<PAGE>
FILED PURSUANT TO RULE 424(B)(5)
REGISTRATION NO. 33-84536
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED JANUARY 30, 1996)
U.S. $196,000,000
CAMDEN PROPERTY TRUST
LOGO
[LOGO OF CAMDEN PROPERTY TRUST APPEARS HERE]
MEDIUM-TERM NOTES, SERIES A
DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
Camden Property Trust (the "Company") may offer from time to time its
Medium-Term Notes, Series A, due nine months or more from the date of issue
(the "Notes"), as selected by the purchaser and agreed to by the Company. The
aggregate initial public offering price of the Notes will not exceed U.S.
$196,000,000 or its equivalent in another currency or composite currency. Such
amount is subject to reduction as a result of the sale by the Company of other
securities described in the accompanying Prospectus.
The Notes may be denominated in U.S. dollars or in such foreign currencies
or composite currencies as the Company may designate at the time of offering.
The Company will set forth the specific currency or composite currency,
interest rate or formula (if any), issue price and maturity date of any Note
in the applicable Pricing Supplement to this Prospectus Supplement. This
Prospectus Supplement provides information with respect to the Notes, in
addition to those terms set forth in the Prospectus included herewith. Unless
otherwise specified in the applicable Pricing Supplement, Notes denominated in
other than U.S. dollars or European Currency Units ("ECUs") will not be sold
in, or to residents of, the country issuing the Specified Currency. See
"Description of Notes".
Unless otherwise specified in the applicable Pricing Supplement, interest on
the Fixed Rate Notes will be payable on each March 15 and September 15 and at
maturity. Interest on the Floating Rate Notes will be payable on the dates
specified therein and in the applicable Pricing Supplement. Floating Rate
Notes will bear interest at a rate determined by reference to the Commercial
Paper Rate, Prime Rate, LIBOR, Treasury Rate, CD Rate, Federal Funds Rate, CMT
Rate or Eleventh District Cost of Funds Rate, as adjusted by a Spread and/or
Spread Multiplier, if any. Indexed Notes may be issued with the principal
amount payable at maturity, or the amount of interest payable on any Interest
Payment Date, to be determined by reference to a currency exchange rate,
composite currency, commodity price or other financial or non-financial index
to be set forth in the applicable Pricing Supplement. Zero Coupon Notes will
not bear interest.
Unless a Redemption Commencement Date is specified in the applicable Pricing
Supplement, the Notes will not be redeemable prior to their Stated Maturity.
If a Redemption Commencement Date is so specified, the Notes will be
redeemable at the option of the Company, as described herein.
If so specified in the applicable Pricing Supplement, the Notes will be
repayable by the Company in whole or from time to time in part at the option
of the Holders thereof on their respective Optional Repayment Dates specified
in such Pricing Supplement.
The Company will issue the Notes offered hereby in permanent global or
definitive certificated form, as specified in the applicable Pricing
Supplement. A Global Security representing Book-Entry Notes will be registered
in the name of, or a nominee of, The Depository Trust Company, which will act
as Depositary. Beneficial interests in Book-Entry Notes will be shown on, and
transfers thereof will be effected only through, records maintained by the
Depositary (with respect to Participants' interests) and its Participants.
Except as described herein under "Description of Notes--Book-Entry Notes,"
owners of beneficial interests in a Global Security will not be considered the
Holders thereof and will not be entitled to receive physical delivery of Notes
in definitive form, and no Global Security will be exchangeable except for
another Global Security of like denomination and terms to be registered in the
name of the Depositary or its nominee. The Notes offered hereby will be issued
in registered form in a minimum denomination of $1,000 and integral multiples
thereof or the approximate equivalent in the Specified Currency. See
"Description of Notes".
SEE "RISK FACTORS" COMMENCING ON PAGE S-2 FOR A DISCUSSION OF CERTAIN RISKS
THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE NOTES
OFFERED HEREBY.
--------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT
RELATES. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRICE TO AGENTS' DISCOUNTS PROCEEDS TO
PUBLIC(1) AND COMMISSIONS(2) COMPANY(2)(3)
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note........ 100% 0.125%-0.750% 99.875%-99.250%
- -------------------------------------------------------------------------------
Total(4)........ $196,000,000 $245,000-$1,470,000 $195,755,000-$194,530,000
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(1) Notes will be issued at 100% of their principal amount, unless otherwise
specified in the applicable Pricing Supplement.
(2) With respect to Notes with maturities of 30 years or less, the Company
will pay the Agents a commission ranging from 0.125% to 0.750%, depending
on maturity, of the principal amount of any Notes sold through them as
agents (or sold to such Agents as principal in circumstances in which no
other discount is agreed). With respect to Notes with maturities in excess
of 30 years that are sold through the Agents, the rate of commission will
be negotiated at the time of sale and will be specified in the applicable
Pricing Supplement. Unless otherwise specified in the applicable Pricing
Supplement, any Note sold to an Agent as principal will be purchased by
such Agent at a price equal to 100% of the principal amount thereof less a
percentage equal to the commission applicable to an agency sale of a Note
of identical maturity, and may be resold by such Agent to investors and
other purchasers at varying prices related to prevailing market prices at
the time of resale to be determined by such Agent or, if so agreed, at
fixed prices. The Company has agreed to indemnify the Agents against
certain liabilities, including liabilities under the Securities Act of
1933.
(3) Before deducting estimated expenses of $100,000 payable by the Company,
including expenses of the Agents to be reimbursed by the Company.
(4) Or its equivalent in any other currency or composite currency.
--------------
Offers to purchase Notes are being solicited, on a continuing basis, from
time to time by the Agents on behalf of the Company. Notes may be sold to the
Agents as principal at negotiated discounts. The Company reserves the right to
sell Notes directly on its own behalf. The Company also reserves the right to
withdraw, cancel, or modify the offering contemplated hereby without notice.
Unless otherwise specified in the applicable Pricing Supplement, the Notes
will not be listed on any securities exchange and there can be no assurance
that the Notes offered hereby will be sold or that there will be a secondary
market for the Notes. The Company or the Agents may reject any order as a
whole or in part. See "Supplemental Plan of Distribution".
NATIONSBANC CAPITAL MARKETS, INC.
MERRILL LYNCH & CO.
J.P. MORGAN & CO.
SMITH BARNEY INC.
UBS SECURITIES
The date of this Prospectus Supplement is March 20, 1997.
<PAGE>
Certain persons participating in this offering may engage in transactions
that stabilize, maintain or otherwise affect the price of the Notes. Such
transactions may include stabilizing the purchase of Notes to cover syndicate
short positions and the imposition of penalty bids. For a description of these
activities, see "Supplemental Plan of Distribution."
__________________________
RISK FACTORS
This Prospectus Supplement does not describe all risks of an investment in
Notes that result from such Notes being denominated or payable in or determined
by reference to a specified currency other than U.S. dollars or to one or more
indices or formulas, either as such risks exist at the date of this Prospectus
Supplement or as such risks may change from time to time. Prospective
purchasers should consult their own financial and legal advisors as to the risks
entailed by an investment in such Notes. Such Notes are not an appropriate
investment for investors who are unsophisticated with respect to foreign
currency transactions or such indices or formulas.
INDEXED NOTES
General
An investment in Indexed Notes (as defined under "Description of Notes--
Indexed Notes") presents certain significant risks not associated with other
types of securities. Certain risks associated with a particular Indexed Note may
be set forth more fully in the applicable Pricing Supplement. Indexed Notes may
present a high level of risk, and investors in certain Indexed Notes may lose
their entire investment.
The treatment of Indexed Notes for U.S. federal income tax purposes is
often unclear due to the absence of any authority specifically addressing the
issues presented by any particular Indexed Note. Accordingly, investors in
Indexed Notes should, in general, be capable of independently evaluating the
federal income tax consequences applicable in their particular circumstances of
purchasing an Indexed Note.
Loss of Principal or Interest
The principal amount of an Indexed Note payable at maturity and/or the
amount of interest payable on an Interest Payment Date will be determined by
reference to one or more currencies (including baskets of currencies), one or
more commodities (including baskets of commodities), one or more securities
(including baskets of securities) and/or any other index (each an "Index"). The
direction and magnitude of the change in the value of the relevant Index will
determine either or both the principal amount of an Indexed Note payable at
maturity or the amount of interest payable on an Interest Payment Date (as
defined under "Description of Notes--Payment of Principal and Interest"). The
terms of a particular Indexed Note may or may not include a guaranteed return of
a percentage of the face amount at maturity or a minimum interest rate.
Accordingly, the holder of an Indexed Note may lose all or a portion of the
principal invested in an Indexed Note and may receive no interest thereon.
Volatility
Certain Indices are highly volatile. The expected principal amount payable
at maturity of, or the interest rate on, an Indexed Note based on a volatile
Index may vary substantially from time to time. Because the principal amount
payable at the maturity of, or interest payable on, an Indexed Note is generally
calculated based on the value of the relevant Index on a specified date or over
a limited period of time, volatility in the Index increases the risk that the
return on the Indexed Notes may be adversely affected by a fluctuation in the
level of the relevant Index.
The volatility of an Index may be affected by political or economic events,
including governmental actions, or by the activities of participants in the
relevant markets, any of which could adversely affect the value of an Indexed
Note.
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Availability and Composition of Indices
Certain Indices reference several different currencies, commodities,
securities or other financial instruments. The compiler of such an Index
typically reserves the right to alter the composition of the Index and the
manner in which the value of the Index is calculated. Such an alteration may
result in a decrease in the value of or return on an Indexed Note which is
linked to such Index.
An Index may become unavailable due to such factors as war, natural
disasters, cessation of publication of the Index, or suspension of or disruption
in trading in the currency or currencies, commodity or commodities, security or
securities or other financial instrument or instruments comprising or underlying
such Index. If an Index becomes unavailable, the determination of principal of
or interest on an Indexed Note may be delayed or an alternative method may be
used to determine the value of the unavailable Index. Alternative methods of
valuation are generally intended to produce a value similar to the value
resulting from reference to the relevant Index. However, it is unlikely that
such alternative methods of valuation will produce values identical to those
which would be produced were the relevant Index to be used. An alternative
method of valuation may result in a decrease in the value of or return on an
Indexed Note.
Certain Indexed Notes are linked to Indices that are not commonly utilized
or have been recently developed. The lack of a trading history may make it
difficult to anticipate the volatility or other risks to which such a Note is
subject. In addition, there may be less trading in such Indices or instruments
underlying such Indices, which could increase the volatility of such Indices and
decrease the value of or return on Indexed Notes relating thereto.
FOREIGN CURRENCY NOTES
Exchange Rates
An investment in Foreign Currency Notes (as defined under "Description of
Notes--General") entails significant risks that are not associated with a
similar investment in a debt security denominated and payable in U.S. dollars.
Such risks include, without limitation, the possibility of significant changes
in the rate of exchange between the U.S. dollar and the applicable Specified
Currency (as defined under "Description of Notes--General") and the possibility
of the imposition or modification of exchange controls by either the United
States or foreign governments. Such risks generally depend on events over which
the Company has no control, such as economic, financial and political events and
the supply and demand for the relevant currencies. In recent years, rates of
exchange between the U.S. dollar and certain foreign currencies have been highly
volatile and such volatility may be expected in the future. Fluctuations in any
particular exchange rate that have occurred in the past are not necessarily
indicative, however, of fluctuations in the rate that may occur during the term
of any Foreign Currency Note. Depreciation of the Specified Currency applicable
to a Foreign Currency Note against the U.S. dollar would result in a decrease in
the U.S. dollar-equivalent yield of such Note, in the U.S. dollar-equivalent
value of the principal and premium, if any, payable at maturity of such Note,
and, generally, in the U.S. dollar-equivalent market value of such Note.
Exchange Controls
Governments or monetary authorities have imposed from time to time exchange
controls and may in the future impose or revise exchange controls at or prior to
the date on which any payment of principal of and premium, if any, or interest
on a Foreign Currency Note is due, which could affect exchange rates as well as
the availability of the Specified Currency on such date. Even if there are no
exchange controls, it is possible that the Specified Currency for any particular
Foreign Currency Note would not be available on the applicable payment date due
to other circumstances beyond the control of the Company. In that event, the
Company will make the required payment in respect of such Foreign Currency Note
in U.S. dollars on the basis of the most recently available Exchange Rate. See
"Description of Notes--Payment of Principal and Interest."
CREDIT RATINGS
The credit ratings assigned to the Company's medium-term note program may
not reflect the potential impact of all risks related to structure and other
factors on the value of the Notes. Accordingly, prospective
S-3
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investors should consult their own financial and legal advisers as to the risks
entailed by an investment in the Notes and the suitability of investing in such
Notes in light of their particular circumstances.
THE COMPANY
This Prospectus Supplement and the attached Prospectus, including the
information incorporated by reference herein, contain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. Actual results could differ materially
from those projected in the forward-looking statements.
GENERAL
Camden Property Trust is a self-administered and self-managed Texas
real estate investment trust (a "REIT"). The Company was formed in 1993 to
continue the multifamily property acquisition, development, management and
marketing operations and related business objectives and strategies of Centeq
Investments, Inc. ("Centeq"). Centeq was formed in 1982 by Richard J. Campo,
the Company's Chairman of the Board of Trust Managers and Chief Executive
Officer, and D. Keith Oden, the Company's President and Chief Operating Officer.
As of September 30, 1996, the Company owned and operated 49
multifamily properties located in Houston, Dallas/Fort Worth, Austin, Corpus
Christi, El Paso, Phoenix and Tucson (the "Operating Properties"). The
Operating Properties contained 17,855 units and had a weighted average occupancy
rate of 94.5% for the quarter ended September 30, 1996. The Company also had
four properties under development in Houston, Dallas and Phoenix, which will,
when completed, add 1,510 units to its portfolio, and had two sites for future
development, which the Company anticipates will, when completed, add 448 units
to its portfolio.
At September 30, 1996, the Company employed 626 persons, approximately
65 of whom were located at the Company's headquarters and 561 of whom were "on-
site" or in regional operating offices. The Company's headquarters are located
at 3200 Southwest Freeway, Suite 1500, Houston, Texas 77027 and its telephone
number is (713) 964-3555. The Company's common shares of beneficial interest,
par value $0.01 per share, are listed on the New York Stock Exchange under the
symbol "CPT".
RECENT DEVELOPMENTS
From September 30, 1996 through February 28, 1997, $18.8 million in
principal amount of the Company's 7.33% Convertible Subordinated Debentures were
converted into 784,206 common shares. In October 1996, the Company completed
the sale of 1,090,000 common shares of beneficial interest at a price of $25.875
per share. In November 1996, the Company issued an aggregate principal amount of
$75 million of 7% ten-year senior unsecured notes. The net proceeds were used
primarily to reduce indebtedness under the Company's $150 million unsecured
credit facility.
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.
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, Carolina and Florida markets.
Paragon is a self-administered and self-managed REIT that, as of September 30,
1996, owned (either directly or through interests in other entities) interests
in 57 multifamily residential communities totalling 15,882 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 September 30, 1996, Paragon, through Paragon Residential
Services, Inc., managed 78 multifamily
S-4
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residential communities (including the Paragon Residential Properties) located
across the United States, containing approximately 21,774 apartment units.
DESCRIPTION OF NOTES
GENERAL
The following description of the particular terms of the Notes offered
hereby (referred to in the accompanying Prospectus as "Debt Securities")
supplements the description of the general terms and provisions of Debt
Securities set forth in the accompanying Prospectus, to which description
reference is hereby made. The Notes will be issued as a series of Senior Debt
Securities under the Indenture, dated as of February 15, 1996 and the
Supplemental Indenture dated as of February 15, 1996 (collectively, the
"Indenture") between the Company and U.S. Trust Company of Texas, N.A., as
Trustee. The Indenture has been filed with the Securities and Exchange
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. Capitalized terms not defined herein have the meanings
assigned to such terms in the accompanying Prospectus. Terms of the Notes may be
varied in the related supplement to this Prospectus Supplement (a "Pricing
Supplement"). References to interest payments and interest-related information
do not apply to Zero Coupon Notes (as defined below).
The Notes constitute a separate series for purposes of the Indenture,
and the aggregate of Notes is limited in amount as set forth on the cover page
of this Prospectus Supplement. For a description of the rights attaching to
different series of Debt Securities under the applicable Indenture, see
"Description of Debt Securities" in the accompanying Prospectus.
The Notes will be unsecured obligations of the Company. The Notes will
rank equally with all other unsecured and unsubordinated indebtedness of the
Company. At December 31, 1996, the Company's senior debt aggregated
approximately $173.8 million.
The Company will at all times have appointed and maintain a Paying
Agent (which may be the Trustee) authorized to pay the principal of (and
premium, if any) or interest on any Notes on the Company's behalf and having an
office or agency (the "Paying Agent Office") in the Borough of Manhattan, the
City of New York, where the Notes may be presented or surrendered for payment
and notices, designations, or requests in respect of payments with respect to
Notes may be served. The Company has initially appointed the Trustee as the
Paying Agent.
