PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED JANUARY 30, 1996)
$75,000,000
[LOGO] CAMDEN PROPERTY TRUST
7% NOTES DUE NOVEMBER 15, 2006
------------------------
The 7% Notes due November 15, 2006 (the "Notes") offered hereby are being
offered by Camden Property Trust, a Texas real estate investment trust (together
with its subsidiaries, the "Company"). Interest on the Notes will be payable
semi-annually in arrears on each May 15 and November 15, commencing on May 15,
1997. The Notes will mature on November 15, 2006, and are redeemable at any time
at the option of the Company, in whole or in part, at a redemption price equal
to the sum of (i) the principal amount of the Notes being redeemed plus accrued
interest thereon to the redemption date and (ii) the Make-Whole Amount (as
defined in "Description of Notes -- Optional Redemption"), if any. The Notes
are not subject to any mandatory sinking fund. See "Description of Notes."
The Notes will be represented by a single fully-registered note in
book-entry form (a "Global Security") registered in the name of a nominee of
The Depository Trust Company ("DTC"). Beneficial interests in the Global
Security will be shown on, and transfers thereof will be effected only through,
records maintained by DTC (with respect to beneficial interests of participants)
or by participants or persons that hold interests through participants (with
respect to beneficial interests of beneficial owners). Owners of beneficial
interests in the Global Security will be entitled to physical delivery of Notes
in certificated form equal in principal amount to their respective beneficial
interests only under the limited circumstances described under "Description of
Notes -- Book-Entry System." Settlement of the Notes will be made in
immediately available funds. The Notes will trade in DTC's Same-Day Funds
Settlement System until maturity or earlier redemption, as the case may be, or
until the Notes are issued in certificated form and secondary market trading
activity in the Notes will therefore settle in immediately available funds. All
payments of principal and interest in respect of the Notes will be made by the
Company in immediately available funds. See "Description of Notes -- Same-Day
Settlement and Payment."
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS TO WHICH IT RELATES. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR
ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.
================================================================================
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) COMPANY(1)(3)
- --------------------------------------------------------------------------------
Per Note......... 98.887% .7% 98.187%
- --------------------------------------------------------------------------------
Total............ $74,165,250 $525,000 $73,640,250
================================================================================
(1) Plus accrued interest, if any, from November 19, 1996.
(2) The Company has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act of
1933, as amended. See "Underwriting."
(3) Before deducting expenses payable by the Company, estimated at $120,000.
------------------------
The Notes are offered by the Underwriters, subject to prior sale, when, as
and if issued by the Company and delivered to and accepted by the Underwriters,
subject to approval of certain legal matters by counsel for the Underwriters and
subject to certain other conditions. The Underwriters reserve the right to
withdraw, cancel or modify such offer and to reject orders in whole or in part.
It is expected that delivery of the Notes offered hereby will be made in
book-entry form through the facilities of DTC in New York, New York on or about
November 19, 1996.
------------------------
MERRILL LYNCH & CO.
J.P. MORGAN & CO.
NATIONSBANC CAPITAL MARKETS, INC.
------------------------
The date of this Prospectus Supplement is November 14, 1996.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY EFFECT TRANSACTIONS
WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED HEREBY AT
LEVELS ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE
DETAILED INFORMATION APPEARING ELSEWHERE IN THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS OR INCORPORATED HEREIN OR THEREIN BY REFERENCE.
THE COMPANY
Camden Property Trust (together with its subsidiaries, the "Company")
is a self-administered and self-managed real estate investment trust (a "REIT")
engaged in the acquisition, renovation, construction, development and management
of multifamily properties. As of September 30, 1996, the Company owned and
operated 49 multifamily properties located in Houston, Dallas/Fort Worth,
Austin, Corpus Christi, El Paso, Phoenix and Tucson (the "Operating Properties")
containing 17,855 apartment units. The Operating Properties had a weighted
average occupancy rate of 94.5% for the quarter ended September 30, 1996. The
Company also owns four properties that it is developing (the "Development
Properties") in Houston, Dallas and Phoenix, which will, when completed, add
1,510 units to its portfolio, and intends to begin construction in the future on
two properties (the "Future Development Properties" and, collectively with the
Operating Properties and the Development Properties, the "Properties"), which
the Company anticipates will, when completed, add 448 units.
The Company's predecessor was Centeq Investments, Inc. The
predecessors to Centeq Investments, Inc. and its related affiliates,
partnerships and companies (collectively, "Centeq"), were formed in 1982 by
Richard J. Campo, the Company's Chairman of the Board and Chief Executive
Officer, and D. Keith Oden, the Company's President and Chief Operating Officer.
Centeq was involved in the acquisition or development, management and marketing
of 28 multifamily properties containing 8,564 units prior to the Company's
initial public offering in July 1993. The Company's senior management began
their association over ten years ago with Centeq, and have an average of over
eighteen years of real estate experience.
THE OFFERING
SECURITIES OFFERED.................. $75,000,000 aggregate principal amount of
7% Notes due November 15, 2006.
MATURITY............................ November 15, 2006
INTEREST PAYMENT DATES.............. Semi-annually on May 15 and November 15,
commencing May 15, 1997, and at maturity.
RANKING............................. The Notes will be senior unsecured
obligations of the Company and will rank
equally with the Company's other unsecured
and unsubordinated indebtedness. The Notes
will be effectively subordinated to
mortgages and other secured indebtedness
of the Company and to indebtedness and
other liabilities of any subsidiary of the
Company. See "Capitalization."
OPTIONAL REDEMPTION................. The Notes will be redeemable at any time
at the option of the Company, in whole or
in part, at a redemption price equal to
the sum of (i) the principal amount of the
Notes being redeemed plus accrued interest
to the redemption date and (ii) the
Make-Whole Amount (as herein defined), if
any. See "Description of the
Notes--Optional Redemption."
USE OF PROCEEDS..................... The net proceeds to the Company of
approximately $73.5 million from the sale
of the Notes will be used to reduce
indebtedness outstanding under the
Company's $150 million unsecured revolving
credit facility (the "Unsecured Credit
Facility") and to repay the Company's only
secured construction loan. See "Use of
Proceeds."
LIMITATIONS ON INCURRENCE
OF DEBT............................. The Notes will contain various covenants
including the following:
o Neither the Company nor any Subsidiary
(as herein defined) may incur any Debt
(as herein defined) if, after giving
effect thereto, the aggregate principal
amount of all outstanding Debt of the
Company and its Subsidiaries on a
consolidated basis is greater than 60%
of the sum of (i) the Total Assets (as
herein defined) of the Company and its
Subsidiaries as of the end of the most
recent calendar quarter and (ii) the
purchase price of any real estate
assets or mortgages receivable
acquired, and the amount of any
securities offering proceeds received
(to the extent that such proceeds were
not used to acquire real estate assets
or mortgages receivable or used
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<PAGE>
to reduce Debt), by the Company or any
Subsidiary since the end of such
calendar quarter, including those
proceeds obtained in connection with
the Incurrence of such additional Debt.
o Neither the Company nor any Subsidiary
may incur any Debt secured by any
mortgage or other lien upon any
property of the Company or any
Subsidiary if, after giving effect
thereto, the aggregate principal amount
of all outstanding Debt of the Company
and its Subsidiaries on a consolidated
basis which is secured by any mortgage
or other lien on any property of the
Company or any Subsidiary is greater
than 40% of the sum of (i) the Total
Assets of the Company and its
Subsidiaries as of the end of the most
recent calendar quarter and (ii) the
purchase price of any real estate
assets or mortgages receivable
acquired, and the amount of any
securities offering proceeds received
(to the extent that such proceeds were
not used to acquire real estate assets
or mortgages receivable or used to
reduce Debt), by the Company or any
Subsidiary since the end of such
calendar quarter, including those
proceeds obtained in connection with
the Incurrence of such additional Debt.
o The Company and its Subsidiaries may
not at any time own Total Unencumbered
Assets (as herein defined) equal to
less than 150% of the aggregate
outstanding principal amount of the
Unsecured Debt (as herein defined) of
the Company and its Subsidiaries on a
consolidated basis.
o Neither the Company nor any Subsidiary
may incur any Debt, if, after giving
effect thereto, the ratio of
Consolidated Income Available for Debt
Service (as herein defined) to the
Annual Service Charge (as herein
defined) for the four consecutive
fiscal quarters most recently ended
prior to the date on which such
additional Debt is to be incurred shall
have been less than 1.5:1 on a pro
forma basis after giving effect to
certain assumptions.
For a more complete description of the
terms and definitions used in the
foregoing summary of limitations on
Incurrence of debt, see "Description of
Notes--Certain Covenants."
S-4
<PAGE>
THE COMPANY
THIS PROSPECTUS SUPPLEMENT AND THE ATTACHED PROSPECTUS, INCLUDING THE
INFORMATION INCORPORATED BY REFERENCE HEREIN, CONTAIN FORWARD-LOOKING STATEMENTS
WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933 AND SECTION 21E
OF THE SECURITIES EXCHANGE ACT OF 1934. ACTUAL RESULTS COULD DIFFER MATERIALLY
FROM THOSE PROJECTED IN THE FORWARD-LOOKING STATEMENTS.
GENERAL
Camden Property Trust is a self-administered and self-managed REIT. The
Company was formed in 1993 to continue the multifamily property acquisition,
development, management and marketing operations and related business objectives
and strategies of Centeq. Centeq was formed in 1982 by Richard J. Campo, the
Company's Chairman of the Board of Trust Managers and Chief Executive Officer,
and D. Keith Oden, the Company's President and Chief Operating Officer.
As of September 30, 1996, the Company owned and operated 49 Operating
Properties located in Houston, Dallas/Fort Worth, Austin, Corpus Christi, El
Paso, Phoenix and Tucson. The Operating Properties contained 17,855 units and
had a weighted average occupancy rate of 94.5% for the quarter ended September
30, 1996. The Company also owns four Development Properties, which will, when
completed, add 1,510 units to its portfolio, and intends to begin construction
in the future on two Future Development Properties, which the Company
anticipates will, when completed, add 448 units to its portfolio.
At September 30, 1996, the Company employed 626 persons, approximately
65 of whom were located at the Company's headquarters and 561 of whom were
"on-site" or in regional operating offices. The Company's senior management has
an average of over eighteen years of experience in real estate management,
acquisitions, dispositions, development and finance. Three of the Company's
executive officers, Messrs. Campo, Oden and Stewart, began their association in
1982 or earlier through Centeq. The Trust Managers have been involved with the
Company's senior management as investors and advisors since 1989 or earlier. The
remaining members of the management team have been with the Company and its
predecessors for four to six years.
The Company's headquarters are located at 3200 Southwest Freeway, Suite
1500, Houston, Texas 77027 and its telephone number is (713) 964-3555. The
Company's common shares of beneficial interest, par value $0.01 per share, are
listed on the New York Stock Exchange under the symbol "CPT".
THE PROPERTIES
The Properties typically consist of two and three story buildings in a
landscaped setting. The Operating Properties units average 783 square feet of
living area and provide residents with a variety of amenities. Most of the
Properties have, or are expected to have, one or more swimming pools and a
clubhouse and many have whirlpool spas, tennis courts and controlled access
gates. Many of the units offer additional features such as fireplaces, vaulted
ceilings, microwave ovens, covered parking, icemakers, washers and dryers and
ceiling fans.
For the nine months ended September 30, 1996, no single Operating
Property accounted for greater than 5% of the Company's total revenues. The
Operating Properties had a weighted average occupancy rate of 94.5% for the
quarter ended September 30, 1996. Resident leases are generally for six-month to
thirteen-month terms and require security deposits. Forty-three of the Operating
Properties have in excess of 200 units, with the largest having 804 units. Nine
of the Operating Properties were constructed by the Company or its predecessors
and placed in service since 1992. Twenty-five were placed in service between
1982 and 1987, thirteen were placed in service between 1974 and 1981 and one was
placed in service in each of 1968 and 1969.
The Company or its predecessors acquired 40 and developed nine of the
Operating Properties. All of the acquired Operating Properties have been
renovated by the Company or its predecessors within the past five years or are
in the process of renovation. The Company operates under a capital improvements
policy designed to maintain the competitive market position of its portfolio and
to generate favorable returns.
S-5
<PAGE>
The Company's real estate portfolio at December 31, 1995 and September
30, 1996 is summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1995 SEPTEMBER 30, 1996
---------------------------------- ---------------------------
UNITS PROJECTS %* UNITS PROJECTS %*
------------ ------------ -------- ----------- ------------ ------
<S> <C> <C> <C> <C> <C> <C>
OPERATING PROPERTIES
Texas
Houston 6,598 20 33% 7,231 19 36%
Dallas 6,065 17 30 6,045 16 31
Austin 1,745 6 9 1,745 6 9
Other 1,513 5 8 1,585 5 8
------ ---- ---- ------ ---- ----
Total Texas Properties 15,921 48 79 16,606 46 84
Arizona 821 2 4 1,249 3 6
------- ---- ---- ------- ---- -----
Total Operating Properties 16,742 50 83 17,855 49 90
------ ---- ---- ------ ---- -----
PROJECTS UNDER DEVELOPMENT **
Texas
Houston 1,226 3 6 758 2 4
Dallas 920 2 5 732 2 4
Other 288 1 1 - - -
------- --- --- ------- ---- -----
Total Texas Properties 2,434 6 12 1,490 4 8
Arizona 716 2 4 288 1 1
Colorado 216 1 1 180 1 1
------ ---- ----- ------ ---- -----
Total Projects Under Development 3,366 9 17 1,958 6 10
------ ---- ----- ------ ---- -----
Total Projects 20,108 59 100% 19,813 55 100%
====== ==== ==== ====== ==== =====
</TABLE>
- ------------------------------
* Based on units.
** The totals for projects under development include two projects
comprising 448 units on which construction has not commenced.
RECENT DEVELOPMENTS
Subsequent to September 30, 1996, $8.0 million in principal amount of
the Company's 7.33% Convertible Subordinated Debentures were converted into
333,370 common shares. On October 16, 1996, the Company completed the sale of
1,090,000 common shares of beneficial interest at a price of $25 7/8 per share.
The net proceeds of $27.6 million were used to retire construction related
indebtedness.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Notes are
estimated to be approximately $73.5 million. The Company intends to use the net
proceeds to retire a $9.4 million secured construction loan (the "Construction
Loan") and to reduce indebtedness under the Unsecured Credit Facility. The
Unsecured Credit Facility matures in July 1998 and the Construction Loan matures
in 1999. Both currently bear interest at LIBOR plus 1.50% (6.9% per annum as of
November 12, 1996). The Company will, in the ordinary course of business, borrow
under the Unsecured Credit Facility to fund acquisition and development costs
and satisfy general working capital requirements, but does not intend to use
secured debt for new borrowings in the future. NationsBank of Texas, N.A., an
affiliate of NationsBanc Capital Markets, Inc., will receive a portion of the
proceeds of the offering to repay outstanding indebtedness of the Company under
the Unsecured Credit Facility. See "Underwriting."
S-6
<PAGE>
CAPITALIZATION
CAPITAL STRUCTURE
The following table sets forth the capitalization of the Company at
September 30, 1996 on a historical basis and as adjusted to reflect the
conversion of $8.0 million principal amount of the Company's 7.33% Convertible
Subordinated Debentures subsequent to September 30, 1996, the sale by the
Company of 1,090,000 common shares on October 16, 1996, the sale by the Company
of the Notes offered by this Prospectus Supplement at the face value thereof,
and the application of the assumed net proceeds from the offering of the Notes.
See "Use of Proceeds."
September 30, 1996
-------------------------
Actual As Adjusted
--------- ---------
(IN THOUSANDS, EXCEPT SHARE DATA)
Notes Payable:
Unsecured credit facility ....................... $ 81,000 $ 14,299
Mortgages and other notes ....................... 93,050 58,591
Senior unsecured notes .......................... 99,609 173,774
--------- ---------
Total notes payable ....................... 273,659 246,664
7.33% Convertible Subordinated Debentures .......... 40,763 32,762
Preferred Shares, $0.01 par value; 10,000,000
authorized; no Preferred Shares issued and
outstanding ..................................... -- --
Shareholders' Equity:
Common shares, $0.01 par value; 100,000,000
authorized; 14,865,927 and 16,308,185 (as
adjusted) issued and outstanding ............... 149 163
Additional paid-in capital ...................... 307,779 343,147
Distributions in excess of net income ........... (45,911) (45,911)
Unearned restricted share awards ................ (3,421) (3,421)
--------- ---------
Total shareholders' equity ................ 258,596 293,978
--------- ---------
Total capitalization ............. $ 573,018 $ 573,404
========= =========
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<PAGE>
DESCRIPTION OF NOTES
THE FOLLOWING DESCRIPTION OF THE PARTICULAR TERMS OF THE NOTES OFFERED
HEREBY SUPPLEMENTS, AND TO THE EXTENT INCONSISTENT THEREWITH REPLACES, THE
DESCRIPTION OF THE GENERAL TERMS AND PROVISIONS OF THE "DEBT SECURITIES" SET
FORTH UNDER "DESCRIPTION OF DEBT SECURITIES" IN THE ACCOMPANYING PROSPECTUS, TO
WHICH REFERENCE IS HEREBY MADE.
