, the period
commencing on the date such Money Market Absolute Rate was made and
ending such number of days thereafter (but not less than 14 days) as the
Borrower may elect in accordance with Section 2.8; provided that such
Interest Period shall be limited as provided in clauses (1)(x) and (y)
above.

     Issuing Bank (whether one or more) means JPMorgan Chase Bank and up to
five (5) other Lenders, in their capacity as the issuer of Letters of Credit
hereunder, and their successors in such capacity as provided in Section 2.2(i).
The Issuing Bank may, in its discretion, arrange for one or more Letters of
Credit to be issued by Affiliates of the Issuing Bank, in which case the term
“Issuing Bank” shall include any such Affiliate with respect to Letters of
Credit issued by such Affiliate.

     LC Disbursement means a payment made by the Issuing Bank pursuant to a
Letter of Credit.

     LC Exposure means, at any time, the sum of (a) the aggregate undrawn
amount of all outstanding Letters of Credit at such time plus (b) the aggregate
amount of all LC Disbursements that have not yet been reimbursed by or on
behalf of the Borrower at such time. The LC Exposure of any Lender at any time
shall be its Percentage of the total LC Exposure at such time.

     Legal Requirement shall mean any law, statute, ordinance, decree,
requirement, order, judgment, rule, regulation (or interpretation of any of the
foregoing) of, and the terms of any license or permit issued by, any
Governmental Authority.

     Lender Commitment means, for any Lender, the amount set forth opposite
such Lender’s name on its signature page of this Agreement, or as may hereafter
become a signatory hereto, as adjusted to reflect assignments or amendments
made in accordance with this Agreement.

     Letter of Credit means any letter of credit issued pursuant to this
Agreement.

     LIBOR Auction shall mean a solicitation of Money Market Quotes setting
forth Money Market Margins based on the Eurodollar Interbank Rate pursuant to
Section 2.8.

     Lien shall mean any mortgage, pledge, charge, encumbrance, security
interest, collateral assignment, negative pledge or other lien or restriction
of any kind, whether based on common law, constitutional provision, statute or
contract, and shall include

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reservations, exceptions, encroachments, easements, rights of way,
covenants, conditions, restrictions, leases and other title exceptions.

     Limiting Agreements shall mean any agreement, instrument or transaction,
including, without limitation, a Person’s Organizational Documents, which has
or may have the effect of prohibiting or limiting any Person’s ability to
pledge assets in the Pool to secure Indebtedness.

     Loans shall mean the Loans described in Sections 2.1, 2.2 and 2.8 hereof.
Loan shall mean any such Loan.

     Majority Lenders shall mean the Lenders with an aggregate amount in excess
of fifty percent (50%) of the amount of the Commitment then outstanding, and
after the Commitment has expired or terminated, shall mean Lenders with an
aggregate amount in excess of fifty percent (50%) of the unpaid principal
balance of the Revolving Credit Exposures.

     Material Adverse Change shall mean a change which could reasonably be
expected to have a Material Adverse Effect.

     Material Adverse Effect means a material adverse effect on (a) the
financial condition, or results of operations of Borrower and its Subsidiaries
taken as a whole, (b) the ability of Borrower to perform its material
obligations under the Credit Documents to which it is a party taken as a whole,
(c) the validity or enforceability of such Credit Documents taken as a whole,
or (d) the material rights and remedies of Lenders and Agent under the Credit
Documents taken as a whole.

     Maturity Date shall mean three (3) years after the date hereof, unless
extended pursuant to Section 9.

     Money Market Absolute Rate has the meaning set forth in Section 2.8.

     Money Market Absolute Rate Loan shall mean a loan to be made by a Lender
pursuant to an Absolute Rate Auction.

     Money Market LIBOR Loan shall mean a loan to be made by a Lender pursuant
to a LIBOR Auction.

     Money Market Loan shall mean a Money Market LIBOR Loan or a Money Market
Absolute Rate Loan, as the context may require or allow.

     Money Market Margin has the meaning set forth in Section 2.8.

     Money Market Quote shall mean an offer by a Lender to make a Money Market
Loan in accordance with Section 2.8.

     Moody’s Rating shall mean the senior unsecured debt rating from time to
time received by the Borrower from Moody’s Investors Service, Inc.

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     Net Operating Income shall mean, for any income producing operating
properties, the difference between (a) any cash rentals, proceeds and other
income received from such Property (but excluding security or other deposits,
or other income of an extraordinary and non-recurring nature) during the
determination period, less (b) all cash costs and expenses (excluding interest
expense and any expenditures that are capitalized in accordance with Generally
Accepted Accounting Principles) incurred as a result of, or in connection with,
or properly allocated to, the operation or leasing of such Property during the
determination period. Net Operating Income shall be calculated on a
consolidated basis in accordance with Generally Accepted Accounting Principles,
and including (without duplication) the Equity Percentage of Net Operating
Income for the Borrower’s Unconsolidated Affiliates.

     Non-recourse Debt shall mean any Indebtedness the payment of which the
Borrower or any of its Subsidiaries is not obligated to make other than to the
extent of any security therefor.

     Notes shall mean the promissory notes of the Borrower described in Section
2.1 hereof, including the Swing Loan Note, any and all renewals, extensions,
modifications, rearrangements and replacements thereof and any and all
substitutions therefor, and Note shall mean any one of them.

     Obligations shall mean, as at any date of determination thereof, the sum
of (a) the aggregate Revolving Credit Exposures plus (b) all other liabilities,
obligations and Indebtedness of any Parties under any Credit Document.

     Occupancy Level shall mean the occupancy level of a Property that is
leased to bona fide tenants paying rent under written leases, based on the
average of the actual occupancy level for the immediately preceding three (3)
months.

     Officer’s Certificate shall mean a certificate in the form attached hereto
as Exhibit A.

     Organizational Documents shall mean, with respect to a corporation, the
certificate of incorporation, articles of incorporation and bylaws of such
corporation; with respect to a partnership, the partnership agreement
establishing such partnership; with respect to a joint venture, the joint
venture agreement establishing such joint venture, and with respect to a trust,
the instrument establishing such trust; in each case including any and all
modifications thereof as of the date of the Credit Document referring to such
Organizational Document and any and all future modifications thereof which are
consented to by the Lenders.

     Parties shall mean all Persons other than the Agent, the Syndication
Agents, the Documentation Agents or any Lender executing any Credit Document.

     Past Due Rate shall mean, on any day, a rate per annum equal to the Base
Rate plus an additional three percent (3%) per annum, but in any event not to
exceed the Ceiling Rate.

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     Percentage shall mean the amount, expressed as a percentage, of each
Lender Commitment as compared to the Commitment, set forth opposite the
Lender’s name on its signature page of this Agreement, or as may hereafter
become signatory hereto, as adjusted or amended in accordance with this
Agreement. If the Commitment has terminated or expired, the Percentage shall
be determined based on the Revolving Credit Exposure most recently in effect,
giving effect to any assignments.

     Permitted Encumbrances shall mean (a) 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; (b) the following: (i) Liens for
taxes not yet due and payable, or being diligently contested in good faith, or
where no Material Adverse Effect could reasonably be expected to result from
such nonpayment or the imposition of such Lien; or (ii) materialmen’s,
mechanic’s, warehousemen’s and other like Liens arising in the ordinary course
of business, securing payment of Indebtedness whose payment is not yet due, or
that are being contested in good faith by appropriate proceedings diligently
conducted, and for or against which the Borrower has established adequate
reserves in accordance with Generally Accepted Accounting Principles; (c) Liens
for taxes, assessments and governmental charges or assessments that are being
contested in good faith by appropriate proceedings diligently conducted, and
for or against which the Borrower has established adequate reserves in
accordance with Generally Accepted Accounting Principles; (d) Liens on Real
Property which are insured around or against by title insurance; (e) Liens
securing assessments or charges payable to a property owner association or
similar entity which assessments are not yet due and payable or are being
diligently contested in good faith; and (f) Liens securing this Agreement and
Indebtedness hereunder.

     Person shall mean any individual, corporation, trust, unincorporated
organization, Governmental Authority or any other form of entity.

     Pool shall have the meaning given to it in Section 5.15(a).

     Pool Value shall mean the Value of the Pool.

     Prime Rate shall mean, as of a particular date, the prime rate of interest
per annum publicly announced from time to time by JPMC as its prime rate in
effect at its principal office in New York, New York; each change in the Prime
Rate shall be effective on the date such change is determined; which Prime Rate
may not necessarily represent the Agent’s lowest or best rate actually charged
to a customer.

     Proper Form shall mean in form and substance reasonably satisfactory to
the Agent and the Majority Lenders.

     Property shall mean any interest in any kind of property or asset, whether
real, personal or mixed, tangible or intangible.

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     QRS Entities shall mean Smith One, Inc., Smith Two, Inc., Smith Three,
Inc., Smith Four, Inc., Smith Five, Inc., Smith Six, Inc. and Smith Seven, Inc.

     Quarterly Unaudited Financial Statements shall mean the quarterly
financial statements of a Person, including all notes thereto, which statements
shall include a balance sheet as of the end of such quarter and an income
statement for such fiscal quarter, and for the fiscal year to date, a statement
of cash flows for such quarter and for the fiscal year to date, subject to
normal year-end adjustments, and a detailed listing of the Borrower’s Property
and the Historical Value thereof, all setting forth in comparative form the
corresponding figures for the corresponding fiscal period of the preceding year
(or, in the case of the balance sheet, the end of the preceding fiscal year),
prepared in accordance with Generally Accepted Accounting Principles except
that the Quarterly Unaudited Financial Statements may contain condensed
footnotes as permitted by regulations of the United States Securities and
Exchange Commission, and certified as true and correct by a managing director,
senior vice president, controller, co-controller or vice president of Borrower.
The Quarterly Unaudited Financial Statements shall be prepared on a
consolidated basis in accordance with Generally Accepted Accounting Principles.

     Rate Designation Date shall mean 1:00 p.m., New York, New York time, on
the date three (3) Eurodollar Business Days preceding the first day of any
proposed Interest Period.

     Real Property means, collectively, all interest in any land and
improvements located thereon, together with all equipment, furniture,
materials, supplies and personal property now or hereafter located at or used
in connection with the land and all appurtenances, additions, improvements,
renewals, substitutions and replacements thereof now or hereafter acquired by
any Person.

     Regulation D shall mean Regulation D of the Board of Governors of the
Federal Reserve System from time to time in effect and shall include any
successor or other regulation relating to reserve requirements applicable to
member lenders of the Federal Reserve System.

     Request for Loan shall mean a written request for a Committed Loan
substantially in the form of Exhibit B.

     Revolving Credit Exposure means, with respect to any Lender at any time,
the sum of the outstanding principal amount of such Lender’s Loans, the Swing
Loans, and its LC Exposure at such time.

     S&P Rating shall mean the senior unsecured debt rating from time to time
received by the Borrower from Standard & Poor’s Rating Services.

     Secured Debt means the Indebtedness of the Borrower or the Parent secured
by a Lien, and any Indebtedness of any of the Borrower’s or the Parent’s
Subsidiaries and Unconsolidated Affiliates owed to a Person not an Affiliate of
the Borrower or the Parent or such Subsidiary.

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     Secured Debt to Total Asset Value Ratio means the ratio (expressed as a
percentage) of Secured Debt to Total Asset Value.

     Stabilization Date shall mean, with respect to a property, the earlier of
(a) eighteen (18) months from the date of acquisition of an income producing
property by the Borrower or eighteen (18) months after substantial completion
of construction or development of a new construction or development property,
and (b) the date on which the Occupancy Level is at least ninety-three percent
(93%).

     Stated Rate shall, on any day, mean whichever of the Base Rate, the
Eurodollar Rate, or a rate applicable to Money Market Loans has been designated
and provided pursuant to this Agreement; provided that, if on any day such rate
shall exceed the Ceiling Rate for that day, the Stated Rate shall be fixed at
the Ceiling Rate on that day and on each day thereafter until the total amount
of interest accrued at the Stated Rate on the unpaid principal balance of the
Notes equals the total amount of interest which would have accrued if there had
been no Ceiling Rate. If the Notes mature (or are prepaid) before such
equality is achieved, then, in addition to the unpaid principal and accrued
interest then owing pursuant to the other provisions of the Credit Documents,
Borrower promises to pay on demand to the order of the holders of the Notes
interest in an amount equal to the excess (if any) of (a) the lesser of (i) the
total interest which would have accrued on the Notes if the Stated Rate had
been defined as equal to the Ceiling Rate from time to time in effect and (ii)
the total interest which would have accrued on the Notes if the Stated Rate
were not so prohibited from exceeding the Ceiling Rate, over (b) the total
interest actually accrued on the Notes to such maturity (or prepayment) date.

     Subsidiary shall mean, as to a particular parent entity, any entity of
which more than fifty percent (50%) of the indicia of voting equity or
ownership rights (whether outstanding capital stock or otherwise) is at the
time directly or indirectly owned by, such parent entity, or by one or more of
its other Subsidiaries.

     Super-Majority Lenders shall mean the Lenders with an aggregate amount of
sixty-six and sixty-seven hundredths percent (66.67%) or more of the amount of
the Commitment then outstanding, and after the Commitment has expired or
terminated, shall mean Lenders with an aggregate amount of sixty-six and
sixty-seven hundredths percent (66.67%) or more of the unpaid balance of the
Revolving Credit Exposures.

     Swing Loan shall mean a Loan made pursuant to Section 2.1(c) hereof.

     Swing Loan Note shall mean that certain promissory note dated of even date
herewith in the original principal amount of $100,000,000.00 executed by the
Borrower payable to the order of JPMC.

     Tangible Net Worth shall mean total assets (without deduction for
accumulated depreciation) less (1) all intangibles and (2) all liabilities
(including contingent and indirect liabilities), all determined in accordance
with Generally Accepted Accounting Principles. The term “intangibles” shall
include, without limitation, (i) deferred charges, and (ii) the

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aggregate of all amounts appearing on the assets side of any such balance
sheet for franchises, licenses, permits, patents, patent applications,
copyrights, trademarks, trade names, goodwill, treasury stock, experimental or
organizational expenses and other like intangibles. The term “liabilities”
shall include, without limitation, (i) Indebtedness secured by Liens on
Property of the Person with respect to which Tangible Net Worth is being
computed whether or not such Person is liable for the payment thereof, (ii)
deferred liabilities, and (iii) obligations under leases which have been
capitalized. Tangible Net Worth shall be calculated on a consolidated basis in
accordance with Generally Accepted Accounting Principles.

     Taxes shall mean any tax, levy, impost, duty, charge or fee.

     Total Asset Value shall mean the sum of (without duplication) (a) the
aggregate Value of all of the Real Property owned by the Borrower and its
Subsidiaries on a consolidated basis plus (b) the amount of the Borrower’s cash
and cash equivalents, excluding tenant security and other restricted deposits,
plus (c) the total book value of all of the Borrower’s other assets not
described in (a) or (b) above, excluding all intangibles and all equity
investments in Unconsolidated Affiliates, plus (d) the Value of the Real
Property, and cash and other assets of the type permitted, and as valued, in
clauses (b) and (c) of this definition, owned by each of the Borrower’s
Unconsolidated Affiliates, multiplied by the Equity Percentage for that
Unconsolidated Affiliate, including gains on sales of assets to Unconsolidated
Affiliates which must be deferred in accordance with Generally Accepted
Accounting Principles. Total Asset Value shall be calculated on a consolidated
basis in accordance with Generally Accepted Accounting Principles.

     Unconsolidated Affiliate shall mean, in respect of any Person, any other
Person that is an Affiliate of such Person and in whom such Person holds a
voting equity or other ownership interest and whose financial results would not
be consolidated under Generally Accepted Accounting Principles with the
financial results of such other Person on the consolidated financial statements
of such first mentioned Person.

     Unit Capital Expenditure shall mean, on an annual basis, an amount equal
to the sum of (a) the result of (i) the number of apartment units contained in
each completed, operating Real Property owned by Borrower and any Subsidiary as
of the last day of each of the immediately preceding four (4) calendar
quarters, divided by four (4), and multiplied by (ii) $200.00; plus (b) for
Unconsolidated Affiliates, the result of (i) the amount in clause (a) above for
Unconsolidated Affiliates, multiplied by (ii) the Equity Percentage for each
Unconsolidated Affiliate.

     Value means the sum of the following:

     (a) for Real Property that has reached the Calculation Date and that the
Person has owned for the full determination period, the result of dividing (i)
the aggregate Net Operating Income of the subject property ((1) beginning with
the Calculation Date until the end of the third full calendar quarter after the
Stabilization Date, based on the annualized Net Operating Income from the
Calculation Date until the time of measurement, and (2)

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beginning with the fourth full calendar quarter after the Stabilization
Date, based on the immediately preceding four (4) calendar quarter period), by
eight percent (8%); plus

     (b)  for Real Property that is completed but has not reached the
Calculation Date or that has not been owned by Borrower for the full
determination period, the Historical Value of the subject property; plus

     (c)  for Real Property that is under construction or development, or that
is undeveloped land, the Historical Value of the subject property.

2. The Loans.

     2.1 Advances. (a) Subject to the terms and conditions of this Agreement,
each Lender severally agrees to make Committed Loans (other than Swing Loans)
prior to the Maturity Date to the Borrower not to exceed an amount (in the
aggregate, the “Commitment”) at any one time outstanding equal to the
difference between the Lender’s Lender Commitment and the Lender’s Revolving
Credit Exposure. Each such request for a Committed Loan by Borrower shall be
deemed a request for a Committed Loan from each Lender equal to such Lender’s
Percentage of the aggregate amount so requested, and such aggregate amount
shall be in an amount at least equal to $1,000,000.00 and equal to a multiple
of $100,000.00, or the difference between the Commitment and the aggregate
Revolving Credit Exposures, whichever is less. Each repayment of the Committed
Loans shall be deemed a repayment of each Lender’s Committed Loan equal to such
Lender’s Percentage of the amount so repaid. The obligations of the Lenders
hereunder are several and not joint, and the preceding two sentences will give
rise to certain inappropriate results if special provisions are not made to
accommodate the failure of a Lender to fund a Committed Loan as and when
required by this Agreement; therefore, notwithstanding anything herein to the
contrary, (A) no Lender shall be required to make Committed Loans at any one
time outstanding in excess of such Lender’s Percentage of the Commitment, and
(B) if a Lender fails to make a Committed Loan as and when required hereunder
and Borrower subsequently makes a repayment on the Committed Loans, such
repayment shall be split among the non-defaulting Lenders ratably in accordance
with their respective Percentages until each Lender has its Percentage of all
of the outstanding Committed Loans, and the balance of such repayment shall be
divided among all of the Lenders in accordance with their respective
Percentages. Notwithstanding the foregoing, borrowings and payments of Swing
Loans shall be for JPMC’s own account. The Loans (other than Swing Loans)
shall be evidenced by the Notes substantially in the form of Exhibit C attached
hereto. The Borrower, the Agent and the Lenders agree that Chapter 346 of the
Texas Finance Code shall not apply to this Agreement, the Notes or any Loan.

     (b) The Borrower shall give the Agent notice of each borrowing of a
Committed Loan to be made hereunder as provided in Section 3.1, and the Agent
shall deliver same to each Lender promptly thereafter. Not later than 12:00
noon, New York, New York time, on the date specified for each such borrowing of
a Committed Loan hereunder other than Swing Loans, each Lender shall make
available the amount of the Loan, if any, to be made by it on such date to the
Agent at the Agent’s principal office in

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New York, New York, in immediately available funds, for the account of the
Borrower. Such amounts received by the Agent will be held in Agent’s general
ledger account. The amounts so received by the Agent shall, subject to the
terms and conditions of this Agreement, be made available to the Borrower by
wiring or otherwise transferring, in immediately available funds not later than
1:00 p.m., New York, New York time, such amount to an account designated by the
Borrower and maintained with JPMC or any other account or accounts which the
Borrower may from time to time designate to the Agent by a written notice as
the account or accounts to which borrowings hereunder are to be wired or
otherwise transferred. JPMC shall make available the amount of each Swing Loan
by depositing the same in immediately available funds, in the foregoing account
by 3:00 p.m., New York, New York time, on the date of the borrowing.

     (c) Subject to the terms and conditions hereof, if necessary to meet the
Borrower’s funding deadlines, JPMC agrees to make Swing Loans to the Borrower
at any time on or prior to the Maturity Date, not to exceed an amount at any
one time outstanding equal to the lesser of (i) $100,000,000.00, or (ii) the
difference between the Commitment and the aggregate Revolving Credit Exposures.
Swing Loans shall constitute “Loans” for all purposes hereunder.
Notwithstanding the foregoing, the aggregate amount of all Loans (including,
without limitation, all Swing Loans) shall not at any time exceed the
difference between the Commitment and the LC Exposure. Each request for a
Swing Loan shall be in an amount at least equal to $1,000,000.00 and equal to a
multiple of $100,000.00. If necessary to meet the Borrower’s funding
deadlines, the Agent may treat any Request for Loan as a request for a Swing
Loan from JPMC and JPMC may fund it as a Swing Loan. Within two (2) Business
Days after each Swing Loan is funded, JPMC shall request that each Lender, and
each Lender shall, on the first Business Day after such request is made,
purchase a portion of any one or more Swing Loans in an amount equal to that
Lender’s Percentage of such Swing Loans by funding under such Lender’s Note,
such purchase to be made in accordance with the terms of Section 2.1(b) just as
if the Lender were funding directly to the Borrower under its Note (such that
all Lenders other than JPMC shall fund only under their respective Note and not
under the Swing Loan Note). Unless the Agent knew or should have known when
JPMC funded a Swing Loan that the Borrower had not satisfied the conditions in
this Agreement to obtain a Loan, each Lender’s obligation to purchase an
interest in the Swing Loans shall be absolute and unconditional and shall not
be affected by any circumstance, including, without limitation, (i) any
set-off, counterclaim, recoupment, defense or other right which such Lender or
any other Person may have against JPMC or any other Person for any reason
whatsoever; (ii) the occurrence or continuance of a Default or Event of Default
or the termination of any Lender Commitment; (iii) any adverse change in the
condition (financial or otherwise) of the Borrower or any of its Subsidiaries;
(iv) any breach of this Agreement or any other Credit Documents by the
Borrower, any of its Subsidiaries, the Agent or any other Lender; or (v) any
other circumstance, happening or event whatsoever, whether or not similar to
any of the foregoing. Any portion of a Swing Loan not so purchased and
converted may be treated by JPMC as a Committed Loan which was not funded by
the non-purchasing Lenders as contemplated in Section 2.1(a), and as a funding
by JPMC under the Commitment in excess of JPMC’s Percentage. Each Swing Loan,
once so sold, shall cease to be a Swing Loan for the purposes of this
Agreement, but shall be a Committed Loan

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made under the Commitment and each Lender’s Lender Commitment. The Swing
Loans shall be evidenced by the Swing Loan Note substantially in the form of
Exhibit C-1 attached hereto.

     (d)  So long as the Borrower is not then in Default and so long as the
Borrower has not reduced the Commitment pursuant to Section 2.9, the Borrower
may on two (2) occasions prior to October 30, 2006, request that the aggregate
Commitment be increased, so long as (i) the aggregate Commitment does not
exceed Nine Hundred Million Dollars ($900,000,000.00) (the “Maximum
Commitment”), and (ii) each increase is a minimum of $50,000,000. If the
Borrower requests that the aggregate Commitment be increased, the Agent shall
use its best efforts to obtain increased or additional commitments up to the
Maximum Commitment, and to do so the Agent may obtain additional lenders of its
choice (and approved by Borrower, such approval not to be unreasonably withheld
or delayed), and without the necessity of approval from any of the Lenders.
The Borrower and each Guarantor shall execute an amendment to this Agreement,
additional Notes and other documents as the Agent may reasonably require to
evidence the increase of the Commitment, and the admission of additional
Persons as Lenders, if necessary.

     2.2 Letters of Credit.

          (a) Subject to the terms and conditions set forth herein, the Borrower may
request the issuance of Letters of Credit for its own account, in a form
reasonably acceptable to the Agent and the Issuing Bank, at any time and from
time to time before the Maturity Date. In the event of any inconsistency
between the terms and conditions of this Agreement and the terms and conditions
of any form of letter of credit application or other agreement submitted by the
Borrower to, or entered into by the Borrower with, the Issuing Bank relating to
any Letter of Credit, the terms and conditions of this Agreement shall control.

          (b) To request the issuance of a Letter of Credit (or the amendment,
renewal or extension of an outstanding Letter of Credit), the Borrower shall
hand deliver or facsimile (or transmit by electronic communication, if
arrangements for doing so have been approved by the Issuing Bank) to the
Issuing Bank and the Agent (reasonably in advance of the requested date of
issuance, amendment, renewal or extension) a notice requesting the issuance of
a Letter of Credit, or identifying the Letter of Credit to be amended, renewed
or extended, and specifying the date of issuance, amendment, renewal or
extension (which shall be a Business Day), the date on which such Letter of
Credit is to expire (which shall comply with paragraph (c) of this Section),
the amount of such Letter of Credit, the name and address of the beneficiary
thereof and such other information as shall be necessary to prepare, amend,
renew or extend such Letter of Credit. If requested by the Issuing Bank, the
Borrower also shall submit a letter of credit application on the Issuing Bank’s
standard form in connection with any request for a Letter of Credit. A Letter
of Credit shall be issued, amended, renewed or extended only if (and upon
issuance, amendment, renewal or extension of each Letter of Credit the Borrower
shall be deemed to represent and warrant that), after giving effect to such
issuance, amendment, renewal or extension (i) the LC Exposure shall not exceed
$150,000,000.00 and (ii) the total Revolving Credit Exposures

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shall not exceed the total Commitment. Copies of all Letters of Credit
and amendments, extensions and cancellations related thereto, must be delivered
to the Agent and the other Lenders by the Issuing Bank.

          (c) Each Letter of Credit shall expire not later than the earlier of (i)
three (3) years after date of issuance of the Letter of Credit (the “Maximum
Outside Date”), and (ii) the close of business on the date that is ten (10)
days prior to the Maturity Date (including the extension period provided in
Section 9); provided, however, that Letters of Credit with an aggregate LC
Exposure not exceeding $50,000,000.00 at any time may expire up to the earlier
of October 30, 2008 and the Maximum Outside Date.

          (d) By the issuance of a Letter of Credit (or an amendment to a Letter of
Credit increasing the amount thereof) and without any further action on the
part of the Issuing Bank or the Lenders, the Issuing Bank hereby grants to each
Lender, and each Lender hereby acquires from the Issuing Bank, a participation
in such Letter of Credit equal to such Lender’s Percentage of the aggregate
amount available to be drawn under such Letter of Credit. In consideration and
in furtherance of the foregoing, each Lender hereby absolutely and
unconditionally agrees to pay to the Agent, for the account of the Issuing
Bank, such Lender’s Percentage of each LC Disbursement made by the Issuing Bank
and not reimbursed by the Borrower on the date due as provided in paragraph (e)
of this Section, or of any reimbursement payment required to be refunded to the
Borrower for any reason. Each Lender acknowledges and agrees that its
obligation to acquire participations pursuant to this paragraph in respect of
Letters of Credit is absolute and unconditional and shall not be affected by
any circumstance whatsoever, including any amendment, renewal or extension of
any Letter of Credit or the occurrence and continuance of a Default or
reduction of the Commitment, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever.

          (e) If the Issuing Bank shall make any LC Disbursement in respect of a
Letter of Credit, the Borrower shall reimburse such LC Disbursement by paying
to the Agent an amount equal to such LC Disbursement not later than 1:00 p.m.,
New York, New York time, on the date that such LC Disbursement is made if the
Borrower shall have received notice of such LC Disbursement prior to 11:00
a.m., New York, New York time, on such date, or, if such notice has not been
received by the Borrower prior to such time on such date, then not later than
1:00 p.m., New York, New York time, on (i) the Business Day that the Borrower
receives such notice, if such notice is received prior to 11:00 a.m., New York,
New York time, on the day of receipt, or (ii) the Business Day immediately
following the day that the Borrower receives such notice, if such notice is not
received prior to such time on the day of receipt; provided that the Borrower
may, subject to the conditions to borrowing set forth herein, request in
accordance with Section 2.1 that such payment be financed with a Base Rate
Borrowing in an equivalent amount and, to the extent so financed, the
Borrower’s obligation to make such payment shall be discharged and replaced by
the resulting Base Rate Borrowing. If the Borrower fails to make such payment
when due, the Agent shall notify each Lender of the applicable LC Disbursement,
the payment then due from the Borrower in respect thereof and such Lender’s
Percentage thereof. Promptly following receipt of such notice, each Lender
shall pay to the Agent its Percentage

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of the payment then due from the Borrower, in the same manner as provided
in Section 2.1(a) with respect to Loans made by such Lender (and Section 2.1(a)
shall apply, mutatis mutandis, to the payment obligations of the Lenders), and
the Agent shall promptly pay to the Issuing Bank the amounts so received by it
from the Lenders. Promptly following receipt by the Agent of any payment from
the Borrower pursuant to this paragraph, the Agent shall distribute such
payment to the Issuing Bank or, to the extent that Lenders have made payments
pursuant to this paragraph to reimburse the Issuing Bank, then to such Lenders
and the Issuing Bank as their interests may appear. Any payment made by a
Lender pursuant to this paragraph to reimburse the Issuing Bank for any LC
Disbursement (other than the funding of Base Rate Loans as contemplated above)
shall not constitute a Loan and shall not relieve the Borrower of its
obligation to reimburse such LC Disbursement.

          (f) The Borrower’s obligation to reimburse LC Disbursements as provided in
paragraph (e) of this Section shall be absolute, unconditional and irrevocable,
and shall be performed strictly in accordance with the terms of this Agreement
under any and all circumstances whatsoever and irrespective of (i) any lack of
validity or enforceability of any Letter of Credit or this Agreement, or any
term or provision therein, (ii) any draft or other document presented under a
Letter of Credit proving to be forged, fraudulent or invalid in any respect or
any statement therein being untrue or inaccurate in any respect, (iii) payment
by the Issuing Bank under a Letter of Credit against presentation of a draft or
other document that does not comply with the terms of such Letter of Credit, or
(iv) any other event or circumstance whatsoever, whether or not similar to any
of the foregoing, that might, but for the provisions of this Section,
constitute a legal or equitable discharge of, or provide a right of setoff
against, the Borrower’s obligations hereunder. Neither the Agent, the Lenders
nor the Issuing Bank shall have any liability or responsibility by reason of or
in connection with the issuance or transfer of any Letter of Credit or any
payment or failure to make any payment thereunder (irrespective of any of the
circumstances referred to in the preceding sentence), or any error, omission,
interruption, loss or delay in transmission or delivery of any draft, notice or
other communication under or relating to any Letter of Credit (including any
document required to make a drawing thereunder), any error in interpretation of
technical terms or any consequence arising from causes beyond the control of
the Issuing Bank; provided that the foregoing shall not be construed to excuse
the Issuing Bank from liability to the Borrower to the extent of any direct
damages (as opposed to consequential damages, claims in respect of which are
hereby waived by the Borrower to the extent permitted by applicable law)
suffered by the Borrower that are caused by the Issuing Bank’s failure to
exercise care when determining whether drafts and other documents presented
under a Letter of Credit comply with the terms thereof. The parties hereto
expressly agree that, in the absence of gross negligence or willful misconduct
on the part of the Issuing Bank (as finally determined by a court of competent
jurisdiction), the Issuing Bank shall be deemed to have exercised care in each
such determination. In furtherance of the foregoing and without limiting the
generality thereof, the parties agree that, with respect to documents presented
which appear on their face to be in substantial compliance with the terms of a
Letter of Credit, the Issuing Bank may, in its sole discretion, either accept
and make payment upon such documents without responsibility for further
investigation, regardless of any notice or information to the

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contrary, or refuse to accept and make payment upon such documents if such
documents are not in strict compliance with the terms of such Letter of Credit.

          (g) The Issuing Bank shall, promptly following its receipt thereof,
examine all documents purporting to represent a demand for payment under a
Letter of Credit. The Issuing Bank shall promptly notify the Agent and the
Borrower by telephone (confirmed by telecopy) of such demand for payment and
whether the Issuing Bank has made or will make an LC Disbursement thereunder;
provided that any failure to give or delay in giving such notice shall not
relieve the Borrower of its obligation to reimburse the Issuing Bank and the
Lenders with respect to any such LC Disbursement.

          (h) If the Issuing Bank shall make any LC Disbursement, then, unless the
Borrower shall reimburse such LC Disbursement in full on the date such LC
Disbursement is made, the unpaid amount thereof shall bear interest, for each
day from and including the date such LC Disbursement is made to but excluding
the date that the Borrower reimburses such LC Disbursement, at the rate per
annum then applicable to Base Rate Loans; provided that, if the Borrower fails
to reimburse such LC Disbursement when due pursuant to paragraph (e) of this
Section, then the unpaid amount thereof shall bear interest from the date
reimbursement was due until the date payment is made at the Past Due Rate.
Interest accrued pursuant to this paragraph shall be for the account of the
Issuing Bank, except that interest accrued on and after the date of payment by
any Lender pursuant to paragraph (e) of this Section to reimburse the Issuing
Bank shall be for the account of such Lender to the extent of such payment.

          (i) The Issuing Bank may be replaced at any time by written agreement
among the Borrower, the Agent, the replaced Issuing Bank and the successor
Issuing Bank. The Agent shall notify the Lenders of any such replacement of
the Issuing Bank. At the time any such replacement shall become effective, the
Borrower shall pay all unpaid fees accrued for the account of the replaced
Issuing Bank pursuant to Section 2.7(c). From and after the effective date of
any such replacement, (i) the successor Issuing Bank shall have all the rights
and obligations of the Issuing Bank under this Agreement with respect to
Letters of Credit to be issued thereafter and (ii) references herein to the
term “Issuing Bank” shall be deemed to refer to such successor or to any
previous Issuing Bank, or to such successor and all previous Issuing Banks, as
the context shall require. After the replacement of an Issuing Bank hereunder,
the replaced Issuing Bank shall remain a party hereto and shall continue to
have all the rights and obligations of an Issuing Bank under this Agreement
with respect to Letters of Credit issued by it prior to such replacement, but
shall not be required to issue additional Letters of Credit.

          (j) If (i) any Event of Default shall occur and be continuing, on the
Business Day that the Borrower receives notice from the Agent or the Majority
Lenders demanding the deposit of cash collateral pursuant to this paragraph, or
(ii) any Letter of Credit will expire after the Maturity Date as allowed by
Section 2.2(c) then at least ten (10) days before the Maturity Date, the
Borrower shall deposit in an account with the Agent, in the name of the Agent
and for the benefit of the Lenders, an amount in cash equal to the LC Exposure
as of such date plus any accrued and unpaid interest thereon; provided that the

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obligation to deposit such cash collateral shall become effective
immediately, and such deposit shall become immediately due and payable, without
demand or other notice of any kind, upon the occurrence of any Event of Default
with respect to the Borrower described in clause (h) or (i) of Section 7.1.
Such deposit shall be held by the Agent as collateral for the payment and
performance of the obligations of the Borrower under this Agreement. The Agent
shall have exclusive dominion and control, including the exclusive right of
withdrawal, over such account. Other than any interest earned on the
investment of such deposits, which investments shall be made at the option and
sole discretion of the Agent and at the Borrower’s risk and expense, such
deposits shall not bear interest. Interest or profits, if any, on such
investments shall accumulate in such account. Moneys in such account shall be
applied by the Agent to reimburse the Issuing Bank for LC Disbursements for
which it has not been reimbursed and, to the extent not so applied, shall be
held for the satisfaction of the reimbursement obligations of the Borrower for
the LC Exposure at such time or, if the maturity of the Loans has been
accelerated, be applied to satisfy other obligations of the Borrower under this
Agreement. If the Borrower is required to provide an amount of cash collateral
hereunder as a result of the occurrence of an Event of Default, such amount (to
the extent not applied as aforesaid) shall be returned to the Borrower within
three Business Days after all Events of Default have been cured or waived.

     2.3 Payments.

          (a) Except to the extent otherwise provided herein, all payments of
principal, interest and other amounts to be made by the Borrower hereunder,
under the Notes and under the other Credit Documents shall be made in
immediately available funds to the Agent at its principal office in New York,
New York (or in the case of a successor Agent, at the principal office of such
successor Agent in the United States), not later than 1:00 p.m., New York, New
York time on the date on which such payment shall become due (each such payment
made after such time on such due date to be deemed to have been made on the
next succeeding Business Day).

          (b) The Borrower may, at the time of making each payment hereunder, under
any Note or under any other Credit Document, specify to the Agent the Loans or
other amounts payable by the Borrower hereunder or thereunder to which such
payment is to be applied (and in the event that it fails so to specify, such
payment shall be applied to the Loans (first to the Swing Loans) or, if no
Loans are outstanding, to other amounts then due and payable, provided that if
no Loans or other amounts are then due and payable or an Event of Default has
occurred and is continuing, the Agent may apply such payment to the Obligations
in such order as it may elect in its sole discretion, but subject to the other
terms and conditions of this Agreement, including without limitation Section
2.4 hereof). Each payment received by the Agent hereunder, under any Note or
under any other Credit Document for the account of a Lender shall be paid
promptly to such Lender, in immediately available funds. If the Agent receives
a payment for the account of a Lender prior to 1:00 p.m., New York, New York
time, such payment must be delivered to the Lender on that same day and if it
is not so delivered due to the fault of the Agent, the Agent shall pay to the
Lender entitled to the payment the interest accrued on the amount of the
payment pursuant to said Lender’s Note from the date the Agent receives the
payment to the

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date the Lender received the payment. The Agent may apply payments
received from the Borrower to pay any unpaid principal and interest on the
Swing Loans before making payment to each Lender of amounts due under the Notes
other than the Swing Loan Note. Loans may be prepaid only if the accompanying
Funding Loss, if any, is also paid.

          (c) If the due date of any payment hereunder or under any Note falls on a
day which is not a Business Day or a Eurodollar Business Day, as the case may
be, the due date for such payments shall be extended to the next succeeding
Business Day or Eurodollar Business Day, respectively, and interest shall be
payable for any principal so extended for the period of such extension;
provided, however, that with respect to Eurodollar Rate Borrowings and Money
Market LIBOR Loans if such extension would cause the Eurodollar Business Day of
payment to fall in another calendar month, the payment shall be due on the
Eurodollar Business Day next preceding the due date of the payment.

          (d) The Borrower shall give the Agent at least one (1) Business Day’s
prior written notice of the Borrower’s intent to make any payment of principal
or interest under the Credit Documents not scheduled to be paid under the
Credit Documents. Any such notification of payment shall be irrevocable after
it is made by the Borrower. Upon receipt by the Agent of such notification of
payment, it shall deliver same to the other Lenders.

          (e) All payments by the Borrower hereunder or under any other Credit
Documents shall be made free and clear of and without deduction for or on
account of any Taxes, including withholding and other charges of any nature
whatsoever imposed by any taxing authority excluding in the case of each Lender
taxes imposed on or measured by its net income or franchise taxes imposed in
lieu of net income taxes by the jurisdiction in which it is organized or
through which it acts for purposes of this Agreement. If any withholding or
deduction from any payment to be made to, or for the account of, a Lender by
the Borrower hereunder or under any other Credit Document is required in
respect of any Taxes pursuant to any applicable law, rule, or regulation, then
the Borrower will (i) pay to the relevant authority the full amount required to
be so withheld or deducted; (ii) to the extent available, promptly forward to
the Agent an official receipt or other documentation satisfactory to the Agent
evidencing such payment to such authority; and (iii) pay to the Agent, for the
account of each affected Lender, such additional amount or amounts as are
necessary to ensure that the net amount actually received by such Lender will
equal the full amount such Lender would have received had no such withholding
or deduction been required. Each Lender shall determine such additional amount
or amounts payable to it (which determination shall, in the absence of manifest
error, be conclusive and binding on the Borrower). If a Lender becomes aware
that any such withholding or deduction from any payment to be made by the
Borrower hereunder or under any other Credit Document is required, then such
Lender shall promptly notify the Agent and the Borrower thereof stating the
reasons therefor and the additional amount required to be paid under this
Section. Each Lender shall execute and deliver to the Agent and Borrower such
forms as it may be required to execute and deliver pursuant to subsection (f)
below. To the extent that any such withholding or deduction results from the
failure of a Lender to provide a form

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required by subsection (f) below (unless such failure is due to some
prohibition under applicable Legal Requirements), the Borrower shall have no
obligation to pay the additional amount required by clause (iii) above.
Anything in this Section notwithstanding, if any Lender elects to require
payment by the Borrower of any material amount under this Section, the Borrower
may, within 60 days after the date of receiving notice thereof and so long as
no Default shall have occurred and be continuing, elect to terminate such
Lender as a party to this Agreement; provided that, concurrently with such
termination the Borrower shall (1) if the Agent and each of the other Lenders
shall consent, pay that Lender all principal, interest and fees and other
amounts owed to such Lender through such date of termination or (2) have
arranged for another institution approved by the Agent (such approval not to be
unreasonably withheld) as of such date, to become a substitute Lender for all
purposes under this Agreement in the manner provided in Section 10.5; provided
further that, prior to substitution for any Lender, the Borrower shall have
given written notice to the Agent of such intention and the Lenders shall have
the option, but no obligation, for a period of 60 days after receipt of such
notice, to increase their Commitments pro rata based on their Lender
Commitments in order to replace the affected Lender in lieu of such
substitution.

          (f) With respect to each Lender which is organized under the laws of a
jurisdiction outside the United States, on the day of the initial borrowing
from each such Lender hereunder and from time to time thereafter if requested
by the Borrower or the Agent, such Lender shall provide the Agent and the
Borrower with the forms prescribed by the Internal Revenue Service of the
United States certifying as to such Lender’s status for purposes of determining
exemption from United States withholding taxes with respect to all payments to
be made to such Lender hereunder or other documents satisfactory to such Lender
and the Agent indicating that all payments to be made to such Lender hereunder
are not subject to United States withholding tax or are subject to such tax at
a rate reduced by an applicable tax treaty. Unless the Borrower and the Agent
shall have received such forms or such documents indicating that payments
hereunder are not subject to United States withholding tax or are subject to
such tax at a rate reduced by an applicable tax treaty, the Borrower or the
Agent shall withhold taxes from such payments at the applicable statutory rate
in the case of payments to or for any Lender organized under the laws of a
jurisdiction outside the United States.

     2.4 Pro Rata Treatment. Except to the extent otherwise provided herein:
(a) each borrowing from the Lenders under Section 2.1(a) hereof shall be made
ratably from the Lenders on the basis of their respective Percentages, except
as provided in Section 2.7(c)(ii) each payment of the Fee (hereinafter defined)
shall be made for the account of the Lenders, and shall be applied, pro rata,
according to the Lenders’ respective Lender Commitment; and (b) each payment by
the Borrower of principal or interest on the Committed Loans other than the
Swing Loans, of any other sums advanced by the Lenders pursuant to the Credit
Documents, and of any other amount owed to the Lenders other than the Fee,
payments of Swing Loans, or any other sums designated by this Agreement as
being owed to a particular Lender, shall be made to the Agent for the account
of the Lenders pro rata in accordance with the respective unpaid principal
amounts of the

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Committed Loans (other than Swing Loans) held by the Lenders. Payments of
Swing Loans shall be for JPMC’s own account.

     2.5 Non-Receipt of Funds by the Agent. Unless the Agent shall have been
notified by a Lender or the Borrower (the “Payor”) prior to the date on which
such Lender is to make payment to the Agent of the proceeds of a Loan (or
purchase of a portion of a Swing Loan) to be made by it hereunder or the
Borrower is to make a payment to the Agent for the account of one or more of
the Lenders, as the case may be (such payment being herein called the “Required
Payment”), which notice shall be effective upon receipt, that the Payor does
not intend to make the Required Payment to the Agent, the Agent may assume that
the Required Payment has been made and may, in reliance upon such assumption
(but shall not be required to), make the amount thereof available to the
intended recipient on such date and, if the Payor has not in fact made the
Required Payment to the Agent, the recipient of such payment shall, on demand,
pay to the Agent the amount made available by the Agent together with interest
thereon in respect of the period commencing on the date such amount was so made
available by the Agent until the date the Agent recovers such amount at a rate
per annum equal to (a) the Past Due Rate for such period if the recipient
returning a Required Payment is the Borrower, or (b) the Federal Funds
Effective Rate for such period if the recipient returning a Required Payment is
the Agent or a Lender.

     2.6 Sharing of Payments, Etc. The Borrower agrees that, in addition to
(and without limitation of) any right of set-off, bankers’ lien or counterclaim
a Lender may otherwise have, each Lender shall be entitled, at its option, to
offset balances held by it for the account of the Borrower at any of its
offices, against any principal of or interest on any of such Lender’s Loans to
the Borrower hereunder, or other Obligations of the Borrower hereunder, which
is not paid (regardless of whether such balances are then due to the Borrower),
in which case it shall promptly notify the Borrower and the Agent thereof,
provided that such Lender’s failure to give such notice shall not affect the
validity thereof. If a Lender shall obtain payment of any principal of or
interest on any Committed Loan made by it under this Agreement (other than
Swing Loans made by JPMC), or other Obligation then due to such Lender
hereunder, through the exercise of any right of set-off, banker’s lien,
counterclaim or similar right, or otherwise, it shall promptly purchase from
the other Lenders portions of the Loans made or other Obligations held (other
than Swing Loans made by JPMC), by the other Lenders in such amounts, and make
such other adjustments from time to time as shall be equitable to the end that
all the Lenders shall share the benefit of such payment (net of any expenses
which may be incurred by such Lender in obtaining or preserving such benefit)
pro rata in accordance with the unpaid principal and interest on the
Obligations then due to each of them. To such end all the Lenders shall make
appropriate adjustments among themselves (by the resale of participations sold
or otherwise) if such payment is rescinded or must otherwise be restored.
Nothing contained herein shall require any Lender to exercise any such right or
shall affect the right of any Lender to exercise, and retain the benefits of
exercising, any such right with respect to any other indebtedness or obligation
of the Borrower.

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     2.7 Fees. The Borrower shall pay fees equal to the following:

          (a) An amount payable as a facility fee by the Borrower to the Agent for
the account of each Lender equal to the following percentage per annum
multiplied by the Commitment (and after the Commitment terminates or expires,
the aggregate Revolving Credit Exposures), which will be in effect whenever
and for so long as the Borrower has received the corresponding Credit Rating
(the method of determining the Credit Rating based on multiple ratings to be
the same as set forth and used to determine the Credit Rating for the
definition of Applicable Margin):

	 	 	 	 	 
	CREDIT RATING	 	FACILITY FEE
	
	 	

	A/A2 or better
	 	 	0.125	%
	A-/A3
	 	 	0.150	%
	BBB+/Baa1
	 	 	0.150	%
	BBB/Baa2
	 	 	0.150	%
	BBB-/Baa3
	 	 	0.200	%

If the Credit Rating is worse than BBB-/Baa3, or if there is no Credit Rating,
then for that calendar quarter and for so long thereafter as the Credit Rating
is worse than BBB-/Baa3 or if there is no Credit Rating, the facility fee will
be equal to the daily unused amount of the Commitment (Swing Loans shall be
deemed to be a utilization of the Commitment solely for the purposes of this
Section 2.7(a)) multiplied by 0.250% per annum. The facility fee is payable in
arrears on or before the tenth (10th) day of each January, April, July and
October prior to termination or expiration of the Commitment, and on demand
thereafter.

          (b) If the Maturity Date is extended pursuant to Section 9 of this
Agreement, an amount payable as an extension fee by the Borrower to the Agent
for the account of each Lender equal to 0.200% of each Lender’s Lender
Commitment at that time payable on the first day of the extension.

          (c) (i) to the Agent for the account of each Lender a participation fee
with respect to its participations in Letters of Credit, which shall accrue at
the Applicable Margin provided for Eurodollar Rate Borrowings on the average
daily amount of the LC Exposure (excluding any portion thereof attributable to
unreimbursed LC Disbursements) during the period from and including the date of
this Agreement to but excluding the later of the date of termination of the
Commitment and the date on which there ceases to be any LC Exposure, and (ii)
to the Issuing Bank a nonrefundable fronting fee which shall accrue at the rate
of 0.100% per annum on the face amount of each Letter of Credit, as well as the
Issuing Bank’s standard fees (not to be less than $1,500.00 per transaction)
with respect to the issuance, amendment, renewal or extension of any Letter of
Credit or processing of drawings thereunder. Participation fees and fronting
fees accrued through and including the last day of March, June, September and
December of each year shall be payable on the tenth (10th) day following such
last day, commencing on the first such date to occur after the date of this
Agreement; provided that all such fees shall be payable on the date on which
the Commitment terminates and any such fees accruing after the date on which
the

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Commitment terminates shall be payable on demand. Any other fees payable
to the Issuing Bank pursuant to this paragraph shall be payable within ten (10)
days after demand. All participation fees and fronting fees shall be computed
on the basis of a year of 360 days and shall be payable for the actual number
of days elapsed (including the first day but excluding the last day).

     The Fee shall not be refundable (except as required by Section 3.1(c) of
this Agreement). Any portion of the Fee which is not paid by the Borrower when
due shall bear interest at the Past Due Rate from the date due until the date
paid by the Borrower. The Fee shall be calculated on the actual number of days
elapsed in a year deemed to consist of 360 days.

     2.8 Money Market Borrowings.

          (a) The Borrower may, as set forth in this Section, whenever at the time
of the request therefor the Borrower has received an Acceptable Credit Rating,
request the Lenders prior to the Maturity Date to make offers to make Money
Market Loans to the Borrower, not to exceed, at such time, the lesser of (i)
the difference between the Commitment and the aggregate Revolving Credit
Exposures, and (ii) fifty percent (50%) of the Commitment. The Lenders may,
but shall have no obligation to, make such offers and the Borrower may, but
shall have no obligation to, accept any such offers in the manner set forth in
this Section. The Borrower shall pay the Agent a fee of $2,000.00 for each
Money Market Quote Request provided below, payable monthly based on the
requests for the previous month.

          (b) When the Borrower wishes to request offers to make Money Market Loans
under this Section, it shall transmit to the Agent (in care of Ms. Angelica M.
Castillo, Loan and Agency Services, 1111 Fannin, Houston, Texas 77002,
Facsimile No. 713-750-2228, telephone number 713-750-2513) by facsimile
transmission a Money Market Quote Request (“Money Market Quote Request”)
substantially in the form of Exhibit E hereto so as to be received no later
than 12:00 noon, New York, New York time on (i) the fourth Eurodollar Business
Day prior to the date of borrowing proposed therein, in the case of a LIBOR
Auction or (ii) the Business Day next preceding the date of borrowing proposed
therein, in the case of an Absolute Rate Auction (or, in either case, such
other time or date as the Borrower and the Agent shall have mutually agreed and
shall have notified to the Lenders not later than the date of the Money Market
Quote Request for the first LIBOR Auction or Absolute Rate Auction for which
such change is to be effective) specifying:

		
	 	     (x) the proposed date of borrowing, which shall
be a Eurodollar Business Day in the case of a LIBOR
Auction or a Business Day in the case of an Absolute
Rate Auction, and

		
	 	     (y) the aggregate amount of such borrowing,
which shall be $20,000,000.00 or a larger multiple
of $1,000,000.00.

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The Borrower may request offers to make Money Market Loans for more than one
Interest Period in a single Money Market Quote Request. No Money Market Quote
Request shall be given within five (5) Eurodollar Business Days (or such other
number of days as the Borrower and the Agent may agree in writing ) of any
other Money Market Quote Request.

          (c) Promptly upon receipt of a Money Market Quote Request, the Agent shall
send to the Lenders by telex or facsimile transmission an Invitation for Money
Market Quotes substantially in the form of Exhibit F hereto, which shall
constitute an invitation by the Borrower to each Lender to submit Money Market
Quotes offering to make the Money Market Loans to which such Money Market Quote
Request relates in accordance with this Section.

          (d) (i) Each Lender may submit a Money Market Quote containing an offer or
offers to make Money Market Loans in response to any Invitation for Money
Market Quotes. Each Money Market Quote must comply with the requirements of
this subsection (d) and must be received by the Agent by telex or facsimile
transmission not later than (x) 9:30 a.m. New York, New York time on the third
Eurodollar Business Day prior to the proposed date of borrowing, in the case of
a LIBOR Auction or (y) 9:30 a.m. New York, New York time on the proposed date
of borrowing, in the case of an Absolute Rate Auction; provided that Money
Market Quotes submitted by the Agent (or any affiliate of the Agent or its
Designated Lender) in the capacity of a Lender may be submitted, and may only
be submitted, if the Agent or such affiliate notifies the Borrower of the terms
of the offer or offers contained therein not later than thirty (30) minutes
prior to the applicable deadline for the other Lenders. Any Money Market Quote
so made shall be irrevocable except with the written consent of the Agent given
on the instructions of the Borrower. If, and only if, the Borrower elected in
the applicable Money Market Quote Request to permit the Lenders to designate
Designated Lenders to fund such Money Market Loans, such Money Market Loans may
be funded by such Lender’s Designated Lender (if any) as provided in Section
10.5(f), however such Lender shall not be required to specify in its Money
Market Quote whether such Money Market Loans will be funded by such Designated
Lender.

          (ii) Each Money Market Quote shall be in substantially the form of Exhibit
G hereto and shall in any case specify:

		
	 	     (1) the principal amount of the Money Market Loan for which each
offer is being made, which principal amount (w) may be greater than or
less than the Lender Commitment of the quoting Lender, (x) must be
$5,000,000.00 or a larger multiple of $500,000.00, (y) may not exceed the
principal amount of Money Market Loans for which offers were requested,
and (z) may be subject to an aggregate limitation as to the principal
amount of Money Market Loans for which offers being made by such quoting
Lender may be accepted,

		
	 	     (2) in the case of a LIBOR Auction, the margin (the “Money Market
Margin”) above or below the applicable Eurodollar Interbank Rate )
offered

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	 	for each such Money Market Loan, expressed as a percentage
(specified to the nearest 1/10,000th of 1%) to be added to or subtracted
from such applicable rate, and

		
	 	     (3) in the case of an Absolute Rate Auction, the rate of interest
per annum (specified to the nearest 1/10,000th of 1%) (the “Money Market
Absolute Rate”) offered for each such Money Market Loan.

A Money Market Quote may set forth up to five (5) separate offers by the
quoting Lender with respect to each Interest Period specified in the related
Invitation for Money Market Quotes.

          (iii) Any Money Market Quote shall be disregarded if it:

		
	 	     (1) is not substantially in conformity with Exhibit G hereto or does
not specify all of the information required by subsection (d)(ii) above;

		
	 	     (2) contains qualifying, conditional or similar language;

		
	 	     (3) proposes terms other than or in addition to those set forth in
the applicable Invitation for Money Market Quotes; or

		
	 	     (4) arrives after the time set forth in subsection (d)(i) above.

          (e) The Agent shall promptly notify the Borrower (i) of the terms of each
proper Money Market Quote and the identity of the Lender submitting such Money
Market Quote, and (ii) of any Money Market Quote that amends, modifies or is
otherwise inconsistent with a previous Money Market Quote submitted by such
Lender with respect to the same Money Market Quote Request. Any such
subsequent Money Market Quote shall be disregarded by the Agent unless such
subsequent Money Market Quote is submitted solely to correct a manifest error
in such former Money Market Quote. The Agent’s notice to the Borrower shall
specify (1) the aggregate principal amount of Money Market Loans for which
offers have been received for each Interest Period specified in the related
Money Market Quote Request, (2) the respective principal amounts and Money
Market Margins or Money Market Absolute Rates, as the case may be, so offered,
and (3) if applicable, limitations on the aggregate principal amount of Money
Market Loans for which offers in any single Money Market Quote may be accepted.

          (f) Not later than 10:30 a.m. New York, New York time on (i) the third
Eurodollar Business Day prior to the proposed date of borrowing, in the case of
a LIBOR Auction, or (ii) the proposed date of borrowing, in the case of an
Absolute Rate Auction, the Borrower shall notify the Agent of its acceptance or
non-acceptance of the offers so notified to it pursuant to subsection (e)
above. In the case of acceptance, such notice (a “Notice of Money Market
Borrowing”) shall specify the aggregate principal amount of offers for each
Interest Period that are accepted. The Borrower may accept any Money Market
Quote in whole or in part; provided that:

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	 	     (1) the aggregate principal amount of each borrowing may not exceed
the applicable amount set forth in the related Money Market Quote
Request;

		
	 	     (2) the principal amount of each borrowing must be $5,000,000.00 or
a larger multiple of $500,000.00;

		
	 	     (3) acceptance of offers may only be made on the basis of ascending
Money Market Margins or Money Market Absolute Rates, as the case may be;
and

		
	 	     (4) the Borrower may not accept any offer that is described in
subsection (d)(iii) above or that otherwise fails to comply with the
requirements of this Agreement.

          (g) If offers are made by two or more Lenders with the same Money Market
Margins or Money Market Absolute Rates, as the case may be, for a greater
aggregate principal amount than the amount in respect of which such offers are
accepted for the related Interest Period, the principal amount of Money Market
Loans in respect of which such offers are accepted shall be allocated by the
Agent among such Lenders as nearly as possible (in multiples of $500,000.00, as
the Agent may deem appropriate) in proportion to the aggregate principal
amounts of such offers. The Agent shall promptly (and in any event within one
(1) Business Day after such offers are accepted) notify the Borrower and each
such Lender in writing of any such allocation of Money Market Loans.
Determinations by the Agent of the allocation of Money Market Loans shall be
conclusive in the absence of manifest error.

          (h) Upon receipt of the Borrower’s Notice of Money Market Borrowing, the
Agent shall, on the date such Notice of Money Market Borrowing is received by
the Agent, promptly notify each Lender of the principal amount of the Money
Market Loans accepted by the Borrower and of such Lender’s share (if any) of
such Money Market Loans and such Notice of Money Market Borrowing shall not
thereafter be revocable by the Borrower. Any Lender so notified shall fund
such Money Market Loans at the times provided in Section 2.1(b). A Lender that
is notified that it has been selected to make a Money Market Loan may designate
its Designated Lender (if any) to fund such Money Market Loan on its behalf, as
described in Section 10.5(f). Any Designated Lender which funds a Money Market
Loan shall on and after the time of such funding become the obligee under such
Money Market Loan and be entitled to receive payment thereof when due. No
Lender shall be relieved of its obligation to fund a Money Market Loan, and no
Designated Lender shall assume such obligation, prior to the time the
applicable Money Market Loan is funded. Money Market Loans shall be evidenced
by a promissory note in the form of Exhibit C-2 attached hereto.

          (i) Notwithstanding anything to the contrary contained herein, each Lender
shall be required to fund its Percentage of each Committed Loan in accordance
with Section 2.1 despite the fact that any Lender’s Lender Commitment may have
been or may be exceeded as a result of such Lender’s making of Money Market
Loans.

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          (j) Each Money Market LIBOR Loan shall bear interest on the outstanding
principal amount thereof, for the Interest Period applicable thereto, at a rate
per annum equal to the sum of the Eurodollar Interbank Rate for such Interest
Period plus (or minus) the Money Market Margin quoted by the Lender making such
Loan in accordance with Section 2.8. Each Money Market Absolute Rate Loan
shall bear interest on the outstanding principal amount thereof, for the
Interest Period applicable thereto, at a rate per annum equal to the Money
Market Absolute Rate quoted by the Lender making such Loan in accordance with
Section 2.8. Such interest shall be payable on each Interest Payment Date.
Each Money Market Loan shall mature at the end of each Interest Period, as
specified in the Money Market Quote.