Unless previously redeemed or repaid, a Note will mature on the date
("Stated Maturity") nine months or more from its date of issue that is specified
on its face and in the applicable Pricing Supplement. The "maturity" of any Note
refers herein to the date on which its principal becomes due and payable,
whether at Stated Maturity, upon redemption, repayment or otherwise.
Each Note will be denominated in a currency, composite currency or
basket of currencies (each a "Specified Currency") as specified on its face and
in the applicable Pricing Supplement, which may include U.S. dollars or any
other currency, composite currency or basket of currencies set forth in the
applicable Pricing Supplement. Purchasers of the Notes are required to pay for
them by delivery of the requisite amount of the Specified Currency to the
applicable Agent, unless other arrangements have been made. Unless otherwise
specified in the applicable Pricing Supplement, payments on the Notes will be
made in the applicable Specified Currency, provided that, at the election of the
Note Holder and in certain circumstances at the Company's option, payments on
Notes denominated in a Specified Currency other than U.S. dollars ("Foreign
Currency Notes") may be made in U.S. dollars. See "Payment of Principal and
Interest" below and "Certain Investment Considerations Relating to Foreign
Currency Notes." The term "Holder" means, with respect to any Note as of any
time, the person in whose name such Note is registered at such time in the
security register for the Notes maintained by the Company and does not include
the owner of a beneficial interest in a Book-Entry Note as described under
"Book-Entry Notes" below.
Each Note will be represented by either a permanent global Note (a
"Global Security") registered in the name of, or a nominee of, the Depositary
(each such Note represented by a permanent Global Security being
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referred to herein as a "Book-Entry Note") or a certificate issued in definitive
registered form, without coupons (a "Certificated Note"), as set forth in the
applicable Pricing Supplement. Except as set forth under "Book-Entry Notes"
below, Book-Entry Notes will not be issuable in certificated form. So long as
the Depositary or its nominee is the registered holder of any permanent Global
Security, the Depositary or its nominee, as the case may be, will be considered
the sole Holder of the Book-Entry Note or Notes represented by such permanent
Global Security for all purposes under the applicable Indenture and the Notes.
For a further description of the respective forms, denominations, and transfer
and exchange procedures for any such permanent Global Security and the Book-
Entry Notes, refer to "Book-Entry Notes" below and to the applicable Pricing
Supplement.
Unless otherwise specified in the applicable Pricing Supplement, Notes
will be sold in individual issues of Notes having such date of issue, interest
rate or interest rate formula, if any, Stated Maturity, and other variable terms
as shall be selected by the initial purchasers and agreed to by the Company.
Notes denominated in U.S. dollars will be initially issued in denominations of
$1,000 and integral multiples thereof, and Notes denominated in other than U.S.
dollars will be initially issued in denominations of the amount of the Specified
Currency for such Note equivalent, at the noon buying rate for cable transfers
in the City of New York for such Specified Currency (the "Exchange Rate") on the
first Market Day (as defined below) next preceding the date on which the Company
accepts the offer to purchase such Note, to $1,000 and integral multiples
thereof (or the equivalent thereof in the Specified Currency for each Note).
Interest rates offered by the Company with respect to the Notes may differ
depending upon, among other things, the aggregate principal amount of the Notes
purchased in any single transaction.
Unless otherwise indicated in the applicable Pricing Supplement, each
Note, except any Notes which pay face value only and are issued at a discount (a
"Zero Coupon Note"), will bear interest at a fixed rate or a rate determined by
reference to one or more of the Commercial Paper Rate, the Prime Rate, LIBOR,
the Treasury Rate, the CD Rate, the CMT Rate, the Eleventh District Cost of
Funds Rate or the Federal Funds Rate, as adjusted by the Spread and/or Spread
Multiplier, if any, applicable to such Note. See "Interest Rate." Zero Coupon
Notes will be issued at a discount from the principal amount payable at maturity
thereof, but holders of Zero Coupon Notes will not receive periodic payments of
interest thereon.
The Notes may be issued as Original Issue Discount Notes ("OID
Notes"). An OID Note is a Note, including any Zero Coupon Note, that is issued
at a price lower than the principal amount thereof and that may provide that
upon redemption or acceleration of the maturity thereof an amount less than the
principal amount thereof shall become due and payable. In the event of
redemption or acceleration of the maturity of an OID Note, the amount payable to
the Holder of such OID Note upon such redemption or acceleration will be
determined in accordance with the terms of the OID Note, but generally will be
an amount less than the amount payable at the Stated Maturity of such OID Note.
In addition, a Note issued at a discount may, for U.S. federal income tax
purposes, be considered an Original Issue Discount Security (as defined in the
accompanying Prospectus), regardless of the amount payable upon redemption or
acceleration of maturity of such Note. See "United States Taxation."
The Notes will not be subject to any sinking fund and, unless the
Company specifies an initial date on which a Note may be redeemed by the Company
(a "Redemption Commencement Date") in the applicable Pricing Supplement, the
Notes will not be redeemable before their maturity. If the Company does specify
a Redemption Commencement Date for any Note, the applicable Pricing Supplement
will also specify one or more redemption prices (expressed as a percentage of
the principal amount of such Note) ("Redemption Prices") and the redemption
period or periods ("Redemption Periods") during which such Redemption Prices
shall apply. Unless otherwise specified in the Pricing Supplement, any such Note
shall be redeemable at the Company's option at any time on or after such
specified Redemption Commencement Date at the specified Redemption Price
applicable to the Redemption Period during which such Note is to be redeemed,
together with interest accrued to the redemption date. If specified in the
applicable Pricing Supplement, Holders may elect to have their Notes redeemed at
one or more optional repayment dates. See "Repayment at the Option of the
Holder" below.
Certificated Notes may be presented for registration of transfer or
exchange at the applicable Paying Agent Office in the City of New York. With
respect to transfers of Book-Entry Notes and exchanges of permanent Global
Securities representing Book-Entry Notes, see "Book-Entry Notes" below.
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The Indenture provisions relating to defeasance and covenant
defeasance which are described in the accompanying Prospectus under "Description
of Debt Securities--Discharge, Defeasance and Covenant Defeasance" will apply
to the Notes.
INTEREST RATE
Each Note, other than a Zero Coupon Note, will bear interest from and
including its date of issue or from and including the most recent Interest
Payment Date (as defined below) to which interest on such Note has been paid or
duly provided for at the fixed rate per annum, or at the rate per annum
determined pursuant to the interest rate formula, stated therein and in the
applicable Pricing Supplement until the principal thereof is paid or made
available for payment. Interest will be payable on each Interest Payment Date
and at maturity as specified below under "Payment of Principal and Interest."
Each Note, other than a Zero Coupon Note, will bear interest at
either:
(a) a fixed rate (a "Fixed Rate Note"); or
(b) a variable rate determined by reference to an interest rate
formula (a "Floating Rate Note"), which may be adjusted by adding or
subtracting the Spread and/or multiplying by the Spread Multiplier (each term
as defined below).
A Floating Rate Note may also have either or both:
(a) a maximum, or ceiling, on the rate of interest that may accrue
during any interest period (a "Maximum Rate"); and
(b) a minimum, or floor, on the rate of interest that may accrue
during any interest period (a "Minimum Rate").
The "Spread" is the number of basis points specified in the applicable
Pricing Supplement as applying to the Interest Rate Basis (as defined below) for
such Note, and the "Spread Multiplier" is the percentage specified in the
applicable Pricing Supplement as applying to the Interest Rate Basis for such
Note.
"Index Maturity" means, for a Floating Rate Note, the period to
maturity of the interest or obligation on which the interest rate formula is
based, as specified in the applicable Pricing Supplement. Unless otherwise
provided in the applicable Pricing Supplement, the Trustee will be the
calculation agent (the "Calculation Agent") for Floating Rate Notes.
"Business Day," as used herein for any particular location, means each
Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which
banking institutions in such location are authorized or obligated by law,
regulation or executive order to close.
"Market Day" means:
(a) for any Note, other than a LIBOR Note or a Note the repayment in
respect of which is to be made in a Specified Currency other than U.S.
dollars, any Business Day in The City of New York;
(b) for a LIBOR Note, any day on which dealings in deposits in the
Index Currency (as defined below) are transacted in the London interbank
market (a "London Banking Day") which is also a Business Day in The City of
New York;
(c) for a Note the payment in respect of which is to be made in a
Specified Currency other than U.S. dollars, any Business Day in the Principal
Financial Center (as defined below) of the country issuing such Specified
Currency which is also a Business Day in The City of New York; and
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(d) for a Note the payment in respect of which is to be made in ECUs,
any Business Day in The City of New York which is also not a day that appears
as an ECU non-settlement day on the display designated as "ISDE" on the
Reuters Monitor Money Rates Service (or a day so designated by the ECU Banking
Association) or, if ECU non-settlement days do not appear on that page (and
are not so designated), is not a day on which payments in ECUs cannot be
settled in the international interbank market.
The applicable Pricing Supplement relating to a Fixed Rate Note will
designate a fixed rate of interest per annum payable on such Fixed Rate Note.
The applicable Pricing Supplement relating to a Floating Rate Note will
designate an interest rate basis (the "Interest Rate Basis") for such Floating
Rate Note. The Interest Rate Basis for each Floating Rate Note will be one or
more of the following:
(a) the Commercial Paper Rate for "Commercial Paper Rate Notes";
(b) the Prime Rate for "Prime Rate Notes";
(c) LIBOR for "LIBOR Notes";
(d) the Treasury Rate for "Treasury Rate Notes";
(e) the CD Rate for "CD Rate Notes";
(f) the Federal Funds Rate for "Federal Funds Rate Notes";
(g) the CMT Rate for "CMT Rate Notes";
(h) the Eleventh District Cost of Funds Rate for "Eleventh District
Cost of Funds Rate Notes"; or
(i) such other interest rate basis or formula as such Pricing
Supplement sets forth.
The applicable Pricing Supplement for a Floating Rate Note will
specify the Interest Rate Basis and, if applicable, the Calculation Agent, the
Index Maturity, the Spread and/or Spread Multiplier, the Maximum Rate, the
Minimum Rate, the Initial Interest Rate, the Interest Payment Dates, the
Interest Determination Date, and the Interest Reset Dates for such Note.
The interest rate on each Floating Rate Note will be reset daily,
weekly, monthly, quarterly, semi-annually, annually, or otherwise (each an
"Interest Reset Date"), as specified in the applicable Pricing Supplement. The
Interest Reset Dates will be:
(a) for Floating Rate Notes which reset daily, each Market Day;
(b) for Floating Rate Notes (other than Treasury Rate Notes) that
reset weekly, the Wednesday of each week;
(c) for Treasury Rate Notes that reset weekly, the Tuesday of each
week, except as provided below;
(d) for Floating Rate Notes (other than Eleventh District Cost of
Funds Rate Notes) that reset monthly, the third Wednesday of each month;
(e) for Eleventh District Cost of Funds Rate Notes that reset
monthly, the first calendar day of the month;
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(f) for Floating Rate Notes that reset quarterly, the third Wednesday
of March, June, September and December;
(g) for Floating Rate Notes that reset semi-annually, the third
Wednesday of two months of each year as specified in the applicable Pricing
Supplement;
(h) for Floating Rate Notes that reset annually, the third Wednesday
of the month of each year as specified in the applicable Pricing Supplement;
and
(i) for Floating Rate Notes that reset at intervals other than those
described above, the days specified in the applicable Pricing Supplement;
provided, however, that the interest rate in effect from the date of issue to
the first Interest Reset Date for a Floating Rate Note will be the Initial
Interest Rate (as set forth in the applicable Pricing Supplement). If any
Interest Reset Date for any Floating Rate Note would otherwise be a day that is
not a Market Day for such Floating Rate Note, the Interest Reset Date for such
Floating Rate Note shall be postponed to the next day that is a Market Day for
such Floating Rate Note (except that for a LIBOR Note, if such Market Day is in
the next succeeding calendar month, such Interest Reset Date shall be the
immediately preceding Market Day).
The Interest Determination Date pertaining to an Interest Reset Date
for a Commercial Paper Rate Note (the "Commercial Paper Rate Interest
Determination Date"), for a Prime Rate Note (the "Prime Rate Interest
Determination Date"), for a CD Rate Note (the "CD Rate Interest Determination
Date"), for a Federal Funds Rate Note (the "Federal Funds Rate Interest
Determination Date") and for a CMT Rate Note (the "CMT Rate Interest
Determination Date") will be the second Market Day preceding such Interest Reset
Date. The Interest Determination Date pertaining to an Interest Reset Date for
an Eleventh District Cost of Funds Rate Note (the "Eleventh District Cost of
Funds Rate Interest Determination Date") will be the last working day of the
month immediately preceding the applicable Interest Reset Date on which the
Federal Home Loan Bank of San Francisco (the "FHLB of San Francisco") publishes
the FHLB Index (as hereinafter defined). The Interest Determination Date
pertaining to an Interest Reset Date for a LIBOR Note will be the second London
Banking Day preceding such Interest Reset Date. The Interest Determination Date
pertaining to an Interest Reset Date for a Treasury Rate Note (the "Treasury
Rate Interest Determination Date") will be the day of the week in which such
Interest Reset Date falls on which Treasury bills would normally be auctioned.
Treasury bills are usually sold at auction on the Monday of each week, unless
that day is a legal holiday, in which case the auction is usually held on the
following Tuesday, except that such auction may be held on the preceding Friday.
If, as the result of a legal holiday, an auction is so held on the preceding
Friday, such Friday will be the Treasury Rate Interest Determination Date
pertaining to the Interest Reset Date occurring in the next succeeding week. If
an auction date shall fall on any Interest Reset Date for a Treasury Rate Note,
then such Interest Reset Date shall instead be the first Market Day immediately
following such auction date.
All percentages resulting from any calculations referred to in this
Prospectus Supplement will be rounded upwards, if necessary, to the next higher
one hundred-thousandth of a percentage point (e.g., 9.876541% (or .09876541)
being rounded to 9.87655% (or .0987655)), and all U.S. dollar amounts used in or
resulting from such calculations will be rounded to the nearest cent (with one-
half cent being rounded upwards) and, in the case of a Specified Currency other
than U.S. dollars, to the nearest unit (with one-half unit being rounded
upward).
In addition to any Maximum Rate that may apply to a Floating Rate Note
under the above provisions, the interest rate on the Floating Rate Notes will in
no event be higher than the maximum rate permitted by New York law, as the same
may be modified by United States law of general application. Under present New
York law the maximum rate of interest is 25% per annum on a simple interest
basis, with certain exceptions. The limit may not apply to Floating Rate Notes
in which U.S. $2,500,000 or more has been invested.
Upon the request of the Holder of any Floating Rate Note, the
Calculation Agent will provide the interest rate then in effect, and, if
determined, the interest rate that will become effective on the next Interest
Reset Date for such Floating Rate Note. The Calculation Agent's determination of
any interest rate will be final and binding
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in the absence of manifest error. Unless otherwise indicated in the applicable
Pricing Supplement, the "Calculation Date," if applicable, pertaining to an
Interest Determination Date will be the earlier of (i) the tenth calendar day
after such Interest Determination Date or, if any such day is not a Market Day,
the next succeeding Market Day and (ii) the Market Day immediately preceding the
applicable Interest Payment Date or the date of maturity, as the case may be.
COMMERCIAL PAPER RATE NOTES
Commercial Paper Rate Notes will bear interest at the interest rates
(calculated with reference to the Commercial Paper Rate and the Spread and/or
Spread Multiplier, if any), and will be payable on the dates, specified on the
face of the Commercial Paper Rate Note and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement,
"Commercial Paper Rate" means, for any Interest Reset Date, the Money Market
Yield (calculated as described below) of the per annum rate (quoted on a bank
discount basis) for the relevant Commercial Paper Rate Interest Determination
Date for commercial paper having the specified Index Maturity as published by
the Board of Governors of the Federal Reserve System in "Statistical Release
H.15(519), Selected Interest Rates" or any successor publication of the Board of
Governors of the Federal Reserve System ("H.15(519)") under the heading
"Commercial Paper." If such rate is not published before 3:00 p.m., New York
City time, on the relevant Calculation Date, then the Commercial Paper Rate for
such Interest Reset Date shall be the Money Market Yield of such rate on such
Commercial Paper Rate Interest Determination Date for commercial paper having
the specified Index Maturity as published by the Federal Reserve Bank of New
York on the Internet, under the heading "Selected Daily Rates." If by 3:00
p.m., New York City time, on such Calculation Date such rate is not yet
published either in H.15(519) or by the Federal Reserve Bank of New York, the
Commercial Paper Rate for such Interest Reset Date shall be calculated by the
Calculation Agent and shall be the Money Market Yield of the arithmetic mean of
the offered per annum rates (quoted on a bank discount basis), as of 11:00 a.m.,
New York City time, on such Commercial Paper Rate Interest Determination Date,
of three leading dealers of U.S. dollar commercial paper in The City of New York
(which may include the Agents) selected by the Calculation Agent for U.S. dollar
commercial paper of the specified Index Maturity placed for an industrial issuer
whose bond rating is "Aa," or the equivalent, from a nationally recognized
statistical rating agency; provided, however, that if fewer than three dealers
selected by the Calculation Agent are quoting as mentioned in this sentence, the
Commercial Paper Rate for such Interest Reset Date will be the Commercial Paper
Rate in effect on such Commercial Paper Rate Interest Determination Date.