The Notes are to be issued under an Indenture dated as of February 15,
1996 and a Supplemental Indenture dated as of February 15, 1996 (collectively,
the "Indenture"), between the Company and U.S. Trust Company of Texas, N.A. (the
"Trustee"). The Indenture has been filed with the Securities and Exchange
Commission (the "Commission") and incorporated by reference herein, and is
available for inspection at the corporate trust office of the Trustee at 2001
Ross Avenue, Suite 2700, Dallas, Texas 75201. The Indenture is subject to, and
governed by, the Trust Indenture Act of 1939, as amended (the "TIA"). The
statements made hereunder relating to the Indenture and the Notes to be issued
thereunder are summaries of certain provisions thereof, do not purport to be
complete and are subject to, and are qualified in their entirety by reference
to, all provisions of the Indenture and such Notes. All section references
appearing herein are to sections of the Indenture, and capitalized terms used
but not defined herein shall have the respective meanings set forth in the
Indenture.
GENERAL
The Notes will be limited to an aggregate principal amount of
$75,000,000. The Notes will be direct, senior unsecured obligations of the
Company and will rank equally with all other unsecured and unsubordinated
indebtedness of the Company from time to time outstanding. The Notes will be
effectively subordinated to mortgages and other secured indebtedness of the
Company and to indebtedness and other liabilities of any Subsidiaries (as
defined below). Accordingly, such prior indebtedness will have to be satisfied
in full before holders of the Notes will be able to realize any value from the
secured or indirectly-held properties.
As of September 30, 1996, on a pro forma basis after giving effect to
the issuance of the Notes offered hereby and the effect of the 1,090,000 common
shares offering on October 16, 1996, and the application of the proceeds
therefrom, the total outstanding indebtedness of the Company was approximately
$246.7 million, of which approximately $58.6 million was secured. The Company
may incur additional indebtedness, including secured indebtedness, subject to
the provisions described below under "Certain Covenants--Limitations on
Incurrence of Debt."
PRINCIPAL AND INTEREST
The Notes will bear interest at 7% per annum and will mature on
November 15, 2006. The Notes will bear interest from November 19, 1996 or from
the immediately preceding Interest Payment Date (as defined below) to which
interest has been paid, payable semi-annually in arrears on May 15 and November
15 of each year, commencing on May 15, 1997, and at maturity (each, an "Interest
Payment Date"), to the persons in whose name the applicable Notes are registered
in the Security Register on the preceding May 1 or November 1 (whether or not a
Business Day, as defined below), as the case may be (each, a "Regular Record
Date"). Interest on the Notes will be computed on the basis of a 360-day year of
twelve 30-day months.
If any Interest Payment Date or Stated Maturity falls on a day that is
not a Business Day, the required payment shall be made on the next Business Day
as if it were made on the date such payment was due and no interest shall accrue
on the amount so payable for the period from and after such Interest Payment
Date or the Maturity Date, as the case may be. "Business Day" means any day,
other than a Saturday or Sunday, or a day on which banks in the City of New York
are required or authorized by law, regulation or executive order to close.
The principal of and interest on the Notes will be payable at the
corporate trust office of U. S. Trust Company of Texas, N.A. (the "Paying
Agent") in the City of New York, initially located at 770 Broadway, 13th Floor,
New York, New York 10003, provided that, at the option of the Company, payment
of interest may be made by check mailed to the address of the Person entitled
thereto as it appears in the Security Register or by wire transfer of funds to
such Person at an account maintained within the United States (Sections 301,
307, 1001 and 1002).
OPTIONAL REDEMPTION
The Notes may be redeemed at any time at the option of the Company, in
whole or in part, at a redemption price equal to the sum of (i) the principal
amount of the Notes being redeemed plus accrued interest thereon to the
redemption date and (ii) the Make-Whole Amount (as defined below), if any, with
respect to such Notes (the "Redemption Price").
If notice has been given as provided in the Indenture and funds for the
redemption of any Notes called for redemption shall have been made available on
the redemption date referred to in such notice, such Notes will cease to bear
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<PAGE>
interest on the date fixed for such redemption specified in such notice and the
only right of the Holders of the Notes will be to receive payment of the
Redemption Price. (Section 1106).
Notice of any optional redemption of any Notes will be given to Holders
at their addresses, as shown in the Security Register, not more than 60 nor less
than 30 days prior to the date fixed for redemption. The notice of redemption
will specify, among other items, the Redemption Price and the principal amount
of the Notes held by such Holder to be redeemed. (Section 1104).
If less than all the Notes are to be redeemed at the option of the
Company, the Company will notify the Trustee at least 45 days prior to the
Redemption Date (or such shorter period as is satisfactory to the Trustee) of
the aggregate principal amount of Notes to be redeemed and their Redemption
Date. The Trustee shall select, in such manner as it shall deem fair and
appropriate, Notes to be redeemed in whole or in part. Notes may be redeemed in
part in the minimum authorized denomination for Notes or in any integral
multiple thereof. (Section 1102 and 1103).
"Make-Whole Amount" means, in connection with any optional redemption
or accelerated payment of any Note, the excess, if any, of (i) the aggregate
present value as of the date of such redemption or accelerated payment of each
dollar of principal being redeemed or paid and the amount of interest (exclusive
of interest accrued to the date of redemption or accelerated payment) that would
have been payable in respect of such dollar if such redemption or accelerated
payment had not been made, determined by discounting, on a semi-annual basis,
such principal and interest at the Reinvestment Rate (determined on the third
Business Day preceding the date such notice of redemption is given or
declaration of acceleration is made) from the respective dates on which such
principal and interest would have been payable if such redemption or accelerated
payment had not been made, over (ii) the aggregate principal amount of the Notes
being redeemed or paid.
"Reinvestment Rate" means .25% (twenty-five one hundredths of one
percent) plus the arithmetic mean of the yields under the respective headings
"This Week" and "Last Week" published in the Statistical Release under the
caption "Treasury Constant Maturities" for the maturity (rounded to the nearest
month) corresponding to the remaining life to maturity, as of the payment date
of the principal being redeemed or paid. If no maturity exactly corresponds to
such maturity, yields for the two published maturities most closely
corresponding to such maturity shall be calculated pursuant to the immediately
preceding sentence and the Reinvestment Rate shall be interpolated or
extrapolated from such yields on a straight-line basis, rounding in each of such
relevant periods to the nearest month. For purposes of calculating the
Reinvestment Rate, the most recent Statistical Release published prior to the
date of determination of the Make-Whole Amount shall be used.
"Statistical Release" means the statistical release designated
"H.15(519)" or any successor publication which is published weekly by the
Federal Reserve System and which establishes yields on actively traded United
States government securities adjusted to constant maturities or, if such
statistical release is not published at the time of any determination under the
Indenture, then such other reasonably comparable index which shall be designated
by the Company.
CERTAIN COVENANTS
LIMITATIONS ON INCURRENCE OF DEBT. The Company will not, and will not
permit any Subsidiary to, incur any Debt (as defined below) if, immediately
after giving effect to the Incurrence of such additional Debt and the
application of the proceeds thereof, the aggregate principal amount of all
outstanding Debt of the Company and its Subsidiaries on a consolidated basis
determined in accordance with GAAP is greater than 60% of the sum of (without
duplication) (i) the Total Assets (as defined below) of the Company and its
Subsidiaries as of the end of the calendar quarter covered in the Company's
Annual Report on Form 10-K, or the Quarterly Report on Form 10-Q, as the case
may be, most recently filed with the Commission (or, if such filing is not
permitted under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), with the Trustee) prior to the Incurrence of such additional Debt and
(ii) the purchase price of any real estate assets or mortgages receivable
acquired, and the amount of any securities offering proceeds received (to the
extent that such proceeds were not used to acquire real estate assets or
mortgages receivable or used to reduce Debt), by the Company or any Subsidiary
since the end of such calendar quarter, including those proceeds obtained in
connection with the Incurrence of such additional Debt. (Section 1012).
In addition to the foregoing limitations on the Incurrence of Debt, the
Company will not, and will not permit any Subsidiary to, incur any Debt secured
by any Encumbrance (as defined below) upon any of the property of the Company or
any Subsidiary if, immediately after giving effect to the Incurrence of such
additional Debt and the application of the proceeds thereof, the aggregate
principal amount of all outstanding Debt of the Company and its Subsidiaries on
a consolidated basis which is secured by any Encumbrance on property of the
Company or any Subsidiary is greater than 40% of the sum of (without
duplication) (i) the Total Assets of the Company and its Subsidiaries as of the
end of the calendar quarter covered in the Company's Annual Report on Form 10-K
or Quarterly Report on Form 10-Q, as the case may be, most recently filed with
the Commission (or, if such filing is not permitted under the Exchange Act, with
the Trustee) prior to the Incurrence of such additional Debt and (ii) the
purchase price of any real estate assets or mortgages receivable acquired, and
the amount of any securities offering proceeds received (to the extent that such
proceeds were not used to
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<PAGE>
acquire real estate assets or mortgages receivable or used to reduce Debt), by
the Company or any Subsidiary since the end of such calendar quarter, including
those proceeds obtained in connection with the Incurrence of such additional
Debt. (Section 1012).
In addition to the foregoing limitations on the Incurrence of Debt, the
Company and its Subsidiaries may not at any time own Total Unencumbered Assets
(as defined below) equal to less than 150% of the aggregate outstanding
principal amount of the Unsecured Debt (as defined below) of the Company and its
Subsidiaries on a consolidated basis. (Section 1012).
In addition to the foregoing limitations on the Incurrence of Debt, the
Company will not, and will not permit any Subsidiary to, incur any Debt if the
ratio of Consolidated Income Available for Debt Service (as defined below) to
the Annual Service Charge (as defined below) for the four consecutive fiscal
quarters most recently ended prior to the date on which such additional Debt is
to be incurred shall have been less than 1.5:1, on a pro forma basis after
giving effect thereto and to the application of the proceeds therefrom, and
calculated on the assumption that (i) such Debt and any other Debt incurred by
the Company and its Subsidiaries since the first day of such four-quarter period
and the application of the proceeds therefrom, including to refinance other
Debt, had occurred at the beginning of such period; (ii) the repayment or
retirement of any other Debt by the Company and its Subsidiaries since the first
date of such four-quarter period had been repaid or retired at the beginning of
such period (except that, in making such computation, the amount of Debt under
any revolving credit facility shall be computed based upon the average daily
balance of such Debt during such period); (iii) in the case of Acquired Debt (as
defined below) or Debt incurred in connection with any acquisition since the
first day of such four-quarter period, the related acquisition had occurred as
of the first day of such period with appropriate adjustments with respect to
such acquisition being included in such pro forma calculation; and (iv) in the
case of any acquisition or disposition by the Company or its Subsidiaries of any
asset or group of assets since the first day of such four-quarter period,
whether by merger, stock purchase or sale, or asset purchase or sale, such
acquisition or disposition or any related repayment of Debt had occurred as of
the first day of such period with the appropriate adjustments with respect to
such acquisition or disposition being included in such pro forma calculation.
(Section 1012).
"Acquired Debt" means Debt of a Person (i) existing at the time such
Person becomes a Subsidiary or (ii) assumed in connection with the acquisition
of assets from such Person, in each case, other than Debt incurred in connection
with, or in contemplation of, such Person becoming a Subsidiary or such
acquisition. Acquired Debt shall be deemed to be incurred on the date of the
related acquisition of assets from any Person or the date the acquired Person
becomes a Subsidiary.
"Annual Service Charge" as of any date means the maximum amount which
is payable in any period for interest on, and original issue discount of, Debt
of the Company and its Subsidiaries and the amount of dividends which are
payable in respect of any Disqualified Stock.
"Capital Stock" means, with respect to any Person, any capital stock
(including preferred stock), shares, interests, participation or other ownership
interests (however designated) of such Person and any rights (other than debt
securities convertible into or exchangeable for corporate stock), warrants or
options to purchase any thereof.
"Consolidated Income Available for Debt Service" for any period means
Earnings from Operations (as defined below) of the Company and its Subsidiaries
plus amounts which have been deducted, and minus amounts which have been added,
for the following (without duplication): (i) interest on Debt of the Company and
its Subsidiaries, (ii) provision for taxes of the Company and its Subsidiaries
based on income, (iii) amortization of debt discount and deferred financing
costs, (iv) provisions for gains and losses on properties and property
depreciation and amortization, (v) the effect of any noncash charge resulting
from a change in accounting principles in determining Earnings from Operations
for such period and (vi) amortization of deferred charges.
"Debt" of the Company or any Subsidiary means, without duplication, any
indebtedness of the Company or any Subsidiary, whether or not contingent, in
respect of (i) borrowed money or evidenced by bonds, notes, debentures or
similar instruments, (ii) indebtedness for borrowed money secured by any
Encumbrance existing on property owned by the Company or any Subsidiary, (iii)
the reimbursement obligations, contingent or otherwise, in connection with any
letters of credit actually issued (other than letters of credit issued to
provide credit enhancement or support with respect to other indebtedness of the
Company or any Subsidiary otherwise reflected as Debt hereunder) or amounts
representing the balance deferred and unpaid of the purchase price of any
property or services, except any such balance that constitutes an accrued
expense or trade payable, or all conditional sale obligations or obligations
under any title retention agreement, (iv) the principal amount of all
obligations of the Company or any Subsidiary with respect to redemption,
repayment or other repurchase of any Disqualified Stock, or (v) any lease of
property by the Company or any Subsidiary as lessee which is reflected on the
Company's Consolidated Balance Sheet as a capitalized lease in accordance with
GAAP, to the extent, in the case of items of indebtedness under (i) through
(iii) above, that any such items (other than letters of credit) would appear as
a liability on the Company's Consolidated Balance Sheet in accordance with GAAP,
and also includes, to the extent not otherwise included, any obligation by the
Company or any Subsidiary to be liable for, or to pay, as obligor, guarantor or
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otherwise (other than for purposes of collection in the ordinary course of
business), Debt of another Person (other than the Company or any Subsidiary) (it
being understood that Debt shall be deemed to be incurred by the Company or any
Subsidiary whenever the Company or such Subsidiary shall create, assume,
guarantee or otherwise become liable in respect thereof).
"Disqualified Stock" means, with respect to any Person, any Capital
Stock of such Person which by the terms of such Capital Stock (or by the terms
of any security into which it is convertible or for which it is exchangeable or
exercisable), upon the happening of any event or otherwise (i) matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise
(other than Capital Stock which is redeemable solely in exchange for common
stock), (ii) is convertible into or exchangeable or exercisable for Debt or
Disqualified Stock, or (iii) is redeemable at the option of the holder thereof,
in whole or in part (other than Capital Stock which is redeemable solely in
exchange for common stock), in each case on or prior to the Stated Maturity of
the Notes.
"Earnings from Operations" for any period means net earnings excluding
gains and losses on sales of investments, as reflected in the financial
statements of the Company and its Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP.
"Encumbrance" means any mortgage, lien, charge, pledge or security
interest of any kind.
"Subsidiary" means any corporation or other entity of which a majority
of (i) the voting power of the voting equity securities or (ii) the outstanding
equity interests of which are owned, directly or indirectly, by the Company or
one or more other Subsidiaries of the Company. For the purposes of this
definition, "voting equity securities" means equity securities having voting
power for the election of directors, whether at all times or only so long as no
senior class of security has such voting power by reason of any contingency.
"Total Assets" as of any date means the sum of (i) the Undepreciated
Real Estate Assets and (ii) all other assets of the Company and its Subsidiaries
determined in accordance with GAAP (but excluding accounts receivable and
intangibles).
"Total Unencumbered Assets" means the sum of (i) those Undepreciated
Real Estate Assets not subject to an Encumbrance for borrowed money and (ii) all
other assets of the Company and its Subsidiaries not subject to an Encumbrance
for borrowed money determined in accordance with GAAP (but excluding accounts
receivable and intangibles).