     2.9 Reduction of Commitment.

          (a) Unless previously terminated, the Commitment shall terminate on the
Maturity Date.

          (b) The Borrower may on three (3) occasions reduce the Commitment;
provided that (i) each reduction in the Commitment shall be a minimum of
$50,000,000, (ii) the total Commitment may not be reduced to less than
$200,000,000, (iii) after any reduction in the Commitment, the Borrower’s
option to increase the Commitment provided in Section 2.1(d) shall terminate,
and (iv) no reduction in the Commitment will be allowed if a Default is then in
existence.

          (c) The Borrower shall notify the Agent of any election to reduce the
Commitment under Section 2.9(b) at least three (3) Business Days prior to the
effective date of such reduction, specifying such election and the effective
date thereof. Promptly following receipt of any notice, the Agent shall advise
the Lenders of the contents thereof. Each notice delivered pursuant to this
Section shall be irrevocable. Any reduction of the Commitment shall be
permanent. Each reduction in the Commitment shall be made ratably among the
Lenders in accordance with their respective Lender Commitments.

     2.10 Additional Guarantees. From time to time, certain of the direct or
indirect owners of legal interests in the Borrower may request to guarantee
collection of the unpaid balance of the Loans remaining after application of
other recoveries against the Loans by the Administrative Agent and the Lenders.
If the Borrower notifies the Administrative Agent of such a guarantee request
and (a) supplies the Administrative Agent with the Organizational Documents of
the proposed guarantor and any other information regarding the proposed
guarantor as reasonably requested by the Administrative Agent or any of the
Lenders, including any information that the Administrative Agent is required to
obtain for any guarantor pursuant to applicable Legal Requirements, and (b) so
long as the acceptance of the guarantee from the proposed guarantor does not
violate any Legal Requirement applicable to the Administrative Agent or any of
the Lenders, the Administrative Agent agrees, on behalf of the Lenders, to
accept a guarantee from such proposed guarantor in the form attached hereto as
Exhibit K.

3.     Conditions.

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     3.1 All Loans. The obligation of any Lender to make any Loan, or to
issue, renew or extend any Letter of Credit, is subject to the accuracy of all
representations and warranties of the Borrower on the date of such Loan, or
issuance, renewal or extension of such Letter of Credit, to the performance by
the Borrower of its obligations under the Credit Documents and to the
satisfaction of the following further conditions: (a) the Agent shall have
received the following, all of which shall be duly executed and in Proper Form:
(1) for Committed Loans, a Request for Loan (i) by 12:00 noon, New York, New
York time, one (1) Business Day before the date (which shall also be a Business
Day) of the proposed Loan which is to be a Base Rate Borrowing (other than
Swing Loans or Base Rate Borrowings to finance the reimbursement of an LC
Disbursement as contemplated by Section 2.2(e) hereof), (ii) by 12:00 noon, New
York, New York time, on the same Business Day of any proposed Swing Loan or
Base Rate Borrowing to finance the reimbursement of an LC Disbursement as
contemplated by Section 2.2(e) hereof, provided that by 12:00 noon, New York,
New York time on the date of the proposed Loan, Borrower shall also have
notified JPMC by telephone of its request for a Loan, or (iii) by the Rate
Designation Date of the proposed Loan which is to be a Eurodollar Rate
Borrowing; (2) for Money Market Loans the information required by Section 2.8;
(3) for Letters of Credit the documents required by Section 2.2 hereof; and (4)
such other documents as the Agent may reasonably require to satisfy itself or
the request of any Lender; (b) no Default or Event of Default shall have
occurred and be continuing; (c) the making of the Loan or issuance, renewal or
extension of such Letter of Credit, shall not be prohibited by any Legal
Requirement (in which event the applicable portion of the Fee will not be
charged to the Borrower); (d) the Borrower shall have paid all legal fees and
expenses of the type described in Section 5.10 hereof through the date of such
Loan; (e) in the case of a Committed Loan other than a Swing Loan, all Swing
Loans then outstanding shall have been paid or shall be paid with the proceeds
of such Loan and (f) the Agent shall have received an Officer’s Certificate
certifying the information set forth therein as of the end of the immediately
preceding fiscal quarter.

     3.2 First Loan. In addition to the matters described in Section 3.1
hereof, the obligation of the Lenders to make the first Loan under this
Agreement is subject to the receipt by the Lenders of each of the following, in
Proper Form: (a) the Notes, executed by the Borrower; (b) a separate
certificate executed by each of the Secretary of the Borrower and the
Secretary of the Parent dated as of the date hereof; (c) a separate certificate
from the Secretary of State or other appropriate public official of Maryland as
to the continued existence and good standing of each of the Parent and the
Borrower; (d) a separate certificate from the appropriate public official of
Maryland as to the due qualification and good standing of each of the Parent
and the Borrower; (e) a legal opinion from independent counsel for the Parent,
the Borrower and the Guarantors as to the matters set forth on Exhibit D
acceptable to the Lenders; (f) policies of insurance addressed to the Agent
reflecting the insurance required by Section 5.7 hereof; (g) an Officer’s
Certificate in the form of Exhibit A as of the end of the immediately preceding
fiscal quarter; (h) a certificate from Borrower and Parent setting forth the
pro forma calculations of Secured Debt to Total Asset Value Ratio, Coverage
Ratio, Fixed Charge Coverage Ratio, Tangible Net Worth, Debt to Total Asset
Value Ratio, and the Pool pursuant to Section 5.15 (which include actual
figures as of June 30, 2003; and (i) any Guaranty required by Section 5.15

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together with such Guarantors’ organizational documents and certificates
of existence and good standing from the state of its organization; and to the
further condition that, at the time of the initial Loan, all legal matters
incident to the transactions herein contemplated shall be satisfactory to Locke
Liddell & Sapp LLP, counsel for the Agent.

     3.3 Options Available. The outstanding principal balance of the Notes
shall bear interest at the Base Rate; provided, that (1) all past due amounts,
both principal and accrued interest, shall bear interest at the Past Due Rate,
and (2) subject to the provisions hereof, Borrower shall have the option of
having all or any portion of the principal balance of the Notes, other than the
Swing Loan Note, from time to time outstanding bear interest at a Eurodollar
Rate. The records of the Lenders with respect to Interest Options, Interest
Periods and the amounts of Loans to which they are applicable shall be prima
facie evidence thereof. Interest on the Loans shall be calculated at the Base
Rate except where it is expressly provided pursuant to this Agreement that a
Eurodollar Rate is to apply.

     3.4 Designation and Conversion. Borrower shall have the right to
designate or convert its Interest Options in accordance with the provisions
hereof. Provided no Event of Default has occurred and is continuing and
subject to the provisions of Section 3.5, Borrower may elect to have a
Eurodollar Rate apply or continue to apply to all or any portion of the
principal balance of the Notes, other than the Swing Loan Note. Each change in
Interest Options shall be a conversion of the rate of interest applicable to
the specified portion of the Loans, but such conversion shall not change the
respective outstanding principal balance of the Notes. The Interest Options
shall be designated or converted in the manner provided below:

          (a) Borrower shall give Agent a Request for Loan. Each such written
notice shall specify the amount of Loan which is the subject of the
designation, if any; the amount of borrowings into which such borrowings are to
be converted or for which an Interest Option is designated; the proposed date
for the designation or conversion and the Interest Period, if any, selected by
Borrower. The Request for Loan shall be irrevocable and shall be given to
Agent no later than the applicable Rate Designation Date. The Agent shall
promptly deliver the Request for Loan to the Lenders.

          (b) No more than twelve (12) Eurodollar Rate Borrowings with twelve (12)
Interest Periods shall be in effect at any time.

          (c) Each designation or conversion of a Eurodollar Rate Borrowing shall
occur on a Eurodollar Business Day.

          (d) Except as provided in Section 3.5 hereof, no Eurodollar Rate Borrowing
shall be converted on any day other than the last day of the applicable
Interest Period.

          (e) Unless a Request for Loan to the contrary is received as provided in
this Agreement, each Eurodollar Rate Borrowing will convert to a Base Rate
Borrowing after the expiration of the Interest Period.

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     3.5 Special Provisions Applicable to Eurodollar Rate Borrowings and Money
Market Loans.

          (a) If the adoption of any applicable Legal Requirement or any change in
any applicable Legal Requirement or in the interpretation or administration
thereof by any Governmental Authority or compliance by the Lenders with any
request or directive (whether or not having the force of law) of any central
bank or other Governmental Authority shall at any time make it unlawful or
impossible for any Lender to permit the establishment of or to maintain any
Eurodollar Rate Borrowing or a Money Market Loan, or to increase the cost to
such Lender of participating in or maintaining any Letter of Credit, the
commitment of the Lenders to establish or maintain such Eurodollar Rate
Borrowing or a Money Market Loan, or to issue or participate in Letters of
Credit shall forthwith be suspended until such condition shall cease to exist
and Borrower shall forthwith, upon demand by Agent to Borrower, (1) convert the
Eurodollar Rate Borrowing with respect to which such demand was made to a Base
Rate Borrowing; (2) convert the Money Market LIBOR Loan with respect to which
such demand was made to a Loan bearing interest at the Base Rate; (3) pay all
accrued and unpaid interest to date on the amount so converted; and (4) pay any
amounts required to compensate the Lenders for any additional cost or expense
which the Lenders may incur as a result of such adoption of or change in such
Legal Requirement or in the interpretation or administration thereof and any
Funding Loss which the Lenders may incur as a result of such conversion. If,
when Agent so notifies Borrower, Borrower has given a Request for Loan
specifying a Eurodollar Rate Borrowing or a Notice of Money Market Borrowing
but the selected Interest Period has not yet begun, such Request for Loan or a
Notice of Money Market Borrowing shall be deemed to be of no force and effect,
as if never made, and the balance of the Loans specified in such Request for
Loan shall bear interest at the Base Rate until a different available Interest
Option shall be designated in accordance herewith.

          (b) If the adoption of any applicable Legal Requirement or any change in
any applicable Legal Requirement or in the interpretation or administration
thereof by any Governmental Authority or compliance by any Lender with any
request or directive of general applicability (whether or not having the force
of law) of any central bank or Governmental Authority shall at any time as a
result of any portion of the principal balance of the Notes being maintained on
the basis of a Eurodollar Rate or as a Money Market Loan, or as a result of any
Lender issuing or participating in Letters of Credit:

	 	(1)	 	subject any Lender (or make it apparent that
any Lender is subject) to any Taxes, or any deduction or
withholding for any Taxes, on or from any payment due under
any Eurodollar Rate Borrowing, Money Market Loan or other
amount due hereunder, other than income and franchise taxes
of the United States and its political subdivisions; or
	 
	 	(2)	 	change the basis of taxation of payments due
from Borrower to any Lender under any Eurodollar Rate
Borrowing or Money Market

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	 	 	 	Loan (otherwise than by a change in the rate of taxation of
the overall net income of a Lender); or
	 
	 	(3)	 	impose, modify, increase or deem applicable any
reserve requirement (excluding that portion of any reserve
requirement included in the calculation of the applicable
interest rate), special deposit requirement or similar
requirement (including, but not limited to, state law
requirements and Regulation D) imposed, modified, increased
or deemed applicable by any Governmental Authority against
assets held by any Lender, or against deposits or accounts in
or for the account of any Lender, or against loans made by
any Lender, or against any other funds, obligations or other
property owned or held by any Lender; or
	 
	 	(4)	 	impose on any Lender any other condition
regarding any Eurodollar Rate Borrowing, Money Market Loan or
Letter of Credit;

and the result of any of the foregoing is to increase the cost to any Lender of
agreeing to make or of making, renewing or maintaining such Eurodollar Rate
Borrowing or Money Market Loan, or issuing or participating in Letters of
Credit, or reduce the amount of principal or interest received by any Lender,
then, upon demand by Agent, Borrower shall pay to such Lender, from time to
time as specified by such Lender, additional amounts which shall compensate
such Lender for such increased cost or reduced amount. Agent will promptly
notify Borrower in writing of any event which will entitle any Lender to
additional amounts pursuant to this paragraph. A Lender’s determination of the
amount of any such increased cost, increased reserve requirement or reduced
amount shall be prima facie evidence thereof. Borrower shall have the right,
if it receives from Agent any notice referred to in this paragraph, upon three
Business Days’ notice to Agent, either (i) to repay in full (but not in part)
any borrowing with respect to which such notice was given, together with any
accrued interest thereon, or (ii) to convert the Eurodollar Rate Borrowing
which is the subject of the notice to a Base Rate Borrowing or to convert the
Money Market LIBOR Loan which is the subject of the notice to a Loan bearing
interest at the Base Rate; provided, that any such repayment or conversion
shall be accompanied by payment of (x) the amount required to compensate a
Lender for the increased cost or reduced amount referred to in the preceding
paragraph; (y) all accrued and unpaid interest to date on the amount so repaid
or converted, and (z) any Funding Loss which any Lender may incur as a result
of such repayment or conversion.

          (c) If for any reason with respect to any Interest Period Agent shall have
determined (which determination shall be prima facie evidence thereof) that:

	 	(1)      Agent is unable through its customary general practices to
determine any applicable Eurodollar Rate, or
	 
	 	(2)     by reason of circumstances affecting the applicable market
generally, Agent is not being offered deposits in United States
dollars in such market, for the applicable Interest Period and in
an amount equal to the

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	 	amount of any applicable Eurodollar Rate Borrowing requested by
Borrower, or
	 
	 	(3)     any applicable Eurodollar Rate will not adequately and fairly
reflect the cost to the Lenders of making and maintaining such
Eurodollar Rate Borrowing hereunder for any proposed Interest
Period,
	 
	 	then Agent shall give Borrower notice thereof and thereupon, (A)
any Request for Loan previously given by Borrower designating the
applicable Eurodollar Rate Borrowing which has not commenced as of
the date of such notice from Agent shall be deemed for all
purposes hereof to be of no force and effect, as if never given,
and (B) until Agent shall notify Borrower that the circumstances
giving rise to such notice from Agent no longer exist, each
Request for Loan requesting the applicable Eurodollar Rate shall
be deemed a request for a Base Rate Borrowing, and any applicable
Eurodollar Rate Borrowing then outstanding shall be converted,
without any notice to or from Borrower, upon the termination of
the Interest Period then in effect with respect to it, to a Base
Rate Borrowing.

          (d) Borrower shall indemnify the Agent and each Lender against and hold
the Agent and each Lender harmless from any Funding Loss. This agreement shall
survive the payment of the Notes. A certificate as to any additional amounts
payable pursuant to this subsection and setting forth the reasons for the
Funding Loss submitted by Agent to Borrower shall be prima facie evidence
thereof.

          (e) The Borrower shall pay to the Agent or a Lender the Eurodollar Reserve
Requirement incurred by that Lender within thirty (30) days after written
demand by Agent to the Borrower. The demand setting forth the Eurodollar
Reserve Requirement shall be prima facie evidence thereof.

     3.6 Funding Offices; Adjustments Automatic. Any Lender may, if it so
elects, fulfill its obligation as to any Eurodollar Rate Borrowing or Money
Market Loan by causing a branch or affiliate of such Lender to make such Loan
and may transfer and carry such Loan at, to, or for the account of, any branch
office or affiliate of such Lender; provided, that in such event for the
purposes of this Agreement such Loan shall be deemed to have been made by such
Lender and the obligation of Borrower to repay such Loan shall nevertheless be
to such Lender and shall be deemed held by it for the account of such branch or
affiliate. Without notice to Borrower or any other person or entity, each rate
required to be calculated or determined under this Agreement shall
automatically fluctuate upward and downward in accordance with the provisions
of this Agreement.

     3.7 Funding Sources, Payment Obligations. Notwithstanding any provision
of this Agreement to the contrary, each Lender shall be entitled to fund and
maintain its funding of all or any part of the Loans in any manner it sees fit,
it being understood, however, that for the purposes of this Agreement all
determinations hereunder shall be made as if each Lender had actually funded
and maintained each Eurodollar Rate Borrowing and Money Market LIBOR Loan
during each Interest Period through the

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purchase of deposits having a maturity corresponding to such Interest
Period and bearing an interest rate equal to the interest rate for such
Interest Period. Notwithstanding the foregoing, Funding Losses, increased
costs and other obligations relating to Eurodollar Rate Borrowings and Money
Market Loans described in Section 3.5 of this Agreement will only be paid by
the Borrower as and when actually incurred by the Lenders.

     3.8 Mitigation, Non-Discrimination.

          (a) Each Lender will notify the Borrower through the Agent of any event
occurring after the date of this Agreement which will require or enable such
Lender to take the actions described in Sections 3.5(a) or (b) of this
Agreement as promptly as practicable after it obtains knowledge thereof and
determines to request such action, and (if so requested by the Borrower through
the Agent) will designate a different lending office of such Lender for the
applicable Eurodollar Rate Borrowing or Money Market Loan or will take such
other action as the Borrower reasonably requests if such designation or action
is consistent with the internal policy of such Lender and legal and regulatory
restrictions, can be undertaken at no additional cost, will avoid the need for,
or reduce the amount of, such action and will not, in the sole opinion of such
Lender, be disadvantageous to such Lender (provided that such Lender will have
no obligation to designate a different lending office which is located in the
United States of America).

          (b) None of the Lenders shall be able to pass through to the Borrower
changes and costs under Section 3.5 of this Agreement on a discriminating
basis, such that such changes and costs are not also passed through by each
Lender to other customers of such Lender similarly situated where such customer
is subject to documents providing for such pass through.

          (c) If any Lender elects under Section 3.5 of this Agreement to suspend or
terminate the availability of Eurodollar Rate Borrowings for any material
period of time, and the event giving rise to such election is not generally
applicable to all of the Lenders, the Borrower may within sixty (60) days after
notification of such Lender’s election, and so long as no Event of Default is
then in existence, either (i) demand that such Lender, and upon such demand,
such Lender shall promptly, assign its Lender Commitment to another financial
institution subject to and in accordance with the provisions of Section 10.5 of
this Agreement for a purchase price equal to the unpaid balance of principal,
accrued interest, the unpaid balance of the Fee and expenses owing to such
Lender pursuant to this Agreement, or (ii) pay such Lender the unpaid balance
of principal, accrued interest, the unpaid balance of the Fee and expenses
owing to such Lender pursuant to this Agreement, whereupon, such Lender shall
no longer be a party to this Agreement or have any rights or obligations
hereunder or under any other Credit Documents, and the Commitment shall
immediately and permanently be reduced by an amount equal to the Lender
Commitment of such Lender.

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4. Representations and Warranties.

     To induce the Lenders to enter into this Agreement and to make the Loans,
the Borrower represents and warrants to the Agent and the Lenders as follows:

     4.1 Organization. The Borrower is duly organized, validly existing and in
good standing as a real estate investment trust under the laws of the state of
Maryland; has all power and authority to conduct its business as presently
conducted; and is duly qualified to do business and in good standing in every
state where the location of its Property requires it to be qualified to do
business, unless the failure to be so qualified would not reasonably be
expected to have a Material Adverse Effect.

     4.2 Financial Statements. The financial statements delivered to the Agent
fairly present, in accordance with Generally Accepted Accounting Principles
(provided, however, that the Quarterly Unaudited Financial Statements are
subject to normal year-end adjustments and may contain condensed footnotes as
permitted by regulations of the United States Securities and Exchange
Commission), the financial condition and the results of operations of the
Borrower as at the dates and for the periods indicated. No Material Adverse
Change has occurred since the dates of such financial statements. The Borrower
is not subject to any instrument or agreement which would materially prevent it
from conducting its business as it is now conducted or as it is contemplated to
be conducted.

     4.3 Enforceable Obligations; Authorization. The Credit Documents are
legal, valid and binding obligations of the Parties, enforceable in accordance
with their respective terms, except as may be limited by bankruptcy, insolvency
and other laws affecting creditors’ rights generally and by general equitable
principles. The execution, delivery and performance of the Credit Documents
have all been duly authorized by all necessary action; are within the power and
authority of the Parties; do not and will not contravene or violate any Legal
Requirement or the Organizational Documents of the Parties; do not and will not
result in the breach of, or constitute a default under, any agreement or
instrument by which the Parties or any of their respective Property may be
bound or affected, except where such breach or default could not reasonably be
expected to have a Material Adverse Effect; and do not and will not result in
the creation of any Lien upon any Property of any of the Parties except as
expressly contemplated therein. All necessary permits, registrations and
consents for such making and performance have been obtained except where the
lack thereof would not reasonably be expected to have a Material Adverse
Effect.

     4.4 Other Debt. The Borrower is not in default in the payment of any
other Indebtedness or under any agreement, mortgage, deed of trust, security
agreement or lease to which it is a party which default would reasonably be
expected to have a Material Adverse Effect.

     4.5 Litigation. There is no litigation or administrative proceeding
pending or, to the knowledge of the Borrower, threatened against, or any
outstanding judgment, order or decree affecting, the Borrower before or by any
Governmental Authority which is not

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adequately covered by insurance or which, if determined adversely to the
Borrower could reasonably be expected to have a Material Adverse Effect. The
Borrower is not in default with respect to any judgment, order or decree of any
Governmental Authority which default could reasonably be expected to have a
Material Adverse Effect.

     4.6 Taxes. The Borrower has filed all tax returns required to have been
filed and paid all taxes shown thereon to be due, except those for which
extensions have been obtained, those which are being contested in good faith
and those for which the Borrower’s failure to file a return or pay could not
reasonably be expected to have a Material Adverse Effect.

     4.7 Regulation U. None of the proceeds of any Loan or Letter of Credit
will be used for the purpose of purchasing or carrying directly or indirectly
any margin stock or for any other purpose that would constitute this
transaction a “purpose credit” within the meaning of Regulation U of the Board
of Governors of the Federal Reserve System.

     4.8 Securities Act of 1933. Other than the Agent’s efforts in syndicating
the Loans (for which the Agent is responsible) neither the Borrower nor any
agent acting for it has offered the Notes or any similar obligation of the
Borrower for sale to or solicited any offers to buy the Notes or any similar
obligation of the Borrower from any Person other than the Agent or any Lender,
and neither the Borrower nor any agent acting for it will take any action which
would subject the sale of the Note to the provisions of Section 5 of the
Securities Act of 1933, as amended.

     4.9 No Contractual or Corporate Restrictions. The Borrower is not a party
to, or bound by, any contract, agreement or charter or other corporate
restriction materially and adversely affecting its business, Property, assets,
operations or condition, financial or otherwise.

     4.10 Investment Company Act Not Applicable. The Borrower is not an
“investment company”, or a company “controlled” by an “investment company”,
within the meaning of the Investment Company Act of 1940, as amended.

     4.11 Public Utility Holding Company Act Not Applicable. The Borrower is
not a “holding company”, or a “subsidiary company” of a “holding company”, or
an “affiliate” of a “holding company”, or an affiliate of a “subsidiary
company” of a “holding company”, as such terms are defined in the Public
Utility Holding Company Act of 1935, as amended.

     4.12 ERISA Not Applicable. The Borrower is not subject to any
requirements of the Employee Retirement Income Security Act of 1974 as amended
from time to time, or any rules, regulations, rulings or interpretations
adopted by the Internal Revenue Service or the Department of Labor thereunder.

5. Affirmative Covenants.

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     The Borrower covenants and agrees with the Agent and the Lenders that
prior to the termination of this Agreement it will do, and if necessary cause
to be done, each and all of the following:

     5.1 Taxes, Insurance, Existence, Regulations, Property, etc. At all times
(a) pay when due all taxes and governmental charges of every kind upon it or
against its income, profits or Property, unless and only to the extent that the
same shall be contested in good faith and reserves which are adequate under
Generally Accepted Accounting Principles have been established therefor, or
unless such failure to pay could not reasonably be expected to have a Material
Adverse Effect; (b) do all things necessary to preserve its existence,
qualifications, rights and franchises in all States where such qualification is
necessary or desirable, except where failure to obtain the same could not
reasonably be expected to have a Material Adverse Effect; (c) comply with all
applicable Legal Requirements in respect of the conduct of its business and the
ownership of its Property except where failure to so comply could not
reasonably be expected to have a Material Adverse Effect; and (d) cause its
Property to be protected, maintained and kept in good repair (reasonable wear
and tear excepted) and make all replacements and additions to its Property as
may be reasonably necessary to conduct its business.

     5.2 Financial Statements and Information. Furnish or caused to be
furnished (which may be by electronic access) to the Agent each of the
following: (a) as soon as available and in any event within 90 days after the
end of each fiscal year of the Parent, Annual Audited Financial Statements of
the Borrower and the Parent; (b) as soon as available and in any event within
50 days after the end of each quarter (except the last quarter) of each fiscal
year of the Parent, Quarterly Unaudited Financial Statements of the Borrower
and the Parent; (c) concurrently with the financial statements provided for in
Sections 5.2(a) and (b) hereof, an Officer’s Certificate, together with such
schedules, computations and other information (including, without limitation,
if provided to Borrower information as to Unconsolidated Affiliates of the
Borrower), in reasonable detail, as may be required by the Agent to demonstrate
compliance with the covenants set forth herein or reflecting any non-compliance
therewith as of the applicable date, all certified as true, correct and
complete by a managing director, vice president, senior vice president,
controller, a co-controller of Borrower and of the Parent; (d) promptly after
the filing thereof, all reports to or filings made by the Parent or the
Borrower or any of its Subsidiaries with the Securities and Exchange
Commission, including, without limitation, registration statements and reports
on Forms 10-K, 10-Q and 8-K (or their equivalents); (e) within two (2) Business
Days after the receipt thereof, a copy of the notification to the Borrower or
to the Parent of the respective Credit Rating of each, or change therein, and
(f) such other information relating to the financial condition and affairs of
the Borrower and the Parent as from time to time may be reasonably requested by
any Lender. The Agent will send to each Lender the information received by the
Agent pursuant to this Section 5.2 promptly after the receipt thereof by Agent.
The financial calculations for Sections 5.3, 5.15 and 6.4 shall be made (1) on
the date of each Loan or issuance, renewal or extension of a Letter of Credit
using the best information available to the Borrower, and (2) on the last day
of each of the Parent’s fiscal quarters.

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     5.3 Financial Tests. Have and maintain on a consolidated basis in
accordance with Generally Accepted Accounting Principles:

          (a) a Secured Debt to Total Asset Value Ratio no greater than forty
percent (40%);

          (b) a Coverage Ratio of not less than 2.0:1.0;

          (c) a Fixed Charge Coverage Ratio of not less than 1.75:1.00;

          (d) a Tangible Net Worth of at least Three Billion Five Hundred Million
Dollars ($3,500,000,000.00); and

          (e) a Debt to Total Asset Value Ratio no greater than sixty percent (60%).

     5.4 Inspection. In order to permit the Agent to ascertain compliance with
the Credit Documents, during normal business hours permit the Agent to inspect
its Property, to examine its files, books and records and make and take away
copies thereof, and to discuss its affairs with its officers and accountants,
all at such times and intervals and to such extent as a Lender may reasonably
desire.

     5.5 Further Assurances. Promptly execute and deliver any and all other
and further instruments which may be requested by the Agent to cure any defect
in the execution and delivery of any Credit Document or more fully to describe
particular aspects of the Borrower’s agreements set forth in the Credit
Documents or so intended to be.

     5.6 Books and Records. Maintain books of record and account in accordance
with Generally Accepted Accounting Principles.

     5.7 Insurance. Maintain insurance with such insurers, on such of its
properties, in such amounts and against such risks as is consistent with
insurance maintained by businesses of comparable type and size in the industry,
and furnish the Agent satisfactory evidence thereof promptly upon request.

     5.8 Notice of Certain Matters. Notify the Agent promptly upon acquiring
knowledge of the occurrence of any of the following: the institution or
threatened institution of any lawsuit or administrative proceeding affecting
the Borrower in which the claim exceeds $25,000,000.00 and if determined
adversely could have a Material Adverse Effect; when the Borrower believes that
there has been a Material Adverse Change; or the occurrence of any Event of
Default or any Default. The Borrower will notify the Agent in writing at least
thirty (30) Business Days prior to the date that the Borrower changes its name
or the location of its chief executive office or principal place of business or
the place where it keeps its books and records.

     5.9 Use of Proceeds. The proceeds of the Loans will be used for general
business purposes, including (without limitation) for acquisition of
multifamily real estate

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properties, for the development and enhancement of multifamily real estate
properties, for the costs of construction of multifamily real estate projects
owned or to be acquired by the Borrower, for repurchase of the Borrower’s
stock, or for other investments permitted by this Agreement. Notwithstanding
the foregoing, none of the proceeds of the Loans will be used to finance, fund
or complete any hostile acquisition of any Person.

     5.10 Expenses of and Claims Against the Agent and the Lenders. To the
extent not prohibited by applicable law, the Borrower will pay all reasonable
costs and expenses incurred to third parties and reimburse the Agent and each
Lender, as the case may be, for any and all reasonable expenditures of every
character incurred or expended from time to time, in connection with (a)
regardless of whether a Default or Event of Default shall have occurred, the
Agent’s preparation, negotiation and completion of the Credit Documents, and
(b) during the continuance of an Event of Default, all costs and expenses
relating to the Agent’s and such Lender’s exercising any of its rights and
remedies under this or any other Credit Document, including, without
limitation, attorneys’ fees, legal expenses, and court costs; provided, that no
rights or option granted by the Borrower to the Agent or any Lender or
otherwise arising pursuant to any provision of this or any other instrument
shall be deemed to impose or admit a duty on the Agent or any Lender to
supervise, monitor or control any aspect of the character or condition of any
property or any operations conducted in connection with it for the benefit of
the Borrower or any other person or entity other than the Agent or such Lender.
Notwithstanding the foregoing, the Borrower shall not be charged with any cost
or expense incurred by the Agent or any Lender relating to disputes or claims
among or between the Agent, the Lenders, or any of them unless during the
continuance of an Event of Default and related to details of enforcement of the
Lenders’ rights under the Credit Documents.

     5.11 Legal Compliance; Indemnification.

          (a) The Borrower shall operate its Property and businesses in full
compliance with all Legal Requirements. It shall not constitute an Event of
Default if there is a failure to comply with any Legal Requirement which
failure could not reasonably be expected to have a Material Adverse Effect.
The Borrower shall indemnify the Agent and each Lender, their directors,
officers, employees and shareholders (the “Indemnified Parties”) for and defend
and hold the Indemnified Parties harmless against any and all claims, demands,
liabilities, causes of action, penalties, obligations, damages, judgments,
deficiencies, losses, costs or expenses (including, without limitation,
interest, penalties, attorneys’ fees, and amounts paid in settlement)
threatened or incurred by reason of, arising out of or in any way related to
(i) any failure of the Borrower to so comply with the provisions of any Legal
Requirement, this Agreement or the other Credit Documents, or (ii) the Agent or
any Lender’s making of the Loans, issuing or participating in any Letters of
Credit, or any other acts or omissions taken or made in connection with the
Loans or Letters of Credit (including any refusal by the Issuing Bank to honor
a demand for payment under a Letter of Credit if the documents presented in
connection with such demand do not strictly comply with the terms of the Letter
of Credit), and any and all matters arising out of any act, omission, event or
circumstance, regardless of whether the act, omission, event or circumstance
constituted a violation of any such Legal Requirement, this Agreement or the

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other Credit Documents at the time of its existence or occurrence. THE
BORROWER SHALL INDEMNIFY THE AGENT AND EACH LENDER PURSUANT TO THIS SECTION
REGARDLESS OF WHETHER THE ACT, OMISSION, FACTS, CIRCUMSTANCES OR CONDITIONS
GIVING RISE TO SUCH INDEMNIFICATION WERE CAUSED IN WHOLE OR IN PART BY THE
AGENT’S OR SUCH LENDER’S NEGLIGENCE (SIMPLE, BUT NOT GROSS NEGLIGENCE).

          (b) The Parent will comply with all Legal Requirements to maintain, and
will at all times elect, qualify as and maintain, its status as a real estate
investment trust under Section 856(c)(1) of the Code.

          (c) The Parent will (i) maintain at least one class of common shares of
the Parent having trading privileges on the New York Stock Exchange or the
American Stock Exchange, or which is listed on The NASDAQ Stock Market’s
National Market; (ii) own, directly or indirectly, at least fifty-one percent
(51%) of (1) the shares of beneficial interest of the Borrower, and (2) the
Class A-2 Common Units of the Borrower and any other class of security issued
by the Borrower with the power to elect the Trustees of the Borrower; (iii)
maintain management and control of the Borrower; (iv) not sell, transfer or
convey any of the shares of beneficial interest of the Borrower owned by the
Parent, except (A) in payment of the purchase price of Property (including
mergers with and acquisitions of Persons) acquired by the Borrower, (B) upon
conversion or redemption of securities of the Borrower in accordance with their
terms or (C) upon any repurchase by the Borrower of the Borrower’s securities
from the Parent in connection with a repurchase by the Parent of the Parent’s
securities; and (v) hold all of its assets and conduct all of its operations
through the Borrower, the QRS Entities in existence on October 31, 2001 and one
or more of the Borrower’s Subsidiaries.

     5.12 Borrower’s Performance. If the Borrower should fail to comply with
any of the agreements, covenants or obligations of the Borrower under this
Agreement or any other Credit Document which requires the payment of money,
then the Agent (in the Borrower’s name or in Agent’s name) may, if such payment
has not been made within ten (10) days after written request from Agent,
perform or cause to be performed such agreement, covenant or obligation, for
the account of the Borrower and at the Borrower’s sole expense, but shall not
be obligated to do so. Any and all reasonable expenses thus incurred or paid
by the Agent and by any Lender shall be the Borrower’s demand obligations to
the Agent or such Lender and shall bear interest from the date of demand
therefor until the date that the Borrower repays it to the Agent or the
applicable Lender at the Past Due Rate. Upon making any such payment or
incurring any such expense, the Agent or the applicable Lender shall be fully
subrogated to all of the rights of the Person receiving such payment. Any
amounts owing by the Borrower to the Agent or any Lender pursuant to this
provision or any other provision of this Agreement shall automatically and
without notice be secured by any collateral provided by the Credit Documents.
The amount and nature of any such expense and the time when paid shall, absent
manifest error, be fully established by the affidavit of the Agent or the
applicable Lender or any of the Agent’s or the applicable Lender’s officers or
agents.

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     5.13 Professional Services. Promptly upon the Agent’s request to satisfy
itself or the request of any Lender, the Borrower shall: (a) allow an
inspection and/or appraisal of the Borrower’s Property to be made by a Person
approved by the Agent in its sole discretion; and (b) if the Agent believes
that an Event of Default has occurred or is about to occur, cause to be
conducted or prepared any other written report, summary, opinion, inspection,
review, survey, audit or other professional service relating to the Borrower’s
Property or any operations in connection with it (all as designated in the
Agent’s request), including, without limitation, any accounting, auctioneering,
architectural, consulting, engineering, design, legal, management, pest
control, surveying, title abstracting or other technical, managerial or
professional service relating to such property or its operations. So long as
no Event of Default has occurred and is continuing, the foregoing shall not be
at the Borrower’s expense.

     5.14 Capital Adequacy.

          (a) If after the date of this Agreement, the Agent or any Lender shall
have determined that the adoption or effectiveness of any applicable law, rule
or regulation regarding capital adequacy of general applicability, or any
change therein, or any change in the interpretation or administration thereof
by any Governmental Authority, central bank or comparable agency charged with
the interpretation or administration thereof, or compliance by the Agent or any
Lender with any request or directive regarding capital adequacy of general
applicability (whether or not having the force of law) of any such Governmental
Authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on the Agent’s or any Lender’s capital as a
consequence of its obligations hereunder to a level below that which the Agent
or such Lender could have achieved but for such adoption, change or compliance
(taking into consideration the Agent’s or such Lender’s policies with respect
to capital adequacy) by an amount deemed by the Agent or such Lender to be
material, then from time to time, the Borrower shall pay to the Agent or such
Lender such additional amount or amounts as will compensate the Agent or such
Lender for such reduction.

          (b) A certificate of the Agent or such Lender setting forth such amount or
amounts as shall be necessary to compensate the Agent or such Lender as
specified in Section 5.14(a) hereof and making reference to the applicable law,
rule or regulation shall be delivered as soon as practicable to the Borrower
and shall be prima facie evidence thereof. The Borrower shall pay the Agent or
such Lender the amount shown as due on any such certificate within fourteen
(14) Business Days after the Agent or such Lender delivers such certificate.
In preparing such certificate, the Agent or such Lender may employ such
assumptions and allocations of costs and expenses as it shall in good faith
deem reasonable and may use any reasonable averaging and attribution method.

     5.15 Property Pool.

          (a) The Borrower (or a Subsidiary of the Borrower if the conditions in
clause (c) below are satisfied) will at all times own fee simple title to a
pool (the “Pool”) of Real Property that is not subject to any Lien other than
Permitted Encumbrances (the “Pool Real Estate”) and except as permitted by
Section 6.5 with an aggregate Pool Value of at

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least one hundred sixty-seven percent (167%) of the Borrower’s
Indebtedness other than Secured Debt outstanding from time to time, with the
following characteristics:

		
	 	     (i) the Borrower must provide the Agent with written confirmation
that it has received from third party independent environmental
consultants, written assessments for each Pool Real Estate in, or to be
added to, the Pool that do not disclose any material environmental
conditions or risks related to such properties, and

		
	 	     (ii) the Property is not subject to or affected by any Limiting
Agreement.

If requested by the Agent, the Borrower will provide to the Agent written
assessments from third party independent environmental consultants for all Pool
Real Estate acquired after the date of this Agreement. If Super-Majority
Lenders determine that there are material environmental conditions existing on
or risks to such properties, the properties will be excluded from the Pool.

          (b) Notwithstanding the foregoing, (i) the maximum Pool Value that can be
attributable to the Value of land not improved for multifamily use (not
including land that is either under development or planned for commencement of
development within three (3) years after the date of acquisition) is five
percent (5%) of the Pool Value after adding the effect of said land, (ii) the
maximum Pool Value that can be attributable to the Value (in the aggregate) of
Real Property that is under construction or development, that has not reached
the Calculation Date, that has reached the Calculation Date but the Occupancy
Level is less than eighty percent (80%), unimproved land that is planned for
commencement of development within three (3) years after the date of
acquisition, and land not improved for multifamily use, is twenty percent (20%)
of the Pool Value after adding the effect of said Real Property and land; and
(iii) the maximum Pool Value that can be attributable to the Value of improved
property not used for multifamily residential use (property will be considered
as multifamily residential use even if it includes other non-primary uses which
are incidental to the residential use, such as retail or office) is ten percent
(10%) of the Pool Value after adding the effect of said property.

          (c) If any Pool Real Estate is owned by a Subsidiary, then it may be
included in the Pool only if:

		
	 	     (i) the owner of the Pool Real Estate is either (1) a wholly owned
Subsidiary of the Borrower or (2) if not a wholly owned Subsidiary, then
(x) the value of the Pool Real Estate owned by such Subsidiary (“Partial
Subsidiary Real Estate”) to be used in the calculation in clauses (a) and
(b) above shall be as provided in clauses (a) and (b) multiplied by the
cumulative percentage interest of the Subsidiary legally owned by the
Borrower, (y) the maximum Pool Value that can be attributable to Partial
Subsidiary Real Estate is seventeen and one-half percent (17-1/2%) of the
Pool Value after adding the effect of the Partial Subsidiary Real Estate,
and (z) the Borrower controls the right to sell, encumber or refinance
the Partial Subsidiary Real Estate;

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	 	     (ii) the owner of the Pool Real Estate (1) either (x) executes a
Guaranty and delivers it to the Agent, together with such Subsidiary’s
Organizational Documents and current certificates of existence and good
standing for the state in which it is organized and such Guaranty must
remain in full force and effect, or (y) if such Subsidiary is not wholly
owned by the Borrower, has no Indebtedness other than Non-recourse Debt,
and other than Indebtedness to the Borrower subordinated to the
Indebtedness incurred under this Agreement on terms satisfactory to the
Agent; and (2) would not at any time be in default of Sections 7.1(g),
(h), (i), (j), or (k), if said subsections were applicable to said owner;
and

		
	 	     (iii) the indicia of ownership of the Subsidiary is not subject to a
Lien (other than Permitted Encumbrances).

     5.16 DC Holdings. The Borrower shall maintain at least 99.5% aggregate
ownership of the indicia of ownership of each DC Holdings Entity, and shall
maintain management and control of each DC Holdings Entity.

6. Negative Covenants.

     The Borrower covenants and agrees with the Agent and the Lenders that
prior to the termination of this Agreement it will not do any of the following:

     6.1 Mergers, Consolidations and Acquisitions of Assets. In any single
transaction or series of related transactions, directly or indirectly: (a)
liquidate or dissolve; (b) be a party to any merger or consolidation other
than a merger or consolidation in which (i) the Borrower is the surviving
entity after such merger or consolidation, or (ii) the individuals constituting
the Borrower’s Board of Trustees immediately prior to such merger or
consolidation represent a majority of the surviving entity’s Board of Directors
or Board of Trustees after such merger or consolidation; or (c) sell, convey or
lease all or substantially all of its assets.

     6.2 Redemption. At any time redeem, retire or otherwise acquire, directly
or indirectly, any shares of its capital stock if such action would cause the
Borrower to not be in compliance with this Agreement.

     6.3 Nature of Business. Change the nature of its business or enter into
any business which is substantially different from the business in which it is
presently engaged. Borrower’s primary business will be the ownership,
operation and development of multi-family residential properties, and may
include other business initiatives, investments and activities which are
related, but incidental, to Borrower’s primary business, subject only to the
limitations on specific loans and investments described below (“Specified
Permitted Holdings”); provided, however, that the aggregate value of the
Specified Permitted Holdings shall not at any time exceed thirty percent (30%)
of the Total Asset Value after giving effect to the Specified Permitted
Holdings.

     “Specified Permitted Holdings” means the following:

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          (a) securities received in settlement of liabilities created in the
ordinary course of business, so long as the market value of such securities
does not exceed five percent (5%) of the Total Asset Value after giving effect
to such investment;

          (b) investments in Unconsolidated Affiliates that are engaged primarily in
Borrower’s primary business as described in this section, so long as the
aggregate amount of such investments does not exceed twenty percent (20%) of
the Total Asset Value after giving effect to such investments;

          (c) loans, advances, and extensions of credit to Persons (who are not
Affiliates of the Borrower), so long as the aggregate unpaid amount of such
loans does not exceed ten percent (10%) of the Total Asset Value after giving
effect to such loans;

          (d) investments in Persons not included in any other Specified Permitted
Holdings so long as the aggregate value of all such investments (valued at the
lower of cost or then market value) does not exceed ten percent (10%) of the
Total Asset Value after giving effect to such investments;

          (e) investments in income producing Real Property that is not primarily
multifamily residential property (property will be considered as primarily
multifamily residential property even if it includes other non-primary uses
which are incidental to the residential use, such as retail or office), so long
as the aggregate Historical Value of such investments does not exceed ten
percent (10%) of the Total Asset Value after giving effect to such investments;

          (f) investments in land not improved for multifamily use (not including
land that is either under development or planned for commencement of
development within three (3) years after the date of acquisition), so long as
the aggregate Historical Value of such investments does not exceed seven and
one-half percent (7-1/2%) of the Total Asset Value after giving effect to such
investments; and

          (g) investments of any kind not included in any other Specified Permitted
Holdings and which are not incidental to Borrower’s primary business as
described in this Section, so long as the aggregate value of such investments
(valued at the lower of cost or then market value) does not exceed five percent
(5%) of the Total Asset Value after giving effect to such investments.

     6.4 Transactions with Related Parties. Enter into any transaction or
agreement with any officer, director, or holder of more than five percent (5%)
(based on voting rights) of the issued and outstanding capital stock of the
Borrower (or any Affiliate of the Borrower), unless the same is upon terms
substantially similar to those obtainable from qualified wholly unrelated
sources, and is approved by the majority of the Borrower’s non-interested
directors.

     6.5 Limiting Agreements. Neither Borrower nor any of its Subsidiaries has
entered into, and after the date hereof, neither Borrower nor any of its
Subsidiaries shall enter into, any Limiting Agreements; provided that so long
as the Borrower has received

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an S&P Rating and a Moody’s Rating that are BBB/Baa2 or better
(respectively), up to five percent (5%) of the Pool Value (after adding the
effect of said property) may be subject to debt-related agreements (but not the
related mortgages or pledges) that require the owner of the project to mortgage
and pledge the project to secure the debt if the Borrower’s S&P Rating and
Moody’s Rating are below BBB-/Baa3 (respectively).

     6.6 Parent Negative Covenants. The Parent will not (a) have any
Subsidiary that is a “qualified REIT subsidiary” under Section 856 of the Code
other than the QRS Entities; (b) own any Property other than the ownership
interests of the Borrower, and the Parent’s ownership interests as of October
31, 2001 in the QRS Entities; (c) give or allow any Lien on any of its Property
including the ownership interests of the Borrower; and (d) create, incur,
suffer or permit to exist, or assume or guarantee, directly or indirectly,
contingently or otherwise, or become or remain liable with respect to (i) any
Indebtedness if the aggregate of such Indebtedness and the Indebtedness of the
Borrower would violate Sections 5.3(a), (b), (c) or (e) if such aggregate
Indebtedness is treated as the Borrower’s Indebtedness, and (ii) any
Indebtedness of a Person other than the Parent.

7. Events of Default and Remedies.

     7.1 Events of Default. If any of the following events shall occur, then,
as to the events described in Sections 7.1(b), (c), and (d), if the event has
not been waived, cured or remedied within twenty (20) days after the Agent
gives the Borrower notice of such event, at any time thereafter, and as to all
of the other events described herein, at any time, the Agent may do any or all
of the following: (1) without notice to the Borrower, declare the Notes to be,
and thereupon the Notes shall forthwith become, immediately due and payable,
together with all accrued interest thereon, without notice of any kind, notice
of acceleration or of intention to accelerate, presentment and demand or
protest, all of which are hereby expressly waived; (2) without notice to the
Borrower, terminate the Commitment; (3) exercise, as may any other Lender, its
rights of offset against each account and all other Property of the Borrower in
the possession of the Agent or any such Lender, which right is hereby granted
by the Borrower to the Agent and each Lender; and (4) exercise any and all
other rights pursuant to the Credit Documents:

          (a) The Borrower shall fail to pay or prepay any principal of or interest
on the Notes, any reimbursement obligation in respect of an LC Disbursement, or
any fee or any other obligation hereunder within five (5) days after it was
due; or

          (b) The Borrower or any Guarantor shall (i) fail to pay when due (whether
on the scheduled maturity date or otherwise), or within any applicable period
of grace, any principal of or interest on (1) any other Indebtedness, other
than Non-recourse Debt or Disqualified Stock, in excess of $35,000,000.00 in
principal amount, or (2) Non-recourse Debt in excess of $50,000,000.00 in
principal amount; or (ii) fail to comply with Section 1004 of the Indenture
dated February 1, 1994 between the Borrower and Morgan Guaranty Trust Company
of New York, as Trustee, as said Section 1004 may be amended with the consent
of the Majority Lenders; or

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          (c) Any written representation or warranty made in any Credit Document by
or on behalf of the Borrower, when taken as a whole shall prove to have been
incorrect, false or misleading in any material respect; or

          (d) Default shall occur in the punctual and complete performance of any
covenant of the Borrower or any other Person other than the Agent or the
Lenders contained in any Credit Document not specifically set forth in this
Section; or

          (e) A final judgment or judgments in the aggregate for the payment of
money in excess of $35,000,000.00 shall be rendered against the Borrower or any
Guarantor and the same shall remain undischarged for a period of thirty (30)
days during which execution shall not be effectively stayed; or

          (f) The Borrower shall not be in compliance with any provision of Section
6.3 during the period covered by an Officer’s Certificate and such
non-compliance remains in existence on the date the next Officer’s Certificate
is required to be presented to the Agent under Section 5.2(c) of this
Agreement; provided, however, that such right to defer compliance shall be
available to the Borrower for each such provision no more than once every
twelve (12) months; or

          (g) Any order shall be entered in any proceeding against the Borrower or
any Guarantor decreeing the dissolution, liquidation or split-up thereof, and
such order shall remain in effect for more than thirty (30) days; or

          (h) The Borrower or any Guarantor shall make a general assignment for the
benefit of creditors or shall petition or apply to any tribunal for the
appointment of a trustee, custodian, receiver or liquidator of all or any
substantial part of its business, estate or assets or shall commence any
proceeding under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation law of any jurisdiction,
whether now or hereafter in effect; or

          (i) Any such petition or application shall be filed or any such proceeding
shall be commenced against the Borrower or any Guarantor and the Borrower or
such Guarantor by any act or omission shall indicate approval thereof, consent
thereto or acquiescence therein, or an order shall be entered appointing a
trustee, custodian, receiver or liquidator of all or any substantial part of
the assets of such Person or granting relief to such Person or approving the
petition in any such proceeding, and such order shall remain in effect for more
than ninety (90) days; or

          (j) The Borrower or any Guarantor shall fail generally to pay its debts as
they become due or suffer any writ of attachment or execution or any similar
process to be issued or levied against it or any substantial part of its
Property which is not released, stayed, bonded or vacated within thirty (30)
days after its issue or levy; or

          (k) The Borrower or any Guarantor shall have concealed, removed, or
permitted to be concealed or removed, any part of its Property, with intent to
hinder, delay or defraud its creditors or any of them, or made or suffered a
transfer of any of its Property

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which may be fraudulent under any bankruptcy, fraudulent conveyance or
similar law; or shall have made any transfer of its Property to or for the
benefit of a creditor at a time when other creditors similarly situated have
not been paid.

     7.2 Remedies Cumulative. No remedy, right or power conferred upon the
Agent or the Lenders is intended to be exclusive of any other remedy, right or
power given hereunder or now or hereafter existing at law, in equity, or
otherwise, and all such remedies, rights and powers shall be cumulative.

     7.3 Guaranty Proceeds.

          (a) Notwithstanding any other provision of any Credit Document to the
contrary, any funds, claims, or distributions actually received by Agent for
the account of any Lender as a result of the enforcement of, or pursuant to,
any Guaranty, net of Agent’s and Lenders’ expenses of collection thereof (such
net amount, “Guaranty Proceeds”), shall be made available for distribution
equally and ratably (in proportion to the aggregate amount of principal,
interest and other amounts then owed in respect of the Obligations or of an
issuance of Public Debt (as defined below), as the case may be) among the
Agent, the Lenders and the trustee or trustees of any Indebtedness not
subordinated to the Obligations (or to the holders thereof), issued by
Borrower, before or after the date of this Agreement, in offerings registered
under the Securities Act of 1933, as amended, or in transactions exempt from
registration pursuant to rule 144A thereof (“Public Debt”). Agent is hereby
authorized by Borrower, by each Lender and by each Guarantor (by its execution
and delivery of the Guaranty to which it is party) to make such Guaranty
Proceeds so available. No Lender shall have any interest in any amount paid
over by Agent to the trustee or trustees in respect of any Public Debt (or to
the holders thereof) pursuant to the foregoing authorization. This Section
7.3(a) shall apply (i) solely to Guaranty Proceeds and not to any payments,
funds, claims or distributions received by Agent or Lenders directly or
indirectly from Borrower or any other Person other than from a Guarantor
pursuant to a Guaranty, and (ii) as to Public Debt issued after December 20,
2000, only if the documents governing the Public Debt provide for the same
sharing with the Lenders of guaranty proceeds recovered to pay the Public Debt.
Borrower is aware of the terms of the Guaranty, and specifically understands
and agrees with Agent and the Lenders that, to the extent Guaranty Proceeds are
distributed to holders of Public Debt or their respective trustees, such
Guarantor has agreed that the Obligations will not be deemed reduced by any
such distributions, and each Guarantor shall continue to make payments pursuant
to its Guaranty until such times as the Obligations have been paid in full (and
the Commitment has been terminated and any LC Exposure reduced to zero), after
taking into account any such distributions of Guaranty Proceeds in respect of
Indebtedness other than the Obligations.

          (b) Nothing contained herein shall be deemed (i) to limit, modify, or
alter the rights of Agent and Lenders under any Guaranty, (ii) to subordinate
the Obligations to any Public Debt, or (iii) to give any holder of Public Debt
(or any trustee for such holder) any rights of subrogation.

          (c) This Agreement and each Guaranty are for the sole benefit of Agent and
the Lenders and their respective successors and assigns. Nothing contained
herein or in

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any Guaranty shall be deemed for the benefit of any holder of Public Debt,
or any trustee for such holder; nor shall anything contained herein or therein
be construed to impose on Agent or Lenders any fiduciary duties, obligations or
responsibilities to the holder of any Public Debt or their trustees (including,
but not limited to, any duty to pursue any Guarantor for payment under its
Guaranty).

8. The Agent.

     8.1 Appointment, Powers and Immunities.

          (a) Each Lender hereby irrevocably appoints and authorizes the Agent to
act as its agent hereunder and under the other Credit Documents with such
powers as are specifically delegated to the Agent by the terms hereof and
thereof, together with such other powers as are reasonably incidental thereto.
The Agent (i) shall not have any duties or responsibilities except those
expressly set forth in this Agreement and the other Credit Documents, and shall
not by reason of this Agreement or any other Credit Document be a trustee for
any Lender; (ii) shall not be responsible to any Lender for any recitals,
statements, representations or warranties contained in this Agreement or any
other Credit Document, or in any certificate or other document referred to or
provided for in, or received by any of them under, this Agreement or any other
Credit Document, or for the value, validity, effectiveness, genuineness,
enforceability, execution, filing, registration, collectibility, recording,
perfection, existence or sufficiency of this Agreement or any other Credit
Document or any other document referred to or provided for herein or therein or
any property covered thereby or for any failure by any Party or any other
Person to perform any of its obligations hereunder or thereunder, and shall not
have any duty to inquire into or pass upon any of the foregoing matters; (iii)
shall not be required to initiate or conduct any litigation or collection
proceedings hereunder or any other Credit Document except to the extent
requested by the Majority Lenders; (iv) SHALL NOT BE RESPONSIBLE FOR ANY
MISTAKE OF LAW OR FACT OR ANY ACTION TAKEN OR OMITTED TO BE TAKEN BY IT
HEREUNDER OR UNDER ANY OTHER CREDIT DOCUMENT OR ANY OTHER DOCUMENT OR
INSTRUMENT REFERRED TO OR PROVIDED FOR HEREIN OR THEREIN OR IN CONNECTION
HEREWITH OR THEREWITH, INCLUDING, WITHOUT LIMITATION, PURSUANT TO ITS OWN
NEGLIGENCE, BUT NOT INCLUDING AND EXCEPT FOR THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF THE AGENT; (v) shall not be bound by or obliged to recognize any
agreement among or between the Borrower, the Agent, and any Lender other than
this Agreement and the other Credit Documents, regardless of whether the Agent
has knowledge of the existence of any such agreement or the terms and
provisions thereof; (vi) shall not be charged with notice or knowledge of any
fact or information not herein set out or provided to the Agent in accordance
with the terms of this Agreement or any other Credit Document; (vii) shall not
be responsible for any delay, error, omission or default of any mail,
telegraph, cable or wireless agency or operator, and (viii) shall not be
responsible for the acts or edicts of any Governmental Authority. The Agent
may employ agents and attorneys-in-fact and shall not be responsible for the
negligence or misconduct of any such agents or attorneys-in-fact selected by it
with reasonable care.

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          (b) Without the prior written consent of Agent and all of the Lenders,
Agent shall not (i) modify or amend in any respect whatsoever the interest rate
provisions of the Credit Documents, (ii) increase the Commitment above
$600,000,000.00 (provided that an increase requested in accordance with
Section 2.1(d) must only be approved by the Lenders that are increasing their
Commitments), (iii) extend the Maturity Date other than in accordance with the
express provisions of the Credit Documents, (iv) extend or reduce the due date
for, or change the amount of, the scheduled payments of principal or interest
on the Loans, the LC Disbursements or the fees set forth in Section 2.7, (v)
amend the definitions of Majority Lenders or Super-Majority Lenders or any
requirement that certain actions be taken only with the consent of a certain
number of the Lenders, (vi) amend or waive any provisions of Section 5.15 of
this Agreement or (vii) release any Subsidiary from a Guaranty required under
and delivered pursuant to Section 5.15, unless the Guaranty is no longer
required pursuant to Section 5.15. From time to time upon Agent’s request,
each Lender shall execute and deliver such documents and instruments as may be
reasonably necessary to enable Agent to effectively administer and service the
Loan in its capacity as lead lender and servicer and in the manner contemplated
by the provisions of this Agreement.

          (c) Without the prior written consent of the Super-Majority Lenders, Agent
shall not modify, amend or waive in any respect whatsoever the provisions of
(i) Section 5.3 or the definitions of the financial covenants (or any component
thereof) described in Section 5.3 (any modification, amendment or waiver of the
provisions of, or definitions relating to, Section 5.3(e) must also be approved
by the Agent, the Syndication Agents and the Documentation Agents), (ii)
Section 5.11(c)(i), or (iii) Section 6.1.

          (d) All information provided to the Agent under or pursuant to the Credit
Documents, and all rights of the Agent to receive or request information, or to
inspect information or Property, shall be by the Agent on behalf of the
Lenders. If any Lender requests that it be able to receive or request such
information, or make such inspections, in its own right rather than through the
Agent, the Borrower will cooperate with the Agent and such Lender in order to
obtain such information or make such inspection as such Lender may reasonably
require.

          (e) The Borrower shall be entitled to rely upon a written notice or a
written response from the Agent as being pursuant to concurrence or consent of
the Majority Lenders or the Super-Majority Lenders unless otherwise expressly
stated in the Agent’s notice or response.

     8.2 Reliance. The Agent shall be entitled to rely upon any certification,
notice or other communication (including any thereof by telephone, telex,
facsimile, telegram or cable) believed by it to be genuine and correct and to
have been signed or sent by or on behalf of the proper Person or Persons, and
upon advice and statements of legal counsel (which may be counsel for the
Borrower), independent accountants and other experts selected by the Agent.
The Agent shall not be required in any way to determine the identity or
authority of any Person delivering or executing the same. As to any matters
not expressly provided for by this Agreement or any other Credit Document, the
Agent shall in

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all cases be fully protected in acting, or in refraining from acting,
hereunder and thereunder in accordance with instructions of the Majority
Lenders, and any action taken or failure to act pursuant thereto shall be
binding on all of the Lenders. If any order, writ, judgment or decree shall be
made or entered by any court affecting the rights, duties and obligations of
the Agent under this Agreement or any other Credit Document, then and in any of
such events the Agent is authorized, in its sole discretion, to rely upon and
comply with such order, writ, judgment or decree which it is advised by legal
counsel of its own choosing is binding upon it under the terms of this
Agreement, the relevant Credit Document or otherwise; and if the Agent complies
with any such order, writ, judgment or decree, then it shall not be liable to
any Lender or to any other Person by reason of such compliance even though such
order, writ, judgment or decree may be subsequently reversed, modified,
annulled, set aside or vacated.

     8.3 Defaults. The Agent shall not be deemed to have constructive
knowledge of the occurrence of a Default (other than the non-payment of
principal of or interest on Loans) unless it has received notice from a Lender
or the Borrower specifying such Default and stating that such notice is a
“Notice of Default”. In the event that the Agent receives such a notice of the
occurrence of a Default, or whenever the Agent has actual knowledge of the
occurrence of a Default, the Agent shall give prompt written notice thereof to
the Lenders (and shall give each Lender prompt notice of each such
non-payment). The Agent shall (subject to Section 8.7 hereof) take such action
with respect to such Default as shall be directed by the Majority Lenders and
within its rights under the Credit Documents and at law or in equity, provided
that, unless and until the Agent shall have received such directions, the Agent
may (but shall not be obligated to) take such action, or refrain from taking
such action, permitted hereby with respect to such Default as it shall deem
advisable in the best interests of the Lenders and within its rights under the
Credit Documents in order to preserve, protect or enhance the collectibility of
the Loans, at law or in equity.