"Money Market Yield" shall be a yield (expressed as a percentage)
calculated in accordance with the following formula:
360 X D
---------------
Money Market Yield = 100 X 360 - (D X M)
where "D" refers to the per annum rate for commercial paper quoted on a bank
discount basis and expressed as a decimal and "M" refers to the number of days
in the period for which accrued interest is being calculated.
PRIME RATE NOTES
Prime Rate Notes will bear interest at the interest rates (calculated
with reference to the Prime Rate and the Spread and/or Spread Multiplier, if
any), and will be payable on the dates, specified on their faces and in the
applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement,
"Prime Rate" means, for any Interest Reset Date, the rate set forth for the
relevant Prime Rate Interest Determination Date in H.15(519) under the heading
"Bank Prime Loan." If such rate is not published before 3:00 p.m., New York City
time, on the relevant Calculation Date, then the Prime Rate for such Interest
Reset Date will be the arithmetic mean of the rates of interest publicly
announced by each bank that appears on the display designated as page "USPRIME1"
on the Reuters Monitor Money Rates Service (or such other page as may replace
the USPRIME1 page on that service for the purpose of displaying prime rates or
base lending rates of major United States banks) ("Reuters Screen
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USPRIME1 Page") as such bank's prime rate or base lending rate as in effect for
such Prime Rate Interest Determination Date as quoted on the Reuters Screen
USPRIME1 Page on such Prime Rate Interest Determination Date. If fewer than four
such rates appear on the Reuters Screen USPRIME1 Page on such Prime Rate
Interest Determination Date, the Prime Rate for such Interest Reset Date will be
the arithmetic mean of the prime rates or base lending rates (quoted on the
basis of the actual number of days in the year divided by a 360-day year) as of
the close of business on such Prime Rate Interest Determination Date by four
major money center banks in The City of New York selected by the Calculation
Agent. If fewer than four such quotations are so provided, then the Prime Rate
shall be the arithmetic mean of four prime rates quoted on the basis of the
actual number of days in the year divided by a 360-day year as of the close of
business on such Prime Rate Interest Determination Date as furnished in The City
of New York by the major money center banks, if any, that have provided such
quotations and by as many substitute banks or trust companies as necessary in
order to obtain four such prime rate quotations, provided such substitute banks
or trust companies are organized and doing business under the laws of the United
States, or any State thereof, each having total equity capital of at least $500
million and being subject to supervision or examination by Federal or State
authority, selected by the Calculation Agent to provide such rate or rates;
provided, however, that if the banks or trust companies so selected by the
Calculation Agent are not quoting as mentioned in this sentence, the Prime Rate
determined as of such Prime Rate Interest Determination Date will be the Prime
Rate in effect on such Prime Rate Interest Determination Date.
LIBOR NOTES
LIBOR Notes will bear interest at the rates (calculated with reference
to LIBOR and the Spread and/or Spread Multiplier, if any), specified in such
LIBOR Notes and in any applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement,
"LIBOR" means the rate determined by the Calculation Agent in accordance with
the following provisions:
(i) With respect to an Interest Determination Date relating to a LIBOR
Note or any Floating Rate Note for which the interest rate is determined with
reference to LIBOR (a "LIBOR Interest Determination Date"), LIBOR will be
either: (a) if "LIBOR Reuters" is specified in the applicable Pricing
Supplement, the arithmetic mean of the offered rates (unless the specified
Designated LIBOR Page by its terms provides only for a single rate, in which
case such single rate shall be used) for deposits in the Index Currency having
the Index Maturity designated in the applicable Pricing Supplement, commencing
on the second London Banking Day immediately following such LIBOR Interest
Determination Date, that appear on the Designated LIBOR Page specified in the
applicable Pricing Supplement as of 11:00 a.m. London time, on such LIBOR
Interest Determination Date, if at least two such offered rates appear
(unless, as aforesaid, only a single rate is required) on such Designated
LIBOR Page, or (b) if "LIBOR Telerate" is specified in the applicable Pricing
Supplement or if neither "LIBOR Reuters" nor "LIBOR Telerate" is specified as
the method for calculating LIBOR, the rate for deposits in the Index Currency
having the Index Maturity designated in the applicable Pricing Supplement,
commencing on the second London Banking Day immediately following such LIBOR
Interest Determination Date that appears on the Designated LIBOR Page
specified in the applicable Pricing Supplement as of 11:00 a.m., London time,
on such LIBOR Interest Determination Date. If fewer than two such offered
rates appear, or if no such rate appears, as applicable, LIBOR in respect of
the related LIBOR Interest Determination Date will be determined in accordance
with the provisions described in clause (ii) below.
(ii) With respect to a LIBOR Interest Determination Date on which
fewer than two offered rates appear, or no rate appears, as the case may be,
on the applicable Designated LIBOR Page as described in clause (i) above, the
Calculation Agent will request the principal London office of each of four
major reference banks in the London interbank market, as selected by the
Calculation Agent, to provide the Calculation Agent with its offered quotation
for deposits in the Index Currency for the period of the Index Maturity
designated in the applicable Pricing Supplement, commencing on the second
London Banking Day immediately following such LIBOR Interest Determination
Date, to prime banks in the London interbank market at approximately 11:00
a.m., London time, on such LIBOR Interest Determination Date and in a
principal amount that is representative for a single transaction in such Index
Currency in such market at such time. If at least two such quotations are so
provided, then LIBOR on such
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LIBOR Interest Determination Date will be the arithmetic mean of such
quotations. If fewer than two such quotations are provided, LIBOR determined
on such LIBOR Interest Determination Date will be the arithmetic mean of the
rates quoted at approximately 11:00 a.m., in the applicable Principal
Financial Center, on such LIBOR Interest Determination Date by three major
banks in such Principal Financial Center (which may include affiliates of the
Agents) selected by the Calculation Agent, for loans in the Index Currency to
leading European banks, having the Index Maturity designated in the applicable
Pricing Supplement and in a principal amount that is representative for a
single transaction in such Index Currency in such market at such time;
provided, however, that if the banks so selected by the Calculation Agent are
not quoting as mentioned in this sentence, LIBOR determined as of such LIBOR
Interest Determination Date will be LIBOR in effect on such LIBOR Interest
Determination Date.
"Index Currency" means the currency (including composite currencies)
specified in the applicable Pricing Supplement as the currency for which LIBOR
shall be calculated. If no such currency is specified in the applicable Pricing
Supplement, the Index Currency shall be U.S. dollars.
"Designated LIBOR Page" means either (a) if "LIBOR Reuters" is
specified in the applicable Pricing Supplement, the display on the Reuters
Monitor Money Rates Service for the purpose of displaying the London interbank
rates of major banks for the applicable Index Currency, or (b) if "LIBOR
Telerate" is specified in the applicable Pricing Supplement or neither "LIBOR
Reuters" nor "LIBOR Telerate" is specified as the method for calculating LIBOR,
the display on the Dow Jones Telerate Service for the purpose of displaying the
London interbank rates of major banks for the applicable Index Currency.
"Principal Financial Center" will be the capital city of the country
issuing the Specified Currency in respect of which payment on the Notes is to be
made or, solely with respect to the calculation of LIBOR, of the specified Index
Currency, except that with respect to U.S. dollars, Australian dollars, German
Marks, Dutch Guilders, Italian Lire, Swiss Francs and ECUs, the Principal
Financial Center shall be The City of New York, Sydney, Frankfurt, Amsterdam,
Milan, Zurich and Luxembourg, respectively.
TREASURY RATE NOTES
Treasury Rate Notes will bear interest at the interest rates
(calculated with reference to the Treasury Rate and the Spread and/or Spread
Multiplier, if any), and will be payable on the dates, specified on the face of
the Treasury Rate Note and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement,
"Treasury Rate" means, for any Interest Reset Date, the rate for the auction on
the relevant Treasury Rate Interest Determination Date of direct obligations of
the United States ("Treasury Bills") having the specified Index Maturity as
published in H.15(519) under the heading "U.S. Government Securities/Treasury
Bills/Auction Average" or, if not so published by 3:00 p.m., New York City time,
on the relevant Calculation Date, the auction average rate (expressed as a bond
equivalent, on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) for such auction as otherwise announced by the United
States Department of the Treasury. If the results of such auction of Treasury
Bills having the specified Index Maturity are not published or reported as
provided above by 3:00 p.m., New York City time, on such Calculation Date, or if
no such auction is held during such week, then the Treasury Rate shall be the
rate set forth in H.15(519) for the relevant Treasury Rate Interest
Determination Date for the specified Index Maturity under the heading "U.S.
Government Securities/Treasury Bills/Secondary Market." If such rate is not so
published by 3:00 p.m., New York City time, on the relevant Calculation Date,
the Treasury Rate for such Interest Reset Date shall be calculated by the
Calculation Agent and shall be a 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 arithmetic mean of the secondary market bid
rates as of approximately 3:30 p.m., New York City time, on such Treasury Rate
Interest Determination Date, of three primary United States government
securities dealers in The City of New York selected by the Calculation Agent for
the issue of Treasury Bills with a remaining maturity closest to the specified
Index Maturity; provided, however, that if fewer than three dealers selected as
provided above by the Calculation Agent are quoting as mentioned in this
sentence, the Treasury Rate for such Interest Reset Date will be the Treasury
Rate in effect on such Treasury Rate Interest Determination Date.
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CMT RATE NOTES
CMT Rate Notes will bear interest at the interest rates (calculated
with reference to the CMT Rate and the Spread and/or Spread Multiplier, if any),
and will be payable on the dates, specified on the face of the CMT Rate Note and
in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "CMT
Rate" means, with respect to any Interest Reset Date, the treasury constant
maturity rate for direct obligations of the United States ("Treasury Notes") on
the relevant CMT Rate Interest Determination Date for the relevant Index
Maturity as published in H.15(519) under the heading "U.S. Government
Securities/Treasury Constant Maturities." In the event that such rate is not
published by 3:00 p.m., New York City time, on the relevant Calculation Date,
the CMT Rate will be the Bond Equivalent Yield of the arithmetic mean of the
secondary market bid rates as of approximately 3:30 p.m., New York City time, on
such CMT Rate Interest Determination Date of three primary United States
government securities dealers in The City of New York selected by the
Calculation Agent for the issue of Treasury Notes with a remaining maturity
closest to the specified Index Maturity; provided, however, that if fewer than
three dealers selected as aforesaid by the Calculation Agent are quoting as
mentioned in this sentence, the CMT Rate with respect to such Interest Reset
Date will be the CMT Rate in effect on such CMT Rate Interest Determination
Date.
"Bond Equivalent Yield" shall be a yield (expressed as a percentage)
calculated in accordance with the following formula:
D X N
---------------
Bond Equivalent Yield = 100 X 360 - (D X M)
where "D" refers to the per annum rate for Treasury Notes, quoted on a bank
discount basis and expressed as a decimal; "N" refers to 365 or 366, as the case
may be; and "M" refers to, if the Index Maturity approximately corresponds to
the length of the period for which such rate is being determined, the actual
number of days in such period and, otherwise, the actual number of days in the
period from, and including, the Interest Reset Date to, but excluding, the day
that numerically corresponds to that Interest Reset Date (or, if there is not
any such numerically corresponding day, the last day) in the calendar month that
is the number of months corresponding to the specified Index Maturity after the
month in which that Interest Reset Date occurs.
CD RATE NOTES
CD Rate Notes will bear interest at the interest rates (calculated
with reference to the CD Rate and the Spread and/or Spread Multiplier, if any),
and will be payable on the dates, specified on the face of the CD Rate Note and
in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "CD
Rate" means, for any Interest Reset Date, the rate for the relevant CD Rate
Interest Determination Date for negotiable U.S. dollar certificates of deposit
having the specified Index Maturity as published in H.15(519) under the heading
"CDs (Secondary Market)." If such rate is not published before 3:00 p.m., New
York City time, on the relevant Calculation Date, then the CD Rate for such
Interest Reset Date shall be the rate on such CD Rate Interest Determination
Date for negotiable U.S. dollar certificates of deposit having the specified
Index Maturity as published by the Federal Reserve Bank of New York on the
Internet, under the heading "Selected Daily Rates." If by 3:00 p.m., New York
City time, on such Calculation Date such rate is not published either in
H.15(519) or by the Federal Reserve Bank of New York, the CD Rate for such
Interest Reset Date shall be calculated by the Calculation Agent and shall be
the arithmetic mean of the secondary market offered rates, as of 10:00 a.m., New
York City time, on such CD Rate Interest Determination Date, of three leading
nonbank dealers of negotiable U.S. dollar certificates of deposit in The City of
New York selected by the Calculation Agent for negotiable certificates of
deposit of major United States money market banks with a remaining maturity
closest to the specified Index Maturity in a denomination of U.S. $5,000,000;
provided, however, that if fewer than three dealers selected as provided above
by the Calculation Agent are quoting as mentioned in this sentence, the CD Rate
for such Interest Reset Date will be the CD Rate in effect on such CD Rate
Interest Determination Date.
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FEDERAL FUNDS RATE NOTES
Federal Funds Rate Notes will bear interest at the interest rates
(calculated with reference to the Federal Funds Rate and the Spread and/or
Spread Multiplier, if any), and will be payable on the dates, specified on the
face of the Federal Funds Rate Note and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement,
"Federal Funds Rate" means, for any Interest Reset Date, the rate on the
relevant Federal Funds Rate Interest Determination Date for federal funds as
published in H.15(519) under the heading "Federal Funds (Effective)." If such
rate is not published before 3:00 p.m., New York City time, on the relevant
Calculation Date, then the Federal Funds Rate for such Interest Reset Date will
be the rate on such Federal Funds Rate Interest Determination Date as published
by the Federal Reserve Bank of New York on the Internet, under the heading
"Selected Daily Rates." If by 3:00 p.m., New York City time, on such
Calculation Date such rate is not published either in H.15(519) or by the
Federal Reserve Bank of New York, the Federal Funds Rate for such Interest Reset
Date shall be calculated by the Calculation Agent and shall be the arithmetic
mean of the rates, as of 9:00 a.m., New York City time, on such Federal Funds
Rate Interest Determination Date, for the last transaction in overnight federal
funds arranged by three leading brokers of federal funds transactions in The
City of New York selected by the Calculation Agent; provided, however, that if
fewer than three brokers selected by the Calculation Agent are quoting as
mentioned in this sentence, the Federal Funds Rate for such Interest Reset Date
will be the Federal Funds Rate in effect on such Federal Funds Rate Interest
Determination Date.
ELEVENTH DISTRICT COST OF FUNDS RATE NOTES
Eleventh District Cost of Funds Rate Notes will bear interest at the
interest rates (calculated with reference to the Eleventh District Cost of Funds
Rate and the Spread and/or Spread Multiplier, if any), and will be payable on
the dates, specified on the face of the Eleventh District Cost of Funds Rate
Note and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement,
"Eleventh District Cost of Funds Rate" means, for any Interest Reset Date, the
rate on the relevant Eleventh District Cost of Funds Rate Interest Determination
Date, which is equal to the monthly weighted average cost of funds for the
calendar month immediately preceding the month in which such Eleventh District
Cost of Funds Rate Interest Determination Date falls, as set forth under the
caption "11th District" on Telerate Page 7058 as of 11:00 a.m., San Francisco
time, on such Eleventh District Cost of Funds Rate Interest Determination Date.
If such rate does not appear on Telerate Page 7058 on such Eleventh District
Cost of Funds Rate Interest Determination Date, then the Eleventh District Cost
of Funds Rate on such Eleventh District Cost of Funds Rate Interest
Determination Date shall be the monthly weighted average cost of funds paid by
member institutions of the Eleventh Federal Home Loan Bank District that was
most recently announced (the "FHLB Index") by the FHLB of San Francisco as such
cost of funds for the calendar month immediately preceding such Eleventh
District Cost of Funds Rate Interest Determination Date. If the FHLB of San
Francisco fails to announce the FHLB Index on or prior to such Eleventh District
Cost of Funds Rate Interest Determination Date for the calendar month
immediately preceding such Eleventh District Cost of Funds Rate Interest
Determination Date, the Eleventh District Cost of Funds Rate determined as of
such Eleventh District Cost of Funds Rate Interest Determination Date will be
the Eleventh District Cost of Funds Rate in effect on such Eleventh District
Cost of Funds Rate Interest Determination Date.
