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Filed Pursuant to Rule 424(b)(5)
Registration No. 333-24637
PROSPECTUS SUPPLEMENT
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(TO PROSPECTUS DATED APRIL 21, 1997)
$75,000,000
[LOGO] CAMDEN PROPERTY TRUST
REMARKETED RESET NOTES DUE MAY 9, 2002
------------------------
The Remarketed Reset Notes due May 9, 2002 (the "Notes") offered hereby are
being issued by Camden Property Trust, a Texas real estate investment trust (the
"Company"), in an aggregate principal amount of $75,000,000.
During the one-year period ending May 11, 1998 (the "Initial Spread
Period"), the interest rate on the Notes will be reset quarterly, and will equal
LIBOR plus the applicable Spread. The Spread during the Initial Spread Period is
.32%. After the Initial Spread Period, the character and duration of the
interest rate on the Notes will be agreed to by the Company and the Remarketing
Underwriter on each applicable Duration/Mode Determination Date and the Spread
will be agreed to by the Company and the Remarketing Underwriter on the
corresponding Spread Determination Date. Interest on the Notes during each
Subsequent Spread Period shall be payable, as applicable, either (i) at a
floating interest rate (such Notes being in the "Floating Rate Mode", and such
interest rate being a "Floating Rate") or (ii) at a fixed interest rate (such
Notes being in the "Fixed Rate Mode" and such interest rate being a "Fixed
Rate"), in each case as determined by the Remarketing Underwriter and the
Company in accordance with a Remarketing Agreement between the Remarketing
Underwriter and the Company (the "Remarketing Agreement").
After the Initial Spread Period, the Spread applicable to each Subsequent
Spread Period will be determined on each subsequent Spread Determination Date
which precedes the beginning of the corresponding Subsequent Spread Period,
pursuant to agreement between the Company and the Remarketing Underwriter
(except as otherwise provided below), and the interest rate mode used for each
Subsequent Spread Period may be a Floating Rate Mode or a Fixed Rate Mode, at
the discretion of the Company and the Remarketing Underwriter. If the Company
and the Remarketing Underwriter are unable to agree on the Spread, (1) the
Subsequent Spread Period will be one year, (2) the Notes will be reset to the
Floating Rate Mode, (3) the Spread for such Subsequent Spread Period will be the
Alternate Spread and (4) the Notes will be redeemable at the option of the
Company, in whole or in part, upon at least 10 Business Days' notice given by no
later than the second Business Day after the relevant Spread Determination Date,
at a redemption price equal to 100% of the principal amount thereof, together
with accrued interest to the redemption date. During the Initial Spread Period,
interest on the Notes will be payable quarterly in arrears on August 9, 1997,
November 9, 1997, February 9, 1998 and May 11, 1998 (or, if not a Business Day,
on the next succeeding Business Day except as described herein). After the
Initial Spread Period, (i) if the Notes are in the Floating Rate Mode, interest
on the Notes will be payable, unless otherwise specified on the applicable
Duration/Mode Determination Date, quarterly in arrears on each February 9, May
9, August 9 and November 9 during the applicable Subsequent Spread Period, or
(ii) if the Notes are in the Fixed Rate Mode, interest on the Notes will be
payable, unless otherwise specified on the applicable Duration/Mode
Determination Date, semiannually in arrears on each May 9 and November 9 during
the applicable Subsequent Spread Period. "Interest Payment Dates" as used herein
shall mean any date interest is paid on the Notes. See "Description of Notes."
The Notes are not redeemable prior to May 11, 1998. Thereafter, the Notes
may be redeemable, at the option of the Company, on those Interest Payment Dates
that are specified as redemption dates by the Company on the applicable
Duration/Mode Determination Date, in whole or in part, upon notice thereof given
at any time during the 45 calendar day period ending on the tenth calendar day
prior to the redemption date (provided that notice of any partial redemption
must be given to the Noteholders at least 15 calendar days prior to the
redemption date), at 100% of their principal amount, together with accrued
interest to the redemption date. Unless previously redeemed, the Notes will
mature on May 9, 2002. See "Description of Notes -- Redemption of the Notes."
The Notes will be represented by a single Global Note registered in the name
of The Depository Trust Company ("DTC") or its nominee. Beneficial interest in
the Global Note will be shown on, and transfers thereof will be effected only
through, records maintained by DTC and its participants. Except as described
herein, Notes in definitive form will not be issued.
(continued on next page)
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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. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
The Notes will be sold to the public at varying prices to be determined by
the Underwriter at the time of each sale. The net proceeds to the Company,
before deducting expenses payable by the Company (estimated to be $100,000),
will be 99.70% of the principal amount of the Notes sold and the aggregate net
proceeds will be $74,775,000. For further information with respect to the plan
of distribution and any discounts, commissions or profits on resales of Notes
that may be deemed underwriting discounts or commissions, see "Underwriting."
The Notes are offered by the Underwriter, subject to prior sale, when, as
and if issued by the Company and delivered to and accepted by the Underwriter,
subject to approval of certain legal matters by counsel for the Underwriter and
subject to certain other conditions. The Underwriter reserves 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 Global Note will be made in book-entry form
through the facilities of DTC in New York, New York on or about May 9, 1997.
------------------------
MERRILL LYNCH & CO.
------------------------
The date of this Prospectus Supplement is May 6, 1997.
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(continued from previous page)
If the Company and the Remarketing Underwriter agree on the Spread
with respect to any Subsequent Spread Period, each Note may be tendered to the
Remarketing Underwriter for purchase from the tendering Noteholder at 100% of
its principal amount and for remarketing by the Remarketing Underwriter on the
date immediately following the end of each Subsequent Spread Period (the
"Tender Date"). The Tender Date for the initial Subsequent Spread Period will
be May 11, 1998. Notice of a beneficial owner's election to tender to the
Remarketing Underwriter must be received by the Remarketing Underwriter during
the five calendar day period ending at 5:00 p.m., New York City time, on the
fifth calendar day following the relevant Spread Determination Date. The
obligation of the Remarketing Underwriter to purchase tendered Notes from the
tendering Noteholders will be subject to certain conditions and termination
events customary in the Company's public offerings. If the Remarketing
Underwriter does not purchase all tendered notes on the relevant Tender Date,
(1) all tender notices relating thereto will be null and void, (2) the
Subsequent Spread Period will be one year, (3) the Notes will be reset to the
Floating Rate Mode, (4) the Spread for such Subsequent Spread Period will be
the Alternate Spread and (5) the Notes will be redeemable at the option of the
Company, in whole or in part, upon at least 10 Business Days' notice given by
no later than the second Business Day following the relevant Tender Date, at a
redemption price equal to 100% of the principal amount thereof, together with
accrued interest to the redemption date. No beneficial owner of any Note shall
have any rights or claims against the Company or the Remarketing Underwriter as
a result of the Remarketing Underwriter not purchasing such Notes, except as
provided in clause (4) of the preceding sentence. See "Description of Notes --
Tender at Option of Beneficial Owners."
THE UNDERWRITER MAY ENGAGE IN TRANSACTIONS THAT STABILIZE, MAINTAIN
OR OTHERWISE AFFECT THE PRICE OF THE NOTES OFFERED HEREBY. SUCH TRANSACTIONS
MAY INCLUDE STABILIZING TRANSACTIONS AND THE PURCHASE OF NOTES TO COVER
SYNDICATE SHORT POSITIONS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING" HEREIN.
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be
read in conjunction with, the more detailed information appearing elsewhere in
this Prospectus Supplement and the accompanying Prospectus or incorporated
herein or therein by reference. This Prospectus Supplement and the accompanying
Prospectus, including incorporated documents, contain forward-looking
statements within the meaning of Section 27A of the Securities Act (as defined
below) and Section 21E of the Exchange Act (as defined below). The Company's
actual results could differ materially from those set forth in the
forward-looking statements.
THE COMPANY
Camden Property Trust 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"). As of December 31,
1996, the Company owned and operated 48 multifamily properties (the "Operating
Properties") containing 17,611 units located in Houston, Dallas/Fort Worth,
Austin, Corpus Christi, El Paso, Phoenix and Tucson. The Operating Properties
had a weighted average occupancy rate of 94.0% for the year ended December 31,
1996. The Company also had five multifamily properties under development in
Houston, Dallas and Phoenix (the "Development Properties") which will, when
completed, add 1,778 units to its portfolio, and has one site in Denver which
it intends to develop.
On December 16, 1996, the Company entered into an Agreement and Plan
of Merger with Paragon Group, Inc., a Maryland corporation ("Paragon"), which
was approved by the shareholders of both entities on April 15, 1997 and
effected on April 15, 1997. Pursuant to the Agreement and Plan of Merger,
Paragon merged with and into a wholly-owned subsidiary of the Company and each
share of common stock, par value $.01 per share, of Paragon was converted into
the right to receive 0.64 common shares of the Company (the "Merger").
Paragon was a fully integrated REIT headquartered in Dallas, Texas
whose business was the operation, development and acquisition of multifamily
residential communities in the Southwest, Midwest, North Carolina and Florida.