     8.4 Rights as a Lender. With respect to the Commitment and the Loans
made, Agent, in its capacity as a Lender hereunder shall have the same rights
and powers hereunder as any other Lender and may exercise the same as though it
were not acting in its agency capacity, and the term “Lender” or “Lenders”
shall, unless the context otherwise indicates, include the Agent in its
individual capacity. The Agent may (without having to account therefor to any
other Lender) as a Lender, and to the same extent as any other Lender, accept
deposits from, lend money to and generally engage in any kind of banking,
trust, letter of credit, agency or other business with the Borrower (and any of
its Affiliates) as if it were not acting as the Agent but solely as a Lender.
The Agent may accept fees and other consideration from the Borrower (in
addition to the fees heretofore agreed to between the Borrower and the Agent)
for services in connection with this Agreement or otherwise without having to
account for the same to the Lenders.

     8.5 Indemnification. The Lenders agree to indemnify the Agent, its
officers, directors, agents and Affiliates, ratably in accordance with each
Lender’s respective Percentage, for any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind and nature whatsoever (INCLUDING BUT NOT LIMITED TO,
THE CONSEQUENCES OF THE

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NEGLIGENCE OF THE AGENT) which may be imposed on, incurred by or asserted
against the Agent in any way relating to or arising out of this Agreement or
any other Credit Document or any other documents contemplated by or referred to
herein or therein, or the transactions contemplated hereby or thereby
(including, without limitation, interest, penalties, reasonable attorneys’ fees
and amounts paid in settlement in accordance with the terms of this Section 8,
but excluding, unless a Default has occurred and is continuing, normal
administrative costs and expenses incident to the performance of its agency
duties hereunder) or the enforcement of any of the terms hereof or thereof or
of any such other documents, INCLUDING BUT NOT LIMITED TO THE NEGLIGENCE OF THE
AGENT, provided that no Lender shall be liable for any of the foregoing to the
extent they arise from the gross negligence or willful misconduct of the party
to be indemnified, or from the Agent’s default in the express obligations of
the Agent to the Lenders provided for in this Agreement. The obligations of
the Lenders under this Section 8.5 shall survive the termination of this
Agreement and the repayment of the Obligations.

     8.6 Non-Reliance on Agent and Other Lenders. Each Lender agrees that it
has received current financial information with respect to the Borrower and
that it has, independently and without reliance on the Agent or any other
Lender and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Borrower and decision to enter
into this Agreement and that it will, independently and without reliance upon
the Agent or any other Lender, and based on such documents and information as
it shall deem appropriate at the time, continue to make its own analysis and
decisions in taking or not taking action under this Agreement or any of the
other Credit Documents. The Agent shall not be required to keep itself
informed as to the performance or observance by any Party of this Agreement or
any of the other Credit Documents or any other document referred to or provided
for herein or therein or to inspect the properties or books of the Borrower or
any Party except as specifically required by the Credit Documents. Except for
notices, reports and other documents and information expressly required to be
furnished to the Lenders by the Agent hereunder or the other Credit Documents,
the Agent shall not have any duty or responsibility to provide any Lender with
any credit or other information concerning the affairs, financial condition or
business of the Borrower or any other Party (or any of their affiliates) which
may come into the possession of the Agent. Each Lender assumes all risk of
loss in connection with its Percentage in the Loans to the full extent of its
Percentage therein. The Agent assumes all risk of loss in connection with its
Percentage in the Loans to the full extent of its Percentage therein.

     8.7 Failure to Act. Except for action expressly required of the Agent, as
the case may be, hereunder, or under the other Credit Documents, the Agent
shall in all cases be fully justified in failing or refusing to act hereunder
and thereunder unless it shall receive further assurances to its satisfaction
by the Lenders of their indemnification obligations under Section 8.5 hereof
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action.

     8.8 Resignation of Agent. Subject to the appointment and acceptance of a
successor Agent as provided below, the Agent may resign at any time by giving
notice thereof to the Lenders and the Borrower. The Agent shall resign if it
has assigned all of its

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Lender Commitment and Loans and is not an Issuing Bank. Upon any such
resignation, (i) the Majority Lenders with the consent of the Borrower, so long
as no Default is in existence, shall have the right to appoint a successor
Agent so long as such successor Agent is also a Lender at the time of such
appointment and (ii) the Majority Lenders shall have the right to appoint a
successor Agent that is not a Lender at the time of such appointment so long as
the Borrower consents to such appointment (which consent shall not be
unreasonably withheld). If no successor Agent shall have been so appointed by
the Majority Lenders and accepted such appointment within 30 days after the
retiring Agent’s giving of notice of resignation, then the retiring Agent may,
on behalf of the Lenders, and with the consent of the Borrower which shall not
be unreasonably withheld, appoint a successor Agent. Any successor Agent shall
be a bank which has an office in the United States and a combined capital and
surplus of at least $500,000,000.00. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Agent, and the retiring Agent shall be discharged from its
duties and obligations as Agent thereafter arising hereunder and under any
other Credit Documents, but shall not be discharged from any liabilities for
its actions as Agent prior to the date of discharge. Such successor Agent
shall promptly specify by notice to the Borrower its principal office referred
to in Section 2.1 and Section 2.3 hereof. After any retiring Agent’s
resignation hereunder as Agent, the provisions of this Section 8 shall continue
in effect for its benefit in respect of any actions taken or omitted to be
taken by it while it was acting as the Agent.

     8.9 No Partnership. Neither the execution and delivery of this Agreement
nor any of the other Credit Documents nor any interest the Lenders, the Agent
or any of them may now or hereafter have in all or any part of the Obligations
shall create or be construed as creating a partnership, joint venture or other
joint enterprise between the Lenders or among the Lenders and the Agent. The
relationship between the Lenders, on the one hand, and the Agent, on the other,
is and shall be that of principals and agent only, and nothing in this
Agreement or any of the other Credit Documents shall be construed to constitute
the Agent as trustee or other fiduciary for any Lender or to impose on the
Agent any duty, responsibility or obligation other than those expressly
provided for herein and therein.

9. Renewal and Extension.

     9.1 Procedure for Renewal and Extension. The Borrower may extend the
Maturity Date one (1) time by one (1) year by executing and delivering to the
Agent a written request for extension (the “Extension Request”) at least thirty
(30) days (but not more than ninety (90) days) prior to the Maturity Date.

     9.2 Conditions to Renewal and Extension. The extension of the Maturity
Date under Section 9.1 of this Agreement shall be conditioned upon, among other
things, the following terms and conditions (which shall be in addition to those
required by Sections 2.7, 3 and 9.1 of this Agreement):

          (a) Execution by the Borrower of a renewal and extension agreement for
each Note in Proper Form.

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          (b) No Default must be in existence on the date of the Extension Request
or on the Maturity Date (before extension).

          (c) Payment of the extension fee as set forth in Section 2.7(b).

          (d) Such other documents, instruments and items as Agent or any Lender
shall reasonably require to document extension.

10. Miscellaneous.

     10.1 No Waiver, Amendments. No waiver of any Default shall be deemed to
be a waiver of any other Default. No failure to exercise or delay in
exercising any right or power under any Credit Document shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power preclude any further or other exercise thereof or the exercise of any
other right or power. Except as may be prohibited by Section 8.1 hereof, no
amendment, modification or waiver of any Credit Document shall be effective
unless the same is in writing and signed by the Borrower and the Majority
Lenders. No notice to or demand on the Borrower or any other Person shall
entitle the Borrower or any other Person to any other or further notice or
demand in similar or other circumstances.

     10.2 Notices. All notices under the Credit Documents shall be in writing
and either (i) delivered against receipt therefor, or (ii) mailed by registered
or certified mail, return receipt requested, in each case addressed as set
forth herein, or to such other address as a party may designate. Notices shall
be deemed to have been given (whether actually received or not) when delivered
(or, if mailed, on the next Business Day). Provided, however, that as between
the Agent and the Lenders and among the Lenders, notice may be given by
telecopy or facsimile effective upon the earlier of actual receipt or
confirmation of receipt by telephone.

     10.3 Venue. HARRIS COUNTY, TEXAS SHALL BE A PROPER PLACE OF VENUE TO
ENFORCE PAYMENT OR PERFORMANCE OF THIS AGREEMENT AND THE OTHER CREDIT
DOCUMENTS, UNLESS THE AGENT SHALL GIVE ITS PRIOR WRITTEN CONSENT TO A DIFFERENT
VENUE. THE BORROWER HEREBY IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF THE STATE AND FEDERAL COURTS IN THE STATE OF TEXAS AND AGREES
AND CONSENTS THAT SERVICE OF PROCESS MAY BE MADE UPON IT IN ANY PROCEEDING
ARISING OUT OF ANY OF THE CREDIT DOCUMENTS BY SERVICE OF PROCESS AS PROVIDED BY
TEXAS LAW. THE BORROWER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
ANY OF THE CREDIT DOCUMENTS IN THE DISTRICT COURTS OF HARRIS COUNTY, TEXAS, OR
IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS, HOUSTON
DIVISION, AND HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIMS THAT ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN ANY SUCH

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COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. THE BORROWER (A) AGREES
TO DESIGNATE AND MAINTAIN AN AGENT FOR SERVICE OF PROCESS IN THE STATE OF TEXAS
IN CONNECTION WITH ANY SUCH SUIT, ACTION OR PROCEEDING AND TO DELIVER TO THE
AGENT EVIDENCE THEREOF AND (B) IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS
OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING
BY NOTICE GIVEN AS PROVIDED FOR IN THIS AGREEMENT. NOTHING HEREIN SHALL AFFECT
THE RIGHT OF THE AGENT OR THE LENDERS TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST THE BORROWER IN ANY JURISDICTION OR TO SERVE PROCESS
IN ANY MANNER PERMITTED BY APPLICABLE LAW. THE BORROWER HEREBY IRREVOCABLY
AGREES THAT ANY LEGAL ACTION OR PROCEEDING AGAINST THE AGENT OR ANY LENDER
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR THE OTHER CREDIT
DOCUMENTS SHALL BE BROUGHT AND MAINTAINED IN THE DISTRICT COURTS OF HARRIS
COUNTY, TEXAS, OR THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
TEXAS, HOUSTON DIVISION.

     10.4 Choice of Law. THIS AGREEMENT, THE NOTES AND THE OTHER CREDIT
DOCUMENTS HAVE BEEN NEGOTIATED, EXECUTED AND DELIVERED IN THE STATE OF TEXAS
AND SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF TEXAS, INCLUDING ALL APPLICABLE FEDERAL LAW, FROM TIME TO
TIME IN FORCE IN THE STATE OF TEXAS.

     10.5 Survival; Parties Bound; Successors and Assigns.

          (a) All representations, warranties, covenants and agreements made by or
on behalf of the Borrower in connection herewith shall survive the execution
and delivery of the Credit Documents, shall not be affected by any
investigation made by any Person, and shall bind the Borrower and its
successors, trustees, receivers and assigns and inure to the benefit of the
successors and assigns of the Agent and the Lenders (including any Affiliate of
the Issuing Bank that issues any Letter of Credit); provided, however, that (i)
the Borrower may not assign or transfer any of its rights or obligations
hereunder without the prior written consent of the Agent and all of the
Lenders, and any such assignment or transfer without such consent shall be null
and void, and (ii) no Lender may assign or otherwise transfer its rights or
obligations hereunder except in accordance with this Section. Nothing in this
Agreement, expressed or implied, shall be construed to confer upon any Person
(other than the parties hereto, their respective successors and assigns
permitted hereby, participants (to the extent provided in paragraph (c) of this
Section) and, to the extent expressly contemplated hereby, the Affiliates of
each of the Agent and the Lenders) any legal or equitable right, remedy or
claim under or by reason of this Agreement.

          (b) (i) Subject to the conditions set forth in paragraph (b)(ii) below,
any Lender may assign to one or more assignees all or a portion of its rights
and obligations

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under this Agreement (including all or a portion of its Lender Commitment
and the Loans at the time owing to it) with the prior written consent (such
consent not to be unreasonably withheld) of:

		
	 	     (A) the Borrower, provided that no consent of the Borrower shall be
required if a Default has occurred and is continuing; and

		
	 	     (B) the Agent.

          (ii) Assignments shall be subject to the following additional conditions:

		
	 	     (A) except in the case of an assignment of the entire remaining
amount of the assigning Lender’s Lender Commitment or Loans, the amount
of the Lender Commitment or Loans of the assigning Lender subject to each
such assignment (determined as of the date the Assignment and Assumption
with respect to such assignment is delivered to the Agent) shall not be
less than $10,000,000 unless each of the Borrower and the Agent otherwise
consent, provided that no such consent of the Borrower shall be required
if a Default has occurred and is continuing;

		
	 	     (B) each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender’s rights and obligations
under this Agreement;

		
	 	     (C) the parties to each assignment shall execute and deliver to the
Agent an Assignment and Assumption, together with a processing and
recordation fee paid by the assigning Lender of $2,500; and

		
	 	     (D) the assignee, if it shall not be a Lender, shall deliver to the
Agent an Administrative Questionnaire.

          For the purposes of this Section 10.5, the term “Approved Fund” has the
following meaning:

          “Approved Fund” means any Person (other than a natural person) that is
engaged in making, purchasing, holding or investing in bank loans and similar
extensions of credit in the ordinary course of its business and that is
administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an
entity or an Affiliate of an entity that administers or manages a Lender.

          (iii) Subject to acceptance and recording thereof pursuant to paragraph
(b)(iv) of this Section, from and after the effective date specified in each
Assignment and Assumption the assignee thereunder shall be a party hereto and,
to the extent of the interest assigned by such Assignment and Assumption, have
the rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Assumption, be released from its obligations under this
Agreement (and, in the case of an Assignment and

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Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender
shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 3.5, 5.10, 5.11 and 10.7). Any assignment or transfer by
a Lender of rights or obligations under this Agreement that does not comply
with this Section shall be treated for purposes of this Agreement as a sale by
such Lender of a participation in such rights and obligations in accordance
with paragraph (c) of this Section.

          (iv) The Agent, acting for this purpose as an agent of the Borrower, shall
maintain at one of its offices, a copy of each Assignment and Assumption
delivered to it and a register for the recordation of the names and addresses
of the Lenders, and the Lender Commitment of, and principal amount of the Loans
owing to each Lender pursuant to the terms hereof from time to time (the
“Register”). The entries in the Register shall be conclusive, and Borrower,
Agent, and the Lenders may treat each Person whose name is recorded in the
Register pursuant to the terms hereof as a Lender hereunder for all purposes of
this Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by Borrower and any Lender, at any reasonable time and
from time to time upon reasonable prior notice.

          (v) Upon its receipt of a duly completed Assignment and Assumption
executed by an assigning Lender and an assignee, the assignee’s completed
Administrative Questionnaire (unless the assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in paragraph (b) of
this Section and any written consent to such assignment required by paragraph
(b) of this Section, the Agent shall accept such Assignment and Assumption and
record the information contained therein in the Register. No assignment shall
be effective for purposes of this Agreement unless it has been recorded in the
Register as provided in this paragraph.

          (c) A Lender may sell participating interests to an Affiliate of the
participating lender with written notice to the Agent and the Borrower but not
any consent of the Agent, the Borrower or any other Lender, and may sell
participating interests in any of its Loans to an Approved Fund so long as such
participation shall (1) limit the voting rights of the participant, if any, to
the ability to vote for changes in the amount of the Commitment, the interest
rate on the Loans, and the Maturity Date, (2) for the Committed Loans, if the
participant is not an Affiliate of the participating Lender, require the
written consent of the Borrower (so long as no Default is in existence) and the
Agent, such consent not to be unreasonably withheld, (3) for Committed Loans be
in a minimum principal amount of at least $10,000,000.00 if participated to a
Person not already a Lender, and (4) not reduce the Lender’s Lender Commitment
which has not been participated to less than $10,000,000.00. In connection
with any sale of a participating interest made in compliance with this
Agreement, (i) the participating Lender shall continue to be liable for its
Lender Commitment and its other obligations under the Credit Documents, (ii)
the Agent, the Borrower and the other Lenders shall continue to deal solely and
directly with the participating Lender in connection with such Lender’s rights
and obligations under the Credit Documents, and (iii) the participant may not
require the participating Lender to take or refrain from taking any action
under the Credit Documents that is in conflict with the terms and provisions of
the Credit Documents.

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          (d) Notwithstanding any provision hereof to the contrary, (i) any Lender
may assign and pledge all or any portion of its Lender Commitment and Loans to
a Federal Reserve Bank; provided, however, that any such assignment or pledge
shall not relieve such Lender from its obligations under the Credit Documents;
(ii) the Agent may not assign or participate its Lender Commitment so that its
Lender Commitment after such assignment or participation is less than
$15,000,000.00, to any Person other than an Affiliate of the Agent without the
prior written consent of the Borrower, so long as no Default is in existence;
and (iii) JPMC may assign, sell or participate all or any portion of the Swing
Loan without the consent of the Borrower, the Agent or any other Lender.

          (e) The term of this Agreement shall be until the final maturity of the
Notes and the payment of all amounts due under the Credit Documents.

          (f) Any Lender (each, a “Designating Lender”) may at any time designate
one Designated Lender to fund Money Market Loans on behalf of such Designating
Lender subject to the terms of this Section 10.5(f), and the provisions in
Sections 10.5(b) and (c) shall not apply to such designation. No Lender may
designate more than one (1) Designated Lender. The parties to each such
designation shall execute and deliver to the Agent for its acceptance a
Designation Agreement. Upon such receipt of an appropriately completed
Designation Agreement executed by a Designating Lender and a designee
representing that it is a Designated Lender, the Agent will accept such
Designation Agreement and will give prompt notice thereof to the Borrower,
whereupon, (i) the Borrower shall execute and deliver to the Designating Lender
a Designated Lender Note payable to the order of the Designated Lender, (ii)
from and after the effective date specified in the Designation Agreement, the
Designated Lender shall become a party to this Agreement with a right (subject
to the provisions of Section 2.8(b)) to make Money Market Loans on behalf of
its Designating Lender pursuant to Section 2.8 after the Borrower has accepted
a Money Market Loan (or portion thereof) of the Designating Lender, and (iii)
the Designated Lender shall not be required to make payments with respect to
any obligations in this Agreement except to the extent of excess cash flow of
such Designated Lender which is not otherwise required to repay obligations of
such Designated Lender which are then due and payable; provided, however, that
regardless of such designation and assumption by the Designated Lender, the
Designating Lender shall be and remain obligated to the Borrower, Agent and the
Lenders for each and every obligation of the Designating Lender and its related
Designated Lender with respect to this Agreement, including, without
limitation, any indemnification obligations under Section 8.5 hereof and any
sums otherwise payable to the Borrower by the Designated Lender. Each
Designating Lender shall serve as the administrative agent of the Designated
Lender and shall on behalf of, and to the exclusion of, the Designated Lender:
(1) receive any and all payments made for the benefit of the Designated Lender
and (2) give and receive all communications and notices and take all actions
hereunder, including, without limitation, votes, approvals, waivers, consents
and amendments under or relating to this Agreement and the other Credit
Documents. Any such notice, communication, vote, approval, waiver, consent or
amendment shall be signed by the Designating Lender as administrative agent for
the Designated Lender and shall not be signed by the Designated Lender on its
own behalf, and shall be binding upon the Designated Lender to the same extent
as if signed by the Designated Lender on its own

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behalf. The Borrower, the Agent and the Lenders may rely thereon without
any requirement that the Designated Lender sign or acknowledge the same. No
Designated Lender may assign or transfer all or any portion of its interest
hereunder or under any other Credit Document, other than assignments to the
Designating Lender which originally designated such Designated Lender or
otherwise in accordance with the provisions of Sections 10.5(b) and (c). The
Agent and each Lender agrees that it will not institute against any Designated
Lender or join any other Person in instituting against any Designated Lender
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding under any federal or state bankruptcy or similar law, until the
later to occur of (x) one year and one day after the payment in full of the
latest maturing commercial paper note issued by such Designated Lender and (y)
the Maturity Date.

     10.6 Counterparts. This Agreement may be executed in several identical
counterparts, and by the parties hereto on separate counterparts, and each
counterpart, when so executed and delivered, shall constitute an original
instrument, and all such separate counterparts shall constitute but one and the
same instrument.

     10.7 Usury Not Intended; Refund of Any Excess Payments. It is the intent
of the parties in the execution and performance of this Agreement to contract
in strict compliance with the usury laws of the State of Texas and the United
States of America from time to time in effect. In furtherance thereof, the
Agent, the Lenders and the Borrower stipulate and agree that none of the terms
and provisions contained in this Agreement or the other Credit Documents shall
ever be construed to create a contract to pay for the use, forbearance or
detention of money with interest at a rate in excess of the Ceiling Rate and
that for purposes hereof “interest” shall include the aggregate of all charges
which constitute interest under such laws that are contracted for, reserved,
taken, charged or received under this Agreement. In determining whether or not
the interest paid or payable, under any specific contingency, exceeds the
Ceiling Rate, the Borrower, the Agent and the Lenders shall, to the maximum
extent permitted under applicable law, (a) characterize any nonprincipal
payment as an expense, fee or premium rather than as interest, (b) exclude
voluntary prepayments and the effects thereof, and (c) “spread” the total
amount of interest throughout the entire contemplated term of the Loans. The
provisions of this paragraph shall control over all other provisions of the
Credit Documents which may be in apparent conflict herewith.

     10.8 Captions. The headings and captions appearing in the Credit
Documents have been included solely for convenience and shall not be considered
in construing the Credit Documents.

     10.9 Severability. If any provision of any Credit Documents shall be
invalid, illegal or unenforceable in any respect under any applicable law, the
validity, legality and enforceability of the remaining provisions shall not be
affected or impaired thereby.

     10.10 Disclosures. Every reference in the Credit Documents to disclosures
of the Borrower to the Agent and the Lenders in writing, to the extent that
such references refer to disclosures at or prior to the execution of this
Agreement, shall be deemed strictly to

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refer only to written disclosures delivered to the Agent and the Lenders
in an orderly manner concurrently with the execution hereof.

     10.11 No Novation. THE PARTIES HERETO HAVE ENTERED INTO THIS AGREEMENT
AND THE OTHER CREDIT DOCUMENTS SOLELY TO AMEND, RESTATE AND RESTRUCTURE THE
TERMS OF, AND THE OBLIGATIONS OWING UNDER AND IN CONNECTION WITH, THE CREDIT
AGREEMENT DATED DECEMBER 20, 2000 AMONG THE BORROWER, THE AGENT AND CERTAIN OF
THE LENDERS. THE PARTIES DO NOT INTEND THIS AGREEMENT NOR THE TRANSACTIONS
CONTEMPLATED HEREBY TO BE, AND THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
HEREBY SHALL NOT BE CONSTRUED TO BE, A NOVATION OF ANY OF THE OBLIGATIONS OWING
BY THE BORROWER UNDER OR IN CONNECTION WITH THE SAID CREDIT AGREEMENT.

     10.12 Limitation of Liability. NO OBLIGATION OR LIABILITY WHATSOEVER OF
THE BORROWER WHICH MAY ARISE AT ANY TIME UNDER THIS AGREEMENT OR ANY OBLIGATION
OR LIABILITY WHICH MAY BE INCURRED BY IT PURSUANT TO ANY OTHER CREDIT DOCUMENT
SHALL BE PERSONALLY BINDING UPON, NOR SHALL RESORT FOR THE ENFORCEMENT THEREOF
BE HAD TO THE PRIVATE PROPERTY OF, ANY OF THE BORROWER’S TRUSTEES OR
SHAREHOLDERS REGARDLESS OF WHETHER SUCH OBLIGATION OR LIABILITY IS IN THE
NATURE OF CONTRACT, TORT OR OTHERWISE.

     10.13 Entire Agreement. THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS
TOGETHER CONSTITUTE A WRITTEN AGREEMENT AND 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.

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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date set forth above.

	 	 	 	 	 
	 	 	ARCHSTONE-SMITH OPERATING TRUST
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Name:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	

	 	 	 	 	 
	 	 	Address:
	 	 	9200 E. Panorama Circle
	 	 	Suite 400
	 	 	Englewood, Colorado 80112
	 	 	Attention: Corporate Finance

The Parent joins in the execution of this Agreement to evidence its agreement
to the provisions of Sections 5.2, 5.11(b) and (c), and 6.6 of this Agreement.

	 	 	 	 	 
	 	 	ARCHSTONE – SMITH TRUST
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Name:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	

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	Lender Commitment: $35,000,000.00	 	JPMORGAN CHASE BANK,
	Percentage: 5.833333333%	 	as Agent and as a Lender
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Name:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	

	 	 	Address:
	 	 	712 Main Street
	 	 	Houston, Texas 77002
	 	 	Attention: Manager, Real Estate Group
	 	 	 	 	 
	 	 	Telecopy No.: 713/216-7713
	 	 	Telephone No.: Kent Kaiser
	 	 	 	 	          
     713/216-8699

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	Lender Commitment: $30,000,000.00	 	CITICORP NORTH AMERICA, INC.
	Percentage: 5.000000000%	 	 	 	 
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Name:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	

	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Name:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	

	 	 	 	 	 
	 	 	Address:
	 	 	390 Greenwich Street
	 	 	New York, New York 10013
	 	 	Attention: Mr. Michael Chlopak
	 	 	 	 	 
	 	 	Telephone No.: 212/723-5899
	 	 	Telecopier No.: 212/723-8380

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	Lender Commitment: $35,000,000.00	 	BANK OF AMERICA, N.A.
	Percentage: 5.833333333%	 	 	 	 
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Name:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	

	 	 	 	 	 
	 	 	Address:
	 	 	901 Main Street, 64th Floor
	 	 	Dallas, Texas 75202
	 	 	Attention: Charlotte Wai Deinhart
	 	 	 	 	 
	 	 	Telephone No.: 214/209-9129
	 	 	Telecopier No.: 214/209-0995

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	Lender Commitment: $35,000,000.00	 	WELLS FARGO BANK, NATIONAL
	Percentage: 5.833333333%	 	ASSOCIATION
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Name:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	

	 	 	 	 	 
	 	 	Address:
	 	 	4643 S. Ulster Street
	 	 	Suite 1400
	 	 	Denver, Colorado 80237
	 	 	Attention: Martia Kontak
	 	 	 	 	 
	 	 	Telephone No.: 303/741-0800 X208
	 	 	Telecopy No.: 303/741-0867

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	Lender Commitment: $35,000,000.00	 	COMMERZBANK AG, NEW YORK
	Percentage: 5.833333333%	 	BRANCH
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Name:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	

	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Name:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	

	 	 	 	 	 
	 	 	Address:
	 	 	
Commerzbank AG, New York Branch
	 	 	2 World Financial Center
	 	 	New York, New York 10281-1050
	 	 	Attention: David Schwarz
	 	 	 	 	 
	 	 	Telephone No.: 212/266-7632
	 	 	Telecopy No.: 212/266-7565

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	Lender Commitment: $20,000,000.00	 	MELLON BANK, N.A.
	Percentage: 3.333333333%	 	 	 	 
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Name:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	

	 	 	 	 	 
	 	 	Address:
	 	 	One Mellon Bank Center, Room 5325
	 	 	Pittsburgh, PA 15258-0001
	 	 	Attention: James McDunn
	 	 	 	 	 
	 	 	Telephone No.: 412/234-5344
	 	 	Telecopy No.:412/234-8657

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	Lender Commitment: $26,000,000.00	 	SOUTHTRUST BANK
	Percentage: 4.333333333%	 	 	 	 
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Name:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	

	 	 	 	 	 
	 	 	Address:
	 	 	600 West Peachtree, Suite 2600
	 	 	Atlanta, Georgia 30308
	 	 	Attention: Jim Miller
	 	 	 	 	 
	 	 	Telephone No.: 404/532-5259
	 	 	Telecopy No.: 404/532-5280

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	Lender Commitment: $30,000,000.00	 	SUNTRUST BANK
	Percentage: 5.000000000%	 	 	 	 
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Name:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	

	 	 	 	 	 
	 	 	Address:
	 	 	8245 Boone Blvd., Suite 820
	 	 	Vienna, Virginia 22182
	 	 	Attention: Gregory T. Horstman
	 	 	 	 	 
	 	 	Telephone No.: 703/902-9384
	 	 	Telecopy No.: 703/902-9245

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	Lender Commitment: $35,000,000.00	 	BANK ONE, NA
	Percentage: 5.833333333%	 	 	 	 
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Name:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	

	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Name:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	

	 	 	Address:
	 	 	Corporate Real Estate
	 	 	One Bank One Plaza, Suite IL1-0315
	 	 	Chicago, Illinois 60670-0374
	 	 	Attention: Angela L. Kleiman
	 	 	 	 	 
	 	 	Telephone No.: 312/325-3120
	 	 	Telecopy No.: 312/325-3122

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	Lender Commitment: $26,000,000.00	 	UNION BANK OF CALIFORNIA, N.A.
	Percentage: 4.333333333%	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Name:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	

	 	 	Address:
	 	 	350 California Street, 7th Floor
	 	 	San Francisco, California 94120
	 	 	Attention: Karen Kokame
	 	 	 	 	 
	 	 	Telephone No.: 415/705-7116
	 	 	Telecopy No.: 415/433-7438

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	Lender Commitment: $30,000,000.00	 	KEYBANK NATIONAL ASSOCIATION
	Percentage: 5.000000000%	 	 	 	 
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Name:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	

	 	 	 	 	 
	 	 	Address:
	 	 	1675 Broadway, Suite 400
	 	 	Denver, Colorado 80202
	 	 	
Attention:
	 	Scott Childs and Cheryl
	 	 	 	 	Van Klompenberg
	 	 	 	 	 
	 	 	Telephone No.: 720/904-4407/4441
	 	 	Telecopy No.: 720/904-4410/4420

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	Lender Commitment: $26,000,000.00	 	CITIZENS BANK OF MASSACHUSETTS
	Percentage: 4.333333333%	 	 	 	 
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Name:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	

	 	 	 	 	 
	 	 	Address:
	 	 	One Citizens Plaza (RC0440)
	 	 	Providence, Rhode Island 02903
	 	 	Attention: Craig E. Schermerhorn
	 	 	 	 	 
	 	 	Telephone No.: 401/455-5425
	 	 	Telecopy No.: 401/282-4485

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	Lender Commitment: $30,000,000.00	 	PNC BANK, NATIONAL ASSOCIATION
	Percentage: 5.000000000%	 	 	 	 
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Name:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	

	 	 	Address:
	 	 	One PNC Plaza, 19th Floor
	 	 	Mail Stop PL-POPP-19-2
	 	 	Pittsburgh, Pennsylvania 15222
	 	 	Attention: Paul Jamiolkowski
	 	 	 	 	 
	 	 	Telephone No.: 412/768-3928
	 	 	Telecopy No.: 412/762-6500

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	Lender Commitment: $25,000,000.00	 	U.S. BANK NATIONAL ASSOCIATION
	Percentage: 4.166666667%	 	 	 	 
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Name:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	

	 	 	 	 	 
	 	 	Address:
	 	 	918 17th Street, 5th Floor
	 	 	Denver, Colorado 80203
	 	 	Attention: Leanne Toler
	 	 	 	 	 
	 	 	Telephone No.: 303/585-4172
	 	 	Telecopy No.: 303/585-4199

78

Table of Contents

	 	 	 	 	 
	Lender Commitment: $10,000,000.00	 	SCOTIABANC, INC.
	Percentage: 1.666666667%	 	 	 	 
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Name:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	

	 	 	 	 	 
	 	 	Address:
	 	 	600 Peachtree Street, Suite 2700
	 	 	Atlanta, Georgia 30308
	 	 	Attention: Bill Zarrett
	 	 	 	 	 
	 	 	Telephone No.: 404/877-1504
	 	 	Telecopy No.: 404/888-8998

	 	 	 	 	 
	Lender Commitment: $20,000,000.00	 	THE BANK OF NOVA SCOTIA
	Percentage: 3.333333333%	 	 	 	 
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Name:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	

	 	 	 	 	 
	 	 	Address:
	 	 	580 California Street, Suite 2100
	 	 	San Francisco, California 94104
	 	 	Attention: Abid Gilani
	 	 	 	 	 
	 	 	Telephone No.: 415/816-9800
	 	 	Telecopy No.: 415/397-0791

79

Table of Contents

	 	 	 	 	 
	Lender Commitment: $26,000,000.00	 	MANUFACTURERS AND TRADERS
	Percentage: 4.333333333%	 	TRUST COMPANY
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Name:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	

	 	 	 	 	 
	 	 	Address:
	 	 	Mail Code 101-747
	 	 	25 South Charles Street, 17th Floor
	 	 	Baltimore, Maryland 21201
	 	 	Attention: Ken Crawford
	 	 	 	 	 
	 	 	Telephone No.: 410/545-2369
	 	 	Telecopy No.: 410/545-2017

80

Table of Contents

	 	 	 	 	 
	Lender Commitment: $26,000,000.00	 	MORGAN STANLEY BANK
	Percentage:   4.333333333%	 	 	 	 
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Name:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	

	 	 	Address:
	 	 	750 Seventh Avenue, 11th Floor
	 	 	New York, New York 10020
	 	 	Attention: Christopher Whelan
	 	 	 	 	 
	 	 	Telephone No.: 212/762-2929
	 	 	Telecopy No.: 212/762-0346

81

Table of Contents

	 	 	 	 	 
	Lender Commitment: $25,000,000.00	 	LASALLE BANK NATIONAL
	Percentage: 4.166666667%	 	ASSOCIATION
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Name:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	

	 	 	Address:
	 	 	135 South LaSalle Street
	 	 	Chicago, Illinois 60603
	 	 	Attention: Jay Palmer
	 	 	 	 	 
	 	 	Telephone No.: 312/904-7211
	 	 	Telecopy No.: 312/904-6691

82

Table of Contents

	 	 	 	 	 
	Lender Commitment: $20,000,000.00	 	BANK OF CHINA, NEW YORK BRANCH
	Percentage: 3.333333333%	 	 	 	 
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Name:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	

	 	 	 	 	 
	 	 	Address:
	 	 	410 Madison Avenue
	 	 	New York, New York 10017
	 	 	Attention: Joseph Zeng
	 	 	 	 	 
	 	 	Telephone No.: 212/935-3101 X408
	 	 	Telecopy No.: 212/308-4993

83

Table of Contents

	 	 	 	 	 
	Lender Commitment: $20,000,000.00	 	LEHMAN BROTHERS BANK, FSB
	Percentage: 3.333333333%	 	 	 	 
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Name:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	

	 	 	 	 	 
	 	 	Address:
	 	 	745 Seventh Avenue, 6th Floor
	 	 	New York, New York 10019
	 	 	Attention: Jane Gillard
	 	 	 	 	 
	 	 	Telephone No.: 212/526-7417
	 	 	Telecopy No.: 646/758-2538

84

Table of Contents

	 	 	 	 	 
	Lender Commitment: $15,000,000.00	 	COMPASS BANK
	Percentage: 2.500000000%	 	 	 	 
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Name:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	

	 	 	Address:
	 	 	15 South 20th Street, 15th Floor
	 	 	Birmingham, Alabama 35233
	 	 	Attention: Johanna Duke Paley
	 	 	 	 	 
	 	 	Telephone No.: 205/297-3851
	 	 	Telecopy No.: 205/297-7994

85

Table of Contents

	 	 	 	 	 
	Lender Commitment: $10,000,000.00	 	CHEVY CHASE BANK, F.S.B.
	Percentage:   1.666666667%	 	 	 	 
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Name:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	

	 	 	Address:
	 	 	7501 Wisconsin Avenue, 12th Floor
	 	 	Bethesda, Maryland 20814
	 	 	Attention: J. Jordan O’Neill, III
	 	 	 	 	 
	 	 	Telephone No.: 240/497-7733
	 	 	Telecopy No.: 240/497-7714

86

Table of Contents

	 	 	 	 	 
	Lender Commitment: $10,000,000.00	 	E. SUN COMMERCIAL BANK, LTD., LOS
	Percentage: 1.666666667%	 	ANGELES BRANCH
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Name:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	

	 	 	 	 	 
	 	 	Address:
	 	 	17700 Castleton Street, Suite 500
	 	 	City of Industry, California 91748
	 	 	Attention: Nina Siu
	 	 	 	 	 
	 	 	Telephone No.: 626/810-2400 X223
	 	 	Telecopy No.: 626/839-5531

87

Table of Contents

SCHEDULE I

AMERITON Properties Incorporated

ASN Richardson Highlands LLC

ASN Roosevelt Center LLC

SCA North Carolina Limited Partnership

API Hibiscus LLC

API Jefferson Park LLC

API Methuen LLC

ASN Rockville LLC

Kentlands Village Business Trust

Briar Meadows Apartments LLC

ASN Bowie LLC

ASN Cambridge LLC

ASN Esplanade at Park Center LLC

ASN Estancia LLC

ASN Fairfax Corner LLC

ASN Lakeshore East LLC

ASN Miramar Lakes LLC

ASN Northgate, LLC

ASN Park Essex LLC

ASN Santa Monica LLC

ASN Saybrooke LLC

ASN Sussex Commons LLC

ASN Ventura LLC

ASN Warner Center, LLC

ASN Washington Boulevard LLC

ASN Watertown LLC

ASN Dakota Ridge LLC

ASN-Massachusetts Holdings (2) LLC

ASN-Massachusetts Holdings (3) LLC

ASN-Washington Holdings (1) LLC

ASN Wendemere, LLC

Courthouse Hill LLC

PTR-California Holdings (3) LLC

SCA Florida Holdings (2) LLC

Security Capital Atlantic Multifamily LLC

Smith Property Holdings Ballston Place L.L.C.

Smith Property Holdings Harbour House South L.L.C.

Smith Property Holdings Illinois Center L.L.C.

 

Table of Contents

Smith Property Holdings Lincoln Towers L.L.C.

Smith Property Holdings One East Delaware L.L.C.

Smith Property Holdings Reston Landing L.L.C.

Smith Property Holdings South Beach Towers L.L.C.

Smith Property Holdings Sunset Pointe Court L.L.C.

Smith Property Holdings Sunset Pointe 3 L.L.C.

Smith Property Holdings Sunset Pointe North L.L.C.

Smith Property Holdings Superior Place L.L.C.

Smith Property Holdings Harbor House L.L.C.

First Herndon Associates Limited Partnership

Smith Property Holdings 4411 Connecticut L.L.C.

Smith Property Holdings Columbia Road L.P.

Smith Property Holdings Crystal Towers L.P.

Smith Property Holdings Five L.P.

Smith Property Holdings Six L.P.

2

Table of Contents

OFFICER’S CERTIFICATE

     Archstone-Smith Operating Trust (the “Borrower”), Archstone-Smith Trust
(the “Parent”), JPMorgan Chase Bank (“JPMC”), Wells Fargo Bank, N.A. and Bank
of America, N.A., as Agents (the “Agents”) and certain other Lenders (the
“Lenders”) entered into that certain Amended and Restated Credit Agreement (the
“Agreement”) dated as of      , 2003, as the same may be amended.
Any term used herein and not otherwise defined shall have the meaning ascribed
to it in the Agreement.

          The undersigned hereby certifies that:

	I.	 	I am a Vice President of the Borrower and a Vice President of the Parent,
and I make these certifications on behalf of the Borrower or the Parent,
as applicable.
	 
	II.	 	The Parent’s financial statements as of      as filed with the
Securities and Exchange Commission (“SEC”), and the Borrower’s financial
statements as of      delivered to JPMC, were prepared in
conformity with generally accepted accounting principles consistently
applied and present fairly the financial position of the Parent and of the
Borrower, respectively, as of the date thereof and the results of its
operations for the period covered thereby subject to normal year-end
adjustments.
	 
	III.	 	Borrower hereby certifies the following as of the end of the period
covered by the financial statements described above:

	 	1.	 	Maximum Debt to Total Asset Value Ratio Calculation
	 
	 	 	 	(Section 5.3 (e))

	 	 	 	 	 	 	 
	 	 	
(A)
	 	Indebtedness (Borrower and Parent)	 	 
	 	 	 	 	Total Unsecured Debt (per GAAP)
	 	$           
	 	 	 	 	Total Secured Debt (per GAAP)
	 	$           
	 	 	 	 	Guarantees, Endorsements and Other Contingent Obligations
	 	$           
	 	 	 	 	Obligations under Hedging Agreements, as defined
	 	$           
	 	 	 	 	Equity Percentage of Indebtedness of Unconsolidated Affiliates
	 	$           
	 	 	 	 	Other (pursuant to the Agreement)
	 	$           
	 	 	 	 	Total Indebtedness, as defined
	 	$           
	 	 	
(B)
	 	Total Asset Value:	 	 
	 	 	 	 	Aggregated Net Operating Income from Stabilized Properties	 	 
	 	 	 	 	Divided by 8.00%
	 	$           
	 	 	 	 	Historical Value of Pre-Stabilized Properties
	 	$           
	 	 	 	 	Historical Value of Properties Under Construction
	 	$           
	 	 	 	 	Historical Value of Undeveloped Land
	 	$           
	 	 	 	 	Other Assets (excluding intangibles as defined by GAAP)
	 	$           
	 	 	 	 	Total Asset Value of Unconsolidated Affiliates
	 	$           

EXHIBIT A

Page 1 of 7 Pages

Table of Contents

	 	 	 	 	 	 	 
	 	 	 	 	Total Asset Value, as defined
	 	$           
	 	 	
(C)
	 	Maximum Debt to Total Asset Value (Ratio of 1(A) to 1(B))
Required: Maximum:
	 	60%
	 	 	 	 	 	 	 
	 	 	
2.
	 	Maximum Secured Debt Calculation	 	 
	 	 	 	 	(Section 5.3 (a))	 	 
	 	 	 	 	 	 	 
	 	 	 	 	(A)    Secured Debt, as defined
	 	$           
	 	 	 	 	(B)    Total Asset Value, as defined
	 	$           
	 	 	 	 	(C)    Maximum Secured Debt to
Total Asset Value	 	 
	 	 	 	 	(Ratio of 2(A) to 2(B))
	 	            
	 	 	 	 	Required:Maximum:
	 	   40%  
	 	 	 	 	 	 	 
	 	 	
3.
	 	Coverage Ratio Calculation	 	 
	 	 	 	 	(Section 5.3 (b))	 	 
	 	 	 	 	 	 	 
	 	 	
(A)
	 	Borrower’s EBITDA:	 	 
	 	 	 	 	Net Income (per GAAP)
	 	$           
	 	 	 	 	Plus:	 	 
	 	 	 	 	Depreciation and Amortization (per GAAP)
	 	$           
	 	 	 	 	Interest Expense, as defined, of Borrower
and Parent
	 	$           
	 	 	 	 	Income Taxes (per GAAP)
	 	$           
	 	 	 	 	Extraordinary Gains/Losses (per GAAP)
	 	$           
	 	 	 	 	Payments on Borrower’s Preferred Stock (to
the extent included in net income)
	 	$           
	 	 	 	 	Equity Percentage of EBITDA for
	 	$           
	 	 	 	 	Unconsolidated Affiliates
	 	$           
	 	 	 	 	Other (pursuant to the Agreement)
	 	$           
	 	 	 	 	Borrower’s EBITDA, as defined
	 	$           
	 	 	
(B)
	 	Dividends and Distributions Paid with Respect to
Disqualified Stock
	 	$           
	 	 	
(C)
	 	Interest Expense, as defined, of Borrower and Parent
	 	$           
	 	 	
(D)
	 	Sum of 3(B) and 3(C)
	 	$           
	 	 	
(E)
	 	Coverage Ratio (Ratio of 3(A) to 3(D))
	 	:    1.0   
	 	 	 	 	 	 	 
	 	 	 	 	Required:
	Minimum of 2.0 to 1.0
	 	 	 	 	 	 	 
	 	 	
4.
	 	Fixed Charge Coverage Ratio Calculation	 	 
	 	 	 	 	(Section 5.3(c))	 	 
	 	 	 	 	 	 	 
	 	 	
(A)
	 	Borrower’s EBITDA, as defined
	 	$           
	 	 	
(B)
	 	Unit Capital Expenditures
	 	$           
	 	 	
(C)
	 	EBITDA minus Unit Capital Expenditures
	 	$           

EXHIBIT A

Page 2 of 7 Pages

Table of Contents

	 	 	 	 	 	 	 
	 	 	
(D)
	 	Interest Expense, as defined, of Borrower and Parent
	 	$           
	 	 	
(E)
	 	Payments and Payables on Disqualified Stock
	 	$           
	 	 	
(F)
	 	Regularly Scheduled Principal Paid and Payable
(Borrower and Parent)
	 	$           
	 	 	
(G)
	 	Sum of 4(D), 4(E) and 4(F)
	 	$           
	 	 	
(H)
	 	Fixed Charge Coverage Ratio (Ratio of 4(C) to 4(G))
	 	    1.0    
	 	 	 	 	 	 	 
	 	 	 	 	Required:
	Minimum of 1.75 to 1.0
	 	 	 	 	 	 	 
	 	 	
5.
	 	Tangible Net Worth	 	 
	 	 	 	 	(Section 5.3(d))	 	 
	 	 	 	 	Assets
	 	$           
	 	 	 	 	Liabilities
	 	$           
	 	 	 	 	Tangible Net Worth, as defined
	 	$           
	 	 	 	 	 	 	 
	 	 	 	 	Required:
	Minimum of $3.500 billion
	 	 	 	 	 	 	 
	 	 	
6.
	 	Property Pool	 	 
	 	 	 	 	(Section 5.15)	 	 
	 	 	 	 	 	 	 
	 	 	
(A)
	 	Sum of the Aggregate Net Operating Income for Pool Real Estate   That Has Reached the Stabilization Date Divided by 8.00% and the
Aggregate Historical Value for Pool Real Estate That Has Not
Reached the Stabilization Date
	 	$           
	 	 	
(B)
	 	Outstanding Unsecured Indebtedness
	 	$           
	 	 	
(C)
	 	Pool Value Divided by Outstanding Unsecured

Indebtedness (6(A) divided by 6(B))
	 	          %
	 	 	 	 	 	 	 
	 	 	Required:
	Minimum of 167%
	 	 	 	 	 	 	 
	 	 	
(D)
	 	Pool Value attributable to unimproved land (Maximum-5%)
	 	$           
	 	 	
(E)
	 	Pool Value attributable to unimproved land, land under
construction or development, projects that do not have 80%
Occupancy Level, non-multifamily land, land that has not
reached the Calculation Date (Maximum-20%)
	 	$           
	 	 	
(F)
	 	Pool Value attributable to improved property that is not
multifamily residential (Maximum-10%)
	 	$           
	 	 	
(G)
	 	The Borrower confirms that it has received the
environmental assessments required by
Section 5.15(a)(i)
	 	             
	 	 	 	 	 	 	 
	 	 	
7.
	 	Specified Permitted Holdings	 	 
	 	 	 	 	(Section 6.3)	 	 

EXHIBIT A

Page 3 of 7 Pages

Table of Contents

	 	 	 	 	 	 	 
	 	 	
(A)
	 	Securities Received in Settlement Liabilities Created in the
Ordinary Course of Business
	 	          
	 	 	 	 	(Maximum – 5%)	 	 
	 	 	
(B)
	 	Unconsolidated Affiliates Engaged in Permitted Businesses
	 	          
	 	 	 	 	(Maximum – 20%)	 	 
	 	 	
(C)
	 	Loans to Unaffiliated Persons
	 	          
	 	 	 	 	(Maximum – 10%)	 	 
	 	 	
(D)
	 	Other Securities
	 	          
	 	 	 	 	(Maximum – 10%)	 	 
	 	 	
(E)
	 	Income Producing Properties That Are Not Multifamily

Residential
	 	          
	 	 	 	 	(Maximum – 10%)	 	 
	 	 	
(F)
	 	Unimproved Land
	 	          
	 	 	 	 	(Maximum – 7.5%)	 	 
	 	 	
(G)
	 	Unrelated, Non-Incidental Investments
	 	          
	 	 	 	 	(Maximum – 5%)	 	 
	 	 	
(H)
	 	Aggregate Value of the specified Permitted Holdings
(sum of 7(A) through 7(H))
	 	          
	 	 	 	 	(Maximum – 30%)	 	 

	IV.	 	A review of the activities of the Borrower during the period covered by
the financial statements has been made under my supervision and with a
view to determining whether during such period the Borrower has kept,
observed, performed and fulfilled all of its obligations under the
Agreement.
	 
	 	 	The Parent has made available its financial statements and related
footnotes for the most recent period ended      , as filed with the
SEC and can be accessed at http://www.sec.gov/. The Borrower has
delivered to JPMC its financial statements and related footnotes for the
most recent period ended      . The Parent’s and the Borrower’s
earnings press releases and supplemental information for such period have
been posted to the Parent’s website (         ). The
financial statements were prepared in conformity with generally accepted
accounting principles consistently applied (except for the omission of
footnote disclosures and appropriately disclosed consistency exceptions)
and present fairly the financial position of the Parent and the Borrower,
respectively, as of the date thereof and the results of its operations
for the period covered thereby subject to normal year-end adjustments.
	 
	V.	 	(Check either (A) or (B))

	 	 	 
	[  ]	 	
(A) The Borrower has kept, observed, performed and
fulfilled each and every one of its obligations under the Agreement
during the period covered by the applicable financial statements.

EXHIBIT A

Page 4 of 7 Pages

Table of Contents

	 	 	 
	[  ]	 	
(B) The Borrower has kept, observed, performed and
fulfilled each and every one of its obligations under the Agreement
during the period covered by the applicable financial statements
except for the following matters: [Describe all such defaults,
specifying the nature, duration and status thereof and what action
the Borrower has taken or proposes to take with respect thereto].

	VI.	 	With regard to Section 1004 of the Indenture dated as of February 1, 1994 between the Borrower and Morgan
Guaranty Trust Company of New York, as Trustee (and using the terms defined therein), a certificate required
thereunder showing compliance with Section 1004 is attached (only required for the fourth quarter Officer’s
Certificate), for the most recent period ended           :

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	
1.	 	 	(A)
	 	Sum of Total Assets, Aggregate Purchase Price of Real
Estate Assets, or Mortgages Receivable Acquired, and
Securities Offering Proceeds Received to Purchase
said Assets
	 	$           
	 	 	 	 	 	 	(B)
	 	Maximum amount of Debt
	 	$           
	 	 	 	 	 	 	(C)
	 	Debt
	 	$           
	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	
2.	 	 	(A)
	 	Consolidated Income Available for Debt Service
	 	$           
	 	 	 	 	 	 	(B)
	 	Annual Service Charge
	 	$           
	 	 	 	 	 	 	(C)
	 	Ratio of Consolidated Income Available for Debt
Service to Annual Service Charge
	 	             
	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	
3.	 	 	(A)
	 	Total Assets
	 	$           
	 	 	 	 	 	 	(B)
	 	Maximum Secured Debt
	 	$           
	 	 	 	 	 	 	(C)
	 	Secured Debt
	 	$           

	VII.	 	The Parent hereby certifies the
following as to itself as of the end of
the period covered by the financial
statements dated           as
filed with the SEC:

	 	 	 	 	 
	1.	 	
Indebtedness
	 	$           
	2.	 	
Interest Expense
	 	$           

	VIII.	 	Check either (A) or (B)

	 	 	 	 	 
	 	 	
[  ]
	 	(A) The Parent has kept, observed, performed and
fulfilled each and every one of its obligations under the Agreement
during the period covered by the applicable financial statements.
	 	 	 	 	 
	 	 	
[  ]
	 	(B) The Parent has kept, observed, performed and
fulfilled each and every one of its obligations under the Agreement
during the period covered by the applicable financial statements
except for the following matters:

EXHIBIT A

Page 5 of 7 Pages

Table of Contents

	 	 	 	 	 
	 	 	 	 	[Describe all such defaults, specifying the nature, duration and
status thereof and what action the Parent has taken or proposes to
take with respect thereto]

	 	 	 	 	 
	Date:	 	
Name:	 	 
	 	
	 	 	

	 	 	 	 	      [Vice President Name]

(A manually signed Officer’s Certificate is available at the request of any
Agent or Lender.)

EXHIBIT A

Page 6 of 7 Pages

Table of Contents

POOL PROPERTY LIST

     List each property separately showing the Historical Value and the
components, the city, the state, the Occupancy Level for the past three months,
the number of units, the age of the property and net operating income.

EXHIBIT A

Page 7 of 7 Pages

Table of Contents

REQUEST FOR LOAN

Date: _______________, 2003

JPMorgan Chase Bank

712 Main Street

Houston, Texas 77002

(“Agent”)

	 	 	 
	RE:	 	
Request for Loan Under Amended and Restated Credit
Agreement (as amended from time to time, the “Credit
Agreement”) dated as of      , 2003, among
Archstone-Smith Operating Trust (the “Borrower”), the Agent
and the Lenders as signatory to the Credit Agreement

Gentlemen:

     Borrower hereby requests [check as applicable] o a conversion of an
existing Loan as provided below, and/or o an advance under the Credit
Agreement, which is allowed pursuant to Section 5.9 of the Credit Agreement, in
the amount of $            [minimum of $1,000,000.00 and in multiples of
$100,000.00].

	 	 	 	 	 	 	 	 	 	 	 
	 	 	Maximum Principal Amount	 	$	600,000,000.00	 
	 
	 	 	Less the amount outstanding under the
Credit Agreement (including Swing Loans
and Money Market Loans)	 	 	($              .  	)
	 	 	Less the LC Exposure	 	 	($              .  	)
	 	 	 	 	 	 	 	 	 	 	 
	 	 	Less the LC Exposure	 	 	($              .  	)
	 	 	 	 	 	 	 	 	 	 	 
	 	 	Available amount	 	 	$               .  	 
	 	 	 	 	 	 	 	 	 	 	 
	 	 	Less amount requested	 	 	($              .  	)
	 	 	 	 	 	 	 	 	 	 	 
	 	 	Amount remaining to be advanced	 	 	$               .  	 

EXHIBIT B

Page 1 of 3 Pages

Table of Contents

	 	 	 	 	 	 	 	 	 	 	 
	 	 	The advance or conversion is to be made as follows:	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 	 	A.	 	Base Rate Borrowing.	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	1.
	 	Amount of Base Rate Borrowing:
	 	 	$              .  	 
	 	 	 	 	2.
	 	Date of Base Rate Borrowing
	 	 	              ,20  	 
	 	 	 	 	 	 	 	 	 	 	 
	 	 	B.	 	Eurodollar Rate Borrowing:	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	1.
	 	Amount of Eurodollar Rate Borrowing:
	 	 	$              .  	 
	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	2.
	 	Amount of conversion of existing
Loan to Eurodollar Rate Borrowing:
	 	 	$              .  	 
	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	3.
	 	Number of Eurodollar Rate
Borrowing(s) now in effect:
	 	 	                  	 
	 	 	 	 	 	 	[cannot exceed 12]	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	4.
	 	Date of Eurodollar Rate Borrowing
or conversion:
	 	 	              ,20  	 
	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	5.
	 	Interest Period:
	 	 	                  	 
	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	6.
	 	Expiration date of current Interest
Period as to this conversion:
	 	 	              ,20  	 
	 	 	 	 	 	 	 	 	 	 	 
	 	 	C.	 	Swing Loan.	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	1.
	 	Amount of Swing Loan:
	 	 	$              .  	 
	 	 	 	 	 	 	[minimum of $1,000,000.00 and in
multiples of $100,000.00]	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	2.
	 	Date of Swing Loan:
	 	 	              ,20  	 

EXHIBIT B

Page 2 of 3 Pages

Table of Contents

     Borrower hereby represents and warrants that the amounts set forth above
are true and correct, that the amount above requested has actually been
incurred, that the representations and warranties contained in the Credit
Agreement are true and correct as if made as of this date, and that Borrower
has kept, observed, performed and fulfilled each and every one of its
obligations under the Credit Agreement as of the date hereof [except as
follows:]

	 	 	 	 	 
	 	 	Very truly yours,
	 	 	 	 	 
	 	 	ARCHSTONE-SMITH OPERATING TRUST
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Name:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	

EXHIBIT B

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Table of Contents

	 	 	 
	$[          ]	 	
     , 2003

     FOR VALUE RECEIVED ARCHSTONE-SMITH OPERATING TRUST, a Maryland real estate
investment trust (herein called “Maker”) promises to pay to the order of
[           ], a [     ] (“Payee”), at
the offices of JPMorgan Chase Bank, a New York banking corporation, as “Agent”
under the Credit Agreement, at 712 Main Street, Houston, Texas 77002, or at
such other place as the holder (the “Holder”, whether or not Payee is such
holder) of this note may hereafter designate in writing, in immediately
available funds and in lawful money of the United States of America, the
principal sum of [     ] Dollars ($[     ]) (or
the unpaid balance of all principal advanced against this note, if that amount
is less), together with interest on the unpaid principal balance of this note
from time to time outstanding at the Stated Rate and interest on all past due
amounts, both principal and accrued interest, at the Past Due Rate; provided,
that for the full term of this note the interest rate produced by the aggregate
of all sums paid or agreed to be paid to the Holder of this note for the use,
forbearance or detention of the debt evidenced hereby (including, but not
limited to, all interest on this note at the Stated Rate) shall not exceed the
Ceiling Rate.

     1.     Definitions. Any terms not defined herein shall have the meaning given
to them in the Amended and Restated Credit Agreement dated of even date
herewith among the Maker, the Agent and certain other Lenders (as the same may
be amended or modified the “Credit Agreement”).

     2.     Rates Change Automatically and Without Notice. Without notice to Maker
or any other person or entity and to the full extent allowed by applicable law
from time to time in effect, the Prime Rate and the Ceiling Rate shall each
automatically fluctuate upward and downward as and in the amount by which
Agent’s said prime rate, and such maximum nonusurious rate of interest
permitted by applicable law, respectively, fluctuate.

     3.     Calculation of Interest. Interest shall be computed for the actual
number of days elapsed in a year (up to 365, or 366 in a leap year) deemed to
consist of 360 days, unless the Ceiling Rate would thereby be exceeded, in
which event, to the extent necessary to avoid exceeding the Ceiling Rate,
interest shall be computed on the basis of the actual number of days elapsed in
the applicable calendar year in which it accrued.

     4.     Excess Interest Will be Refunded or Credited. If, for any reason
whatever, the interest paid or received on this note during its full term
produces a rate which exceeds the Ceiling Rate, the Holder of this note shall
refund to the payor or, at the Holder’s option,

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credit against the principal of this note such portion of that interest as
shall be necessary to cause the interest paid on this note to produce a rate
equal to the Ceiling Rate.

     5.     Interest Will be Spread. All sums paid or agreed to be paid to the
Holder of this note for the use, forbearance or detention of the indebtedness
evidenced hereby, to the extent permitted by applicable law and to the extent
necessary to avoid violating applicable usury laws, shall be amortized,
prorated, allocated and spread in equal parts throughout the full term of this
note, so that the interest rate is uniform throughout the full term of this
note.

     6.     Payment Schedule. The principal of this note shall be due and payable
on the Maturity Date. Accrued and unpaid interest shall be due and payable on
each Interest Payment Date. All payments shall be applied first to accrued
interest, the balance to principal.