INVERSE FLOATING RATE NOTES
Any Floating Rate Note may be designated in the applicable Pricing
Supplement as an "Inverse Floating Rate Note," in which event the interest rate
on such Floating Rate Note will be equal to (i) in the case of each period
commencing on the date of issue to but excluding the first Interest Reset Date,
the Initial Interest Rate specified in the applicable Pricing Supplement and
(ii) in the case of each period commencing on an Interest Reset Date, a fixed
rate of interest specified in the applicable Pricing Supplement, minus the
interest rate determined by the reference to the Interest Rate Basis specified
in the applicable Pricing Supplement; provided, however, that unless otherwise
specified in the applicable Pricing Supplement, the interest rate thereon will
not be less than zero.
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FLOATING RATE/FIXED RATE NOTES
The applicable Pricing Supplement may provide that a Note will be a
Floating Rate Note for a specified portion of its term and a Fixed Rate Note for
the remainder of its term, in which event the interest rate on such Note will be
determined as herein provided as if it were a Floating Rate Note and a Fixed
Rate Note thereunder for each such respective period, all as specified in such
applicable Pricing Supplement.
AMORTIZING NOTES
The Company may from time to time offer Amortizing Notes. Unless
otherwise specified in the applicable Pricing Supplement, interest on each
Amortizing Note will be computed on the basis of a 360-day year of twelve 30-day
months. Payments with respect to Amortizing Notes will be applied first to
interest due and payable thereon and then to the reduction of the unpaid
principal amount thereof. Further information concerning additional terms and
provisions of Amortizing Notes will be specified in the applicable Pricing
Supplement, including a table setting forth repayment information for such
Amortizing Notes.
INDEXED NOTES
Certain Notes ("Indexed Notes") may be issued with the principal
amount payable at maturity, and/or the amount of interest payable on an Interest
Payment Date, to be determined by reference to one or more currencies (including
baskets of currencies), one or more commodities (including baskets of
commodities), one or more securities (including baskets of securities) and/or
any other index (each, an "Index") as set forth in the applicable Pricing
Supplement. Holders of Indexed Notes may receive a principal amount at maturity
that is greater than or less than the face amount (but not less than zero) of
such Notes depending upon the value at maturity of the applicable Index. With
respect to any Indexed Note, information as to the methods for determining the
principal amount payable at maturity and/or the amount of interest payable on an
Interest Payment Date, as the case may be, as to any one or more currencies
(including baskets of currencies), commodities (including baskets of
commodities), securities (including baskets of securities) or other indices to
which principal or interest is indexed, as to any additional foreign exchange or
other risks or as to any additional tax considerations may be set forth in the
applicable Pricing Supplement. See "Risk Factors."
PAYMENT OF PRINCIPAL AND INTEREST
Payments of principal of (and premium, if any) and interest on all
Book-Entry Notes will be made in accordance with the procedures of the
Depositary and its Participants in effect from time to time as described under
"Book-Entry Notes" below. Unless otherwise specified in the applicable Pricing
Supplement, payments of principal of (and premium, if any) and interest on all
Certificated Notes will be made in the applicable Specified Currency; provided,
however, that payments of principal (and premium, if any) and interest on Notes
denominated in a Specified Currency other than U.S. dollars will nevertheless be
made in U.S. dollars:
(a) with respect to any Certificated Notes, at the option of the
Holders of such Notes under the procedures described in the two following
paragraphs; and
(b) with respect to any Notes, at the Company's option in the case of
imposition of exchange controls or other circumstances beyond the Company's
control as described in the last paragraph under this heading.
Unless otherwise specified in the applicable Pricing Supplement, and
except as provided in the next paragraph, payments of principal of (and premium,
if any) and interest on any Certificated Note denominated in a Specified
Currency other than U.S. dollars will be made in U.S. dollars if the registered
Holder of such Note on the relevant Regular Record Date, or at maturity, as the
case may be, has transmitted a written request for such payment in U.S. dollars
to the Paying Agent at the Paying Agent Office in The City of New York on or
before such Regular Record Date, or the date 15 days before maturity, as the
case may be. Such request may be in writing (mailed or hand delivered) or sent
by cable, telex, or other form of facsimile transmission. Any such request made
for any Certificated Note by a registered Holder will remain in effect for any
further payments of principal of (and
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premium, if any) and interest on such Note payable to such Holder, unless such
request is revoked on or before the relevant Regular Record Date or the date 15
days before maturity, as the case may be. Holders of Certificated Notes
denominated in a Specified Currency other than U.S. dollars that are registered
in the name of a broker or nominee should contact such broker or nominee to
determine whether and how to elect to receive payments in U.S. dollars.
Unless otherwise specified in the applicable Pricing Supplement, the
U.S. dollar amount to be received by a Holder of a Note (including a Book-Entry
Note) denominated in a Specified Currency other than U.S. dollars who elects to
receive payment in U.S. dollars will be based on the highest bid quotation in
The City of New York received by the Exchange Rate Agent (as defined below) as
of 11:00 a.m., New York City time, on the second Market Day next preceding the
applicable payment date from three recognized foreign exchange dealers (one of
which may be the Exchange Rate Agent) for the purchase by the quoting dealer of
the Specified Currency for U.S. dollars for settlement on such payment date in
the aggregate amount of the Specified Currency payable to all Holders of Notes
electing to receive U.S. dollar payments and at which the applicable dealer
commits to execute a contract. If three such bid quotations are not available on
the second Market Day preceding the date of payment of principal (and premium,
if any) or interest for any Note, such payment will be made in the Specified
Currency. All currency exchange costs associated with any payment in U.S.
dollars on any such Note will be borne by the Holder thereof by deductions from
such payment. The Exchange Rate Agent (the "Exchange Rate Agent") with respect
to any Notes denominated in a Specified Currency other than U.S. dollars will be
specified in the applicable Pricing Supplement.
Interest will be payable to the person in whose name a Note is
registered (which for a permanent Global Security representing Book-Entry Notes
will be the Depositary or a nominee of the Depositary) at the close of business
on the Regular Record Date next preceding each Interest Payment Date; provided,
however, that interest payable at maturity will be payable to the person to whom
principal shall be payable (which for permanent Global Securities representing
Book-Entry Notes, will be the Depositary or a nominee of the Depositary). The
first payment of interest on any Note originally issued between a Regular Record
Date and an Interest Payment Date will be made on the second such Interest
Payment Date next succeeding its date of issue to the Holder of such Note on the
Regular Record Date relating to such second Interest Payment Date. Unless
otherwise indicated in the applicable Pricing Supplement, the "Regular Record
Date" for any Floating Rate Note shall be the date 15 calendar days before each
Interest Payment Date, whether or not such date shall be a Market Day, and the
"Regular Record Date" for any Fixed Rate Note shall be the March 1 and September
1 next preceding the March 15 and September 15 Interest Payment Dates.
Unless otherwise indicated in the applicable Pricing Supplement and
except as provided below, interest will be payable:
(a) for Floating Rate Notes that reset daily, weekly or monthly, on
the third Wednesday of each month or on the third Wednesday of March, June,
September and December of each year (as indicated in the applicable Pricing
Supplement);
(b) for Floating Rate Notes that reset quarterly, on the third
Wednesday of March, June, September and December of each year;
(c) for Floating Rate Notes that reset semi-annually, on the third
Wednesday of the two months of each year specified in the applicable Pricing
Supplement;
(d) for Floating Rate Notes that reset annually, on the third
Wednesday of the month specified in the applicable Pricing Supplement; and
(e) for Floating Rate Notes that reset at intervals other than those
described above, on the days specified in the applicable Pricing Supplement,
(each an "Interest Payment Date") and in each case, at maturity. Payments of
interest on any Fixed Rate Note or Floating Rate Note for any Interest Payment
Date will include interest accrued to but excluding the applicable Interest
Payment Date or date of maturity as the case may be.
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For a Floating Rate Note, accrued interest from (and including) the
date of issue or from (and including) the last date to which interest has been
paid is calculated by multiplying the principal amount of such Floating Rate
Note by an accrued interest factor. Such accrued interest factor is computed by
adding the interest factor calculated for each day from (and including) the date
of issue, or from (and including) the last date to which interest has been paid
to (but excluding) the date for which accrued interest is being calculated. The
interest factor (expressed as a decimal) for each such day is computed by
dividing the interest rate (expressed as a decimal) applicable to such date by
360 for Commercial Paper Rate Notes, Prime Rate Notes, LIBOR Notes, CD Rate
Notes, Eleventh District Cost of Funds Rate Notes or Federal Funds Rate Notes,
or by the actual number of days in the year for Treasury Rate Notes or CMT Rate
Notes. Interest on Fixed Rate Notes will be computed on the basis of a 360-day
year of twelve 30-day months.
Except as provided in the next sentence, a payment on any Note due on
any day that is not a Market Day need not be made on such day, but may be made
on the next succeeding Market Day with the same force and effect as if made on
the due date, and no interest on such payment shall accrue for the period from
and after such date. If an Interest Payment Date (other than at maturity) for
any Floating Rate Note would otherwise fall on a day that is not a Market Day
for such Note, such Interest Payment Date will be postponed to the next
succeeding Market Day (or, for a LIBOR Note, if such day falls in the next
calendar month, the next preceding Market Day).
Payment of the principal of (and premium, if any) and any interest due
on any Certificated Note at maturity to be made in U.S. dollars will be made in
immediately available funds upon surrender of such Note at the Paying Agent
Office in The City of New York, provided that such Certificated Note is
presented to the Paying Agent in time for the Paying Agent to make such payments
in such funds in accordance with its normal procedures. Payments of interest on
any Certificated Note to be made in U.S. dollars other than at maturity will be
made by check mailed to the address of the Person entitled thereto as it appears
in the Security Register or, if such Holder owns Notes aggregating at least $10
million in principal amount, by wire transfer to such account as may have been
appropriately designated by such Person.
Unless otherwise specified in the applicable Pricing Supplement,
payments of interest and principal (and premium, if any) with respect to any
Certificated Note to be made in a Specified Currency other than U.S. dollars
will be made by wire transfer of immediately available funds to such account
with a bank located in the country issuing the Specified Currency (or, with
respect to Certificated Notes denominated in ECUs, to an ECU account) or other
jurisdiction acceptable to the Company and the Paying Agent as shall have been
designated at least five Business Days prior to the Interest Payment Date or
Stated Maturity, as the case may be, by the registered Holder of such Note on
the relevant Regular Record Date or maturity, provided that, in the case of
payment of principal (and premium, if any) and any interest due at maturity, the
Note is presented to the Paying Agent in time for the Paying Agent to make such
payments in such funds in accordance with its normal procedures. Such
designation shall be made by filing the appropriate information with the Paying
Agent at the Paying Agent Office in The City of New York, and, unless revoked,
any such designation made with respect to any Certificated Note by a registered
Holder will remain in effect with respect to any further payments with respect
to such Note payable to such Holder. If a payment with respect to any such Note
cannot be made by wire transfer because the required designation has not been
received by the Paying Agent on or before the requisite date or for any other
reason, a notice will be mailed to the Holder at its registered address
requesting a designation pursuant to which such wire transfer can be made and,
upon the Paying Agent's receipt of such a designation, such payment will be made
within five Business Days of such receipt. The Company will pay any
administrative costs imposed by banks in connection with making payments by wire
transfer, but any tax, assessment or governmental charge imposed upon payments
will be borne by the Holders of the Certificated Notes in respect of which
payments are made.
If the principal of (and premium, if any) or interest on any Note is
payable in other than U.S. dollars and such Specified Currency (other than ECUs)
is not available due to the imposition of exchange controls or other
circumstances beyond the control of the Company, the Company will be entitled to
satisfy its obligations to the Holder of such Note by making such payment
(including any such payment at maturity) in U.S. dollars on the basis of the
most recently available Exchange Rate. If the principal of (and premium, if any)
and interest on any Note is payable in ECUs, and the ECU is not available due to
the imposition of exchange controls or other circumstances beyond the control of
the Company or the ECU is used neither as the unit of account of the European
Communities
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nor as the currency of the European Union, the Company will be entitled to
satisfy its obligations to the Holder of such Note by making such payment
(including any such payment at maturity) as described under "Certain Investment
Considerations Relating to Foreign Currency Notes - Notes Denominated in ECUs."
Any payment made under such circumstances in such a manner will not constitute
an Event of Default under any Note or the applicable Indenture.
REDEMPTION AT THE OPTION OF THE COMPANY
Unless otherwise specified in the applicable Pricing Supplement, the
Notes will not be subject to any sinking fund. The Notes will be redeemable at
the option of the Company prior to Stated Maturity only if a Redemption
Commencement Date is specified in the applicable Pricing Supplement. If so
specified, the Notes will be subject to redemption at the option of the Company
on any date on and after the applicable Redemption Commencement Date in whole or
from time to time in part in increments of $1,000 (or the minimum denomination
specified in such Pricing Supplement), provided that any remaining principal
amount of such Note will be an authorized denomination of such Note, at the
applicable Redemption Price (as defined below) on notice given not more than 60
nor less than 30 days prior to the date of redemption and in accordance with the
provisions of the applicable Indenture. "Redemption Price," with respect to a
Note, means an amount equal to the sum of (i) 100% of the unpaid principal
amount thereof or the portion thereof to be redeemed (or, if such Note is an OID
Note, the Amortized Face Amount (as defined below) determined as of the date of
redemption as provided below), (ii) either (a) the Initial Redemption Percentage
specified in such Pricing Supplement (as adjusted by the Annual Redemption
Percentage Reduction, if applicable, also as specified in the Pricing
Supplement) multiplied by the unpaid principal amount or the portion to be
redeemed (or, if such Note is an OID Note, the Issue Price (as determined under
Treasury Regulation Section 1.1273-2(a)(1)) specified in such Pricing Supplement
(the "Issue Price"), net of any portion of such Issue Price which has been paid
prior to the date of redemption, or the portion of such Issue Price (or such net
amount) proportionate to the portion of the unpaid principal amount to be
redeemed), or (b) a Make-Whole Amount (as defined below), as specified in the
applicable Pricing Supplement, plus (iii) accrued interest to the date of
redemption (or, if such Note is an OID Note, any accrued interest to the date of
redemption the payment of which would constitute qualified stated interest
payments within the meaning of Treasury Regulation Section 1.1273-1(c) under the
Code (as defined below)). The Initial Redemption Percentage, if any, applicable
to a Note shall decline at each anniversary of the Redemption Commencement Date
by an amount equal to the applicable Annual Redemption Percentage Reduction, if
any, until it equals zero.
"Amortized Face Amount," with respect to an OID Note, means an amount
equal to the sum of (i) the Issue Price plus (ii) the aggregate of the portions
of the original issue discount (the excess of the amounts considered as part of
the "stated redemption price at maturity" of such Note within the meaning of
Section 1273(a)(2) of the Code, whether denominated as principal or interest,
over the Issue Price) which shall theretofore have accrued pursuant to Section
1272 of the Code (without regard to Section 1272(a)(7) of the Code) from the
date of issue of such Note to the date of determination, minus (iii) any amount
considered as part of the "stated redemption price at maturity" of such Note
which has been paid from the date of issue to the date of determination.
"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 0.25% (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 H.15(519) 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
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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 H.15(519) published prior to the date of
determination of the Make-Whole Amount shall be used.
REPAYMENT AT THE OPTION OF THE HOLDER
If so specified in the applicable Pricing Supplement, the Notes will
be repayable by the Company in whole or from time to time in part at the option
of the Holders thereof on their respective Optional Repayment Dates specified in
such Pricing Supplement. If no Optional Repayment Date is specified with respect
to a Note, such Note will not be repayable at the option of the Holder thereof
prior to Stated Maturity. Any repayment in part will be in increments of $1,000
(or the minimum denomination specified in the applicable Pricing Supplement)
provided that any remaining principal amount of such Note will be an authorized
denomination of such Note. Unless otherwise specified in the applicable Pricing
Supplement, the repayment price for any Note to be repaid means an amount equal
to the sum of (i) 100% of the unpaid principal amount thereof or the portion
thereof (or, if such Note is an OID Note, the Amortized Face Amount determined
as of the date of repayment) plus (ii) accrued interest to the date of repayment
(or, if such Note is an OID Note, any accrued interest to the date of repayment
the payment of which would constitute qualified stated interest payments within
the meaning of Treasury Regulation Section 1.1273-1(c) under the Code).
Information with respect to the repayment price for Indexed Notes shall be set
forth in the applicable Pricing Supplement. For any Note to be repaid, such Note
must be received, together with the form thereon entitled "Option to Elect
Repayment" duly completed, by the Trustee at its Corporate Trust Office (or such
other address of which the Company shall from time to time notify the Holders)
not more than 60 nor less than 30 days prior to the date of repayment. Exercise
of such repayment option by the Holder will be irrevocable.