"Undepreciated Real Estate Assets" as of any date means the cost
(original cost plus capital improvements) of real estate assets of the Company
and its Subsidiaries on such date, before depreciation and amortization
determined on a consolidated basis in accordance with GAAP.
"Unsecured Debt" means Debt which is not secured by any Encumbrance
upon any of the properties of the Company or any Subsidiary.
See "Description of Debt Securities--Certain Covenants" in the
Prospectus for a description of additional covenants applicable to the Company.
CONSOLIDATION, MERGER OR SALE
The Company may consolidate with, or sell, lease or convey all or
substantially all of its assets to, or merge with or into, any other entity,
provided that (i) either the Company shall be the continuing entity, or the
successor entity (if other than the Company) formed by or resulting from any
such consolidation or merger or which shall have received the transfer of such
assets is a Person organized and existing under the laws of the United States or
any state thereof and shall expressly assume the due and punctual payment of the
principal of (and premium or Make-Whole Amount, if any) and any interest
(including all Additional Amounts, if any) on all of the Notes and the due and
punctual performance and observance of all of the covenants and conditions
contained in the Indenture to be performed by the Company; (ii) immediately
after giving effect to such transaction and treating any indebtedness which
becomes an obligation of the Company or any Subsidiary as a result thereof as
having been incurred by the Company or such Subsidiary at the time of such
transaction, no Event of Default under the Indenture, and no event which after
notice or the lapse of time, or both, would become such an Event of Default,
shall have occurred and be continuing; and (iii) an Officers' Certificate and
legal opinion covering such conditions shall be delivered to the Trustee.
(Sections 801, 803).
EVENTS OF DEFAULT, NOTICE AND WAIVER
The Indenture provides that the following events are "Events of
Default" with respect to the Notes: (i) default for 30 days in the payment of
any installment of interest or Additional Amount payable on any Note when due
and payable; (ii) default in the payment of the principal of (or premium or
Make-Whole Amount, if any) any Note when due and payable; (iii) default in the
performance, or breach, of any covenant of the Company contained in the
Indenture (other than a covenant
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added to the Indenture solely for the benefit of a series of Debt Securities
other than the Notes), which continues for 60 days after written notice as
provided in the Indenture; (iv) default under any bond, debenture, note,
mortgage, indenture or instrument under which there may be issued or by which
there may be secured or evidenced any indebtedness for money borrowed by the
Company (or by any Subsidiary, the repayment of which the Company has guaranteed
or for which the Company is directly responsible or liable as obligor or
guarantor) having an aggregate principal amount outstanding of at least
$10,000,000, whether such indebtedness now exists or shall hereafter be incurred
or created, which default shall have resulted in such indebtedness becoming or
being declared due and payable prior to the date on which it would otherwise
have become due and payable, without such indebtedness having been discharged or
such acceleration having been rescinded or annulled within a period of 30 days
after written notice to the Company as provided in the Indenture; (v) the entry
by a court of competent jurisdiction of one or more judgments, orders or decrees
against the Company or any of its Subsidiaries in an aggregate amount (excluding
amounts covered by insurance) in excess of $10,000,000 and such judgments,
orders or decrees remain undischarged, unstayed and unsatisfied in an aggregate
amount (excluding amounts covered by insurance) in excess of $10,000,000 for a
period of 30 consecutive days; or (vi) certain events of bankruptcy, insolvency
or reorganization, or court appointment of a receiver, liquidator or trustee of
the Company or any Significant Subsidiary or for all or substantially all of
either of its property. (Section 501).
"Significant Subsidiary" means any Subsidiary which is a "significant
subsidiary" (within the meaning of Regulation S-X, promulgated under the
Securities Act) of the Company.
See "Description of Debt Securities--Events of Default, Notice and
Waiver" in the accompanying Prospectus for a description of rights, remedies and
other matters relating to Events of Default.
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
The provisions of Article 14 of the Indenture relating to defeasance
and covenant defeasance, which are described in the accompanying Prospectus,
will apply to the Notes.
BOOK-ENTRY SYSTEM
The Notes will be issued in the form of single fully registered global
security without coupons ("Global Security") which will be deposited with, or on
behalf of, DTC, and registered in the name of DTC's nominee, Cede & Co. Except
under the circumstance described below, the Notes will not be issuable in
definitive form. Unless and until it is exchanged in whole or in part for the
individual Notes represented thereby, a Global Security may not be transferred
except as a whole by DTC to a nominee of DTC or by a nominee of DTC to DTC or
another nominee of DTC or by DTC or any nominee of DTC to a successor depository
or any nominee of such successor.
DTC has advised the Company of the following information regarding DTC:
DTC is a limited-purpose trust company organized under the New York Banking Law,
a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that persons having accounts with DTC deposit with DTC (its
"Participants"). DTC also facilitates the clearance and settlement among its
Participants of securities transactions, such as transfers and pledges, in
deposited securities through electronic computerized book-entry charges in its
Participants' accounts, thereby eliminating the need for physical movement of
securities certificates. Direct Participants of DTC include securities brokers
and dealers (including the Underwriters), banks, trust companies, clearing
corporations, and certain other organizations. DTC is owned by a number of its
direct Participants and by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc. and the National Association of Securities Dealers, Inc. Access
to the DTC system is also available to others such as securities brokers and
dealers, banks and trust companies that clear through or maintain a custodial
relationship with a direct Participant of DTC, either directly or indirectly.
The rules applicable to DTC and its participants are on file with the
Commission.
The Company expects that, pursuant to procedures established by DTC,
ownership of beneficial interests in the Notes evidenced by the Global Security
will be shown on, and the transfer of that ownership will be effected only
through, records maintained by DTC or its nominee (with respect to beneficial
interests of Participants) and records of Participants (with respect to
beneficial interests of persons who hold through Participants). Neither the
Company nor the Trustee will have any responsibility or liability for any aspect
of the records of DTC or for maintaining, supervising or reviewing any records
of DTC or any of its Participants relating to beneficial ownership interests in
the Notes. The laws of some states require that certain purchasers of securities
take physical delivery of such securities in definitive form. Such limits and
laws may impair the ability to own, pledge or transfer beneficial interest in a
Global Security.
So long as DTC or its nominee is the registered owner of such Global
Security, DTC or such nominee, as the case may be, will be considered the sole
owner or holder of the Notes represented by such Global Security for all
purposes under the Indenture. Except as described below, owners of beneficial
interest in Notes evidenced by a Global Security will not be entitled to have
any of the individual Notes represented by such Global Security registered in
their names, will not receive
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or be entitled to receive physical delivery of any such Notes in definitive form
and will not be considered the owners or holders thereof under the Indenture.
Beneficial owners of Notes evidenced by a Global Security will not be considered
the owners or holders thereof under the Indenture for any purpose, including
with respect to the giving of any direction, instructions or approvals to the
Trustee thereunder. Accordingly, each person owning a beneficial interest in a
Global Security must rely on the procedures of DTC and, if such person is not a
Participant, on the procedures of the Participant through which such person owns
its interests, to exercise any rights of a Holder under the Indenture. The
Company understands that, under existing industry practice, if it requests any
action of Holders or if an owner of a beneficial interest in a Global Security
desires to give or take any action which a Holder is entitled to give or take
under the Indenture, DTC would authorize the Participants holding the relevant
beneficial interest to give or take such action, and such Participants would
authorize beneficial owners through such Participants to give or take such
actions or would otherwise act upon the instructions of beneficial owners
holding through them.
Payments of principal of, any premium or Make-Whole Amount, if any, and
any interest or Additional Amount on individual Notes represented by a Global
Security registered in the name of the holder of the Global Security or its
nominee will be made by the Trustee to or at the direction of the holder of the
Global Security or its nominee, as the case may be, as the registered owner of
the Global Security under the Indenture. Under the terms of the Indenture, the
Company and the Trustee may treat the persons in whose name Notes, including a
Global Security, are registered as the owners thereof for the purpose of
receiving such payments. Consequently, neither the Company nor the Trustee has
or will have any responsibility or liability for the payment of such amounts to
beneficial owners of Notes (including principal, premium or Make-Whole Amount,
if any, and interest or Additional Amount). The Company believes, however, that
it is currently the policy of DTC to immediately credit the accounts of relevant
Participants with such payments in amounts proportionate to their respective
holdings of beneficial interests in the relevant security as shown on the
records of DTC. Payments by Participants to the beneficial owners of Notes will
be governed by standing instructions and customary practice and will be the
responsibility of DTC's Participants. Redemption notices with respect to any
Notes will be sent to the holder of the Global Security. If less than all of the
Notes of any series are to be redeemed, the Company expects the holder of the
Global Security to determine the amount of interest of each Participant in such
Notes to be redeemed to be determined by lot. None of the Company, the Trustee,
any Paying Agent or the Security Registrar for such Notes will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the Global
Security for such Notes or for maintaining.
Neither the Company nor the Trustee will be liable for any delay by the
holder of a Global Security or DTC in identifying the beneficial owners of Notes
and the Company and the Trustee may conclusively rely on, and will be protected
in relying on, instructions from the holder of a Global Security or DTC for all
purposes.
If DTC is at any time unwilling, unable or ineligible to continue as
depository and a successor depository is not appointed by the Company within 90
days, the Company will issue individual Notes in exchange for the Global
Security representing such Notes. In addition, the Company may at any time and
in its sole discretion, subject to certain limitations set forth in the
Indenture, determine not to have any of such Notes represented by one or more
Global Securities and in such event will issue individual Notes in exchange for
the Global Security or Securities representing such Debt Securities. Individual
Notes so issued will be issued in denominations of $1,000 and integral multiples
thereof.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Notes will be made by the Underwriters (as defined
herein) in immediately available funds. All payments of principal and interest
in respect of the Notes will be made by the Company in immediately available
funds.
Secondary trading in long-term notes and debentures of corporate
issuers is generally settled in clearing house or next-day funds. In contrast,
the Notes will trade in DTC's Same-Day Funds Settlement System until maturity or
until the Notes are issued in certificated form, and secondary market trading
activity in the Notes will therefore be required by DTC to settle in immediately
available funds.
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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a general summary of the material federal income tax
considerations to the Company based on current law, is not tax advice and is for
general information only. The following discussion is not exhaustive of all
possible tax considerations and is not tax advice. Moreover, this summary does
not deal with all tax aspects that might be relevant to a particular prospective
holder of Notes in light of its individual investment or tax circumstances; nor
does it deal with particular types of holders that are subject to special
treatment under the Internal Revenue Code of 1986, as amended (the "Code"), such
as insurance companies, financial institutions and broker-dealers. The Code
provisions governing the federal income tax treatment of REITs are highly
technical and complex, and this summary is qualified in its entirety by the
applicable Code provisions, rules and regulations promulgated thereunder, and
administrative and judicial interpretations thereof.
EACH PROSPECTIVE PURCHASER IS URGED TO CONSULT HIS OR HER OWN TAX
ADVISOR WITH RESPECT TO SUCH PURCHASER'S SPECIFIC FEDERAL, STATE, LOCAL, FOREIGN
AND OTHER TAX CONSEQUENCES OF THE PURCHASE, HOLDING AND SALE OF NOTES AND OF
POTENTIAL CHANGES IN APPLICABLE TAX LAWS.
The Company has elected to be taxed as a REIT under the Code. The
Company believes that it has been organized, has operated and will operate in
such a manner as to qualify for taxation as a REIT under the Code. No assurance
can be given, however, that such requirements will be met in the future.
FEDERAL INCOME TAXATION OF THE COMPANY
If and as long as the Company qualifies for taxation as a REIT, it
generally will not be subject to federal corporate income taxes on that portion
of its ordinary income or capital gain that is currently distributed to
shareholders. The REIT provisions of the Code generally allow a REIT to deduct
dividends paid to its shareholders. This deduction for dividends paid to
shareholders substantially eliminates the federal "double taxation" on earnings
(once at the corporate level and once again at the shareholder level) that
usually results from investments in a corporation.
Even if the Company qualifies for taxation as a REIT, the Company will
be subject to federal income tax, however, as follows:
First, the Company will be taxed at regular corporate rates on
its undistributed REIT taxable income, including undistributed net
capital gains.
Second, under certain circumstances, the Company may be
subject to the "alternative minimum tax" as a consequence of its items
of tax preference to the extent that such tax exceeds its regular tax.
Third, if the Company has net income from the sale or other
disposition of "foreclosure property" that is held primarily for sale
to customers in the ordinary course of business or other non-qualifying
income from foreclosure property, it will be subject to tax at the
highest corporate rate on such income.
Fourth, if the Company has net income from prohibited
transactions (which are, in general, certain sales or other
dispositions of property held primarily for sale to customers in the
ordinary course of business, but excluding foreclosure property), such
income will be subject to a 100% tax.
Fifth, if the Company should fail to satisfy certain gross
income tests, but has nonetheless maintained its qualification as a
REIT because certain other requirements had been met, it will be
subject to a 100% tax on the net income attributable to the greater of
the amount by which the Company fails such tests, multiplied by a
fraction intended to reflect the Company's profitability.
Sixth, if the Company fails to distribute during each year at
least the sum of (i) 85% of its REIT ordinary income for such year,
(ii) 95% of its REIT capital gain net income for such year and (iii)
any undistributed taxable income from prior periods, the Company will
be subject to a 4% excise tax on the excess of such required
distributions over the distributed amount.
Seventh, if the Company should acquire any asset from a C
corporation (i.e., a corporation subject to full corporate-level tax)
in a carryover-basis transaction and the Company subsequently
recognizes gain on the disposition of such asset during the ten-year
period (the "Recognition Period") beginning on the date on which the
asset was acquired by the Company, then the excess of (a) the fair
market value of the asset as of the beginning of the applicable
Recognition Period over (b) the Company's adjusted basis in such asset
as of the beginning of such Recognition Period will be subject to tax
at the highest regular corporate rate, pursuant to guidelines issued by
the Internal Revenue Service (the "IRS").
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FAILURE TO QUALIFY
If the Company fails to qualify for taxation as a REIT in any taxable
year and certain relief provisions do not apply, the Company will be subject to
tax (including any applicable alternative minimum tax) on its taxable income at
regular corporate rates. Distributions to shareholders in any year in which the
Company fails to qualify as a REIT will not be deductible by the Company nor
will they be required to be made. In such event, to the extent of current and
accumulated earnings and profits, all distributions to shareholders will be
dividends, taxable as ordinary income, and subject to certain limitations of the
Code, corporate distributees may be eligible for the dividends-received
deduction. Unless the Company is entitled to relief under specific statutory
provisions, the Company also will be disqualified from taxation as a REIT for
the four taxable years following the year during which qualification was lost.
It is not possible to state whether in all circumstances the Company would be
entitled to such statutory relief. For example, if the Company fails to satisfy
the gross income tests because nonqualifying income that the Company
intentionally incurs exceeds the limit on such income, the IRS could conclude
that the Company's failure to satisfy the tests was not due to reasonable cause.
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UNDERWRITING
Subject to the terms and conditions in the underwriting agreement dated
the date hereof (the "Underwriting Agreement"), the Company has agreed to sell
to each of the Underwriters named below (the "Underwriters") severally, and each
of the Underwriters has severally agreed to purchase, the principal amount of
Notes set forth opposite its name below. The Underwriting Agreement provides
that the obligations of the Underwriters are subject to certain conditions
precedent, and that the Underwriters will be obligated to purchase all of the
Notes if any are purchased.
PRINCIPAL
AMOUNT
UNDERWRITER OF NOTES
----------- -----------
Merrill Lynch, Pierce, Fenner & Smith Incorporated ............ $52,500,000
J.P. Morgan Securities Inc..................................... 11,250,000
NationsBanc Capital Markets, Inc............................... 11,250,000
Total............................................ $75,000,000
The Underwriters have advised the Company that they propose initially
to offer the Notes to the public at the public offering price set forth on the
cover page of this Prospectus Supplement, and to certain dealers at such price
less a concession not in excess of .4% of the principal amount of the Notes. The
Underwriters may allow, and such dealers may reallow, a concession not in excess
of .25% of the principal amount of the Notes to certain other dealers. After the
initial public offering, the public offering price and such concession may be
changed.
The Notes are a new issue of securities with no established trading
market. The Company does not intend to apply for listing of the Notes on a
national securities exchange. The Company has been advised by the Underwriters
that the Underwriters intend to make a market in the Notes as permitted by
applicable laws and regulations, but the Underwriters are not obligated to do so
and may discontinue market making at any time without notice. No assurance can
be given as to the liquidity of the trading market for the Notes.
The Company has agreed to indemnify the Underwriters against certain
civil liabilities, including liabilities under the Securities Act of 1933, as
amended, or to contribute to payments the Underwriters may be required to make
in respect thereof.