     7.     Prepayment. Maker may prepay this note only as provided in the Credit
Agreement.

     8.     Revolving Credit. Upon and subject to the terms and conditions of the
Credit Agreement and the other provisions of this note, Maker may borrow, repay
and reborrow against this note at any time unless and until a default (however
designated) or event (an “Event of Potential Default”) which, if not cured
after notice or before the lapse of time (or both) would develop into a default
under this note, the Credit Agreement or any other Credit Documents has
occurred which the Holder has not declared to have been fully cured or waived,
and (except as the Credit Agreement or any of the other Credit Documents may
otherwise provide) there is no limit on the number of advances against this
note so long as the total unpaid principal of this note at any time outstanding
does not exceed the Payee’s Lender Commitment. Interest on the amount of each
advance against this note shall be computed on the amount of the unpaid balance
of that advance from the date it is made until the date it is repaid. If
Maker’s right (if any) to borrow against this note shall ever lapse because of
the occurrence of any default, it shall not be reinstated (or construed from
any course of conduct or otherwise to have been reinstated) unless and until
the Holder shall declare in a signed writing that it has been cured or waived.
The unpaid principal balance of this note at any time shall be the total of all
principal lent against this note to Maker or for Maker’s account less the sum
of all principal payments and permitted prepayments on this note received by
the Holder. Absent manifest error, the Holder’s computer records shall on any
day conclusively evidence the unpaid balance of this note and its advances and
payments history posted up to that day. All loans and advances and all
payments and permitted prepayments made on this note may be (but are not
required to be) endorsed by the Holder on the schedule attached hereto (which
is hereby made a part hereof for all purposes) or otherwise recorded in the
Holder’s computer

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or manual records; provided, that any Holder’s failure to make notation of
(a) any principal advance or accrual of interest shall not cancel, limit or
otherwise affect Maker’s obligations or any Holder’s rights with respect to
that advance or accrual, or (b) any payment or permitted prepayment of
principal or interest shall not cancel, limit or otherwise affect Maker’s
entitlement to credit for that payment as of the date of its receipt by the
Holder. Maker and Payee expressly agree, as expressly allowed by Chapter 346
of the Texas Finance Code, that Chapter 346 (which relates to open-end line of
credit revolving loan accounts) shall not apply to this note or to any loan
evidenced by this note and that neither this note nor any such loan shall be
governed by Chapter 346 or subject to its provisions in any manner whatsoever.

     9.     Credit Agreement. This note has been issued pursuant to the terms of
the Credit Agreement, to which reference is made for all purposes. Advances
against this note by Payee or other Holder hereof shall be governed by the
Credit Agreement. Payee is entitled to the benefits of the Credit Agreement.
As additional security for this note, Maker hereby grants to Payee and all
other present and future Holders an express lien against, security interest in
and contractual right of setoff in and to, all property and any and all
deposits (general or special, time or demand, provisional or final) at any time
held by the Payee or other Holder for any Maker’s credit or account.

     10.     Defaults and Remedies. Time is of the essence. Maker’s failure to
pay any principal or accrued interest owing on this note when due and after
expiration of any applicable period for notice and right to cure such a default
which is specifically provided for in the Credit Agreement or any other
provision of this note, or the occurrence of any default under the Credit
Agreement or any other Credit Documents shall constitute default under this
note, whereupon the Holder may elect to exercise any or all rights, powers and
remedies afforded (a) under the Credit Agreement and all other papers related
to this note and (b) by law, including the right to accelerate the maturity of
this entire note.

     In addition to and cumulative of such rights, the Holder is hereby
authorized at any time and from time to time after any such default, at
Holder’s option, without notice to Maker or any other person or entity (all
rights to any such notice being hereby waived), to set off and apply any and
all of any Maker’s deposits at any time held by the Holder, and any other debt
at any time owing by the Holder to or for the credit or account of any Maker,
against the outstanding balance of this note, in such order and manner as
Holder may elect in its sole discretion.

     The Holder’s right to accelerate this note on account of any late payment
or other default shall not be waived or deemed waived by the Holder by reason
of the Holder’s having previously accepted one or more late payments or by
reason of any Holder’s otherwise not accelerating this note or exercising other
remedies for any default, and no Holder shall ever be obligated or deemed
obligated to notify Maker or any other person

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that Holder is requiring strict compliance with this note or any papers
securing or otherwise relating to it before such Holder may accelerate this
note or exercise any other remedy.

     Nothing in this Section or elsewhere shall be construed as diminishing
Holder’s absolute right to demand payment of all or any part of this note at
any time.

     11.     Legal Costs. If any Holder of this note retains an attorney in
connection with any such default or to collect, enforce or defend this note or
any papers intended to secure or guarantee it in any lawsuit or in any probate,
reorganization, bankruptcy or other proceeding, or if Maker sues any Holder in
connection with this note or any such papers and does not prevail, then Maker
agrees to pay to each such Holder, in addition to principal and interest, all
reasonable costs and expenses incurred by such Holder in trying to collect this
note or in any such suit or proceeding, including reasonable attorneys’ fees.

     12.     Waivers. Except only for any notices which are specifically required
by the Credit Agreement, Maker and any and all co-makers, endorsers, guarantors
and sureties severally waive notice (including, but not limited to, notice of
intent to accelerate and notice of acceleration, notice of protest and notice
of dishonor), demand, presentment for payment, protest, diligence in collecting
and the filing of suit for the purpose of fixing liability and consent that the
time of payment hereof may be extended and re-extended from time to time
without notice to any of them. Each such person agrees that his, her or its
liability on or with respect to this note shall not be affected by any release
of or change in any guaranty or security at any time existing or by any failure
to perfect or maintain perfection of any lien against or security interest in
any such security or the partial or complete unenforceability of any guaranty
or other surety obligation, in each case in whole or in part, with or without
notice and before or after maturity.

     13.     Rate of Return Maintenance Covenant. If at any time after the date of
this note, any Holder determines that (a) any applicable law, rule or
regulation regarding capital adequacy of general applicability has been adopted
or changed, or (b) its interpretation or administration by any governmental
authority, central bank or comparable agency has changed, and determines that
such change or the Holder’s compliance with any request or directive regarding
capital adequacy of general applicability (whether or not having the force of
law) of any such authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on the Holder’s capital as a
consequence of its obligations under this note or any related papers to a level
below that which the Holder could have achieved but for such adoption, change
or compliance (taking into consideration the Holder’s own capital adequacy
policies) by an amount the Holder deems to be material, then Maker promises to
pay from time to time to the order of the Holder such additional amount or
amounts as will compensate the Holder for such reduction. A certificate of any
Holder setting forth the amount or amounts necessary to compensate the Holder
as specified above shall be given to Maker as soon as practicable

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after the Holder has made such determination and shall be conclusive and
binding, absent manifest error. Maker shall pay the Holder the amount shown as
due on any such certificate within 15 days after the Holder gives it. In
preparing such certificate, the Holder may employ such assumptions and make
such allocations of costs and expenses as the Holder in good faith deems
reasonable and may use any reasonable averaging and attribution method.

     14.     Governing Law, Jurisdiction and Venue. This note shall be governed by
and construed in accordance with the laws of the State of Texas and the United
States of America from time to time in effect.

     15.     General Purpose of Loan. Maker warrants and represents to Payee and
all other Holders that all loans evidenced by this note are and will be for
business, commercial, investment or other similar purpose and not primarily for
personal, family, household or agricultural use.

     16.     Participations and Assignments. Payee and each other Holder reserves
the right, exercisable in such Holder’s discretion and without notice to Maker
or any other person, to sell participations, assign interests or both, in all
or any part of this note or the debt evidenced by this note, in accordance with
the Credit Agreement.

     17.     Limitation of Liability. No obligation or liability whatsoever of
Maker which may arise at any time under this promissory note or any obligation
or liability which may be incurred by it pursuant to any other instrument,
transaction or undertaking contemplated hereby shall be personally binding
upon, nor shall resort for the enforcement thereof be had to the private
property of, any of Maker’s trustees or shareholders regardless of whether such
obligation or liability is in the nature of contract, tort or otherwise.

	 	 	 	 	 
	 	 	ARCHSTONE-SMITH OPERATING TRUST
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Name:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	

EXHIBIT C

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SWING LOAN NOTE

	 	 	 
	$100,000,000.00	 	
     , 2003

     FOR VALUE RECEIVED ARCHSTONE-SMITH OPERATING TRUST, a Maryland real estate
investment trust (herein called “Maker”) promises to pay to the order of
JPMORGAN CHASE BANK, a New York banking corporation, at 712 Main Street,
Houston, Texas 77002, or at such other place as the holder (the “Holder”,
whether or not Payee is such holder) of this note may hereafter designate in
writing, in immediately available funds and in lawful money of the United
States of America, the principal sum of One Hundred Million Dollars
($100,000,000.00) (or the unpaid balance of all principal advanced against this
note, if that amount is less), together with interest on the unpaid principal
balance of this note from time to time outstanding at the Stated Rate and
interest on all past due amounts, both principal and accrued interest, at the
Past Due Rate; provided, that for the full term of this note the interest rate
produced by the aggregate of all sums paid or agreed to be paid to the Holder
of this note for the use, forbearance or detention of the debt evidenced hereby
(including, but not limited to, all interest on this note at the Stated Rate)
shall not exceed the Ceiling Rate.

     1.     Definitions. Any terms not defined herein shall have the meaning given
to them in the Amended and Restated Credit Agreement dated of even date
herewith among the Maker, and certain other Lenders (as the same may be amended
or modified the “Credit Agreement”).

     2.     Rates Change Automatically and Without Notice. Without notice to Maker
or any other person or entity and to the full extent allowed by applicable law
from time to time in effect, the Prime Rate and the Ceiling Rate shall each
automatically fluctuate upward and downward as and in the amount by which
Holder’s said prime rate, and such maximum nonusurious rate of interest
permitted by applicable law, respectively, fluctuate.

     3.     Calculation of Interest. Interest shall be computed for the actual
number of days elapsed in a year (up to 365, or 366 in a leap year) deemed to
consist of 360 days, unless the Ceiling Rate would thereby be exceeded, in
which event, to the extent necessary to avoid exceeding the Ceiling Rate,
interest shall be computed on the basis of the actual number of days elapsed in
the applicable calendar year in which it accrued.

     4.     Excess Interest Will be Refunded or Credited. If, for any reason
whatever, the interest paid or received on this note during its full term
produces a rate which exceeds the Ceiling Rate, the Holder of this note shall
refund to the payor or, at the Holder’s option, credit against the principal of
this note such portion of that interest as shall be necessary to cause the
interest paid on this note to produce a rate equal to the Ceiling Rate.

     5.     Interest Will be Spread. All sums paid or agreed to be paid to the
Holder of this note for the use, forbearance or detention of the indebtedness
evidenced hereby, to the extent permitted by applicable law and to the extent
necessary to avoid violating applicable usury laws,

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shall be amortized, prorated, allocated and spread in equal parts
throughout the full term of this note, so that the interest rate is uniform
throughout the full term of this note.

     6.     Payment Schedule. The principal of this note shall be due and payable
on the Revolving Credit Termination Date. Accrued and unpaid interest shall be
due and payable on each Interest Payment Date. All payments shall be applied
first to accrued interest, the balance to principal.

     7.     Prepayment. Maker may prepay this note only as provided in the Credit
Agreement.

     8.     Revolving Credit. Upon and subject to the terms and conditions of the
Credit Agreement and the other provisions of this note, Maker may borrow, repay
and reborrow against this note at any time unless and until a default (however
designated) or event (an “Event of Potential Default”) which, if not cured
after notice or before the lapse of time (or both) would develop into a default
under this note, the Credit Agreement or any other Credit Documents has
occurred which the Holder has not declared to have been fully cured or waived,
and (except as the Credit Agreement or any of the other Credit Documents may
otherwise provide) there is no limit on the number of advances against this
note so long as the total unpaid principal of this note at any time outstanding
does not exceed $100,000,000.00. Interest on the amount of each advance
against this note shall be computed on the amount of the unpaid balance of that
advance from the date it is made until the date it is repaid. If Maker’s right
(if any) to borrow against this note shall ever lapse because of the occurrence
of any default, it shall not be reinstated (or construed from any course of
conduct or otherwise to have been reinstated) unless and until the Holder shall
declare in a signed writing that it has been cured or waived. The unpaid
principal balance of this note at any time shall be the total of all principal
lent against this note to Maker or for Maker’s account less the sum of all
principal payments and permitted prepayments on this note received by the
Holder. Absent manifest error, the Holder’s computer records shall on any day
conclusively evidence the unpaid balance of this note and its advances and
payments history posted up to that day. All loans and advances and all
payments and permitted prepayments made on this note may be (but are not
required to be) endorsed by the Holder on the schedule attached hereto (which
is hereby made a part hereof for all purposes) or otherwise recorded in the
Holder’s computer or manual records; provided, that any Holder’s failure to
make notation of (a) any principal advance or accrual of interest shall not
cancel, limit or otherwise affect Maker’s obligations or any Holder’s rights
with respect to that advance or accrual, or (b) any payment or permitted
prepayment of principal or interest shall not cancel, limit or otherwise affect
Maker’s entitlement to credit for that payment as of the date of its receipt by
the Holder. Maker and Payee expressly agree, as expressly allowed by Chapter
346 of the Texas Finance Code, that Chapter 346 (which relates to open-end line
of credit revolving loan accounts) shall not apply to this note or to any loan
evidenced by this note and that neither this note nor any such loan shall be
governed by Chapter 346 or subject to its provisions in any manner whatsoever.

     9.     Credit Agreement. This note has been issued pursuant to the terms of
the Credit Agreement, to which reference is made for all purposes. Advances
against this note by Payee or other Holder hereof shall be governed by the
Credit Agreement. Payee is entitled to the benefits

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of the Credit Agreement. As additional security for this note, Maker
hereby grants to Payee and all other present and future Holders an express lien
against, security interest in and contractual right of setoff in and to, all
property and any and all deposits (general or special, time or demand,
provisional or final) at any time held by the Payee or other Holder for any
Maker’s credit or account.

     10.     Defaults and Remedies. Time is of the essence. Maker’s failure to
pay any principal or accrued interest owing on this note when due and after
expiration of any applicable period for notice and right to cure such a default
which is specifically provided for in the Credit Agreement or any other
provision of this note, or the occurrence of any default under the Credit
Agreement or any other Credit Documents shall constitute default under this
note, whereupon the Holder may elect to exercise any or all rights, powers and
remedies afforded (a) under the Credit Agreement and all other papers related
to this note and (b) by law, including the right to accelerate the maturity of
this entire note.

     In addition to and cumulative of such rights, the Holder is hereby
authorized at any time and from time to time after any such default, at
Holder’s option, without notice to Maker or any other person or entity (all
rights to any such notice being hereby waived), to set off and apply any and
all of any Maker’s deposits at any time held by the Holder, and any other debt
at any time owing by the Holder to or for the credit or account of any Maker,
against the outstanding balance of this note, in such order and manner as
Holder may elect in its sole discretion.

     The Holder’s right to accelerate this note on account of any late payment
or other default shall not be waived or deemed waived by the Holder by reason
of the Holder’s having previously accepted one or more late payments or by
reason of any Holder’s otherwise not accelerating this note or exercising other
remedies for any default, and no Holder shall ever be obligated or deemed
obligated to notify Maker or any other person that Holder is requiring strict
compliance with this note or any papers securing or otherwise relating to it
before such Holder may accelerate this note or exercise any other remedy.

     Nothing in this Section or elsewhere shall be construed as diminishing
Holder’s absolute right to demand payment of all or any part of this note at
any time.

     11.     Legal Costs. If any Holder of this note retains an attorney in
connection with any such default or to collect, enforce or defend this note or
any papers intended to secure or guarantee it in any lawsuit or in any probate,
reorganization, bankruptcy or other proceeding, or if Maker sues any Holder in
connection with this note or any such papers and does not prevail, then Maker
agrees to pay to each such Holder, in addition to principal and interest, all
reasonable costs and expenses incurred by such Holder in trying to collect this
note or in any such suit or proceeding, including reasonable attorneys’ fees.

     12.     Waivers. Except only for any notices which are specifically required
by the Credit Agreement, Maker and any and all co-makers, endorsers, guarantors
and sureties severally waive notice (including, but not limited to, notice of
intent to accelerate and notice of acceleration, notice of protest and notice
of dishonor), demand, presentment for payment,

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protest, diligence in collecting and the filing of suit for the purpose of
fixing liability and consent that the time of payment hereof may be extended
and re-extended from time to time without notice to any of them. Each such
person agrees that his, her or its liability on or with respect to this note
shall not be affected by any release of or change in any guaranty or security
at any time existing or by any failure to perfect or maintain perfection of any
lien against or security interest in any such security or the partial or
complete unenforceability of any guaranty or other surety obligation, in each
case in whole or in part, with or without notice and before or after maturity.

     13.     Rate of Return Maintenance Covenant. If at any time after the date of
this note, any Holder determines that (a) any applicable law, rule or
regulation regarding capital adequacy of general applicability has been adopted
or changed, or (b) its interpretation or administration by any governmental
authority, central bank or comparable agency has changed, and determines that
such change or the Holder’s compliance with any request or directive regarding
capital adequacy of general applicability (whether or not having the force of
law) of any such authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on the Holder’s capital as a
consequence of its obligations under this note or any related papers to a level
below that which the Holder could have achieved but for such adoption, change
or compliance (taking into consideration the Holder’s own capital adequacy
policies) by an amount the Holder deems to be material, then Maker promises to
pay from time to time to the order of the Holder such additional amount or
amounts as will compensate the Holder for such reduction. A certificate of any
Holder setting forth the amount or amounts necessary to compensate the Holder
as specified above shall be given to Maker as soon as practicable after the
Holder has made such determination and shall be conclusive and binding, absent
manifest error. Maker shall pay the Holder the amount shown as due on any such
certificate within 15 days after the Holder gives it. In preparing such
certificate, the Holder may employ such assumptions and make such allocations
of costs and expenses as the Holder in good faith deems reasonable and may use
any reasonable averaging and attribution method.

     14.     Governing Law, Jurisdiction and Venue. This note shall be governed by
and construed in accordance with the laws of the State of Texas and the United
States of America from time to time in effect.

     15.     General Purpose of Loan. Maker warrants and represents to Payee and
all other Holders that all loans evidenced by this note are and will be for
business, commercial, investment or other similar purpose and not primarily for
personal, family, household or agricultural use.

     16.     Participations and Assignments. Payee and each other Holder reserves
the right, exercisable in such Holder’s discretion and without notice to Maker
or any other person, to sell participations, assign interests or both, in all
or any part of this note or the debt evidenced by this note, in accordance with
the Credit Agreement.

     17.     Limitation of Liability. No obligation or liability whatsoever of
Maker which may arise at any time under this promissory note or any obligation
or liability which may be incurred by it pursuant to any other instrument,
transaction or undertaking contemplated hereby shall be personally binding
upon, nor shall resort for the enforcement thereof be had to the

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private property of, any of Maker’s trustees or shareholders regardless of
whether such obligation or liability is in the nature of contract, tort or
otherwise.

	 	 	 	 	 
	 	 	ARCHSTONE-SMITH OPERATING TRUST
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Name:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	

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MASTER NOTE

Money Market Borrowings

	 	 	 
	$300,000,000.00	 	
     , 2003

     FOR VALUE RECEIVED ARCHSTONE-SMITH OPERATING TRUST, a Maryland real estate
investment trust (herein called “Maker”) promises to pay to the order of            (“Payee”),
at the offices
of JPMorgan Chase Bank, a New York banking
corporation, as “Agent” under the Credit Agreement, at 712 Main Street,
Houston, Texas 77002, or at such other place as the holder (the “Holder”,
whether or not Payee is such holder) of this note may hereafter designate in
writing, in immediately available funds and in lawful money of the United
States of America, the principal sum of Three Hundred Million Dollars
($300,000,000.00) (or the unpaid balance of all principal advanced against this
note, if that amount is less), together with interest on the unpaid principal
balance of this note from time to time outstanding at the Stated Rate for Money
Market Loans and interest on all past due amounts, both principal and accrued
interest, at the Past Due Rate; provided, that for the full term of this note
the interest rate produced by the aggregate of all sums paid or agreed to be
paid to the Holder of this note for the use, forbearance or detention of the
debt evidenced hereby (including, but not limited to, all interest on this note
at the Stated Rate for Money Market Loans) shall not exceed the Ceiling Rate.

     1.     Definitions. Any terms not defined herein shall have the meaning given
to them in the Amended and Restated Credit Agreement dated of even date
herewith among the Maker, the Agent and certain other Lenders (as the same has
been and may be further amended or modified the “Credit Agreement”).

     2.     Rates Change Automatically and Without Notice. Without notice to Maker
or any other person or entity and to the full extent allowed by applicable law
from time to time in effect, the Prime Rate and the Ceiling Rate shall each
automatically fluctuate upward and downward as and in the amount by which
Agent’s said prime rate, and such maximum nonusurious rate of interest
permitted by applicable law, respectively, fluctuate.

     3.     Calculation of Interest. Interest shall be computed for the actual
number of days elapsed in a year (up to 365, or 366 in a leap year) deemed to
consist of 360 days, unless the Ceiling Rate would thereby be exceeded, in
which event, to the extent necessary to avoid exceeding the Ceiling Rate,
interest shall be computed on the basis of the actual number of days elapsed in
the applicable calendar year in which it accrued.

     4.     Excess Interest Will be Refunded or Credited. If, for any reason
whatever, the interest paid or received on this note during its full term
produces a rate which exceeds the Ceiling Rate, the Holder of this note shall
refund to the payor or, at the Holder’s option, credit

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against the principal of this note such portion of that interest as shall
be necessary to cause the interest paid on this note to produce a rate equal to
the Ceiling Rate.

     5.     Interest Will be Spread. All sums paid or agreed to be paid to the
Holder of this note for the use, forbearance or detention of the indebtedness
evidenced hereby, to the extent permitted by applicable law and to the extent
necessary to avoid violating applicable usury laws, shall be amortized,
prorated, allocated and spread in equal parts throughout the full term of this
note, so that the interest rate is uniform throughout the full term of this
note.

     6.     Payment Schedule. The principal of this note shall be due and payable
on the date set forth in each Notice of Money Market Borrowing with respect to
the principal borrowed pursuant to said Notice, and the Maturity Date. Accrued
and unpaid interest shall be due and payable on each Interest Payment Date.
All payments shall be applied first to accrued interest, the balance to
principal.

     7.     Prepayment. Maker may prepay this note only as provided in the Credit
Agreement.

     8.     Revolving Credit. Upon and subject to the terms and conditions of the
Credit Agreement and the other provisions of this note, Maker may borrow, repay
and reborrow against this note at any time unless and until a default (however
designated) or event (an “Event of Potential Default”) which, if not cured
after notice or before the lapse of time (or both) would develop into a default
under this note, the Credit Agreement or any other Credit Documents has
occurred which the Holder has not declared to have been fully cured or waived,
and (except as the Credit Agreement or any of the other Credit Documents may
otherwise provide) there is no limit on the number of advances against this
note so long as the total unpaid principal of this note at any time outstanding
does not exceed $300,000,000.00. Interest on the amount of each advance
against this note shall be computed on the amount of the unpaid balance of that
advance from the date it is made until the date it is repaid. If Maker’s right
(if any) to borrow against this note shall ever lapse because of the occurrence
of any default, it shall not be reinstated (or construed from any course of
conduct or otherwise to have been reinstated) unless and until the Holder shall
declare in a signed writing that it has been cured or waived. The unpaid
principal balance of this note at any time shall be the total of all principal
lent against this note to Maker or for Maker’s account less the sum of all
principal payments and permitted prepayments on this note received by the
Holder. Absent manifest error, the Holder’s computer records shall on any day
conclusively evidence the unpaid balance of this note and its advances and
payments history posted up to that day. All loans and advances and all
payments and permitted prepayments made on this note may be (but are not
required to be) endorsed by the Holder on the schedule attached hereto (which
is hereby made a part hereof for all purposes) or otherwise recorded in the
Holder’s computer or manual records; provided, that any Holder’s failure to
make notation of (a) any principal advance or accrual of interest shall not
cancel, limit or otherwise affect Maker’s obliga-

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tions or any Holder’s rights with respect to that advance or accrual, or
(b) any payment or permitted prepayment of principal or interest shall not
cancel, limit or otherwise affect Maker’s entitlement to credit for that
payment as of the date of its receipt by the Holder. Maker and Payee expressly
agree, as expressly allowed by Chapter 346 of the Texas Finance Code, that
Chapter 346 (which relates to open-end line of credit revolving loan accounts)
shall not apply to this note or to any loan evidenced by this note and that
neither this note nor any such loan shall be governed by Chapter 346 or subject
to its provisions in any manner whatsoever.

     9.     Credit Agreement. This note has been issued pursuant to the terms of
Section 2.8 of the Credit Agreement, to which reference is made for all
purposes. Advances against this note by Payee or other Holder hereof shall be
governed by the Credit Agreement. Payee is entitled to the benefits of the
Credit Agreement. As additional security for this note, Maker hereby grants to
Payee and all other present and future Holders an express lien against,
security interest in and contractual right of setoff in and to, all property
and any and all deposits (general or special, time or demand, provisional or
final) at any time held by the Payee or other Holder for any Maker’s credit or
account.

     10.     Defaults and Remedies. Time is of the essence. Maker’s failure to
pay any principal or accrued interest owing on this note when due and after
expiration of any applicable period for notice and right to cure such a default
which is specifically provided for in the Credit Agreement or any other
provision of this note, or the occurrence of any default under the Credit
Agreement or any other Credit Documents shall constitute default under this
note, whereupon the Holder may elect to exercise any or all rights, powers and
remedies afforded (a) under the Credit Agreement and all other papers related
to this note and (b) by law, including the right to accelerate the maturity of
this entire note.

     In addition to and cumulative of such rights, the Holder is hereby
authorized at any time and from time to time after any such default, at
Holder’s option, without notice to Maker or any other person or entity (all
rights to any such notice being hereby waived), to set off and apply any and
all of any Maker’s deposits at any time held by the Holder, and any other debt
at any time owing by the Holder to or for the credit or account of any Maker,
against the outstanding balance of this note, in such order and manner as
Holder may elect in its sole discretion.

     The Holder’s right to accelerate this note on account of any late payment
or other default shall not be waived or deemed waived by the Holder by reason
of the Holder’s having previously accepted one or more late payments or by
reason of any Holder’s otherwise not accelerating this note or exercising other
remedies for any default, and no Holder shall ever be obligated or deemed
obligated to notify Maker or any other person that Holder is requiring strict
compliance with this note or any papers securing or otherwise relating to it
before such Holder may accelerate this note or exercise any other remedy.

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     Nothing in this Section or elsewhere shall be construed as diminishing
Holder’s absolute right to demand payment of all or any part of this note at
any time.

     11.     Legal Costs. If any Holder of this note retains an attorney in
connection with any such default or to collect, enforce or defend this note or
any papers intended to secure or guarantee it in any lawsuit or in any probate,
reorganization, bankruptcy or other proceeding, or if Maker sues any Holder in
connection with this note or any such papers and does not prevail, then Maker
agrees to pay to each such Holder, in addition to principal and interest, all
reasonable costs and expenses incurred by such Holder in trying to collect this
note or in any such suit or proceeding, including reasonable attorneys’ fees.

     12.     Waivers. Except only for any notices which are specifically required
by the Credit Agreement, Maker and any and all co-makers, endorsers, guarantors
and sureties severally waive notice (including, but not limited to, notice of
intent to accelerate and notice of acceleration, notice of protest and notice
of dishonor), demand, presentment for payment, protest, diligence in collecting
and the filing of suit for the purpose of fixing liability and consent that the
time of payment hereof may be extended and re-extended from time to time
without notice to any of them. Each such person agrees that his, her or its
liability on or with respect to this note shall not be affected by any release
of or change in any guaranty or security at any time existing or by any failure
to perfect or maintain perfection of any lien against or security interest in
any such security or the partial or complete unenforceability of any guaranty
or other surety obligation, in each case in whole or in part, with or without
notice and before or after maturity.

     13.     Rate of Return Maintenance Covenant. If at any time after the date of
this note, any Holder determines that (a) any applicable law, rule or
regulation regarding capital adequacy of general applicability has been adopted
or changed, or (b) its interpretation or administration by any governmental
authority, central bank or comparable agency has changed, and determines that
such change or the Holder’s compliance with any request or directive regarding
capital adequacy of general applicability (whether or not having the force of
law) of any such authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on the Holder’s capital as a
consequence of its obligations under this note or any related papers to a level
below that which the Holder could have achieved but for such adoption, change
or compliance (taking into consideration the Holder’s own capital adequacy
policies) by an amount the Holder deems to be material, then Maker promises to
pay from time to time to the order of the Holder such additional amount or
amounts as will compensate the Holder for such reduction. A certificate of any
Holder setting forth the amount or amounts necessary to compensate the Holder
as specified above shall be given to Maker as soon as practicable after the
Holder has made such determination and shall be conclusive and binding, absent
manifest error. Maker shall pay the Holder the amount shown as due on any such
certificate within 15 days after the Holder gives it. In preparing such
certificate, the Holder may employ such assumptions and make such allocations
of costs and expenses as the Holder in good faith deems reasonable and may use
any reasonable averaging and attribution method.

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     14.     Governing Law, Jurisdiction and Venue. This note shall be governed by
and construed in accordance with the laws of the State of Texas and the United
States of America from time to time in effect.

     15.     General Purpose of Loan. Maker warrants and represents to Payee and
all other Holders that all loans evidenced by this note are and will be for
business, commercial, investment or other similar purpose and not primarily for
personal, family, household or agricultural use.

     16.     Participations and Assignments. Payee and each other Holder reserves
the right, exercisable in such Holder’s discretion and without notice to Maker
or any other person, to sell participations, assign interests or both, in all
or any part of this note or the debt evidenced by this note, in accordance with
the Credit Agreement.

     17.     Limitation of Liability. No obligation or liability whatsoever of
Maker which may arise at any time under this promissory note or any obligation
or liability which may be incurred by it pursuant to any other instrument,
transaction or undertaking contemplated hereby shall be personally binding
upon, nor shall resort for the enforcement thereof be had to the private
property of, any of Maker’s trustees or shareholders regardless of whether such
obligation or liability is in the nature of contract, tort or otherwise.

	 	 	 	 	 
	 	 	ARCHSTONE-SMITH OPERATING TRUST
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Name:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	

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Form of Money Market Quote Request

	 	 	 
	To:	 	
JPMorgan Chase Bank (the “Agent”)
	 	 	 
	From:	 	
Archstone-Smith Operating Trust (the “Borrower”)
	 	 	 
	Re:	 	
Amended and Restated Credit Agreement (the “Credit Agreement”),
dated      , 2003 among the Borrower, the Lenders parties
thereto and the Agent

               We hereby give notice pursuant to Section 2.8 of the Credit Agreement that
we request Money Market Quotes for the following proposed Money Market Loan(s):

     Date of Borrowing:      

	 	 	 	 	 
	Principal Amount	 	Interest Period
	
	 	

	$

               Such Money Market Quotes should offer a Money Market [Margin] [Absolute
Rate]. [The applicable base rate is the Adjusted Eurodollar Interbank Rate].

               The funding of Money Market Loans made in connection with this Money
Market Quote Request [may/may not] be made by Designated Lenders.

               Terms used herein have the meanings assigned to them in the Credit
Agreement.

	 	 	 	 	 	 	 
	 	 	ARCHSTONE-SMITH OPERATING TRUST
	 	 	 	 	 	 	 
	 	 	
By:	 	 	 	 
	 	 	 	 	

	 	 	 	 	Name:	 	 
	 	 	 	 	 	 	

	 	 	 	 	Title:	 	 
	 	 	 	 	 	 	

Amount must be $20,000,000 or a larger multiple of $1,000,000.

Not less than one month (LIBOR Auction) or not less than 30 days (Absolute Rate
Auction), subject to the provisions of the definition of Interest Period.

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EXHIBIT F

Form of Invitation for Money Market Quotes

	 	 	 
	To:	 	
[Name of Lender]
	 	 	 
	RE:	 	
Invitation for Money Market Quotes to Archstone-Smith Operating Trust
(the “Borrower”)

     Pursuant to Section 2.8 of the Amended and Restated Credit Agreement dated
     , 2003 among the Borrower, the Lenders parties thereto and the
undersigned, as Agent, we are pleased on behalf of the Borrower to invite you
to submit Money Market Quotes to the Borrower for the following proposed Money
Market Loan(s):

Date of Borrowing:

	 	 	 	 	 
	Principal Amount	 	Interest Period
	
	 	

	$

     Such Money Market Quotes should offer a Money Market [Margin] [Absolute
Rate]. [The applicable base rate is the Adjusted Eurodollar Interbank Rate.]

     Please respond to this invitation by no later than      A.M. (New
York, New York time) on [date].

	 	 	 	 	 
	 	 	JPMORGAN CHASE BANK,
	 	 	as Agent
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	 	 	     Authorized Officer

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Form of Money Market Quote

	 	 	 
	To:	 	
JPMorgan Chase Bank, as Agent
	 	 	 
	RE:	 	
Money Market Quote to Archstone-Smith Operating Trust (the “Borrower”)

     In response to your invitation on behalf of the Borrower dated
     , 200     , we hereby make the following Money Market Quote on
the following terms:

	1.	 	Quoting Bank:
	 
	2.	 	Person to contact at Quoting Bank:
	 
	3.	 	We hereby offer to make Money Market Loan(s) in the following principal
amounts, for the following Interest Periods and the following rates:

	 	 	 	 	 	 	 	 	 
	Principal	 	Interest	 	Money Market
	Amount	 	Period	 	[Margin] [Absolute Rate]	
	
	 	
	 	

	$
	 
	$

	 	 	[Provided, that the aggregate principal amount of Money Market Loans for
which the above offers may be accepted shall not exceed
$     .]

		
	 	       We understand and agree that the offer(s) set forth above, subject
to the satisfaction of the applicable conditions set forth in the Amended
and Restated Credit Agreement dated
     , 2003 among the
Borrower, the Lenders parties thereto and yourselves, as Agent,
irrevocably obligates us to make the Money Market Loan(s) for which any
offer(s) are accepted, in whole or in part.

	 	 	 	 	 
	 	 	Very truly yours,
	 	 	 	 	 
	 	 	[NAME OF LENDER]
	 	 	 	 	 
	Dated:	 	
By:	 	 
	 	 	 	 	

	 	 	 	 	     Authorized Officer

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Form of Designation Agreement

Dated
               , 200__

     Reference is made to that certain Amended and Restated Credit Agreement
dated
               , 2003 (as amended, supplemented or otherwise modified from
time to time, the “Credit Agreement”) among ARCHSTONE-SMITH OPERATING TRUST,
the Lenders parties thereto, and JPMORGAN CHASE BANK (the “Agent”), as Agent.
Terms defined in the Credit Agreement are used herein with the same meaning.

     [NAME OF DESIGNOR] (the “Designor”), [NAME OF DESIGNEE] (the “Designee”),
the Agent and Borrower agree as follows:

     1.     The Designor hereby designates the Designee, and the Designee hereby
accepts such designation, to have a right to make Money Market Loans pursuant
to Section 2.8 of the Credit Agreement. Any assignment by Designor to Designee
of its rights to make a Money Market Loan pursuant to such Section 2.8 shall be
effective at the time of the funding of such Money Market Loan and not before
such time.

     2.     Except as set forth in Section 7 below, the Designor makes no
representation or warranty and assumes no responsibility pursuant to this
Designation Agreement with respect to (a) any statements, warranties or
representations made in or in connection with any Credit Document or the
execution, legality, validity, enforceability, genuineness, sufficiency or
value of any Credit Document or any other instrument and document furnished
pursuant thereto and (b) the financial condition of the Borrower or the
performance or observance by the Borrower of any of its obligations under any
Credit Document or any other instrument or document furnished pursuant thereto.

     3.     The Designee (a) confirms that it has received a copy of each Credit
Document, together with copies of the financial statements referred to in
Section 5.2 of the Credit Agreement and such other documents and information as
it has deemed appropriate to make its own credit analysis and decision to enter
into this Designation Agreement; (b) agrees that it will independently and
without reliance upon the Agent, the Designor 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 action under
any Credit Document; (c) confirms that it is a Designated Lender; (d) appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers and discretion under any Credit Document as are delegated
to the Agent by the terms thereof, together with such powers and discretion as
are reasonably incidental thereto; and (e) agrees to be bound by each and every
provision of each Credit Document and further agrees that it will perform in
accordance with their terms all of the obligations which by the terms of any
Credit Document are required to be performed by it as a Lender.

     4.     The Designee hereby appoints Designor as Designee’s agent and attorney
in fact, and grants to Designor an irrevocable power of attorney, to receive
payments made for the

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benefit of Designee under the Credit Agreement, to deliver and receive all
communications and notices under the Credit Agreement and other Credit
Documents and to exercise on Designee’s behalf all rights to vote and to grant
and make approvals, waivers, consents or amendments to or under the Credit
Agreement or other Credit Documents. Any document executed by the Designor on
the Designee’s behalf in connection with the Credit Agreement or other Credit
Documents shall be binding on the Designee. The Borrower, the Agent and each
of the Lenders may rely on and are beneficiaries of the preceding provisions.

     5.     Following the execution of this Designation Agreement by the Designor
and its Designee, it will be delivered to the Agent for acceptance by the
Agent. The effective date for this Designation Agreement (the “Effective
Date”) shall be the date of acceptance hereof by the Agent, unless otherwise
specified on the signature page hereto.

     6.     The Agent hereby agrees that it will not institute against any Designee
or join any other Person in instituting against any Designee any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceeding under any
federal or state bankruptcy or similar law, until the later to occur of (i) one
year and one day after the payment in full of the latest maturing commercial
paper note issued by such Designee and (ii) the Revolving Credit Termination
Date.

     7.     The Designor unconditionally agrees to pay or reimburse the Designee
and save the Designee harmless against all liabilities, obligations, losses,
damages, penalties, actions and judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed or asserted
by any of the parties to the Credit Documents against the Designee, in its
capacity as such, in any way relating to or arising out of this Designation
Agreement or any other Credit Documents or any action taken or omitted by the
Designee hereunder or thereunder, INCLUDING THE NEGLIGENCE OF THE DESIGNEE
provided that the Designor shall not be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements if the same results from the Designee’s
gross negligence or willful misconduct.

     8.     As of the Effective Date the Designee shall be a party to the Credit
Agreement with a right (subject to the provisions of Section 2.8(b)) to make
Money Market Loans as a Lender pursuant to Section 2.8 of the Credit Agreement
and the rights and obligations of a Lender related thereto; provided, however,
that the Designee shall not be required to make payments with respect to such
obligations except to the extent of excess cash flow of such Designee which is
not otherwise required to repay obligations of such Designee, which are then
due and payable. Notwithstanding the foregoing, the Designor, as
administrative agent for the Designee, shall be and remain obligated to the
Borrower, the Agent and the Lenders for each and every one of the obligations
of the Designee and its Designor with respect to the Credit Agreement,
including, without limitation, any indemnification obligations under Section
8.5 of the Credit Agreement and any sums otherwise payable to the Borrower by
the Designee.

     9.     This Designation Agreement shall be governed by, and construed in
accordance with, the laws of the State of Texas.

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     10.     This Designation Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Delivery of an executed
counterpart of a signature page to this Designation Agreement by facsimile
transmission shall be effective as delivery of a manually executed counterpart
of this Designation Agreement.

     IN WITNESS WHEREOF, the Designor and the Designee, intending to be legally
bound, have caused this Designation Agreement to be executed by their officers
thereunto duly authorized as of the date first above written.

Effective Date:

                         ,
200     

	 	 	 	 	 
	 	 	[NAME OF DESIGNOR], as Designor
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	

	 	 	 	 	 
	 	 	[NAME OF DESIGNEE], as Designee
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	

	 	 	 	 	 
	 	 	Applicable Lending Office

(and address for notices):
	 	 	 	 	 
	 	 	[Address]

Accepted this _____ day of

______________, 200__

JPMORGAN CHASE BANK, as Agent

	 	 	 	 
	By:	 	 	 
	 	 	

	 
	Name:	 	 	 
	 	 	

	 
	Title:	 	 	 
	 	 	

	 

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FORM OF GUARANTY

     THIS
GUARANTY dated as of
               , 2003 executed and delivered by
each of the undersigned, whether one or more, (all each a “Guarantor” and
collectively, the “Guarantors”), in favor of (a) JPMORGAN CHASE BANK, in its
capacity as Agent (the “Agent”) for the Lenders under that certain Amended and
Restated Credit Agreement dated as of October 30, 2003 by and among
ARCHSTONE-SMITH OPERATING TRUST (the “Borrower”), the financial institutions
party thereto and their assignees in accordance therewith (the “Lenders”), and
the Agent (as the same may be amended, restated, supplemented or otherwise
modified from time to time in accordance with its terms, the “Credit
Agreement”) and (b) the Lenders.

     WHEREAS, pursuant to the Credit Agreement, the Lenders have made available
to the Borrower certain financial accommodations on the terms and conditions
set forth in the Credit Agreement;

     WHEREAS, each Guarantor is a wholly-owned Subsidiary of the Borrower;

     WHEREAS, the Borrower, each Guarantor and the other Subsidiaries of the
Borrower, though separate legal entities, are mutually dependent on each other
in the conduct of their respective businesses as an integrated operation and
have determined it to be in their mutual best interests to obtain financing
from the Agent and the Lenders through their collective efforts;

     WHEREAS, each Guarantor acknowledges that it will receive direct and
indirect benefits from the Agent and the Lenders making such financial
accommodations available to the Borrower under the Credit Agreement and,
accordingly, each Guarantor is willing to guarantee the Borrower’s obligations
to the Agent and the Lenders on the terms and conditions contained herein; and

     WHEREAS, each Guarantor’s execution and delivery of this Guaranty is one
of the conditions precedent to the Agent and the Lenders making, or continuing
to make, such financial accommodations to the Borrower.

     NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by each Guarantor, each Guarantor
agrees as follows:

     Section 1. Guaranty. Each Guarantor hereby absolutely and
unconditionally guaranties the due and punctual payment and performance of all
of the following (collectively referred to as the “Obligations”): (a) all
indebtedness and obligations owing by the Borrower to any of the Lenders or the
Agent under or in connection with the Credit Agreement and any other Credit
Document, including without limitation, the repayment of all principal of the
Loans made by the Lenders to the Borrower under the Credit Agreement and the
payment of all interest, fees, charges, reasonable attorneys fees and other
amounts payable to any Lender or the Agent thereunder or in connection
therewith; (b) any and all extensions, renewals, modifications, amendments or
substitutions of the foregoing; and (c) all expenses, including, without
limitation,

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reasonable attorneys’ fees and disbursements, that are incurred by the
Lenders or the Agent in the enforcement of any of the foregoing or any
obligation of such Guarantor hereunder.

     Section 2. Guaranty of Payment and Not of Collection. This Guaranty is a
guaranty of payment, and not of collection, and a debt of each Guarantor for
its own account. Accordingly, the Lenders and the Agent shall not be obligated
or required before enforcing this Guaranty against any Guarantor: (a) to pursue
any right or remedy the Lenders or the Agent may have against the Borrower, any
other Guarantor or any other Person or commence any suit or other proceeding
against the Borrower, any other Guarantor or any other Person in any court or
other tribunal; (b) to make any claim in a liquidation or bankruptcy of the
Borrower, any other Guarantor or any other Person; or (c) to make demand of the
Borrower, any other Guarantor or any other Person or to enforce or seek to
enforce or realize upon any collateral security held by the Lenders or the
Agent which may secure any of the Obligations. In this connection, each
Guarantor hereby waives the right of such Guarantor to require any holder of
the Obligations to take action against the Borrower as provided by any Legal
Requirement.

     Section 3. Guaranty Absolute. Each Guarantor guarantees that the
Obligations will be paid strictly in accordance with the terms of the documents
evidencing the same, regardless of any Legal Requirement now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of the
Agent or the Lenders with respect thereto. The liability of each Guarantor
under this Guaranty shall be absolute and unconditional in accordance with its
terms and shall remain in full force and effect without regard to, and shall
not be released, suspended, discharged, terminated or otherwise affected by,
any circumstance or occurrence whatsoever, including without limitation, the
following (whether or not such Guarantor consents thereto or has notice
thereof):

     (a)  (i) any change in the amount, interest rate or due date or other term
of any of the Obligations, (ii) any change in the time, place or manner of
payment of all or any portion of the Obligations, (iii) any amendment or waiver
of, or consent to the departure from or other indulgence with respect to, the
Credit Agreement, any other Credit Document, or any other document or
instrument evidencing or relating to any Obligations, or (iv) any waiver,
renewal, extension, addition, or supplement to, or deletion from, or any other
action or inaction under or in respect of, the Credit Agreement, any of the
other Credit Documents, or any other documents, instruments or agreements
relating to the Obligations or any other instrument or agreement referred to
therein or evidencing any Obligations or any assignment or transfer of any of
the foregoing;

     (b)  any lack of validity or enforceability of the Credit Agreement, any of
the other Credit Documents, or any other document, instrument or agreement
referred to therein or evidencing any Obligations or any assignment or
transfer of any of the foregoing;

     (c)  any furnishing to the Agent or the Lenders of any security for the
Obligations, or any sale, exchange, release or surrender of, or realization on,
any collateral security for the Obligations;

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     (d)  any settlement or compromise of any of the Obligations, any security
therefor, or any liability of any other party with respect to the Obligations,
or any subordination of the payment of the Obligations to the payment of any
other liability of the Borrower;

     (e)  any bankruptcy, insolvency, reorganization, composition, adjustment,
dissolution, liquidation or other like proceeding relating to any other
Guarantor, the Borrower or any other Person, or any action taken with respect
to this Guaranty by any trustee or receiver, or by any court, in any such
proceeding;

     (f)  any nonperfection of any security interest or other Lien on any of the
collateral securing any of the Obligations;

     (g)  any act or failure to act by the Borrower or any other Person which
may adversely affect such Guarantor’s subrogation rights, if any, against the
Borrower to recover payments made under this Guaranty;

     (h)  any application of sums paid by the Borrower or any other Person with
respect to the liabilities of the Borrower to the Agent or the Lenders,
regardless of what liabilities of the Borrower remain unpaid;

     (i)  any defect, limitation or insufficiency in the borrowing powers of the
Borrower or in the exercise thereof; or

     (j)  any other circumstance which might otherwise constitute a defense
available to, or a discharge of, any Guarantor hereunder.

     Section 4. Action with Respect to Obligations. The Lenders and the Agent
may, at any time and from time to time, without the consent of, or notice to,
any Guarantor, and without discharging any Guarantor from its obligations
hereunder take any and all actions described in Section 3 and may otherwise:
(a) amend, modify, alter or supplement the terms of any of the Obligations,
including, but not limited to, extending or shortening the time of payment of
any of the Obligations or the interest rate that may accrue on any of the
Obligations; (b) amend, modify, alter or supplement the Credit Agreement or any
other Credit Document; (c) sell, exchange, release or otherwise deal with all,
or any part, of any collateral securing any of the Obligations; (d) release any
Person liable in any manner for the payment or collection of the Obligations;
(e) exercise, or refrain from exercising, any rights against the Borrower or
any other Person (including, without limitation, any other Guarantor); and (f)
apply any sum, by whomsoever paid or however realized, to the Obligations in
such order as the Lenders or the Agent shall elect.

     Section 5. Representations and Warranties. Each Guarantor hereby makes
to the Agent and the Lenders all of the representations and warranties made by
the Borrower with respect to or in any way relating to such Guarantor in the
Credit Agreement and the other Credit Documents, as if the same were set forth
herein in full.

     Section 6. Covenants. Each Guarantor will comply with all covenants which
the Borrower is to cause such Guarantor to comply with under the terms of the
Credit Agreement or

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any other Credit Documents. Guarantor specifically agrees that to the
extent Guaranty Proceeds (as defined in Section 7.3(a) of the Credit Agreement)
are distributed to holders of Public Debt or their respective trustees (as
defined in Section 7.3(a) of the Credit Agreement) pursuant to Section 7.3 of
the Credit Agreement, the Obligations will not be deemed to be reduced by any
such distributions and each Guarantor shall continue to make payments under
this Guaranty until such time as the Obligations have been paid in full (and
the Commitment has been terminated and any LC Exposure reduced to zero), after
taking into account any such distributions of payments hereunder in report of
Indebtedness other than the Obligations.

     Section 7. Waiver. Each Guarantor, to the fullest extent permitted by
applicable law, hereby waives notice of acceptance hereof or any presentment,
demand, protest or notice of any kind, and any other act or thing, or omission
or delay to do any other act or thing, which in any manner or to any extent
might vary the risk of such Guarantor or which otherwise might operate to
discharge such Guarantor from its obligations hereunder.

     Section 8. Inability to Accelerate Loan. If the Agent and/or the Lenders
are prevented from demanding or accelerating payment thereof by reason of any
automatic stay or otherwise, the Agent and/or the Lenders shall be entitled to
receive from each Guarantor, upon demand therefor, the sums which otherwise
would have been due had such demand or acceleration occurred.

     Section 9. Reinstatement of Obligations. Each Guarantor agrees that this
Guaranty shall continue to be effective or be reinstated, as the case may be,
with respect to any Obligations if at any time payment of any such Obligations
is rescinded or otherwise must be restored by the Agent and/or the Lenders upon
the bankruptcy or reorganization of the Borrower or any Guarantor or otherwise.

     Section 10. Subrogation. Until all of the Obligations shall have been
indefeasibly paid in full, no Guarantor shall have any right of subrogation and
each Guarantor hereby waives any right to enforce any remedy which the Agent
and/or the Lenders now have or may hereafter have against the Borrower, and
each Guarantor hereby waives any benefit of, and any right to participate in,
any security or collateral given to the Agent and the Lenders to secure payment
or performance of any of the Obligations.

     Section 11. Payments Free and Clear. All sums payable by each Guarantor
hereunder, whether of principal, interest, fees, expenses, premiums or
otherwise, shall be paid in full, without set-off or counterclaim or any
deduction or withholding whatsoever (including any withholding tax or liability
imposed by any Governmental Authority, or any Legal Requirement promulgated
thereby), and if any Guarantor is required by such Legal Requirement or by such
Governmental Authority to make any such deduction or withholding, such
Guarantor shall pay to the Agent and the Lenders such additional amount as will
result in the receipt by the Agent and the Lenders of the full amount payable
hereunder had such deduction or withholding not occurred or been required.

     Section 12. Set-off. In addition to any rights now or hereafter granted
under applicable law and not by way of limitation of any such rights, each
Lender is hereby authorized by each

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Guarantor, at any time or from time to time, without notice to any
Guarantor or to any other Person, any such notice being hereby expressly
waived, but subject to receipt of Agent’s prior written consent, to set-off and
to appropriate and to apply any and all deposits (general or special,
including, but not limited to, indebtedness evidenced by certificates of
deposit, whether matured or unmatured) and any other indebtedness at any time
held or owing by such Lender or any Affiliate of such Lender, to or for the
credit or the account of each Guarantor against and on account of any of the
Obligations then due and owing after the expiration of any applicable grace
periods. Each Guarantor agrees, to the fullest extent it may effectively do so
under applicable law, that any holder of a participation in a Note, whether or
not acquired pursuant to the applicable provisions of the Credit Agreement, 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 such Guarantor in the amount of such participation.

     Section 13. Subordination. Each Guarantor hereby expressly covenants
and agrees for the benefit of the Agent and the Lenders that all obligations
and liabilities of the Borrower or any other Guarantor to such Guarantor of
whatever description, including without limitation, all intercompany
receivables of such Guarantor from the Borrower or any other Guarantor
(collectively, the “Junior Claims”) shall be subordinate and junior in right of
payment to all Obligations. If an Event of Default shall have occurred and be
continuing, then no Guarantor shall accept any direct or indirect payment (in
cash, property, securities by setoff or otherwise) from the Borrower or any
other Guarantor on account of or in any manner in respect of any Junior Claim
until all of the Obligations have been indefeasibly paid in full.

     Section 14. Avoidance Provisions. It is the intent of each Guarantor, the
Agent and the Lenders that in any Proceeding, such Guarantor’s maximum
obligation hereunder shall equal, but not exceed, the maximum amount which
would not otherwise cause the obligations of such Guarantor hereunder (or any
other obligations of such Guarantor to the Agent and the Lenders) to be
avoidable or unenforceable against such Guarantor in such Proceeding as a
result of applicable law, including without limitation, (a) Section 548 of the
Bankruptcy Code of 1978, as amended (the “Bankruptcy Code”) and (b) any state
fraudulent transfer or fraudulent conveyance act or statute applied in such
Proceeding, whether by virtue of Section 544 of the Bankruptcy Code or
otherwise. The applicable laws under which the possible avoidance or
unenforceability of the obligations of such Guarantor hereunder (or any other
obligations of such Guarantor to the Agent and the Lenders) shall be determined
in any such Proceeding are referred to as the “Avoidance Provisions”.
Accordingly, to the extent that the obligations of any Guarantor hereunder
would otherwise be subject to avoidance under the Avoidance Provisions, the
maximum Obligations for which such Guarantor shall be liable hereunder shall be
reduced to that amount which, as of the time any of the Obligations are deemed
to have been incurred under the Avoidance Provisions, would not cause the
obligations of any Guarantor hereunder (or any other obligations of such
Guarantor to the Agent and the Lenders), to be subject to avoidance under the
Avoidance Provisions. This Section is intended solely to preserve the rights of
the Agent and the Lenders hereunder to the maximum extent that would not cause
the obligations of any Guarantor hereunder to be subject to avoidance under the
Avoidance Provisions, and no Guarantor nor any other Person shall have any
right or claim under this Section as against the Agent and the Lenders that
would not otherwise be available to such Person under the Avoidance Provisions.

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     Section 15. Information. Each Guarantor assumes all responsibility for
being and keeping itself informed of the financial condition of the Borrower,
of the other Guarantors and of all other circumstances bearing upon the risk of
nonpayment of any of the Obligations and the nature, scope and extent of the
risks that such Guarantor assumes and incurs hereunder, and agrees that none of
the Agent or any Lender shall have any duty whatsoever to advise any Guarantor
of information regarding such circumstances or risks.

     Section 16. Governing Law. THIS GUARANTY SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.

     SECTION 17. JURISDICTION, VENUE.

     (a)  EACH GUARANTOR AGREES THAT THE FEDERAL DISTRICT COURT OF THE SOUTHERN
DISTRICT OF TEXAS, HOUSTON DIVISION, OR, AT THE OPTION OF THE AGENT, ANY STATE
COURT LOCATED IN HARRIS COUNTY, TEXAS SHALL HAVE NON-EXCLUSIVE JURISDICTION TO
HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN OR AMONG ANY GUARANTOR, THE
AGENT OR ANY OF THE LENDERS, PERTAINING DIRECTLY OR INDIRECTLY TO THIS GUARANTY
OR ANY OTHER CREDIT DOCUMENT OR TO ANY MATTER ARISING HEREFROM OR THEREFROM OR
ANY COLLATERAL. EACH GUARANTOR EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO
SUCH JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED IN SUCH COURTS. THE
CHOICE OF FORUM SET FORTH IN THIS SECTION SHALL NOT BE DEEMED TO PRECLUDE THE
BRINGING OF ANY ACTION BY THE AGENT OR ANY LENDER OR THE ENFORCEMENT BY THE
AGENT OR ANY LENDER IN ANY OTHER APPROPRIATE JURISDICTION. FURTHER, EACH
GUARANTOR IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE
VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY
SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.

     (b)  THE FOREGOING WAIVERS HAVE BEEN MADE WITH THE ADVICE OF COUNSEL AND
WITH A FULL UNDERSTANDING OF THE LEGAL CONSEQUENCES THEREOF, AND SHALL SURVIVE
THE PAYMENT OF THE OBLIGATIONS AND ALL OTHER AMOUNTS PAYABLE HEREUNDER OR UNDER
THE OTHER CREDIT DOCUMENTS AND THE TERMINATION OF THIS GUARANTY.

     Section 18. Loan Accounts. The Agent may maintain books and accounts
setting forth the amounts of principal, interest and other sums paid and
payable with respect to the Obligations, and in the case of any dispute
relating to any of the outstanding amount, payment or receipt of Obligation or
otherwise, the entries in such account shall be binding upon each Guarantor as
to the outstanding amount of such Obligations and the amounts paid and payable
with respect thereto absent manifest error. The failure of the Agent to
maintain such books and accounts shall not in any way relieve or discharge any
Guarantor of any of its obligations hereunder.

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     Section 19. Waiver of Remedies. No delay or failure on the part of the
Agent or the Lenders in the exercise of any right or remedy it may have against
any Guarantor hereunder or otherwise shall operate as a waiver thereof, and no
single or partial exercise by the Agent or the Lenders of any such right or
remedy shall preclude other or further exercise thereof or the exercise of any
other such right or remedy.

     Section 20. Successors and Assigns. Each reference herein to the Agent
or the Lenders shall be deemed to include such Person’s respective successors
and assigns (including, but not limited to, any holder of the Obligations) in
whose favor the provisions of this Guaranty also shall inure, and each
reference herein to any Guarantor shall be deemed to include the Guarantor’s
successors and assigns, upon whom this Guaranty also shall be binding. The
Lenders and the Agent may, in accordance with the applicable provisions of the
Credit Agreement, assign, transfer or sell any Obligation, or grant or sell
participation in any Obligations, to any Person or entity without the consent
of, or notice to, any Guarantor and without releasing, discharging or modifying
such Guarantor’s obligations hereunder. Each Guarantor hereby consents to the
delivery by the Agent or any Lender to any assignee, transferee or participant
of any financial or other information regarding the Borrower or any Guarantor.
Each Guarantor may not assign or transfer its obligations hereunder to any
Person.

     SECTION 21. JOINT AND SEVERAL OBLIGATIONS. THE OBLIGATIONS OF THE
GUARANTORS HEREUNDER AND UNDER OTHER CREDIT DOCUMENTS SHALL BE JOINT AND
SEVERAL, AND ACCORDINGLY, EACH GUARANTOR CONFIRMS THAT IT IS LIABLE FOR THE
FULL AMOUNT OF THE OBLIGATIONS AND ALL OF THE OBLIGATIONS AND LIABILITIES OF
EACH OF THE OTHER GUARANTORS HEREUNDER AND UNDER OTHER COURT DOCUMENTS.

     Section 22. Amendments. This Guaranty may not be amended except as
provided in the Credit Agreement.

     Section 23. Payments. All payments made by any Guarantor pursuant to
this Guaranty shall be made in Dollars, in immediately available funds to the
Agent at its Lending Office, not later than 12:00 noon, New York, New York time
on the date one (1) Business Day after demand therefor.

     Section 24. Notices. All notices, requests and other communications
hereunder shall be in writing and shall be given as provided in the Loan
Agreement. Each Guarantor’s address for notice is set forth below its
signature hereto.

     Section 25. Severability. In case any provision of this Guaranty shall
be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.

     Section 26. Headings. Section headings used in this Guaranty are for
convenience only and shall not affect the construction of this Guaranty.