Paragon was a self-administered and self-managed REIT that, as of December 31,
1996, owned (either directly or through interests in other entities) interests
in 57 multifamily residential communities totalling 15,954 apartment units (the
"Paragon Residential Properties") located in six states, with three additional
multifamily communities, totaling 856 residential units, under construction.
Paragon also had indirect minority ownership interests in three commercial
properties, including a 20% interest in a 401,625 square foot office building.
As of December 31, 1996, Paragon, through Paragon Residential Services, Inc.,
managed 77 multifamily residential communities (including the Paragon
Residential Properties) located across the United States, containing
approximately 21,696 apartment units. Subsequent to December 31, 1996 and
prior to consummation of the Merger, three of Paragon's properties containing
835 units were sold and all three of Paragon's construction properties were
substantially complete and in lease-up, resulting in 15,975 units in its
portfolio at the date of the Merger. Following the Merger, the Company had an
interest in a multifamily property portfolio (the "Properties") which totalled
35,364 units as of April 15, 1997.
Management believes that the Merger provides the Company with several
operational and financial benefits, including, but not limited to: (i)
increased geographic diversification of the Company's multifamily property
portfolio, as well as increased market share in certain Southwestern markets
and entry into new Southeastern and Midwestern growth markets, which add to the
strength and predictability of the Company's cash flow; (ii) the elimination of
certain redundant activities in the combined organization and the resulting
savings in costs and expenses; and (iii) increased size and increased liquidity
for the Company's common shares of beneficial interest ("Common Shares"), and
the related improvement in access to equity and debt capital. Further, due to
the benefits of increased size, scope and diversification, management believes
the Company is in a better position to receive a potential ratings upgrade,
which could result in a lower relative cost of debt.
As a result of the Merger, the Company now owns 45.2% of its assets
through Camden Operating, L.P. (the "Operating Partnership"), which the Company
controls through its subsidiaries CPT-GP, Inc., the sole general partner of and
the holder of a 1.0% general partner interest in the Operating Partnership, and
CPT-LP, Inc., the holder of 79.1% of the units of limited partnership in the
Operating Partnership. Generally, all management powers over the business and
affairs of the Operating Partnership are exclusively vested in CPT-GP, Inc.,
and consequently, the exercise of such powers is controlled by the Company.
The Company is vertically integrated, with operations that encompass
multifamily property acquisition, development, construction services,
management, marketing, finance, leasing, brokerage and asset management.
Camden's principal executive offices are located at 3200 Southwest Freeway,
Suite 1500, Houston, Texas 77027, and its telephone number is (713) 964-3555.
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THE OFFERING
All capitalized terms used herein and not defined herein have the
meanings provided in "Description of Notes." For a more complete description of
the terms of the Notes specified in the following summary, see "Description of
Notes" herein and "Description of Debt Securities" in the accompanying
Prospectus.
SECURITIES OFFERED . . . . . . $75,000,000 aggregate principal amount of
Remarketed Reset Notes due May 9, 2002.
MATURITY . . . . . . . . . . . The Notes will mature on May 9, 2002,
unless previously redeemed.
INTEREST PAYMENT DATES . . . . During the Initial Spread Period, interest
on the Notes will be payable quarterly on
August 9, 1997, November 9, 1997, February
9, 1998 and May 11, 1998. During the
Initial Spread Period, the interest rate
on the Notes will be reset quarterly.
After the Initial Spread Period, interest
on the Notes will be payable in arrears
(i) on each February 9, May 9, August 9
and November 9 during the Subsequent
Spread Period in the case of Notes in the
Floating Rate Mode or (ii) on each May 9
and November 9 during the Subsequent
Spread Period in the case of Notes in the
Fixed Rate Mode, in either case unless
otherwise specified by the Company and the
Remarketing Underwriter on the applicable
Duration/Mode Determination Date in
connection with the establishment of each
Subsequent Spread Period. See
"Description of Notes."
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."
REDEMPTION . . . . . . . . . . The Notes may not be redeemed by the
Company prior to May 11, 1998. On that
date and on any redemption date agreed to
by the Company and the Remarketing
Underwriter, as selected on each
Duration/Mode Determination Date, the
Notes may be redeemed at the option of the
Company, as described herein. The Notes
also may be redeemed at the option of the
Company under certain circumstances, as
described herein. See "Description of
Notes -- Tender at Option of Beneficial
Owners" and "-- Redemption of the Notes."
USE OF PROCEEDS . . . . . . . . The net proceeds to the Company of
approximately $74.7 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"). 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 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
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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."
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THE COMPANY
GENERAL
Camden Property Trust is a self-administered and self-managed REIT
formed pursuant to 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, 1996, the Company owned and operated 48 Operating Properties
containing 17,611 units located in Houston, Dallas/Fort Worth, Austin, Corpus
Christi, El Paso, Phoenix and Tucson. The Operating Properties had a weighted
average occupancy rate of 94.0% for the year ended December 31, 1996. The
Company also had five Development Properties in Houston, Dallas and Phoenix
which will, when completed, add 1,778 units to its portfolio, and has one site
in Denver which it intends to develop. 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 (the "Formation Transactions"), the Company succeeded to the
Multifamily Operations of Centeq and owned and operated 20 properties located
in the Houston, Dallas and Austin metropolitan areas containing 7,054 units and
owned contracts to purchase two 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.
On December 16, 1996, the Company entered into an Agreement and Plan
of Merger with Paragon, which was approved by the shareholders of both entities
on April 15, 1997 and effected on April 15, 1997. Pursuant to the Agreement
and Plan of Merger, Paragon merged with and into a wholly-owned subsidiary of
the Company and each share of common stock, par value $.01 per share, of
Paragon was converted into the right to receive 0.64 Common Shares.
Paragon was a fully integrated REIT headquartered in Dallas, Texas
whose business was the operation, development and acquisition of multifamily
residential communities in the Southwest, Midwest, North Carolina and Florida.
Paragon was a self-administered and self-managed REIT that, as of December 31,
1996, owned (either directly or through interests in other entities) interests
in 57 Paragon Residential Properties totalling 15,954 apartment units located
in six states, with three additional multifamily communities, totaling 856
residential units, under construction. Paragon also had indirect minority
ownership interests in three commercial properties, including a 20% interest in
a 401,625 square foot office building. As of December 31, 1996, Paragon,
through Paragon Residential Services, Inc., managed 77 multifamily residential
communities (including the Paragon Residential Properties) located across the
United States, containing approximately 21,696 apartment units. Subsequent to
December 31, 1996 and prior to consummation of the Merger, three of Paragon's
properties containing 835 units were sold and all three of Paragon's
construction properties were substantially complete and in lease-up, resulting
in 15,975 units in its portfolio at the date of the Merger. Following the
Merger, the Company had an interest in a multifamily property portfolio which
totalled 35,364 units as of April 15, 1997.
Management believes that the Merger provides the Company with several
operational and financial benefits, including, but not limited to: (i)
increased geographic diversification of the Company's multifamily property
portfolio, as well as increased market share in certain Southwestern markets
and entry into new Southeastern and Midwestern growth markets, which add to the
strength and predictability of the Company's cash flow; (ii) the elimination of
certain redundant activities in the combined organization and the resulting
savings in costs and expenses; and (iii) increased size and increased liquidity
for the Company's Common Shares, and the related improvement in access to
equity and debt capital. Further, due to the benefits of increased size, scope
and diversification, management believes the Company is in a better position to
receive a potential ratings upgrade, which could result in a lower relative
cost of debt.
Paragon had conducted substantially all of its business through an
operating partnership structure. As a result of the Merger, the Company now
owns 45.2% of its assets through the Operating Partnership, which the Company
controls through its subsidiaries CPT-GP, Inc., the sole general partner of and
the holder of a 1.0% general partner interest in the Operating
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Partnership (the "General Partner"), and CPT-LP, Inc., the holder of 79.1% of
the units of limited partnership in the Operating Partnership. The other
limited partners of the Operating Partnership include entities controlled by
former Paragon executive officers and other prior owners of interests in
properties or assets owned by Paragon. The units of limited partnership are
redeemable for cash or, at the election of the Company, Common Shares of the
Company on the basis of one unit for one share. See "-- Property Ownership
Structure."
The Company is vertically integrated, with operations that encompass
multifamily property acquisition, development, construction services,
management, marketing, finance, leasing, brokerage and asset management. The
Common Shares of the Company are listed on the New York Stock Exchange under
the symbol "CPT." The Company's principal executive offices are located at
3200 Southwest Freeway, Suite 1500, Houston, Texas 77027 and its telephone
number is (713) 946-3555.
THE PROPERTIES
The Properties typically consist of two and three story buildings in a
landscaped setting. After giving effect to the Merger, the Properties' units
average 792 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.
No single Property accounts for greater than 5% of the Company's total
revenues. The Properties had a weighted average occupancy rate of 93.3% for
the quarter ended December 31, 1996, excluding properties under development
during that period. Resident leases are generally for six-month to
thirteen-month terms and require security deposits. Ninety-four of the
Operating Properties have in excess of 200 units, with the largest having 804
units. The Company currently has three properties under construction.
Twenty-six of the Properties were placed in service in the ten years since
1988, sixty-seven were placed in service between 1978 and 1987 and fourteen
were placed in service before 1978.