In the ordinary course of their respective businesses, the Underwriters
and their affiliates have engaged, and may in the future engage, in commercial
banking and investment banking transactions with the Company. NationsBank of
Texas, N.A., an affiliate of NationsBanc Capital Markets, Inc., will receive a
portion of the proceeds of the offering used to repay outstanding indebtedness
of the Company under the Unsecured Credit Facility. See "Use of Proceeds."
LEGAL MATTERS
Certain legal matters will be passed upon for the Company by Liddell,
Sapp, Zivley, Hill & LaBoon, L.L.P., Dallas, Texas and for the Underwriters by
Goodwin, Procter & Hoar, LLP, Boston, Massachusetts.
EXPERTS
The consolidated financial statements of Camden Property Trust as of
December 31, 1995 and 1994 and for the years ended December 31, 1995 and 1994
and for the period from July 29, 1993 to December 31, 1993, the related
financial statement schedule and the combined financial statements of Camden
Predecessors for the period from January 1, 1993 to July 28, 1993, incorporated
in this Prospectus Supplement and the attached Prospectus by reference from the
Annual Report on Form 10-K of Camden Property Trust for the year ended December
31, 1995 have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their reports which are incorporated herein by reference, and have
been so incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
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PROSPECTUS
CAMDEN PROPERTY TRUST
$400,000,000
DEBT SECURITIES, PREFERRED SHARES,
COMMON SHARES AND SECURITIES WARRANTS
Camden Property Trust (the "Company") may from time to time offer and
sell in one or more series (i) its unsecured senior debt securities (the "Debt
Securities"); (ii) shares of its preferred shares of beneficial interest, par
value $0.01 per share (the "Preferred Shares"); (iii) common shares of
beneficial interest, par value $0.01 per share (the "Common Shares"); or (iv)
warrants to purchase Common Shares (the "Common Shares Warrants"), warrants to
purchase Debt Securities (the "Debt Securities Warrants") and warrants to
purchase Preferred Shares (the "Preferred Shares Warrants"), with an aggregate
public offering price of up to $400,000,000, on terms to be determined by market
conditions at the time of offering. The Common Shares Warrants, the Debt
Securities Warrants and the Preferred Shares Warrants shall be referred to
herein collectively as the "Securities Warrants." The Debt Securities, Preferred
Shares, Common Shares, and Securities Warrants (collectively, the "Offered
Securities") may be offered separately or together, in separate series, in
amounts and at prices and terms to be set forth in an accompanying supplement to
this Prospectus (a "Prospectus Supplement").
With respect to the Debt Securities, the specific title, aggregate
principal amount, currency, form (which may be registered or bearer, or
certificated or global), authorized denominations, maturity, rate (or manner of
calculation thereof) and time of payment of interest, terms for redemption at
the option of the Company or repayment at the option of the Holder, any sinking
fund provisions and any conversion provisions will be set forth in the
applicable Prospectus Supplement. The terms of the Preferred Shares, including
the specific designation and stated value per share, any dividend, liquidation,
redemption, conversion, voting and other rights, and all other specific terms of
the Preferred Shares will be set forth in the applicable Prospectus Supplement.
In the case of the Common Shares, the specific number of shares and issuance
price per share will be set forth in the applicable Prospectus Supplement. In
the case of the Securities Warrants, the duration, offering price, exercise
price and detachability, if applicable, will be set forth in the applicable
Prospectus Supplement. In addition, such specific terms may include limitations
on direct or beneficial ownership and restrictions on transfer of the Offered
Securities, in each case as may be appropriate to preserve the status of the
Company as a real estate investment trust ("REIT") for United States federal
income tax purposes. The applicable Prospectus Supplement will also contain
information, where applicable, about certain United States federal income tax
considerations relating to, and any listing on a securities exchange of, the
Offered Securities covered by such Prospectus Supplement.
The Offered Securities may be offered directly, through agents
designated from time to time by the Company, or to or through underwriters or
dealers. If any agents or underwriters are involved in the sale of any of the
Offered Securities, their names, and any applicable purchase price, fee,
commission or discount arrangement between or among them, will be set forth, or
will be calculable from the information set forth, in the applicable Prospectus
Supplement. See "Plan of Distribution." No Offered Securities may be sold
without delivery of the applicable Prospectus Supplement describing the method
and terms of the offering of such series of Offered Securities.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
--------------------
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR
ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION
TO THE CONTRARY IS UNLAWFUL.
--------------------
This Prospectus may not be used to consummate sales of Offered
Securities unless accompanied by a Prospectus Supplement.
____________________
The date of this Prospectus is January 30, 1996
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission"), 450 Fifth Street, N.W., Washington, D.C. 20549, a Registration
Statement on Form S-3 under the Securities Act of 1933, as amended (the
"Securities Act") and the rules and regulations promulgated thereunder with
respect to the securities offered pursuant to this Prospectus. This Prospectus,
which is part of the Registration Statement, does not contain all of the
information set forth in the Registration Statement and the exhibits and
schedules thereto. For further information with respect to the Company and the
Offered Securities, reference is made to the Registration Statement and such
exhibits and schedules. Statements contained in this Prospectus as to the
contents of any contract or other document which is filed as an exhibit to the
Registration Statement are not necessarily complete, and each such statement is
qualified in its entirety by reference to the full text of such contract or
document.
The Company is subject to the information requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy and information statements and other
information with the Commission. Such reports, proxy and information statements
and other information and the Registration Statement and exhibits and schedules
thereto filed by the Company with the Commission can be inspected and copied at
the Public Reference Section of the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices of
the Commission located at 7 World Trade Center, 13th Floor, New York, New York
10048 and at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511.
Copies of such material can be obtained from the Public Reference Section of the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549 at prescribed rates. Such reports, proxy and information statements
and other information can also be inspected at the offices of the New York Stock
Exchange, 20 Broad Street, New York, New York 10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated by reference herein and shall be deemed to be a part hereof:
(a) Annual Report on Form 10-K for the year ended December 31,
1994;
(b) Quarterly Report on Form 10-Q for the quarters ended March 31,
1995, June 30, 1995 and September 30, 1995; and
(c) The description of the Common Shares contained in the
Company's Registration Statement on Form 8-A (File No.
1-12110).
All documents subsequently filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus
and prior to the termination of this offering shall be deemed to be incorporated
by reference in this Prospectus and to be a part hereof from the date of the
filing of such documents. Any statement contained in a document incorporated by
reference shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed incorporated document or in an accompanying prospectus
supplement, if any, modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
Upon written or oral request of any person to whom a Prospectus is
delivered, including any beneficial owner, the Company will provide, without
charge, a copy of the documents which have been incorporated by reference (other
than exhibits unless such exhibits are specifically incorporated by reference in
any such document) in this Prospectus. Requests for such documents should be
directed to G. Steven Dawson, Sr. Vice President Finance and Chief Financial
Officer, Camden Property Trust, 3200 Southwest Freeway, Suite 1500, Houston,
Texas 77027, telephone number (713) 964-3555.
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<PAGE>
THE COMPANY
Camden Property Trust (the "Company") is a self-administered and
self-managed real estate investment trust (a "REIT") formed pursuant to the
Texas Real Estate Investment Trust Act, as amended (the "Texas REIT Act").
Unless the context otherwise requires, all references herein to the "Company"
shall mean Camden Property Trust and its subsidiaries, and "Centeq" shall mean
Centeq Investments, Inc. and its predecessors and related affiliates,
partnerships and companies. As of December 31, 1995, the Company owned and
operated 50 multifamily properties (the "Operating Properties") located in
Houston, Dallas/Fort Worth, Austin, Corpus Christi, El Paso, San Antonio and
Tucson. The Operating Properties contained 16,742 apartment units and had an
occupancy rate of 93.7% at December 31, 1995. The Company is developing four
multifamily properties in Houston, Dallas, Corpus Christi and Phoenix (the
"Development Properties") which will, when completed, add 1,688 units to its
portfolio, and has five properties on which it intends to begin construction in
the next twelve months (the "Future Development Properties") which the Company
anticipates will, when completed, add an estimated 1,678 units to its portfolio.
Through Apartment Connection, Inc., an affiliate of the Company, the Company
engages in apartment marketing in the Houston metropolitan area utilizing a
network of 32 independent licensed real estate agents operating in four offices.
The Company is vertically integrated, with operations that encompass multifamily
property acquisition, development, construction services, management, marketing,
finance, leasing, brokerage and asset management.
The Company was formed in 1993 to continue the multifamily property
acquisition, development, management and marketing operations and related
business objectives and strategies of Centeq (the "Multifamily Operations").
Upon completion of the Company's initial public offering in July 1993 and the
concurrent completion of the transactions involved in the formation of the
Company ("Formation Transactions"), the Company succeeded to the Multifamily
Operations of Centeq and owned and operated 20 of the Operating Properties
located in the Houston, Dallas and Austin metropolitan areas containing 7,054
units and owned contracts to purchase two of the Development Properties. The
predecessors of Centeq were formed in 1982 by Richard J. Campo, the Company's
Chairman of the Board of Trust Managers and Chief Executive Officer, and D.
Keith Oden, the Company's President and Chief Operating Officer, to provide real
estate services to owners and financial institutions. Centeq was involved in the
acquisition, development, management and marketing of approximately 28
multifamily properties containing 8,564 units in certain major Texas and other
markets and the development, marketing and management of a number of other types
of properties, including office facilities, high-rise condominiums and research
facilities. The Company is operated under the direction of Messrs. Campo and
Oden and a management team consisting of substantially all of the former
personnel of Centeq.
In April 1994, the Company completed two concurrent offerings (the
"Subsequent Offerings"), consisting of a public offering of 3,450,000 Common
Shares (including 450,000 Common Shares issued pursuant to the underwriters'
over-allotment option) and a public offering of $86,250,000 aggregate principal
amount of its 7.33% Convertible Subordinated Debentures due 2001 (the
"Convertible Debentures") (including $11,250,000 aggregate principal amount of
the Convertible Debentures issued pursuant to the underwriters' over-allotment
option). The net proceeds of the Subsequent Offerings of $159 million were used
to repay approximately $108 million of floating rate indebtedness, to acquire
additional multifamily properties and to fund certain development activities.
The Company elected to be taxed as a REIT for federal income tax
purposes for its taxable year ended December 31, 1994, and expects to continue
to elect such status. Although the Company believes that it was organized and
has been operating in conformity with the requirements for qualification under
the Internal Revenue Code of 1986, as amended (the "Code"), no assurance can be
given that the Company will continue to qualify as a REIT. Qualification as a
REIT involves application of highly technical and complex Code provisions for
which there are only limited judicial or administrative interpretations. If in
any taxable year the Company would fail to qualify as a REIT, the Company would
not be allowed a deduction for distributions to shareholders for computing
taxable income and would be subject to federal taxation at regular corporate
rates. Unless entitled to relief under certain statutory provisions, the Company
would also be disqualified from treatment as a REIT for the four taxable years
following the year during which qualification was lost. As a result, the
Company's ability to make distributions to its shareholders would be adversely
affected.
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<PAGE>
To ensure that the Company qualifies as a REIT, transfer of the Common
Shares or Preferred Shares is subject to certain restrictions and ownership of
the outstanding Shares (as defined in the Company's Declaration of Trust) by any
single person is limited to 9.8% of the total number of outstanding Shares,
subject to certain exceptions. As provided in the Declaration of Trust of the
Company, any purported transfer in violation the above-described ownership
limitations shall be void.
The Common Shares of the Company are listed on the NYSE under the
symbol "CPT." On September 14, 1995, the Company declared a regular quarterly
distribution ($0.46 per Common Share) for the third quarter of 1995 to all
shareholders of record on September 29, 1995, paid on October 17, 1995. On
December 14, 1995, the Company declared a regular quarterly distribution ($0.46
per Common Share) for the fourth quarter of 1995, bringing total dividends for
the year to $1.84 per Common Share. The fourth quarter distribution was paid on
January 17, 1996 to shareholders of record as of December 27, 1995. The Company
intends to continue making regular quarterly distributions to its shareholders.
Distributions depend upon a variety of factors, and there can be no assurance
that distributions will be made.
The Company's principal executive offices are located at 3200 Southwest
Freeway, Suite 1500, Houston, Texas 77027 and its telephone number is (713)
964-3555.
USE OF PROCEEDS
Unless otherwise described in the Prospectus Supplement which
accompanies this Prospectus, the Company intends to use the net proceeds from
the sale of the Offered Securities for general corporate purposes, which may
include the acquisition and development of multifamily properties as suitable
opportunities arise, the improvement of certain properties in the Company's
portfolio and the repayment of certain then-outstanding secured or unsecured
indebtedness.
DESCRIPTION OF COMMON SHARES
The Declaration of Trust of the Company provides that the Company may
issue up to 110,000,000 shares of beneficial interest of the Company, par value
$.01 per share, consisting of 100,000,000 Common Shares and 10,000,000 Preferred
Shares. At December 31, 1995, 14,513,526 Common Shares were issued and
outstanding and 84,783 Series A Preferred Shares were issued and outstanding.
The following description of the Common Shares sets forth certain
general terms and provisions of the Common Shares to which any Prospectus
Supplement may relate, including a Prospectus Supplement providing that Common
Shares will be issuable upon conversion of Debt Securities or Preferred Shares
of the Company or upon the exercise of the Common Shares Warrants issued by the
Company. The statements below describing the Common Shares are in all respects
subject to and qualified in their entirety by reference to the applicable
provisions of the Company's Declaration of Trust and Bylaws.
GENERAL
Subject to the provisions of the Declaration of Trust regarding Excess
Securities (as defined therein), holders of Common Shares are entitled to such
dividends, in cash, property or shares of beneficial interest, as may be
declared from time to time by the Board of Trust Managers. The Company is
prohibited from declaring or paying any dividend when the Company is unable to
pay its debts as they become due in the usual course or when the payment of such
dividend would result in the Company becoming unable to pay its debts as they
become due. Payment and declaration of dividends on the Common Shares and
purchases of shares thereof by the Company will be subject to certain
restrictions if the Company fails to pay dividends on the Preferred Shares. See
"Description of Preferred Shares." In the event of any liquidation, dissolution
or winding-up of the affairs of the Company, holders of Common Shares will be
entitled to share equally and ratably in the assets of the Company remaining
after provision for liabilities to creditors and payment of liquidation
preferences to holders of Preferred Shares or senior debt securities and subject
to the provisions of the Declaration of Trust regarding Excess Securities. Each
outstanding Common Share entitles the holder to one vote on all matters
submitted to a vote of shareholders,
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<PAGE>
including the election of Trust Managers. There is no cumulative voting in the
election of Trust Managers. Upon receipt by the Company of lawful payment
therefor, the Common Shares will, when issued, be fully paid and nonassessable,
and will not be subject to redemption except (as described in the Declaration of
Trust) as necessary to preserve the Company's status as a REIT. A shareholder of
the Company has no preemptive rights to subscribe for additional Common Shares
or other securities of the Company except as may be granted by the Board of
Trust Managers.
RESTRICTIONS ON OWNERSHIP
For the Company to qualify as a REIT under the Code, not more than 50%
in value of its outstanding Shares may be owned directly or indirectly, by five
or fewer individuals (as defined in the Code to include certain entities) during
the last half of a taxable year, and such Shares must be beneficially owned by
100 or more persons during at least 335 days of a taxable year of 12 months, or
during a proportionate part of a shorter taxable year.
Because the Board of Trust Managers believes it is essential for the
Company to continue to qualify as a REIT, the Declaration of Trust, subject to
certain exceptions, provides that no holder may own, or be deemed to own by
virtue of the attribution provisions of the Code, more than 9.8% (the "Ownership
Limit") of the total outstanding Shares. The Trust Managers are not permitted to
waive the Ownership Limit. Any transfer of Shares that would; (i) create a
direct or indirect ownership of Shares in excess of the Ownership Limit; (ii)
result in the Shares being owned by fewer than 100 persons; (iii) result in the
Company being "closely held" within the meaning of Section 856(h) of the Code;
or (iv) result in the disqualification of the Company as a REIT, shall be null
and void, and the intended transferee will acquire no rights in the Shares,
except as provided in the Declaration of Trust regarding Excess Securities.