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     Section 27. Definitions. (a) For the purposes of this Guaranty:

     “Proceeding” means any of the following: (i) a voluntary or involuntary
case concerning any Guarantor shall be commenced under the Bankruptcy Code or
any other applicable bankruptcy laws; (ii) a custodian (as defined in the
Bankruptcy Code or any other applicable bankruptcy laws) is appointed for, or
takes charge of, all or any substantial part of the property of any Guarantor;
(iii) any other proceeding under any applicable law, domestic or foreign,
relating to bankruptcy, insolvency, reorganization, winding-up or composition
for adjustment of debts, whether now or hereafter in effect, is commenced
relating to any Guarantor; (iv) any Guarantor is adjudicated insolvent or
bankrupt; (v) any order of relief or other order approving any such case or
proceeding is entered by a court of competent jurisdiction; (vi) any Guarantor
makes a general assignment for the benefit of creditors; (vii) any Guarantor
shall fail to pay, or shall state that it is unable to pay, or shall be unable
to pay, its debts generally as they become due; (viii) any Guarantor shall call
a meeting of its creditors with a view to arranging a composition or adjustment
of its debts; (ix) any Guarantor shall by any act or failure to act indicate
its consent to, approval of or acquiescence in any of the foregoing; or (x) any
corporate action shall be taken by any Guarantor for the purpose of effecting
any of the foregoing.

     (b)  Terms not otherwise defined herein are used herein with the respective
meanings given them in the Credit Agreement.

     IN WITNESS WHEREOF, each Guarantor has duly executed and delivered this
Guaranty as of the date and year first written above.

	 	[Guarantor Signature]

	 	Address:

9200 E. Panorama Circle

Suite 400

Englewood, Colorado 80112

Attention: Corporate Finance

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ASSIGNMENT AND ASSUMPTION

     This Assignment and Assumption (the “Assignment and Assumption”) is dated
as of the Effective Date set forth below and is entered into by and between
[Insert name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the
“Assignee”). Capitalized terms used but not defined herein shall have the
meanings given to them in the Credit Agreement identified below (as amended,
the “Credit Agreement”), receipt of a copy of which is hereby acknowledged by
the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached
hereto are hereby agreed to and incorporated herein by reference and made a
part of this Assignment and Assumption as if set forth herein in full.

     For an agreed consideration, the Assignor hereby irrevocably sells and
assigns to the Assignee, and the Assignee hereby irrevocably purchases and
assumes from the Assignor, subject to and in accordance with the Standard Terms
and Conditions and the Credit Agreement, as of the Effective Date inserted by
the Administrative Agent as contemplated below (i) all of the Assignor’s rights
and obligations in its capacity as a Lender under the Credit Agreement and any
other documents or instruments delivered pursuant thereto to the extent related
to the amount and percentage interest identified below of all of such
outstanding rights and obligations of the Assignor under the respective
facilities identified below (including any letters of credit, guarantees, and
swingline loans included in such facilities) and (ii) to the extent permitted
to be assigned under applicable law, all claims, suits, causes of action and
any other right of the Assignor (in its capacity as a Lender) against any
Person, whether known or unknown, arising under or in connection with the
Credit Agreement, any other documents or instruments delivered pursuant thereto
or the loan transactions governed thereby or in any way based on or related to
any of the foregoing, including contract claims, tort claims, malpractice
claims, statutory claims and all other claims at law or in equity related to
the rights and obligations sold and assigned pursuant to clause (i) above (the
rights and obligations sold and assigned pursuant to clauses (i) and (ii) above
being referred to herein collectively as the “Assigned Interest”). Such sale
and assignment is without recourse to the Assignor and, except as expressly
provided in this Assignment and Assumption, without representation or warranty
by the Assignor.

	 	 	 	 	 
	1.	 	
Assignor:	 	 
	 	 	 	 	

	2.	 	
Assignee:	 	 
	 	 	 	 	

	 	 	 	 	[and is an Affiliate/Approved Fund of [identify Lender]1]
	 	 	 	 	 
	3.	 	
Borrower:
	 	Archstone-Smith Operating Trust
	 	 	 	 	 
	4.	 	
Administrative Agent:
	 	JPMorgan Chase Bank, as the administrative agent under the Credit Agreement
	 	 	 	 	 
	5.	 	
Credit Agreement:
	 	[The Amended
and Restated Credit Agreement dated as of
     , 2003 among Archstone-Smith
Operating Trust, the Lenders parties thereto, JPMorgan Chase Bank, as Administrative Agent, and
the other lenders parties thereto]

	1 Select as applicable.

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	6.	 	Assigned Interest:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Aggregate Amount of	 	Amount of	 	 	 	 
	 	 	Commitment/Loans	 	Commitment/Loans	 	Percentage Assigned of
	Facility Assigned2	 	for all Lenders	 	Assigned	 	Commitment/Loans3
	
	 	
	 	
	 	

	 	 	 	
$	 	 	$	 	 	 	 	%	 
	 	 	 	
$	 	 	$	 	 	 	 	%	 
	 	 	 	
$	 	 	$	 	 	 	 	%	 

Effective
Date:               ,
20      [TO BE INSERTED BY ADMINISTRATIVE
AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE
REGISTER THEREFOR.]

The terms set forth in this Assignment and Assumption are hereby agreed to:

	 	 	 	 	 
	 	 	ASSIGNOR
	 	 	 	 	 
	 	 	[NAME OF ASSIGNOR]
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	

	 	 	
Title:	 
	 	 	 	 	 
	 	 	ASSIGNEE
	 	 	 	 	 
	 	 	[NAME OF ASSIGNEE]
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	

	 	 	
Title:	 

	2 Fill in the appropriate terminology for the types of facilities under the
Credit Agreement that are being assigned under this Assignment (e.g. “Revolving
Commitment,” “Tranche A Commitment,” “Tranche B Commitment,” etc.)
	 
	3 Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of
all Lenders thereunder.

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[Consented to and]4 Accepted:

JPMORGAN CHASE BANK, as

   Administrative Agent

	 	 	 
	By	 	 
	 	

	 	Title:	 

[Consented to:]5

[NAME OF RELEVANT PARTY]

	 	 	 
	By	 	 
	 	

	 	Title:	 

	4 To be added only if the consent of the Administrative Agent is required by
the terms of the Credit Agreement.
	 
	5 To be added only if the consent of the Borrower and/or other parties (e.g.
Swingline Lender, Issuing Bank) is required by the terms of the Credit
Agreement.

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ANNEX 1

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

          1. Representations and Warranties.

          1.1 Assignor. The Assignor (a) represents and warrants that (i) it is
the legal and beneficial owner of the Assigned Interest, (ii) the Assigned
Interest is free and clear of any lien, encumbrance or other adverse claim and
(iii) it has full power and authority, and has taken all action necessary, to
execute and deliver this Assignment and Assumption and to consummate the
transactions contemplated hereby; and (b) assumes no responsibility with
respect to (i) any statements, warranties or representations made in or in
connection with the Credit Agreement or any other Loan Document, (ii) the
execution, legality, validity, enforceability, genuineness, sufficiency or
value of the Loan Documents or any collateral thereunder, (iii) the financial
condition of the Borrower, any of its Subsidiaries or Affiliates or any other
Person obligated in respect of any Loan Document or (iv) the performance or
observance by the Borrower, any of its Subsidiaries or Affiliates or any other
Person of any of their respective obligations under any Loan Document.

          1.2. Assignee. The Assignee (a) represents and warrants that (i) it has
full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby and to become a Lender under the Credit Agreement, (ii) it
satisfies the requirements, if any, specified in the Credit Agreement that are
required to be satisfied by it in order to acquire the Assigned Interest and
become a Lender, (iii) from and after the Effective Date, it shall be bound by
the provisions of the Credit Agreement as a Lender thereunder and, to the
extent of the Assigned Interest, shall have the obligations of a Lender
thereunder, (iv) it has received a copy of the Credit Agreement, together with
copies of the most recent financial statements delivered pursuant to Section
5.2 thereof, as applicable, 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 Assumption and to purchase the Assigned Interest on the
basis of which it has made such analysis and decision independently and without
reliance on the Administrative Agent or any other Lender, and (v) if it is a
Foreign Lender, attached to the Assignment and Assumption is any documentation
required to be delivered by it pursuant to the terms of the Credit Agreement,
duly completed and executed by the Assignee; and (b) agrees that (i) it will,
independently and without reliance on the Administrative Agent, the Assignor 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 action under the Loan Documents, and (ii) it will perform in
accordance with their terms all of the obligations which by the terms of the
Loan Documents are required to be performed by it as a Lender.

          2. Payments. From and after the Effective Date, the Administrative Agent
shall make all payments in respect of the Assigned Interest (including payments
of principal, interest, fees and other amounts) to the Assignor for amounts
which have accrued to but excluding the Effective Date and to the Assignee for
amounts which have accrued from and after the Effective Date.

          3. General Provisions. This Assignment and Assumption shall be binding
upon, and inure to the benefit of, the parties hereto and their respective
successors and assigns. This Assignment and Assumption may be executed in any
number of counterparts, which together shall constitute one instrument.
Delivery of an executed counterpart of a signature page of this Assignment and
Assumption by telecopy shall be effective as delivery of a manually executed
counterpart of this Assignment and Assumption. This Assignment and Assumption
shall be governed by, and construed in accordance with, the law of the State of
Texas.

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GUARANTY OF COLLECTION

     THIS
GUARANTY (this “Guaranty”), dated as of
               
 is made by
                    
(the “Guarantor”), in favor of (a) JPMorgan Chase Bank,
in its capacity as Administrative Agent (the “Agent”) for the Lenders under
that certain Amended and Restated Credit Agreement dated as of October 30, 2003
by and among Archstone-Smith Operating Trust (the “Borrower”), the financial
institutions party thereto and their assignees in accordance therewith (the
“Lenders”), and the Agent (as the same may be amended, restated, supplemented,
or otherwise modified from time to time in accordance with its terms, the
“Credit Agreement”) and (b) the Lenders.

     PRELIMINARY STATEMENT. Capitalized terms not otherwise defined herein
shall have the respective meanings assigned thereto under the Credit Agreement.
The Guarantor is a beneficial common unitholder of the Borrower and therefore
the Guarantor has determined that the making of the Loan by the Lenders
benefited, directly or indirectly, the Guarantor. If other beneficial common
unitholders of the Borrower have entered into similar guaranty agreements (the
“Other Guarantees”) with the Agent as this Guaranty, they shall be referred to
in this Guaranty as the “Other Guarantors.”

     NOW, THEREFORE, in consideration of the premises, the Guarantor hereby
agrees as follows:

     SECTION 1. Guaranty. This guaranty constitutes a limited guaranty of
collection. The Guarantor hereby guarantees the punctual collection when due,
on a several basis, whether at stated maturity, by demand, acceleration or
otherwise, of (a) that portion of the principal and interest outstanding on the
indebtedness of the Borrower under the Credit Agreement that remains
outstanding equal to $       [THIS NUMBER IS INTENDED TO BE THE ACTUAL
AMOUNT OF GUARANTEE] less such amounts as the Agent has collected upon
exercising all rights, assertion of all claims and demands and enforcement of
all remedies available to it (other than this Guaranty and the Other
Guarantees) under the Credit Documents, and (b) reasonable attorney’s fees and
all costs and expenses incurred in enforcing any rights under this Guaranty
(such obligations being the “Obligations”). An objective of this guaranty is
that the Obligation shall be a “recourse liability” as defined in Treasury
Regulation §1.752-1(a)(1), and the Guarantor shall bear the economic risk of
loss with respect to such portion of the liabilities as is equal to the
Obligations within the meaning of Treasury Regulation §1.752-2.

     SECTION 2. Guaranty Absolute. The Guarantor hereby guarantees that the
Obligations will be paid strictly in accordance with their terms, regardless of
any law, regulation or order now or hereafter in effect in any jurisdiction
affecting any of such terms or the rights of the Agent with respect thereto.
The liability of the Guarantor under this Guaranty shall be absolute and
unconditional irrespective of:

	 	(a)	 	Any lack of validity or enforceability of the Credit
Agreement or any other Credit Documents or agreement relating
thereto or executed in connection therewith;
	 
	 	(b)	 	Any change in the time, manner or place of payment of, or in
any other term of, all or any of the Obligations or any other
amendment or waiver of or any consent

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	 	 	 	to any departure from the Credit Agreement, any other Credit
Documents or any other documents or agreement relating thereto or
executed in connection therewith;
	 
	 	(c)	 	Any exchange, release or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to
departure from any guaranty, for all or any of the Obligations; or
	 
	 	(d)	 	Any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Borrower, any
subsidiary of Borrower or any other person that is a party to the
Credit Agreement, any other Credit Documents or any other document
or agreement related thereto or executed in connection therewith
(including any guarantor) in respect to the Obligations.

This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Obligations is rescinded or must
otherwise be returned by the Agent or any Lender upon the insolvency,
bankruptcy or reorganization of the Borrower or Guarantor or otherwise, all as
though such payment had not been made. The obligations of the Guarantor under
this Guaranty shall not be subject to reduction, termination or other
impairment by reason of any setoff, recoupment, counterclaim or defense or for
any other reason. This Guaranty is to be in addition to and is not to
prejudice or be prejudiced by any other securities or guaranties (including any
guaranty signed by the Guarantor) which the Agent may now or hereafter hold
from or on account of the Borrower and is to be binding on the Guarantor as a
continuing guaranty notwithstanding any payments from time to time made to the
Agent or any settlement of account or disability or incapacity affecting the
Guarantor or any other thing whatsoever.

     SECTION 3. Representations and Warranties. Guarantor hereby represents
and warrants that it has the requisite power and authority to execute and
deliver and to carry out this Guaranty and the transactions contemplated
herein; and to perform its obligations hereunder. This Guaranty has been duly
and validly executed and delivered by the Guarantor and constitutes a valid and
legally binding agreement of the Guarantor, enforceable in accordance with its
terms.

     SECTION 4. Waiver. The Guarantor waives any notice with respect to any of
the Obligations and this Guaranty (it being the understanding of the Agent and
the Guarantor that this Guaranty is a guaranty of collection and not of
payment).

     SECTION 5. No Subrogation. The Guarantor will not exercise any rights
which it may acquire by way of subrogation under this Guaranty or in respect of
any security for the Obligations, by any payment made hereunder or otherwise.

     SECTION 6. Amendments, Etc. No amendment or waiver of any provision of
this Guaranty nor consent to any departure by the Guarantor herefrom, shall be
effective unless the same is in writing and signed by the Agent and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.

     SECTION 7. Notices. Except as otherwise expressly provided herein, all
notices and other communications provided for hereunder shall be in writing or
by facsimile, telegraph or

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cable and mailed or sent or delivered as to each party hereto at the
address for notices set forth under its name on the signature page hereof or,
in the case of each party, at such other address as shall be designated by such
party in a written notice to all other parties. All such notices and other
communications shall be effective when received, and in the case of notice by
facsimile, telegraph or cable, when sent, and upon receipt of an answer back,
in each case addressed as set forth above.

     SECTION 8. No Waiver; Cumulative Remedies. No failure on the part of the
Agent or any Lender to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof or
the exercise of any other right. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law.

     SECTION 9. Absolute and Continuing Guaranty. This Guaranty is an absolute
and continuing guaranty and shall (a) remain in full force and effect until
full payment of the Obligations or all amounts payable under this Guaranty, (b)
be binding upon the Guarantor and its successors and assigns, and (c) inure to
the benefit of the Agent and its successors and assigns.

     SECTION 10. Savings Clause. Nothing herein is intended to contract for,
take, reserve, charge or receive interest or other consideration for the use,
forbearance or detention of money at a rate in excess of the highest rate
permitted by applicable laws (“Highest Lawful Rate”) nor shall the Guarantor be
required to pay unearned interest. If any amount payable by the Guarantor
hereunder is deemed to constitute unearned interest or if the Agent shall
receive from the Guarantor any monies that are deemed to constitute interest at
a rate in excess of the Highest Lawful Rate, then (a) the amount of interest
which would otherwise be payable under this Guaranty shall be reduced to the
amount allowed under applicable law, and (b) any unearned interest paid by the
Guarantor or any interest paid by the Guarantor in excess of the Highest Lawful
Rate shall, at the option of the Agent, be either refunded to the Guarantor or
credited against the amounts payable by the Guarantor hereunder, in such order
as the Agent shall determine.

     SECTION 11. Governing Law. This Guaranty shall be deemed to be executed
by the parties hereto under the laws of the State of Texas, and shall be
construed in accordance with the laws of Texas and applicable federal law.

     SECTION 12. Waiver of Suretyship Rights. By signing this Guaranty,
Guarantor WAIVES each and every right to which it may be entitled by virtue of
any suretyship law, including any rights it may have pursuant to Rule 31 of the
Texas Rules of Civil Procedure, §17.001 of the Texas Civil Practice and
Remedies Code and Chapter 34 of the Texas Business and Commerce Code, as the
same may be amended from time to time.

     SECTION 13. Release of Claims. Guarantor hereby releases, discharges and
acquits forever Agent, Lenders and their respective officers, directors,
trustees, agents, employees and counsel (in each case, past, present or future)
from any and all Claims existing as of the date hereof (or the date of actual
execution hereof by Guarantor, if later). As used herein, the term “Claim”
shall mean any and all liabilities, claims, defenses, demands, actions, causes
of action,

EXHIBIT K

Page 3 of 4

 

Table of Contents

judgments, deficiencies, interest, liens, costs or expenses (including
court costs, penalties, attorneys’ fees and disbursements, and amounts paid in
settlement) of any kind and character whatsoever, including claims for usury,
breach of contract, breach of commitment, negligent misrepresentation or
failure to act in good faith, in each case whether now known or unknown,
suspected or unsuspected, asserted or unasserted or primary or contingent, and
whether arising out of written documents, unwritten undertakings, course of
conduct, tort, violations of laws or regulations or otherwise. To the maximum
extent permitted by applicable law, Guarantor hereby waives all rights,
remedies, claims and defenses based upon or related to Sections 51.003, 51.004
and 51.005 of the Texas Property Code, to the extent the same pertain or may
pertain to any enforcement of this Guaranty.

     IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered as of the date first above written.

	 	 	 	 	 
	 	 	[Name of Guarantor]
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	

	 	 	
Name:	 	 
	 	 	 	

	 	 	
Title:	 	 
	 	 	 	

	 	 	 	 	 
	 	 	[Address of Guarantor]

EXHIBIT K

Page 4 of 4Exhibit
10.1

 

EXECUTION COPY

 

 

THE BOEING COMPANY

 

364-DAY

CREDIT AGREEMENT

 

among

 

THE BOEING COMPANY

for itself and on behalf of its Subsidiaries,

as a Borrower

 

THE LENDERS PARTY
HERETO

 

CITIBANK, N.A.,

as Administrative Agent

 

JPMORGAN CHASE
BANK,

as Syndication Agent

 

and

 

CITIGROUP GLOBAL
MARKETS INC.

and

J.P.MORGAN SECURITIES INC.,

as Joint Lead Arrangers and Joint Book Managers

dated as of November 21, 2003

 

 

TABLE OF CONTENTS

 

	
  Article and Section

  	
   

  
	
   

  	
   

  
	
  ARTICLE 1 DEFINITIONS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.1

  	
  Definitions

  	
   

  
	
   

  	
  1.2

  	
  Use of Defined Terms; References

  	
   

  
	
   

  	
  1.3

  	
  Accounting
  Terms

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 2 AMOUNTS AND TERMS OF THE ADVANCES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.1

  	
  Committed Advances

  	
   

  
	
   

  	
  2.2

  	
  Making Committed Advances

  	
   

  
	
   

  	
  2.3

  	
  Conversion to Term Loans, Repayment

  	
   

  
	
   

  	
  2.4

  	
  Interest Rate on Committed Advances

  	
   

  
	
   

  	
  2.5

  	
  Bid
  Advances

  	
   

  
	
   

  	
  2.6

  	
  Lender Assignment or Sale

  	
   

  
	
   

  	
  2.7

  	
  Fees

  	
   

  
	
   

  	
  2.8

  	
  Reduction of the Commitments

  	
   

  
	
   

  	
  2.9

  	
  Additional Interest on Eurodollar Rate
  Committed Advances

  	
   

  
	
   

  	
  2.10

  	
  Eurodollar Interest Rate Determination

  	
   

  
	
   

  	
  2.11

  	
  Voluntary Conversion of Committed Advances

  	
   

  
	
   

  	
  2.12

  	
  Prepayments

  	
   

  
	
   

  	
  2.13

  	
  Increases in Costs

  	
   

  
	
   

  	
  2.14

  	
  Taxes

  	
   

  
	
   

  	
  2.15

  	
  Illegality

  	
   

  
	
   

  	
  2.16

  	
  Payments and Computations

  	
   

  
	
   

  	
  2.17

  	
  Sharing of Payments, Etc.

  	
   

  
	
   

  	
  2.18

  	
  Evidence
  of Debt

  	
   

  
	
   

  	
  2.19

  	
  Alteration of Commitments and Addition of
  Lenders

  	
   

  
	
   

  	
  2.20

  	
  Assignments; Sales of Participations and
  Other Interests in Advances

  	
   

  
	
   

  	
  2.21

  	
  Extension of Termination Date

  	
   

  
	
   

  	
  2.22

  	
  Subsidiary Borrowers

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 3 REPRESENTATIONS AND WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.1

  	
  Representations and Warranties by the
  Borrowers

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 4 COVENANTS OF TBC

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.1

  	
  Affirmative Covenants of TBC

  	
   

  
	
   

  	
  4.2

  	
  General Negative Covenants of TBC

  	
   

  
	
   

  	
  4.3

  	
  Financial Statement Terms

  	
   

  
	
   

  	
  4.4

  	
  Waivers of Covenants

  	
   

  

 

i

 

	
  ARTICLE 5 CONDITIONS PRECEDENT TO
  BORROWINGS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.1

  	
  Conditions Precedent to the Initial
  Borrowing of TBC

  	
   

  
	
   

  	
  5.2

  	
  Conditions Precedent to Each Committed
  Borrowing of TBC

  	
   

  
	
   

  	
  5.3

  	
  Conditions Precedent to Each Bid Borrowing
  of TBC

  	
   

  
	
   

  	
  5.4

  	
  Conditions Precedent to the Initial
  Borrowing of a Subsidiary Borrower

  	
   

  
	
   

  	
  5.5

  	
  Conditions Precedent to Each Committed
  Borrowing of a Subsidiary Borrower

  	
   

  
	
   

  	
  5.6

  	
  Conditions Precedent to Each Bid Borrowing
  of a Subsidiary Borrower

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 6 EVENTS OF DEFAULT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.1

  	
  Events
  of Default

  	
   

  
	
   

  	
  6.2

  	
  Lenders’ Rights upon Borrower Default

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 7 THE AGENT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.1

  	
  Authorization and Action

  	
   

  
	
   

  	
  7.2

  	
  Agent’s Reliance, Etc.

  	
   

  
	
   

  	
  7.3

  	
  Citibank, N.A. and its Affiliates

  	
   

  
	
   

  	
  7.4

  	
  Lender Credit Decision

  	
   

  
	
   

  	
  7.5

  	
  Indemnification

  	
   

  
	
   

  	
  7.6

  	
  Successor
  Agent

  	
   

  
	
   

  	
  7.7

  	
  Certain Obligations May Be Performed by
  Affiliates

  	
   

  
	
   

  	
  7.8

  	
  Other
  Agents

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 8 MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.1

  	
  Modification, Consents and Waivers

  	
   

  
	
   

  	
  8.2

  	
  Notices

  	
   

  
	
   

  	
  8.3

  	
  Costs, Expenses and Taxes.

  	
   

  
	
   

  	
  8.4

  	
  Binding
  Effect

  	
   

  
	
   

  	
  8.5

  	
  Severability

  	
   

  
	
   

  	
  8.6

  	
  Governing
  Law

  	
   

  
	
   

  	
  8.7

  	
  Headings

  	
   

  
	
   

  	
  8.8

  	
  Execution in Counterparts

  	
   

  
	
   

  	
  8.9

  	
  Right
  of Set-Off

  	
   

  
	
   

  	
  8.10

  	
  Confidentiality

  	
   

  
	
   

  	
  8.11

  	
  Agreement in Effect

  	
   

  

 

	
   

  	
  Exhibit A-1

  	
   

  	
  -

  	
   

  	
  Committed Note

  
	
   

  	
  Exhibit A-2

  	
   

  	
  -

  	
   

  	
  Bid Note

  
	
   

  	
  Exhibit B-1

  	
   

  	
  -

  	
   

  	
  Notice of Committed Borrowing

  
	
   

  	
  Exhibit B-2

  	
   

  	
  -

  	
   

  	
  Notice of Bid Borrowing

  
	
   

  	
  Exhibit C

  	
   

  	
  -

  	
   

  	
  Request for Alteration

  
	
   

  	
  Exhibit D

  	
   

  	
  -

  	
   

  	
  Borrower Subsidiary Letter

  
	
   

  	
  Exhibit E  

  	
   

  	
  -

  	
   

  	
  Extension Request

  
	
   

  	
  Exhibit F

  	
   

  	
  -

  	
   

  	
  Continuation Notice

  
	
   

  	
  Exhibit G

  	
   

  	
  -

  	
   

  	
  Opinion of Counsel of the Company

  
	
   

  	
  Exhibit H

  	
   

  	
  -

  	
   

  	
  Opinion of Counsel for Agent

  

 

ii

 

	
   

  	
  Exhibit I

  	
   

  	
  -

  	
   

  	
  Opinion of in-house counsel to Subsidiary
  Borrower

  
	
   

  	
  Exhibit J

  	
   

  	
  -

  	
   

  	
  Guaranty of TBC

  
	
   

  	
  Exhibit K

  	
   

  	
  -

  	
   

  	
  Opinion of Counsel to TBC

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Schedule I

  	
   

  	
  -

  	
   

  	
  Commitments

  

 

iii

 

CREDIT AGREEMENT

 

Dated as of
November 21, 2003

 

THE BOEING COMPANY, a Delaware corporation (“TBC”
or the “Company”),
for itself and on behalf of the other BORROWERS (as defined below), the LENDERS
(as defined below), CITIGROUP GLOBAL MARKETS INC. and J.P.MORGAN SECURITIES
INC., as joint lead arrangers and joint book managers, JPMORGAN CHASE BANK, as
syndication agent, and CITIBANK, N.A., in its capacity as administrative agent
for the Lenders (in such capacity, the “Agent”), agree as follows:

 

ARTICLE 1

Definitions

 

1.1                               Definitions.  As used
in this Agreement, the following terms have the respective meanings set out
below:

 

“2002 Credit Agreement” means
the Bank Credit Agreement, dated as of November 23, 2001, as amended and
restated as of November 22, 2002, by and among TBC, Citibank, N.A., as
administrative agent, and certain other banks as lenders.

 

“Advance” means a Committed
Advance or a Bid Advance.

 

“Agent” means Citibank, N.A.
acting in its capacity as administrative agent for the Lenders, or any
successor administrative agent appointed pursuant to Section 7.6.

 

“Agent’s Account” means the
account of the Agent maintained by the Agent with Citibank, N.A., at its office
at 388 Greenwich Street, New York, New York 10013, Account 36852248,
Attention:  Bank Loan Syndications.

 

“Affiliate” means, as to any
Person, any other Person that, directly or indirectly, controls, is controlled
by or is under common control with such Person or is a director or officer of
such Person.  (For purposes of this
definition, the term “controls”, “controlling”, “controlled by” and “under
common control with” mean, with respect to a Person, the possession, direct or
indirect, of the power to vote 5% or more of the Voting Stock of such Person or
to direct or cause the direction of the management and policies of such Person,
whether through the ownership of Voting Stock, by contract, or otherwise.)

 

“Agreement” means this
agreement, as it may be amended or otherwise modified from time to time, and
any written additions or supplements hereto.

 

“Applicable Lending Office”
means, with respect to each Lender, such Lender’s Domestic Lending Office, in
the case of a Base Rate Advance, and such Lender’s Eurodollar Lending Office,
in the case of a Eurodollar Rate Advance, and, in the case of a Bid Advance,
the office of such Lender specified by such Lender in a notice to the Agent as
its Applicable Lending Office with respect to such Bid Advance.

 

“Applicable Margin” means,

 

(i)                                     with respect to
Base Rate Advances, 0% per annum; and

 

 

(ii)                                  with respect to
Eurodollar Rate Advances for any date, a fluctuating per annum rate equal to
the then-applicable rate set forth in the pricing grid below, depending upon
the rating of the long-term senior unsecured debt of TBC then in effect:

 

	
  Level

  	
   

  	
  Public
  Debt Rating: S&P and Moody’s

  	
   

  	
  Applicable

  Margin Through

  the Termination

  Date

  	
   

  	
  Applicable

  Margin After the

  Termination

  Date

  	
   

  
	
  Level I

  	
   

  	
  A+ by S&P or A1 by
  Moody’s or above

  	
   

  	
  0.100

  	
  %

  	
  0.500

  	
  %

  
	
  Level II

  	
   

  	
  less than Level I  but at least A by S&P or A2 by Moody’s

  	
   

  	
  0.240

  	
  %

  	
  0.650

  	
  %

  
	
  Level III

  	
   

  	
  less than Level II  but at least A- by S&P or A3 by
  Moody’s

  	
   

  	
  0.280

  	
  %

  	
  0.750

  	
  %

  
	
  Level IV

  	
   

  	
  less than Level
  III  but at least BBB+ by S&P or
  Baa1 by Moody’s

  	
   

  	
  0.350

  	
  %

  	
  1.000

  	
  %

  
	
  Level V

  	
   

  	
  less than Level IV

  	
   

  	
  0.475

  	
  %

  	
  1.375

  	
  %

  

 

provided,
however, that if the ratings from S&P and Moody’s fall within
different levels, then the Applicable Margin shall be based on the higher of
the two ratings except that, if the lower of such ratings is more than one
level below the higher of such ratings, the Applicable Margin shall be
determined based on the level above the lower of such ratings, and

 

provided
further that if, at any time, no rating is available from S&P and
Moody’s or any other nationally recognized statistical rating organization
designated by TBC and approved in writing by the Majority Lenders, the
Applicable Margin for each Interest Period or each other period commencing
during the thirty days following such ratings becoming unavailable shall be the
Applicable Margin in effect immediately prior to such ratings becoming
unavailable.  Thereafter, the rating to
be used until ratings from S&P and Moody’s become available shall be as
agreed between TBC and the Majority Lenders, and TBC and the Majority Lenders
shall use good faith efforts to reach such agreement within such thirty-day
period, provided, however, that if no such agreement is reached
within such thirty-day period the Applicable Margin thereafter, until such
agreement is reached, shall be (a) if any such rating has become unavailable as
a result of S&P or Moody’s ceasing its business as a rating agency, the
Applicable Margin in effect immediately prior to such cessation or (b)
otherwise, the Applicable Margin as set forth under Level V above.

 

“Applicable Percentage” means,
for any date, a fluctuating per annum rate equal to the then-applicable rate
set forth in the pricing grid below, depending
upon the rating of the long-term senior unsecured debt of TBC then in effect:

 

	
  Level

  	
   

  	
  Public
  Debt Rating: S&P and Moody’s

  	
   

  	
  Applicable

  Percentage

  	
   

  
	
  Level I

  	
   

  	
  A+ by S&P or A1 by
  Moody’s or above

  	
   

  	
  0.050

  	
  %

  
	
  Level II

  	
   

  	
  less than Level I  but at least A by S&P or A2 by Moody’s

  	
   

  	
  0.060

  	
  %

  
	
  Level III

  	
   

  	
  less than Level II  but at least A- by S&P or A3 by
  Moody’s

  	
   

  	
  0.070

  	
  %

  
	
  Level IV

  	
   

  	
  less than Level
  III  but at least BBB+ by S&P or
  Baa1 by Moody’s

  	
   

  	
  0.100

  	
  %

  
	
  Level V

  	
   

  	
  less than Level IV

  	
   

  	
  0.125

  	
  %

  

 

2

 

provided,
however, that if the ratings from S&P and Moody’s fall within
different levels, then the Applicable Percentage shall be based on the higher
of the two ratings except that, if the lower of such ratings is more than one
level below the higher of such ratings, the Applicable Percentage shall be
determined based on the level above the lower of such ratings, and

 

provided
further that if, at any time, no rating is available from S&P and
Moody’s or any other nationally recognized statistical rating organization
designated by TBC and approved in writing by the Majority Lenders, the
Applicable Percentage for each period commencing during the thirty days
following such ratings becoming unavailable shall be the Applicable Percentage
in effect immediately prior to such ratings becoming unavailable.  Thereafter, the rating to be used until
ratings from S&P and Moody’s become available shall be as agreed between
TBC and the Majority Lenders, and TBC and the Majority Lenders shall use good faith
efforts to reach such agreement within such thirty-day period, provided,
however, that if no such agreement is reached within such thirty-day
period the Applicable Percentage thereafter, until such agreement is reached,
shall be (a) if any such rating has become unavailable as a result of S&P
or Moody’s ceasing its business as a rating agency, the Applicable Percentage
in effect immediately prior to such cessation or (b) otherwise, the Applicable
Percentage as set forth under Level V above.

 

“Applicable Utilization Fee”
means, for any date that the aggregate principal amount of outstanding Advances
exceed 25% of the aggregate Commitments, a fluctuating per annum rate equal to
the then-applicable rate set forth in the pricing grid below, depending upon the rating of the
long-term senior unsecured debt of TBC then in effect:

 

	
  Level

  	
   

  	
  Public
  Debt Rating: S&P and Moody’s

  	
   

  	
  Applicable

  Utilization Fee

  	
   

  
	
  Level I

  	
   

  	
  A+ by S&P or A1 by
  Moody’s or above

  	
   

  	
  0.100

  	
  %

  
	
  Level II

  	
   

  	
  less than Level I  but at least A by S&P or A2 by Moody’s

  	
   

  	
  0.100

  	
  %

  
	
  Level III

  	
   

  	
  less than Level II  but at least A- by S&P or A3 by
  Moody’s

  	
   

  	
  0.150

  	
  %

  
	
  Level IV

  	
   

  	
  less than Level
  III  but at least BBB+ by S&P or
  Baa1 by Moody’s

  	
   

  	
  0.225

  	
  %

  
	
  Level V

  	
   

  	
  less than Level IV

  	
   

  	
  0.275

  	
  %

  

 

provided,
however, that if the ratings from S&P and Moody’s fall within
different levels, then the Applicable Utilization Fee shall be based on the
higher of the two ratings except that, if the lower of such ratings is more
than one level below the higher of such ratings, the Applicable Utilization Fee
shall be determined based on the level above the lower of such ratings, and

 

provided
further that if, at any time, no rating is available from S&P and
Moody’s or any other nationally recognized statistical rating organization
designated by TBC and approved in writing by the Majority Lenders, the
Applicable Utilization Fee for each period commencing during the thirty days
following such ratings becoming unavailable shall be the Applicable Utilization
Fee in effect immediately prior to such ratings becoming unavailable.  Thereafter, the rating to be used

 

3

 

until ratings from
S&P and Moody’s become available shall be as agreed between TBC and the
Majority Lenders, and TBC and the Majority Lenders shall use good faith efforts
to reach such agreement within such thirty-day period, provided, however,
that if no such agreement is reached within such thirty-day period the
Applicable Utilization Fee thereafter, until such agreement is reached, shall
be (a) if any such rating has become unavailable as a result of S&P or
Moody’s ceasing its business as a rating agency, the Applicable Utilization Fee
in effect immediately prior to such cessation or (b) otherwise, the Applicable
Utilization Fee as set forth under Level V above.

 

“Available Commitments” means,
as of any date of determination, (a) the aggregate Commitments of the Lenders,
as such amount may be reduced, changed or terminated in accordance with the
terms of this Agreement, reduced by (b) the aggregate Advances outstanding on
such date of determination.

 

“Base Rate” means the rate of
interest announced publicly by Citibank, N.A., in New York City, from time to
time, as Citibank’s “base” rate.

 

“Base Rate Advance” means a
Committed Advance which bears interest at the Base Rate.

 

“Bid Advance” means an advance
by a Lender to a Borrower as part of a Bid Borrowing resulting from the auction
bidding procedure described in Section 2.5, and refers to a Fixed Rate Advance
or a Eurodollar Rate Bid Advance, each of which shall be a “Type” of Bid
Advance.

 

“Bid Borrowing” means a
borrowing consisting of simultaneous Bid Advances from each of the Lenders
whose offers to make one or more Bid Advances as part of such borrowing has
been accepted by a Borrower under the auction bidding procedure described in
Section 2.5.

 

“Bid Note” means a promissory
note of a Borrower payable to the order of a Lender, in substantially the form
of Exhibit A-2, evidencing the indebtedness of that Borrower to such Lender
resulting from a Bid Advance made by such Lender to such Borrower.

 

“Bid Reduction” has the
meaning specified in Section 2.1(a).

 

“Borrower” means, individually
and collectively, as the context requires, TBC and each Subsidiary Borrower
(unless and until it becomes a “Terminated Subsidiary Borrower” pursuant to
Section 2.22).

 

“Borrower Subsidiary Letter”
means, with respect to any Subsidiary Borrower, a letter in the form of Exhibit
D, signed by such Subsidiary Borrower and TBC.

 

“Borrowing” means a Committed
Borrowing or a Bid Borrowing.

 

“Business Day” means a day of
the year on which banks are not required or authorized to close in New York
City and, if the applicable Business Day relates to any Eurodollar Rate
Advance, on which dealings are carried on in the London interbank market.

 

“Commitment” means, for each
Lender, the full amount set forth opposite the name of such Lender in Schedule
I or, if such Lender is a Replacement Lender or a Lender that has entered into
one or more assignments pursuant to Section 2.20 or Section 2.21, the amount
set forth for such Lender in the Register maintained by the Agent pursuant to
Section 2.20(d), as such amount may be reduced pursuant to Section 2.3, Section
2.8 or Section 2.19 or increased pursuant to Section 2.19.

 

4

 

“Committed Advance” means an
advance made by a Lender to a Borrower as part of a Committed Borrowing and
refers to a Base Rate Advance or a Eurodollar Rate Committed Advance, each of
which is a “Type” of Committed Advance.

 

“Committed Borrowing” means a
borrowing consisting of simultaneous Committed Advances of the same Type made
by each of the Lenders pursuant to Section 2.1.

 

“Committed Note” means a
promissory note of a Borrower payable to the order of any Lender, in
substantially the form of Exhibit A-1, evidencing the indebtedness of that
Borrower to such Lender resulting from the Committed Advances made by such
Lender to that Borrower.

 

“Company” means The Boeing
Company, a Delaware corporation (usually referred to herein as “TBC”).

 

“Confidential Information”
means information that a Borrower furnishes to the Agent or any Lender in a
writing designated as confidential, but does not include any such information
that is or becomes generally available to the public or that is or becomes
available to the Agent or such Lender from a source other than a Borrower.

 

“Consolidated” refers to the
consolidation of accounts in accordance with generally accepted accounting
principles.

 

“Continuing Lender” has the
meaning specified in Section 2.21(a).

 

“Convert”, “Conversion”
and “Converted”
each means a conversion of Committed Advances of one Type into Committed
Advances of another Type pursuant to Section 2.10, 2.11 or 2.15.

 

“Debt” of a Person means

 

(i)                                     indebtedness
for borrowed money or for the deferred purchase price of property or services;

 

(ii)                                  financial
obligations evidenced by bonds, debentures, notes or other similar instruments,

 

(iii)                               financial
obligations as lessee under leases which have been or should be, in accordance
with generally accepted accounting principles, recorded as capital leases; and

 

(iv)                              obligations
under direct or indirect guaranties in respect of, and obligations (contingent
or otherwise) to purchase or otherwise acquire, or otherwise to assure a
creditor against loss in respect of, indebtedness or financial obligations of
others of the kind referred to in clauses (i) through (iii) above.

 

“Default” means any Event of Default or any
event that would constitute an Event of Default but for the requirement that
notice be given or time elapse or both.

 

“Domestic Lending Office”
means with respect to any Lender, the office of such Lender specified as its
“Domestic Lending Office” opposite its name on Schedule I, or in the assignment
or other agreement pursuant to which it became a Lender or such other office of
such Lender as such Lender may from time to time specify to TBC and the Agent.

 

“Effective Date” has the
meaning specified in Section 2.19.

 

“Eligible Assignee” means

 

5

 

(i)                                     a
commercial bank organized under the laws of the United States, or any state
thereof, and having a combined capital and surplus in excess of $3,000,000,000;

 

(ii)                                  a
commercial bank organized under the laws of any other country which is a member
of the OECD, or a political subdivision of any such country, and having a
combined capital and surplus in excess of $3,000,000,000, provided that
such bank is acting through a branch or agency located in either (a) the
country in which it is organized or (b) another country which is also a member
of the OECD or the Cayman Islands;

 

(iii)                               the
central bank of any country which is a member of the OECD;

 

(iv)                              any
Lender;

 

(v)                                 an
Affiliate of any Lender; and

 

(vi)                              so
long as no Default has occurred and is continuing, any other Person approved in
writing by TBC, which approval has been communicated in writing to the Agent, provided
that neither TBC nor an Affiliate of TBC shall qualify as an Eligible Assignee.

 

“ERISA” means the Employee Retirement
Income Security Act of 1974, as amended from time to time and the regulations
promulgated and rulings issued thereunder.

 

“Eurocurrency Liabilities” has
the meaning assigned to that term in Regulation D of the Board of Governors of
the Federal Reserve System, as in effect from time to time.

 

“Eurodollar Lending Office”
means, with respect to any Lender, (a) the office of such Lender specified as
its “Eurodollar Lending Office” opposite its name on Schedule I (or, if no such
office is specified, its Domestic Lending Office) or in the assignment or other
agreement pursuant to which it became a Lender or (b) such other office of such
Lender as such Lender may from time to time specify to TBC and the Agent.

 

“Eurodollar Rate” means, for
an Interest Period for a Eurodollar Rate Committed Advance constituting part of
a Committed Borrowing, and for the relevant period specified in the applicable
Notice of Bid Borrowing for a Eurodollar Rate Bid Advance, an interest rate per
annum equal to either

 

(a)                                  the
offered rate (rounded to the nearest whole multiple of 1/16 of 1% per annum, if
such average is not such a multiple) for deposits in U.S. dollars for a period
substantially equal to such Interest Period (if a Committed Advance) or such
relevant period specified in the applicable Notice of Bid Borrowing (if a Bid
Advance), appearing on Telerate Markets Page 3750 (or any successor page or, if
unavailable for any reason by Telerate, then by reference to Reuters Screen) as
of 11:00 a.m. (London time) two business days before the first day of such
Interest Period or the first day of the relevant period specified in such
Notice of Bid Borrowing; or

 

(b)                                 if
the foregoing rate is unavailable from Telerate or the Reuters Screen for any
reason, the average (rounded to the nearest whole multiple of 1/16 of 1% per
annum, if such average is not such a multiple) of the rates per annum are
offered by the principal office of each of the Reference Banks to prime banks
in the London interbank market at 11:00 a.m. (London time) on deposits in U.S.
dollars two Business Days before the first day of such Interest Period or the
first day of such relevant period specified in the Notice of Bid Borrowing

 

6

 

(i)                             for
such Eurodollar Committed Advance, on an amount substantially equal to such
Reference Bank’s Eurodollar Rate Advance constituting part of such Committed
Borrowing and for a period equal to such Interest Period, or

 

(ii)                          for
such Eurodollar Rate Bid Advance, on an amount substantially equal to the
amount of the Eurodollar Rate Bid Borrowing which includes such Bid Advance
multiplied by a fraction equal to such Reference Bank’s ratable portion of the
Commitments and for a period equal to the relevant period specified in such
Notice of Bid Borrowing.

 

The Eurodollar Rate for
any Interest Period for each Eurodollar Rate Committed Advance constituting
part of the same Borrowing and for the relevant period specified in a Notice of
Bid Borrowing for each Eurodollar Rate Bid Advance shall be determined by the
Agent on the basis of applicable rates furnished to and received by the Agent
from the Reference Banks two Business Days before the first day of such
Interest Period or period, as the case may be, subject, however,
to the provisions of Section 2.10.

 

“Eurodollar Rate Advance”
means a Committed Advance (a “Eurodollar Rate Committed Advance”) or a
Bid Advance (a “Eurodollar Rate Bid Advance”) which bears interest at a rate
of interest quoted as a margin (which shall be the Applicable Margin in the
case of a Committed Advance or as offered by a Lender and accepted by a
Borrower in the case of a Bid Advance) over the Eurodollar Rate.

 

“Eurodollar Rate Bid Borrowing”
has the meaning specified in Section 2.5(b).

 

“Eurodollar Rate Reserve Percentage”
means the reserve percentage applicable to a Lender for any Interest Period for
a Eurodollar Rate Advance during such Interest Period (or if more than one such
percentage shall be so applicable, the daily average of such percentages for
those days in such Interest Period during which any such percentage shall be so
applicable) under regulations issued from time to time by the Board of
Governors of the Federal Reserve System (or any successor) for determining the
maximum reserve requirement (including, without limitation, any emergency,
supplemental or other marginal reserve requirement) for such Lender with
respect to liabilities or assets consisting of or including Eurocurrency
Liabilities (or with respect to any other category of liabilities that includes
deposits by reference to which the interest rate on Eurodollar Rate Advances is
determined) having a term equal to such Interest Period.

 

“Event of Default” means any
of the events described in Section 6.1.

 

“Extension Request” has the
meaning specified in Section 2.21.

 

“Facility Fee” has the meaning
specified in Section 2.7.

 

“Federal Funds Rate” means,
for each day during a period, an interest rate per annum equal to the weighted
average of the fluctuating rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the
immediately preceding Business Day) by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day which is a Business Day, the
average of the quotations for such day on such transactions received by the
Agent from three Federal funds brokers of recognized standing selected by it.

 

“Fixed Rate Advance” means an
Advance made by a Lender to a Borrower as part of a Fixed Rate Borrowing.

 

7

 

“Fixed Rate Borrowing” has the
meaning specified in Section 2.5(b).

 

“Guaranty” means each Guaranty
Agreement executed by TBC in favor of the Agent and the Lenders,
unconditionally guaranteeing the payment of all obligations of a Subsidiary
Borrower hereunder and under any Notes executed or to be executed by it.

 

“Indemnified Costs” has the meaning
specified in Section 7.5.

 

“Indemnified Parties” has the meaning
specified in Section 8.3(b).

 

“Interest Period” means, for
each Eurodollar Rate Committed Advance constituting part of the same Borrowing,
the period commencing on the date of such Committed Advance or the date of the
Conversion of a Base Rate Advance into such a Eurodollar Rate Committed Advance
and ending on the last day of the period selected by the applicable Borrower
pursuant to the provisions below and, thereafter, each subsequent period
commencing on the last day of the immediately preceding Interest Period and
ending on the last day of the period selected by such Borrower pursuant to the
provisions below.  The duration of each
such Interest Period shall be one, two, three, or six months (or nine months,
with the consent of all Lenders funding those particular Advances), as the
applicable Borrower may, upon notice received by the Agent not later than 11:00
a.m. (New York City time) on the third Business Day prior to the first day of
such Interest Period, select, provided, however, that:

 

(i)                             no
Interest Period shall end on a date later than the Termination Date (or in the
case of a Committed Advance which is converted to a Term Loan pursuant to
Section 2.3, the Maturity Date);

 

(ii)                          Interest
Periods commencing on the same date for Committed Advances constituting part of
the same Committed Borrowing shall be of the same duration; and

 

(iii)                       whenever the last day of any
Interest Period would otherwise occur on a day other than a Business Day, the
last day of such Interest Period shall be extended to occur on the next
succeeding Business Day, provided that, if such extension would cause
the last day of such Interest Period to occur in the next following calendar
month, the last day of the Interest Period shall occur on the immediately
preceding Business Day.

 

“Lender”, subject to Section
2.20, means any of the institutions that is a signatory hereto or that,
pursuant to Section 2.13, 2.19, 2.20 or 2.21, becomes a “Lender” hereunder.

 

“Majority Lenders” means
Lenders having greater than 50% of the total Commitments or, if the Commitments
have been terminated in full, Lenders holding greater than 50% of the then
aggregate unpaid principal amount of the Advances.

 

“Maturity Date” means the
Termination Date or, if the Term Loan Conversion Option described in Section
2.3 has been exercised, the date that is the one-year anniversary of the
Termination Date.

 

“Moody’s” means Moody’s
Investor Services, Inc.

 

“Non-Extending Lender” has the
meaning specified in Section 2.21(a).

 

“Note” means a Committed Note
or a Bid Note.

 

“Notice of Bid Borrowing” has
the meaning specified in Section 2.5(b).

 

8

 

“Notice of Borrowing” means a
Notice of Committed Borrowing or a Notice of Bid Borrowing.

 

“Notice of Committed Borrowing”
has the meaning specified in Section 2.2(a).

 

“OECD” means the Organization
for Economic Cooperation and Development.

 

“Person” means an individual,
partnership, corporation (including a business trust), limited liability
company, joint stock company, trust, unincorporated association, joint venture
or other entity, or a government or any political subdivision or agency
thereof.

 

“Property, Plant and Equipment”
means any item of real property, or any interest therein, buildings,
improvements and machinery.

 

“Proposed Increased Commitment”
has the meaning specified in Section 2.19(a).

 

“Reference Banks” means
JPMorgan Chase Bank, Citibank, N.A., Bank of America, N.A., and Deutsche Bank
AG.

 

“Register” has the meaning
specified in Section 2.20(d).

 

“Replacement Lenders” has the
meaning specified in Section 2.21(c).

 

“Request for Alteration” means
a document substantially in the form of Exhibit C, duly executed by TBC,
pursuant to Section 2.19.

 

“Required Assignment” has the
meaning specified in Section 2.20(a).

 

“S&P” means Standard &
Poor’s, a division of The McGraw-Hill Companies, Inc.

 

“Subsidiary” means any Person
in which more than 50% of the Voting Stock or the interest in the capital or
profits is owned by TBC, by TBC and any one or more other Subsidiaries, or by
any one or more other Subsidiaries.

 

“Subsidiary Borrower” means,
individually and collectively, as the context requires, each Subsidiary that is
or becomes a “Borrower” in accordance with Section 2.22; in each case, unless
and until it becomes a “Terminated Subsidiary Borrower”.

 

“TBC” means The Boeing
Company, a Delaware corporation.

 

“Term Loan” means a term loan
resulting from the conversion of Committed Advances on the Termination Date
pursuant to Section 2.3.

 

“Term Loan Conversion Option”
means the option under Section 2.3 for TBC to convert, as of the Termination
Date, all Committed Advances then outstanding into Term Loans.

 

“Terminated Subsidiary Borrower”
means, individually and collectively, as the context requires, a Subsidiary
Borrower that has ceased to be a “Borrower” in accordance with Section 2.22.

 

“Termination Date” means the
earlier to occur of (i) November 19, 2004, as such date may be extended from
time to time pursuant to Section 2.21, and (ii) the date of termination in
whole of the Commitments pursuant to Section 2.8 or Section 6.2.

 

“Total Capital” has the
meaning specified in Section 4.2(b).

 

9

 

“Type”, as to Committed
Borrowings, means either Base Rate Advances or Eurodollar Rate Committed
Advances and, as to Bid Borrowings, means either Fixed Rate Advances  or Eurodollar Rate Bid Advances.

 

“Voting Stock” means, as to a
corporation, all the issued and outstanding capital stock of such corporation
having general voting power, under ordinary circumstances, to elect a majority
of the Board of Directors of such corporation (irrespective of whether or not
any capital stock of any other class or classes shall or might have voting
power upon the occurrence of any contingency).

 

1.2                                Use of Defined Terms; References.  Any defined term used in the
plural preceded by the definite article encompasses all members of the relevant
class.  Any defined term used in the
singular preceded by “a”, “an” or “any” indicates any number of the members of
the relevant class.  All references in
this Agreement to a Section, Article, Schedule or Exhibit are to a Section,
Article, Schedule or Exhibit of or to this Agreement, unless otherwise
indicated.

 

1.3                                Accounting Terms.  All accounting terms
not specifically defined herein shall be construed in accordance with generally
accepted accounting principles consistently applied.

 

ARTICLE 2

Amounts and Terms of the Advances

 

2.1                                Committed
Advances.

 

(a)                                  Obligation
to Make Committed Advances.  Each
Lender severally agrees, on the terms and conditions hereinafter set forth, to
make Committed Advances to the Borrowers from time to time on any Business Day
during the period from the date hereof until the Termination Date in an
aggregate principal amount at any time outstanding not to exceed such Lender’s
Commitment, provided that the aggregate amount of the Commitments of the
Lenders shall be deemed used from time to time to the extent of the aggregate
amount of the Bid Advances then outstanding and such deemed use of the
aggregate amount of the Commitments shall be applied to the Lenders ratably
according to their respective Commitments (such deemed use of the aggregate
amount of the Commitments being a “Bid
Reduction”).

 

(b)                                 Amount
of Committed Advances.  Each
Committed Borrowing shall be in an aggregate amount not less than $10,000,000
or an integral multiple of $1,000,000 in excess thereof.

 

(c)                                  Type
of Committed Advances.  Each
Committed Borrowing shall consist of Committed Advances of the same Type made
on the same day by the Lenders ratably according to their respective
Commitments.  Within the limits of each
Lender’s Commitment, the Borrowers may from time to time borrow, prepay
pursuant to Section 2.12, and reborrow under this Section 2.1 and Section 2.2.

 

2.2                                Making Committed Advances.

 

(a)                                  Notice
of Committed Borrowing.   Each Committed Borrowing shall be made on
notice, given by a Borrower to the Agent not later than 11:00 a.m. (New York
City time) on the day of the proposed Committed Borrowing in the case of a Base
Rate Borrowing and on the third Business Day prior to the date of the proposed
Committed Borrowing in the case of a Eurodollar Rate Borrowing (a “Notice of Committed Borrowing”).  Each such Notice of Committed Borrowing
shall be in substantially the form of Exhibit B-l, specifying the requested

 

10

 

(i)                                     date
of such Committed Borrowing,

 

(ii)                                  Type
of Committed Advances constituting such Committed Borrowing,

 

(iii)                               aggregate
amount of such Committed Borrowing, and

 

(iv)                              in
the case of a Committed Borrowing composed of Eurodollar Rate Advances, the
initial Interest Period for each such Committed Advance, which Interest Period
may be 1, 2, 3 or 6 months, at the option of the Borrower, or, if acceptable to
all the Lenders, 9 months.

 

Every Notice of Committed
Borrowing given by a Subsidiary Borrower must be countersigned by an authorized
representative of TBC, in order to evidence the consent of TBC, in its sole
discretion, to that proposed Committed Borrowing.  Upon receipt of a Notice of Committed Borrowing, the Agent shall
promptly give notice to each Lender thereof.

 

(b)                                 Funding
Committed Advances.   Each Lender shall, before 1:00 p.m. (New York
City time) on the date of such Committed Borrowing, make available for the
account of its Applicable Lending Office to the Agent at the Agent’s Account,
in same day funds, such Lender’s ratable portion of such Committed
Borrowing.  After the Agent’s receipt of
such funds and upon fulfillment of the applicable conditions set forth in
Article 5, the Agent will make such funds available to the relevant Borrower at
an account specified by such Borrower.

 

(c)                                  Irrevocable
Notice.  Each Notice of Committed
Borrowing shall be irrevocable and binding. 
In the case of any Committed Borrowing that  the related Notice of Committed Borrowing specifies is to be
composed of Eurodollar Rate Advances, the Borrower requesting such Committed
Borrowing shall indemnify each Lender against any loss, cost or expense incurred
by such Lender on account of any failure to fulfill on or before the date
specified for such Committed Borrowing in such Notice of Committed Borrowing
the applicable conditions set forth in Article 5, including, without
limitation, any loss (but excluding loss of anticipated profits), cost or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by such Lender to fund the Committed Advance to be made by
such Lender as part of such Committed Borrowing when such Committed Advance, as
a result of such failure, is not made on such date.

 

(d)                                 Lender’s
Ratable Portion.  Unless the Agent
has received notice from a Lender prior to 1:00 p.m. (New York City time) on
the day of any Committed Borrowing that such Lender will not make available to
the Agent such Lender’s ratable portion of such Committed Borrowing, the Agent
may assume that such Lender has made such portion available to the Agent on the
date of such Committed Borrowing in accordance with subsection (b) of this Section
2.2 and the Agent may, in reliance upon such assumption, make available to the
requesting Borrower on such date a corresponding amount.  If and to the extent that a Lender has not
so made such ratable portion available to the Agent, such Lender and such
Borrower shall severally repay to the Agent forthwith on demand an amount that
in the aggregate equals such corresponding amount together with interest
thereon for each day from the date such amount is made available by the Agent
to such Borrower until the date such amount is repaid to the Agent, at

 

(i)                                     in
the case of such Borrower, the interest rate applicable at the time to
Committed Advances constituting such Committed Borrowing, and

 

(ii)                                  in
the case of such Lender, the Federal Funds Rate.

 

If such Lender shall
repay to the Agent such corresponding amount, such amount so repaid shall
constitute such Lender’s Committed Advance as part of such Committed Borrowing
for purposes of this Agreement.

 

11

 

(e)                                  Independent
Lender Obligations.  The failure of
any Lender to make the Committed Advance to be made by it as part of any
Committed Borrowing shall not relieve any other Lender of its obligation, if
any, hereunder to make its Committed Advance on the date of such Committed
Borrowing, but no Lender shall be responsible for the failure of any other
Lender to make the Committed Advance to be made by such other Lender on the
date of any Committed Borrowing.

 

2.3                                Conversion to Term Loans, Repayment. 
The Borrowers shall, subject to the next succeeding sentence, repay to
the Agent for the ratable account of the Lenders on the Termination Date the
aggregate principal amount of the Committed Advances then outstanding.  TBC may, upon notice given to the Agent not later
than 11:00 a.m. (New York City time) on the Termination Date, convert all or a
part of the unpaid principal amount of the Committed Advances outstanding as of
the Termination Date into Term Loans. 
If this Term Loan Conversion Option is exercised, then, on the
Termination Date, immediately prior to the time when the unpaid principal
amount of the Committed Advances would otherwise be due, the Committed Advances
shall automatically convert into Term Loans which the respective Borrowers
shall repay to the Agent for the ratable accounts of the Lenders on the
Maturity Date.  The amounts so converted
shall be treated for all purposes of this Agreement as Committed Advances
except that after the Termination Date:

 

(i)                                     the
Borrowers may not make any additional borrowings;

 

(ii)                                  any
amounts paid or prepaid may not be reborrowed;

 

(iii)                               the
amount of each Lender’s Commitment shall be equal at all times to the principal
amount of the Term Loans payable to such Lender from time to time;

 

(iv)                              the
provisions of Section 2.19 shall not be effective; and

 

(v)                                 no
Facility Fees or utilization fees shall accrue or be payable after the
Termination Date.

 

2.4                                Interest Rate on Committed Advances.  Each Borrower shall pay interest on the
unpaid principal amount of each of its Committed Advances from the date of such
Committed Advance until such principal amount is paid in full, at the following
rates per annum:

 

(i)                                     during
each period in which such Committed Advance is a Base Rate Advance, at a rate
per annum equal at all times to the Base Rate in effect from time to time plus
the Applicable Margin plus the Applicable Utilization Fee, if any, payable
quarterly in arrears on the first day of each January, April, July and October
and on (x) the Termination Date, or (y) if TBC has exercised the Term Loan
Conversion Option, the Maturity Date, and

 

(ii)                                  during
each period in which such Committed Advance is a Eurodollar Rate Advance, at a
rate per annum equal at all times during each relevant Interest Period for such
Committed Advance to the Eurodollar Rate for such Interest Period plus the
Applicable Margin plus the Applicable Utilization Fee, if any, payable on the
last day of each such Interest Period, and if such Interest Period has a
duration of more than three months, quarterly on each day during such Interest
Period that is three months from either (A) the first day of such Interest
Period or (B) the last such interest payment date and on the date such
Committed Advance is Converted or paid in full.