The Company's real estate portfolio at December 31, 1996 and April 15,
1997, after giving effect to the Merger, is summarized as follows:
<TABLE>
<CAPTION>
December 31, 1996 April 15, 1997
--------------------------- -----------------------------
Units Projects %* Units Projects** %*
------ -------- ----- ------ ---------- -----
PROPERTIES
<S> <C> <C> <C> <C> <C> <C>
Texas
Houston 7,745 20 40% 7,745 20 22%
Dallas 6,777 18 35 9,381 26 27
Austin 1,745 6 9 1,745 6 5
Other 1,585 5 8 1,585 5 4
------ ------- ----- ------ ------- -----
Total Texas Properties 17,852 49 92 20,456 57 58
Arizona 1,537 4 8 1,537 4 4
Florida -- -- -- 6,007 21 17
Kentucky -- -- -- 1,142 5 3
Missouri -- -- -- 3,487 13 10
North Carolina -- -- -- 2,735 10 8
------ ------- ----- ------ ------- -----
Total Properties 19,389 53 100% 35,364 110 100%
</TABLE>
- ----------------
* Based on units.
** The totals for projects under development include 3
multifamily properties comprising 1,110 units, which were
under construction as of April 15, 1997.
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PROPERTY OWNERSHIP STRUCTURE
The Company owns 54.8% of its assets directly or through wholly-owned
corporate subsidiaries, and as a result of the Merger, 45.2% of its assets
through the Operating Partnership. Generally, all management powers over the
business and affairs of the Operating Partnership are exclusively vested in the
General Partner, and consequently, the exercise of such powers is controlled by
the Company without the consent of the limited partners, subject to certain
limitations discussed below. Limited partners are not entitled to rights as
shareholders of the Company prior to redemption of their limited partnership
units.
Specific powers granted to the General Partner include, without
limitation, the full authority to make expenditures, lend or borrow funds on
behalf of the Operating Partnership, provide guaranties for indebtedness,
collect Operating Partnership funds, and acquire or dispose of or otherwise
encumber or unencumber the assets of the Operating Partnership without the
consent of the limited partners, subject only to certain narrow limitations
with regard to the sale of all or substantially all of the assets of the
Operating Partnership in a transaction not involving the liquidation of the
Operating Partnership. If all or substantially all of the assets are to be
disposed of in a transaction not involving a liquidation, the consent of a
majority-in-interest of non-affiliated partners will be required. The General
Partner may also engage in certain transactions with the Company or affiliates
of the Company on behalf of the Operating Partnership, such as the sale or
purchase of property or the borrowing or lending of funds, as long as such
transactions are fair and reasonable to the Operating Partnership.
The General Partner is required to distribute "available cash," if
any, as determined by the General Partner in its reasonable discretion in
accordance with the partnership agreement. Otherwise, the General Partner has
no obligation to distribute cash to the limited partners, other than its
general obligation to act in good faith in attempting to equalize distributions
from the Operating Partnership with distributions made to the Company's
shareholders. Under the partnership agreement, the General Partner has no
obligation to consider the tax consequences of its actions to the limited
partners.
No member of the Company's management team owns an interest in the
Operating Partnership, and only two of the seven trust managers of the Company
own a limited partner interest (such members being former Paragon directors).
Accordingly, Company management believes that conflicts of interest are
minimal.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Notes are
estimated to be approximately $74.7 million. The Company intends to use the
net proceeds to reduce indebtedness under the Unsecured Credit Facility. The
Unsecured Credit Facility matures in July, 2000, and currently bears interest
at LIBOR plus 1.05%. In connection with the Merger, the Company has drawn
$95.0 million under the Unsecured Credit Facility for the repayment of certain
outstanding indebtedness of Paragon, including Paragon's $44.2 million secured
line of credit, $48.7 million outstanding under other secured obligations, and
$2.1 million of related prepayment penalties. Additionally, in April, the
Company retired $16.8 million of maturing secured debt using the Unsecured
Credit Facility. The Company will, in the ordinary course of business, borrow
under the Unsecured Credit Facility, issue unsecured medium term notes and use
other sources of capital to fund acquisition and development costs and satisfy
general working capital requirements, including the retirement of outstanding
secured indebtedness, but does not intend to use secured debt for new
borrowings in the future.
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CAPITALIZATION
CAPITAL STRUCTURE
The following table sets forth the capitalization of the Company at
December 31, 1996 on a historical basis and as adjusted to reflect: (i) the
issuance of 9.5 million common shares and 2.4 million operating partnership
units at a price of $27.75 per share; (ii) the assumption of $289.8 million of
secured debt (both in connection with the Paragon Merger); and (iii) the
conversion of $14.8 million principal amount of the Company's 7.33% Convertible
Subordinated Debentures, all subsequent to year end. These amounts are further
adjusted to reflect 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."
<TABLE>
<CAPTION>
December 31, 1996
------------------------------------------------------
Camden
Property As Further
Trust Adjustments As Adjusted Adjusted
---------- ------------- -------------- -----------
(In thousands)
<S> <C> <C> <C> <C>
Notes Payable:
Unsecured credit facility . . . . . . . . . . . . . . $ 12,000 $ 44,200 $ 56,200 $ 47,093
Mortgages and other notes . . . . . . . . . . . . . . 58,382 245,571 303,953 238,385
Senior unsecured notes . . . . . . . . . . . . . . . . 173,800 173,800 248,800
---------- ------------- -------------- -----------
Total notes payable . . . . . . . . . . . . . . 244,182 289,771 533,953 534,278
7.33% Convertible Subordinated Debentures . . . . . . . . 27,702 (14,828) 12,874 12,874
Minority Interests -- 65,268 65,268 65,268
Shareholders' Equity:
Preferred Shares, $0.01 par value; 10,000 authorized; -- -- -- --
no Preferred Shares issued and outstanding . . . . . .
Common Shares, $0.01 par value; 100,000 165 101 266 266
authorized; 16,521 issued and outstanding . . . . . .
Additional paid-in capital . . . . . . . . . . . . . . . 348,339 276,973 625,312 625,312
Distributions in excess of net income . . . . . . . . . . (49,515) -- (49,515) (49,515)
Unearned restricted share awards . . . . . . . . . . . . (3,561) -- (3,561) (3,561)
---------- ------------- -------------- -----------
Total shareholders' equity . . . . . . . . . . . 295,428 277,074 572,502 572,502
---------- ------------- -------------- -----------
Total capitalization . . . . . $ 567,312 $ 617,285 $ 1,184,597 $ 1,184,922
========== ============= ============== ===========
</TABLE>
S-9
<PAGE> 10
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 and a Supplemental
Indenture, each 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, and
the statements made hereunder relating to the Remarketing Agreement and the
Remarketing Underwriting Agreement (the forms of which will be filed, pursuant
to a Current Report on Form 8-K, as an exhibit to the Registration Statement of
which the Prospectus forms a part), 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, such Notes,
the Remarketing Agreement and the Remarketing Underwriting Agreement. 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, and will mature, unless previously redeemed, on May 9, 2002. The
Notes will be senior unsecured obligations of the Company and will rank
equally with each other and 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 December 31, 1996, on a pro forma basis after giving effect to
the issuance of the Notes offered hereby, the application of the proceeds
therefrom, the conversion of certain of the Company's 7.33% Convertible
Subordinated Debentures and the Merger on April 15, 1997, the total outstanding
indebtedness of the Company was approximately $547.2 million, of which
approximately 56.4% was unsecured. The Company may incur additional
indebtedness, including secured indebtedness, subject to the provisions
described below under "Certain Covenants--Limitations on Incurrence of Debt."
Except as described under "-- Merger, Consolidation or Sale" and "--
Certain Covenants" below and under "Description of Debt Securities -- Merger,
Consolidation or Sale" and "-- Certain Covenants" in the accompanying
Prospectus, 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 the Notes protection in the event of (i) a highly leveraged or
similar transaction involving the Company or any Affiliate of the Company, (ii)
a change of control, or (iii) a reorganization, restructuring, merger or
similar transaction involving the Company that may adversely affect the holders
of the Notes. In addition, subject to the limitations set forth under "--
Merger, Consolidation or Sale" and "-- Certain Covenants" below or under
"Description of Debt Securities -- Merger, Consolidation or Sale" and "--
Certain Covenants" in the accompanying Prospectus, the Company may, in the
future, enter into certain transactions such as the sale of all or
substantially all of its assets or the merger or consolidation of the Company
that would increase the amount of the Company's indebtedness or substantially
reduce or eliminate the Company's assets, which may have an adverse effect on
the Company's ability to service its indebtedness, including the Notes. The
Company and its management have no present intention of engaging in a highly
leveraged or similar transaction involving the Company.
FLOATING RATE MODE
During the Initial Spread Period, interest on the Notes will be
payable quarterly in arrears, on August 9, 1997, November 9, 1997, February 9,
1998 and May 11, 1998 (or, if not a Business Day (as defined below), on the
next succeeding Business Day (except as described below)), to the persons in
whose names the Notes are registered at the close of business on the applicable
record date (i.e., the 15th calendar day, whether or not a Business Day, next
preceding the applicable Interest Payment Date) next preceding such Interest
Payment Date. During the Initial Spread Period and any Subsequent Spread
Period, the interest rate on the Notes will be reset quarterly and the Notes
will bear interest at a per annum rate (computed on the basis of the actual
number of days elapsed over a 360-day year) equal to LIBOR (as defined below)
for the applicable Quarterly Period (as defined below), plus the applicable
Spread (as defined below). Interest on the Notes will accrue from and
including each Interest Payment Date
S-10
<PAGE> 11
(or in the case of the Initial Quarterly Period, May 9, 1997) to but excluding
the next succeeding Interest Payment Date or maturity date, as the case may be.