The Company's Declaration of Trust provides that Shares owned, or
deemed to be owned, or transferred to a shareholder in excess of the Ownership
Limit will automatically be deemed to be Excess Securities and as such will be
deemed to have been transferred to the Company as trustee of a trust for the
exclusive benefit of the transferees to whom such Shares may ultimately be
transferred without violating the Ownership Limit. While the Excess Securities
are held in trust, they will not be entitled to vote, and they will not be
considered for purposes of any shareholder vote or the determination of a quorum
for such vote, and they will not be entitled to participate in dividends or
other distributions. Any dividend or distribution paid to a proposed transferee
of Excess Securities prior to the discovery by the Company that Shares have been
transferred in violation of the provisions of the Company's Declaration of Trust
shall be repaid to the Company upon demand. The Excess Securities are not
treasury shares, but rather constitute a separate class of issued and
outstanding Shares of the Company. The original transferee-shareholder may, at
any time the Excess Securities are held by the Company in trust, transfer the
interest in the trust representing the Excess Securities to any individual whose
ownership of the Shares that have been deemed to be Excess Securities would be
permitted under the Ownership Limit, at a price not in excess of the price paid
by the original transferee-shareholder for the Shares that were exchanged into
Excess Securities. Immediately upon the transfer to the permitted transferee,
the Excess Securities will automatically be deemed to be Shares of the class
from which they were converted. If the foregoing transfer restrictions are
determined to be void or invalid by virtue of any legal decision, statute, rule
or regulation, then the intended transferee-shareholder of any Excess Securities
may be deemed, at the option of the Company, to have acted as an agent on behalf
of the Company in acquiring the Excess Securities and to hold the Excess
Securities on behalf of the Company.
In addition to the foregoing transfer restrictions, the Company will
have the right, for a period of 90 days during the time any Excess Securities
are held by the Company in trust, to purchase all or any portion of the Excess
Securities from the original transferee-shareholder at the lesser of the price
paid for the Shares by the original transferee-shareholder and the market price
(as determined in the manner set forth in the Declaration of Trust) of the
Shares on the date the Company exercises its option to purchase. The 90-day
period begins on the later of the date of the violative transfer or date the
Board of Trust Managers determines that a violative transfer has been made.
All certificates representing the Common Shares will bear a legend
referring to the restrictions described above.
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Each shareholder shall upon demand be required to disclose to the
Company in writing any information with respect to the direct, indirect and
constructive ownership of beneficial interests as the Board of Trust Managers
deems necessary to comply with the provisions of the Code applicable to REITs,
to comply with the requirements of any taxing authority or governmental agency
or to determine any such compliance.
The Ownership Limit may have the effect of precluding acquisition of
control of the Company unless the Board of Trust Managers and the shareholders
determine that maintenance of REIT status is no longer in the best interest of
the Company.
American Stock Transfer & Trust Company or its successor is the
transfer agent and registrar for the Common Shares.
DESCRIPTION OF PREFERRED SHARES
The following description of the terms of the Preferred Shares sets
forth certain general terms and provisions of the Preferred Shares to which any
Prospectus Supplement may relate. Certain other terms of any series of the
Preferred Shares offered by any Prospectus Supplement will be described in such
Prospectus Supplement. The description of certain provisions of the Preferred
Shares set forth below and in any Prospectus Supplement does not purport to be
complete and is subject to and qualified in its entirety by reference to the
Company's Declaration of Trust and the Board of Trust Managers' resolution or
resolutions relating to each series of the Preferred Shares which will be filed
with the Commission and incorporated by reference as an exhibit to the
Registration Statement of which this Prospectus is a part at or prior to the
time of the issuance of such series of Preferred Shares.
GENERAL
The Company is authorized to issue 10,000,000 preferred shares of
beneficial interest, par value $0.01 per share, of which 84,783 Series A
Preferred Shares were outstanding at December 31, 1995.
Under the Company's Declaration of Trust, the Board of Trust Managers,
without further shareholder approval, may from time to time establish and issue
Preferred Shares in one or more series with such designations, powers,
preferences or rights of the shares of such series and the qualifications,
limitations or restrictions thereon.
The Preferred Shares shall have the dividend, liquidation, redemption
and voting rights set forth below unless otherwise provided in a Prospectus
Supplement relating to a particular series of the Preferred Shares. Reference is
made to the Prospectus Supplement relating to the particular series of the
Preferred Shares offered thereby for specific terms, including: (i) the
designation and stated value per share of such Preferred Shares and the number
of shares offered; (ii) the amount of liquidation preference per share; (iii)
the initial public offering price at which such Preferred Shares will be issued;
(iv) the dividend rate (or method of calculation), the dates on which dividends
shall be payable and the dates from which dividends shall commence to cumulate,
if any; (v) any redemption or sinking fund provisions; (vi) any conversion
right; and (vii) any additional voting, dividend, liquidation, redemption,
sinking fund and other rights, preferences, privileges, limitations and
restrictions not in conflict with the Declaration of Trust or the Texas REIT
Act. The Preferred Shares will, when issued for lawful consideration therefor,
be fully paid and nonassessable and will have no preemptive rights.
RANK
Unless otherwise specified in the Prospectus Supplement, the Preferred
Shares will, with respect to dividend rights and rights upon liquidation,
dissolution or winding up of the Company, rank (i) senior to all classes or
series of Common Shares and to all equity securities ranking junior to such
Preferred Shares; (ii) on a parity with all equity securities issued by the
Company the terms of which specifically provide that such equity securities rank
on a parity with the Preferred Shares; and (iii) junior to all equity securities
issued by the Company the terms of which specifically provide that such equity
securities rank senior to the Preferred Shares. The rights of the holders of
each series of the Preferred Shares will be subordinate to those of the
Company's general creditors.
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DIVIDENDS
Holders of each series of Preferred Shares shall be entitled to
receive, when, as and if declared by the Board of Trust Managers of the Company,
out of assets of the Company legally available for payment, cash dividends at
such rates and on such dates as will be set forth in the applicable Prospectus
Supplement. Such rate may be fixed or variable or both. Each such dividend shall
be payable to holders of record as they appear on the share transfer books of
the Company on such record dates as shall be fixed by the Board of Trust
Managers of the Company, as specified in the Prospectus Supplement relating to
such series of Preferred Shares.
Dividends on any series of the Preferred Shares may be cumulative or
non-cumulative, as provided in the applicable Prospectus Supplement. Dividends,
if cumulative, will be cumulative from and after the date set forth in the
applicable Prospectus Supplement. If the Board of Trust Managers of the Company
fails to declare a dividend payable on a dividend payment date on any series of
the Preferred Shares for which dividends are noncumulative, then the holders of
such series of the Preferred Shares will have no right to receive a dividend in
respect of the dividend period ending on such dividend payment date, and the
Company will have no obligation to pay the dividend accrued for such period,
whether or not dividends on such series are declared payable on any future
dividend payment date. Dividends on shares of each series of Preferred Shares
for which dividends are cumulative will accrue from the date on which the
Company initially issues shares of such series.
So long as any series of the Preferred Shares shall be outstanding,
unless (i) full dividends (including if such dividends are cumulative, dividends
for prior dividend periods) shall have been paid or declared and set apart for
payment on all outstanding Preferred Shares of such series and all other classes
and series of Preferred Shares of the Company (other than Junior Shares, as
defined below); and (ii) the repurchase or other mandatory retirement of, or
with respect to any sinking or other analogous fund for, any shares of Preferred
Shares of such series or any other Preferred Shares of the Company of any class
or series (other than Junior Shares), the Company may not declare any dividends
on any Common Shares of the Company or any other shares of the Company ranking
as to dividends or distributions of assets junior to such series of Preferred
Shares (the Common Shares and any such other shares being herein referred to as
"Junior Shares"), or make any payment on account of, or set apart money for, the
purchase, redemption or other retirement of, or for a sinking or other analogous
fund for, any Junior Shares or make any distribution in respect thereof, whether
in cash or property or in obligations or shares of the Company, other than
Junior Shares which are neither convertible into, nor exchangeable or
exercisable for, any securities of the Company other than Junior Shares.
Any dividend payment made on a series of Preferred Shares shall first
be credited against the earliest accrued but unpaid dividend due with respect to
shares of such series which remains payable.
REDEMPTION
A series of Preferred Shares may be redeemable, in whole or from time
to time in part, at the option of the Company, and may be subject to mandatory
redemption pursuant to a sinking fund or otherwise, in each case upon terms, at
the times and at the redemption prices set forth in the Prospectus Supplement
relating to such series. Shares of the Preferred Shares redeemed by the Company
will be restored to the status of authorized but unissued Preferred Shares of
the Company.
The Prospectus Supplement relating to a series of Preferred Shares that
is subject to mandatory redemption will specify the number of shares of such
Preferred Shares that shall be redeemed by the Company in each year commencing
after a date to be specified, at a redemption price per share to be specified,
together with an amount equal to all accrued and unpaid dividends thereon (which
shall not, if such Preferred Shares do not have a cumulative dividend, include
any accumulation in respect of unpaid dividends for prior dividend periods) to
the date of redemption. The redemption price may be payable in cash or other
property, as specified in the applicable Prospectus Supplement. If the
redemption price for Preferred Shares of any series is payable only from the net
proceeds of the issuance of shares of beneficial interest of the Company, the
terms of such Preferred Shares may provide that, if no such shares shall have
been issued or to the extent the net proceeds from any issuance are
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<PAGE>
insufficient to pay in full the aggregate redemption price then due, such
Preferred Shares shall automatically and mandatorily be converted into shares of
the applicable shares of beneficial interest of the Company pursuant to
conversion provisions specified in the applicable Prospectus Supplement.
So long as any dividends on shares of any series of the Preferred
Shares or any other series of Preferred Shares of the Company ranking on a
parity as to dividends and distribution of assets with such series of the
Preferred Shares are in arrears, no shares of any such series of the Preferred
Shares or such other series of Preferred Shares of the Company will be redeemed
(whether by mandatory or optional redemption) unless all such shares are
simultaneously redeemed, and the Company will not purchase or otherwise acquire
any such shares; provided, however, that the foregoing will not prevent the
purchase or acquisition of such shares pursuant to a purchase or exchange offer
made on the same terms to holders of all such shares outstanding.
In the event that fewer than all of the outstanding shares of a series
of the Preferred Shares are to be redeemed, whether by mandatory or optional
redemption, the number of shares to be redeemed will be determined by lot or pro
rata (subject to rounding to avoid fractional shares) as may be determined by
the Company or by any other method as may be determined by the Company in its
sole discretion to be equitable. From and after the redemption date (unless
default shall be made by the Company in providing for the payment of the
redemption price plus accumulated and unpaid dividends, if any), dividends shall
cease to accumulate on the Preferred Shares called for redemption and all rights
of the holders thereof (except the right to receive the redemption price plus
accumulated and unpaid dividends, if any) shall cease.
LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or winding
up of the affairs of the Company, then, before any distribution or payment shall
be made to the holders of any Junior Shares, the holders of each series of
Preferred Shares shall be entitled to receive out of assets of the Company
legally available for distribution to shareholders, liquidating distributions in
the amount of the liquidation preference per share (set forth in the applicable
Prospectus Supplement), plus an amount equal to all dividends accrued and unpaid
thereon (which shall not include any accumulation in respect of unpaid dividends
for prior dividend periods if such Preferred Shares do not have a cumulative
dividend). After payment of the full amount of the liquidating distributions to
which they are entitled, the holders of Preferred Shares will have no right or
claim to any of the remaining assets of the Company. In the event that, upon any
such voluntary or involuntary liquidation, dissolution or winding up, the
available assets of the Company are insufficient to pay the amount of the
liquidating distributions on all outstanding Preferred Shares and the
corresponding amounts payable on all shares of other classes or series of shares
of beneficial interest of the Company ranking on a parity with the Preferred
Shares in the distribution of assets, then the holders of the Preferred Shares
and all other such classes or series of shares of beneficial interest shall
share ratably in any such distribution of assets in proportion to the full
liquidating distributions to which they would otherwise be respectively
entitled.
If liquidating distributions shall have been made in full to all
holders of Preferred Shares, the remaining assets of the Company shall be
distributed among the holders of Junior Shares, according to their respective
rights and preferences and in each case according to their respective number of
shares. For such purposes, the consolidation or merger of the Company with or
into any other corporation, or the sale, lease or conveyance of all or
substantially all of the property or business of the Company, shall not be
deemed to constitute a liquidation, dissolution or winding up of the Company.
VOTING RIGHTS
Except as indicated below or in a Prospectus Supplement relating to a
particular series of the Preferred Shares, or except as required by applicable
law, holders of the Preferred Shares will not be entitled to vote for any
purpose.
So long as any series of Preferred Shares remain outstanding, the
consent or the affirmative vote of the holders of at least 66-2/3% of the votes
entitled to be cast with respect to the then outstanding shares of such series
of the Preferred Shares together with any Other Preferred Shares (as defined
below), voting as one class, either
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expressed in writing or at a meeting called for that purpose, will be necessary
(i) to permit, effect or validate the authorization, or any increase in the
authorized amount, of any class or series of shares of the Company ranking prior
to the Preferred Shares of such series as to dividends, voting or upon
distribution of assets; and (ii) to repeal, amend or otherwise change any of the
provisions applicable to the Preferred Shares of such series in any manner which
adversely affects the powers, preferences, voting power or other rights or
privileges of such series of the Preferred Shares. In case any series of the
Preferred Shares would be so affected by any such action referred to in clause
(ii) above in a different manner than one or more series of the Other Preferred
Shares which will be similarly affected, the holders of the Preferred Shares of
such series, together with any series of the Other Preferred Shares which will
be similarly affected, will be entitled to vote as a class, and the Company will
not take such action without the consent or affirmative vote, as above provided,
of at least 66-2/3% of the total number of votes entitled to be cast with
respect to each such series of the Preferred Shares and the Other Preferred
Shares, then outstanding, in lieu of the consent or affirmative vote hereinabove
otherwise required.
With respect to any matter as to which the Preferred Shares of any
series is entitled to vote, holders of the Preferred Shares of such series and
any other series of Preferred Shares of the Company ranking on a parity with
such series of the Preferred Shares as to dividends and distributions of assets
and which by its terms provides for similar voting rights (the "Other Preferred
Shares") will be entitled to cast the number of votes set forth in the
Prospectus Supplement with respect to that series of Preferred Shares. As a
result of the provisions described in the preceding paragraph requiring the
holders of shares of a series of the Preferred Shares to vote together as a
class with the holders of shares of one or more series of Other Preferred
Shares, it is possible that the holders of such shares of Other Preferred Shares
could approve action that would adversely affect such series of Preferred
Shares, including the creation of a class of shares of beneficial interest
ranking prior to such series of Preferred Shares as to dividends, voting or
distributions of assets.
CONVERSION RIGHTS
The terms and conditions, if any, upon which shares of any series of
Preferred Shares are convertible into Common Shares will be set forth in the
applicable Prospectus Supplement relating thereto. Such terms will include the
number of shares of Common Shares into which the Preferred Shares are
convertible, the conversion price (or manner of calculation thereof), the
conversion period, provisions as to whether conversion will be at the option of
the holders of the Preferred Shares or the Company, the events requiring an
adjustment of the conversion price and provisions affecting conversion.
RESTRICTIONS ON OWNERSHIP
See "Description of Common Shares--Restrictions on Ownership" for a
discussion of the restrictions on shares of beneficial interest ownership
necessary for the Company to qualify as a REIT under the Code.
TRANSFER AGENT AND REGISTRAR
Unless otherwise indicated in a Prospectus Supplement relating thereto,
American Stock Transfer & Trust Company will be the transfer agent and registrar
for shares of each series of the Preferred Shares.
DESCRIPTION OF SECURITIES WARRANTS
The Company may issue Securities Warrants for the purchase of Debt
Securities, Preferred Shares or Common Shares. Securities Warrants may be issued
independently or together with any other Offered Securities offered by any
Prospectus Supplement and may be attached to or separate from such Offered
Securities. Each series of Securities Warrants will be issued under a separate
warrant agreement (each, a "Warrant Agreement") to be entered into between the
Company and a warrant agent specified in the applicable Prospectus Supplement
(the "Warrant Agent"). The Warrant Agent will act solely as an agent of the
Company in connection with the Securities Warrants of such series and will not
assume any obligation or relationship of agency or trust for or with any holders
or beneficial owners of Securities Warrants. The following summaries of certain
provisions of the Securities Warrant Agreement and the Securities Warrants do
not purport to be complete and are subject to, and are qualified
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in their entirety by reference to, all the provisions of the Securities Warrant
Agreement and the Securities Warrant certificates relating to each series of
Securities Warrants which will be filed with the Commission and incorporated by
reference as an exhibit to the Registration Statement of which this Prospectus
is a part at or prior to the time of the issuance of such series of Securities
Warrants.