 

provided
that in the event and during the continuance of an Event of Default (x) the
Applicable Margin shall immediately increase by 1.0% above the Applicable
Margin then in effect, and, in the case of a Eurodollar Rate Advance, such
Advance shall automatically convert to a Base Rate Advance at the end of the
Interest Period then in

 

12

 

effect for such
Eurodollar Rate Advance and (y) to the fullest extent permitted by law, the
Borrower shall pay interest on the amount of any interest, fee or other amount
payable hereunder that is not paid when due, from the date such amount shall be
due until such amount shall be paid in full, payable in arrears on the date
such amount shall be paid in full and on demand, at a rate per annum equal at all
times to 1% above the Base Rate.

 

2.5                                Bid Advances.

 

(a)                                  Bid
Advances Impact on Commitments.  The
Borrowers may make Bid Borrowings from time to time on any Business Day during
the period from the date hereof until the Termination Date in the manner set
forth below, provided that, following the making of each Bid Borrowing,
the aggregate amount of the Advances then outstanding shall not exceed the
aggregate amount of the Commitments of the Lenders (computed without regard to
the Bid Reduction).  As provided in
Section 2.1 above, the aggregate amount of the Commitments of the Lenders shall
be deemed used from time to time to the extent of the aggregate amount of the
Bid Advances then outstanding, and such deemed use of the aggregate amount of
the Commitments shall be applied to the Lenders ratably according to their
respective Commitments; provided, however, that any Lender’s Bid
Advances shall not otherwise reduce that Lender’s obligation to lend its pro
rata share of the remaining Available Commitments.

 

(b)                                 Notice
of Bid Borrowing.  Any Borrower may
request a Bid Borrowing by delivering to the Agent a notice of a Bid Borrowing
(a “Notice of Bid Borrowing”), in
substantially the form of Exhibit B-2, specifying the following:

 

(i)                                     the
date and aggregate amount of the proposed Bid Borrowing,

 

(ii)                                  the
maturity date for repayment of each Bid Advance to be made as part of such Bid
Borrowing, which maturity date

 

(A)                              may
not be later than 5 Business Days prior to the Termination Date, but may
otherwise be 7 days or more from the date of such requested Bid Advance if the
Borrower specifies in the Notice of Bid Borrowing that the rates of interest to
be offered by the Lenders will be fixed rates per annum (a “Fixed Rate
Borrowing”), and

 

(B)                                shall
be either 1, 2, 3, 6 or 9 months from the date of such Bid Borrowing if the
Borrower specifies in the Notice of Bid Borrowing that such Bid Borrowing is to
consist of Eurodollar Rate Bid Advances (a “Eurodollar Rate Bid Borrowing”),

 

(iii)                               the
interest payment date or dates relating thereto, and

 

(iv)                              any
other terms to be applicable to such Bid Borrowing.

 

A Borrower
requesting a Bid Borrowing shall deliver a Notice of Bid Borrowing to the Agent
not later than 11:00 a.m. (New York City time) (A) at least one Business Day prior
to the date of the proposed Bid Borrowing if the proposed Bid Borrowing is to
be a Fixed Rate Borrowing, and (B) at least four Business Days prior to the
date of the proposed Bid Borrowing, if the proposed Bid Borrowing is to be a
Eurodollar Rate Bid Borrowing.  Every
Notice of Bid Borrowing given by a Subsidiary Borrower must be countersigned by
an authorized representative of TBC, in order to evidence the consent of TBC,
in its sole discretion, to that proposed Bid Borrowing.  The Agent shall in turn promptly notify each
Lender of each request for a Bid Borrowing by sending such Lender a copy of the
related Notice of Bid Borrowing.

 

13

 

(c)                                  Discretion
as to Bid Advances.  Each Lender
may, in its sole discretion, elect to irrevocably offer to make one or more Bid
Advances to the applicable Borrower as part of such proposed Bid Borrowing at a
rate or rates of interest specified by such Lender in its sole discretion (each
such rate of interest to be a fixed rate if the Borrower requested Fixed Rate
Advances or a margin over the Eurodollar Rate if the Borrower requested
Eurodollar Rate Bid Advances), by notifying the Agent (which shall give prompt
notice thereof to the Company and such Borrower), before 10:00 a.m. (New York
City time) (A) on the date of such proposed Bid Borrowing, if the proposed Bid
Borrowing is to be a Fixed Rate Borrowing and (B) three Business Days before
the date of such proposed Bid Borrowing, in the case of a Notice of Bid
Borrowing is to be a Eurodollar Rate Bid Borrowing.  In such notice the Lender shall specify the following:

 

(i)                                     the
minimum amount and maximum amount of each Bid Advance which such Lender would
be willing to make as part of such proposed Bid Borrowing (which amounts may,
subject to the first proviso in this Section 2.5(a), exceed such Lender’s
Commitment),

 

(ii)                                  the
rate or rates of interest therefor (specified as stated in this paragraph (c)),
and

 

(iii)                               such
Lender’s Applicable Lending Office with respect to such Bid Advance;

 

provided
that if the Agent in its capacity as a Lender, in its sole discretion, elects
to make any such offer, it shall notify such Borrower and the Company of such
offer before 9:30 a.m. (New York City time) on the date on which notice of such
election is to be given to the Agent by the other Lenders.  If, by 10:00 a.m. (New York City time) on
the date on which notice of a Lender’s election under this Section 2.5(c) is to
be made, the Agent fails to receive, at its address specified in Section 8.2, a
notice from a Lender provided for in this Section 2.5(c), the Agent may
conclusively presume that such Lender has elected not to offer to make any Bid
Advances to such Borrower with respect to the related Notice of Bid Borrowing.

 

(d)                                 Borrower
Selection of Lender Bids.  The
Borrower proposing the Bid Borrowing shall, in turn, (A) before 11:00 a.m. (New
York City time) on the date of such proposed Bid Borrowing, in the case of a
proposed Bid Borrowing to be a Fixed Rate Borrowing, and (B) before 12:00 noon
(New York City time) three Business Days before the date of such proposed Bid
Borrowing, in the case of a proposed Bid Borrowing to be a Eurodollar Rate Bid
Borrowing, either:

 

(i)                                     cancel
such Bid Borrowing by giving the Agent notice to that effect, or

 

(ii)                                  accept,
in its sole discretion, one or more of the offers made by a Lender or Lenders
pursuant to Section 2.5(c), by giving notice to the Agent of the amount of each
Bid Advance (which amount shall be equal to or greater than the minimum amount
and equal to or less than the maximum amount, notified to such Borrower by the
Agent on behalf of such Lender for such Bid Advance pursuant to Section 2.5(c))
to be made by each Lender as part of such Bid Borrowing, and reject any
remaining offers made by Lenders pursuant to Section 2.5(c) by giving the Agent
notice to that effect; provided that offers will be accepted, if at all,
in order of lowest to highest interest rates, and, if two or more Lenders bid
at the same rate, the Bid Borrowing with respect to such rate will be allocated
among such Lenders in proportion to the amount bid by each such Lender.

 

If the Borrower proposing
the Bid Borrowing notifies the Agent that such Bid Borrowing is canceled
pursuant to Section 2.5(d)(i), the Agent shall give prompt notice thereof to
the Lenders and such Bid Borrowing shall not be made.

 

(e)                                  Bid
Borrowing.  If the Borrower
proposing the Bid Borrowing accepts one or more of the offers made by a Lender
or Lenders pursuant to Section 2.5(d)(ii), the Agent shall in turn promptly

 

14

 

(i)                                     notify
each Lender that has made an offer as described in Section 2.5(c), of the date
and aggregate amount of such Bid Borrowing and whether or not any offer or
offers made by such Lender pursuant to Section 2.5(c) have been accepted by
such Borrower,

 

(ii)                                  notify
each Lender that is to make a Bid Advance, as part of such Bid Borrowing, of
the amount of each Bid Advance to be made by such Lender as part of such Bid
Borrowing, and

 

(iii)                               upon
satisfaction of the conditions set forth in 5.3 or 5.6, as applicable, notify
each Lender that is to make a Bid Advance as part of such Bid Borrowing that
the applicable conditions set forth in Article 5 appear to have been satisfied.

 

When each Lender that is
to make a Bid Advance as part of such Bid Borrowing has received notice from
the Agent pursuant to clause (iii) of the preceding sentence, such Lender
shall, before 1:00 p.m. (New York City time) on the date of such Bid Borrowing
specified in the notice received from the Agent pursuant to clause (i) of the
preceding sentence, make available for the account of its Applicable Lending
Office to the Agent at the Agent’s Account such Lender’s portion of such Bid
Borrowing, in same day funds.  Upon
fulfillment of the applicable conditions set forth in Article 5 and after
receipt by the Agent of such funds, the Agent will make such funds available to
the relevant Borrower at an account specified by such Borrower.  Promptly after each Bid Borrowing the Agent
shall notify each Lender of the amount of the Bid Borrowing, the consequent Bid
Reduction, and the dates upon which such Bid Reduction commenced and will
terminate.

 

(f)                                    If
the Borrower proposing such Bid Borrowing notifies the Agent pursuant to
Section 2.5(d)(ii) above that it accepts one or more of the offers made by any
Lender or Lenders, such notice of acceptance shall be irrevocable and binding
on such Borrower.  Such Borrower shall
indemnify each Lender against any loss, cost or expense incurred by such Lender
as a result of any failure to fulfill on or before the date specified in the
related Notice of Bid Borrowing for such Bid Borrowing the applicable
conditions set forth in Article 5, including, without limitation, any loss (but
excluding loss of anticipated profits), cost or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by such
Lender to fund the Bid Advance to be made by such Lender as part of such Bid
Borrowing when such Bid Advance, as a result of such failure, is not made on
such date.

 

(g)                                 Amount
of Bid Borrowings.  Each Notice of
Bid Borrowing shall request an aggregate amount of Bid Advances not less
than $10,000,000 or an integral multiple of $1,000,000 in excess thereof, provided
that a Borrower may accept offers aggregating less than $10,000,000 and offers
which are not an integral multiple of $1,000,000, and provided  further
that, as provided in Section 2.5(a), following the making of each Bid
Borrowing, the aggregate amount of the Advances then outstanding shall not
exceed the aggregate amount of the Commitments of the Lenders (computed without
regard to the Bid Reduction).  Within
the limits and on the conditions set forth in this Section 2.5, the Borrowers
may from time to time borrow under this Section 2.5, repay pursuant to Section
2.5(g), and reborrow under this Section 2.5, provided that a Bid
Borrowing shall not be made within three Business Days of the date of any other
Bid Borrowing.

 

(h)                                 Repayment
of Bid Advances.  On the maturity
date of each Bid Advance specified by the relevant Borrower for repayment of
such Bid Advance in the related Notice of Bid Borrowing, the Borrower shall
repay to the Agent for the account of the Lender which has made such Bid
Advance the then unpaid principal amount of such Bid Advance.  The Borrowers shall have no right to prepay
any principal amount of any Bid Advance.

 

15

 

(i)                                     Interest
on Bid Advances; Bid Notes.  The
relevant Borrower shall pay interest on the unpaid principal amount of each Bid
Advance, from the date of such Bid Advance to the date the principal amount of
such Bid Advance is repaid in full, at the fixed rate of interest specified by
the Lender making such  Fixed Rate
Advance in its notice with respect thereto delivered pursuant to Section 2.5(c)
or, in the case of a Eurodollar Rate Bid Advance, the margin specified by the
Lender making such Bid Advance in its notice with respect thereto plus the
Eurodollar Rate determined with respect to such Bid Borrowing pursuant to
Section 2.10, payable on the interest payment date or dates specified by the
Borrower for such Bid Advance in the related Notice of Bid Borrowing.  Upon the occurrence and during the
continuance of an Event of Default, the applicable Borrower shall pay interest
on the amount of unpaid principal of and interest on each Bid Advance owing to
a Lender, payable in arrears on the date or dates interest is payable thereon,
at a rate per annum equal at all times to 1% per annum above the rate per
annum required to be paid on such Bid Advance under the terms of the Bid Note
evidencing such Bid Advance unless otherwise agreed in such Bid Note.  The indebtedness of the applicable Borrower
resulting from each Bid Advance made to the Borrower as part of a Bid Borrowing
shall be evidenced by a separate Bid Note of such Borrower payable to the order
of the Lender making such Bid Advance, which Bid Note shall be returned to the
Borrower upon payment in full of such Bid Advance.

 

2.6                                Lender Assignment or Sale.  Any Lender may, without the prior written
consent of the Borrowers, sell or assign all or any part of such Lender’s
rights in any or all of the Bid Advances made by such Lender or in the Bid
Notes in connection with such Bid Advances as a participation, provided,
however, that

 

(i)                                     any
such sale or assignment shall not require any Borrower to file a registration
statement with the Securities and Exchange Commission or apply to qualify the
Advances or the Notes under the blue sky laws of any state, and the selling or
assigning Lender shall otherwise comply with all federal and state securities
laws applicable to such transaction,

 

(ii)                                  no
purchaser or assignee in such a transaction shall thereby become a “Lender” for
any purpose under this Agreement,

 

(iii)                               such
Lender’s obligations under this Agreement (including, without limitation, its
Commitment to the Borrowers) shall remain unchanged,

 

(iv)                              such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, and

 

(v)                                 the
Borrowers, the Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement.

 

2.7                                Fees. 
TBC agrees to pay to the Agent for the account of each Lender a facility
fee (“Facility Fee”) on such
Lender’s Commitment, without regard to usage. 
The Facility Fee shall be payable for the periods from the date hereof
in the case of each Lender named in Schedule I, and from the effective date on
which any other Lender becomes party hereto, until the Termination Date (or
such earlier date on which such Lender ceases to be a party hereto) at the rate
per annum equal to the Applicable Percentage in effect from time to time.  Facility Fees shall be payable in arrears on
each January 1, April 1, July 1 and October 1 during the term of this Agreement
until and on the Termination Date.  The
amount of the Facility Fee payable on January 1, 2004 and on the Termination
Date shall be prorated based on the actual number of days elapsed either since
the date hereof (in the case of the January 1, 2004 payment) or since the date
on which the last

 

16

 

payment in respect of the Facility Fee was made (in the
case of the payment made on the Termination Date).

 

2.8                                Reduction of
the Commitments.

 

(a)                                  Optional
Reductions.  TBC shall have the
right, upon at least 3 Business Days’ notice to the Agent, to permanently
terminate in whole or permanently reduce ratably in part the unused portions of
the Commitments, provided that each partial reduction shall be in a
minimum amount of $10,000,000 or an integral multiple of $1,000,000 in excess
thereof, and provided  further that the aggregate amount of the
Commitments shall not be reduced to an amount which is less than the aggregate
principal amount of the Bid Advances then outstanding.

 

(b)                                 Mandatory
Reduction.  At the close of business
on the Termination Date, the aggregate Commitments shall be automatically and
permanently reduced, on a pro rata basis, by an amount equal to the amount by
which the aggregate Commitments immediately prior to giving effect to such
reduction exceed the aggregate unpaid principal amount of the Committed
Advances then outstanding.

 

2.9                                Additional Interest on Eurodollar Rate Committed
Advances.  Each Borrower
shall pay to each Lender, so long as such Lender is required under regulations
of the Board of Governors of the Federal Reserve System to maintain reserves
with respect to liabilities or assets consisting of or including Eurocurrency
Liabilities, additional interest on the unpaid principal amount of each
Eurodollar Rate Committed Advance of such Lender to such Borrower, from the
date of such Committed Advance until such principal amount is paid in full, at
an interest rate per annum for each Interest Period equal to the remainder
obtained by subtracting (i) the Eurodollar Rate for such Interest Period for
such Committed Advance from (ii) the rate obtained by dividing such Eurodollar
Rate by a percentage equal to 100% minus the Eurodollar Rate Reserve Percentage
of such Lender for such Interest Period, payable on each date on which interest
is payable on such Committed Advance. 
Such additional interest shall be determined by such Lender and notified
to the relevant Borrowers through the Agent.

 

2.10                          Eurodollar
Interest Rate Determination.

 

(a)                                  Methods
to Determine Eurodollar Rate.  The
Agent shall determine the Eurodollar Rate for each Eurodollar Rate Advance by
using the methods described in the definition of the term “Eurodollar Rate,”
and shall give prompt notice to the relevant Borrowers and the Lenders of each
such Eurodollar Rate.

 

(b)                                 Role
of Reference Banks.  In the event
the Eurodollar Rate cannot be determined by the first method described in the
definition of “Eurodollar Rate,” each Reference Bank shall furnish to the Agent
timely information for the purpose of determining the Eurodollar Rate in
accordance with the second method described therein.  If any one or more of the Reference Banks does not furnish such
timely information to the Agent for the purpose of determining a Eurodollar
Rate, the Agent shall determine such interest rate on the basis of timely
information furnished by the remaining Reference Banks.  In the event the rate cannot be determined
by either of the methods described in the definition of “Eurodollar Rate,”
then:

 

(i)                                     the
Agent shall forthwith notify the Borrowers and the Lenders that the interest
rate cannot be determined for such Eurodollar Rate Advances,

 

(ii)                                  each
such Advance, if a Committed Advance, will automatically, on the last day of
the then existing Interest Period therefor, Convert into a Base Rate Advance
(or if the

 

17

 

Borrower was attempting to Convert a Base
Rate Advance into a Eurodollar Rate Committed Advance, such Advance will
continue as a Base Rate Advance), and

 

(iii)                               the
obligation of the Lenders to make Eurodollar Rate Bid Advances, or to make, or
to Convert Base Rate Advances into, Eurodollar Rate Committed Advances shall be
suspended until the Agent notifies the Borrowers and the Lenders that the
circumstances causing such suspension no longer exist.

 

(c)                                  Inadequate
Eurodollar Rate.  If, with respect
to any Eurodollar Rate Committed Advances, the Majority Lenders notify the
Agent that the Eurodollar Rate for any Interest Period for such Committed
Advances will not adequately reflect the cost to such Majority Lenders of
making, funding or maintaining their respective Eurodollar Rate Committed
Advances for such Interest Period, the Agent shall forthwith so notify the
relevant Borrowers and the Lenders, whereupon

 

(i)                                     each such
Eurodollar Rate Committed Advance will automatically, on the last day of the
then existing Interest Period therefor, Convert into a Base Rate Advance, and

 

(ii)                                  the obligation of the
Lenders to make, or to Convert Base Rate Advances into, Eurodollar Rate
Committed Advances shall be suspended until the Agent notifies the Borrowers
and the Lenders that the circumstances causing such suspension no longer exist.

 

(d)                                 Absence
of an Interest Period on a Eurodollar Rate Committed Advance.  If a Borrower fails to select the duration
of an Interest Period for a Eurodollar Rate Committed Advance in accordance
with the provisions contained in the definition of “Interest Period” in Section
1.1, the Agent will forthwith so notify the Borrower and the Lenders and such
Committed Advances will automatically, on the last day of the then existing
Interest Period therefor, Convert into Base Rate Advances.

 

2.11                          Voluntary Conversion of Committed Advances.  Subject to the provisions of Sections 2.10
and 2.15, any Borrower may Convert all such Borrower’s Committed Advances of
one Type constituting the same Committed Borrowing into Advances of the other
Type on any Business Day, upon notice given to the Agent not later than 11:00
a.m. (New York City time) on the third Business Day prior to the date of the
proposed Conversion; provided, however, that the Conversion of a
Eurodollar Rate Committed Advance into a Base Rate Advance may be made on, and
only on, the last day of an Interest Period for such Eurodollar Rate Committed
Advance.  Each such notice of a
Conversion shall, within the restrictions specified above, specify

 

(i)                                     the
date of such Conversion,

 

(ii)                                  the
Committed Advances to be Converted, and

 

(iii)                               if
such Conversion is into Eurodollar Rate Committed Advances, the duration of the
Interest Period for each such Committed Advance.

 

2.12                          Prepayments.  Any
Borrower shall have the right at any time and from time to time, upon prior
written notice from such Borrower to the Agent, to prepay its outstanding
principal obligations with respect to its Committed Advances in whole or
ratably in part (except as provided in Section 2.15 or 2.19), provided
that every notice of prepayment given by a Subsidiary Borrower must be
countersigned by an authorized representative of TBC, in order to evidence the
consent of TBC, in its sole discretion, to that prepayment.  Such prepaying Borrower may be obligated to
make certain prepayments of obligations with respect to one or more Committed
Advances subject to and in accordance with this Section 2.12.

 

18

 

(a)                                  Base
Rate Borrowings Prepayments.  With
respect to Base Rate Borrowings, such prepayment shall be without premium or
penalty, upon notice given to the Agent, and shall be made not later than 11:00
a.m. (New York City time) on the date of such prepayment.  The Borrower shall designate in such notice
the amount and date of such prepayment. 
Accrued interest on the amount so prepaid shall be payable on the first
Business Day of the calendar quarter next following the prepayment.  The minimum amount of Base Rate Borrowings
which may be prepaid on any occasion shall be $10,000,000 or an integral
multiple of $1,000,000 in excess thereof or, if less, the total amount of Base
Rate Advances then outstanding for that Borrower.

 

(b)                                 Eurodollar
Rate Committed Borrowings Prepayments. 
With respect to Eurodollar Rate Committed Borrowings, such prepayment
shall be made on at least 3 Business Days’ prior written notice to the Agent
not later than 11:00 a.m. (New York City time), and if such notice is given the
applicable Borrower shall prepay the outstanding principal amount of the
Committed Advances constituting part of the same Committed Borrowing in whole
or ratably in part, together with accrued interest to the date of such
prepayment on the principal amount prepaid. 
The minimum amount of Eurodollar Rate Committed Borrowings which may be
prepaid on any occasion shall be $10,000,000 or an integral multiple of
$1,000,000 in excess thereof or, if less, the total amount of Eurodollar Rate
Committed Advances then outstanding for that Borrower.

 

(c)                                  Additional
Prepayment Payments.  The prepaying
Borrower shall, on the date of the prepayment of any Eurodollar Rate Committed
Advances, pay to the Agent for the account of each Lender interest accrued to
such date of prepayment on the principal amount prepaid plus, in the case only
of a prepayment on any date which is not the last day of an applicable
Eurodollar Interest Period, any amounts which may be required to compensate
such Lender for any losses or out-of-pocket costs or expenses (including any
loss, cost or expense incurred by reason of the liquidation or reemployment of
deposits or other funds, but excluding loss of anticipated profits) incurred by
such Lender as a result of such prepayment, provided that such Lender
shall exercise reasonable efforts to minimize any such losses, costs and
expenses.

 

(d)                                 Eurodollar
Rate Committed Advance Prepayment Expense. 
If, due to the acceleration of any of the Committed Advances pursuant to
Section 6.2(b), an assignment, repayment or prepayment under Section 2.19 or
2.20 or otherwise, any Lender receives payment of its portion of, or is subject
to any Conversion from, any Eurodollar Rate Committed Advance on any day other
than the last day of an Interest Period with respect to such Committed Advance,
the relevant Borrowers shall pay to the Agent for the account of such Lender
any amounts which may be payable to such Lender by such Borrower by reason of
payment on such day as provided in Section 2.12(c).

 

2.13                          Increases in
Costs.

 

(a)                                  Costs
from Law or Authorities.  If, due to
either

 

(1)                                  the
introduction of, or any change (other than, in the case of Eurodollar Rate
Borrowings, a change by way of imposition or an increase of reserve
requirements described in Section 2.9) in, or new interpretation of, any law or
regulation effective at any time and from time to time on or after the date
hereof, or

 

(2)                                  the
compliance with any guideline or the request from or by any central bank or
other governmental authority (whether or not having the force of law),

 

there is an increase in
the cost incurred by a Lender in agreeing to make or making, funding or
maintaining any Eurodollar Rate Committed Advance or Eurodollar Rate Bid
Advance then or at any time thereafter outstanding (excluding for purposes of
this Section 2.13 any such increased

 

19

 

costs resulting from (i)
Taxes or Other Taxes (as to which Section 2.14 shall govern) and (ii) changes
in the basis of taxation of overall net income or overall gross income by the
United States or by the foreign jurisdiction or state under the laws of which
such Lender is organized or has its Applicable Lending Office (or any political
subdivision thereof), then TBC shall from time to time, upon demand of such
Lender (with a copy of such demand to the Agent), pay to the Agent for the
account of such Lender such amounts as are required to compensate such Lender
for such increased cost, provided that such Lender shall exercise
reasonable efforts (consistent with its internal policy and legal and
regulatory restrictions) to minimize any such increased cost and provided
further that the Borrowers shall not be required to pay any such
compensation with respect to any period prior to the 90th day before the date
of any such demand, unless such introduction, change, compliance or request
shall have retroactive effect to a date prior to such 90th day.  A certificate as to the amount of such
increase in cost, submitted to the relevant Borrowers and the Agent by such
Lender, shall be conclusive and binding for all purposes under this Section
2.13(a), absent manifest error.

 

(b)                                 Increased
Capital Requirements.  If any Lender
determines that compliance with any law or regulation or any guidelines or
request from any central bank or other governmental authority (whether or not
having the force of law) which is enacted, adopted or issued at any time and
from time to time after the date hereof affects or would affect the amount of
capital required or expected to be maintained by such Lender (or any
corporation controlling such Lender) and that the amount of such capital is
increased by or based upon the existence of such Lender’s Commitment and other
commitments of this type, then, upon demand by such Lender (with a copy of such
demand to the Agent), the Borrowers shall immediately pay to the Agent for the
account of such Lender, from time to time as specified by such Lender,
additional amounts sufficient to compensate such Lender in the light of such
circumstances, to the extent that such Lender reasonably determines such
increase in capital to be allocable to the existence of such Lender’s
Commitment, provided that such Lender shall exercise reasonable efforts
(consistent with its internal policy and legal and regulatory restrictions) to
minimize any such compensation payable by the Borrowers hereunder and provided
further that the Borrowers shall not be required to pay any such
compensation with respect to any period prior to the 90th day before the date
of any such demand, unless such introduction, change, compliance or request
shall have retroactive effect to a date prior to such 90th day.  A certificate as to such amounts submitted
to the relevant Borrowers and the Agent by such Lender, shall be conclusive and
binding for all purposes, absent manifest error.

 

(c)                                  Borrower
Rights Upon Cost Increases.  Upon
receipt of notice from any Lender claiming compensation pursuant to this
Section 2.13 or Section 2.14 and as long as no Default has occurred and is
continuing, TBC shall have the right, on or before the 30th day after the date
of receipt of any such notice,

 

(i)                                     to
arrange for one or more Lenders or other commercial banks to assume the
Commitment of such Lender; subject, however, to payment to the Agent by the
assignor or the assignee of a processing and recording fee of $3,500, in the
event the assuming lender is not a Lender; or

 

(ii)                                  to
arrange for the Commitment of such Lender to be terminated and all Committed
Advances owed to such Lender to be prepaid;

 

and, in either case,
subject to payment in full of all principal, accrued and unpaid interest, fees
and other amounts payable under this Agreement and then owing to such Lender
immediately prior to the assignment or termination of the Commitment of such
Lender.

 

20

 

2.14                          Taxes.

 

(a)                                  Exclusion
and Inclusion of Taxes.  Any and all
payments by each Borrower hereunder or with respect to any Advances or under
any Notes shall be made, in accordance with Section 2.16, free and clear of and
without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto, excluding,
in the case of each Lender and the Agent, taxes that are imposed on its overall
net income by the United States and taxes that are imposed on its overall net
income (and franchise taxes imposed in lieu thereof)  by the state or foreign jurisdiction under the laws of which such
Lender or the Agent (as the case may be) is organized or any political
subdivision thereof and, in the case of each Lender, taxes that are imposed on
its overall net income ( and franchise taxes imposed in lieu thereof) by the
state or foreign jurisdiction of such Lender’s Applicable Lending Office or any
political subdivision thereof (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities in respect of payments
hereunder or with respect to any Advances or under any Notes, hereinafter
referred to as “Taxes”).  If any Borrower shall be required by law to
deduct any Taxes from or in respect to any sum payable hereunder or with
respect to any Advances or under any Note to any Lender or the 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 2.14) such Lender or the Agent (as the case may be) receives
an amount equal to the sum it would have received had no such deductions been
made, (ii) such Borrower shall make such deductions and (iii) such  Borrower shall pay the full amount deducted
to the relevant taxation authority or other authority in accordance with
applicable law.

 

(b)                                 Payment
of Other Taxes.  In addition, each
Borrower shall pay any present or future stamp, documentary, excise, property
or similar taxes, charges, or levies that arise from any payment made hereunder
or with respect to any Advances and under any Notes or from the execution,
delivery or registration of, performance under, or otherwise with respect to,
this Agreement or any Notes ( “Other Taxes”).

 

(c)                                  Indemnification
as to Taxes.  Each Borrower shall
indemnify each Lender and the Agent for and hold it harmless against the full
amount of Taxes and Other Taxes, and for the full amount of taxes of any kind
imposed by any jurisdiction on amounts payable under this Section 2.14, imposed
on or paid by such Lender or the Agent (as the case may be) and any liability (
including penalties, interest and expenses) arising therefrom or with respect
thereto.  This indemnification shall be
made within 30 days from the date such Lender or the Agent (as the case may be)
makes written demand therefor.

 

(d)                                 Evidence
of or Exemption from Taxes.  Within
30 days after the date of any payment of Taxes, the Borrower which paid such
Taxes shall furnish to the Agent, at its address referred to in Section 8.2,
the original or a certified copy of a receipt evidencing such payment.  In the case of any payment hereunder or with
respect to the Advances or under any Notes by or on behalf of any Borrower
through an account or branch outside the United States or by or on behalf of
any Borrower by a payor that is not a United States person, if the Borrower
determines that no taxes are payable in respect thereof, such Borrower shall
furnish, or shall cause such payor to furnish, to the Agent, at such address,
an opinion of counsel acceptable to the Agent stating that such payment is
exempt from Taxes.  For purposes of this
subsection (d) and subsection (e), the terms “United
States” and “United States person”
have the meanings specified in Section 7701 of the Internal Revenue Code.

 

(e)                                  Non-U.S.
Lenders.  Each Lender organized
under the laws of a jurisdiction outside the United States shall, on or prior
to the date of its execution and delivery of this Agreement (in the case of
each Lender listed in Schedule I), and from the date on which any other Lender
becomes a party hereto (in the case of each other Lender), and from time to
time thereafter as requested in writing by TBC (but only so long thereafter as
such Lender remains lawfully able to do so), provide each of the Agent and TBC
with two original Internal Revenue Service forms W-8BEN or W-8EC1, as

 

21

 

appropriate, or any successor form prescribed
by the Internal Revenue Service, to establish that such Lender is not subject
to, or is entitled to a reduced rate of, United States withholding tax on
payments pursuant to this Agreement or with respect to any Advances or any
Notes.  If the forms provided by a
Lender at the time such Lender first becomes a party to this Agreement
indicates a United States interest withholding tax rate in excess of zero,
withholding tax at such rate shall be considered excluded from Taxes unless and
until such Lender provides the appropriate form certifying that a lower rate
applies, whereupon withholding tax at such lower rate only shall be considered
excluded from Taxes for periods governed by such form; provided,
however, that, if at the date on which a Lender becomes a party to this
Agreement, the Lender assignor was entitled to payments under subsection
2.14(a) in respect of United States withholding tax with respect to interest
paid at such date, then, to such extent, the term Taxes shall include (in
addition to withholding taxes that may be imposed in the future or other
amounts otherwise includable in Taxes) United States withholding tax, if any,
applicable with respect to the Lender assignee on such date.  If any form or document referred to in this
subsection 2.14(e) requires the disclosure of information, other than
information necessary to compute the tax payable and information required on
the date hereof by Internal Revenue Service form W-8BEN or W-8EC1, that the
Lender reasonably considers to be confidential, the Lender shall give notice thereof
to the relevant Borrowers and shall not be obligated to include in such form or
document confidential information.

 

(f)                                    Lender
Failure to Provide IRS Forms.  For
any period with respect to which any Lender has failed to provide TBC with the
appropriate form described in subsection 2.14(e) (other than if such failure is
due to a change in law occurring after the date on which a form originally was
required to be provided or if such form otherwise is not required under
subsection 2.14(e)), such Lender shall not be entitled to indemnification under
subsection (a) or (c) with respect to Taxes imposed by the United States by
reason of such failure; provided, however, that should a Lender
become subject to Taxes because of its failure to deliver a form required
hereunder, TBC shall take such steps as such Lender shall reasonably request to
assist such Lender to recover such Taxes.

 

2.15                          Illegality.  If any Lender shall notify the Agent that
either

 

(a)                                  there
is any introduction of, or change in or in the interpretation of, any law or
regulation that in the opinion of counsel for such Lender in the relevant
jurisdiction makes it unlawful, or

 

(b)                                 any
central bank or other governmental authority asserts that it is unlawful

 

for such Lender to
continue to fund or maintain any Eurodollar Rate Advances or to perform its
obligations hereunder with respect to Eurodollar Rate Advances hereunder, then,
upon the issuance of such opinion of counsel or such assertion by a central
bank or other governmental authority, the Agent shall give notice of such
opinion or assertion to the Borrowers (accompanied by such opinion, if
applicable).  The Borrowers shall
forthwith either

 

(i)                                     prepay
in full all Eurodollar Rate Committed Advances and all Eurodollar Rate Bid
Advances made by such Lender, with accrued interest thereon or

 

(ii)                                  Convert
each such Eurodollar Rate Committed Advance made by such Lender into a Base
Rate Advance.

 

Upon such prepayment or
Conversion, the obligation of such Lender to make Eurodollar Rate Committed Advances
or Eurodollar Rate Bid Advances, or to Convert Committed Advances into
Eurodollar Rate Committed Advances, shall be suspended until the Agent shall
notify the Borrowers that the circumstances causing such suspension no longer
exists.

 

22

 

2.16                          Payments and
Computations.

 

(a)                                  Time
and Distribution of Payments.  The
Borrowers shall make each payment hereunder and with respect to any Advances or
under any Notes, without counterclaim or setoff, not later than 11:00 a.m. (New
York City time) on the day when due in U.S. dollars to the Agent at the Agent’s
Account in same day funds.  The Agent
shall promptly thereafter cause to be distributed like funds relating to the payment
of principal or interest or fees ratably (other than amounts payable pursuant
to Section 2.5, 2.9, 2.13, 2.14, 2.15 or 2.19) to the Lenders for the account
of their respective Applicable Lending Offices, and like funds relating to the
payment of any other amount payable to any Lender to such Lender for the
account of its Applicable Lending Office, in each case to be applied in
accordance with the terms of this Agreement. 
From and after the effective date of an assignment pursuant to Section
2.20, the Agent shall make all payments hereunder and with respect to any
Advances or under any Notes in respect of the interest assigned thereby to the
Lender assignee thereunder, and the parties to such assignment shall make all
appropriate adjustments in such payments for the periods prior to such effective
date directly between themselves.

 

(b)                                 Computation
of Interest and Fees.  All
computations of interest based on the Base Rate and utilization fees shall be
made by the Agent on the basis of a year of 365 or 366 days, as the case may
be.  All computations of interest based
on the Eurodollar Rate or the Federal Funds Rate and of Facility Fees shall be
made by the Agent, and all computations of interest pursuant to Section 2.9
shall be made by a Lender, on the basis of a year of 360 days, in each case for
the actual number of days (including the first day but excluding the last day)
occurring in the period for which such interest or fees are payable.  Each determination by the Agent (or, in the
case of Section 2.9, by a Lender) of an interest rate hereunder shall be
conclusive and binding for all purposes, absent manifest error.

 

(c)                                  Payment
Due Dates.  Whenever any payment
hereunder or with respect to any Advances or under any Notes shall be stated to
be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or fee, as the case may be,
but not later than the Termination Date or, if the Term Loan Election has been
exercised, the Maturity Date; provided, however, if such
extension would cause payment of interest on or principal of Eurodollar Rate
Advances to be made in the next following calendar month, such payment shall be
made on the immediately preceding Business Day.

 

(d)                                 Presumption
of Borrower Payment.  Unless the
Agent receives notice from a Borrower prior to the date on which any payment is
due to any Lenders hereunder that such Borrower will not make such payment in
full, the Agent may assume that the Borrower has made such payment in full to
the Agent on such date and the Agent may, in reliance upon such assumption,
cause to be distributed to each such Lender on such due date an amount equal to
the amount then due such Lender.  If and
to the extent that such Borrower has not made such payment in full to the
Agent, each such Lender shall repay to the Agent forthwith on demand such
amount distributed to such Lender together with interest thereon, for each day
from the date such amount is distributed to such Lender until the date such
Lender repays such amount to the Agent, at the Federal Funds Rate.

 

2.17                          Sharing of Payments, Etc.  If any Lender obtains
any payment (whether voluntary, involuntary, through the exercise of any right
of set-off, or otherwise) on account of the Committed Advances made by it
(other than pursuant to Sections 2.9, 2.13, 2.14, 2.15 or 2.19), in excess of
its ratable share of payments on account of the Committed Advances obtained by
all the Lenders, such Lender shall forthwith purchase from the other Lenders
such participations in the Committed Advances made by them as shall be
necessary to cause such purchasing Lender to share the

 

23

 

excess payment
ratably with each of them, provided, however, that if all or any portion
of such excess payment is thereafter recovered from such purchasing Lender,
such purchase from each other Lender shall be rescinded and each such other
Lender shall repay to the purchasing Lender the purchase price to the extent of
such recovery together with an amount equal to such Lender’s ratable share
(according to the proportion of (i) the amount of such Lender’s required
repayment to (ii) the total amount so recovered from the purchasing Lender) of
any interest or other amount paid or payable by the purchasing Lender in
respect of the total amount so recovered. 
The Borrowers agree that any Lender so purchasing a participation from
another Lender pursuant to this Section 2.17 may, to the fullest extent
permitted by law, exercise all its rights of payment (including the right of
set-off) with respect to such participation as fully as if such Lender were a
creditor of the Borrowers in the amount of such participation.

 

2.18                          Evidence of
Debt.

 

(a)                                  Lender
Records; If Notes Required.  Each
Lender shall maintain in accordance with its usual practice an account or
accounts evidencing the indebtedness of each Borrower to such Lender resulting
from each Committed Advance owing to such Lender from time to time, including
the amounts of principal and interest payable and paid to such Lender from time
to time hereunder in respect of Committed Advances.  Each Borrower shall, upon notice by any Lender to such Borrower
(with a copy of such notice to the Agent) to the effect that a Committed Note
is required or appropriate in order for such Lender to evidence (whether for
purposes of pledge, enforcement or otherwise) the Committed Advances owing to,
or to be made by, such Lender, such Borrower shall promptly execute and deliver
to such Lender a Committed Note payable to the order of such Lender in a
principal amount up to the Commitment of such Lender.

 

(b)                                 Record
of Borrowings, Payables and Payments.  The Register maintained by the Agent pursuant to Section 2.20(d)
shall include a control account, and a subsidiary account for each Lender, in
which accounts (taken together) shall be recorded

 

(i)                                     the
date and amount of each Borrowing made hereunder to each Borrower, the Type of
Advances constituting such Borrowing and, if appropriate, the Interest Period
applicable thereto,

 

(ii)                                  the
terms of each assignment pursuant to Section 2.20,

 

(iii)                               the
amount of any principal or interest due and payable or to become due and
payable from each Borrower to each Lender hereunder, and

 

(iv)                              the
amount of any sum received by the Agent from a Borrower hereunder and each
Lender’s share thereof.

 

(c)                                  Evidence
of Payment Obligations.  Entries
made in good faith by the Agent in the Register pursuant to subsection (b)
above, and by each Lender in its account or accounts pursuant to subsection (a)
above, shall be prima  facie evidence of the amount of principal
and interest due and payable or to become due and payable from a Borrower to,
in the case of the Register, each Lender and, in the case of such account or
accounts, such Lender, under this Agreement, absent manifest error; provided,
however, that the failure of the Agent or such Lender to make an entry,
or any finding that an entry is incorrect, in the Register or such account or
accounts shall not limit or otherwise affect the obligations of the Borrowers
under this Agreement.

 

24

 

2.19                          Alteration
of Commitments and Addition of Lenders.

 

(a)                                  Alter
Lender Commitment.  By a written
agreement executed only by TBC, the Agent and the affected Lender and any
non-party lender involved,

 

(i)                                     the Commitment of
such affected Lender may be increased to the amount set forth in such
agreement;

 

(ii)                                  such non-party lender
may be added as a Lender with a Commitment as set forth in such agreement, provided
that such lender agrees to be bound by all the terms and provisions of this
Agreement; and

 

(iii)                               the unused portion of
the Commitment of such affected Lender may be reduced or terminated and the
Committed Advances owing to such Lender may be prepaid in whole or in part, all
as set forth in such agreement.

 

(b)                                 Conditions
to Alteration.  The Agent may
execute any such agreement without the prior consent of any Lender other than
the Lender affected, provided, however, that if at the time the
Agent proposes to execute such agreement either (A) TBC’s long-term senior
unsecured debt is rated lower than A- by S&P or lower than A3 by Moody’s or
(B) a Default has occurred and is continuing, then the Agent shall not execute
any such agreement unless it has first obtained the prior written consent of
the Majority Lenders, and provided  further that the Agent shall
not execute any such agreement without the prior written consent of the
Majority Lenders if such agreement would increase the total of the Commitments
to an amount in excess of $2,500,000,000 or, pursuant to Section 2.19(c),
$3,000,000,000.

 

(c)                                  Increase
Total Commitment.  The Company has
the right, once prior to the initial Termination Date (and, if the Termination
Date is extended pursuant to Section 2.21, once following such extension), to
increase the total of the Commitments through a Request for Alteration, in minimum increments of $50,000,000,
up to a maximum aggregate of Commitments of $3,000,000,000, provided
that, in addition to the  requirements specified in Section 2.19(b), at
the time of and after giving effect to an increase, TBC’s long-term senior
unsecured non-credit-enhanced debt ratings from Moody’s and S&P are better
than or equal to A3 and A-, respectively. 
The Company may offer the increases to

 

(i)                                     the
Lenders, and each Lender shall have the right, but no obligation, to increase
its Commitment, by giving notice thereof to the Agent, to all or a portion of
the proposed increase (the “Proposed
Increased Commitment”), allocations to be based on the ratio of each
Lender’s Proposed Increased Commitment, if any, to the aggregate of all
Proposed Increased Commitments, and

 

(ii)                                  third
party financial institutions acceptable to the Agent, provided  that the minimum commitment of each such
institution equals or exceeds $50,000,000.

 

(d)                                 Request
for Alteration.  The Agent shall
give each Lender prompt notice of any such agreement becoming effective.  All requests for Lender consent under the
provisions of this Section 2.19 shall specify the date upon which any such
increase, addition, reduction, termination, or prepayment shall become
effective (the “Effective Date”)
and shall be made by means of a Request for
Alteration substantially in the form as set forth in Exhibit C.  On the Effective Date on which the
Commitment of any Lender is increased, decreased, terminated or created or on
which prepayment is made, all as described in such Request for Alteration, the
Borrowers or such Lender, as the case may be, shall make available to the Agent
not later than 12:30 p.m. (New York City time) on such date, in same day funds,
the amount, if any, which may be required (and the Agent shall distribute such
funds received by it to the Borrowers or to such Lenders, as the case may be)
so that at the close of business on such date the sum of the Committed Advances
of

 

25

 

each Lender then outstanding shall be in the same
proportion to the total of the Committed Advances of all the Lenders then
outstanding as the Commitment of such Lender is to the total of the
Commitments.  The Agent shall give each
Lender notice of the amount to be made available by, or to be distributed to,
such Lender at least 3 Business Days before such payment is made.

 

2.20                          Assignments;
Sales of Participations and Other Interests in Advances.

 

(a)                                  Assignment
of Lender Obligations.  From time to
time each Lender may, with the prior written consent of TBC (so long as no
Event of Default has occurred and is continuing) and subject to the
qualifications set forth below, assign to one or more Lenders or an Eligible
Assignee all or any portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Commitment, the Committed
Advances owing to it and the Committed Note, if any, held by it) and will, at
any time, if arranged by the Company pursuant to clause (i)(A) below upon at
least 30 days’ notice to such Lender and the Agent, assign to one or more
Eligible Assignees all of its rights and obligations under this Agreement
(including without limitation, all of its Commitment, the Committed Advances
owing to it and the Committed Note, if any, held by it); subject to the
following:

 

(i)                                     If
such Lender notifies TBC and the Agent of its intent to request the consent of
TBC to an assignment, TBC shall have the right, for 30 days after receipt of
such notice and so long as no Event of Default has occurred and is continuing,
in its sole discretion either (A) to arrange for one or more Eligible Assignees
to accept such assignment (a “Required
Assignment”) or (B) to arrange for the rights and obligations of
such Lender (including, without limitation, such Lender’s Commitment), and the
total Commitments, to be reduced by an amount equal to the amount of such
Lender’s Commitment proposed to be assigned and, in connection with such
reduction, to prepay that portion of the Committed Advances owing to such
Lender which it proposes to assign;

 

(ii)                                  If
TBC fails to notify such Lender within 30 days of TBC’s receipt of such
Lender’s request for consent to assignment, the Borrowers shall be deemed to
consent to the proposed assignment;

 

(iii)                               Any
such assignment shall not require any Borrower to file a registration statement
with the Securities and Exchange Commission or apply to qualify the interests
in the Committed Advances under the blue sky laws of any state and the
assigning Lender shall otherwise comply with all federal and state securities
laws applicable to such assignment;

 

(iv)                              Unless
TBC consents, the amount of the Commitment of the assigning Lender being
assigned pursuant to any such assignment (determined as of the date of the
assignment) shall either (A) equal 50% of all such rights and obligations (or
100% in the case of a Required Assignment) or (B) not be less than $10,000,000
or an integral multiple of $1,000,000 in excess thereof;

 

(v)                                 Unless
TBC consents, the aggregate amount of the Commitment assigned pursuant to all
such assignments of such Lender (after giving effect to such assignment) shall
in no event exceed 50% (except in the case of a Required Assignment) of all
such Lender’s Commitment (as set forth in Schedule I, in the case of each
Lender that is a party hereto as of November 21, 2003, or as set forth in the
Register as the aggregate Commitment assigned to such Lender pursuant to one or
more assignments, in the case of any assignee); and

 

(vi)                              No
Lender shall be obligated to make a Required Assignment unless such Lender has
received payments in an aggregate amount at least equal to the outstanding
principal

 

26

 

amount of all Committed Advances being
assigned, together with accrued interest thereon to the date of payment of such
principal amount and all other amounts payable to such Lender under this
Agreement (including without limitation Section 2.12(c), provided that
such Lender shall receive its pro rata share of the Facility Fee on the next
date on which the Facility Fee is payable).

 

(b)                                 Effect
of Lender Assignment.  From and
after the effective date of any assignment pursuant to Section 2.20(a), (i) the
assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such assignment, it
shall have the rights and obligations of a Lender hereunder and (ii) the Lender
assignor thereunder shall, to the extent that rights and obligations hereunder
have been assigned by it pursuant to such assignment, relinquish its rights
(other than its rights under Section 2.13, 2.14, 2.19 or 8.3 to the extent any
claim thereunder relates to an event arising prior to such assignment) and be
released from its obligations under this Agreement (and, in the case of an
assignment covering all or the remaining portion of an assigning Lender’s
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto).

 

(c)                                  Security
Interest; Assignment to Lender Affiliate. 
Notwithstanding any other provision in this Agreement, any Lender may,
upon prior or contemporaneous notice to TBC and the Agent, at any time (i)
create a security interest in all or any portion of its rights under this
Agreement (including without limitation, the Advances owing to it and the Notes
held by it, if any) in favor of any Federal Reserve Bank in accordance with
Regulation A of the Board of Governors of the Federal Reserve System, and (ii)
assign all or any portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Commitment, the
Committed Advances owing to it and the Committed Note held by it, if any) to an
Affiliate of such Lender unless the result of such an assignment would
be to increase the cost to any Borrowers of requesting, borrowing, continuing,
maintaining, paying or converting any Advances.

 

(d)                                 Agent’s
Register.  The Agent shall maintain
at its address referred to in Section 8.2 a copy of each assignment delivered
to and accepted by it and a register for the recordation of the names and
addresses of the Lenders and the Commitment of, and principal amount of the
Committed Advances of each Borrower owing to, 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 the Borrowers,
the Agent and the Lenders may treat each entity 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 the Borrowers or any Lender at any reasonable time and from time
to time upon reasonable prior notice. 
Upon receipt by the Agent from the assigning Lender of an assignment in
form and substance satisfactory to the Agent executed by an assigning Lender
and an assignee representing that it is an Eligible Assignee, together with
evidence of each Committed Advance subject to such assignment, and a processing
and recording fee of $3,500 (payable by either the assignor or the assignee),
the Agent shall, if such assignment is a Required Assignment or has been consented
to by TBC to the extent required by Section 2.20(a) or has been effected
pursuant to Section 2.21(c), (i) accept such assignment, (ii) record the
information contained therein in the Register, and (iii) give prompt notice
thereof to TBC.

 

(e)                                  Lender
Sale of Participations.  Each Lender
may sell participations in all or a portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion of its
Commitment, the Advances owing to it and the Notes held by it, if any) to one
or more Affiliates of such Lender or to one or more other commercial banks; provided,
however, that

 

(i)                                     any
such participation shall not require any Borrowers to file a registration
statement with the Securities and Exchange Commission or apply to qualify any
interests in the Advances or any Notes under the blue sky laws of any state and
the Lender selling or

 

27

 

granting such participation shall otherwise
comply with all federal and state securities laws applicable to such
transaction,

 

(ii)                                  no
purchaser of such a participation shall be considered to be a “Lender” for any
purpose under the Agreement,

 

(iii)                               such
Lender’s obligations under this Agreement (including, without limitation, its
Commitment to the Borrowers) shall remain unchanged,

 

(iv)                              such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations,

 

(v)                                 such
Lender shall remain the holder of any Notes issued with respect to its Advances
for all purposes of this Agreement,

 

(vi)                              the
Borrowers, the Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement, and

 

(vii)                           no
participant under any such participation shall have any right to approve any
amendment or waiver of any provision of this Agreement or any Note, or any
consent to any departure by any Borrower therefrom, except to the extent that
such amendment, waiver or consent would reduce the principal of, or interest
on, the Notes or any fees or other amounts payable hereunder, in each case to
the extent subject to such participation, or postpone any date fixed for any
payment of principal of, or interest on, the Notes or any fees or other amounts
payable hereunder, in each case to the extent subject to such participation.

 

(f)                                    Confidential
Borrower Information.  Any Lender
may, in connection with any assignment or participation or proposed assignment
or participation pursuant to this Section 2.20, disclose to the assignee or
participant or proposed assignee or participant, any information relating to
the Borrowers furnished to such Lender by or on behalf of the Borrowers; provided,
however, that, prior to any such disclosure of Confidential Information,
such Lender shall obtain the written consent of the Borrowers, and the assignee
or participant or proposed assignee or participant shall agree to preserve the
confidentiality of any such Confidential Information received by it from such Lender
except as disclosure may be required or appropriate to governmental
authorities, pursuant to legal process, or by law or governmental regulation or
authority.

 

2.21                          Extension of
Termination Date.

 

(a)                                  Extension
Request.  TBC may, on behalf of
itself and the Subsidiary Borrowers, by written notice to the Agent in the form
of Exhibit E (each such notice being an “Extension
Request”) given no earlier than 60 days and no later than 45 days
prior to the then applicable Termination Date, request that the then applicable
Termination Date be extended to a date 364 days after the then applicable
Termination Date; provided, however, that TBC shall not have
exercised the Term Loan Conversion Option for Committed Advances outstanding on
such Termination Date prior to such time. 
Such extension shall be effective with respect to each Lender which, by
a written notice in the form of Exhibit F (a “Continuation
Notice”) to TBC and the Agent given no earlier than 30 days and no
later than 20 days prior to the then applicable Termination Date, consents, in
its sole discretion, to such extension (each Lender giving a Continuation
Notice being referred to sometimes as a “Continuing
Lender” and each Lender other than a Continuing Lender being a “Non-Extending Lender”), provided,
however, that such
extension shall be effective only if the aggregate Commitments of the
Continuing Lenders are not less than 51% of the aggregate

 

28

 

Commitments of the Lenders on the date of the
Extension Request.  No Lender shall have
any obligation to consent to any such extension of the Termination Date.  The Agent shall notify each Lender of the
receipt of an Extension Request within three (3) Business Days after receipt
thereof.  The Agent shall notify the
Company and the Lenders no later than 15 days prior to the then applicable
Termination Date whether the Agent has received Continuation Notices from
Lenders holding at least 51% of the aggregate Commitments on the date of the
Extension Request.

 

(b)                                 Non-Extending
Lenders.  The Commitment of each
Non-Extending Lender shall terminate at the close of business on the
Termination Date in effect prior to the delivery of such Extension Request
without giving any effect to such proposed extension, and on such Termination
Date TBC shall take one of the following three actions:

 

(i)                                     Replace
the Non-Extending Lenders pursuant to Section 2.21(c); or

 

(ii)                                  Pay
or cause to be paid to the Agent, for the account of the Non-Extending Lenders,
an amount equal to the Non-Extending Lenders’ Committed Advances, together with
accrued but unpaid interest and fees thereon and all other amounts then payable
hereunder to the Non-Extending Lenders; or

 

(iii)                               By
giving notice to the Agent no later than three days prior to the Termination
Date in effect prior to the delivery of such Extension Request, elect not to
extend the Termination Date beyond the then applicable Termination Date,  and in this event the Borrowers may in
their sole discretion repay any amount of the Committed Advances then
outstanding or exercise the Term Loan Conversion Option with respect to the
Committed Advances outstanding on the Termination Date in accordance with
Section 2.3.

 

(c)                                  Replacement
Lenders.  A Non-Extending Lender
shall be obligated, at the request of TBC, to assign at any time prior to the
close of business on the Termination Date applicable to such Non-Extending
Lender all of its rights (other than rights that would survive the termination
of the Agreement pursuant to Section 8.3) and obligations hereunder to one or
more Lenders or other commercial banks nominated by TBC and willing to become
Lenders in place of such Non-Extending Lender (the “Replacement Lenders”). 
In order to qualify as a Replacement Lender, a Lender or lender must
satisfy all of the requirements of this Agreement (including without limitation
the terms of Section 2.20 relating to Required Assignments).  Such obligation of each Non-Extending
Lenders is subject to such Non-Extending Lender’s receiving (i) payment in full
from the Replacement Lenders of the principal amount of all Advances owing to
such Non-Extending Lender immediately prior to an assignment to the Replacement
Lenders and (ii) payment in full from the relevant Borrowers of all accrued
interest and fees and other amounts payable hereunder and then owing to such
Non-Extending Lender immediately prior to the assignment to the Replacement
Lenders.  Upon such assignment, the
Non-Extending Lender shall no longer be a Lender, such Replacement Lender shall
become a Continuing Lender, and the Agent shall make appropriate entries in the
Register to reflect the foregoing.

 

2.22                          Subsidiary
Borrowers.

 

(a)                                  Subsidiary
Borrower Designation.  TBC may at
any time, and from time to time, by delivery to the Agent of a Borrower Subsidiary Letter substantially in
the form of Exhibit D, duly executed by TBC and the respective Subsidiary,
designate such Subsidiary as a “Subsidiary
Borrower” for purposes of this Agreement, and such Subsidiary shall
thereupon become a “Subsidiary Borrower” for purposes of this Agreement and, as
such, shall have all of the rights and obligations of a Borrower
hereunder.  The Agent shall promptly
notify each Lender of each such designation by TBC and the identity of the
designated Subsidiary.

 

29

 

(b)                                 TBC
Consent to Subsidiary Borrower Borrowings and Notices.  No Advances shall be made to a Subsidiary
Borrower, and no Conversion of any Advances at the request of a Subsidiary
Borrower shall be effective, without, in each and every instance, the prior
consent of TBC, in its sole discretion, which shall be evidenced by the
countersignature of TBC to the relevant Notice of Borrowing or notice of
Conversion.  In addition, no notices
which are to be delivered by a Borrower hereunder shall be effective, with
respect to any Subsidiary Borrower, unless the notice is countersigned by TBC.

 

(c)                                  Subsidiary
Borrower Termination Event.  The
occurrence of any of the following events with respect to any Subsidiary
Borrower shall constitute a “Subsidiary
Borrower Termination Event” with respect to such Subsidiary
Borrower:

 

(i)                                     such
Subsidiary Borrower ceases to be a Subsidiary;

 

(ii)                                  such
Subsidiary Borrower is liquidated or dissolved;

 

(iii)                               such
Subsidiary Borrower fails to preserve and maintain its existence or makes any
material change in the nature of its business as carried out on the date such
Subsidiary Borrower became a Borrower hereunder;

 

(iv)                              such
Subsidiary Borrower merges or consolidates with or into another Person, or
conveys, transfers, leases, or otherwise disposes of (whether in one
transaction or in a series of transactions) all or substantially all of its
assets (whether now owned or hereafter acquired) to any Person (except that a
Subsidiary Borrower may merge into or dispose of assets to another Borrower);

 

(v)                                 any
of the “Events of Default” described in Section 6.1(a) through (f) occurs to or
with respect to such Subsidiary Borrower as if such Subsidiary Borrower were
“TBC”; or

 

(vi)                              the
Guaranty with respect to such Subsidiary Borrower ceases, for any reason, to be
valid and binding on TBC or TBC so states in writing.

 

(d)                                 Terminated
Subsidiary Borrower.  Upon the
occurrence of a Subsidiary Borrower Termination Event with respect to any
Subsidiary Borrower, such Subsidiary Borrower (a “Terminated Subsidiary Borrower”) shall cease to be a Borrower
for purposes of this Agreement and shall no longer be entitled to request or
borrow Advances hereunder.  All
outstanding Advances of a Terminated Subsidiary Borrower shall be automatically
due and payable as of the date on which the Subsidiary Borrower Termination
Event of such Terminated Subsidiary Borrower occurred, together with accrued
interest thereon and any other amounts then due and payable by that Borrower hereunder,
unless, in the case of a Subsidiary Borrower Termination Event described in
paragraph (iv) of Section 2.22(c), the other Person party to the transaction is
a Borrower and such other Borrower has assumed in writing all of the
outstanding Advances and other obligations under this Agreement and under the
Notes, if any, of the Terminated Subsidiary Borrower.

 

(e)                                  TBC
as Subsidiary Borrowers’ Agent. 
Each of the Subsidiary Borrowers hereby appoints and authorizes TBC to
take such action as agent on its behalf and to exercise such powers under this
Agreement as are delegated to TBC by the terms hereof, together with such
powers as are reasonably incidental thereto.

 

(f)                                    Subsidiaries’
Several Liabilities. 
Notwithstanding anything in this Agreement to the contrary, each of the
Subsidiary Borrowers shall be severally liable for the liabilities and
obligations of such Subsidiary Borrower under this Agreement and its
Borrowings, and Notes, if any.  No
Subsidiary Borrower shall be liable for the obligations of any other Borrower
under this

 

30

 

Agreement or any Borrowings of any other
Borrower or any other Borrower’s Notes, if any.  Each Subsidiary Borrower shall be severally liable for all
payments of the principal of and interest on Advances to such Subsidiary
Borrower, and any other amounts due hereunder that are specifically allocable
to such Subsidiary Borrower or the Advances to such Subsidiary Borrower.  With respect to any amounts due hereunder,
including fees, that are not specifically allocable to a particular Borrower,
each Borrower shall be liable for such amount pro rata in the same proportion
as such Borrower’s outstanding Advances bear to the total of then-outstanding
Advances to all Borrowers.