The Initial Quarterly Period will be the period from and including May 9, 1997
to but excluding the first Interest Payment Date (August 9, 1997) (the "Initial
Quarterly Period"). Thereafter, each Quarterly Period during the Initial
Spread Period or any Subsequent Spread Period (as defined below) (each, a
"Quarterly Period") will be from and including the most recent Interest Payment
Date to which interest has been paid to but excluding the next Interest Payment
Date; the first day of a Quarterly Period is referred to herein as an "Interest
Reset Date."
The Spread applicable during the Initial Spread Period will be .32%
(the "Initial Spread"), and the interest rate mode used for the Initial Spread
Period will be the Floating Rate Mode. Thus, the interest rate per annum
during the Initial Quarterly Period will be equal to LIBOR, determined as of
May 7, 1997, plus .32%. The interest rate per annum for each succeeding
Quarterly Period during the Initial Spread Period will equal LIBOR for such
Quarterly Period plus the Initial Spread. Thereafter, the Spread will be
determined in the manner described below for each subsequent Spread period (a
"Subsequent Spread Period"), which will be one or more periods of at least six
months and not more than four years (or any six month interval therein),
designated by the Company, commencing on a May 9 or November 9 (or as otherwise
specified by the Company and the Remarketing Underwriter on the applicable
Duration/Mode Determination Date in connection with the establishment of each
Subsequent Spread Period), as applicable (the "Commencement Date"), through and
including May 9, 2002 (no Subsequent Spread Period may end after May 9, 2002).
The first Commencement Date will be May 11, 1998.
If any Interest Payment Date (other than at maturity), redemption
date, Interest Reset Date, Duration/Mode Determination Date (as defined below),
Spread Determination Date (as defined below), Commencement Date or Tender Date
(as defined below) would otherwise be a day that is not a Business Day, such
Interest Payment Date, redemption date, Interest Reset Date, Duration/Mode
Determination Date, Spread Determination Date, Commencement Date or Tender Date
will be postponed to the next succeeding day that is a Business Day, except
that if such Business Day is in the next succeeding calendar month, such
Interest Payment Date, redemption date, Interest Reset Date, Commencement Date
or Tender Date shall be the next preceding Business Day.
LIBOR applicable for a Quarterly Period will be determined by the Rate
Agent (as defined under "Tender at Option of Beneficial Owners" below) as of
the second London Business Day (as defined below) preceding each Interest Reset
Date (the "LIBOR Determination Date") in accordance with the following
provisions:
(i) LIBOR will be determined on the basis of the offered rates for
three-month deposits in U.S. Dollars of not less than U.S. $1,000,000,
commencing on the second London Business Day immediately following such LIBOR
Determination Date, which appears on Telerate Page 3750 (as defined below) as
of approximately 11:00 a.m., London time, on such LIBOR Determination Date.
"Telerate Page 3750" means the display designated on page "3750" on the
Telerate Service (or such other page as may replace the 3750 page on that
service or such other service or services as may be nominated by the British
Bankers' Association for the purpose of displaying London interbank offered
rates for U.S. Dollar deposits). If no rate appears on Telerate Page 3750,
LIBOR for such LIBOR Determination Date will be determined in accordance with
the provisions of paragraph (ii) below.
(ii) With respect to a LIBOR Determination Date on which no rate
appears on Telerate Page 3750 as of approximately 11:00 a.m., London time, on
such LIBOR Determination Date, the Rate Agent shall request the principal
London offices of each of four major reference banks in the London interbank
market selected by the Rate Agent to provide the Rate Agent with a quotation of
the rate at which three-month deposits in U.S. Dollars, commencing on the
second London Business Day immediately following such LIBOR Determination Date,
are offered by it to prime banks in the London interbank market as of
approximately 11:00 a.m., London time, on such LIBOR Determination Date and in
a principal amount equal to an amount of not less than U.S. $1,000,000 that is
representative for a single transaction in such market at such time. If at
least two such quotations are provided, LIBOR for such LIBOR Determination Date
will be the arithmetic mean of such quotations as calculated by the Rate Agent.
If fewer than two quotations are provided, LIBOR for such LIBOR Determination
Date will be the arithmetic mean of the rates quoted as of approximately 11:00
a.m., New York City time, on such LIBOR Determination Date by three major banks
in The City of New York selected by the Rate Agent (after consultation with the
Company) for loans in U.S. Dollars to leading European banks, having a
three-month maturity commencing on the second London Business Day immediately
following such LIBOR Determination Date and in a principal amount equal to an
amount of not less than U.S. $1,000,000 that is representative for a single
transaction in such market at such time; provided, however, that if the banks
selected as aforesaid by the Rate Agent are not quoting as mentioned in this
sentence, LIBOR for such LIBOR Determination Date will be LIBOR determined with
respect to the immediately preceding LIBOR Determination Date, or in the case
of the first LIBOR Determination Date, LIBOR for the Initial Quarterly Period.
S-11
<PAGE> 12
FIXED RATE MODE
If the Notes are to be reset to the Fixed Rate Mode, as agreed to by
the Company and the Remarketing Underwriter on a Duration/Mode Determination
Date, then the applicable Fixed Rate for the corresponding Subsequent Spread
Period will be determined as of the sixth calendar day following the Spread
Determination Date (provided that such date is a Business Day; otherwise, as of
the next Business Day thereafter) (the "Fixed Rate Determination Date")
(provided, however, that in the case where the Notice Date also falls on the
Fixed Rate Determination Date, the Fixed Rate Determination Date will be the
following Business Day thereafter), in accordance with the following
provisions: the Fixed Rate will be a per annum rate and will be determined as
of 12:00 noon on such Fixed Rate Determination Date by adding the applicable
Spread (as agreed to by the Company and the Remarketing Underwriter on the
preceding Spread Determination Date) to the yield to maturity (expressed as a
bond equivalent, on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) of the applicable United States Treasury security,
selected by the Rate Agent after consultation with the Remarketing Underwriter,
as having a maturity comparable to the duration selected for the following
Subsequent Spread Period, which would be used in accordance with customary
financial practice in pricing new issues of corporate debt securities of
comparable maturity to the duration selected for the following Subsequent
Spread Period.
Interest in the Fixed Rate Mode will be computed on the basis of a
360-day year of twelve 30-day months. Such interest will be payable
semiannually in arrears on the Interest Payment Dates (May 9 and November 9,
unless otherwise specified by the Company and the Remarketing Underwriter on
the applicable Duration/Mode Determination Date) at the applicable Fixed Rate,
as determined by the Company and the Remarketing Underwriter on the Fixed Rate
Determination Date, beginning on the Commencement Date and for the duration of
the relevant Subsequent Spread Period. Interest on the Notes will accrue from
and including each Interest Payment Date to but excluding the next succeeding
Interest Payment Date or maturity date, as the case may be. See "Additional
Terms of the Notes" for other provisions applicable to Notes in the Fixed Rate
Mode.
If any Duration/Mode Determination Date (as defined below), Spread
Determination Date (as defined below), Commencement Date or Tender Date (as
defined below) would otherwise be a day that is not a Business Day, such
Duration/Mode Determination Date, Spread Determination Date, Commencement Date
or Tender Date will be postponed to the next succeeding day that is a Business
Day.
If any Interest Payment Date or any redemption date falls on a day
that is not a Business Day (in either case, other than any Interest Payment
Date or redemption date that falls on a Commencement Date, in which case such
date will be postponed to the next day that is a Business Day), the related
payment of principal and interest will be made on the next succeeding Business
Day as if it were made on the date such payment was due, and no interest will
accrue on the amounts so payable for the period from and after such dates.
ADDITIONAL TERMS OF THE NOTES
The Spread that will be applicable during each Subsequent Spread
Period will be the percentage (1) recommended by the Remarketing Underwriter
(as defined under "Tender at Option of Beneficial Owners" below) so as to
result in a rate that, in the opinion of the Remarketing Underwriter, will
enable tendered Notes to be remarketed by the Remarketing Underwriter at 100%
of the principal amount thereof, as described under "Tender at Option of
Beneficial Owners" below, and (2) agreed to by the Company. The interest rate
mode during each Subsequent Spread Period shall be either the Floating Rate
Mode or the Fixed Rate Mode, as determined by the Company and the Remarketing
Underwriter.
If the maturity date for the Notes falls on a day that is not a
Business Day, the related payment of principal and interest will be made on the
next succeeding Business Day as if it were made on the date such payment was
due, and no interest will accrue on the amounts so payable for the period from
and after such dates.