While the Book-Entry Notes are represented by the Global Securities
held by or on behalf of the Depositary, and registered in the name of the
Depositary or the Depositary's nominee, the option for repayment may be
exercised by the Depositary, acting on behalf of each applicable Participant,
who is in turn acting on behalf of the beneficial owners of the Global Security
or Securities representing such Book-Entry Notes, by delivering a written notice
substantially similar to the above-mentioned form to the Trustee at its
Corporate Trust Office (or such other address of which the Company shall from
time to time notify the Holders) not more than 60 nor less than 30 days prior to
the date of repayment. Such written notice must be received by the Trustee by
5:00 p.m., New York City time, on the last day for giving such notice. In order
to ensure that such notice is received by the Trustee on a particular day, the
beneficial owner of the Global Security or Securities representing such Book-
Entry Notes must so direct the applicable Participant before such Participant's
deadline for accepting instructions for that day. Different firms may have
different deadlines for accepting instructions from their customers.
Accordingly, beneficial owners of the Global Security or Securities representing
Book-Entry Notes should consult the Participants through which they own their
interest therein for the respective deadlines for such Participants. All
instructions given to Participants from beneficial owners relating to the option
to elect repayment shall be irrevocable. In addition, at the time such
instructions are given, such beneficial owners shall cause the applicable
Participant to transfer such beneficial owner's interest in the Global Security
or Securities representing such Book-Entry Notes, on the Depositary's records,
to the applicable Trustee. See "Book-Entry Notes."
If applicable, the Company will comply with the requirements of Rule
14e-1 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and any other securities laws or regulations in connection with any such
repayment.
The Company may at any time purchase Notes at any price or prices in
the open market or otherwise. Notes so purchased by the Company may be held or
resold or, at the discretion of the Company, may be surrendered to the Trustee
for cancellation.
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
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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).
"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.
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"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.
CONSOLIDATION, MERGER OR SALE
The Company may consolidate with, or sell, lease or convey all or
substantially all of its assets to, or merge with or into, any other entity,
provided that (i) either the Company shall be the continuing entity, or the
successor entity (if other than the Company) formed by or resulting from any
such consolidation or merger or which shall have received the transfer of such
assets is a Person organized and existing under the laws of the United States or
any state thereof and shall expressly assume the due and punctual payment of the
principal of (and premium or Make-Whole Amount, if any) and any interest
(including all Additional Amounts, if any) on all of the Notes and the due and
punctual performance and observance of all of the covenants and conditions
contained in the Indenture to be performed by the Company; (ii) immediately
after giving effect to such transaction and treating any indebtedness which
becomes an obligation of the Company or any Subsidiary as a result thereof as
having been incurred by the Company or such Subsidiary at the time of such
transaction, no Event of Default under the Indenture, and no event which after
notice or the lapse of time, or both, would become such an Event of Default,
shall have occurred and be continuing; and (iii) an Officers' Certificate and
legal opinion covering such conditions shall be delivered to the Trustee.
(Sections 801, 803).
EVENTS OF DEFAULT, NOTICE AND WAIVER
The Indenture provides that the following events are "Events of
Default" with respect to the Notes: (i) default for 30 days in the payment of
any installment of interest or Additional Amount payable on any Note when due
and payable; (ii) default in the payment of the principal of (or premium or
Make-Whole Amount, if any) any Note when due and payable; (iii) default in the
performance, or breach, of any covenant of the Company contained in the
Indenture (other than a covenant 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;
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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.
BOOK-ENTRY NOTES
The following provisions assume that the Company has established a
depository arrangement with The Depository Trust Company with respect to the
Book-Entry Notes. Any additional or differing terms of the depository
arrangements with respect to the Book-Entry Notes will be described in the
applicable Pricing Supplement.
Upon issuance, all Book-Entry Notes bearing interest (if any) at the
same rate or pursuant to the same formula and having the same date of issue,
currency of denomination and payment, redemption provisions (if any), repayment
provisions (if any), Stated Maturity and other variable terms will be
represented by a single Global Security. Each Global Security representing Book-
Entry Notes will be deposited with, or on behalf of, the Depositary and will be
registered in the name of the Depositary or a nominee of the Depositary. No
Global Security may be transferred except as a whole by a nominee of the
Depositary to the Depositary or to another nominee of the Depositary, or by the
Depositary or such nominee to a successor of the Depositary or a nominee of such
successor.
So long as the Depositary or its nominee is the registered owner of a
Global Security, the Depositary or its nominee, as the case may be, will be the
sole Holder of the Book-Entry Notes represented thereby for all purposes under
the Indenture. Except as otherwise provided in this section, the beneficial
owners of the Global Security or Securities representing Book-Entry Notes will
not be entitled to receive physical delivery of Certificated Notes and will not
be considered the Holders thereof for any purpose under the Indenture, and no
Global Security representing Book-Entry Notes shall be exchangeable or
transferable. Accordingly, each person owning a beneficial interest in a Global
Security must rely on the procedures of the Depositary and, if such person is
not a Participant, on the procedures of the Participant through which such
person owns its interest in order to exercise any rights of a Holder under the
Indenture. The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of such securities in certificated form. Such
limits and such laws may impair the ability to transfer beneficial interests in
a Global Security representing Book-Entry Notes.
Unless otherwise specified in the applicable Pricing Supplement, each
Global Security representing Book-Entry Notes will be exchangeable for
Certificated Notes of like tenor and terms and of differing authorized
denominations aggregating a like amount, only if (i) the Depositary notifies the
Company that it is unwilling or unable to continue as Depositary for the Global
Securities, (ii) the Depositary ceases to be a clearing agency registered under
the Exchange Act, (iii) the Company in its sole discretion determines that the
Global Securities shall be exchangeable for Certificated Notes, or (iv) there
shall have occurred and be continuing an Event of Default under the Indenture
with respect to the Notes. Upon any such exchange, Certificated Notes shall be
registered in the names of the beneficial owners of the Global Security or
Securities representing Book-Entry Notes as provided by the Depositary's
relevant Participants (as identified by the Depositary).
With respect to any Book-Entry Note denominated in a Specified
Currency other than U.S. dollars, the Depositary currently has elected to have
payments of principal (and premium, if any) and Interest on such Note made in
U.S. dollars unless notified by any of its Participants through which an
interest in such Note is held that it elects to receive such payment of
principal (or premium, if any) or interest in such Specified Currency. Unless
otherwise specified in the applicable Pricing Supplement, a Beneficial Owner of
Book-Entry Notes denominated in a Specified Currency other than U.S. dollars
electing to receive payments of principal or any premium or interest in a
currency other than U.S. dollars must notify the Participant through which its
interest is held on or prior to the
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applicable Record Date, in the case of a payment of Interest, and on or prior to
the sixteenth day prior to maturity, in the case of principal or premium, of
such Beneficial Owner's election to receive all or a portion of such payment in
such Specified Currency. Such Participant must notify the Depositary of such
election on or prior to the third Business Day after such Record Date or after
such sixteenth day. The Depositary will notify the Paying Agent of such election
on or prior to the fifth Business Day after such Record Date or after such
sixteenth day. If complete instructions are received by the Participant and
forwarded by the Participant to the Depositary and by the Depositary to the
Paying Agent, on or prior to such dates, the Beneficial Owner will receive
payments in the Specified Currency.
The following is based on information furnished by the Depositary:
The Depositary will act as securities depository for the Book-Entry
Notes. The Book-Entry Notes will be issued as fully registered securities
registered in the name of Cede & Co. (the Depositary's partnership nominee). One
fully registered Global Security will be issued for each issue of Book-Entry
Notes, each in the aggregate principal amount of such issue, and will be
deposited with the Depositary.
The Depositary 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. The Depositary holds securities that its participants
("Participants") deposit with the Depositary. The Depositary also facilitates
the settlement among Participants of securities transactions, such as transfers
and pledges, in deposited securities through electronic computerized book-entry
changes in Participants' accounts, thereby eliminating the need for physical
movement of securities certificates. Direct Participants include securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations. The Depositary is owned by a number of its direct
participants ("Direct Participants") and by the New York Stock Exchange, Inc.,
the American Stock Exchange, Inc., and the National Association of Securities
Dealers, Inc. Access to the Depositary's 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, either directly
or indirectly ("Indirect Participants"). The rules applicable to the Depositary
and its Participants are on file with the Securities and Exchange Commission.
Purchases of Book-Entry Notes under the Depositary's system must be
made by or through Direct Participants, which will receive a credit for such
Book-Entry Notes on the Depositary's records. The ownership interest of each
actual purchaser of each Book-Entry Note represented by a Global Security
("Beneficial Owner") is in turn to be recorded on the Direct and Indirect
Participants' records. Beneficial Owners will not receive written confirmation
from the Depositary of their purchase, but Beneficial Owners are expected to
receive written confirmations providing details of the transaction, as well as
periodic statements of their holdings, from the Direct or Indirect Participants
through which such Beneficial Owner entered into the transaction. Transfers of
ownership interests in a Global Security representing Book-Entry Notes are to be
accomplished by entries made on the books of Participants acting on behalf of
Beneficial Owners. Beneficial Owners of a Global Security representing Book-
Entry Notes will not receive Notes in certificated form representing their
ownership interests therein, except in the event that use of the book-entry
system for such Book-Entry Notes is discontinued.
To facilitate subsequent transfers, all Global Securities,
representing Book-Entry Notes which are deposited with, or on behalf of, the
Depositary are registered in the name of the Depositary's nominee, Cede & Co.
The deposit of Global Securities with, or on behalf of, the Depositary and their
registration in the name of Cede & Co. effect no change in beneficial ownership.
The Depositary has no knowledge of the actual Beneficial Owners of the Global
Securities representing the Book-Entry Notes; the Depositary's records reflect
only the identity of the Direct Participants to whose accounts such Book-Entry
Notes are credited, which may or may not be the Beneficial Owners. The
Participants will remain responsible for keeping account of their holdings on
behalf of their customers.
Conveyance of notices and other communications by the Depositary to
Direct Participants, by Direct Participants to Indirect Participants, and by
Direct Participants and Indirect Participants to Beneficial Owners will be
governed by arrangements among them, subject to any regulatory requirements as
may be in effect from time to time.
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If applicable, redemption notices shall be sent to Cede & Co. If less
than all of the Book-Entry Notes within an issue are being redeemed, the
Depositary's practice is to determine by lot the amount of the interest of each
Direct Participant in such issue to be redeemed.
Neither the Depositary nor Cede & Co. will consent or vote with
respect to the Global Securities representing the Book-Entry Notes. Under its
usual procedures, the Depositary mails an omnibus proxy (the "Omnibus Proxy") to
the Company as soon as possible after the applicable record date. The Omnibus
Proxy assigns Cede & Co.'s consenting or voting rights to those Direct
Participants to whose accounts the Book-Entry Notes are credited on the
applicable record date (identified in a listing attached to the Omnibus Proxy).
Principal, premium, if any, and interest payments on the Global
Securities representing the Book-Entry Notes will be made to the Depositary. The
Depositary's practice is to credit Direct Participant's accounts on the
applicable payment date in accordance with their respective holdings shown on
the Depositary's records unless the Depositary has reason to believe that it
will not receive payment on such date. Payments by Participants to Beneficial
Owners will be governed by standing instructions and customary practices, as is
the case with securities held for the accounts of customers in bearer form or
registered in "street name," and will be the responsibility of such Participant
and not of the Depositary, the Trustee or the Company, subject to any statutory
or regulatory requirements as may be in effect from time to time. Payment of
principal, premium, if any, and interest to the Depositary is the responsibility
of the Company or the Trustee, disbursement of such payments to Direct
Participants shall be the responsibility of the Depositary, and disbursement of
such payments to the Beneficial Owners shall be the responsibility of Direct and
Indirect Participants.
A Beneficial Owner shall give notice of any option to elect to have
its Book-Entry Notes repaid by the Company, through its Participant, to the
Trustee, and shall effect delivery of such Book-Entry Notes by causing the
Direct Participant to transfer the Participant's interest in the Global Security
or Securities representing such Book-Entry Notes, on the Depositary's records,
to the Trustee. The requirements for physical delivery of Book-Entry Notes in
connection with a demand for repayment will be deemed satisfied when the
ownership rights in the Global Security or Securities representing such Book-
Entry Notes are transferred by Direct Participants on the Depositary's records.
The Depositary may discontinue providing its services as securities
depositary with respect to the Book-Entry Notes at any time by giving reasonable
notice to the Company or the Trustee. Under such circumstances, in the event
that a successor securities depositary is not obtained, Notes in certificated
form are required to be printed and delivered.
The Company may decide to discontinue use of a system of book-entry
transfers through the Depositary (or a successor securities depository). In that
event, Notes in certificated form will be printed and delivered.
The information in this section concerning the Depositary and the
Depositary's system has been obtained from sources that the Company believes to
be reliable, but the Company takes no responsibility for the accuracy thereof.
CERTAIN INVESTMENT CONSIDERATIONS RELATING TO
FOREIGN CURRENCY NOTES
GENERAL
Unless otherwise specified in the applicable Pricing Supplement, Notes
denominated in a Specified Currency other than U.S. dollars or ECUs will not be
sold in, or to residents of, the country issuing the Specified Currency in which
the particular Notes are denominated. The information set forth in this
Prospectus Supplement is directed to prospective purchasers who are U.S.
residents and, with respect to Foreign Currency Notes, is by necessity
incomplete. The Company disclaims any responsibility to advise prospective
purchasers who are residents of countries other than the United States with
respect to any matters that may affect the purchase, holding or receipt of
payments of principal of and premium, if any, and interest on the Notes. Such
persons should consult their own financial and legal advisors with regard to
such matters. See "Risk Factors--Foreign Currency Notes."
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It is possible that the Specified Currency for any particular Foreign
Currency Note would not be available on the applicable payment date due to
exchange controls or other circumstances beyond the control of the Company. See
"Risk Factors--Foreign Currency Notes." In that event, the Company will make
the required payment in respect of such Foreign Currency Note in U.S. dollars on
the basis of the most recently available Exchange Rate. See "Description of
Notes - Payment of Principal and Interest."
Unless otherwise indicated in the applicable Pricing Supplement,
payments on Notes made in a Specified Currency other than U.S. dollars may be
made, at the Company's option, from an account with a bank located in the
country issuing the Specified Currency (or, with respect to Notes denominated in
ECUs, from an ECU account). See "Description of Notes - Payment of Principal and
Interest."
GOVERNING LAW; JUDGMENTS
The Notes will be governed by and construed in accordance with the
laws of the State of New York. If an action based on Foreign Currency Notes were
commenced in a court of the United States, it is likely that such court would
grant judgment relating to such Notes only in U.S. dollars. It is not clear,
however, whether, in granting such judgment, the rate of conversion into U.S.
dollars would be determined with reference to the date of default, the date
judgment is rendered or some other date. Under current New York law, a state
court in the State of New York rendering a judgment on a Foreign Currency Note
would be required to render such judgment in the Specified Currency in which
such Foreign Currency Note is denominated, and such judgment would be converted
into U.S. dollars at the exchange rate prevailing on the date of entry of the
judgment. Accordingly, Holders of Foreign Currency Notes would bear the risk of
exchange rate fluctuations between the time the amount of the judgment is
calculated and the time such amount is converted from U.S. dollars into the
applicable Specified Currency.
NOTES DENOMINATED IN ECUS
Value of the ECU
Except as otherwise provided below, the value of the ECU for the
purpose of any Notes denominated in ECUs, as referred to in Articles 109G and
109L.4 of the Treaty establishing the European Community, as amended (the "EC
Treaty"), is equal to the value of the ECU that is at present used as the unit
of account of the European Communities and which is from time to time valued on
the basis of specified amounts of the currencies of the member states of the
European Community as shown below.
Pursuant to Council Regulation (EEC) No. 1971/89 of 19th June, 1989,
the ECU is at present defined as the sum of the following components:
0.6242 German mark 0.130 Luxembourg franc
0.08784 Pound sterling 0.1976 Danish krone
1.332 French francs 0.008552 Irish pound
1.8 Italian lire 1.440 Greek drachmas
0.2198 Dutch guilder 6.885 Spanish pesetas
3.301 Belgian francs 1.393 Portuguese escudos
Article 109G of the EC Treaty, as amended by the Treaty on European Union,
is applicable from November 1, 1993. This Article provides: "The currency
composition of the ECU basket shall not be changed. From the start of the third
stage, the value of the ECU shall be irrevocably fixed in accordance with
Article 109L.4." Changes as to the nature or composition of the ECU may be made
by the European Community in conformity with the provisions of the EC Treaty.
References herein to the ECU shall be deemed to be references to the ECU as so
changed.