 

ARTICLE 3

Representations and Warranties

 

3.1                               Representations and Warranties by the Borrowers.  Each of the Borrowers represents and
warrants as follows:

 

(a)                                  Corporate
Standing.  TBC is a duly organized
corporation existing in good standing under the laws of the State of
Delaware.  Each Subsidiary Borrower is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, and each of TBC and each Subsidiary Borrower
is qualified to do business in every jurisdiction where such qualification is
required, except where the failure to so qualify would not have a material
adverse effect on the financial condition of TBC and the Subsidiary Borrowers
as a whole.

 

(b)                                 Corporate
Powers; Governmental Approvals.  The
execution and delivery and the performance of the terms of this Agreement are,
and the execution and delivery and the performance of the terms of any Notes
and of each Guaranty will be, within the corporate powers of each Borrower
party thereto, have been or will have been (as appropriate) duly authorized by
all necessary corporate action, have, or will have, received (as appropriate)
all necessary governmental approval, if any (which approval, if any, remains in
full force and effect), and do not contravene any law, any provision of the
Certificate of Incorporation or By-Laws of any Borrower party thereto or any
contractual restriction binding on any Borrower party thereto.

 

(c)                                  Enforceability.  This Agreement and the Notes, if any, when
duly executed and delivered by each Borrower party thereto, will constitute
legal, valid and binding obligations of such Borrower, enforceable against such
Borrower in accordance with their respective terms, and each Guaranty, when
duly executed and delivered by TBC, will constitute a legal, valid and binding
obligation of TBC, enforceable against TBC in accordance with its terms,
subject to general equitable principles and except as the enforceability
thereof may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws of general application relating to creditors’
rights.

 

(d)                                 No
Material Pending or Threatened Actions. 
In TBC’s opinion, there are no pending or threatened actions or
proceedings before any court or administrative agency that are reasonably
likely to have a material adverse affect on the financial condition or
operations of the Company which is likely to materially impair the ability of
the Company to repay the Advances or which would affect the legality, validity
or enforceability of this Agreement or the Advances.

 

(e)                                  Consolidated
Statements.  The Consolidated
statement of financial position as of December 31, 2002 and the related
Consolidated statement of earnings and retained earnings for the year then
ended (copies of which have been furnished to each Lender) correctly set forth
the Consolidated financial condition of TBC and its Subsidiaries as of such
date and the result of the Consolidated operations for such year.  The Consolidated statement of financial
position as of September 30, 2003

 

31

 

and the related Consolidated statement of
earnings and retained earnings for the nine month period then ended (copies of
which have been furnished to each Lender) correctly set forth, subject to
year-end audit adjustments, the Consolidated financial condition of TBC and its
Subsidiaries as of such date and the result of the Consolidated operations for
such nine month period.

 

(f)                                    Regulation
U.  No Borrower is engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stock within the meaning of Regulation U issued by the Board of Governors of
the Federal Reserve System, and no proceeds of any Advance will be used to
purchase or carry any margin stock or to extend credit to others for the
purpose of purchasing or carrying any margin stock.  Following application of the proceeds of each Advance, not more
than 25 percent of the value of the assets (either of any Borrower only or of
each Borrower and its subsidiaries on a Consolidated basis) subject to the
provisions of Section 4.2(a) or subject to any restriction contained in any
agreement or instrument between any Borrower and any Lender or any Affiliate of
a Lender relating to Debt within the scope of Section 6.1(d) will be margin
stock (within the meaning of Regulation U issued by the Board of Governors of
the Federal Reserve System).

 

(g)                                 Investment
Company Act.  No Borrower is an
“investment company,” or an “affiliated person” of, or “promoter” or “principal
underwriter” for, an “investment company,” as such terms are defined in the
Investment Company Act of 1940, as amended. 
Neither the making of any Advances, nor the application of the proceeds
or repayment thereof by any Borrower, nor the consummation of the other
transactions contemplated hereby, will violate any provision of such Act or any
rule, regulation or order of the Securities and Exchange Commission thereunder.

 

(h)                                 No
Material Adverse Change.  Except as
disclosed in filings with the Securities and Exchange Commission prior to the
date hereof, there has been no material adverse change in the Company’s
financial condition or results of operations since December 31, 2002 that is
likely to impair the ability of the Company to repay the Advances.

 

ARTICLE 4

Covenants of TBC

 

4.1                                Affirmative Covenants of TBC. 
From the date of this Agreement and so long as any amount is payable by
a Borrower to any Lender hereunder or any Commitment is outstanding, TBC will:

 

(a)                                  Periodic Reports.  Furnish to the Lenders:

 

(1)                                  within
60 days after the close of each of the first three quarters of each of TBC’s
fiscal years, a Consolidated statement of financial position of TBC and the
Subsidiaries as of the end of such quarter and a Consolidated comparative
statement of earnings and retained earnings of TBC and the Subsidiaries for the
period commencing at the end of the previous fiscal year and ending with the
end of such quarter, each certified by an authorized officer of TBC,

 

(2)                                  within
120 days after the close of each of TBC’s fiscal years, and with respect to any
quarter thereof, if requested in writing by the Majority Lenders (with a copy
to the Agent), within 60 days after the later of (x) the close of any of the
first three quarters thereof subject of such request and (y) such request, a
statement certified by an authorized officer of TBC showing in detail the
computations required by the provisions

 

32

 

of Sections
4.2(a), 4.2(b), 4.2(c) and 4.2(d), based on the figures which appear on the
books of account of TBC and the Subsidiaries at the close of such quarters,

 

(3)                                  within
120 days after the close of each of TBC’s fiscal years, a copy of the annual
audit report of TBC, certified by independent public accountants of nationally
recognized standing, together with financial statements consisting of a
Consolidated statement of financial position of TBC and the Subsidiaries as of
the end of such fiscal year and a Consolidated statement of earnings and
retained earnings of TBC and the Subsidiaries for such fiscal year,

 

(4)                                  within
120 days after the close of each of TBC’s fiscal years, a statement certified
by the independent public accountants who shall have prepared the corresponding
audit report furnished to the Lenders pursuant to the provisions of clause (3)
of this subsection (a), to the effect that, in the course of preparing such
audit report, such accountants had obtained no knowledge, except as
specifically stated, that TBC had been in violation of the provisions of any
one of Sections 4.2(a), 4.2(b), 4.2(c) and 4.2(d), at any time during such
fiscal year,

 

(5)                                  promptly
upon their becoming available, all financial statements, reports and proxy
statements which TBC sends to its stockholders,

 

(6)                                  promptly
upon their becoming available, all regular and periodic financial reports which
TBC or any Subsidiary files with the Securities and Exchange Commission or any
national securities exchange,

 

(7)                                  within
3 Business Days after the discovery of the occurrence of any event which
constitutes a Default, notice of such occurrence together with a detailed
statement by a responsible officer of TBC of the steps being taken by TBC or
the appropriate Subsidiary to cure the effect of such event, and

 

(8)                                  such
other information respecting the financial condition and operations of TBC or
the Subsidiaries as the Agent may from time to time reasonably request.

 

In
lieu of furnishing the Lenders the items referred to in clauses (1), (3), (5)
and (6) above, TBC may notify the Lenders that such items are available on
TBC’s website at www.boeing.com, on the SEC’s website at www.sec.gov or at such
other website as notified to the Agent and the Lenders.

 

(b)                                 Payment of Taxes,
Etc.  Duly pay and discharge, and
cause each Subsidiary duly to pay and discharge, all material taxes,
assessments and governmental charges upon it or against its properties prior to
a date which is 5 Business Days after the date on which penalties are attached
thereto, except and to the extent only that the same shall be contested in good
faith and by appropriate proceedings by TBC or the appropriate Subsidiary.

 

(c)                                  Insurance.  Maintain, and cause each Subsidiary to
maintain, with financially sound and reputable insurance companies or
associations, insurance of the kinds, covering the risks and in the relative
proportionate amounts usually carried by companies engaged in businesses
similar to that of TBC or such Subsidiary, except, to the extent consistent
with good business practices, such insurance may be provided by TBC through its
program of self insurance.

 

(d)                                 Corporate Existence.  Preserve and maintain its corporate
existence.

 

33

 

(e)                                  Material
Compliance With Laws.  Comply, and
cause each Subsidiary to comply, in all material respects with all applicable
laws (including ERISA and applicable environmental laws), except to the extent
that failure to so comply would not have a material adverse effect on the
financial condition or operations of the Company.

 

4.2                                General Negative Covenants of TBC. 
From the date of this Agreement and so long as any amount shall be
payable by TBC or any other Borrower to any Lender hereunder or any Commitment
shall be outstanding, TBC will not:

 

(a)                                  Mortgages, Liens, Etc.  Create, incur, assume or suffer to
exist any mortgage, pledge, lien, security interest or other charge or
encumbrance (including the lien or retained security title of a conditional
vendor) upon or with respect to any of its Property, Plant and Equipment, or
upon or with respect to the Property, Plant and Equipment of any Subsidiary, or
assign or otherwise convey, or permit any Subsidiary to assign or otherwise
convey, any right to receive income from or with respect to its Property, Plant
and Equipment, except

 

(1)                                  liens
in connection with workmen’s compensation, unemployment insurance or other
social security obligations;

 

(2)                                  liens
securing the performance of bids, tenders, contracts (other than for the
repayment of borrowed money), leases, statutory obligations, surety and appeal
bonds, liens to secure progress or partial payments made to TBC or such
Subsidiary and other liens of like nature made in the ordinary course of
business;

 

(3)                                  mechanics’,
workmen’s, materialmen’s or other like liens arising in the ordinary course of
business in respect of obligations which are not due or which are being
contested in good faith;

 

(4)                                  liens
for taxes not yet due or being contested in good faith and by appropriate
proceedings by TBC or the affected Subsidiary;

 

(5)                                  liens
which arise in connection with the leasing of equipment in the ordinary course
of business;

 

(6)                                  liens
on Property, Plant and Equipment owned by TBC or any Subsidiary of TBC existing
on the date of this Agreement;

 

(7)                                  liens
on assets of a Person existing at the time such Person is merged into or
consolidated with TBC or a Subsidiary of TBC or at the time of purchase, lease,
or acquisition of the property or Voting Stock of such Person as an entirety or
substantially as an entirety by TBC or a Subsidiary of TBC, whether or not any
Debt secured by such liens is assumed by TBC or such Subsidiary, provided
that such liens are not created in anticipation of such purchase, lease,
acquisition or merger;

 

(8)                                  liens
securing Debt of a Subsidiary of TBC owing to TBC or to another Subsidiary;

 

(9)                                  liens
on assets existing at the time of acquisition of such property by TBC or a
Subsidiary of TBC or purchase money liens to secure the payment of all or part
of the purchase price of property upon acquisition of such assets by TBC or
such Subsidiary or to secure any Debt incurred or guaranteed by TBC or a
Subsidiary prior to, at the time of, or within one year after the later of the
acquisition, completion or construction (including any improvements on existing
property), or commencement of full operation, of such property, which Debt is
incurred or guaranteed solely for the purpose of financing all or

 

34

 

any part of the purchase price thereof or construction or improvements
thereon; provided, however, that in the case of any such
acquisition, construction or improvement, the lien shall not apply to any
property theretofore owned by TBC or such Subsidiary other than, in the case of
such construction or improvement, any theretofore unimproved real property on
which the property so constructed or the improvement made is located;

 

(10)                            liens
securing obligations of TBC or a Subsidiary incurred in conjunction with
industrial revenue bonds or other instruments utilized in connection with incentive
structures for tax purposes issued for the benefit of TBC or a Subsidiary in
connection with any Property, Plant and Equipment used by TBC or a Subsidiary;

 

(11)                            any
extension, renewal or replacement (or successive extensions, renewals or
replacements in whole or in part of any lien referred to in the foregoing; provided,
however, that the principal amount of Debt secured thereby shall not exceed
the principal amount of Debt so secured at the time of such extension, renewal
or replacement and that such extension, renewal or replacement shall be limited
to all or any part of the property that secured the lien so extended, renewed
or replace (plus improvements and construction on such property); and

 

(12)                            other
liens, charges and encumbrances, so long as the aggregate amount of the
Consolidated Debt for which all such liens, charges and encumbrances serve as
security does not exceed 15% of Consolidated net Property, Plant and Equipment.

 

(b)                                 Consolidated Debt.  Permit Consolidated Debt (subject to Section
4.3) to be at any time more than 60% of Total Capital, where “Total Capital” means the sum of
Shareholders’ Equity and Consolidated Debt.

 

(c)                                  Payment in
Violation of an Agreement.  Make any
payment, or permit any Subsidiary to make any payment, of principal or
interest, on any Debt which payment would constitute a violation of the terms
of this Agreement or of the terms of any indenture or agreement binding on such
corporation or to which such corporation is a party except, in the case of any
payment made by a Subsidiary, to the extent such payment is not likely to
impair the ability of TBC to repay the Advances.

 

(d)                                 Merger or
Consolidation.  Merge or consolidate
with or into, or convey, transfer, lease, or otherwise dispose of (whether in
one transaction or in a series of transactions) all or substantially all of its
assets (whether now owned or hereafter acquired) to any Person except that a
Borrower may merge or consolidate with any Person so long as such Borrower is
the surviving corporation and no Default has occurred and is continuing or
would result therefrom, and except that any direct or indirect Subsidiary of
TBC may merge or consolidate with or into, or dispose of assets to, TBC or any
other direct or indirect Subsidiary of TBC, provided, in each case, that
no Event of Default has occurred and is continuing at the time of such proposed
transaction or would result therefrom.

 

(e)                                  Material Change in
Business.  Make any material change
in the nature of its business as carried out on the date hereof.

 

4.3                                Financial Statement Terms.  For purposes of Section 4.2(b), all
capitalized terms not defined in this Agreement shall have the respective
meanings used in TBC’s published Consolidated financial statements and
calculated under the generally accepted accounting principles and practices
applied by TBC on the date hereof in the preparation of such financial
statements.  However, notwithstanding
the foregoing, (a) such terms shall exclude amounts attributable to Boeing
Capital Services Corporation and its Subsidiaries and Boeing Financial
Corporation, a

 

35

 

Delaware
corporation; and (b) Total Capital shall exclude the effects of any repurchase
by TBC of its common stock and any merger-related accounting adjustments which
are attributable to the merger with or acquisition of McDonnell Douglas
Corporation by TBC.

 

4.4                                Waivers of Covenants.  The departure by TBC
or any Subsidiary from the requirements of any of the provisions of this
Article 4 shall be permitted only if such departure has been consented to in
advance in a writing signed by the Majority Lenders, and such writing shall be
effective as a consent only to the specific departure described in such
writing.  Such departure by TBC or any
Subsidiary when properly consented to by the Majority Lenders shall not
constitute an Event of Default under Section 6.1(c).

 

ARTICLE 5

Conditions Precedent to Borrowings

 

5.1                                Conditions Precedent to the Initial Borrowing of TBC. 
The obligation of each Lender to make its initial Advance to TBC is
subject to receipt by the Agent on or before the day of the initial Borrowing
of all of the following, each dated as of the day hereof, in form and substance
satisfactory to the Agent and its counsel:

 

(a)                                  Documentation.  Copies of all documents, certified by an
officer of TBC, evidencing necessary corporate action by TBC and governmental
approvals, if any, with respect to this Agreement, to the Notes, if any, and to
Guaranties to be delivered by TBC pursuant to Section 5.4(e);

 

(b)                                 Officer’s
Certificate.  A certificate of the
Secretary or an Assistant Secretary of TBC which certifies the names of the
officers of TBC authorized to sign the Notes, if any, and the other documents
to be delivered hereunder, together with true specimen signatures of such
officers and facsimile signatures of officers authorized to sign by facsimile
signature (on which certificate each Lender may conclusively rely until it
receives a further certificate of the Secretary or an Assistant Secretary of TBC
canceling or amending the prior certificate and submitting specimen signatures
of the officers named in such further certificate);

 

(c)                                  Opinion
of Company Counsel.  A favorable
opinion of counsel for TBC substantially in the form of Exhibit G and as to such
other matters as the Agent may reasonably request, which opinion TBC hereby
expressly instructs such counsel to prepare and deliver;

 

(d)                                 Opinion
of Agent’s Counsel.  A favorable
opinion of Shearman & Sterling LLP, counsel for the Agent, substantially in
the form of Exhibit H;

 

(e)                                  Termination
of 2002 Agreement.  TBC shall have
terminated in whole the commitments of the banks parties to the 2002 Credit
Agreement; and

 

(f)                                    Satisfaction
of 2002 Agreement Obligations.  TBC
and its Subsidiaries shall have satisfied all of their respective obligations
under the 2002 Credit Agreement including, without limitation, the payment of
all fees under such agreement.

 

5.2                                Conditions Precedent to Each Committed Borrowing of
TBC.  The obligation of each Lender to make a Committed
Advance on the occasion of each Committed Borrowing (including the initial
Borrowing) is subject to the further conditions precedent that on the date of
the request for a Committed Borrowing and on the date of such Borrowing, the
following statements shall be

 

36

 

true, and both
the giving of the applicable Notice of Committed Borrowing and the acceptance
by TBC of the proceeds of such Committed Borrowing shall be a representation by
TBC that:

 

(a)                                  the
representations and warranties contained in subsections (a) through (g) of
Section 3.1 are true and accurate on and as of each such date as though made on
and as of each such date (except to the extent that such representations and
warranties relate solely to an earlier date); and

 

(b)                                 as
of each such date no event has occurred and is continuing, or would result from
the proposed Committed Borrowing, which constitutes a Default.

 

5.3                                Conditions Precedent to Each Bid Borrowing of TBC. 
The obligation of any Lender to make a Bid Advance on the occasion of a
Bid Borrowing (including the initial Borrowing) is subject to the further
conditions precedent that:

 

(a)                                  Notice
of Bid Borrowing.  The Agent shall
have received the written confirmatory Notice of Bid Borrowing with respect
thereto;

 

(b)                                 Bid
Notes.  On or before the date of
such Bid Borrowing, but prior to such Bid Borrowing, the Agent shall have
received a Bid Note payable to the order of such Lender for each of the one or
more Bid Advances to be made by such Lender as part of such Bid Borrowing, in a
principal amount equal to the principal amount of the Bid Advance to be
evidenced thereby and otherwise on such terms as were agreed to for such Bid
Advance in accordance with Section 2.5;

 

(c)                                  Periodic
Reports.  Each Lender intending to
make a Bid Advance shall have received the statements provided by TBC pursuant
to Section 4.1(a)(1), (2) and (3) or shall have received notice that such
statements are available on TBC’s website www.boeing.com or any successor
website notified to the Agent and the Lenders; and

 

(d)                                 Representations.  On the date of such request and the date of
such Borrowing, the following statements shall be true, and each of the giving
of the applicable Notice of Borrowing and the acceptance by TBC of the proceeds
of such Bid Borrowing shall be a representation by TBC that:

 

(i)                                     the
representations and warranties contained in subsections (a) through (g) of
Section 3.1 are true and accurate on and as of each such date as though made on
and as of each such date (except to the extent that such representations and
warranties relate solely to an earlier date);

 

(ii)                                  as of each such date
no event has occurred and is continuing, or would result from the proposed Bid
Borrowing, which constitutes a Default; and

 

(iii)                               no event has occurred
and no circumstance exists as a result of which any information concerning TBC
that has been provided by TBC to the Agent or the Lenders in connection with
such Bid Borrowing would include an untrue statement of a material fact or omit
to state any material fact or any fact necessary to make the statements
contained therein, in light of the circumstances under which they were made,
not misleading.

 

5.4                                Conditions Precedent to the Initial Borrowing of a
Subsidiary Borrower.  The
obligation of each Lender to make its initial Advance to any particular
Subsidiary Borrower is subject to the receipt by the Agent, on or before the
day of the initial Borrowing by such Subsidiary Borrower,

 

37

 

of all of the
following, each dated on or prior to the day of the initial Borrowing, in form
and substance satisfactory to the Agent and its counsel:

 

(a)                                  Borrower
Subsidiary Letter.  A Borrower
Subsidiary Letter, substantially in the form of Exhibit D, executed by such
Subsidiary Borrower and TBC;

 

(b)                                 Documentation.  Copies of all documents, certified by an
officer of the Subsidiary Borrower, evidencing necessary corporate action by
the Subsidiary Borrower and governmental approvals, if any, with respect to
this Agreement and any Notes;

 

(c)                                  Officer’s
Certificate.  A certificate of the
Secretary or an Assistant Secretary of TBC or the Subsidiary Borrower which
certifies the names of the officers of the Subsidiary Borrower authorized to
sign the Notes and the other documents to be delivered hereunder, together with
true specimen signatures of such officers and facsimile signatures of officers
authorized to sign by facsimile signature (on which certificate each Lender may
conclusively rely until it receives a further certificate of the Secretary or
an Assistant Secretary of TBC or the Subsidiary Borrower canceling or amending
the prior certificate and submitting signatures of the officers named in such
further certificate);

 

(d)                                 Opinion
of Subsidiary Counsel.  A favorable
opinion of in-house counsel to the Subsidiary Borrower, substantially in the
form of Exhibit I and as to such other matters as the Agent may reasonably
request; and

 

(e)                                  TBC
Guaranty.  A Guaranty of TBC that
unconditionally guarantees the payment of all obligations of such Subsidiary
Borrower hereunder and under the Notes of such Subsidiary Borrower,
substantially in the form of Exhibit J, executed and delivered by TBC to the
Agent; and

 

(f)                                    Opinion
of TBC Counsel.  A favorable opinion
of in-house counsel to TBC, substantially in the form of Exhibit K and as to
such other matters as the Agent may reasonably request.

 

5.5                                Conditions Precedent to Each Committed Borrowing of a
Subsidiary Borrower.  The
obligation of each Lender to make a Committed Advance to a Subsidiary Borrower
on the occasion of each Committed Borrowing (including the initial Borrowing)
is subject to the further conditions precedent that on the date of the request
for such Committed Borrowing and the date of such Borrowing, the following
statements shall be true, and each of the giving of the applicable Notice of
Committed Borrowing and the acceptance by such Subsidiary Borrower of the
proceeds of such Committed Borrowing shall be (a) a representation by such Subsidiary
Borrower that:

 

(i)                                     the
representations and warranties of that Subsidiary Borrower contained (A) in
subsections (a) through (g) of Section 3.1 are true and accurate on and as of
each such date as though made on and as of each such date (except to the extent
that such representations and warranties relate solely to an earlier date), and
(B) in its Borrower Subsidiary Letter are true and correct on and as of the
date of such Borrowing, before and after giving effect to such Borrowing; and

 

(ii)                                  as of each such date
no event has occurred and is continuing, or would result from the proposed
Committed Borrowing, which constitutes a Default;

 

and (b) a representation
by TBC that the representations and warranties of TBC contained in subsections
(a) through (g) of Section 3.1 are true and accurate on and as of each such
date as though made on and as of each such date (except to the extent that such
representations and

 

38

 

warranties relate solely
to an earlier date), and that, as of each such date, no event has occurred and
is continuing, or would result from the proposed Committed Borrowing, which
constitutes a Default.

 

5.6                                Conditions Precedent to Each Bid Borrowing of a
Subsidiary Borrower.  The
obligation of any Lender to make a Bid Advance to any particular Subsidiary
Borrower on the occasion of each Bid Borrowing (including the initial
Borrowing) is subject to the further conditions precedent that:

 

(a)                                  Notice
of Bid Borrowing.  The Agent shall
have received the written confirmatory Notice of Bid Borrowing with respect
thereto;

 

(b)                                 Bid
Notes.  On or before the date of
such Bid Borrowing, but prior to such Bid Borrowing, the Agent shall have
received a Bid Note payable to the order of such Lender for each of the one or
more Bid Advances to be made by such Lender as part of such Bid Borrowing, in a
principal amount equal to the principal amount of the Bid Advance to be
evidenced thereby and otherwise on such terms as were agreed to for such Bid
Advance in accordance with Section 2.5;

 

(c)                                  Periodic
Reports.  Each Lender intending to
make a Bid Advance shall have received the statements provided by TBC pursuant
to Section 4.1(a)(1), (2) and (3) or shall have received notice that such
statements are available on TBC’s website; and

 

(d)                                 Subsidiary
Representations.  On the date of
such request and the date of such Borrowing, the following statements shall be
true, and each of the giving of the applicable Notice of Bid Borrowing and the
acceptance by the Subsidiary of the proceeds of such Bid Borrowing shall be (a)
a representation by such Subsidiary Borrower that:

 

(i)                                     the
representations and warranties contained (A) in subsections (a) through (g) of
Section 3.1 hereof with respect to such Subsidiary Borrower are true and
accurate on and as of each such date as though made on and as of each such date
(except to the extent that such representations and warranties relate solely to
an earlier date), and (B) in its Borrower Subsidiary Letter are true and
correct on and as of the date of such Borrowing, before and after giving effect
to such Borrowing;

 

(ii)                                  as of each such date
no event has occurred and is continuing, or would result from the proposed Bid
Borrowing which constitutes a Default; and

 

(iii)                               no event has occurred
and no circumstance exists as a result of which any information concerning TBC
or the Subsidiary Borrower that has been provided by TBC or the Subsidiary
Borrower to the Agent or the Lenders in connection with such Bid Borrowing
would include an untrue statement of a material fact or omit to state any
material fact or any fact necessary to make the statements contained therein,
in light of the circumstances under which they were made, not misleading; and

 

(e)                                  TBC
Representation.  A representation by
TBC that the representations and warranties of TBC contained in subsections (a)
through (g) of Section 3.1 are true and accurate on and as of each such date as
though made on and as of each such date (except to the extent that such
representations and warranties relate solely to an earlier date), and that, as
of each such date, no event has occurred and is continuing, or would result
from the proposed Committed Borrowing which constitutes a Default.

 

39

 

ARTICLE 6

Events of Default

 

6.1                                Events of Default.  Each of the following shall constitute an
Event of Default:

 

(a)                                  Failure by TBC to
make when due any payment of principal of or interest on any Advance or under a
Guaranty when the same becomes due and payable and such failure is not remedied
within 5 Business Days thereafter;

 

(b)                                 Any representation or
warranty made by TBC in connection with the execution and delivery of this
Agreement, the Borrowings or any Guaranty, or otherwise furnished pursuant
hereto proves to have been incorrect when made in any material respect;

 

(c)                                  Failure by TBC to
perform any other term, covenant or agreement contained in this Agreement, and
such failure is not remedied within 30 days after written notice thereof has
been given to TBC by the Agent, at the request, or with the consent, of the
Majority Lenders;

 

(d)                                 Failure by TBC to pay
when due (i) any obligation for the payment of borrowed money on any regularly
scheduled payment date or following acceleration thereof or (ii) any other
monetary obligation if the aggregate unpaid principal amount of the obligations
with respect to which such failure to pay or acceleration occurred equals or
exceeds $50,000,000 and such failure is not remedied within 5 Business Days
after TBC receives notice thereof from the Agent or the creditor on such
obligation;

 

(e)                                  TBC or any of its
Subsidiaries

 

(1)                                  incurs
liability with respect to any employee pension benefit plan in excess of
$150,000,000 in the aggregate under

 

(A)                              Sections
4062, 4063, 4064 or 4201 of ERISA; or

 

(B)                                otherwise
under Title IV of ERISA as a result of any reportable event within the meaning
of ERISA (other than a reportable event as to which the provision of 30 days’
notice is waived under applicable regulations);

 

(2)                                  has
a lien imposed on its property and rights to property under Section 4068 of
ERISA on account of a liability in excess of $50,000,000 in the aggregate; or

 

(3)                                  incurs
liability under Title IV of ERISA

 

(A)                              in
excess of $50,000,000 in the aggregate as a result of the Company or any
Subsidiary or any Person that is a member of the “controlled group” (as defined
in Section 4001(a)(14) of ERISA) of the Company or any Subsidiary having filed
a notice of intent to terminate any employee pension benefit plan under the “distress
termination” provision of Section 4041 of ERISA, or

 

(B)                                in
excess of $50,000,000 in the aggregate as a result of the Pension Benefit
Guaranty Corporation having instituted proceedings to terminate, or to have a
trustee appointed to administer, any such plan;

 

(f)                                    The happening of
any of the following events, provided such event has not then been cured or
stayed:

 

40

 

(1)                                  the
insolvency or bankruptcy of TBC,

 

(2)                                  the
cessation by TBC of the payment of its Debts as they mature,

 

(3)                                  the
making of an assignment for the benefit of the creditors of TBC,

 

(4)                                  the
appointment of a trustee or receiver or liquidator for TBC or for a substantial
part of its property, or

 

(5)                                  the
institution of bankruptcy, reorganization, arrangement, insolvency or similar
proceedings by or against TBC under the laws of any jurisdiction in which TBC
is organized or has material business, operations or assets; or

 

(g)                                 So long as any
Subsidiary is a Borrower hereunder, the Guaranty with respect to such
Subsidiary Borrower for any reason ceases to be valid and binding on TBC or TBC
so states in writing.

 

6.2                                Lenders’ Rights upon Borrower Default.  If an Event of Default occurs or is
continuing, then the Agent shall at the request, or may with the consent, of
the Majority Lenders, by notice to TBC,

 

(a)                                  declare
the obligation of each Lender to make further Advances to be terminated,
whereupon the same shall forthwith terminate, and

 

(b)                                 declare
the Advances, all interest thereon, and all other amounts payable under this
Agreement to be forthwith due and payable, whereupon the Advances, all such
interest, and all such other amounts shall become and be forthwith due and
payable, without presentment, demand, protest or further notice of any kind,
all of which are hereby expressly waived by the Borrowers, provided, however,
that in the event of an actual or deemed entry of an order for relief with
respect to any Borrower under the Federal Bankruptcy Code (whether in
connection with a voluntary or an involuntary case), (i) the obligation of each
Lender to make Advances shall automatically be terminated and (ii) the payment
obligations of the Borrowers with respect to Advances, all such interest, and
all such amounts shall automatically become and be due and payable, without
presentment, demand, protest, or any notice of any kind, all of which are
hereby expressly waived by the Borrowers.

 

ARTICLE 7

The Agent

 

7.1                                Authorization and Action. 
Each Lender hereby appoints and authorizes the Agent to take such action
as agent on its behalf and to exercise such powers under this Agreement as are
delegated to the Agent by the terms hereof, together with such powers as are
reasonably incidental thereto.  As to
any matters not expressly provided for by this Agreement (including without
limitation, enforcement or collection of any Notes), the Agent shall not be
required to exercise any discretion or take any action, but shall be required
to act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Majority Lenders or as
otherwise required by Section 8.1(b) and such instructions shall be binding
upon all Lenders and all holders of interests in Advances; provided, however,
that the Agent shall not be required to take any action which exposes the Agent
to personal liability or which is contrary to this Agreement or applicable
law.  The Agent agrees to give to each
Lender prompt notice of each notice given to it by the Borrowers pursuant to
the terms of this Agreement.

 

41

 

7.2                                Agent’s Reliance, Etc.  Neither the Agent nor any of its directors,
officers, agents or employees shall be liable for any action taken or omitted
to be taken by it or them under or in connection with this Agreement, except
for its or their own gross negligence or willful misconduct.  Without limiting the generality of the
foregoing, the Agent:

 

(a)                                  may
treat the Lender that made any Advance as the payee thereof until the Agent
receives and accepts an assignment entered into by such Lender, as assignor,
and an Eligible Assignee, as assignee, as provided in Section 2.20;

 

(b)                                 may
consult with legal counsel (including counsel for the Borrowers), independent
public accountants and other experts selected by it and shall not be liable for
any action taken or omitted to be taken in good faith by it in accordance with
the advice of such counsel, accountants or other experts;

 

(c)                                  makes
no warranty or representation to any Lender and shall not be responsible to any
Lender for any statements, warranties or representations (whether written or
oral) made in or in connection with this Agreement;

 

(d)                                 shall
not have any duty to ascertain or to inquire as to the performance or observance
of any of the terms, covenants or conditions of this Agreement on the part of
any Borrower or to inspect the property (including the books and records) of
any Borrower;

 

(e)                                  shall
not be responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any
other instrument or document furnished pursuant hereto; and

 

(f)                                    shall
incur no liability under or in respect of this Agreement by acting upon any
notice, consent, certificate or other instrument or writing (which may be by
telecopier, cable or telex) believed by it to be genuine and signed or sent by
the proper party or parties.

 

7.3                                Citibank, N.A. and its Affiliates. 
With respect to its Commitment, the Advances made by it, and any Notes
issued to it, Citibank, N.A. shall have the same rights and powers under this
Agreement as any other Lender and may exercise the same as though it were not
the Agent hereunder; and the term “Lender” or “Lenders” shall, unless otherwise
expressly indicated, include Citibank, N.A., in its individual capacity.  Citibank, N.A. and its Affiliates may accept
deposits from, lend money to, accept drafts drawn by, act as trustee under
indentures of, and generally engage in any kind of business with, the Company,
any of its Subsidiaries and any person or entity who may do business with or
own securities of the Company or any Subsidiary, all as if Citibank, N.A. were
not the Agent hereunder and without any duty to account therefor to the other
Lenders.

 

7.4                                Lender Credit Decision. 
Each Lender acknowledges that it has, independently and without reliance
upon the Agent or any other Lender and based on the financial statements
referred to in Section 3.1(e) and the representations and warranties contained
in Sections 3.1 and 3.2 and such other documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into
this Agreement.  Each Lender also
acknowledges that it will, independently and without reliance upon the Agent 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 action under this Agreement.

 

7.5                                Indemnification.  The Lenders agree to
indemnify the Agent (to the extent not reimbursed by TBC or any other
Borrower), ratably according to the respective principal amounts of the
Committed Advances then outstanding made by each of them (or if no Committed
Advances are

 

42

 

at the time
outstanding or if interests in any Committed Advances are held by Persons which
are not Lenders, ratably according to the respective amounts of their
Commitments), from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by, or
asserted against the Agent in any way relating to or arising out of this
Agreement or any action taken or omitted by the Agent under this Agreement
(collectively, the “Indemnified Costs”),
provided that no Lender shall be liable for any portion of the
Indemnified Costs resulting from the Agent’s gross negligence or willful
misconduct.  Without limitation of the
foregoing, each Lender agrees to reimburse the Agent promptly upon demand for
its ratable share of any out-of-pocket expenses (including counsel fees)
incurred by the Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement to the extent that the Agent
is not reimbursed for such expenses by TBC or any other Borrower.  In the case of any investigation, litigation
or proceeding giving rise to any Indemnified Costs, this Section 7.5
applies whether any such investigation, litigation or proceeding is brought by
the Agent, any Lender or a third party.

 

7.6                                Successor Agent.  The Agent may resign
at any time by giving written notice thereof to the Lenders and TBC and may be
removed at any time with or without cause by the Majority Lenders.  Upon any such resignation or removal, the
Majority Lenders shall have the right, with the consent of TBC (if no Event of
Default has occurred and is continuing), which shall not be unreasonably
withheld, to appoint a successor Agent, which shall be a commercial bank
organized or licensed under the laws of the United States of America or of any
state thereof and having a combined capital and surplus of at least
$50,000,000.  If no successor Agent  has been so appointed by the Majority Lenders,
and has accepted such appointment, within 30 days after the retiring Agent’s giving
of notice of resignation or the removal of the retiring Agent as provided
herein, then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent which meets the requirements set out in the previous sentence.  Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Agent, and the retiring Agent shall be discharged from its duties
and obligations under this Agreement. 
After any retiring Agent’s resignation or removal hereunder as Agent,
the provisions of this Article 7 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Agreement.

 

7.7                                Certain Obligations May Be Performed by Affiliates. 
The Agent may appoint any of its Affiliates to perform its obligations
hereunder other than any obligation requiring the Agent to receive, pay, or
otherwise handle funds or Notes, and provided that the Agent shall
continue to be responsible to the Borrowers and the Lenders for the due
performance of the Agent’s obligations under this Agreement.

 

7.8                               Other Agents.  Each Lender hereby acknowledges that neither the documentation
agent, syndication agent nor any other Lender designated as any “Agent” (other
than the Agent) on the signature pages hereof has any liability hereunder other
than in its capacity as a Lender.

 

43

 

ARTICLE 8

 

Miscellaneous

 

8.1                                Modification, Consents and Waivers.

 

(a)                                  Waiver.  No failure or delay on the part of any
Lender in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power
preclude any other or further exercise thereof or the exercise of any other
right or power hereunder.  No notice to
or demand on the Borrowers in any case shall entitle the Borrowers to any other
or further notice or demand in similar or other circumstances.

 

(b)                                 Amendment.  No amendment or waiver of any provision of
this Agreement or of any Committed Notes, nor consent to any departure by the
Borrowers therefrom, shall in any event be effective unless such amendment,
waiver or consent is in writing and signed by the Majority Lenders, and then
such amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given; provided, however,
that no amendment, waiver or consent shall, unless in writing and signed by all
the Lenders, do any of the following:

 

(i)                                     waive any of the
conditions specified in Section 5.1, 5.2, or 5.3,

 

(ii)                                  except as provided in
Section 2.19 or Section 2.21, increase the Commitments of the Lenders or
subject the Lenders to any additional obligations,

 

(iii)                               reduce the principal of,
or interest on, the Committed Advances or any fees or other amounts payable
hereunder,

 

(iv)                              except as provided in
Section 2.21, postpone any date fixed for any payment of principal of, or
interest on, the Committed Advances or any fees or other amounts payable
hereunder,

 

(v)                                 change the percentage
of the Commitments or of the aggregate unpaid principal amount of the Committed
Advances or the number of Lenders required for the Lenders or any of them to
take any action hereunder,

 

(vi)                              amend this Section 8.1,
or

 

(vii)                           release TBC from any of its
obligations under any Guaranty or limit the liability of TBC as guarantor
thereunder;

 

and provided further
that no amendment, waiver, or consent shall, unless in writing and signed by
the Agent in addition to the Lenders required above to take such action, affect
the rights or duties of the Agent under this Agreement or any Note.

 

(c)                                  Majority Lenders.  Notwithstanding the foregoing, this Section
8.1 shall not affect the provisions of Section 4.4, “Waivers of Covenants”, or
Article 6, “Events of Default”.

 

8.2                                Notices.

 

(a)                                  Addresses.  All communications and notices provided for
hereunder shall be in writing and mailed, telecopied, telexed or delivered and,

 

if to the Agent,

 

Citibank, N.A.

Two Penns Way, Suite 200

New Castle, Delaware  19720

Attention:  Bank Loans Syndications Department

 

facsimile number (212)
994 0961;

 

44

 

if to any Borrower,

 

care of The Boeing
Company

100 N. Riverside

Mail Code: 5003 3648

Chicago, Illinois

Attention:  Assistant Treasurer, Corporate Finance and
Banking

 

facsimile number (312)
544-2399

 

if to any Lender, to its
office at the address given on the signature pages of this Agreement; or,

 

as to each party, at such
other address as designated by such party in a written notice to each other
party referring specifically to this Agreement.

 

(b)                                 Effectiveness of
Notices.  All communications and
notices shall, when mailed, telecopied, or telexed, be effective when deposited
in the mail, telecopied, or confirmed by telex answerback, respectively.  Delivery by telecopier of an executed
counterpart of any amendment or waiver of any provision of this Agreement or
any Notes or of any Exhibit to be executed and delivered hereunder shall be
effective as delivery of a manually executed counterpart thereof.

 

(c)                                  Electronic Mail.  Electronic mail may be used to
distribute routine communications, such as financial statements and other
information, and documents to be signed by the parties hereto; provided,
however, that no Notice of Borrowing, signature, or other notice or
document intended to be legally binding shall be effective if sent by
electronic mail.

 

(d)                                 Internet
Distributions.

 

(1)                                  So
long as Citibank or any of its Affiliates is the Agent, such materials as may
be agreed between the Borrowers and the Agent may be delivered to the Agent in
an electronic medium in a format acceptable to the Agent and the Lenders by
e-mail at oploanswebadmin@citigroup.com. 
The Borrowers agree that the Agent may make such materials, as well as
any other written information, documents, instruments and other material
relating to the Company, any of its Subsidiaries or any other materials or
matters relating to this Agreement, the Notes or any of the transactions
contemplated hereby (collectively, the “Communications”) available to
the Lenders by posting such notices on Intralinks, “e-Disclosure”, the Agent’s
internet delivery system that is part of Fixed Income Direct, Global Fixed
Income’s primary web portal, or a substantially similar electronic system (the
“Platform”).  The Borrowers
acknowledge that (i) the distribution of material through an electronic medium
is not necessarily secure and that there are confidentiality and other risks associated with such distribution,
(ii) the Platform is provided “as is” and “as available” and (iii) neither the
Agent nor any of its Affiliates warrants the accuracy, adequacy or completeness
of the Communications or the Platform and each expressly disclaims liability
for errors or omissions in the Communications or the Platform.  No warranty of any kind, express, implied or
statutory, including, without limitation, any warranty of merchantability,
fitness for a particular purpose, non-infringement of third party rights or
freedom from viruses or other code defects, is made by the Agent or any of its
Affiliates in connection with the Platform.

 

(2)                                  Each Lender agrees that notice to it (as provided
in the next sentence) (a “Notice”) specifying that any Communications have been posted to the Platform shall constitute
effective delivery of such information, documents or other materials to such
Lender for purposes of this Agreement;
provided that if requested by any Lender the Agent shall

 

45

 

deliver
a copy of the Communications to such Lender by email or telecopier.  Each Lender agrees (i) to notify the Agent
in writing of such Lender’s e-mail address to which a Notice may be sent by
electronic transmission (including by electronic communication) on or before
the date such Lender becomes a party to this Agreement (and from time to time
thereafter to ensure that the Agent has on record an effective e-mail address
for such Lender) and (ii) that any Notice may be sent to such e-mail address.

 

8.3                                Costs, Expenses and Taxes.

 

(a)                                  TBC shall pay upon
written request all reasonable costs and expenses in connection with the
preparation, execution, delivery, modification and amendment requested by any
of the Borrowers of this Agreement, any Notes and the Guaranties (including,
without limitation, printing costs and the reasonable fees and out-of-pocket
expenses of counsel for the Agent) and costs and expenses, if any, in
connection with the enforcement of this Agreement, any Notes and the Guaranties
(whether through negotiations, legal proceedings or otherwise and including,
without limitation, the reasonable fees and out-of-pocket expenses of counsel),
as well as any and all stamp and other taxes, and to save the Lenders and other
holders of interests in the Advances or any Notes harmless from any and all
liabilities with respect to or resulting from any delay by or omission of the
Borrowers to pay such taxes, if any, which may be payable or determined to be
payable in connection with the execution and delivery of this Agreement, any
Notes and the Guaranties.

 

(b)                                 TBC agrees to
indemnify the Agent and each Lender and each of their Affiliates and their
officers, directors, employees, agents and advisors (each, an “Indemnified Party”) from and against any and all claims,
damages, losses, liabilities and expenses (including, without limitation,
reasonable fees and expenses of counsel) incurred by or asserted or awarded
against any Indemnified Party, in each case arising out of or in connection
with or by reason of (including, without limitation, in connection with any
investigation, litigation or proceeding or preparation of a defense in
connection therewith) the Advances, this Agreement, the Notes, any of the
transactions contemplated herein or the actual or proposed use of the proceeds
of the Advances, except to the extent such claim, damage, loss, liability or
expense resulted from such Indemnified Party’s gross negligence or willful
misconduct and except that no Indemnified Party shall have the right to be
indemnified hereunder to the extent such indemnification relates to
relationships of, between or among each of, or any of, the Agent, the Lenders,
any assignee of a Lender or any participant. 
In the case of any investigation, litigation or other proceeding to
which this Section 8.3 applies, such indemnity shall be effective whether
or not such investigation, litigation or proceeding is brought by TBC, its
directors, shareholders or creditors or an Indemnified Party or any other
Person or an Indemnified Party is otherwise a party thereto and whether or not
the transactions contemplated hereby are consummated.  The Borrowers also agree not to assert any claim on any theory of
liability for special, indirect, consequential or punitive damages against the
Agent, any Lender, any of their Affiliates, or any of their respective
directors, officers, employees, attorneys and agents, arising out of or
otherwise relating to the Notes, this Agreement, any of the transactions contemplated
herein or the actual or proposed use of the proceeds of Advances.

 

(c)                                  Without prejudice to
the survival of any other agreement of the Borrowers hereunder, the agreements
and obligations of the Borrowers contained in Sections 2.13, 2.14 and 8.3
shall survive the payment in full of principal, interest and all other amounts
payable hereunder and under the Notes for a period of seven years.

 

8.4                                Binding Effect.  This Agreement shall
be binding upon and inure to the benefit of the Borrowers, the Lenders and the
Agent, and their respective successors and assigns, except that the Borrowers
may not assign or transfer their rights hereunder without the prior written
consent of the Lenders.

 

46

 

8.5                                Severability.  Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

 

8.6                                Governing Law.  This Agreement, any
Notes, the Guaranties and each Borrower Subsidiary Letter shall be deemed to be
contracts under the laws of the State of New York and for all purposes shall be
construed in accordance with the laws of such State.

 

8.7                                Headings.  The Table of Contents
and Article and Section headings used in this Agreement are for convenience
only and shall not affect the construction of this Agreement.

 

8.8                                Execution in Counterparts. 
This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together
shall constitute one and the same agreement. 
Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.

 

8.9                                Right of Set-Off.  Each Lender and each
of its Affiliates that is or was at one time a Lender hereunder is authorized
at any time and from time to time, upon

 

(i)                                     the occurrence and
during the continuance of any Event of Default and

 

(ii)                                  the making of the
request or the granting of the consent specified by Section 6.2 to authorize
the Agent to declare any Advances due and payable pursuant to the provisions of
Section 6.2,

 

to the fullest extent
permitted by law, without notice to any Borrower (any such notice being
expressly waived by each Borrower), to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Lender or such Affiliate to or for
the credit or the account of any Borrower against any and all of the
obligations to such Lender or such Affiliate of such Borrower now or hereafter
existing under this Agreement and any Notes held by such Lender, whether or not
such Lender has made a demand under this Agreement or such Notes and although
such obligations may be unmatured.  Each
Lender shall promptly notify any Borrower after any such setoff and application
made by such Lender, provided that the failure to give such notice shall
not affect the validity of such setoff and application.  The rights of each Lender under this Section
are in addition to other rights and remedies (including, without limitation,
other rights of setoff) which such Lender and its Affiliates may have.

 

8.10                          Confidentiality.  Neither the Agent nor any Lender shall disclose any Confidential
Information to any other Person without the consent of a Borrower, other than

 

(a)                                  to
the Agent’s or such Lender’s Affiliates and their officers, directors, employees,
agents and advisors and, as contemplated by Section 2.20(f), to actual or
prospective assignees and participants, and then only on a confidential basis,

 

(b)                                 as
required by any law, rule or regulation or judicial process, and

 

(c)                                  as
requested or required by any state, federal or foreign authority or examiner
regulating banks or banking.

 

47

 

Notwithstanding
anything herein to the contrary, each Borrower, the Agent and each Lender (and
each employee, representative or other agent of each of the foregoing parties)
may disclose to any and all Persons, without limitation of any kind, the U.S.
tax treatment and tax structure of the transactions contemplated hereby and all
materials of any kind (including opinions or other tax analyses) that are
provided to any of the foregoing parties relating
to such U.S. tax treatment and tax structure.

 

8.11                          Agreement in Effect.  This Agreement shall
become effective upon its execution and delivery, respectively, to the Agent
and TBC by TBC and the Agent, and when the Agent shall have been notified by
each Lender listed on Schedule I that such Lender has executed it.

 

48

 

IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by their officers thereunto duly authorized as of
the day and year first above written.

 

	
   

  	
  THE BOEING COMPANY

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Title: Assistant
  Treasurer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CITIBANK, N.A., Individually and

  
	
   

  	
  as Agent

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  Syndication Agent

  
	
   

  	
   

  
	
   

  	
  JPMORGAN CHASE BANK

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  Documentation Agents

  
	
   

  	
   

  
	
   

  	
  BANK OF AMERICA, N.A.

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  BANK ONE, NA

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  DEUTSCHE BANK AG NEW
  YORK BRANCH

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
						

 

 

	
   

  	
  WACHOVIA BANK, NATIONAL
  ASSOCIATION

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  THE BANK OF
  TOKYO-MITSUBISHI, LTD.

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  SUMITOMO MITSUI BANKING
  CORPORATION

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  Senior Managing Agents

  
	
   

  	
   

  
	
   

  	
  BARCLAYS BANK PLC

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  CREDIT
  SUISSE FIRST BOSTON, acting through its

  CAYMAN ISLANDS BRANCH

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  MERRILL LYNCH BANK USA

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  MIZUHO CORPORATE BANK,
  LTD.

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  MORGAN STANLEY BANK

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
					

 

2

 

	
   

  	
  WILLIAM
  STREET COMMITMENT

  CORPORATION (Recourse only to assets of

  William Street Commitment Corporation)

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  BNP PARIBAS

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  CREDIT LYONNAIS NEW
  YORK BRANCH

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  THE ROYAL BANK OF
  SCOTLAND PLC

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  UBS LOAN FINANCE LLC

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  BAYERISCHE
  LANDESBANK, CAYMAN ISLAND

  BRANCH

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

3

 

	
   

  	
  Managing Agents

  
	
   

  	
   

  
	
   

  	
  PNC BANK, NATIONAL
  ASSOCIATION

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  STANDARD CHARTERED BANK

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  Co-Agents

  
	
   

  	
   

  
	
   

  	
  ABN AMRO BANK, N.V.

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  BANCO BILBAO VIZCAYA
  ARGENTARIA

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  LLOYDS TSB BANK PLC

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  THE NORTHERN TRUST
  COMPANY

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  SOCIETE GENERALE

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
					

 

4

 

	
   

  	
  U.S. BANK NATIONAL
  ASSOCIATION

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  WESTPAC BANKING
  CORPORATION

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  AUSTRALIA
  AND NEW ZEALAND BANKING

  GROUP LIMITED

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  KEYBANK NATIONAL
  ASSOCIATION

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  Lenders

  
	
   

  	
   

  
	
   

  	
  BMO NESBITT BURNS
  FINANCING, INC.

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  KBC  BANK, N.V.

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  SANPAOLO IMI S.P.A.

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

5

 

SCHEDULE I

APPLICABLE LENDING OFFICES

 

	
  Name of Initial Lender

  	
   

  	
  Commitment

  	
   

  	
  Domestic
  Lending Office

  	
   

  	
  Eurodollar
  Lending Office

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ABN Amro Bank, N.V.

  	
   

  	
  $

  	
  31,250,000

  	
   

  	
  208 South LaSalle

  Suite 1500

  Chicago, IL  60604

  Attn:  Dominic Blea

  T:  312 992-5176

  F:  312 992-5111

  	
   

  	
  208 South LaSalle

  Suite 1500

  Chicago, IL  60604

  Attn:  Dominic Blea

  T:  312 992-5176
F:  312 992-5111

  	
   

  
	
  Australia and New
  Zealand Banking Group Limited

  	
   

  	
  $

  	
  21,875,000

  	
   

  	
  1177 Avenue of the
  Americas

  6th Floor

  New York, NY  10036

  Attn:  Peter Gray

  T:  212 801-9739

  F:  212 556-4839

  	
   

  	
  1177 Avenue of the
  Americas

  6th Floor

  New York, NY  10036

  Attn:  Peter Gray

  T:  212 801-9739

  F:  212 556-4839

  	
   

  
	
  Banco Bilbao Vizcaya
  Argerntaria

  	
   

  	
  $

  	
  31,250,000

  	
   

  	
  1345 Avenue of the
  Americas

  45th Floor

  New York, NY  10105

  Attn:  Santiago Hernandez

  T:  212 728-1677

  F:  212 333-2904

  	
   

  	
  1345 Avenue of the
  Americas

  45th Floor

  New York, NY  10105

  Attn:  Santiago Hernandez

  T:  212 728-1677

  F:  212 333-2904

  	
   

  
	
  Bank One, NA

  	
   

  	
  $

  	
  125,000,000

  	
   

  	
  One Bank One Plaza

  Chicago, IL  60670

  Attn:  Abby Tan
T:  312 385-7077

  F:  312 385-7103

  	
   

  	
  One Bank One Plaza

  Chicago, IL  60670

  Attn:  Abby Tan
T:  312 385-7077

  F:  312 385-7103

  	
   

  
	
  Bank of America, N.A.

  	
   

  	
  $

  	
  156,250,000

  	
   

  	
  1850 Gateway Blvd.

  CA4-707-05-11

  Concord, CA  94520

  Attn:  Vilma Tang
T:  925 675-7336

  F:  925 969-2865

  	
   

  	
  1850 Gateway Blvd.

  CA4-707-05-11
Concord, CA  94520
Attn:  Vilma Tang

  T:  925 675-7336

  F:  925 969-2865

  	
   

  
	
  The Bank of
  Tokyo-Mitsubishi, Ltd.

  	
   

  	
  $

  	
  125,000,000

  	
   

  	
  900 Fourth Avenue

  Suite 4000

  Seattle, WA  98164

  Attn:  Ellen Yuson

  T:  213 488-3796

  F:  213 613-1136

  	
   

  	
  900 Fourth Avenue

  Suite 4000

  Seattle, WA  98164

  Attn:  Ellen Yuson

  T:  213 488-3796

  F:  213 613-1136

  	
   

  
	
  Barclays Bank PLC

  	
   

  	
  $

  	
  93,750,000

  	
   

  	
  200 Park Avenue

  New York, NY  10163

  Attn:  Eddie Cotto

  T:  212 412 3710

  F:  212 412 5306

  	
   

  	
  200 Park Avenue

  New York, NY  10163

  Attn:  Eddie Cotto

  T:  212 412 3710

  F:  212 412 5306

  	
   

  

 

 

	
  Bayerische Landesbank,
  Cayman Island Branch

  	
   

  	
  $

  	
  62,500,000

  	
   

  	
  560 Lexington Avenue

  New York, NY  10022

  Attn:  James Fox

  T:  212 310-9986
F:  212 310-9868

  	
   

  	
  560 Lexington Avenue

  New York, NY  10022

  Attn:  James Fox

  T:  212 310-9986

  F:  212 310-9868

  	
   

  
	
  BMO Nesbitt Burns
  Financing, Inc.

  	
   

  	
  $

  	
  15,625,000

  	
   

  	
  115 S. LaSalle Street,
  12W

  Chicago, IL  60603

  Attn:  Ellen Dancer

  T:  312 750-3453

  F:  312 750-6061

  	
   

  	
  115 S. LaSalle Street,
  12W

  Chicago, IL  60603

  Attn:  Ellen Dancer

  T:  312 750-3453

  F:  312 750-6061

  	
   

  
	
  BNP Paribas

  	
   

  	
  $

  	
  78,125,000

  	
   

  	
  209 South LaSalle Suite
  500

  Chicago, IL 60604

  Attn:  Catherine Lui

  T:  312 977-2200

  F:  312 977-1380

  	
   

  	
  209 South LaSalle Suite
  500

  Chicago, IL 60604

  Attn:  Catherine Lui

  T:  312 977-2200

  F:  312 977-1380

  	
   

  
	
  Citibank, N.A.

  	
   

  	
  $

  	
  206,250,000

  	
   

  	
  388 Greenwich Street

  New York, NY  10013

  Attn:  Philippa Portnoy

  T:  212 559-5812
F:  212 793-1246

  	
   

  	
  388 Greenwich Street

  New York, NY  10013

  Attn:  Philippa Portnoy

  T:  212 559-5812
F:  212 793-1246

  	
   

  
	
  Credit Lyonnais New
  York Branch

  	
   

  	
  $

  	
  78,125,000

  	
   

  	
  1301 Avenue of the
  Americas

  New York, NY  10019

  Attn:  Bertrand Cousin

  T:  212 261-7363
F:  212 261-7368

  	
   

  	
  1301 Avenue of the
  Americas

  New York, NY  10019

  Attn:  Bertrand Cousin

  T:  212 261-7363
F:  212 261-7368

  	
   

  
	
  Credit Suisse First
  Boston Cayman Islands Branch

  	
   

  	
  $

  	
  93,750,000

  	
   

  	
  11 Madison Avenue

  New York, NY  10010

  Attn:  Robert Finney

  T:  212 325-9038

  F:  212 325-8319

  	
   

  	
  11 Madison Avenue

  New York, NY  10010

  Attn:  Robert Finney

  T:  212 325-9038

  F:  212 325-8319

  	
   

  
	
  Deutsche Bank AG New
  York Branch

  	
   

  	
  $

  	
  125,000,000

  	
   

  	
  31 West 52nd
  Street

  New York, NY  10019

  Attn:  Frank Gerencser –

  Global Loans Los Angeles.

  T:  213 620-8310

  F:  213 620-8293

  	
   

  	
  31 West 52nd
  Street

  New York, NY  10019

  Attn:  Frank Gerencser –

  Global Loans Los Angeles.

  T:  213 620-8310

  F:  213 620-8293

  	
   

  
	
  JPMorgan Chase Bank

  	
   

  	
  $

  	
  206,250,000

  	
   

  	
  270 Park Avenue

  New York, NY  10017

  Attn:  Matt Massie

  T:  212 270-5432
F:  212 270-5100

  	
   

  	
  270 Park Avenue

  New York, NY  10017

  Attn:  Matt Massie
T:  212 270-5432

  F:  212 270-5100

  	
   

  
	
  KBC Bank, N.V.

  	
   

  	
  $

  	
  15,625,000

  	
   

  	
  125 West 55th
  Street

  10th Floor

  New York, NY  10019

  Attn:  Robert Pacifici

  T:  212 541-0671

  F:  212 956-5581

  	
   

  	
  125 West 55th
  Street

  10th Floor

  New York, NY  10019

  Attn:  Robert Pacifici

  T:  212 541-0671

  F:  212 956-5581

  	
   

  

 

2

 

	
  Keybank National
  Association

  	
   

  	
  $

  	
  21,875,000

  	
   

  	
  127 Public Square

  Cleveland, OH  44114

  Attn:  Diane Cox

  T:  216 689-4450

  F:  216 689-4981

  	
   

  	
  127 Public Square

  Cleveland, OH  44114

  Attn:  Diane Cox

  T:  216 689-4450

  F:  216 689-4981

  	
   

  
	
  Lloyds TSB Bank Plc

  	
   

  	
  $

  	
  31,250,000

  	
   

  	
  1251 Avenue of the
  Americas

  39th Floor

  New York, NY  10020

  Attn:  Patricia Kilian

  T:  212 930-8914

  F:  212 930-5098

  	
   

  	
  1251 Avenue of the
  Americas

  39th Floor

  New York, NY  10020

  Attn:  Patricia Kilian

  T:  212 930-8914

  F:  212 930-5098

  	
   

  
	
  Merrill Lynch Bank USA

  	
   

  	
  $

  	
  93,750,000

  	
   

  	
  15 W. South Temple

  Suite 300

  Salt Lake City, UT 84101

  Attn:  Derek Befus

  T:  801 526-8324

  F:  801 531-7470

  	
   

  	
  15 W. South Temple

  Suite 300

  Salt Lake City, UT 84101

  Attn:  Derek Befus

  T:  801 526-8324

  F:  801 531-7470

  	
   

  
	
  Mizuho Corporate Bank,
  Ltd.