Unless notice of redemption of the Notes as a whole has been given,
the duration, redemption dates, Commencement Date, Interest Payment Dates and
interest rate mode (i.e., Fixed Rate Mode or Floating Rate Mode) (and any other
relevant terms) for each Subsequent Spread Period will be established by 3:00
p.m., New York City time, on the 15th calendar day prior to the Commencement
Date of each Subsequent Spread Period (the "Duration/Mode Determination Date").
In addition, the Spread for each Subsequent Spread Period will be established
by 3:00 p.m., New York City time, on the 10th calendar day prior to the
Commencement Date of such Subsequent Spread Period (the "Spread Determination
Date"). The Company will request, not later than seven nor more than 15
calendar days prior to any Spread Determination Date, that DTC notify its
Participants of such Spread Determination Date and of the procedures that must
be followed if any beneficial owner of a Note wishes to tender such
S-12
<PAGE> 13
Note as described under "Tender at Option of Beneficial Owners" below. The
term "Business Day" means any day other than a Saturday or Sunday or a day on
which banking institutions in The City of New York are required or authorized
to close and, in the case of Notes in the Floating Rate Mode, that is also a
London Business Day. The term "London Business Day" means any day on which
dealings in deposits in U.S. Dollars are transacted in the London interbank
market.
In the event that the Company and the Remarketing Underwriter do not
agree on the Spread for any Subsequent Spread Period, then (1) the Subsequent
Spread Period will be one year, (2) the Notes will be reset to the Floating Rate
Mode, (3) the Spread for such Subsequent Spread Period will be the Alternate
Spread and (4) the Notes will be redeemable at the option of the Company in
whole or in part, upon at least 10 Business Days' notice given by no later than
the second Business Day after the Spread Determination Date in the manner
described under "Redemption of Notes" below, at a redemption price equal to
100% of the principal amount thereof, together with accrued interest to the
redemption date. The Alternate Spread will be the percentage equal to LIBOR
(determined as described above) for the Quarterly Period beginning on the
Commencement Date for such Subsequent Spread Period.
Unless notice of redemption of the Notes as a whole has been given,
the Company will cause a notice to be published on the New York Business Day
(as defined below) following the Spread Determination Date for each Subsequent
Spread Period in the manner described below, specifying (1) the duration of
such Subsequent Spread Period, (2) the mode (i.e., Fixed Rate Mode or Floating
Rate Mode), (3) the Commencement Date, (4) any redemption dates, (5) the Spread
for such Subsequent Spread Period, (6) the identity of the Remarketing
Underwriter, if applicable, and (7) any other relevant provisions. Such notice
will be given by publication in a daily newspaper in the English language of
general circulation in The City of New York, which is expected to be The Wall
Street Journal. The term "New York Business Day" means any day other than a
Saturday or Sunday or a day on which banking institutions in The City of New
York are required or authorized to close.
All percentages resulting from any calculation of any interest rate
for the Notes will be rounded, if necessary, to the nearest one hundred
thousandth of a percentage point, with five one millionths of a percentage
point rounded upward and all dollar amounts will be rounded to the nearest
cent, with one-half cent being rounded upward.
TENDER AT OPTION OF BENEFICIAL OWNERS
In the event the Company and the Remarketing Underwriter agree on the
Spread on the Spread Determination Date with respect to any Subsequent Spread
Period, the Company and the Remarketing Underwriter will enter into a
Remarketing Underwriting Agreement (the "Remarketing Underwriting Agreement")
on such Spread Determination Date, under which the Remarketing Underwriter will
agree, subject to the terms and conditions set forth therein, to purchase from
tendering Noteholders on the date immediately following the end of a Subsequent
Spread Period (the "Tender Date") all Notes with respect to which the
Remarketing Underwriter receives a Tender Notice as described below at 100% of
the principal amount thereof (the "Purchase Price"). In such event (except as
otherwise provided in the next succeeding paragraph), each beneficial owner of
a Note may, at such owner's option, upon giving notice as provided below (the
"Tender Notice"), tender such Note for purchase by the Remarketing Underwriter
on the Tender Date at the Purchase Price. The Purchase Price will be paid by
the Remarketing Underwriter in accordance with the standard procedures of DTC,
which currently provide for payments in same-day funds. Interest accrued on
the Notes with respect to the preceding interest period will be paid in the
manner described under "Book-Entry System" below and "Additional Terms of the
Notes" above. If such beneficial owner has an account at the Remarketing
Underwriter and tenders such Note through such account, such beneficial owner
will not be required to pay any fee or commission to the Remarketing
Underwriter. If such Note is tendered through a broker, dealer, commercial
bank, trust company or other institution, other than the Remarketing
Underwriter, such holder may be required to pay fees or commissions to such
other institution. It is currently anticipated that Notes so purchased by the
Remarketing Underwriter will be remarketed by it.
The Tender Notice must be received by the Remarketing Underwriter
during the period commencing on the calendar day following the Spread
Determination Date (or, if not a Business Day, on the next succeeding Business
Day) and ending at 5:00 p.m., New York City time, on the fifth calendar day
following the Spread Determination Date (or, if not a Business Day, on the next
succeeding Business Day) (the "Notice Date"). In order to ensure that a Tender
Notice is received on a particular day, the beneficial owner of Notes must
direct his broker or other designated Participant or Indirect Participant to
give such Tender Notice before the broker's cut-off time for accepting
instructions for that day. Different firms may have different cut-off times
for accepting instructions from their customers. Accordingly, beneficial
owners should consult the brokers or other Participants or Indirect
Participants through which they own their interests in the Notes for the
cut-off times for such brokers, other Participants or Indirect Participants.
See "Book- Entry System" below. Except as otherwise provided below, a Tender
Notice shall be irrevocable. If a Tender is not received for any reason by the
Remarketing Underwriter with respect to any Note
S-13
<PAGE> 14
by 5:00 p.m., New York City time, on the Notice Date, the beneficial owner of
such Note shall be deemed to have elected not to tender such Note for purchase
by the Remarketing Underwriter.
The obligation of the Remarketing Underwriter to purchase Notes from
tendering Noteholders will be subject to several conditions precedent set forth
in the Remarketing Underwriting Agreement that are customary in the Company's
public offerings, including a condition that no material adverse change in the
condition of the Company and its subsidiaries, taken as a whole, shall have
occurred since the Spread Determination Date. In addition, the Remarketing
Underwriting Agreement will provide for the termination thereof by the
Remarketing Underwriter upon the occurrence of certain events that are also
customary in the Company's public securities offerings. In the event that,
with respect to any Subsequent Spread Period, the Remarketing Underwriter does
not purchase on the relevant Tender Date all of the Notes for which a Tender
Notice shall have been given, (1) all such Tender Notices will be null and
void, (2) none of the Notes for which such Tender Notices shall have been given
will be purchased by the Remarketing Underwriter on such Tender Date, (3) the
Subsequent Spread Period will be one year, which Subsequent Spread Period shall
be deemed to have commenced upon the applicable Commencement Date, (4) the
Notes will be reset to the Floating Rate Mode, (5) the Spread for such
Subsequent Spread Period will be the Alternate Spread and (6) the Notes will be
redeemable at the option of the Company, in whole or in part, upon at least 10
Business Days' notice given by no later than the second Business Day following
the relevant Tender Date in the manner described under "Redemption of the
Notes" below, at a redemption price equal to 100% of the principal amount
thereof, together with accrued interest to the redemption date.
No beneficial owner of any Note shall have any rights or claims under
the Remarketing Underwriting Agreement or against the Company or the
Remarketing Underwriter as a result of the Remarketing Underwriter not
purchasing such Notes, except as provided in clause (5) of the last sentence of
the preceding paragraph. The Company will have no obligation under any
circumstance to repurchase any Notes, except in the case of Notes called for
redemption as described below.
If the Remarketing Underwriter does not purchase all Notes tendered
for purchase on any Tender Date, it will promptly notify the Company and the
Trustee. As soon as practicable after receipt of such notice, the Company will
cause a notice to be published specifying (1) the one-year duration of the
Subsequent Spread Period, (2) that the Notes will be reset to the Floating Rate
Mode, (3) the Spread for such Subsequent Spread Period (which shall be the
Alternate Spread) and (4) LIBOR for the initial Quarterly Period of such
Subsequent Spread Period. Such notice will be published on a New York Business
Day in a daily newspaper in the English language of general circulation in The
City of New York, which is expected to be The Wall Street Journal.
The term "Remarketing Underwriter" means the nationally recognized
broker-dealer selected by the Company to act as remarketing underwriter. The
term "Rate Agent" means the nationally recognized broker-dealer selected by the
Company as its agent to determine (i) LIBOR and the interest rate on the Notes
for any Quarterly Period and/or (ii) the yield to maturity on the applicable
United States Treasury security that is used in connection with the
determination of the applicable Fixed Rate, and the ensuing applicable Fixed
Rate. Pursuant to the Remarketing Agreement, Merrill Lynch, Pierce, Fenner &
Smith Incorporated has agreed to act as Remarketing Underwriter and as Rate
Agent. The Company, in its sole discretion, may change the Remarketing
Underwriter and the Rate Agent for any Subsequent Spread Period at any time on
or prior to 3:00 p.m., New York City time, on the Duration/Mode Determination
Date relating thereto.