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Choice of Component Currencies for Future Payments
With respect to any payment date in respect of Notes denominated in ECUs on
which the ECU is not available due to the imposition of exchange controls or
other circumstances beyond the control of the Company or the ECU is used neither
as the unit of account of the European Communities nor as the currency of the
European Union, the Exchange Rate Agent shall, without liability on its part,
choose a component currency of the ECU (the "chosen currency") in which all
payments due on that payment date with respect to such Notes shall be made. The
amount of each payment in the chosen currency shall be computed on the basis of
the equivalent of the ECU in that currency, determined as set forth herein as of
the fourth Business Day prior to the date on which such payment is due.
Choice of Component Currency for Payments Already Due
On the first Market Day on which the ECU is not available due to the
imposition of exchange controls or other circumstances beyond the control of the
Company or the ECU is used neither as the unit of account of the European
Communities nor as the currency of the European Union, the Exchange Rate Agent
shall, without liability on its part, choose a component currency of the ECU
(the "chosen currency") in which all payments of principal, interest or other
amounts in respect of Notes denominated in ECUs having a payment date prior
thereto but not yet presented for payment are to be made. The amount of each
payment in the chosen currency shall be computed on the basis of the equivalent
of the ECU in that currency, determined as set forth herein as of such first
Market Day.
Determination of Equivalent in Component Currency
The equivalent of the ECU in the relevant chosen currency as of any date
(the "Day of Valuation") shall be determined on the following basis by the
Exchange Rate Agent. The component currencies of the ECU for this purpose (the
"Components") shall be the currency amounts which were components of the ECU
when the ECU was most recently used as the unit of account of the European
Communities. The equivalent of the ECU in the chosen currency shall be
calculated by first aggregating the U.S. dollar equivalents of the Components
and then, using the rate used for determining the U.S. dollar equivalent of the
Component in the chosen currency as set forth below, calculating the equivalent
in the chosen currency of such aggregate amount in U.S. dollars.
U.S. Dollar Equivalent of Component Currencies
The U.S. dollar equivalent of each of the Components shall be determined by
the Exchange Rate Agent, on the basis of the middle spot delivery quotations
prevailing at 2:30 p.m. (Luxembourg time) on the Day of Valuation of one or more
leading banks, as selected by the Exchange Rate Agent (following consultation,
if practicable, with the Company), in the country of issue of the Component in
question.
No Direct Quotation for Component Currency
If no direct quotations are available for a Component as of a Day of
Valuation from any of the banks selected by the Exchange Rate Agent for this
purpose because foreign exchange markets are closed in the country of issue of
that currency or for any other reason, the most recent direct quotations for
that currency obtained by the Exchange Rate Agent shall be used in computing the
equivalents of the ECU on such Day of Valuation; provided, however, that such
most recent quotations may be used only if they were prevailing in the country
of issue not more than two Market Days before such Day of Valuation. Beyond such
period of two Market Days, the Exchange Rate Agent shall determine the U.S.
dollar equivalent of such Component on the basis of cross rates derived from the
middle spot delivery quotations for such component currency and for the U.S.
dollar prevailing at 2:30 p.m. (Luxembourg time) on such Day of Valuation of one
or more leading banks, as selected by the Exchange Rate Agent (following
consultation, if practicable, with the Company), in a country other than the
country of issue of such Component. Within such period of two Market Days, the
Exchange Rate Agent shall determine the U.S. dollar equivalent of such Component
on the basis of such cross rates if the Exchange Rate Agent judges that the
equivalent so calculated is more representative than the U.S. dollar equivalent
calculated on the basis of such most recent direct quotations. Unless otherwise
specified by the Exchange Rate Agent, if there is more than one
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market for dealing in any Component by reason of foreign exchange regulations or
for any other reason, the market to be referred to in respect of such currency
shall be that upon which a non-resident issuer of securities denominated in such
currency would purchase such currency in order to make payments in respect of
such securities.
EXCHANGE RATE AGENT
All determinations made by the Exchange Rate Agent shall be at its sole
discretion (except to the extent expressly provided herein or in the applicable
Pricing Supplement that any determination is subject to approval by the Company)
and, in the absence of manifest error, shall be conclusive for all purposes and
binding on Holders of the Notes and the Company, and the Exchange Rate Agent
shall have no liability therefor.
UNITED STATES TAXATION
The following general discussion summarizes certain U.S. federal income tax
aspects of the acquisition, ownership and disposition of the Notes. This
discussion is a summary for general information only and does not consider all
aspects of U.S. federal income tax that may be relevant to the purchase,
ownership and disposition of the Notes by a prospective investor in light of the
investor's own circumstances. This discussion also does not address the U.S.
federal income tax consequences of ownership of Notes not held as capital assets
within the meaning of Section 1221 of the U.S. Internal Revenue Code of 1986, as
amended (the "Code"), or the U.S. federal income tax consequences to investors
subject to special treatment under the U.S. federal income tax laws, such as
dealers in securities or foreign currency, tax-exempt entities, banks, thrifts,
insurance companies, persons that hold the Notes as part of a "straddle" or as a
"hedge" against currency risk or that have a "functional currency" other than
the U.S. dollar, and investors in pass-through entities. In addition, the
discussion is generally limited to the U.S. federal income tax consequences to
initial Holders. It does not describe any tax consequences arising out of the
tax laws of any state, local or foreign jurisdiction. This discussion also does
not address the special rules that apply if the Holder receives principal in
installment payments or if the Note is called before the Stated Maturity.
This summary is based upon the Code, existing and proposed regulations
thereunder, and current administrative rulings and court decisions. All of the
foregoing are subject to change, and any such change could affect the continuing
validity of this discussion.
PERSONS CONSIDERING THE PURCHASE OF NOTES SHOULD CONSULT THEIR OWN TAX
ADVISORS CONCERNING THE APPLICATION OF U.S. FEDERAL INCOME TAX LAWS, AS WELL AS
THE LAWS OF ANY STATE, LOCAL, OR FOREIGN TAXING JURISDICTION TO THEIR PARTICULAR
SITUATIONS. ADDITIONAL U.S. FEDERAL INCOME TAX CONSEQUENCES APPLICABLE TO
PARTICULAR NOTES MAY BE SET FORTH IN THE APPLICABLE PRICING SUPPLEMENT.
Special considerations which relate to the U.S. federal income taxation of
payments on Foreign Currency Notes are discussed separately below under the
heading "U.S. Holders - Foreign Currency Notes." Special considerations relevant
to the U.S. federal income taxation of payments on Notes, the interest and/or
principal of which is indexed to property other than foreign currency and which
is not a "variable rate debt instrument" (discussed below under the heading
"U.S. Holders - Stated Interest; Original Issue Discount") will be discussed in
the applicable Pricing Supplement. Special considerations relevant to the U.S.
federal income taxation of Notes issued in bearer form will be discussed in the
applicable Pricing Supplement. The discussion below assumes that the Notes will
be treated as debt for U.S. federal income tax purposes. However, it is possible
that some contingent payment arrangements would not be treated as debt for U.S.
federal income tax purposes. Holders should consult their own tax advisors with
respect to whether any contingent payment obligations are debt.
U.S. HOLDERS
The following discussion is limited to the U.S. federal income tax
consequences relevant to a holder of a note that is (i) a citizen or resident of
the United States, (ii) a corporation organized under the laws of the United
States or any political subdivision thereof or therein, (iii) an estate the
income of which is subject to U.S. federal income tax regardless of the source,
or (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
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control all substantial decisions of the trust (a "U.S. Holder"). Certain
aspects of U.S. federal income tax relevant to a holder other than a U.S. Holder
are discussed separately below.
Stated Interest; Original Issue Discount
Except as set forth below, interest on a Note will be taxable to a U.S.
Holder as ordinary interest income at the time it accrues or is received in
accordance with such holder's method of accounting for tax purposes. U.S.
Holders of Notes that bear original issue discount ("OID") generally will be
subject to the special tax accounting rules for original issue discount
obligations. U.S. Holders of Notes that bear OID and that mature more than one
year from the date of issuance will generally be required to include OID in
income as it accrues in advance of the receipt of cash attributable to such
income, whether such Holder uses the cash or accrual method of accounting.
The Internal Revenue Service (the "IRS") issued final regulations (the "OID
Regulations") concerning the U.S. federal income tax treatment of debt
instruments issued with OID on February 2, 1994, and amended them on June 11,
1996. In general, the OID regulations apply to debt instruments issued on or
after April 4, 1994. Special rules for computing OID on a "variable rate debt
instrument" are considered below under the heading "Variable Rate Notes."
In connection with the issuance of the OID Regulations, the IRS issued as a
temporary and proposed regulation an anti-abuse rule which provides that if a
principal purpose in structuring a debt instrument or applying the OID
Regulations is to achieve a result that is unreasonable in light of the purposes
of the applicable statutes, then the commissioner of the IRS can apply or depart
from the OID Regulations as necessary or appropriate to achieve a reasonable
result. Whether a result is unreasonable is determined based on all of the facts
and circumstances. Although the Company does not believe that the Notes were
structured with such a principal purpose, there can be no assurance that the IRS
will agree with such position.
The amount of OID, if any, on a Note is the excess of its "stated
redemption price at maturity" over its "issue price," subject to a statutory de
minimis exception. For this purpose, de minimis OID is OID that is less than
one-quarter of one percent of the stated redemption price at maturity multiplied
by the number of complete years to its maturity from the issue date.
Generally, the issue price of an issue of Notes will be the first price at
which a substantial amount of such Notes has been sold. (For this purpose, sales
to bond houses, brokers or similar persons or organizations acting in the
capacity of underwriters, placement agents or wholesalers are ignored.) A U.S.
Holder may elect in certain circumstances to decrease the issue price by an
amount equal to the portion of the initial purchase price of the Note equal to
pre-issuance accrued interest.
A Note's stated redemption price at maturity includes all payments required
to be made over the term of the Note other than the payment of "qualified stated
interest," which is defined as interest that is unconditionally payable in cash
or property (other than debt instruments of the issuer) at least annually at a
single fixed rate. If a debt instrument provides for alternate payment schedules
upon the occurrence of one or more contingencies, the determination of whether a
debt instrument provides for qualified stated interest is made by analyzing each
alternative payment schedule (including the stated payment schedule) as if it
were the debt instrument's sole payment schedule. The debt instrument will be
considered to provide for qualified stated interest to the extent of the lowest
fixed rate at which qualified interest would be payable under any payment
schedule.
Interest is generally considered unconditionally payable only if late
payment (other than late payment within a reasonable grace period) or nonpayment
is expected to be penalized or reasonable remedies exist to compel payment.
For purposes of determining whether the OID on a Note is de minimis, in the
case of a Note that otherwise has less than the de minimis amount of OID and on
which all stated interest would be qualified stated interest except that for one
or more accrual periods the interest rate is below the rate applicable for the
remaining term of such Note (e.g., Notes with teaser rates or interest
holidays), the Note's stated redemption price at maturity is treated
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as equal to the Note's issue price plus the greater of the amount of foregone
interest or the "true" discount (i.e., the excess of the Note's stated principal
amount over its issue price).
A U.S. Holder (whether on the cash or accrual method of accounting) must
include in income for the taxable year the sum of the daily portions of OID for
each day of the taxable year on which the U.S. Holder held the Note with a
Stated Maturity of more than one year. The daily portions of OID are determined
by determining the OID attributable to each accrual period and allocating a
ratable portion of such amount to each day in the accrual period. The accrual
period may be of any length and may vary in length over the term of the Note,
provided that each accrual period is no longer than one year and each scheduled
payment of principal and interest occurs on the final day of an accrual period
or on the first day of an accrual period. In general, OID allocable to an
accrual period equals the product of (i) the adjusted issue price at the
beginning of the accrual period (i.e., the original issue price plus previously
accrued OID minus previous payments other than payments of qualified stated
interest) multiplied by the original yield to maturity of the Note (determined
on the basis of compounding at the end of each accrual period) minus (ii) the
amount of qualified stated interest allocable to the accrual period.
The OID Regulations provide special rules for determining the amount of OID
allocable to a period when there is unpaid qualified stated interest, for short
initial accrual periods and final accrual periods, and for determining the yield
to maturity for debt instruments subject to certain contingencies as to the
timing of payments, debt instruments that provide for options to accelerate or
defer any payments, and debt instruments with indefinite maturities. Under the
OID Regulations, options to convert debt into stock of the issuer or into stock
or debt of certain related parties or into cash or other property in an amount
equal to the approximate value of such stock or debt are disregarded in
determining OID. Under the Code and the OID Regulations, U.S. Holders generally
will have to include in income increasingly greater amounts of OID in successive
accrual periods.
Variable Rate Notes
The OID Regulations contain special rules for determining the accrual of
OID and the amount of qualified stated interest on a "variable rate debt
instrument." For purposes of these regulations, a variable rate debt instrument
is a debt instrument that: (1) has an issue price that does not exceed total
noncontingent principal payments by more than a specified amount; (2) provides
for stated interest (compounded or paid at least annually) at (a) one or more
"qualified floating rates," (b) a single fixed rate and one or more qualified
floating rates, (c) a single "objective rate," or (d) a single fixed rate and a
single objective rate that is a "qualified inverse floating rate;" (3) provides
that a qualified floating rate or objective rate in effect at any time during
the term of the instrument is set at a current value of that rate; and (4)
generally, does not provide for any principal payments that are contingent.
For purposes of determining if a Note is a variable rate debt instrument, a
variable rate is a "qualified floating rate" if variations in the rate can
reasonably be expected to measure contemporaneous variations in the cost of
newly borrowed funds in the currency in which the debt instrument is
denominated. A multiple of a qualified floating rate is generally not a
qualified floating rate, unless it is either (a) a product of a qualified rate
times a fixed multiple greater than 0.65 but not more than 1.35 or (b) a
multiple of the type described in (a) increased or decreased by a fixed rate. If
a debt instrument provides for two or more qualified floating rates that can
reasonably be expected to have approximately the same value throughout the term
of the instrument, the qualified floating rates will be considered a single
qualified floating rate. Two or more such rates will be considered to have
approximately the same value throughout the term of the instrument, if the
values of the rates on the date of issuance are within 25 basis points of each
other.
An "objective rate" is a rate, other than a qualified floating rate, that
is determined using a single fixed formula and that is based on objective
financial or economic information. In addition, the IRS may designate other
variable rates that will be treated as objective rates. Restrictions on a
minimum interest rate ("floor") or maximum interest rate ("cap"), or the amount
of increase or decrease in the stated interest rate ("governor"), generally will
not result in a variable rate failing to be treated as a qualified floating rate
if the restriction is fixed throughout the term of the instrument. A cap or
similar restriction that is not reasonably expected as of the issue date of the
debt instrument to cause the yield on the debt instrument to be significantly
less than the expected yield determined without the cap will not generally cause
a variable rate to fail to be a qualified floating rate. A floor or similar
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restriction that is not reasonably expected as of the issue date of the debt
instrument to cause the yield on the debt instrument to be significantly more
than the expected yield without the floor will not generally cause a variable
rate to fail to be a qualified floating rate. A governor or similar restriction
that is not reasonably expected as of the issue date of the debt instrument to
cause the yield on the debt instrument to be significantly more or significantly
less than the expected yield without the governor will not generally cause a
variable rate to fail to be a qualified floating rate. However, a rate is not
an objective rate if it is reasonably expected that the average value of such
rate over the first half of the instrument's term will be either significantly
less or more than the average value of the rate during the final half of the
instrument's term e.g., if there is a significant front-loading or back-loading
of interest.
An objective rate is a "qualified inverse floating rate" if it is equal to
a fixed rate minus a qualified floating rate and if variations in the rate can
reasonably be expected inversely to reflect contemporaneous variations in the
qualified floating rate.
In general, any other debt instrument that qualifies as a "variable rate
debt instrument" will be converted into an "equivalent" fixed rate debt
instrument for purposes of determining the amount and accrual of original issue
discount and qualified stated interest on the debt instrument. The OID
Regulations generally require that such a debt instrument be converted into an
"equivalent" fixed rate debt instrument by substituting any qualified floating
rate or qualified inverse floating rate provided for under the terms of the debt
instrument with a fixed rate equal to the value of the qualified floating rate
or qualified inverse floating rate, as the case may be, as of the debt
instrument's issue date. Any objective rate (other than a qualified inverse
floating rate) provided for under the terms of the debt instrument is converted
into a fixed rate that reflects the yield that is reasonably expected for the
debt instrument. In the case of a debt instrument that qualifies as a "variable
rate debt instrument" and provides for stated interest at a fixed rate in
addition to either one or more qualified floating rates or a qualified inverse
floating rate, the debt instrument is treated as if it provided for a qualified
floating rate (or a qualified inverse floating rate, if the debt instrument
provides for a qualified inverse floating rate) rather than the fixed rate.