If Securities Warrants are offered, the applicable Prospectus
Supplement will describe the terms of such Securities Warrants, including, in
the case of Securities Warrants for the purchase of Debt Securities, the
following where applicable: (i) the offering price; (ii) the denominations and
terms of the series of Debt Securities purchasable upon exercise of such
Securities Warrants; (iii) the designation and terms of any series of Debt
Securities with which such Securities Warrants are being offered and the number
of such Securities Warrants being offered with such Debt Securities; (iv) the
date, if any, on and after which such Securities Warrants and the related series
of Debt Securities will be transferable separately; (v) the principal amount of
the series of Debt Securities purchasable upon exercise of each such Securities
Warrant and the price at which such principal amount of Debt Securities of such
series may be purchased upon such exercise; (vi) the date on which the right to
exercise such Securities Warrants shall commence and the date on which such
right shall expire (the "Expiration Date"); (vii) whether the Securities
Warrants will be issued in registered or bearer form; (viii) any special United
States federal income tax consequences; (ix) the terms, if any, on which the
Company may accelerate the date by which the Securities Warrants must be
exercised; and (x) any other material terms of such Securities Warrants.
In the case of Securities Warrants for the purchase of Preferred Shares
or Common Shares, the applicable Prospectus Supplement will describe the terms
of such Securities Warrants, including the following where applicable: (i) the
offering price; (ii) the aggregate number of shares purchasable upon exercise of
such Securities Warrants, the exercise price, and in the case of Securities
Warrants for Preferred Shares, the designation, aggregate number and terms of
the series of Preferred Shares purchasable upon exercise of such Securities
Warrants; (iii) the designation and terms of any series of Preferred Shares with
which such Securities Warrants are being offered and the number of such
Securities Warrants being offered with such Preferred Shares; (iv) the date, if
any, on and after which such Securities Warrants and the related series of
Preferred Shares or Common Shares will be transferable separately; (v) the date
on which the right to exercise such Securities Warrants shall commence and the
Expiration Date; (vi) any special United States federal income tax consequences;
and (vii) any other material terms of such Securities Warrants.
Securities Warrant certificates may be exchanged for new Securities
Warrant certificates of different denominations, may (if in registered form) be
presented for registration of transfer, and may be exercised at the corporate
trust office of the Securities Warrant Agent or any other office indicated in
the applicable Prospectus Supplement. Prior to the exercise of any Securities
Warrant to purchase Debt Securities, holders of such Securities Warrants will
not have any of the rights of holders of the Debt Securities purchasable upon
such exercise, including the right to receive payments of principal, premium, if
any, or interest, if any, on such Debt Securities or to enforce covenants in the
applicable indenture. Prior to the exercise of any Securities Warrants to
purchase Preferred Shares or Common Shares, holders of such Securities Warrants
will not have any rights of holders of such Preferred Shares or Common Shares,
including the right to receive payments of dividends, if any, on such Preferred
Shares or Common Shares, or to exercise any applicable right to vote.
EXERCISE OF SECURITIES WARRANTS
Each Securities Warrant will entitle the holder thereof to purchase
such principal amount of Debt Securities or number of shares of Preferred Shares
or Common Shares, as the case may be, at such exercise price as shall in each
case be set forth in, or calculable from, the Prospectus Supplement relating to
the offered Securities Warrants. After the close of business on the Expiration
Date (or such later date to which such Expiration Date may be extended by the
Company), unexercised Securities Warrants will become void.
Securities Warrants may be exercised by delivering to the Securities
Warrant Agent payment as provided in the applicable Prospectus Supplement of the
amount required to purchase the Debt Securities, Preferred Shares or Common
Shares, as the case may be, purchasable upon such exercise together with certain
information set forth on the reverse side of the Securities Warrant certificate.
Securities Warrants will be deemed to have been exercised upon receipt of
payment of the exercise price, subject to the receipt within five (5) business
days, of the Securities
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Warrant certificate evidencing such Securities Warrants. Upon receipt of such
payment and the Securities Warrant certificate properly completed and duly
executed at the corporate trust office of the Securities Warrant Agent or any
other office indicated in the applicable Prospectus Supplement, the Company
will, as soon as practicable, issue and deliver the Debt Securities, Preferred
Shares or Common Shares, as the case may be, purchasable upon such exercise. If
fewer than all of the Securities Warrants represented by such Securities Warrant
certificate are exercised, a new Securities Warrant certificate will be issued
for the remaining amount of Securities Warrants.
AMENDMENTS AND SUPPLEMENTS TO WARRANT AGREEMENT
The Warrant Agreements may be amended or supplemented without the
consent of the holders of the Securities Warrants issued thereunder to effect
changes that are not inconsistent with the provisions of the Securities Warrants
and that do not adversely affect the interests of the holders of the Securities
Warrants.
ADJUSTMENTS
Unless otherwise indicated in the applicable Prospectus Supplement, the
exercise price of, and the number of shares of Common Shares covered by, a
Common Shares Warrant are subject to adjustment in certain events, including (i)
payment of a dividend on the Common Shares payable in shares of beneficial
interest and share splits, combinations or reclassification of the Common
Shares; (ii) issuance to all holders of Common Shares of rights or warrants to
subscribe for or purchase shares of Common Shares at less than their current
market price (as defined in the Warrant Agreement for such series of Common
Shares Warrants); and (iii) certain distributions of evidences of indebtedness
or assets (including securities but excluding cash dividends or distributions
paid out of consolidated earnings or retained earnings or dividends payable in
Common Shares) or of subscription rights and warrants (excluding those referred
to above).
No adjustment in the exercise price of, and the number of Common Shares
covered by, a Common Shares Warrant will be made for regular quarterly or other
periodic or recurring cash dividends or distributions or for cash dividends or
distributions to the extent paid from consolidated earnings or retained
earnings. No adjustment will be required unless such adjustment would require a
change of at least 1% in the exercise price then in effect. Except as stated
above, the exercise price of, and the number of Common Shares covered by, a
Common Shares Warrant will not be adjusted for the issuance of Common Shares or
any securities convertible into or exchangeable for Common Shares, or carrying
the right or option to purchase or otherwise acquire the foregoing, in exchange
for cash, other property or services.
In the event of any (i) consolidation or merger of the Company with or
into any entity (other than a consolidation or a merger that does not result in
any reclassification, conversion, exchange or cancellation of outstanding shares
of Common Shares); (ii) sale, transfer, lease or conveyance of all or
substantially all of the assets of the Company; or (iii) reclassification,
capital reorganization or change of the Common Shares (other than solely a
change in par value or from par value to no par value), then any holder of a
Common Shares Warrant will be entitled, on or after the occurrence of any such
event, to receive on exercise of such Common Shares Warrant the kind and amount
of shares of beneficial interest or other securities, cash or other property (or
any combination thereof) that the holder would have received had such holder
exercised such holder's Common Shares Warrant immediately prior to the
occurrence of such event. If the consideration to be received upon exercise of
the Common Shares Warrant following any such event consists of common shares of
the surviving entity, then from and after the occurrence of such event, the
exercise price of such Common Shares Warrant will be subject to the same
anti-dilution and other adjustments described in the second preceding paragraph,
applied as if such common shares were Common Shares.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities are to be issued under an Indenture, as amended or
supplemented from time to time (the "Indenture"), between the Company and a
trustee to be selected by the Company (the "Trustee"). A form of the Indenture
executed by the Company will be filed as an exhibit to an amendment to the
Registration Statement of which this Prospectus is a part or to a Current Report
on Form 8-K incorporated by reference into the Registration Statement of which
this Prospectus is a part. The Indenture will be subject to, and governed by,
the
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Trust Indenture Act of 1939, as amended (the "TIA"). The description of the
Indenture set forth below assumes that the Company has entered into the
Indenture. The Company will execute the applicable Indenture when and if the
Company issues Debt Securities. The statements made hereunder relating to the
Indenture and the Debt Securities to be issued thereunder are summaries of
certain provisions thereof and do not purport to be complete and are subject to,
and are qualified in their entirety by reference to, all provisions of the
Indenture and such Debt Securities. All section references appearing herein are
to sections of the Indenture, and capitalized terms used but not defined herein
shall have the respective meanings set forth in the Indenture.
GENERAL
The Debt Securities will be direct, unsecured and unsubordinated
obligations of the Company and will rank equally with all other unsecured and
unsubordinated indebtedness of the Company. The Indenture provides that the Debt
Securities may be issued without limit as to aggregate principal amount, in one
or more series, in each case as established from time to time in or pursuant to
authority granted by a resolution of the Board of Trust Managers of the Company
or as established in one or more indentures supplemental to the Indenture. All
Debt Securities of one series need not be issued at the same time and, unless
otherwise provided, a series may be reopened, without the consent of the Holders
of the Debt Securities of such series, for issuances of additional Debt
Securities of such series (Section 301).
The Indenture provides that there may be more than one Trustee
thereunder, each with respect to one or more series of Debt Securities. Any
Trustee under the Indenture may resign or be removed with respect to one or more
series of Debt Securities, and a successor Trustee may be appointed to act with
respect to such series (Section 609). In the event that two or more persons are
acting as Trustee with respect to different series of Debt Securities, each such
Trustee shall be a Trustee of a trust under the Indenture separate and apart
from the trust administered by any other Trustee (Section 610), and, except as
otherwise indicated herein, any action described herein to be taken by the
Trustee may be taken by each such Trustee with respect to, and only with respect
to, the one or more series of Debt Securities for which it is Trustee under the
Indenture.
Reference is made to the Prospectus Supplement relating to the series
of Debt Securities being offered for the specific terms thereof, including:
1. the title of such Debt Securities;
2. the aggregate principal amount of such Debt Securities and any
limit on such aggregate principal amount;
3. the date or dates, or the method for determining such date or
dates, on which the principal (and premium or Make-Whole
Amount, if any) of such Debt Securities will be payable;
4. the rate or rates (which may be fixed or variable), or the
method by which such rate or rates shall be determined, at
which such Debt Securities will bear interest, if any;
5. the date or dates, or the method for determining such date or
dates, from which any such interest will accrue, the Interest
Payment Dates on which any such interest will be payable, the
Regular Record Dates for such Interest Payment Dates, or the
method by which such dates shall be determined, the Person to
whom such interest shall be payable, and the basis upon which
interest shall be calculated if other than that of a 360-day
year of twelve 30-day months;
6. the place or places where the principal of (and premium or
Make-Whole Amount, if any) and interest (including all
Additional Amounts), if any, on such Debt Securities will be
payable, such Debt Securities may be surrendered for
conversion or registration of transfer or exchange, and
notices or demands to or upon the Company in respect of such
Debt Securities and the Indenture may be served;
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7. the period or periods within which, the price or prices at
which and the terms and conditions upon which such Debt
Securities may be redeemed, as a whole or in part, at the
option of the Company, if the Company is to have such an
option;
8. the obligation, if any, of the Company to redeem, repay or
purchase such Debt Securities pursuant to any sinking fund or
analogous provision or at the option of a Holder thereof, and
the period or periods within which, the price or prices at
which and the terms and conditions upon which such Debt
Securities will be redeemed, repaid or purchased, as a whole
or in part, pursuant to such obligation;
9. the percentage of the principal amount at which such Debt
Securities will be issued and, if other than the principal
amount thereof, the portion of the principal amount thereof
payable upon declaration of acceleration of the maturity
thereof, or (if applicable) the portion of the principal
amount of such Debt Securities which is convertible into
Common Shares, Preferred Shares or Debt Securities of another
series, or the method by which any such portion shall be
determined;
10. if other than U.S. dollars, the currency or currencies in
which such Debt Securities are denominated and payable, which
may be a foreign currency or units of two or more foreign
currencies or a composite currency or currencies, and the
terms and conditions relating thereto;
11. whether the amount of payments of principal of (and premium or
Make-Whole Amount, if any, including any amount due upon
redemption, if any) or interest and Additional Amounts, if
any, on such Debt Securities may be determined with reference
to an index, formula or other method (which index, formula or
method may, but need not be, based on a currency, currencies,
currency unit or units or composite currency or currencies)
and the manner in which such amounts shall be determined;
12. any additions to, modifications of or deletions from the terms
of such Debt Securities with respect to the Events of Default
or covenants set forth in the Indenture;
13. whether such Debt Securities will be issued in certificated or
book-entry form;
14. whether such Debt Securities will be in registered or bearer
form and, if in registered form, the denominations thereof if
other than $1,000 and any integral multiple thereof and, if in
bearer form, the denominations thereof and terms and
conditions relating thereto;
15. the applicability, if any, of the defeasance and covenant
defeasance provisions of Article Fourteen of the Indenture;
16. if such Debt Securities are to be issued upon the exercise of
Debt Securities Warrants, the time, manner and place for such
Debt Securities to be authenticated and delivered;
17. the terms, if any, upon which Debt Securities may be
convertible into Common Shares, Preferred Shares or Debt
Securities of another series of the Company and the terms and
conditions upon which such conversion will be effected,
including, without limitation, the initial conversion price or
rate and the conversion period;
18. if convertible, in connection with the preservation of the
Company's status as a REIT, any applicable limitations on the
ownership or transferability of the Common Shares, Preferred
Shares or other capital shares of the Company into which such
Debt Securities are convertible;
19. whether and under what circumstances the Company will pay
Additional Amounts as contemplated in the Indenture on such
Debt Securities in respect of any tax, assessment or
governmental charge and, if so, whether the Company will have
the option to redeem such Debt Securities in lieu of making
such payment; and
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20. any other terms of such Debt Securities not inconsistent with
the provisions of the Indenture (Section 301).
If so provided in the applicable Prospectus Supplement, the Debt
Securities may be issued at a discount below their principal amount and may
provide for less than the entire principal amount thereof to be payable upon
declaration of acceleration of the maturity thereof or bear no interest or bear
interest at a rate which at the time of issuance is below market rates
("Original Issue Discount Securities"). Special U.S. federal income tax,
accounting and other considerations applicable to Original Issue Discount
Securities will be described in the applicable Prospectus Supplement.
Except as set forth below under "Certain Covenants-Limitations on
Incurrence of Debt," the Indenture does not contain any other provisions that
would limit the ability of the Company to incur indebtedness or that would
afford Holders of Debt Securities protection in the event of a highly leveraged
or similar transaction involving the Company or in the event of a change of
control. However, restrictions on ownership and transfers of the Company's
Common Shares and Preferred Shares are designed to preserve its status as a REIT
and, therefore, may act to prevent or hinder a change of control. See
"Description of Common Shares" and "Description of Preferred Shares." Reference
is made to the applicable Prospectus Supplement for information with respect to
any deletions from, modifications of or additions to the Events of Default or
covenants of the Company that are described below, including any addition of a
covenant or other provision providing event risk or similar protection.
DENOMINATIONS, INTEREST, REGISTRATION AND TRANSFER
Unless otherwise described in the applicable Prospectus Supplement, the
Debt Securities of any series will be issuable in denominations of $1,000 and
integral multiples thereof (Section 302).
Unless otherwise specified in the applicable Prospectus Supplement, the
principal of (and premium or Make-Whole Amount, if any) and interest or
Additional Amounts, if any on any series of Debt Securities will be payable at
the corporate trust office of the Trustee, provided that, at the option of the
Company, payment of interest may be made by check mailed to the address of the
Person entitled thereto as it appears in the Security Register or by wire
transfer of funds to such Person at an account maintained within the United
States (Sections 301, 305, 306, 307 and 1002).
Any interest not punctually paid or duly provided for on any Interest
Payment Date with respect to a Debt Security ("Defaulted Interest") will
forthwith cease to be payable to the Holder on the applicable Regular Record
Date and may either be paid to the person in whose name such Debt Security is
registered at the close of business on a special record date (the "Special
Record Date") for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to the Holder of such Debt Security not
less than 10 days prior to such Special Record Date, or may be paid at any time
in any other lawful manner, all as more completely described in the Indenture.
Subject to certain limitations imposed upon Debt Securities issued in
book-entry form, the Debt Securities of any series will be exchangeable for
other Debt Securities of the same series and of a like aggregate principal
amount and tenor of different authorized denominations upon surrender of such
Debt Securities at the corporate trust office of the Trustee. In addition,
subject to certain limitations imposed upon Debt Securities issued in book-entry
form, the Debt Securities of any series may be surrendered for conversion or
registration of transfer thereof at the corporate trust office of the Trustee.
Every Debt Security surrendered for conversion, registration of transfer or
exchange shall be duly endorsed or accompanied by a written instrument of
transfer. No service charge will be made for any registration of transfer or
exchange of any Debt Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith (Section 305). If the applicable Prospectus Supplement refers to any
transfer agent (in addition to the Trustee) initially designated by the Company
with respect to any series of Debt Securities, the Company may at any time
rescind the designation of any such transfer agent or approve a change in the
location through which any such transfer agent acts, except that the Company
will be required to maintain a transfer agent in each Place of Payment for such
series. The Company may at any time designate additional transfer agents with
respect to any series of Debt Securities (Section 1002).