Each of the Rate Agent and the Remarketing Underwriter, in its
individual or any other capacity, may buy, sell, hold and deal in any of the
Notes. Either of such parties may exercise any vote or join in any action
which any beneficial owner of Notes may be entitled to exercise or take with
like effect as if it did not act in any capacity under the Remarketing
Agreement. Either of such parties, in its individual capacity, either as
principal or agent, may also engage in or have an interest in any financial or
other transaction with the Company as freely as if it did not act in any
capacity under the Remarketing Agreement.
REDEMPTION OF THE NOTES
The Notes may not be redeemed prior to May 11, 1998. On that date,
and on those Interest Payment Dates specified as redemption dates by the
Company on the Duration/Mode Determination Date in connection with any
Subsequent Spread Period, the Notes may be redeemed, at the option of the
Company, in whole or in part, upon notice thereof given at any time during the
45 calendar day period ending on the tenth calendar day prior to the redemption
date (provided that notice of any partial redemption must be given at least 15
calendar days prior to the redemption date), at a redemption price equal to
100% of the principal amount thereof, together with accrued interest to such
redemption date. In the event that less than all of the outstanding Notes are
to be redeemed, the Notes to be redeemed shall be selected by such method as
the Company shall deem fair and appropriate. So long as the Global Note is
held by DTC, the Company will give notice to DTC, whose nominee is the
S-14
<PAGE> 15
record holder of all of the Notes, and DTC will determine the principal amount
to be redeemed from the account of each Participant. A Participant may
determine to redeem from some beneficial owners (which may include a
Participant holding Notes for its own account) without redeeming from the
accounts of other beneficial owners. The Notes are also subject to redemption
as provided under "Tender at Option of Beneficial Owners" above.
Notice of redemption of the Notes will be given by publication in a
daily newspaper in the English language of general circulation in The City of
New York, which is expected to be The Wall Street Journal.
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 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).
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"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 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.
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"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.
MERGER, CONSOLIDATION, 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).
"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.
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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 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 Note") 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 Note 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, the American Stock Exchange and the National Association of
Securities Dealers, Inc. Access to 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 Note
will be shown on, and the transfer of that ownership will be effected only
through, records
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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 Note.
So long as DTC or its nominee is the registered owner of such Global
Note, DTC or such nominee, as the case may be, will be considered the sole
owner or holder of the Notes represented by such Global Note for all purposes
under the Indenture. Except as described below, owners of beneficial interest
in Notes evidenced by a Global Note will not be entitled to have any of the
individual Notes represented by such Global Note registered in their names,
will not receive 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 Note
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 Note 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 Note 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 Note registered in the name of the holder of the Global Note or its
nominee will be made by the Trustee to or at the direction of the holder of the
Global Note or its nominee, as the case may be, as the registered owner of the
Global Note 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
Note, 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 Note. If less than all of
the Notes of any series are to be redeemed, the Company expects the holder of
the Global Note 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 Note
for such Notes.
Neither the Company nor the Trustee will be liable for any delay by
the holder of a Global Note 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 Note 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 Note
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 Notes
and in such event will issue individual Notes in exchange for the Global Note
or Notes 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 Underwriter (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
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in certificated form, and secondary market trading activity in the Notes will
therefore be required by DTC to settle in immediately available funds.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following summary of certain United States Federal income tax
consequences of the purchase, ownership and disposition of the Notes is based
upon laws, regulations, rulings and decisions now in effect, all of which are
subject to change (including changes in effective dates) or possible differing
interpretations. The following discussion deals only with Notes held as
capital assets and does not purport to deal with persons in special tax
situations, such as financial institutions, banks, insurance companies,
regulated investment companies, dealers in securities or currencies, persons
holding Notes as a hedge against currency risks or as a position in a
"straddle" for tax purposes, or persons whose functional currency is not the
United States dollar. It also does not deal with holders other than original
purchasers (except where otherwise specifically noted). Persons considering
the purchase of the Notes should consult their own tax advisors concerning the
application of United States Federal income tax laws to their particular
situations as well as any consequences of the purchase, ownership and
disposition of the Notes arising under the laws of any other taxing
jurisdiction.
As used herein, the term "U.S. Holder" means a beneficial owner of a
Note that is for United States Federal income tax purposes (i) a citizen or
resident of the United States, (ii) a corporation, partnership or other entity
created or organized in or under the laws of the United States or of any
political subdivision thereof, (iii) an estate the income of which is subject
to United States Federal income taxation regardless of its source, (iv) a trust
if a court within the United States is able to exercise primary supervision
over the administration of the trust and one or more United States fiduciaries
have the authority to control all substantial decisions of the trust, or (v)
any other person whose income or gain in respect of a Note is effectively
connected with the conduct of a United States trade or business. As used
herein, the term "non-U.S. Holder" means a beneficial owner of a Note that is
not a U.S. Holder.
U.S. HOLDERS
Payments of Interest. Under general principles of current United
States Federal income tax law, payments of interest on a debt instrument
generally will be taxable to a U.S. Holder as ordinary interest income at the
time such payments are accrued or are received (in accordance with the U.S.
Holder's regular method of tax accounting).
Disposition of a Note. Under general principles of current United
States Federal income tax law, upon the sale, exchange or retirement of a Note,
a U.S. Holder generally will recognize taxable gain or loss in an amount equal
to the difference, if any, between the amount realized upon the sale, exchange
or retirement (other than amounts representing accrued and unpaid interest
which will be taxable as interest income) and such U.S. Holder's adjusted tax
basis in its Note. A U.S. Holder's adjusted tax basis in a Note is generally
equal to such U.S. Holder's initial investment in such Note. Any gain or loss
realized by a U.S. Holder upon the sale, exchange or retirement of a Note
generally will be long-term or short-term capital gain or loss, depending upon
whether the U.S. Holder has held the Note for more than one year.
Gain or Income Received by a Foreign Corporation. A foreign
corporation whose income or gain in respect of a Note is effectively connected
with the conduct of a United States trade or business, in addition to being
subject to regular U.S. income tax, may be subject to a branch profits tax
equal to 30% of its "effectively connected earnings and profits" within the
meaning of the Internal Revenue Code of 1986, as amended (the "Code"), for the
taxable year, as adjusted for certain items, unless it qualifies for a lower
rate under an applicable tax treaty (as modified by the branch profits tax
rules).
NON-U.S. HOLDERS
Generally, a non-U.S. Holder will not be subject to United States
Federal income taxes on payments of principal, premium, if any, or interest on
a Note, if (i) such non-U.S. Holder does not own 10% or more of the shares of
beneficial interest of the Company and (ii) the last United States payor in the
chain of payment (the "Withholding Agent") has received in the year in which a
payment of interest or principal occurs, or in either of the two preceding
calendar years, a statement signed by the beneficial owner of the Note under
penalties of perjury certifying that such owner is not a U.S. Holder and
providing the name and address of the beneficial owner. The statement may be
made on an IRS Form W-8 or a substantially similar form, and the beneficial
owner must inform the Withholding Agent of any change in the information on the
statement within 30 days of such change. If a Note is held through a
securities clearing organization or certain other financial institutions, the
organization or institution may provide a signed statement to the Withholding
Agent. However, in such case, the signed statement must be accompanied by a
copy of the IRS Form W-8 or the substitute form provided by the beneficial
owner to the organization or
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institution. Interest received by a non-U.S. Holder which does not qualify for
exemption from taxation will be subject to United States Federal income tax and
withholding tax at a rate of 30% unless reduced or eliminated by applicable tax
treaty. The Treasury Department is considering implementation of further
certification requirements aimed at determining whether the issuer of a debt
obligation is related to holders thereof.
Generally, a non-U.S. Holder will not be subject to Federal income
taxes on any amount which constitutes capital gain upon retirement or
disposition of a Note, provided the gain is not effectively connected with the
conduct of a trade or business in the United States by the non-U.S. Holder.
Certain other exceptions may be applicable, and a non-U.S. Holder should
consult its tax advisor in this regard.
On April 22, 1996, the IRS issued proposed Treasury regulations that
would revise the procedures for securing an exemption from the 30% United
States Federal withholding tax (the "Proposed Regulations"). If adopted in
final form, the Proposed Regulations generally would apply to payments made
after December 31, 1997.
The Notes will not be includible in the estate of a non-U.S. Holder
unless the individual owns directly or indirectly 10% or more of the shares of
beneficial interest of the Company or, at the time of such individual's death,
payments in respect of the Notes would have been effectively connected with the
conduct by such individual of a trade or business in the United States.
BACKUP WITHHOLDING
Backup withholding of United States income tax at a rate of 31% may
apply to payments made in respect of the Notes to registered owners who are not
"exempt recipients" and who fail to provide certain identifying information
(such as the registered owner's taxpayer identification number) in the required
manner. Generally, individuals are not exempt recipients, whereas corporations
and certain other entities generally are exempt recipients. Payments made in
respect of the Notes to a U.S. Holder must be reported to the IRS, unless the
U.S. Holder is an exempt recipient or establishes an exemption. Compliance
with the identification procedures described in the preceding section would
establish an exemption from backup withholding for those non-U.S. Holders who
are not exempt recipients.