Under such circumstances, the qualified floating rate or qualified inverse
floating rate that replaces the fixed rate must be such that the fair market
value of the debt instrument as of the debt instrument's issue date is
approximately the same as the fair market value of an otherwise identical debt
instrument that provides for either the qualified floating rate or qualified
inverse floating rate rather than the fixed rate. Subsequent to converting the
fixed rate into either a qualified floating rate or a qualified inverse floating
rate, the debt instrument is then converted into an "equivalent" fixed rate debt
instrument in the manner described above.
Once the debt instrument is converted into an "equivalent" fixed rate debt
instrument pursuant to the foregoing rules, the amount of original issue
discount and qualified stated interest, if any, are determined for the
"equivalent" fixed rate debt instrument by applying the general OID rules to the
"equivalent" fixed rate debt instrument and a U.S. Holder of the debt instrument
will account for such OID and qualified stated interest as if the U.S. Holder
held the "equivalent" fixed rate debt instrument. Each accrual period,
appropriate adjustments will be made to the amount of qualified stated interest
or OID assumed to have been accrued or paid with respect to the "equivalent"
fixed rate debt instrument in the event that such amounts differ from the actual
amount of interest accrued or paid on the debt instrument during the accrual
period.
A Note which does not qualify as a "variable rate debt instrument" under
the OID Regulations would be treated as a contingent payment debt obligation.
U.S. Holders should be aware that on June 11, 1996, the Treasury Department
issued final regulations (the "CPDI Regulations") concerning the proper United
States Federal income tax treatment of contingent payment debt instruments. In
general, the CPDI Regulations would cause the timing and character of income,
gain or loss reported on a contingent payment debt instrument to substantially
differ from the timing and character of income, gain or loss reported on a
contingent payment debt instrument under general principles of current United
States Federal income tax law. Specifically, the CPDI Regulations generally
require a U.S. Holder of such an instrument to include future contingent and
noncontingent interest payments in income as such interest accrues based upon a
projected payment schedule. Moreover, in general, under the CPDI Regulations,
any gain recognized by a U.S. Holder on the sale, exchange, or retirement of a
contingent payment debt instrument will be treated as ordinary income and all or
a portion of any loss realized could be treated as ordinary loss as opposed to
capital loss (depending upon the circumstances). The CPDI Regulations apply to
debt instruments issued on or after August 13, 1996. Moreover, certain Indexed
Notes may not constitute indebtedness
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for United States Federal income tax purposes. In such case, the United States
Federal income tax treatment of such Indexed Notes would not significantly
differ from the treatment thereof if such Indexed Notes were to constitute
indebtedness. The proper United States Federal income tax treatment of Variable
Notes that are treated as contingent payment debt obligations will be more fully
described in the applicable Pricing Supplement. Furthermore, any other special
United States Federal income tax considerations, not otherwise discussed herein,
which are applicable to any particular issue of Notes will be discussed in the
applicable Pricing Supplement.
Election to Treat all Interest as OID
Under the OID Regulations, a U.S. Holder may elect for a Note acquired
after April 4, 1994, to account for all income on a Note (other than foreign
currency gain or loss), including stated interest, acquisition discount, OID, de
minimis OID, market discount, de minimis market discount and unstated interest,
as adjusted by any amortizable bond premium, or acquisition premium in the same
manner as OID. If this election is made, the U.S. Holder may be subject to the
conformity requirements of Section 171(c) or 1278(b), respectively, which may
require the amortization of bond premium and the accrual of market discount on
other debt instruments held by the same U.S. Holder.
Short-Term Notes
In general, an individual or other cash method U.S. Holder of a Note that
has a Stated Maturity of not more than one year from the date of issuance (a
"short-term Note") is not required to accrue OID unless he or she elects to do
so. Such an election applies to all short-term Notes acquired by the U.S. Holder
during the first taxable year for which the election is made, and all subsequent
taxable years of the U.S. Holder unless the IRS consents to a revocation. U.S.
Holders who report income for U.S. federal income tax purposes on the accrual
method and certain other U.S. Holders and electing cash method U.S. Holders are
required to include OID on such short-term Notes on a straight-line basis,
unless an irrevocable election with respect to any short-term Note is made to
accrue the OID according to a constant interest rate based on daily compounding.
In the case of a U.S. Holder who is not required, and does not elect, to include
OID in income currently, any gain realized on the sale, exchange or retirement
of the short-term Note will be ordinary income to the extent of the OID accrued
on a straight-line basis (or, if elected, according to the constant yield method
based on daily compounding) through the date of sale, exchange or retirement. In
addition, such non-electing U.S. Holders who are not subject to the current
inclusion requirement described above will be required to defer deductions for
any interest paid on indebtedness incurred or continued to purchase or carry
such short-term Notes.
Market Discount
If a Note is acquired at a "market discount," some or all of any gain
realized upon a sale or other disposition, or payment at maturity, or some or
all of a partial principal payment of such Note may be treated as ordinary
income, as described below. For this purpose, "market discount" is the excess
(if any) of the Note's issue price (or, in the case of a subsequent purchaser,
the Note's stated redemption price at maturity) over the purchase price, subject
to a statutory de minimis exception. In the case of a Note issued with OID, in
lieu of using the Note's stated redemption price at maturity, the Note's revised
issue price as of the purchase date is used. Unless a U.S. Holder has elected to
include the market discount in income as it accrues, any gain realized on any
subsequent disposition of such Note (other than in connection with certain
nonrecognition transactions) or payment at maturity, or some or all of any
partial principal payment with respect to such Note, will be treated as ordinary
income to the extent of the market discount that is treated as having accrued
during the period such Note was held.
The amount of market discount treated as having accrued will be determined
either (i) on a ratable basis by multiplying the market discount times a
fraction, the numerator of which is the number of days the Note was held by the
U.S. Holder and the denominator of which is the total number of days after the
date such U.S. Holder acquired the Note up to and including the date of its
maturity, or (ii) if the U.S. Holder so elects, on a constant interest rate
method. A U.S. Holder may make that election with respect to any Note, and such
election is irrevocable.
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In lieu of recharacterizing gain upon disposition as ordinary income to the
extent of accrued market discount at the time of disposition, a U.S. Holder of
such Note acquired at a market discount may elect to include market discount in
income currently, through the use of either the ratable inclusion method or the
elective constant interest method. Once made, the election to include market
discount in income currently applies to all Notes and other obligations of the
U.S. Holder that are purchased at a market discount during the taxable year for
which the election is made, and all subsequent taxable years of the U.S. Holder,
unless the IRS consents to a revocation of the election. If an election is made
to include market discount in income currently, the basis of the Note in the
hands of the U.S. Holder will be increased by the market discount thereon as it
is includable in income.
If the U.S. Holder makes the election to treat as OID all interest on a
debt instrument that has market discount, the U.S. Holder is deemed to have made
the election to accrue currently market discount on all other debt instruments
with market discount. In addition, if the U.S. Holder has previously made the
election to accrue market discount currently, the conformity requirements of
that election are met for debt instruments with respect to which the U.S. Holder
elects to treat all interest as OID.
Unless a U.S. Holder who acquires a Note at a market discount elects to
include market discount in income currently, such U.S. Holder may be required to
defer a portion of any interest expense that may otherwise be deductible on any
indebtedness incurred or maintained to purchase or carry such Note.
Premium
If a U.S. Holder purchases a Note issued with OID at an "acquisition
premium," the U.S. Holder reduces the amount of OID includable in income in each
taxable year by that portion of acquisition premium allocable to that year. A
Note is purchased at an acquisition premium if, immediately after the purchase,
the purchaser's adjusted basis in the Note is greater than the adjusted issue
price but not greater than all amounts payable on the instrument after the
purchase date (other than qualified stated interest) (i.e., the Note is not
purchased at a "bond premium"). In general, the reduction in OID allocable to
acquisition premium is determined by multiplying the daily portion of OID by a
fraction the numerator of which is the excess of the U.S. Holder's adjusted
basis in the Note immediately after the acquisition over the adjusted issue
price of the Note and the denominator of which is the excess of the sum of all
amounts payable on the Note after the purchase date, other than payments of
qualified stated interest, over the Note's adjusted issue price. Rather than
apply the above fraction, the U.S. Holder may, as discussed above, elect to
treat all interest, including for this purpose acquisition premium, as OID.
If a U.S. Holder purchases a Note and, immediately after the purchase, the
adjusted basis of the Note exceeds the sum of all amounts payable on the
instrument after the purchase date, other than qualified stated interest, the
Note has "bond premium." A U.S. Holder that purchases a Note at a bond premium
is not required to include OID in income. In addition, a U.S. Holder may elect
to amortize such bond premium over the remaining term of such Note (or, in
certain circumstances, until an earlier call date).
If bond premium is amortized, the amount of interest that must be included
in the U.S. Holder's income for each period ending on an Interest Payment Date
or maturity, as the case may be, will be reduced by the portion of premium
allocable to such period based on the Note's yield to maturity. If such an
election to amortize bond premium is not made, a U.S. Holder must include the
full amount of each interest payment in income in accordance with its regular
method of accounting and will receive a tax benefit from the premium only in
computing its gain or loss upon the sale or other disposition or payment of the
principal amount of the Note.
An election to amortize premium will apply to amortizable bond premium on
all Notes and other bonds, the interest on which is includable in the U.S.
Holder's gross income, held at the beginning of the U.S. Holder's first taxable
year to which the election applies or thereafter acquired, and may be revoked
only with the consent of the IRS. The election to treat all interest, including
for this purpose amortizable premium, as OID is deemed to be an election to
amortize premium under Section 171(c) of the Code for purposes of the conformity
requirements of that section. In addition, if the U.S. Holder has already made
an election to amortize premium, the conformity requirements will be deemed
satisfied with respect to any Notes for which the U.S. Holder makes an election
to treat all interest as OID.
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Sale, Exchange, Redemption or Repayment of the Notes
Upon the disposition of a Note by sale, exchange, redemption, or repayment,
the U.S. Holder will generally recognize gain or loss equal to the difference
between (i) the amount realized on the disposition (other than amounts
attributable to accrued and unpaid interest) and (ii) the U.S. Holder's tax
basis in the Note. A U.S. Holder's tax basis in a Note generally will equal the
cost of the Note (net of accrued interest) to the U.S. Holder increased by
amounts includable in income as OID or market discount (if the holder elects to
include market discount on a current basis) and reduced by any amortized premium
and any payments other than payments of qualified stated interest (or fixed
periodic interest) made on such Note.
To the extent that the Note is held as a capital asset, such gain or loss
(except to the extent that the market discount rules or rules relating to
certain short term OID notes otherwise provide) will generally constitute
capital gain or loss and will be long-term capital gain or loss if the U.S.
Holder has held such Note for longer than one year. In certain circumstances, if
an issuer were found to have an intention, at the time its debt obligations were
issued, to call such obligations before maturity, gain would be ordinary income
to the extent of any unamortized OID. The OID Regulations clarify that this rule
will not apply to publicly offered debt instruments.
Foreign Currency Notes
The following discussion applies to Foreign Currency Notes, if such Notes
are not denominated in or indexed to a currency that is considered a
"hyperinflationary" currency. Special U.S. tax considerations apply to
obligations denominated in or indexed to a hyperinflationary currency.
In general, a U.S. Holder that uses the cash method of accounting and holds
Foreign Currency Notes will be required to include in income the U.S. dollar
value of the amount of interest income received whether or not the payment is
received in U.S. dollars or converted into U.S. dollars. The U.S. dollar value
of the amount of interest received is the amount of foreign currency interest
paid translated at the spot rate on the date of receipt. The U.S. Holder will
not have exchange gain or loss on the interest payment but may have exchange
gain or loss when it disposes of any foreign currency received.
A U.S. Holder on the accrual method of accounting is generally required to
include in income the U.S. dollar value of interest accrued during the accrual
period. Accrual basis U.S. Holders may determine the amount of income recognized
with respect to such interest in accordance with either of two methods. Under
the first method, the U.S. dollar value of accrued interest is translated at the
average rate for the interest accrual period (or, with respect to an accrual
period that spans two taxable years, the partial period within the taxable
year). For this purpose, the average rate is the simple average of spot rates of
exchange for each Business Day of such period or other average exchange rate for
the period reasonably derived and consistently applied by the U.S. Holder. Under
the second method, a U.S. Holder can elect to accrue interest at the spot rate
on the last day of an accrual period (in the case of a partial accrual period,
the last date of the taxable year) or if the last day of an accrual period is
within five Business Days of the receipt, the spot rate on the date of receipt.
Any such election will apply to all debt instruments held by the U.S. Holder at
the beginning of the first taxable year to which the election applies or
thereafter acquired and will be irrevocable without the consent of the IRS. An
accrual basis U.S. Holder will recognize exchange gain or loss, as the case may
be, on the receipt of a foreign currency interest payment if the exchange rate
on the date payment is received differs from the rate applicable to the previous
accrual of interest income. The foreign currency gain or loss will generally be
treated as U.S. source ordinary income or loss. OID on a Note denominated in a
foreign currency is determined in foreign currency and is translated into U.S.
dollars in the same manner that an accrual basis U.S. Holder translates accrued
interest. Exchange gain or loss will be determined when OID is considered paid
to the extent the exchange rate on the date of payment differs from the exchange
rate at which the OID was accrued.
The amount of market discount on a Foreign Currency Note includable in
income will generally be determined by computing the market discount in the
foreign currency and translating that amount into U.S. dollars on the spot rate
on the date the Foreign Currency Note is retired or otherwise disposed of. If
the U.S. Holder accrues market discount currently, the amount of market discount
which accrues during any accrual period is determined in the foreign currency
and translated into U.S. dollars on the basis of the average exchange rate in
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effect during the accrual period. Exchange gain or loss may be recognized to the
extent that the rate of exchange on the date of the retirement or disposition of
the Note differs from the rate of exchange at which the market discount was
accrued.
Amortizable premium on Foreign Currency Notes is also computed in units of
foreign currency and, if the U.S. Holder elects, will reduce interest income in
units of foreign currency. At the time amortized bond premium offsets interest
income, exchange gain or loss is realized measured by the difference between
exchange rates at that time and at the time of the acquisition of the Note.
In the case of a Note denominated in foreign currency, the cost of the Note
to the U.S. Holder will be the U.S. dollar value of the foreign currency
purchase price translated at the spot rate for the date of purchase (or, in some
cases, the settlement date). The conversion of U.S. dollars to a foreign
currency and the immediate use of that currency to purchase Foreign Currency
Notes generally will not result in a taxable gain or loss for a U.S. Holder. A
U.S. Holder who purchases a Note with previously owned foreign currency
generally will recognize exchange gain or loss on such currency equal to the
difference between the U.S. Holder's tax basis in the currency and the fair
market value of the currency determined on the date of purchase.
With respect to the sale, exchange, retirement, or repayment of a Note
denominated in a foreign currency, the foreign currency amount realized will be
considered to be the payment of accrued but unpaid interest (on which exchange
gain or loss is recognized as described above), accrued but unpaid OID (on which
exchange gain or loss is recognized as described above), and, finally, as a
payment of principal on which (i) gain or loss is computed in foreign currency
and translated on the date of retirement or disposition; and (ii) exchange gain
or loss is separately computed on the foreign currency amount of principal
(reduced by amortizable premium) that is repaid to the extent that the rate of
exchange on the date of retirement or disposition differs from the rate of
exchange on the date the Note was acquired or deemed acquired. Exchange gain or
loss computed on accrued interest, OID, accrued market discount and principal
shall be recognized, however, only to the extent of total gain or loss on the
transaction. For purposes of determining the total gain or loss on the
transaction, a U.S. Holder's tax basis in the Note generally will equal the U.S.
dollar cost of the Note (as determined above) increased by the U.S. dollar
amounts includable in income as accrued interest, OID, or market discount (if
the U.S. Holder elects to include such market discount on a current basis) and
reduced by the U.S. dollar amount of amortized premium and of any payments other
than payments of qualified stated interest. A U.S. Holder will have a tax basis
in any foreign currency received on the sale, exchange or retirement of a Note
equal to the U.S. dollar value of such currency on the date of receipt.
Backup Withholding
A U.S. Holder of a Note may be subject to U.S. backup withholding at the
rate of 31% with respect to interest paid on the Note, unless such U.S. Holder
(i) is a corporation or comes within certain other exempt categories and, when
required, demonstrates this fact or (ii) provides a correct taxpayer
identification number, certifies as to no loss of exemption from backup
withholding and otherwise complies with the applicable requirements of the
backup withholding rules. U.S. Holders of Notes should consult their tax
advisors as to their qualification for exemption from U.S. backup withholding
and the procedure for obtaining such an exemption. Any amount paid as backup
withholding will be creditable against the U.S. Holder's U.S. federal income tax
liability.