  	
   

  	
  $

  	
  93,750,000

  	
   

  	
  Harborside Financial
  Center

  1800 Plaza Ten, 16th Floor

  Jersey City, NJ  07311

  Attn:  Nate Spivey

  T:  201 626-9161

  F:  201 626-9944

  	
   

  	
  Harborside Financial
  Center

  1800 Plaza Ten, 16th Floor

  Jersey City, NJ  07311

  Attn:  Nate Spivey

  T:  201 626-9161

  F:  201 626-9944

  	
   

  
	
  Morgan Stanley Bank

  	
   

  	
  $

  	
  93,750,000

  	
   

  	
  750 Seventh Avenue

  11th Floor

  New York, NY  10020

  Attn:  Joseph DiTomaso

  T:  212 762-2320

  F:  212 762-0346

  	
   

  	
  750 Seventh Avenue

  11th Floor

  New York, NY  10020

  Attn:  Joseph DiTomaso

  T:  212 762-2320

  F:  212 762-0346

  	
   

  
	
  The Northern Trust
  Company

  	
   

  	
  $

  	
  31,250,000

  	
   

  	
  801 S. Canal Street

  Chicago, IL  60607

  Attn:  Linda Honda

  T:  312 444-3532

  F:  312 630-1566

  	
   

  	
  801 S. Canal Street

  Chicago, IL  60607

  Attn:  Linda Honda

  T:  312 444-3532

  F:  312 630-1566

  	
   

  
	
  PNC Bank, National
  Association

  	
   

  	
  $

  	
  53,125,000

  	
   

  	
  One PNC Plaza

  249 Fifth Avenue, 2nd Floor

  Mailstop P1-POPP-2-3

  Pittsburgh, PA 15222

  Attn:  Philip K. Liebscher

  T:  (412) 762-3202

  F:  (412) 762-6484

  	
   

  	
  One PNC Plaza

  249 Fifth Avenue, 2nd Floor

  Mailstop P1-POPP-2-3

  Pittsburgh, PA 15222

  Attn:  Philip K. Liebscher

  T:  (412) 762-3202

  F:  (412) 762-6484

  	
   

  
	
  Royal Bank of Scotland

  	
   

  	
  $

  	
  62,500,000

  	
   

  	
  Waterhouse Square

  138-142 Holborn

  London England

  EC1N 2TH

  Attn:  Andrew Waddington

  T:  44 207 375-8504

  F:  44 207 375-8282

  	
   

  	
  Waterhouse Square

  138-142 Holborn

  London England

  EC1N 2TH

  Attn:  Andrew Waddington

  T:  44 207 375-8504

  F:  44 207 375-8282

  	
   

  

 

3

 

	
  SANPAOLO IMI S.p.a.

  	
   

  	
  $

  	
  15,625,000

  	
   

  	
  245 Park Avenue

  New York, NY  10167

  Attn:  Manuela Insana

  T:  212 692-3128

  F:  212 692-3178

  	
   

  	
  245 Park Avenue

  New York, NY  10167

  Attn:  Manuela Insana

  T:  212 692-3128

  F:  212 692-3178

  	
   

  
	
  Societe Generale

  	
   

  	
  $

  	
  31,250,000

  	
   

  	
  2001 Ross Avenue

  Dallas, TX  75201

  Attn:  Deborah McNealey

  T:  214 979-2762

  F:  214 754-0171

  	
   

  	
  2001 Ross Avenue

  Dallas, TX  75201

  Attn:  Deborah McNealey

  T:  214 979-2762

  F:  214 754-0171

  	
   

  
	
  Standard Chartered Bank

  	
   

  	
  $

  	
  37,500,000

  	
   

  	
  One Evertrust Plaza

  Jersey City, NJ 07302

  Attn:  Victoria Faltine

  T:  201 633-3454
F:  201 536-04478

  	
   

  	
  One Evertrust Plaza

  Jersey City, NJ 07302

  Attn:  Victoria Faltine

  T:  201 633-3454
F:  201 536-04478

  	
   

  
	
  Sumitomo Mitsui Banking
  Corporation

  	
   

  	
  $

  	
  125,000,000

  	
   

  	
  277 Park Avenue

  New York, NY  10172

  Attn:  Noel Swift

  T:  212 224-4328

  F:  212 224-5197

  	
   

  	
  277 Park Avenue

  New York, NY  10172

  Attn:  Noel Swift

  T:  212 224-4328

  F:  212 224-5197

  	
   

  
	
  UBS Loan Finance LLC

  	
   

  	
  $

  	
  62,500,000

  	
   

  	
  677 Washington Blvd.

  Stamford, Connecticut 06901

  Attn:  Marie Haddad

  Banking Product Services

  T:  203 719-5609

  F:  203 719-3888

  	
   

  	
  677 Washington Blvd.

  Stamford, Connecticut 06901

  Attn:  Marie Haddad

  Banking Product Services

  T:  203 719-5609

  F:  203 719-3888

  	
   

  
	
  U.S. Bank National
  Association

  	
   

  	
  $

  	
  31,250,000

  	
   

  	
  1420 Fifth Avenue, 11th
  Floor

  Seattle, WA  98101

  Attn:  James Farmer

  T:  206 587-5237

  F:  206 344-3654

  	
   

  	
  1420 Fifth Avenue, 11th
  Floor

  Seattle, WA  98101

  Attn:  James Farmer

  T:  206 587-5237

  F:  206 344-3654

  	
   

  
	
  Wachovia Bank, National
  Association

  	
   

  	
  $

  	
  125,000,000

  	
   

  	
  191 Peachtree Street NE

  Atlanta, GA  30303

  Attn:  Joe Baschuite

  T:  404 332-5178

  F:  404 332-4136

  	
   

  	
  191 Peachtree Street NE

  Atlanta, GA  30303

  Attn:  Joe Baschuite

  T:  404 332-5178

  F:  404 332-4136

  	
   

  
	
  Westpac Banking
  Corporation

  	
   

  	
  $

  	
  31,250,000

  	
   

  	
  GMO Nightshift
  Operations

  255 Elizabeth Street, 3rd Floor

  Sydney, Australia 2000

  Attn:  London Operations

  T:  61 29 284-8241

  F:  011 44 207 621-7608

  	
   

  	
  GMO Nightshift
  Operations

  255 Elizabeth Street, 3rd Floor

  Sydney, Australia 2000

  Attn:  London Operations

  T:  61 29 284-8241

  F:  011 44 207 621-7608

  	
   

  
	
  William Street
  Commitment Corporation

  	
   

  	
  $

  	
  93,750,000

  	
   

  	
  85 Broad Street, 6th
  Floor

  New York, NY  10004

  Attn:  Pedro Ramirez

  T:  212 343-8319

  F:  212 357-6240

  	
   

  	
  85 Broad Street, 6th
  Floor

  New York, NY  10004

  Attn:  Pedro Ramirez

  T:  212 343-8319

  F:  212 357-6240

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total of Commitments:

  	
   

  	
  $

  	
  2,500,000,000

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

4

 

EXHIBIT A-1

 

FORM OF COMMITTED
NOTE

 

	
  U.S.$

  	
   

  	
  Dated: 
                                   ,
  200    

  

 

FOR VALUE RECEIVED, the undersigned, [NAME OF
BORROWER], a
                      
corporation (the “Borrower”), HEREBY PROMISES TO PAY to the order of

 

(the “Lender”) for
the account of its Applicable Lending Office (as defined in the Credit
Agreement referred to below) on the later of the Termination Date and the date
designated pursuant to Section 2.3 of such Credit Agreement (as defined in such
Credit Agreement) the principal sum of U.S.$[amount of the Lender’s Commitment
in figures] or, if less, the aggregate unpaid principal amount of the Committed
Advances (as defined below) under and pursuant to the 364-Day Credit Agreement
dated as of November     , 2003, among the Borrower, [The
Boeing Company,] the Lender and certain other lenders parties thereto, JPMorgan
Chase Bank, as syndication agent, Citigroup Global Markets Inc. and J.P. Morgan
Securities, Inc., as joint lead arrangers and joint book managers, and
Citibank, N.A., as Agent for the Lender and such other Lenders (as amended or
modified from time to time, the “Credit Agreement”), outstanding on such
date.  Capitalized terms used in the
promissory note that are not defined herein have the respective meanings
specified in the Credit Agreement.

 

The Borrower promises to pay interest on the unpaid
principal amount of each Committed Advance made by the Lender to the Borrower
pursuant to the Credit Agreement (each, a “Committed Advance”) from the date of
such Committed Advance until such principal amount is paid in full, at such
interest rates, and payable at such times, as are determined pursuant to the
Credit Agreement.

 

Both principal and interest are payable in lawful
money of the United States of America to Citibank, N.A., as Agent, at 388
Greenwich Street, New York, New York 
10013, in same day funds.  Each
Committed Advance, and all payments made on account of principal thereof, shall
be recorded by the Lender and, prior to any transfer hereof, endorsed on the
grid attached hereto which is part of this Promissory Note.

 

This Promissory Note is one of the Committed Notes
referred to in, and is entitled to the benefits of, the Credit Agreement.  The Credit Agreement, among other things (i)
provides for the making of Committed Advances by the Lender to the Borrower
from time to time in an aggregate amount not to exceed at any time outstanding
the U.S. dollar amount first above mentioned, the indebtedness of the Borrower
resulting from each such Committed Advance being evidenced by this Promissory
Note and (ii) contains provisions for acceleration of the maturity hereof upon
the happening of certain stated events and also for prepayments on account of
principal hereof prior to the maturity hereof upon the terms and conditions
therein specified.

 

The Borrower hereby waives presentment, demand,
protest and notice of any kind.  No
failure to exercise, and no delay in exercising, any rights hereunder on the
part of the holder hereof shall operate as a waiver of such rights.

 

5

 

This Promissory Note shall be governed by, and
construed in accordance with, the laws of the State of New York, United States.

 

	
   

  	
  [NAME OF BORROWER]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

6

 

ADVANCES AND
PAYMENTS OF PRINCIPAL

 

 

	
  Date

  	
   

  	
  Amount of

  Advance

  	
   

  	
  Maturity

  Date

  	
   

  	
  Amount of
  Principal

  Paid or Prepaid

  	
   

  	
  Unpaid
  Principal

  Balance

  	
   

  	
  Notation
  Made by

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

7

 

EXHIBIT A-2

 

FORM OF BID NOTE

 

	
   

  	
  Dated: 
                                 ,
  200     

  

 

FOR VALUE RECEIVED, the undersigned, [NAME OF
BORROWER], a
                    
corporation (the “Borrower”), HEREBY PROMISES TO PAY to the order of

 

                          
(the “Lender”) for the account of its Applicable Lending Office (as
defined in the 364-Day Credit Agreement dated as of November
    , 2003, among the Borrower,[The Boeing Company,] the
Lender and certain other lenders parties thereto, JPMorgan Chase Bank, as
syndication agent, Citigroup Global Markets Inc. and J.P. Morgan Securities,
Inc., as joint lead arrangers and joint book managers, and Citibank, N.A., as
Agent for the Lender and such other Lenders (as amended or modified from time
to time, the “Credit Agreement”)
on                    ,
200  , the principal amount of
U.S.$                    .  Capitalized terms used in this promissory
note that are not defined herein have the respective meanings specified in the
Credit Agreement).

 

The Borrower promises to pay interest on the unpaid
principal amount hereof from the date hereof until such principal amount is
paid in full, at the interest rate and payable on the interest payment date or
dates provided below:

 

Interest Rate: 
         % per annum (calculated
on the basis of a year of
            days for the
actual number of days elapsed).

 

Interest Payment Date or
Dates: 
                                     

 

Both principal and interest are payable in lawful
money of the United States of America to Citibank, N.A., as Agent, at 388
Greenwich Street, New York, New York 
10013, in same day funds.

 

This Promissory Note is one of the Bid Notes referred
to in, and is entitled to the benefits of, the Credit Agreement.  The Credit Agreement, among other things,
contains provisions for acceleration of the maturity hereof upon the happening
of certain stated events.

 

The Borrower hereby waives presentment, demand,
protest and notice of any kind.  No
failure to exercise, and no delay in exercising, any rights hereunder on the
part of the holder hereof shall operate as a waiver of such rights.

 

This Promissory Note shall be governed by, and
construed in accordance with, the laws of the State of New York, United States.

 

	
   

  	
  [NAME OF BORROWER]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  
						

 

 

EXHIBIT B-1

 

NOTICE OF
COMMITTED BORROWING

 

Citibank, N.A., as Agent

for the Lenders parties

to the Credit Agreement

referred to below

388 Greenwich Street

New York, New York  10013

[Date]

 

Attention: 
                               

 

Gentlemen:

 

The undersigned, [NAME OF BORROWER] (the “Borrower”),
refers to the 364-Day Credit Agreement dated as of November
    , 2003, among the Borrower, [The Boeing Company] the
Lender and certain other lenders parties thereto, JPMorgan Chase Bank, as
syndication agent, Citigroup Global Markets Inc. and J.P. Morgan Securities,
Inc., as joint lead arrangers and joint book managers, and Citibank, N.A., as
Agent for the Lender and such other Lenders (as amended or modified from time
to time, the “Credit Agreement”). 
Capitalized terms used in this notice that are not defined herein have
the respective meanings specified in the Credit Agreement.  The undersigned hereby gives you notice,
irrevocably, pursuant to Section 2.2 of the Credit Agreement that the
undersigned hereby requests a Committed Borrowing under the Credit Agreement,
and in that connection sets forth below the information relating to such
Committed Borrowing (the “Proposed Committed Borrowing”) as required by
Section 2.2(a) of the Credit Agreement:

 

(i)            The
date of the Proposed Committed Borrowing is
                                ,
200   .

 

(ii)           The
Type of Committed Advances constituting the Proposed Committed Borrowing is
[Base Rate Advances] [Eurodollar Rate Advances].

 

(iii)          The
aggregate amount of the Proposed Committed Borrowing is
$                            .

 

[(iv)         The
initial Interest Period for each Eurodollar Rate Advance made as part of the    Proposed Committed Borrowing is
           month[s]].

 

The undersigned hereby certifies that the following
statements are true on and as of the date hereof, and will be true on and as of
the date of the Proposed Committed Borrowing:

 

(A)          the representations and warranties
contained in Section 3.1(a) through (g) of the Credit Agreement are true and
accurate as though made on and as of

 

 

each such date (except to
the extent that such representations and warranties relate solely to an earlier
date); [and]

 

(B)           no event has occurred and is
continuing or would result from such Proposed Committed Borrowing which constitutes
a Default.

 

[(C)         the representations and warranties of
the undersigned Subsidiary Borrower contained in Section 3.1(a) through (g) of
the Credit Agreement are and will be true and accurate on and as of each such
date as though made on and as of each such date (except to the extent that such
representations and warranties relate solely to an earlier date); and the
representations and warranties of the undersigned Subsidiary Borrower contained
in the Borrower Subsidiary Letter of the undersigned Subsidiary Borrower are
and will be true and correct on and as of the date of such Borrowing, before
and after giving effect to such Borrowing.]*

 

	
  `

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  [NAME OF SUBSIDIARY
  BORROWER]*

  
	
   

  	
   

  
	
   

  	
  [By 

  	
   

  	
   

  
	
   

  	
   

  	
  Title:]

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE BOEING COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
						

 

 

*                                         Include if
Borrower is not The Boeing Company.

 

2

 

EXHIBIT B-2

 

NOTICE OF BID
BORROWING

 

Citibank, N.A., as Agent

for the Lenders parties

to the Credit Agreement

referred to below

388 Greenwich Street

New York, New York  10013

 

	
  [Date]

  
	
   

  	
  Attention:  

  

 

Gentlemen:

 

The undersigned, [NAME OF BORROWER] (the “Borrower”),
refers to the 364-Day Credit Agreement dated as of November
    , 2003, among the Borrower,[The Boeing Company,] certain
lenders parties thereto, JPMorgan Chase Bank, as syndication agent, Citigroup
Global Markets Inc. and J.P. Morgan Securities, Inc., as joint lead arrangers
and joint book managers, and Citibank, N.A., as Agent for such lenders (as
amended or modified from time to time, the “Credit Agreement”).  Capitalized terms used in this notice that
are not defined herein have the respective meanings specified in the Credit
Agreement.  The undersigned hereby gives
you notice pursuant to Section 2.5(a) of the Credit Agreement that the
undersigned requests a Bid Borrowing under the Credit Agreement, and in that
connection sets forth the terms on which such Bid Borrowing (the “Proposed
Bid Borrowing”) is requested to be made:

 

	
   

  	
  (A)

  	
  Date of Bid Borrowing

  	
   

  	
   

  
	
   

  	
  (B)

  	
  Amount of Bid Borrowing

  	
   

  	
   

  
	
   

  	
  (C)

  	
  The maturity date

  	
   

  	
   

  
	
   

  	
  (D)

  	
  Type

  	
   

  	
  [Fixed Rate][Eurodollar
  Rate]

  
	
   

  	
  (E)

  	
  Interest Payment
  Date(s)

  	
   

  	
   

  
	
   

  	
  (F)

  	
  Interest Calculation
  Basis

  	
   

  	
   

  
	
   

  	
  [(G)

  	
  Interest Rate Period

  	
   

  	
                                                                       ]

  

 

The undersigned hereby certifies that the following
statements are true on and as of the date hereof, and will be true on and as of
the date of the Proposed Bid Borrowing:

 

(a)           the
representations and warranties contained in Section 3.1(a) through (g) of the
Credit Agreement are true and accurate as though made on and as of each such
date (except to the extent that such representations and warranties relate
solely to an earlier date);

 

(b)           no
event has occurred and is continuing, or would result from the Proposed Bid
Borrowing which constitutes a Default; and

 

(c)           no
event has occurred and no circumstance exists as a result of which any
information concerning [the Borrower] [The Boeing Company] that has been
provided by [the

 

 

Borrower] [The
Boeing Company]*
to the Agent or the Lenders in connection with the Proposed Bid Borrowing would
include an untrue statement of a material fact or omit to state any material
fact or any fact necessary to make the statements contained therein, in the
light of the circumstances under which they were made, not misleading.

 

[(d)          the
representations and warranties contained (1) in Section 3.1 (a) through (g) of
the Credit Agreement with respect to the undersigned Subsidiary Borrower are
true and accurate on and as of each such date as though made on and as of each
such date (except to the extent that such representations and warranties
related solely to an earlier date), and (2) in the Borrower Subsidiary Letter
of the undersigned Subsidiary Borrower are true and correct on and as of the
date of such Borrowing, before and after giving effect to such Borrowing;

 

(e)           no
event has occurred and no circumstance exists as a result of which any
information concerning The Boeing Company or the undersigned Subsidiary
Borrower that has been provided by The Boeing Company or the undersigned
Subsidiary Borrower to the Agent or the Lenders in connection with such Bid
Borrowing would include an untrue statement of a material fact or omit to state
any material fact or any fact necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading.]*

 

The undersigned hereby confirms that the Proposed Bid
Borrowing is to be made available to it in accordance with Section 2.5(e) of
the Credit Agreement.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  [[NAME OF BORROWER]

  
	
   

  	
   

  
	
   

  	
  By 

  	
   

  	
   

  
	
   

  	
   

  	
  Title:]*

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE BOEING COMPANY

  
	
   

  	
   

  
	
   

  	
  By 

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  
					

 

 

*              Reference
should describe The Boeing Company.

*              Include
if the Borrower is not The Boeing Company.

 

2

 

EXHIBIT C

REQUEST FOR ALTERATION

 

To the Lenders Parties to

Credit Agreement referred

to below

 

Gentlemen:

 

In accordance with Section 2.19 of the 364-Day Credit
Agreement dated as of November     , 2003, among The Boeing
Company, the lenders parties thereto, JPMorgan Chase Bank, as syndication
agent, Citigroup Global Markets Inc. and J.P. Morgan Securities, Inc., as joint
lead arrangers and joint book managers, and Citibank, N.A., as Agent for such
lenders (as amended or modified from time to time, the “Credit Agreement”;
the terms defined therein being used herein as therein defined), you are hereby
notified that, with the consent, if any, required of the Lenders pursuant to
such Section 2.19:

 

[Complete as Appropriate]

 

                                                                      
shall become a party to the Credit Agreement with a Commitment of
$                              .

 

the Commitment of
                                  
shall be increased/decreased from
$                        
to
$                        .

 

the Commitment of
                                
shall be terminated,

 

the Committed Advances of
                                          
shall be prepaid in the amount of
$                   .

 

If this Request for
Alteration has been executed by the Company, the Agent and each Lender [and
prospective lender] affected by this Request for Alteration and all prepayments
called for hereby shall have been paid in full on or before                 ,
200    (the “Effective Date”), then pursuant to Section
2.19 of the Credit Agreement this Request for Alteration, and each increase,
decrease, termination or creation effected hereby, shall thereupon become
effective on the Effective Date.  [The
Company hereby certifies that no event exists, or would result from giving
effect to this Request for Alteration, which would require the Agent to obtain
the consent of the Majority Lenders before signing this Request for
Alteration.]  [The Agent may not sign
this Request for Alteration without the prior written consent of the Majority
Lenders.]

 

 

Please indicate your consent to this Request for
Alteration by signing the enclosed copy and returning it to the Agent.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  THE BOEING COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
  We hereby consent to the foregoing.

  	
   

  
	
  [Name of Affected Lender]

  	
   

  
	
   

  	
   

  
	
  By 

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
  [We hereby consent to the foregoing.

  	
   

  
	
  [Name of affected prospective lender]

  	
   

  
	
   

  	
   

  
	
  By 

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
  CITIBANK, N.A. as Agent

  	
   

  
	
   

  	
   

  
	
  By 

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
  [We hereby consent to the foregoing.

  	
   

  
	
  [If Majority Lender consent is required.]]

  	
   

  
	
   

  	
   

  
	
  [Name of Lender]

  	
   

  
	
   

  	
   

  
	
  By 

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
							

 

2

 

EXHIBIT D

 

FORM OF BORROWER
SUBSIDIARY LETTER

 

	
  [DATE]

  

 

To each of the Lenders

parties to the Credit Agreement

(as defined  below) and to Citibank
N.A.,

as Agent for such Lenders

 

 

Ladies and Gentlemen:

 

Reference is made to the 364-Day Credit Agreement
dated as of November     , 2003, among The Boeing Company,
the lenders parties thereto, JPMorgan Chase Bank, as syndication agent,
Citigroup Global Markets Inc. and J.P. Morgan Securities, Inc., as joint lead
arrangers and joint book managers, and Citibank, N.A., as Agent for such
lenders (as amended or modified from time to time, the “Credit Agreement”).  Capitalized terms used in this letter that
are not defined herein have the respective meanings specified in the Credit
Agreement.

 

Please be advised that the Company hereby designates
its undersigned Subsidiary,                          
(the “Subsidiary Borrower”), as a “Subsidiary Borrower” under and for
all purposes of the Credit Agreement.

 

The Subsidiary Borrower, in consideration of each
Lender’s agreement to extend credit to it under and on the terms and conditions
set forth in the Credit Agreement, does hereby assume each of the obligations
imposed upon a “Subsidiary Borrower” as a “Borrower” under the Credit Agreement
and agrees to be bound by the terms and conditions of the Credit Agreement.  In furtherance of the foregoing, the
Subsidiary Borrower hereby represents and warrants to each Lender as follows:

 

(a)           The Subsidiary Borrower is a
corporation duly organized, validly existing and in good standing under the
laws of
                                          .  The Subsidiary Borrower is qualified to do
business in every jurisdiction where such qualification is required, except
where the failure to so qualify would not have a materially adverse effect on
the financial condition of the Company and the Subsidiary Borrowers as a whole.

 

(b)           The execution, delivery and
performance by the Subsidiary Borrower of this Subsidiary Borrower Letter and
its Notes, if any, are within the Subsidiary Borrower’s corporate powers, have
been duly authorized by all necessary corporate action, have received all
necessary governmental approval, if any (which approval remains in full force
and effect), and do not contravene any law, any provision of the Subsidiary
Borrower’s charter or by-laws or any contractual restriction binding on the
Subsidiary Borrower.

 

 

(c)           This Subsidiary Borrower Letter does,
and the Notes of the Subsidiary Borrower when duly executed and delivered by
the Subsidiary Borrower will, constitute legal, valid and binding obligations
of the Subsidiary Borrower, enforceable against the Subsidiary Borrower in
accordance with their respective terms.

 

(d)           In the Subsidiary Borrower’s opinion,
there are no pending or threatened actions or proceedings before any court or
administrative agency that are reasonably likely to have a material adverse
affect on the financial condition or operations of the Subsidiary Borrower or
any Subsidiary which is likely to impair the ability of the Subsidiary Borrower
to repay the Advances to it or which would affect the legality, validity or
enforceability of such Advances or its Notes, if any.

 

(e)           The Consolidated statement of
financial position as of December 31, 2002 and the related Consolidated
statement of earnings and retained earnings for the year then ended (copies of
which have been furnished to each Lender) correctly set forth the Consolidated
financial condition of the Company and its Subsidiaries as of such date and the
result of the Consolidated operations for such year.

 

(f)            The Subsidiary Borrower is not
engaged in the business of extending credit for the purpose of purchasing or
carrying margin stock within the meaning of Regulation U issued by the Board of
Governors of the Federal Reserve System, and no proceeds of any Advance to the
Subsidiary Borrower will be used to purchase or carry any margin stock or to
extend credit to others for the purpose of purchasing or carrying any margin
stock.  Following application of the
proceeds of each Advance, not more than 25 percent of the value of the assets
(either of the Subsidiary Borrower only or of the Subsidiary Borrower and its
subsidiaries on a consolidated basis) subject to the provisions of Section
4.2(a) of the Credit Agreement or subject to any restriction contained in any
agreement or instrument between the Subsidiary Borrower and any Lender or any
Affiliate of a Lender relating to Debt within the scope of Section 6.1(d) of
the Credit Agreement will be margin stock (within the meaning of Regulation U
issued by the Board of Governors of the Federal Reserve System).

 

(g)           The Subsidiary Borrower is not an
“investment company,” or an “affiliated person” of, or “promoter” or “principal
underwriter” for, an “investment company,” as such terms are defined in the
Investment Company Act of 1940, as amended. 
Neither the making of any Advances, nor the application of the proceeds
or repayment thereof by the Subsidiary Borrower, nor the consummation of the
other transactions contemplated hereby, will violate any provision of such Act
or any rule, regulation or order of the Securities and Exchange Commission
thereunder.

 

2

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  THE BOEING COMPANY

  
	
   

  	
   

  
	
   

  	
  By 

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  [SUBSIDIARY BORROWER]

  
	
   

  	
   

  
	
   

  	
  By 

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

3

 

EXHIBIT E

 

EXTENSION REQUEST

 

	
  [Date]

  

 

Citibank, N.A., as Agent

for the Lenders parties

to the Credit Agreement

referred to below

388 Greenwich Street

New York, New York  10013

 

	
  Re:

  	
  Extension Request Under The Boeing Company 364-Day

  
	
  Credit Agreement dated
  as of November     , 2003.

  

 

Reference is made to the 364-Day Credit Agreement
dated as of November     , 2003, among The Boeing Company,
the lenders parties thereto, JPMorgan Chase Bank, as syndication agent,
Citigroup Global Markets Inc. and J.P. Morgan Securities, Inc., as joint lead
arrangers and joint book managers, and Citibank, N.A., as Agent for the lenders
(as amended or modified from time to time, the “Credit Agreement”).  The terms defined in the Credit Agreement
are used herein as therein defined. 
Pursuant to Section 2.21 of the Credit Agreement, the Company hereby
provides notice of its desire to extend the Termination Date to November
    , 2005.

 

The Company hereby instructs the Agent promptly to
notify each of the Lenders of the receipt of this Extension Request by
providing each such Lender with a copy of this Extension Request.

 

	
   

  	
  THE BOEING COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
					

 

 

EXHIBIT F

 

CONTINUATION
NOTICE

 

[Date]

 

The Boeing Company

 

Citibank, N.A., as
Agent

for the Lenders parties

to the Credit Agreement

388 Greenwich Street

New York, New York 
10013

 

Reference is made to the 364-Day Credit Agreement
dated as of November     , 2003, among The Boeing Company,
the lenders parties thereto, JPMorgan Chase Bank, as syndication agent,
Citigroup Global Markets Inc. and J.P. Morgan Securities, Inc., as joint lead
arrangers and joint book managers, and Citibank, N.A., as Agent for the lenders
(as amended or modified from time to time, the “Credit Agreement”).  The terms defined in the Credit Agreement
are used herein as therein defined.

 

Reference is made to the Extension Request dated
[                 ],
200    from the Company to the Agent.  We have reviewed the Extension Request and we hereby consent to
the extension of the Termination Date to November     ,
2005.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  [LENDER]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
					

 

 

EXHIBIT G

 

FORM OF OPINION OF
COUNSEL TO THE COMPANY

 

[Date]

 

To each of the Lenders parties

to the Credit
Agreement  referred to

below, and to Citibank,
N.A., as Agent

 

The Boeing Company

 

Gentlemen:

 

This opinion is furnished to you pursuant to Section
5.1(c) of the 364-Day Credit Agreement dated as of November
    , 2003, among The Boeing Company, the lenders parties
thereto, JPMorgan Chase Bank, as syndication agent, Citigroup Global Markets
Inc. and J.P. Morgan Securities, Inc., as joint lead arrangers and joint book
managers, and Citibank, N.A., as Agent for the lenders (as amended or modified
from time to time, the “Credit Agreement”).  The terms defined in the Credit Agreement are used herein as
therein defined.

 

I am counsel to the Company, and have acted in such
capacity in connection with the preparation, execution and delivery of, and the
initial Borrowing made by the Company under, the Credit Agreement.

 

In that connection, I have or have had examined:

 

(1)           The
Credit Agreement.

 

(2)           The
other documents furnished by the Company pursuant to Article 5 of the Credit
Agreement.

 

(3)           The
Certificate of Incorporation of the Company and all amendments thereto (the “Charter”).

 

(4)           The
by-laws of the Company and all amendments thereto (the “By-Laws”).

 

In addition, I have or have had examined the
originals, or copies certified to my satisfaction, of such other corporate
records of the Company, certificates of officers of the Company, and
agreements, instruments and other documents, as I have deemed necessary as a
basis for the opinions expressed below. 
I have assumed the due execution and delivery, pursuant to due
authorization, of the Credit Agreement by the Lenders and the Agent.

 

I am qualified to practice law in the State of
California and I do not purport to be an expert on any laws other than the laws
of the State of California, the General Corporation Law of the State of Delaware
and the Federal laws of the United States.

 

 

Based upon the foregoing and upon such investigation
as I have deemed necessary, I am of the following opinions:

 

1.     The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware.

 

2.     The execution, delivery and performance by the Company of the
Credit Agreement and the Notes, if any, are within the Company’s corporate
powers, have been duly authorized by all necessary corporate action, and do not
contravene (i) the Charter or the By-Laws or (ii) any law, rule or regulation
applicable to the Company (including, without limitation, Regulation X of the
Board of Governors of the Federal Reserve System) or (iii) any contractual or
legal restriction binding on the Company. 
The Credit Agreement and the Notes, if any, have been duly executed and
delivered on behalf of the Company.

 

3.     No authorization, approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body is required for
the due execution, delivery and performance by the Company of the Credit
Agreement and the Notes[, except
for            ,
all of which have been duly obtained or made and are in full force and effect].

 

4.     In any action or proceeding arising out of or relating to the
Credit Agreement or the Notes, if any, in any court of the State of California
or in any federal court sitting in the State of California, such court would
recognize and give effect to the provisions of Section 8.6 of the Credit
Agreement wherein the parties thereto agree that the Credit Agreement and the
Notes shall be governed by, and construed in accordance with, the laws of the
State of New York.  Without limiting the
generality of the foregoing, a court of the State of California or a federal
court sitting in the State of California would apply the usury law of the State
of New York, and would not apply the usury law of the State of California, to
the Credit Agreement and the Notes. 
However, if a court were to hold that the Credit Agreement and the Notes
are governed by, and to be construed in accordance with, the laws of the State
of California, the Credit Agreement and the Notes would be, under the laws of
the State of California, legal, valid and binding obligations of the Company
enforceable against the Company in accordance with their respective terms.

 

5.     To the best of my knowledge, there are no pending overtly
threatened actions or proceedings against the Company or any of its
Subsidiaries before any court or administrative agency that (i) purport to
affect the legality, validity, binding effect or enforceability of the Credit
Agreement or any of the Notes or (ii) except as disclosed in the Company’s
financial statements delivered to you prior to the date hereof pursuant to
Section 3.1(e) of the Credit Agreement or as set forth on Annex A hereto, are
reasonably likely to have a material adverse affect on the financial condition
or operations of the Company or any Subsidiary which is likely to impair the
ability of the Company or any Subsidiary to repay their respective Advances or
which would affect the legality, validity or enforceability of the Credit
Agreement.

 

The opinions set forth above are subject to the
following qualifications:

 

2

 

(a)     My
opinion in the last sentence of paragraph 4 above is subject to the effect of
any applicable bankruptcy, insolvency, reorganization, moratorium or similar
law affecting creditors’ rights generally.

 

(b)     My
opinion in paragraph 4 above is subject to the effect of general principles of
equity, including (without limitation) concepts of materiality, reasonableness,
good faith and fair dealing (regardless of whether considered in a proceeding
in equity or at law).

 

	
   

  	
  Very truly yours,

  

 

3

 

ANNEX A

 

On September 3,
2003, the Inspector General of the U.S. Department of Defense announced a
formal investigation into whether a former senior U.S. Air Force official who
is now a Company employee improperly provided data from a competitor to the
Company in the course of the Air Force’s evaluation of the Company’s proposal
to lease tanker aircraft to the Air Force. 
The Company is conducting its own confidential and parallel
investigation into this subject matter, including the circumstances under which
the former senior U.S. Air Force official became a Company employee.

 

4

 

EXHIBIT H

 

 

	
   

  	
  November
      , 2003

  

 

To the Initial Lenders
party to the

Credit Agreement referred

to below and to Citibank, N.A.,

as Agent

 

Ladies and Gentlemen:

 

We have acted as special
New York counsel to Citibank, N.A., as Agent, in connection with the
preparation, execution and delivery of the 364-Day Credit Agreement dated as of
November     , 2003, among The Boeing Company, the Lenders
parties thereto, JPMorgan Chase Bank, as syndication agent, Citigroup Global
Markets Inc. and J.P. Morgan Securities, Inc., as joint lead arrangers and
joint book managers, and Citibank, N.A., as Agent for the Lenders (as amended
or modified from time to time, the “Credit Agreement”; the terms defined
therein being used herein as therein defined).

 

In that connection, we
have examined a counterpart of the Credit Agreement executed by TBC and, to the
extent relevant to our opinion expressed below, the other documents delivered
by TBC pursuant to Section 5.1 of the Credit Agreement.

 

In our examination of the
Credit Agreement and such other documents, we have assumed, without independent
investigation (a) the due execution and delivery of the Credit Agreement
by all parties thereto, (b) the genuineness of all signatures,
(c) the authenticity of the originals of the documents submitted to us and
(d) the conformity to originals of any documents submitted to us as
copies.

 

In addition, we have
assumed, without independent investigation, that (i) TBC is duly organized
and validly existing under the laws of the jurisdiction of its organization and
has full power and authority (corporate and otherwise) to execute, deliver and
perform the Credit Agreement and (ii) the execution, delivery and
performance by TBC of the Credit Agreement have been duly authorized by all
necessary action (corporate or otherwise) and do not (A) contravene the certificate
of incorporation, bylaws or other constituent documents of TBC,
(B) conflict with or result in the breach of any document or instrument
binding on TBC or (C) violate or require any governmental or regulatory
authorization or other action under any law, rule or regulation applicable to
TBC other than New York law or United States federal law applicable to
borrowers generally or, assuming the correctness of TBC’s statements made as
representations and warranties in Section 3.1(b) of the Credit Agreement, applicable
to TBC.  We have also assumed that the
Credit Agreement is the legal, valid and binding obligation of each Lender,
enforceable against such Lender in accordance with its terms.

 

Based upon the foregoing
examination and assumptions and upon such other investigation as we have deemed
necessary and subject to the qualifications set forth below, we

 

 

are of the opinion that the Credit Agreement is the legal, valid and
binding obligation of TBC, enforceable against TBC in accordance with its
terms.

 

Our opinion above is
subject to the following qualifications:

 

(i)            Our opinion above is subject to the
effect of any applicable bankruptcy, insolvency (including, without limitation,
all laws relating to fraudulent transfers), reorganization, moratorium or similar
law affecting creditors’ rights generally.

 

(ii)           Our opinion above is also subject to
the effect of general principles of equity, including (without limitation)
concepts of materiality, reasonableness, good faith and fair dealing
(regardless of whether considered in a proceeding in equity or at law).

 

(iii)          We express no opinion as to the
enforceability of the indemnification provisions set forth in Section 8.3 of
the Credit Agreement to the extent enforcement thereof is contrary to public
policy regarding the exculpation of criminal violations, intentional harm and
acts of gross negligence or recklessness.

 

(iv)          Our opinion above is limited to the
law of the State of New York and the federal law of the United States of
America and we do not express any opinion herein concerning any other law.  Without limiting the generality of the
foregoing, we express no opinion as to the effect of the law of a jurisdiction
other than the State of New York wherein any Lender may be located or wherein
enforcement of the Credit Agreement may be sought that limits the rates of
interest legally chargeable or collectible.

 

A copy of this opinion
letter may be delivered by any of you to any Person that becomes a Lender in
accordance with the provisions of the Credit Agreement.  Any such Lender may rely on the opinion
expressed above as if this opinion letter were addressed and delivered to such
Lender on the date hereof.

 

This opinion letter
speaks only as of the date hereof.  We
expressly disclaim any responsibility to advise you or any other Lender who is
permitted to rely on the opinion expressed herein as specified in the next
preceding paragraph of any development or circumstance of any kind including
any change of law or fact that may occur after the date of this opinion letter
even though such development, circumstance or change may affect the legal
analysis, a legal conclusion or any other matter set forth in or relating to
this opinion letter.  Accordingly, any
Lender relying on this opinion letter at any time should seek advice of its
counsel as to the proper application of this opinion letter at such time.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
  DLB:SLH

  	
   

  

 

2

 

EXHIBIT I

 

FORM OF OPINION OF
IN-HOUSE COUNSEL TO

SUBSIDIARY
BORROWER

 

[Date]

 

To each of the Lenders
parties

to the Credit Agreement referred

to below and to Citibank,

N.A., as Agent

 

The Boeing Company

 

Ladies and Gentlemen:

 

This opinion is furnished to you pursuant to Section
5.4(d) of the 364-Day Credit Agreement dated as of November
    , 2003, among The Boeing Company, the lenders parties
thereto, JPMorgan Chase Bank, as syndication agent, Citigroup Global Markets
Inc. and J.P. Morgan Securities, Inc., as joint lead arrangers and joint book
managers, and Citibank, N.A., as Agent for the lenders (as amended or modified
from time to time, the “Credit Agreement”; the terms defined therein
being used herein as therein defined).

 

I am legal counsel for [insert name of Subsidiary
Borrower] (the “Subsidiary Borrower”), and have acted in such capacity
in connection with the execution and delivery of the Borrower Subsidiary Letter
dated as of [month, date, year] by the Company and the Subsidiary Borrower (the
“Borrower Subsidiary Letter”), and the initial Borrowing made by the Subsidiary
Borrower under the Credit Agreement.

 

In that connection, I have examined:

 

(1)           The
Credit Agreement.

 

(2)           The
Borrower Subsidiary Letter.

 

(3)           The other documents furnished by the
Company and/or the Subsidiary Borrower pursuant to Article 5 of the Credit
Agreement.

 

(4)           The Certificate of Incorporation of
the Subsidiary Borrower and all amendments thereto (the “Subsidiary Borrower
Charter”).

 

(5)           The by-laws of the Subsidiary
Borrower and all amendments thereto (the “Subsidiary Borrower By-Laws”).

 

(6)           A certificate of the Secretary of
State of the State of [insert state of incorporation of Subsidiary Borrower],
dated                     ,
2000, attesting to the continued corporate existence and good standing of the
Subsidiary Borrower in that State.

 

 

In addition, I have examined the originals, or copies
certified to my satisfaction, of such other corporate records of the Subsidiary
Borrower, certificates of public officials and of officers of the Company and
the Subsidiary Borrower, and agreements, instruments and other documents, as I
have deemed necessary as a basis for the opinions expressed below.  I have assumed the due execution and
delivery, pursuant to due authorization, of the Credit Agreement by the
Lenders, the Agent and the syndication agent.

 

I am qualified to practice law in the State of
California [and [insert state of incorporation of the Subsidiary Borrower if
other than Delaware]] and I do not purport to be an expert on any laws other
than the laws of the State of California, the General Corporation Law of the
State of Delaware and the Federal laws of the United States.

 

Based upon the foregoing and upon such investigation
as I have deemed necessary, I am of the following opinions:

 

1.     The Subsidiary Borrower is a corporation duly organized, validly
existing and in good standing under the laws of the State of [insert state of
incorporation].

 

2.     The execution, delivery and performance by the Subsidiary
Borrower of the Credit Agreement, the Borrower Subsidiary Letter and the Subsidiary
Borrower’s Notes are within the Subsidiary Borrower’s corporate powers, have
been duly authorized by all necessary corporate action, and do not contravene
(i) the Subsidiary Borrower Charter or the Subsidiary Borrower By-Laws or (ii)
any law, rule or regulation applicable to the Subsidiary Borrower (including,
without limitation, Regulation X of the Board of Governors of the Federal
Reserve System) or (iii) any contractual or legal restriction binding on the
Subsidiary Borrower.  The Credit
Agreement, the Borrower Subsidiary Letter and the Subsidiary Borrower’s Notes
have been duly executed and delivered on behalf of the Subsidiary Borrower.

 

3.     No authorization, approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body is required for
the due execution, delivery and performance by the Subsidiary Borrower of the
Credit Agreement, the Borrower Subsidiary Letter and the Subsidiary Borrower’s
Notes [, except for                    ,
all of which have been duly obtained or made and are in full force and effect].

 

4.     In any action or proceeding arising out of or relating to the
Credit Agreement, the Borrower Subsidiary Letter, or the Subsidiary Borrower’s
Notes in any court of the State of [insert state of incorporation of the
Subsidiary Borrower] or in any federal court sitting in the State of [insert
state of incorporation of the Subsidiary Borrower], such court would recognize
and give effect to the provisions in the Credit Agreement, the Borrower
Subsidiary Letter and the Subsidiary Borrower’s Notes wherein the parties
thereto agree that the Credit Agreement, the Borrower Subsidiary Letter and the
Subsidiary Borrower’s Notes shall be governed by, and construed in accordance
with, the laws of the State of New York. 
Without limiting the generality of the foregoing, a court of the State
of [insert state of incorporation of the Subsidiary Borrower]or a federal court
sitting in the State of [insert state of incorporation of the Subsidiary
Borrower]would apply the usury law of the State of New York, and would not
apply the usury law of the State of [insert state of incorporation of the

 

2

 

Subsidiary Borrower], to
the Credit Agreement, the Borrower Subsidiary Letter or the Subsidiary
Borrower’s Notes.  However, if a court
were to hold that the Credit Agreement, the Borrower Subsidiary Letter and the
Subsidiary Borrower’s Notes are governed by, and are to be construed in accordance
with, the laws of the State of [insert state of incorporation of the Subsidiary
Borrower], to the Credit Agreement, the Borrower Subsidiary Letter and the
Subsidiary Borrower’s Notes would be, under the laws of the State of [insert
state of incorporation of the Subsidiary Borrower], legal, valid and binding
obligations of the Company and the Subsidiary Borrower parties thereto,
enforceable against the Company and the Subsidiary Borrower parties thereto in
accordance with their respective terms.

 

5.     To the best of my knowledge, there are no pending overtly
threatened actions or proceedings against the Subsidiary Borrower before any
court or administrative agency that (i) purport to affect the legality,
validity, binding effect or enforceability of the Credit Agreement, the
Borrower Subsidiary Letter or any of the Subsidiary Borrower’s Notes, or (ii)
except as disclosed in the Company’s financial statements delivered to you
prior to the date hereof pursuant to the Credit Agreement are reasonably likely
to have a material adverse affect on the financial condition or operations of
the Subsidiary Borrower which is likely to impair the ability of the Subsidiary
Borrower to repay Advances to it or which would affect the legality, validity
or enforceability of such Advances or its Notes.

 

The opinions set forth
above are subject to the following qualifications:

 

(a)           My opinion in the last sentence of
paragraph 4 above is subject to the effect of any applicable bankruptcy,
insolvency, reorganization, moratorium or similar law affecting creditors’
rights generally.

 

(b)           My opinion in paragraph 4 above is
subject to the effect of general principles of equity, including (without
limitation) concepts of materiality, reasonableness, good faith and fair
dealing (regardless of whether considered in a proceeding in equity or at law).

 

	
   

  	
  Very truly
  yours,

  

 

 

3

 

EXHIBIT J

 

FORM OF GUARANTY

 

THIS GUARANTY (“Guaranty”) is made and entered into
this            day of
                    ,
200   , by THE BOEING COMPANY, a Delaware corporation (“TBC”)
in favor of the LENDERS (as defined in the Credit Agreement defined below) and
CITIBANK, N.A., in its capacity as administrative agent for the Lenders (in
such capacity, the “Agent”).

 

RECITALS

 

This Guaranty is executed and delivered in connection
with the 364-Day Credit Agreement dated as of November
    , 2003, among The Boeing Company, the Lenders, JPMorgan
Chase Bank, as syndication agent, Citigroup Global Markets Inc. and J.P. Morgan
Securities, Inc., as joint lead arrangers and joint book managers, and the
Agent (as amended or modified from time to time, the “Credit Agreement”).

 

The Credit Agreement provides that certain
subsidiaries of TBC may, upon satisfaction of certain conditions set forth
therein, become a Subsidiary Borrower for purposes of the Credit Agreement and
have all of the rights and obligations of a Borrower thereunder.  One of the conditions precedent to the
making of any Advances to any particular Subsidiary Borrower is the execution
and delivery of this Guaranty.

 

In consideration of the foregoing, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and in order to induce the Lenders to make Advances and other
credit accommodations under the Credit Agreement to [insert name of the
Subsidiary Borrower] (the “Subject Subsidiary Borrower”), TBC hereby
agrees as follows:

 

1.                Guarantee. TBC hereby
guarantees punctual payment when due (subject to applicable grace periods, if
any), whether at stated maturity, by acceleration or otherwise, by the Subject
Subsidiary Borrower of each and every payment obligation of such Subject
Subsidiary Borrower arising under the Credit Agreement and the promissory notes
delivered thereunder (collectively, the “Guaranteed Obligations”).  Without limiting the generality of the
foregoing, TBC’s liability shall extend to all amounts that constitute part of
the Guaranteed Obligations and would be owed by the Subject Subsidiary Borrower
to the Agent or any Lender under this Guaranty but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving the Subject Subsidiary
Borrower.  Upon receipt of a demand for
payment from the guaranteed party in accordance with the terms of this
Guaranty, TBC will effect payment within thirty (30) days of receipt.

 

2.  Liability of Guarantor.

 

2.1           TBC
agrees that its obligations hereunder are irrevocable, absolute, independent
and unconditional and shall not be affected by any circumstance which
constitutes a legal or equitable discharge of a guarantor or surety other than
indefeasible payment in full of the

 

 

Guaranteed Obligations.  In
furtherance of the foregoing and without limiting the generality thereof, TBC
agrees that this Guaranty shall remain in full force and effect and be binding
upon TBC and its successors and assigns until all the Guaranteed Obligations
have been satisfied in full.  TBC agrees
that the release or discharge, in whole or in part, or the bankruptcy,
liquidation or dissolution of the Subject Subsidiary Borrower, shall not
discharge or affect the liabilities of TBC hereunder.

 

2.2           TBC
guarantees that the Guaranteed Obligations will be paid (to the fullest extent
permitted by applicable law), strictly in accordance with the terms of the
Credit Agreement and this Guaranty, regardless of any law, regulation or order
now or hereafter in effect in any jurisdiction affecting any of such terms or
the rights of any Lender or the Agent with respect thereto.  The obligations of TBC under this Guaranty
are independent of the Guaranteed Obligations, and a separate action or actions
may be brought and prosecuted against TBC to enforce this Guaranty,
irrespective of whether any action is brought against the Subject Subsidiary
Borrower or any other Borrower or whether the Subject Subsidiary Borrower or
any other Borrower is joined in any such action or actions.  The liability of TBC under this Guaranty
shall be irrevocable, absolute and unconditional irrespective of, and TBC
hereby irrevocably waives any defenses it may now or hereafter have in any way
relating to, any or all of the following:

 

(a)               any lack of validity or
enforceability of this Guaranty, the Credit Agreement, or any other agreement
or instrument respectively relating thereto;

 

(b)              any change in the time, manner or
place of payment of, or in any other term of, all or any of the Guaranteed
Obligations, or any other amendment or waiver of or any consent to departure
from this Guaranty or the Credit Agreement (including, without limitation, any
extension pursuant to Section 2.21 of the Credit Agreement);

 

(c)               any taking, exchange, release or
non-perfection of any collateral or any taking, release or amendment or waiver
of or consent to departure from any other guaranty, for all or any of the
Guaranteed Obligations;

 

(d)              any change, restructuring or
termination of the corporate structure or existence of the Subject Subsidiary
Borrower or any other Borrower; or

 

(e)               any other circumstance,
(including, without limitation, any statute of limitations to the fullest
extent permitted by applicable law) which might otherwise constitute a defense
available to, or a discharge of, TBC, the Subject Subsidiary Borrower, any
other Borrower or any other guarantor (other than indefeasible payment in full
of the Guaranteed Obligations).

 

This Guaranty shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the
Guaranteed Obligations is rescinded or must otherwise be returned by any of the
Lenders or the Agent upon the insolvency, bankruptcy or reorganization of the
Subject Subsidiary Borrower or any other Borrower or otherwise, all as though
such payment had not been made.

 

2

 

3.  Notices,_etc.  All notices, demands and other
communications provided for under this Guaranty shall be in writing and may be
given by first class mail (postage prepaid), telecopy or any other customary
means of communication, addressed to TBC at the address set forth below, or to
such other address as TBC may advise in a written notice to the Agent:

 

The Boeing Company

100 N. Riverside

Mail Code: 5003 3648

Chicago, Illinois

Attention:  Assistant Treasurer, Corporate Finance and
Banking

Telecopy:  (312)
544-2399

 

The effective date of any notice, demand or other
communication given in connection with this Guaranty shall be the date when
mailed or telecopied, or if sent by overnight courier, the date following the
day of delivery to the overnight courier.

 

4.  No
Waiver: Cumulative Rights.  No
failure on the part of the Agent to exercise, and no delay in exercising, any
right, remedy or power under this Guaranty shall operate as a waiver thereof,
nor shall any single or partial exercise by the Agent of any right, remedy or
power under this Guaranty preclude any other or future exercise of any right,
remedy or power.  Each and every right,
remedy and power hereby granted to the Agent and the Lenders or allowed by law
or other agreement shall be cumulative and not exclusive of any other, and may
be exercised from time to time.

 

5.  Waivers.  (a) 
TBC hereby expressly waives promptness, diligence, notice of acceptance,
presentment, protest, any requirement that any right or power be exhausted or
any action be taken against the Subject Subsidiary Borrower, any other Borrower
or against any other guarantor, and all other notices and demands whatsoever
(except for demand for payment, which must be made in all instances; provided,
however, that TBC hereby expressly waives demand for payment to the
Subject Subsidiary Borrower in those instances in which such demand for payment
is prohibited by law or prevented by operation of law).

 

(b)           TBC
hereby waives any right to revoke this Guaranty, and acknowledges that this
Guaranty is continuing in nature and applies to all Guaranteed Obligations,
whether existing now or in the future.

 

(c)           TBC
acknowledges that it will receive substantial direct and indirect benefits from
the financing arrangements contemplated herein and that the waivers set forth
in this Guaranty are knowingly made in contemplation of such benefits.

 

(d)           TBC
agrees that payments made by it pursuant to this Guaranty will be subject to
the provisions of Section 2.9 and 2.14 of the Credit Agreement, as if such
payments were made by TBC in its capacity as a Borrower.

 

6.  Subrogation.  TBC will not exercise any rights that it may
now or hereafter acquire against the Subject Subsidiary Borrower, any other
Borrower or any other insider

 

3

 

guarantor that arise from the existence, payment, performance or
enforcement of the Guaranteed Obligations under this Guaranty, including,
without limitation, any right of subrogation, reimbursement, exoneration,
contribution or indemnification and any right to participate in any claim or
remedy of the Agent or any Lender against the Subject Subsidiary Borrower, any
other Borrower or any other insider guarantor or any collateral, whether or not
such claim, remedy or right arises in equity or under contract, statute or
common law, including, without limitation, the right to take or receive from
the Subject Subsidiary Borrower, another Borrower or any other insider
guarantor, directly or indirectly, in cash or other property or by set-off or
in any other manner, payment or security on account of such claim, remedy or
right, unless and until all of the Guaranteed Obligations and all other amounts
payable under this Guaranty shall have been paid in full in cash and the
Commitments shall have expired or terminated. 
If any amount shall be paid to TBC in violation of the preceding
sentence at any time prior to the later of the payment in full in cash or
immediately available funds of the Guaranteed Obligations and all other amounts
payable under this Guaranty and the Termination Date, such amount shall be held
in trust for the benefit of the Agent and the Lenders and shall forthwith be
paid to the Agent to be credited and applied to the Guaranteed Obligations and
all other amounts payable under this Guaranty, whether matured or unmatured, in
accordance with the terms of the Credit Agreement.  If (i) TBC shall make payment to the Agent or any Lender of all
or any part of the Guaranteed Obligations, (ii) all the Guaranteed Obligations
and all other amounts payable under this Guaranty shall be paid in full in cash
and (iii) the Termination Date shall have occurred, the Agent and the Lenders
will, at TBC’s request and expense, execute and deliver to TBC appropriate
documents, without recourse and without representation or warranty, necessary
to evidence the transfer by subrogation to TBC of an interest in the Guaranteed
Obligations resulting from such payment by TBC.  TBC acknowledges that it will receive direct and indirect
benefits from the financing arrangements contemplated by the Credit Agreement
and that the waiver set forth in this section is knowingly made in
contemplation of such benefits.

 

7.  Survival.  This Guaranty is a continuing guarantee and shall (a) remain in
full force and effect until payment in full (after the Termination Date) of the
Guaranteed Obligations and all other amounts payable under this Guaranty, (b)
be binding upon TBC, its successors and assigns, (c) inure to the benefit of
and be enforceable by each Lender (including each assignee Lender pursuant to
the terms of the Credit Agreement) and the Agent and their respective
successors, transferees and assigns and (d) be reinstated if at any time any
payment to a Lender or the Agent hereunder is required to be restored by such
Lender or the Agent.

 

8.  Costs and Expenses.  Without limitation on any other Guaranteed
Obligations of TBC or remedies of the Lenders under this Guaranty, TBC shall
pay on demand any and all losses, liabilities, damages, reasonable costs,
expenses and charges (including the reasonable fees and disbursements of
counsel for the Lenders and the Agent) 
suffered or incurred by such Lender as a result of any failure of any
Guaranteed Obligations to be the legal, valid and binding obligations of the
Subject Subsidiary Borrower enforceable against such Subject Subsidiary
Borrower in accordance with their terms.

 

4

 

9.  Amendments.  No amendment or waiver of any provision of this Guaranty, nor
consent to any departure therefrom by TBC, shall in any event be effective
unless the same shall be in writing and signed by TBC and the Agent, and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.

 

10.                                                     Headings,_Definitions.  Section and paragraph headings in this
Guaranty are included herein for convenience of reference only and shall not
modify, define, expand or limit any of the terms or provisions of this
Guaranty.  Any term used in the Guaranty
but not defined herein shall have the definition given to it in the Credit
Agreement.

 

11.                                                     Governing_Law.  This Guaranty shall be governed by, and
construed in accordance with, the laws of the State of New York, United States.

 

	
   

  	
  THE BOEING COMPANY

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  	
   

  
	
   

  	
  Its: 

  	
   

  	
   

  

 

5

 

EXHIBIT K

 

FORM OF OPINION OF
IN-HOUSE COUNSEL TO TBC

 

[Date]

 

To each of the Lenders
parties

to the Credit Agreement referred to

below, and to Citibank, N.A., as Agent

 

The Boeing Company

 

Gentlemen:

 

This opinion is furnished
to you pursuant to Section 5.4(f) of the 364-Day Credit Agreement dated as of
November     , 2003, among The Boeing Company, the lenders
parties thereto, JPMorgan Chase Bank, as syndication agent, Citigroup Global Markets
Inc. and J.P. Morgan Securities, Inc., as joint lead arrangers and joint book
managers, and Citibank, N.A., as Agent for the lenders (as amended or modified
from time to time, the “Credit Agreement”).  The terms defined in the Credit Agreement are used herein as
therein defined.

 

I am counsel to the
Company, and have acted in such capacity in connection with the preparation,
execution and delivery of the Borrower Subsidiary Letter, dated as of [month,
date, year], by the Company and                                                   ,
a Subsidiary of the Company (the “Subsidiary Borrower” and such letter, the “Borrower
Subsidiary Letter”) and the execution and delivery of the Guaranty
Agreement, dated as of [month, date, year], made by the Company in favor of the
Agent and the Lenders (the “Guaranty”) in conjunction with the initial
Borrowing made by the Subsidiary Borrower under the Credit Agreement.

 

In that connection, I
have or have had examined:

 

(1)                                  The
Credit Agreement.

 

(2)                                  The
Borrower Subsidiary Letter.

 

(3)                                  The
Guaranty.

 

(4)                                  The
Certificate of Incorporation of the Company and all amendments thereto (the “Charter”).

 

(5)                                  The
by-laws of the Company and all amendments thereto (the “By-Laws”).

 

In addition, I have or
have had examined the originals, or copies certified to my satisfaction, of
such other corporate records of the Company, certificates of officers of the
Company, and agreements, instruments and other documents, as I have deemed
necessary as a basis for the opinions expressed below.

 

 

I am qualified to
practice law in the State of California and I do not purport to be an expert on
any laws other than the laws of the State of California, the General
Corporation Law of the State of Delaware and the Federal laws of the United
States.

 

Based upon the foregoing
and upon such investigation as I have deemed necessary, I am of the following
opinions:

 

1.     The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware.

 

2.     The execution, delivery and performance by the Company of the
Borrower Subsidiary Letter and the Guaranty are within the Company’s corporate
powers, have been duly authorized by all necessary corporate action, and do not
contravene (i) the Charter or the By-laws or (ii) any law, rule or regulation
applicable to the Company (including, without limitation, Regulation X of the
Board of Governors of the Federal Reserve System) or (iii) any contractual or
legal restriction binding on the Company. 
The Borrower Subsidiary Letter and the Guaranty have been duly executed
and delivered on behalf of the Company.

 

3.     No authorization, approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body is required for
the due execution, delivery and performance by the Company of the Borrower
Subsidiary Letter and the Guaranty [, except for
                    ,
all of which have been duly obtained or made and are in full force and effect].

 

4.     To the best of my knowledge, there are no pending overtly
threatened actions or proceedings against the Company or any of its
Subsidiaries before any court or administrative agency which purport to affect
the legality, validity, binding effect or enforceability of the Borrower
Subsidiary Letter or the Guaranty.

 

The
opinions set forth above are subject to the following qualifications:

 

My opinion in paragraph 4
above is subject to the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar law affecting creditors’ rights generally
and to the effect of general principles of equity, including (without
limitation) concepts of materiality, reasonableness, good faith and fair
dealing (regardless of whether considered in a proceeding in equity or at law).

 

	
   

  	
  Very truly yours,

  

 

 

2

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