In addition, upon the sale of a Note or (or through) a broker, the
broker must withhold 31% of the entire purchase price, unless either (i) the
broker determines that the seller is a corporation or other exempt recipient or
(ii) the seller provides, in the required manner, certain identifying
information and, in the case of a non-U.S. Holder, certifies that such seller
is a non-U.S. Holder (and certain other conditions are met). Such a sale must
also be reported by the broker to the IRS, unless either (i) the broker
determines that the seller is an exempt recipient or (ii) the seller certifies
its non-U.S. status (and certain other conditions are met). Certification of
the registered owner's non-U.S. status would be made normally on an IRS Form
W-8 under penalties of perjury, although in certain cases it may be possible to
submit other documentary evidence.
Any amounts withheld under the backup withholding rules from a payment
to a beneficial owner would be allowed as a refund or a credit against such
beneficial owner's United States Federal income tax provided the required
information is furnished to the IRS.
UNDERWRITING
Merrill Lynch, Pierce, Fenner & Smith Incorporated (the "Underwriter")
has agreed, subject to the terms and conditions set forth in the Underwriting
Agreement, to purchase the Notes from the Company at a price equal to 99.70% of
the principal amount thereof.
The Underwriter has advised the Company that the Underwriter proposes
to offer the Notes from time to time for sale in negotiated transactions or
otherwise, at prices determined at the time of sale. The Underwriter may
effect such transactions by selling Notes to or through dealers and such
dealers may receive compensation in the form of underwriting discounts,
concessions or commissions from the Underwriter and any purchasers of Notes for
whom they may act as agent. The Underwriter and any dealers that participate
with the Underwriter in the distribution of the Notes may be deemed to be
underwriters, and any discounts or commissions received by them and any profit
on the resale of Notes by them may be deemed to be underwriting compensation.
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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 Underwriter
that it intends to make a market in the Notes as permitted by applicable laws
and regulations, but it is 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.
Until the distribution of the Notes is completed, rules of the
Securities and Exchange Commission may limit the ability of the Underwriter to
bid for and purchase the Notes. As an exception to these rules, the
Underwriter is permitted to engage in certain transactions that stabilize the
price of the Notes. Such transactions consist of bids or purchases for the
purpose of pegging, fixing or maintaining the price of the Notes.
If the Underwriter creates a short position in the Notes in connection
with the offering, i.e., if it sells more of the Notes than are set forth on
the cover page of this Prospectus Supplement, the Underwriter may reduce that
short position by purchasing Notes in the open market.
In general, purchases of a security for the purpose of stabilization
or to reduce a short position could cause the price of the security to be
higher than it might be in the absence of such purchases.
Neither the Company nor the Underwriter makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the prices of the Notes. In addition, neither the
Company nor the Underwriter makes any representation that the Underwriter will
engage in such transactions or that such transactions, once commenced, will not
be discontinued without notice.
The Company has agreed to indemnify the Underwriter against certain
civil liabilities, including liabilities under the Securities Act of 1933, as
amended (the "Securities Act"), or to contribute to payments the Underwriter
may be required to make in respect thereof.
In the ordinary course of their respective businesses, the Underwriter
and its affiliates have engaged, and may in the future engage, in commercial
banking and investment banking transactions with the Company.
LEGAL MATTERS
Certain legal matters with respect to the Notes offered hereby will be
passed upon for the Company by Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P.,
Dallas, Texas and for the Underwriter by Brown & Wood LLP , New York, New York.
EXPERTS
The consolidated financial statements and the related financial
statement schedule of the Company as of December 31, 1996 and 1995 and for each
of the three years in the period ended December 31, 1996 included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1996 and
incorporated by reference in this Prospectus Supplement 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.
S-22
<PAGE> 23
PROSPECTUS
CAMDEN PROPERTY TRUST
$500,000,000
DEBT SECURITIES, PREFERRED SHARES,
COMMON SHARES AND SECURITIES WARRANTS
Camden Property Trust, a Texas real estate investment 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) its preferred
shares of beneficial interest, par value $0.01 per share (the "Preferred
Shares"); (iii) its 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
$500,000,000 (or its equivalent in any other currency or composite currency
based on the exchange rate at the time of sale) in amounts, at prices and 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 "Securities") may be offered, separately or together, in
separate series in amounts, at prices and on 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 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 Securities, in each case as may be appropriate to preserve the
status of the Company as a real estate investment trust (a "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 Securities covered by such Prospectus Supplement.
The Securities may be offered directly by the Company, 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
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 Securities may be sold without
delivery of the applicable Prospectus Supplement describing the method and
terms of the offering of such series of 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 Securities
unless accompanied by a Prospectus Supplement.
--------------------
The date of this Prospectus is April 21, 1997
<PAGE> 24
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission"), a Registration Statement on Form S-3 (the "Registration
Statement") 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 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 informational 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 maintained by the Commission at Room
1024, 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, 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. The Commission also maintains a
Web site at (http://www.sec.gov) that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the Commission. Such reports, proxy and information statements and other
information can also be inspected at the offices of the New York Stock Exchange
(the "NYSE"), 20 Broad Street, New York, New York 10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission (File
No. 1-12110) 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,
1996; and
(b) The description of the Common Shares contained in the
Company's Registration Statement on Form 8-A.
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 or deemed to be 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 or any accompanying prospectus supplement.
UPON WRITTEN OR ORAL REQUEST OF ANY PERSON TO WHOM A PROSPECTUS IS
DELIVERED, 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.
2
<PAGE> 25
THE COMPANY
Camden Property Trust 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, 1996, the Company owned and operated 48
multifamily properties (the "Operating Properties") containing 17,611 units
located in Houston, Dallas/Fort Worth, Austin, Corpus Christi, El Paso, Phoenix
and Tucson. The Operating Properties had a weighted average occupancy rate of
94.0% for the year ended December 31, 1996. The Company also had five
multifamily properties under development in Houston, Dallas and Phoenix (the
"Development Properties") which will, when completed, add 1,778 units to its
portfolio, and has one site in Denver which it intends to develop. 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 (the "Formation Transactions"), the Company succeeded to the
Multifamily Operations of Centeq and owned and operated 20 properties located
in the Houston, Dallas and Austin metropolitan areas containing 7,054 units and
owned contracts to purchase two 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.
On December 16, 1996, the Company entered into an Agreement and Plan
of Merger with Paragon Group, Inc., a Maryland corporation ("Paragon").
Pursuant to the Agreement and Plan of Merger, Paragon would merge with and into
a wholly-owned subsidiary of the Company and each share of common stock, par
value $.01 per share, of Paragon would be converted into the right to receive
0.64 common shares of the Company subject to adjustment in certain limited
circumstances. The consummation of the transaction is subject to certain
conditions, including shareholder approval. Both parties have scheduled
shareholder meetings to be held on April 15, 1997 for purposes of voting on the
proposed merger.
Paragon is a fully integrated REIT headquartered in Dallas, Texas
whose business is the operation, development and acquisition of multifamily
residential communities in the Southwest, Midwest, North Carolina and Florida.
Paragon is a self-administered and self-managed REIT that, as of December 31,
1996, owned (either directly or through interests in other entities) interests
in 57 multifamily residential communities totalling 15,954 apartment units (the
"Paragon Residential Properties") located in six states, with three additional
multifamily communities, totaling 856 residential units, under construction.
Paragon also has indirect minority ownership interests in three commercial
properties, including a 20% interest in a 401,625 square foot office building.
In addition, as of December 31, 1996, Paragon, through Paragon Residential
Services, Inc., managed 77 multifamily residential communities (including the
Paragon Residential Properties) located across the United States, containing
approximately 21,696 apartment units. Subsequent to December 31, 1996, three
of Paragon's properties were sold and one of Paragon's construction properties
was completed.
The Company elected to be taxed as a REIT for federal income tax
purposes for its taxable year ended December 31, 1996, 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 as a
REIT 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
3
<PAGE> 26
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.
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 Amended and Restated
Declaration of Trust (the "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, any purported transfer in
violation of the above-described ownership limitations shall be void.
The Common Shares of the Company are listed on the NYSE under the
symbol "CPT." On February 5, 1997, the Company announced an anticipated
dividend increase from $1.90 per share to $1.96 for 1997. On March 17, 1997,
the Company declared its quarterly dividend ($0.49 per Common Share) for the
first quarter of 1997. The dividend is payable on April 17, 1997 to
shareholders of record as of March 31, 1997. 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 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. Pending use for the foregoing purposes, such proceeds may be
invested in short-term, interest-bearing time or demand deposits with financial
institutions, cash items or qualified government securities.
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, par value $0.01 per
share, consisting of 100,000,000 Common Shares and 10,000,000 Preferred Shares.
At December 31, 1996, 16,521,366 Common Shares were issued and outstanding and
no 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 Amended and Restated
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 of business or when the
payment of such dividend would result in the Company becoming unable to pay its
debts as they become due in the usual course of business. Payment and
declaration of dividends on the Common Shares and purchases of shares thereof
by the
4
<PAGE> 27
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,
including the election or removal of Trust Managers, amendments to the
Declaration of Trust, proposals to terminate, reorganize, merge or consolidate
the Company or to sell or dispose of substantially all of the Company's
property and with respect to certain business combinations. There is no
cumulative voting in the election of Trust Managers. The Company will have
perpetual existence unless and until dissolved and terminated. 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. For purposes of such
Ownership Limit, convertible securities will be treated as if such securities
had been converted in calculating the Ownership Limit. While the Excess
Securities are held in trust, they will not be entitled to vote (except as
required by law), 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 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
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<PAGE> 28
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.