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Neither the Company nor the Trustee shall be required to (i) issue,
register the transfer of or exchange Debt Securities of any series during a
period beginning at the opening of business 15 days before any selection of Debt
Securities of that series to be redeemed and ending at the close of business on
the day of mailing of the relevant notice of redemption; (ii) register the
transfer of or exchange any Debt Security, or portion thereof, called for
redemption, except the unredeemed portion of any Debt Security being redeemed in
part; or (iii) issue, register the transfer of or exchange any Debt Security
which has been surrendered for repayment at the option of the Holder, except the
portion, if any, of such Debt Security not to be so repaid (Section 305).
MERGER, CONSOLIDATION OR SALE
The Company, without the consent of the Holders of any of the Debt
Securities, may consolidate with, or sell, lease or convey all or substantially
all of its assets to, or merge with or into, any other corporation, provided
that (a) either the Company shall be the continuing corporation or, the
successor corporation (if other than the Company) formed by or resulting from
any such consolidation or merger or which shall have received the transfer of
such assets shall expressly assume payment of the principal of (and premium or
Make-Whole Amount, if any) and interest (including Additional Amounts, if any)
on all of the Debt Securities and the due and punctual performance and
observance of all of the covenants and conditions contained in the Indenture;
(b) immediately after giving effect to such transaction and treating any
indebtedness which becomes an obligation of the Company or any Subsidiary as a
result thereof as having been incurred by the Company or such Subsidiary at the
time of such transaction, no Event of Default under the Indenture, and no event
which, after notice or the lapse of time, or both, would become such an Event of
Default, shall have occurred and be continuing; and (c) an officers' certificate
and legal opinion covering such conditions shall be delivered to the Trustee
(Sections 801 and 803).
CERTAIN COVENANTS
EXISTENCE. Except as permitted under "Merger, Consolidation or Sale,"
the Company will do or cause to be done all things necessary to preserve and
keep in full force and effect its corporate existence, rights (charter and
statutory) and franchises; PROVIDED, HOWEVER, that the Company shall not be
required to preserve any right or franchise if it determines that the
preservation thereof is no longer desirable in the conduct of its business and
that the loss thereof is not disadvantageous in any material respect to the
Holders of the Debt Securities (Section 1004).
MAINTENANCE OF PROPERTIES. The Company will cause all of its properties
used or useful in the conduct of its business or the business of any Subsidiary
to be maintained and kept in good condition, repair and working order and
supplied with all necessary equipment and will cause to be made all necessary
repairs, renewals, replacements and improvements thereof, all as in the judgment
of the Company may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; PROVIDED,
HOWEVER, that the Company and its Subsidiaries shall not be prevented from
selling or otherwise disposing for value its properties in the ordinary course
of business (Section 1005).
INSURANCE. The Company will, and will cause each of its Subsidiaries
to, keep all of its insurable properties insured against loss or damage in
accordance with industry practices and with insurers of recognized
responsibility and of suitable financial stability (Section 1006).
PAYMENT OF TAXES AND OTHER CLAIMS. The Company will pay or discharge or
cause to be paid or discharged, before the same shall become delinquent, (i) all
taxes, assessments and governmental charges levied or imposed upon it or any
Subsidiary or upon the income, profits or property of the Company or any
Subsidiary; and (ii) all lawful claims for labor, materials and supplies which,
if unpaid, might by law become a lien upon the property of the Company or any
Subsidiary; PROVIDED, HOWEVER, that the Company shall not be required to pay or
discharge or cause to be paid or discharged any such tax, assessment, charge or
claim whose amount, applicability or validity is being contested in good faith
by appropriate proceedings (Section 1007).
PROVISION OF FINANCIAL INFORMATION. Whether or not the Company is
subject to Section 13 or 15(d) of the Exchange Act, the Company will, to the
extent permitted under the Exchange Act, file with the Commission the annual
reports, quarterly reports and other documents which the Company would have been
required to file with
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the Commission pursuant to such Section 13 or 15(d) (the "Financial Statements")
if the Company were so subject, such documents to be filed with the Commission
on or prior to the respective dates (the "Required Filing Dates") by which the
Company would have been required so to file such documents if the Company were
so subject. The Company will also in any event (x) within 15 days of each
Required Filing Date file with the Trustee copies of the annual reports,
quarterly reports and other documents which the Company would have been required
to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act
if the Company were subject to such Sections; and (y) if filing such documents
by the Company with the Commission is not permitted under the Exchange Act,
promptly upon written request and payment of the reasonable cost of duplication
and delivery, supply copies of such documents to any prospective Holder (Section
1008).
EVENTS OF DEFAULT, NOTICE AND WAIVER
The Indenture provides that the following events are "Events of
Default" with respect to a series of Debt Securities issued thereunder: (a)
default for 30 days in the payment of any installment of interest or Additional
Amount payable on any Debt Security of such series when due and payable; (b)
default in the payment of the principal of (or premium or Make-Whole Amount, if
any) any Debt Security of such series when due and payable; (c) default in the
performance, or breach, of any covenant of the Company contained in the
Indenture (other than a covenant added to the Indenture solely for the benefit
of a series of Debt Securities other than such series), which continues for 60
days after written notice as provided in the Indenture; (d) default under any
bond, debenture, note, mortgage, indenture or instrument under which there may
be issued or by which there may be secured or evidenced any indebtedness for
money borrowed by the Company (or by any Subsidiary, the repayment of which the
Company has guaranteed or for which the Company is directly responsible or
liable as obligor or guarantor) having an aggregate principal amount outstanding
of at least $10,000,000, whether such indebtedness now exists or shall hereafter
be incurred or created, which default shall have resulted in such indebtedness
becoming or being declared due and payable prior to the date on which it would
otherwise have become due and payable, without such indebtedness having been
discharged or such acceleration having been rescinded or annulled within a
period of 30 days after written notice to the Company as provided in the
Indenture; (e) the entry by a court of competent jurisdiction of one or more
judgments, orders or decrees against the Company or any of its Subsidiaries in
an aggregate amount (excluding amounts covered by insurance) in excess of
$10,000,000 and such judgments, orders or decrees remain undischarged, unstayed
and unsatisfied in an aggregate amount (excluding amounts covered by insurance)
in excess of $10,000,000 for a period of 30 consecutive days; or (f) certain
events of bankruptcy, insolvency or reorganization, or court appointment of a
receiver, liquidator or trustee of the Company or any Significant Subsidiary or
for all or substantially all of either of its property (Section 501).
If an Event of Default under the Indenture with respect to Debt
Securities of any series at the time Outstanding occurs and is continuing, then
in every such case the Trustee or the Holders of not less than 25% in principal
amount of the Outstanding Debt Securities of that series may declare the
principal amount (or, if the Debt Securities of that series are Original Issue
Discount Securities or Indexed Securities, such portion of the principal amount
as may be specified in the terms thereof) of all of the Debt Securities of that
series to be due and payable immediately by written notice thereof to the
Company (and to the Trustee if given by the Holders). However, at any time after
such a declaration of acceleration with respect to Debt Securities of such
series (or of all Debt Securities then Outstanding under the Indenture, as the
case may be) has been made, but before a judgment or decree for payment of the
money due has been obtained by the Trustee, the Holders of not less than a
majority in principal amount of Outstanding Debt Securities of such series (or
of all Debt Securities then Outstanding under the Indenture, as the case may be)
may rescind and annul such declaration and its consequences if (a) the Company
shall have deposited with the Trustee all required payments of the principal of
(and premium and Make-Whole Amount, if any) and interest on and any Additional
Amounts and any other amounts that may be payable in respect of the Debt
Securities of such series (or of all Debt Securities then Outstanding under the
Indenture, as the case may be), plus certain fees, expenses, disbursements and
advances of the Trustee and (b) all Events of Default, other than the
non-payment of accelerated principal (or specified portion thereof), with
respect to Debt Securities of such series (or all Debt Securities then
Outstanding under the Indenture, as the case may be) have been cured or waived
as provided in the Indenture (Section 502). The Indenture also provides that the
Holders of not less than a majority in principal amount of the Outstanding Debt
Securities of any series (or of all Debt Securities then Outstanding under the
Indenture, as the case may be) may waive any past default with respect to such
series and its consequences, except a default (x) in the payment of the
principal of (or premium and Make-Whole Amount, if any)
16
<PAGE>
or interest on and any Additional Amounts payable in respect of any Debt
Security of such series or (y) in respect of a covenant or provision contained
in the Indenture that cannot be modified or amended without the consent of the
Holder of each Outstanding Debt Security affected thereby (Section 513).
The Trustee is required to give notice to the Holders of Debt
Securities within 90 days of a default under the Indenture; PROVIDED, HOWEVER,
that the Trustee may withhold notice to the Holders of any series of Debt
Securities of any default with respect to such series (except a default in the
payment of the principal of (or premium, if any) or interest on any Debt
Security of such series or in the payment of any sinking fund installment in
respect of any Debt Security of such series) if the Responsible Officers of the
Trustee consider such withholding to be in the interest of such Holders (Section
601).
The Indenture provides that no Holders of Debt Securities of any series
may institute any proceedings, judicial or otherwise, with respect to the
Indenture or for any remedy thereunder, except in the case of failure of the
Trustee, for 60 days, to act after it has received a written request to
institute proceedings in respect of an Event of Default from the Holders of not
less than 25% in principal amount of the Outstanding Debt Securities of such
series, as well as an offer of reasonable indemnity (Section 507). This
provision will not prevent, however, any Holder of Debt Securities from
instituting suit for the enforcement of payment of the principal of (and
premium, if any) and interest on such Debt Securities at the respective due
dates thereof (Section 508).
Subject to provisions in the Indenture relating to its duties in case
of default, the Trustee is under no obligation to exercise any of its rights or
powers under the Indenture at the request or direction of any Holders of any
series of Debt Securities then outstanding under the Indenture, unless such
Holders shall have offered to the Trustee reasonable security or indemnity
(Section 602). The Holders of not less than a majority in principal amount of
the Outstanding Debt Securities of any series (or of all Debt Securities then
Outstanding under the Indenture, as the case may be) shall have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or of exercising any trust or power conferred upon the
Trustee. However, the Trustee may refuse to follow any direction which is in
conflict with any law or the Indenture, which may involve the Trustee in
personal liability or which may be unduly prejudicial to the Holders of Debt
Securities of such series not joining therein (Section 512).
Within 120 days after the close of each fiscal year, the Company must
deliver to the Trustee a certificate, signed by one of several specified
officers, stating whether or not such officer has knowledge of any default under
the Indenture and, if so, specifying each such default and the nature and status
thereof (Section 1009).
MODIFICATION OF THE INDENTURE
Modifications and amendments of the Indenture may be made only with the
consent of the Holders of not less than a majority in principal amount of all
outstanding Debt Securities which are affected by such modification or
amendment; PROVIDED, HOWEVER, that no such modification or amendment may,
without the consent of the Holder of each such Debt Security affected thereby,
(a) change the Stated Maturity of the principal of, or any installment of
interest (or premium or Make-Whole Amount, if any) on, any such Debt Security;
(b) reduce the principal amount of, or the rate or amount of interest on or
Additional Amounts payable in respect thereof, or any premium on redemption of,
any such Debt Security, or change any obligation of the Company to pay
Additional Amounts (except as provided in the Indenture), or reduce the amount
of principal of an Original Issue Discount Security that would be due and
payable upon declaration of acceleration of the maturity thereof or would be
provable in bankruptcy, or adversely affect any right of repayment of the Holder
of any such Debt Security; (c) change the Place of Payment, or the coin or
currency, for payment of principal of, premium, if any, or interest on any such
Debt Security; (d) impair the right to institute suit for the enforcement of any
payment on or with respect to any such Debt Security; (e) reduce the
above-stated percentage of Outstanding Debt Securities of any series necessary
to modify or amend the Indenture, to waive compliance with certain provisions
thereof or certain defaults and consequences thereunder or to reduce the quorum
or voting requirements set forth in the Indenture; or (f) modify any of the
foregoing provisions or any of the provisions relating to the waiver of certain
past defaults or certain covenants, except to increase the required percentage
to effect such action or to provide that certain other provisions may not be
modified or waived without the consent of the Holder of such Debt Security
(Section 902).
17
<PAGE>
The Holders of not less than a majority in principal amount of each
series of Outstanding Debt Securities have the right to waive compliance by the
Company with certain covenants in the Indenture (Section 1011).
Modifications and amendments of the Indenture may be made by the
Company and the Trustee without the consent of any Holder of Debt Securities for
any of the following purposes: (i) to evidence the succession of another person
to the Company as obligor under the Indenture; (ii) to add to the covenants of
the Company for the benefit of the Holders of all or any series of Debt
Securities or to surrender any right or power conferred upon the Company in the
Indenture; (iii) to add Events of Default for the benefit of the Holders of all
or any series of Securities; (iv) to add or change any provisions of the
Indenture to facilitate the issuance of, or to liberalize certain terms of, Debt
Securities in bearer form, or to permit or facilitate the issuance of Debt
Securities in uncertificated form, PROVIDED that such action shall not adversely
affect the interest of the Holders of the Debt Securities of any series in any
material respect; (v) to change or eliminate any provisions of the Indenture,
PROVIDED that any such change or elimination shall become effective only when
there are no Debt Securities Outstanding of any series created prior thereto
which are entitled to the benefit of such provision; (vi) to secure the Debt
Securities; (vii) to establish the form or terms of Debt Securities of any
series, including the provisions and procedures, if applicable, for the
conversion of such Debt Securities into Common Shares or Preferred Shares of the
Company; (viii) to provide for the acceptance of appointment by a successor
Trustee or facilitate the administration of the trusts under the Indenture by
more than one Trustee; (ix) to cure any ambiguity, correct or supplement any
provision which may be defective or inconsistent or make any other provisions
with respect to matters or questions arising under the Indenture, PROVIDED that
such action shall not adversely affect the interests of Holders of Debt
Securities of any series in any material respect; or (x) to supplement any of
the provisions of the Indenture to the extent necessary to permit or facilitate
defeasance and discharge of any series of such Debt Securities, PROVIDED that
such action shall not adversely affect the interests of the Holders of the Debt
Securities of any series in any material respect (Section 901).
The Indenture provides that in determining whether the Holders of the
requisite principal amount of Outstanding Debt Securities of a series have given
any request, demand, authorization, direction, notice, consent or waiver
thereunder or whether a quorum is present at a meeting of Holders of Debt
Securities, (i) the principal amount of an Original Issue Discount Security that
shall be deemed to be outstanding shall be the amount of the principal thereof
that would be due and payable as of the date of such determination upon
declaration of acceleration of the maturity thereof; (ii) the principal amount
of a Debt Security denominated in a Foreign Currency that shall be deemed
outstanding shall be the U.S. dollar equivalent, determined on the issue date
for such Debt Security, of the principal amount (or, in the case of an Original
Issue Discount Security, the U.S. dollar equivalent on the issue date of such
Debt Security of the amount determined as provided in (i) above); (iii) the
principal amount of an Indexed Security that shall be deemed outstanding shall
be the principal face amount of such Indexed Security at original issuance,
unless otherwise provided with respect to such Indexed Security pursuant to
Section 301 of the Indenture; and (iv) Debt Securities owned by the Company or
any other obligor upon the Debt Securities or any Affiliate of the Company or of
such other obligor shall be disregarded (Section 101).
The Indenture contains provisions for convening meetings of the Holders
of Debt Securities of a series (Section 1501). A meeting may be called at any
time by the Trustee, and also, upon request, by the Company or the Holders of at
least 10% in principal amount of the Outstanding Debt Securities of such series,
in any such case upon notice given as provided in the Indenture (Section 1502).
Except for any consent that must be given by the Holder of each Debt Security
affected by certain modifications and amendments of the Indenture, any
resolution presented at a meeting or adjourned meeting duly reconvened at which
a quorum is present may be adopted by the affirmative vote of the Holders of a
majority in principal amount of the Outstanding Debt Securities of that series;
PROVIDED, HOWEVER, that, except as referred to above, any resolution with
respect to any request, demand, authorization, direction, notice, consent,
waiver or other action that may be made, given or taken by the Holders of a
specified percentage, which is less than a majority, in principal amount of the
Outstanding Debt Securities of a series may be adopted at a meeting or adjourned
meeting duly reconvened at which a quorum is present by the affirmative vote of
the Holders of such specified percentage in principal amount of the Outstanding
Debt Securities of that series. Any resolution passed or decision taken at any
meeting of Holders of Debt Securities of any series duly held in accordance with
the Indenture will be binding on all Holders of Debt Securities of that series.
The quorum at any meeting called to adopt a resolution, and at any reconvened
meeting, will be Persons holding or
18
<PAGE>
representing a majority in principal amount of the Outstanding Debt Securities
of a series; PROVIDED, HOWEVER, that if any action is to be taken at such
meeting with respect to a consent or waiver which may be given by the Holders of
not less than a specified percentage in principal amount of the Outstanding Debt
Securities of a series, the Persons holding or representing such specified
percentage in principal amount of the Outstanding Debt Securities of such series
will constitute a quorum (Section 1504).
Notwithstanding the foregoing provisions, if any action is to be taken
at a meeting of Holders of Debt Securities of any series with respect to any
request, demand, authorization, direction, notice, consent, waiver or other
action that the Indenture expressly provides may be made, given or taken by the
Holders of a specified percentage in principal amount of all Outstanding Debt
Securities affected thereby, or of the Holders of such series and one or more
additional series: (i) there shall be no minimum quorum requirement for such
meeting; and (ii) the principal amount of the Outstanding Debt Securities of
such series that vote in favor of such request, demand, authorization,
direction, notice, consent, waiver or other action shall be taken into account
in determining whether such request, demand, authorization, direction, notice,
consent, waiver or other action has been made, given or taken under the
Indenture (Section 1504).
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
The Company may discharge certain obligations to Holders of any series
of Debt Securities that have not already been delivered to the Trustee for
cancellation and that either have become due and payable or will become due and
payable within one year (or scheduled for redemption within one year) by
irrevocably depositing with the Trustee, in trust, funds in such currency or
currencies, currency unit or units or composite currency or currencies in which
such Debt Securities are payable in an amount sufficient to pay the entire
indebtedness on such Debt Securities in respect of principal (and premium or
Make-Whole Amount, if any) and interest to the date of such deposit (if such
Debt Securities have become due and payable) or to the Stated Maturity or
Redemption Date, as the case may be (Section 1401).
The Indenture provides that, if the provisions of Article Fourteen are
made applicable to the Debt Securities of or within any series pursuant to
Section 301 of the Indenture, the Company may elect either (a) to defease and be
discharged from any and all obligations with respect to such Debt Securities
(except for the obligation to pay Additional Amounts, if any, upon the
occurrence of certain events of tax, assessment or governmental charge with
respect to payments on such Debt Securities and the obligations to register the
transfer or exchange of such Debt Securities, to replace temporary or mutilated,
destroyed, lost or stolen Debt Securities, to maintain an office or agency in
respect of such Debt Securities and to hold moneys for payment in trust)
("defeasance") (Section 1402) or (b) to be released from its obligations with
respect to such Debt Securities under Section 1004 to 1008, inclusive, of the
Indenture (being the restrictions described under "Certain Covenants") or, if
provided pursuant to Section 301 of the Indenture, its obligations with respect
to any other covenant, and any omission to comply with such obligations shall
not constitute a default or an Event of Default with respect to such Debt
Securities ("covenant defeasance") (Section 1403), in either case upon the
irrevocable deposit by the Company with the Trustee, in trust, of an amount, in
such currency or currencies, currency unit or units or composite currency or
currencies in which such Debt Securities are payable at Stated Maturity, or
Governmental Obligations (as defined below), or both, applicable to such Debt
Securities which through the scheduled payment of principal and interest in
accordance with their terms will provide money in an amount sufficient to pay
the principal of (and premium, if any) and interest on such Debt Securities, and
any mandatory sinking fund or analogous payments thereon, on the scheduled due
dates therefor.
Such a trust may only be established if, among other things, the
Company has delivered to the Trustee an Opinion of Counsel (as specified in the
Indenture) to the effect that the Holders of such Debt Securities will not
recognize income, gain or loss for U.S. federal income tax purposes as a result
of such defeasance or covenant defeasance and will be subject to U.S. federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such defeasance or covenant defeasance had not
occurred, and such Opinion of Counsel, in the case of defeasance, must refer to
and be based upon a ruling of the Internal Revenue Service or a change in
applicable United States federal income tax law occurring after the date of the
Indenture (Section 1404).
19
<PAGE>
"Government Obligations" means securities which are (i) direct
obligations of the United States of America or the government which issued the
Foreign Currency in which the Debt Securities of a particular series are
payable, for the payment of which its full faith and credit is pledged or (ii)
obligations of a Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America or such government which issued
the Foreign Currency in which the Debt Securities of such series are payable,
the payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America or such other government, which, in
either case, are not callable or redeemable at the option of the issuer thereof,
and shall also include a depository receipt issued by a bank or trust company as
custodian with respect to any such Government Obligation or a specific payment
of interest on or principal of any such Government Obligation held by such
custodian for the account of the holder of a depository receipt, PROVIDED that
(except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depository receipt from
any amount received by the custodian in respect of the Government Obligation or
the specific payment of interest on or principal of the Government Obligation
evidenced by such depository receipt (Section 101).
Unless otherwise provided in the applicable Prospectus Supplement, if
after the Company has deposited funds and/or Government Obligations to effect
defeasance or covenant defeasance with respect to Debt Securities of any series,
(a) the Holder of a Debt Security of such series is entitled to, and does, elect
pursuant to Section 301 of the Indenture or the terms of such Debt Security to
receive payment in a currency, currency unit or composite currency other than
that in which such deposit has been made in respect of such Debt Security, or
(b) a Conversion Event (as defined below) occurs in respect of the currency,
currency unit or composite currency in which such deposit has been made, the
indebtedness represented by such Debt Security shall be deemed to have been, and
will be, fully discharged and satisfied through the payment of the principal of
(and premium or Make-Whole Amount, if any) and interest on such Debt Security as
they become due out of the proceeds yielded by converting the amount so
deposited in respect of such Debt Security into the currency, currency unit or
composite currency in which such Debt Security becomes payable as a result of
such election or such cessation of usage based on the applicable market exchange
rate (Section 1405). "Conversion Event" means the cessation of use of (i) a
currency, currency unit or composite currency both by the government of the
country which issued such currency and for the settlement of transactions by a
central bank or other public institutions of or within the international banking
community, (ii) the ECU both within the European Monetary System and for the
settlement of transactions by public institutions of or within the European
Communities or (iii) any currency unit or composite currency other than the ECU
for the purposes for which it was established. Unless otherwise provided in the
applicable Prospectus Supplement, all payments of principal of (and premium or
Make-Whole Amount, if any) and interest on any Debt Security that is payable in
a Foreign Currency that ceases to be used by its government of issuance shall be
made in U.S. dollars (Section 101).
In the event the Company effects covenant defeasance with respect to
any Debt Securities and such Debt Securities are declared due and payable
because of the occurrence of any Event of Default other than the Event of
Default described in clause (d) under "Events of Default, Notice and Waiver"
with respect to Sections 1004 to 1008, inclusive, of the Indenture (which
Sections would no longer be applicable to such Debt Securities) or described in
clause (g) under "Events of Default, Notice and Waiver" with respect to any
other covenant as to which there has been covenant defeasance, the amount in
such currency, currency unit or composite currency in which such Debt Securities
are payable, and Government Obligations on deposit with the Trustee, will be
sufficient to pay amounts due on such Debt Securities at the time of their
Stated Maturity but may not be sufficient to pay amounts due on such Debt
Securities at the time of the acceleration resulting from such Event of Default.
However, the Company would remain liable to make payment of such amounts due at
the time of acceleration.
The applicable Prospectus Supplement may further describe the
provisions, if any, permitting such defeasance or covenant defeasance, including
any modifications to the provisions described above, with respect to the Debt
Securities of or within a particular series.
CONVERSION RIGHTS
The terms and conditions, if any, upon which the Debt Securities are
convertible into Common Shares, Preferred Shares or Debt Securities of another
series will be set forth in the applicable Prospectus Supplement
20
<PAGE>
relating thereto. Such terms will include whether such Debt Securities are
convertible into Common Shares, Preferred Shares or Debt Securities of another
series, the conversion price (or manner of calculation thereof), the conversion
period, provisions as to whether conversion will be at the option of the Holders
or the Company, the events requiring an adjustment of the conversion price and
provisions affecting conversion in the event of the redemption of such Debt
Securities. To protect the Company's status as a REIT, a Holder may not convert
any Debt Security, and such Debt Security shall not be convertible by any
Holder, if as a result of such conversion any person would then be deemed to
own, directly or indirectly, more than 9.8% of the Company's capital shares.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in
the form of one more global securities (the "Global Securities") that will be
deposited with, or on behalf of, a depositary (the "Depositary") identified in
the applicable Prospectus Supplement relating to such series. Global Securities
may be issued in either registered or bearer form and in either temporary or
permanent form. The specific terms of the depositary arrangement with respect to
a series of Debt Securities will be described in the applicable Prospectus
Supplement relating to such series. The laws of some jurisdictions require that
certain purchasers of securities take physical delivery of such securities in
definitive form. Such laws may impair the ability to transfer beneficial
interests in Debt Securities represented by Global Securities.
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges and the ratio of earnings to
combined fixed charges and preferred distributions for the nine months ended
September 30, 1995 and each of the last five fiscal years for the Company
(including its predecessors in interest) are presented below. The ratio of
earnings to fixed charges for the Company is computed by dividing earnings by
fixed charges. The ratio of earnings to combined fixed charges and preferred
distributions is computed by dividing earnings by the sum of fixed charges and
preferred shares dividend requirements.
For purposes of computing these ratios, "earnings" have been calculated
by adding fixed charges to income from operations before income taxes. "Fixed
charges" consist of interest costs, the interest component of capitalized lease
obligations, a portion of rental expense, other than on capitalized leases,
estimated to represent the interest factor in such rental expense and the
amortization of debt discounts and issue costs.
21
<PAGE>
<TABLE>
<CAPTION>
CAMDEN PROPERTY TRUST CAMDEN PREDECESSORS
Nine Months
Ended Year Ended July 29 to January 1
September 30, December 31, December 31, to July 28, YEARS ENDED DECEMBER 31,
1995 1994 1993 1993 1992 1991 1990
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings
to fixed charges 1.37x 1.60x 3.27x 1.10x 0.88x 0.48x 0.19x
Dollar amount of
coverage
deficiency (in
thousands) -- -- -- -- $( 778) $(1,917) $(1,764)
Ratio of earnings
to combined fixed
charges and
preferred share
dividends (a) 1.36x 1.60x
</TABLE>
- --------------------
(a) The ratio of earnings to combined fixed charges and preferred share
dividends is the same as the ratio of earnings to fixed charges for
fiscal years prior to 1994 as the Company had no preferred share
dividends prior to 1994.
PLAN OF DISTRIBUTION
The Company may sell the Offered Securities to one or more underwriters
for public offering and sale by them or may sell the Offered Securities to
investors directly or through agents. Any such underwriter or agent involved in
the offer and sale of the Offered Securities will be named in the applicable
Prospectus Supplement.
Underwriters may offer and sell the Offered Securities at a fixed price
or prices, which may be changed, at prices related to the prevailing market
prices at the time of sale or at negotiated prices. The Company also may offer
and sell the Offered Securities in exchange for one or more of its then
outstanding issues of debt or convertible debt securities. The Company also may,
from time to time, authorize underwriters acting as the Company's agents to
offer and sell the Offered Securities upon the terms and conditions as are set
forth in the applicable Prospectus Supplement. In connection with the sale of
Offered Securities, underwriters may be deemed to have received compensation
from the Company in the form of underwriting discounts or commissions and may
also receive commissions from purchasers of Offered Securities for whom they may
act as agent. Underwriters may sell Offered Securities to or through dealers,
and such dealers may receive compensation in the form of discounts, concessions
or commissions from the underwriters and/or commissions from the purchasers for
whom they may act as agent.
Any underwriting compensation paid by the Company to underwriters or
agents in connection with the offering of Offered Securities, and any discounts,
concessions or commissions allowed by underwriters to participating dealers,
will be set forth in the applicable Prospectus Supplement. Underwriters, dealers
and agents participating in the distribution of the Offered Securities may be
deemed to be underwriters, and any discounts and commissions received by them
and any profit realized by them on resale of the Offered Securities may be
deemed
22
<PAGE>
to be underwriting discounts and commissions, under the Securities Act.
Underwriters, dealers and agents may be entitled, under agreements entered into
with the Company, to indemnification against and contribution toward certain
civil liabilities, including liabilities under the Securities Act.
If so indicated in the applicable Prospectus Supplement, the Company
will authorize dealers acting as the Company's agents to solicit offers by
certain institutions to purchase Offered Securities from the Company at the
public offering price set forth in such Prospectus Supplement pursuant to
Delayed Delivery Contracts ("Contracts") providing for payment and delivery on
the date or dates stated in such Prospectus Supplement. Each Contract will be
for an amount not less than, and the aggregate principal amount of Offered
Securities sold pursuant to Contracts shall be not less nor more than, the
respective amounts stated in the applicable Prospectus Supplement. Institutions
with whom Contracts, when authorized, may be made include commercial and savings
banks, insurance companies, pension funds, investment companies, educational and
charitable institutions, and other institutions but will in all cases be subject
to the approval of the Company. Contracts will not be subject to any conditions
except (i) the purchase by an institution of the Offered Securities covered by
its Contracts shall not at the time of delivery be prohibited under the laws of
any jurisdiction in the United States to which such institution is subject; and
(ii) if the Offered Securities are being sold to underwriters, the Company shall
have sold to such underwriters the total principal amount of the Offered
Securities less the principal amount thereof covered by the Contracts.
Certain of the underwriters and their affiliates may be customers of,
engage in transactions with and perform services for the Company and its
subsidiaries in the ordinary course of business.
LEGAL MATTERS
Certain legal matters relating to the validity of the Offered
Securities will be passed upon for the Company by Liddell, Sapp, Zivley, Hill &
LaBoon, L.L.P., Dallas, Texas.
EXPERTS
The consolidated financial statements of Camden Property Trust as of
December 31, 1994 and 1993 and for the year ended December 31, 1994 and for the
period from July 29, 1993 to December 31, 1993, the related financial statement
schedules and the combined financial statements of Camden Predecessors for the
period from January 1, 1993 to July 28, 1993 and for the year ended December 31,
1992, incorporated in this Prospectus by reference from the Annual Report on
Form 10-K of Camden Property Trust for the year ended December 31, 1994 have
been audited by Deloitte & Touche LLP, independent auditors, as stated in their
reports which are incorporated herein by reference, and have been so
incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
23
<PAGE>
================================================================================
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN
CONNECTION WITH THE OFFERING MADE BY THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS.
THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES OTHER THAN THE
SECURITIES TO WHICH THEY RELATE OR ANY OFFER TO SELL, OR THE SOLICITATION OF ANY
OFFER TO BUY, BY ANYONE IN ANY STATE IN WHICH SUCH OFFER TO SELL OR SOLICITATION
IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS
NOT QUALIFIED TO DO SO, OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS NOR ANY SALE MADE HEREUNDER AND THEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THEREOF OR THAT THE INFORMATION
CONTAINED OR INCORPORATED BY REFERENCE HEREIN OR THEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO THE DATE OF SUCH INFORMATION.
------------------------
TABLE OF CONTENTS
PAGE
----
PROSPECTUS SUPPLEMENT
Prospectus Summary...................... S-3
The Company............................. S-5
Use of Proceeds......................... S-6
Capitalization.......................... S-7
Description of Notes.................... S-8
Certain Federal Income Tax
Considerations........................ S-14
Underwriting............................ S-16
Legal Matters........................... S-16
Experts................................. S-16
PROSPECTUS
Available Information................... 2
Incorporation of Certain Documents by
Reference............................. 2
The Company............................. 3
Use of Proceeds......................... 4
Description of Common Shares............ 4
Description of Preferred Shares......... 6
Description of Securities Warrants...... 9
Description of Debt Securities.......... 11
Ratio of Earnings to Fixed Charges...... 21
Plan of Distribution.................... 22
Legal Matters........................... 23
Experts................................. 23
================================================================================
CAMDEN
PROPERTY
TRUST
LOGO
$75,000,000
7% NOTES DUE NOVEMBER 15, 2006
--------------------------
PROSPECTUS SUPPLEMENT
--------------------------
MERRILL LYNCH & CO.
J. P. MORGAN & CO.
NATIONSBANC CAPITAL MARKETS, INC.
NOVEMBER 14, 1996
================================================================================