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.
SHAREHOLDER LIABILITY
The Declaration of Trust provides that no shareholder shall be
personally or individually liable in any manner whatsoever for any debt, act,
omission or obligation incurred by the Company or the Board of Trust Managers.
A shareholder shall be under no obligation to the Company or to its creditors
with respect to such Shares other than the obligation to pay to the Company the
full amount of the consideration for which such Shares were issued or to be
issued. By statute, the State of Texas provides limited liability for
shareholders of a REIT organized under the Texas REIT Act.
TRANSFER AGENT AND REGISTRAR
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 no Preferred Shares
were outstanding at December 31, 1996.
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
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<PAGE> 29
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.
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 rates 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. No interest, or sum of money
in lieu of interest, shall be payable in respect to any dividend payment or
payments on Preferred Shares of such series which may be in arrears.
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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 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 to preserve the REIT status of the
Company or 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
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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 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.
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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.
SHAREHOLDER LIABILITY
See "Description of Common Shares--Shareholder Liability" for a
discussion of limitations on shareholder liability under the Declaration of
Trust and the Texas REIT Act.
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 (which may include
subscription rights distributed to the Company's shareholders) for the purchase
of Debt Securities, Preferred Shares or Common Shares. Securities Warrants may
be issued independently or together with any other Securities offered by any
Prospectus Supplement and may be attached to or separate from such 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 Warrant Agreement and the Securities Warrant certificates do
not purport to be complete and are subject to, and are qualified in their
entirety by reference to, all the provisions of the 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.
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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 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 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 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
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will not be adjusted for the issuance of (i) Common Shares, (ii) any securities
convertible into or exchangeable for Common Shares, or (iii) any securities
carrying the right or option to purchase or otherwise acquire Common Shares, 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
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
Unless otherwise stated in the applicable Prospectus Supplement, the
Debt Securities are to be issued under an Indenture, dated as of February 15,
1996, as amended or supplemented from time to time (the "Indenture"), between
the Company and U.S. Trust Company of Texas, N.A., as trustee. The term
"Trustee" as used herein shall refer to U.S. Trust Company of Texas, N.A. or
such other bank or trust company as the Company may appoint as trustee pursuant
to the terms of the Indenture. The form of the Indenture executed by the
Company is filed as an exhibit to the Registration Statement of which this
Prospectus is a part. The Indenture will be subject to, and governed by, the
Trust Indenture Act of 1939, as amended (the "TIA"), and may be amended or
supplemented from time to time. 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:
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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, where such Debt Securities may be surrendered for
conversion or registration of transfer or exchange, and where
notices or demands to or upon the Company in respect of such
Debt Securities and the Indenture may be served;
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;
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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
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 in a supplemental indenture made applicable to the
Debt Securities, and as further described in an applicable Prospectus
Supplement, 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
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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).
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 or trust or
entity, provided that (a) 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 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).
15
<PAGE> 38
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 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
16
<PAGE> 39
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) 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).
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<PAGE> 40
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).
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
18
<PAGE> 41
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 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
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<PAGE> 42
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).
"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).
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<PAGE> 43
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 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.
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<PAGE> 44
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 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.
<TABLE>
<CAPTION>
Camden Property Trust Camden Predecessors
----------------------------------------------------------- --------------------------
July 29 to January 1 to Year Ended
Year Ended December 31, December 31, July 28, December 31,
--------------------------------------------- ------------ ------------ ------------
1996(a) 1995 1994 1993 1993 1992
------------- ------------- -------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to
fixed charges 1.20x 1.35x 1.60x 3.27x 1.10x 0.88x
Dollar amount of
coverage deficiency
(in thousands) $( 778)
Ratio of earnings to
combined fixed
charges and
preferred share
dividends (b) 1.20x 1.35x 1.60x
</TABLE>
- ----------------
(a) Earnings includes a $(5,351,000) impact from the extinguishment of
hedges upon hedges upon debt refinancing. Excluding the impact from
the extinguishment of hedges upon debt refinancing, such ratio of
earnings to fixed charges would be 1.44x.
(b) 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 Securities to or through one or more underwriters
for public offering and sale, or may also sell Securities directly to other
purchasers or through agents in exchange for cash or other consideration
(including real properties) as may be specified in the applicable Prospectus
Supplement. Direct sales to purchasers may also be accomplished through
subscription rights distributed to the Company's shareholders. In connection
with distribution of subscription rights to shareholders, if all of the
underlying Securities are not subscribed for, the Company may sell such
unsubscribed Securities directly to third parties or may engage the services of
underwriters to sell such unsubscribed Securities to third parties as may be
specified in the applicable Prospectus Supplement. Any underwriter or agent
involved in the offer and sale of the Securities will be named in the
applicable Prospectus Supplement.
The distribution of the Securities may be effected from time to time
in one or more transactions at a fixed price or prices, which may be changed,
or at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices (any of which may represent a
discount from the prevailing market
22
<PAGE> 45
prices). The Company also may, from time to time, authorize underwriters
acting as the Company's agents to offer and sell the Securities upon the terms
and conditions set forth in the applicable Prospectus Supplement.
In connection with the sale of Securities, underwriters may receive or
be deemed to have received compensation from the Company or from purchasers of
Securities, for whom they may act as agents, in the form of discounts,
concessions, or commissions. Underwriters may sell 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 agents. Underwriters, dealers and agents
that participate in the distribution of Securities may be deemed to be
underwriters, and any discounts or commissions they receive from the Company,
and any profit on the resale of Securities they realize may be deemed to be
underwriting discounts and commissions under the Securities Act. Any such
underwriter or agent will be identified, and any such compensation received
from the Company will be described, in the applicable Prospectus Supplement.
Unless otherwise specified in the related Prospectus Supplement, each
series of Securities will be a new issue with no established trading market,
other than the Common Shares which are listed on the NYSE. Any Common Shares
sold pursuant to a Prospectus Supplement will be listed on such exchange,
subject to official notice of issuance. The Company may elect to list any
series of Debt Securities or Preferred Shares on an exchange, but is not
obligated to do so. It is possible that one or more underwriters may make a
market in a series of Securities, but will not be obligated to do so and may
discontinue any market making at any time without notice. Therefore, no
assurance can be given as to the liquidity of the trading market for the
Securities.
Under agreements the Company may enter into, underwriters, dealers and
agents who participate in the distribution of Securities may be entitled to
indemnification by the Company against certain liabilities, including
liabilities under the Securities Act.
Underwriters, dealers and agents may engage in transactions with, or
perform services for, or be customers of, the Company in the ordinary course of
business.
If so indicated in the Prospectus Supplement, the Company will
authorize underwriters or other persons acting as the Company's agents to
solicit offers by certain institutions to purchase Securities from the Company
pursuant to contracts providing for payment and delivery on a future date.
Each contract will be for an amount not less than, and the aggregate principal
amount of Securities sold pursuant to contracts shall be not less or more than,
the respective amounts stated in the applicable Prospectus Supplement.
Institutions with which such contracts may be made include commercial and
savings banks, insurance companies, pension funds, investment companies,
educational and charitable institutions and others, but in all cases such
institutions must be approved by the Company. The obligations of any purchaser
under any such contract will be subject to the condition that (i) the purchase
of the Securities shall not at the time of delivery be prohibited under the
laws of the jurisdiction to which such purchaser is subject and (ii) if the
Securities are being sold to underwriters, the Company shall have sold to such
underwriters the total principal amount of the Securities less the principal
amount thereof covered by contracts. The underwriters and such other agents
will not have any responsibility in respect of the validity or performance of
such contracts.
LEGAL MATTERS
Certain legal matters relating to the validity of the Securities will
be passed upon for the Company by Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P.,
Dallas, Texas.
EXPERTS
The consolidated financial statements and the related financial
statement schedule of the Company as of December 31, 1996 and 1995 and for each
of the three years in the period ended December 31, 1996 included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1996 and
incorporated by reference in this prospectus 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> 46
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NO DEALER, SALESMAN 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 UNDERWRITER.
NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY
SALE MADE HEREUNDER AND THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE FACTS SET FORTH IN THIS
PROSPECTUS SUPPLEMENT OR IN THE PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT
CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER
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.
------------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... S-3
The Company........................... S-6
Use of Proceeds....................... S-8
Capitalization........................ S-9
Description of Notes.................. S-10
Certain Federal Income Tax
Considerations...................... S-20
Underwriting.......................... S-21
Legal Matters......................... S-22
Experts............................... S-22
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.... 10
Description of Debt Securities........ 12
Ratio of Earnings to Fixed Charges.... 22
Plan of Distribution.................. 22
Legal Matters......................... 23
Experts............................... 23
</TABLE>
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[CAMDEN LOGO]
$75,000,000
REMARKETED RESET NOTES
DUE MAY 9, 2002
---------------------------
PROSPECTUS SUPPLEMENT
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MERRILL LYNCH & CO.
MAY 6, 1997
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