Pre-Issuance Accrued Interest
If (i) a portion of the initial purchase price of a Note is attributable to
pre-issuance accrued interest, (ii) the first stated interest payment on the
Note is to be made within one year of the Note's issue date and (iii) the
payment will equal or exceed the amount of pre-issuance accrued interest, then
the U.S. Holder may elect to decrease the issue price of the Note by the amount
of pre-issuance accrued interest. In that event, a portion of the first stated
interest payment will be treated as a return of the excluded pre-issuance
accrued interest and not as an amount payable on the Note.
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NON-U.S. HOLDERS
The following is a summary of the U.S. federal income tax consequences of
the ownership and disposition of the Notes by a holder who does not meet the
criteria set forth in the definition of a U.S. Holder (a "Non-U.S. Holder").
This discussion does not consider all aspects of U.S. federal income and estate
taxation that may be relevant to the purchase, ownership or disposition of the
Notes by such Non-U.S. Holder in light of such holder's personal circumstances,
including holding the Notes through a partnership. For example, persons who are
partners in foreign partnerships and beneficiaries of foreign trusts or estates
who are subject to U.S. federal income tax because of their own status, such as
United States residents or foreign persons engaged in a trade or business in the
United States, may be subject to U.S. federal income tax even though the entity
is not subject to income tax on the disposition of its Note.
For purposes of the following discussion, interest (including OID) and gain
on the sale, exchange or other disposition of the Note will be considered "U.S.
trade or business income" if such income or gain is (i) effectively connected
with the conduct of a U.S. trade or business or (ii) in the case of a treaty
resident, attributable to a U.S. permanent establishment (or in the case of an
individual treaty resident, a fixed base) in the United States.
Interest and Original Issue Discount
Generally, any interest or OID paid to a Non-U.S. Holder of a Note that is
not "U.S. trade or business income" will not be subject to U.S. federal income
tax if the interest (or OID) qualifies as "portfolio interest." Generally,
interest on registered Notes will qualify as portfolio interest if (i) the Non-
U.S. Holder does not actually or constructively own 10% or more of the total
voting power of all voting stock of the Company, is not a controlled foreign
corporation with respect to which the Company is a "related person" within the
meaning of the Code and is not a bank receiving interest described in Section
881(c)(3)(A) of the Code, and (ii) the beneficial owner, under penalty of
perjury, certifies that the beneficial owner is not a U.S. Holder and such
certificate provides the beneficial owner's name and address.
The gross amount of payments to a Non-U.S. Holder of interest or OID that
do not qualify for the portfolio interest exception and that are not U.S. trade
or business income will be subject to U.S. federal income tax at the rate of 30%
unless a U.S. income tax treaty applies to reduce or eliminate withholding. U.S.
trade or business income will be taxed on a net basis at regular U.S. rates
rather than the 30% gross rate. To claim the benefit of a tax treaty or to claim
exemption from withholding because the income is U.S. trade or business income,
the Non-U.S. Holder must provide a properly executed Form 1001 or Form 4224, as
applicable, prior to the payment of interest or OID. The Forms 1001 and 4224
must be periodically updated.
Indexed Notes
The IRS has stated that it is considering various issues relating to the
treatment of Non-U.S. Holders of contingent payment debt obligations, including
"the possibility of tax avoidance that may arise when a contingent payment debt
obligation is structured with payments that approximate the yield on an equity
security or an index and the proper characterization of gain recognized by a
foreign holder on the disposition of a debt instrument in certain cases"
(including coordination with the rules for taxation of foreign investment in
U.S. real property). Subject to certain exceptions, recently enacted legislation
provides that the portfolio interest exception from withholding tax does not
apply to certain payments of contingent interest if: (1) the amount of interest
is determined by reference to (i) receipts, sales or other cash flows of the
Company or a related person, (ii) any income or profits of the Company or a
related person, (iii) any change in the value of any property of the Company or
a related person, or (iv) any dividends, partnership distributions, or similar
payments made by the Company or a related person; or (2) the interest is
identified in regulations not yet issued as contingent interest for which the
portfolio interest exception should be denied. Gain from the sale of certain
contingent payment debt obligations is also treated as interest under draft
proposed regulations that were released by the IRS but were withdrawn pending
review.
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Sale of Notes
Except as described below and subject to the discussion concerning backup
withholding and Indexed Notes, any gain realized by a Non-U.S. Holder on the
sale or exchange of a Note generally will not be subject to U.S. federal income
tax, unless (i) such gain is U.S. trade or business income, (ii) subject to
certain exceptions, the Non-U.S. Holder is an individual who holds the Note as a
capital asset and is present in the United States for 183 days or more in the
taxable year of the disposition, or (iii) the Non-U.S. Holder is subject to tax
pursuant to the provisions of U.S. tax law applicable to certain U.S.
expatriates.
Federal Estate Tax
Except with respect to Notes that bear contingent interest that is not
eligible for the portfolio interest exception, Notes held (or treated as held)
by an individual who is a Non-U.S. Holder at the time of his death will not be
subject to U.S. federal estate tax provided that the individual does not
actually or constructively own 10% or more of the total voting power of all
voting stock of the Company.
Information Reporting and Backup Withholding
The Company must report annually to the IRS and to each Non-U.S. Holder any
interest and OID that is subject to withholding or that is exempt from U.S.
withholding tax pursuant to a tax treaty or the portfolio interest exception.
Copies of these information returns may also be made available under the
provisions of a specific treaty or agreement with the tax authorities of the
country in which the Non-U.S. Holder resides.
In the case of payments of principal on the Notes by the Company to a Non-
U.S. Holder, the regulations provide that backup withholding and information
reporting will not apply to payments if the Holder certifies to its Non-U.S.
Holder status under penalties of perjury or otherwise establishes an exemption
(provided that neither the Company nor its paying agent has actual knowledge
that the holder is a U.S. Holder or that the conditions of any other exemption
are not, in fact, satisfied).
The payment of the proceeds from the disposition of Notes to or through the
U.S. office of any broker, U.S. or foreign, will be subject to information
reporting and possible backup withholding unless the owner certifies its Non-
U.S. Holder status under penalty of perjury or otherwise establishes an
exemption, provided that the broker does not have actual knowledge that the
Holder is a U.S. Holder or that the conditions of any other exemption are not,
in fact, satisfied. The payment of the proceeds from the disposition of a Note
to or through a non-U.S. office of a non-U.S. broker will not be subject to
information reporting or backup withholding if the broker is not a U.S. related
person. For this purpose, a "U.S. related person" is (i) a "controlled foreign
corporation" for U.S. federal income tax purposes, or (ii) a foreign person 50%
or more of whose gross income from all sources for the three-year period ending
with the close of its taxable year preceding the payment (or for such part of
the period that the broker has been in existence) is derived from activities
that are effectively connected with the conduct of a United States trade or
business.
In the case of the payment of proceeds from the disposition of Notes
through a non-U.S. office of a broker that is either a U.S. person or a "U.S.
related person," existing regulations require information reporting on the
payment, unless the broker has documentary evidence in its files that the owner
is a Non-U.S. Holder and the broker has no knowledge to the contrary. Backup
withholding will not apply to payments made through foreign offices of a broker
that is a U.S. person or a U.S. related person (absent actual knowledge that the
payee is a U.S. person).
Any amounts withheld under the backup withholding rules from a payment to a
Non-U.S. Holder will be allowed as a refund or a credit against such Non-U.S.
Holder's U.S. federal income tax liability, provided that certain required
information is furnished to the IRS.
S-37
<PAGE>
SUPPLEMENTAL PLAN OF DISTRIBUTION
Subject to the terms and conditions set forth in the Distribution
Agreement, dated March 20, 1997 (the "Distribution Agreement"), the Notes are
being offered on a continuing basis by the Company through NationsBanc Capital
Markets, Inc., Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, J.P. Morgan Securities Inc., Smith Barney Inc. and UBS Securities
LLC (the "Agents"), who have agreed to use reasonable efforts to solicit
purchases of the Notes. The Company will have the sole right to accept offers to
purchase Notes and may reject any proposed purchase of Notes in whole or in
part. The Agents shall have the right, in their discretion reasonably exercised,
to reject any offer to purchase Notes, in whole or in part. The Company will pay
the Agents a commission ranging from 0.125% to 0.750% of the principal amount of
Notes, depending upon maturity, for sales made through them as Agents.
Commissions with respect to Notes with stated maturities in excess of 30 years
will be negotiated between the Company and the Agents at the time of such sale.
The Company may also sell Notes to the Agents as principals for their own
accounts at a discount to be agreed upon at the time of sale, or the purchasing
Agents may receive from the Company a commission or discount equivalent to that
set forth on the cover page of this Prospectus Supplement in the case of any
such principal transaction in which no other discount is agreed. Such Notes may
be resold by an Agent to investors at prevailing market prices, or, if so
agreed, at fixed prices. The Company reserves the right to sell Notes directly
on its own behalf. No commission will be payable on any Notes sold directly by
the Company.
In addition, the Agents may offer the Notes they have purchased as
principal to other dealers. The Agents may sell Notes to any dealer at a
discount and, unless otherwise specified in the applicable Pricing Supplement,
such discount allowed to any dealer may include all or part of the discount to
be received from the Company. Unless otherwise indicated in the applicable
Pricing Supplement, any Note sold to an Agent as principal will be purchased by
such Agent at a price equal to 100% of the principal amount thereof less a
percentage equal to the commission applicable to any agency sale of a Note of
identical maturity. After the initial public offering of Notes, the public
offering price (in the case of Notes to be resold on a fixed price basis),
concession and discount may be changed.
The Agents may 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 Agents create a short position in the Notes in connection with the
offering, i.e., if they sell more Notes than are set forth on the cover page of
this Prospectus Supplement, the Agents may reduce that short position by
purchasing Notes in the open market.
The Agents may also impose a penalty bid on certain syndicate and selling
group members. This means that if the Agents purchase Notes in the open market
to reduce the Agents' short position or to stabilize the price of the Notes,
they may reclaim the amount of the selling concession from the syndicate and
selling group members who sold those Notes as part of the offering.
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. The imposition of a penalty bid
might also have an effect on the price of a security to the extent that it were
to discourage resales of the security.
Neither the Company nor any of the Agents makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the Notes. In addition, neither the
Company nor any of the Agents makes any representation that the Agents will
engage in such transactions or that such transactions, once commenced, will not
be discontinued without notice.
The Agents, as agents or principals, as well as any dealers who resell
Notes to investors, may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933 (the "Act"). The Company has agreed to indemnify the
Agents against certain liabilities, including liabilities under the Act. The
Company has agreed to reimburse the Agents for certain expenses.
S-38
<PAGE>
Unless otherwise indicated in the applicable Pricing Supplement, payment of
the purchase price of Notes will be required to be made in immediately available
funds in The City of New York.
The Agents may be customers of, engage in transactions with, and perform
services for the Company in the ordinary course of business in the future.
In the ordinary course of their respective businesses, the Agents and their
affiliates have engaged, and may in the future engage, in commercial banking and
investment banking transactions with the Company. NationsBank of Texas, N.A.,
an affiliate of NationsBanc Capital Markets, Inc., is a lender under the
Company's unsecured credit facility and will receive its proportionate share of
any repayments by the Company of amounts outstanding under such facility from
the proceeds of the offering of the Notes.
The Notes are a new issue of securities with no established trading market
and will not be listed on any securities exchange. No assurance can be given as
to the existence or liquidity of the secondary market for the Notes.
VALIDITY OF NOTES
The validity of the Notes will be passed upon for the Company by Liddell,
Sapp, Zivley, Hill & LaBoon, L.L.P., Dallas, Texas, and for the Agents by Brown
& Wood LLP, New York, New York. The opinions of Liddell, Sapp, Zivley, Hill &
LaBoon, L.L.P. and Brown & Wood LLP will be conditioned upon, and subject to,
certain assumptions as to future actions required to be taken in connection with
the issuance and sale of the Notes and as to other events that may affect the
validity of the Notes but which cannot be ascertained on the date of such
opinions.
S-39
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S-40
<PAGE>
PROSPECTUS
CAMDEN PROPERTY TRUST
$400,000,000
DEBT SECURITIES, PREFERRED SHARES,
COMMON SHARES AND SECURITIES WARRANTS
Camden Property Trust (the "Company") may from time to time offer and sell
in one or more series (i) its unsecured senior debt securities (the "Debt
Securities"); (ii) shares of its preferred shares of beneficial interest, par
value $0.01 per share (the "Preferred Shares"); (iii) common shares of
beneficial interest, par value $0.01 per share (the "Common Shares"); or (iv)
warrants to purchase Common Shares (the "Common Shares Warrants"), warrants to
purchase Debt Securities (the "Debt Securities Warrants") and warrants to
purchase Preferred Shares (the "Preferred Shares Warrants"), with an aggregate
public offering price of up to $400,000,000, on terms to be determined by market
conditions at the time of offering. The Common Shares Warrants, the Debt
Securities Warrants and the Preferred Shares Warrants shall be referred to
herein collectively as the "Securities Warrants." The Debt Securities, Preferred
Shares, Common Shares, and Securities Warrants (collectively, the "Offered
Securities") may be offered separately or together, in separate series, in
amounts and at prices and terms to be set forth in an accompanying supplement to
this Prospectus (a "Prospectus Supplement").
With respect to the Debt Securities, the specific title, aggregate
principal amount, currency, form (which may be registered or bearer, or
certificated or global), authorized denominations, maturity, rate (or manner of
calculation thereof) and time of payment of interest, terms for redemption at
the option of the Company or repayment at the option of the Holder, any sinking
fund provisions and any conversion provisions will be set forth in the
applicable Prospectus Supplement. The terms of the Preferred Shares, including
the specific designation and stated value per share, any dividend, liquidation,
redemption, conversion, voting and other rights, and all other specific terms of
the Preferred Shares will be set forth in the applicable Prospectus Supplement.
In the case of the Common Shares, the specific number of shares and issuance
price per share will be set forth in the applicable Prospectus Supplement. In
the case of the Securities Warrants, the duration, offering price, exercise
price and detachability, if applicable, will be set forth in the applicable
Prospectus Supplement. In addition, such specific terms may include limitations
on direct or beneficial ownership and restrictions on transfer of the Offered
Securities, in each case as may be appropriate to preserve the status of the
Company as a real estate investment trust ("REIT") for United States federal
income tax purposes. The applicable Prospectus Supplement will also contain
information, where applicable, about certain United States federal income tax
considerations relating to, and any listing on a securities exchange of, the
Offered Securities covered by such Prospectus Supplement.
The Offered Securities may be offered directly, through agents designated
from time to time by the Company, or to or through underwriters or dealers. If
any agents or underwriters are involved in the sale of any of the Offered
Securities, their names, and any applicable purchase price, fee, commission or
discount arrangement between or among them, will be set forth, or will be
calculable from the information set forth, in the applicable Prospectus
Supplement. See "Plan of Distribution." No Offered Securities may be sold
without delivery of the applicable Prospectus Supplement describing the method
and terms of the offering of such series of Offered Securities.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
____________________
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR
ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION
TO THE CONTRARY IS UNLAWFUL.
____________________
This Prospectus may not be used to consummate sales of Offered Securities
unless accompanied by a Prospectus Supplement.
____________________
The date of this Prospectus is January 30, 1996
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission"), 450 Fifth Street, N.W., Washington, D.C. 20549, a Registration
Statement on Form S-3 under the Securities Act of 1933, as amended (the
"Securities Act") and the rules and regulations promulgated thereunder with
respect to the securities offered pursuant to this Prospectus. This Prospectus,
which is part of the Registration Statement, does not contain all of the
information set forth in the Registration Statement and the exhibits and
schedules thereto. For further information with respect to the Company and the
Offered Securities, reference is made to the Registration Statement and such
exhibits and schedules. Statements contained in this Prospectus as to the
contents of any contract or other document which is filed as an exhibit to the
Registration Statement are not necessarily complete, and each such statement is
qualified in its entirety by reference to the full text of such contract or
document.
The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy and information statements and other information
with the Commission. Such reports, proxy and information statements and other
information and the Registration Statement and exhibits and schedules thereto
filed by the Company with the Commission can be inspected and copied at the
Public Reference Section of the Commission at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices of the
Commission located at 7 World Trade Center, 13th Floor, New York, New York 10048
and at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511.
Copies of such material can be obtained from the Public Reference Section of the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549 at prescribed rates. Such reports, proxy and information statements
and other information can also be inspected at the offices of the New York Stock
Exchange, 20 Broad Street, New York, New York 10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated by reference herein and shall be deemed to be a part hereof:
(a) Annual Report on Form 10-K for the year ended December 31, 1994;
(b) Quarterly Report on Form 10-Q for the quarters ended March 31, 1995,
June 30, 1995 and September 30, 1995; and
(c) The description of the Common Shares contained in the Company's
Registration Statement on Form 8-A (File No. 1-12110).
All documents subsequently filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and
prior to the termination of this offering shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of the filing
of such documents. Any statement contained in a document incorporated by
reference shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed incorporated document or in an accompanying prospectus
supplement, if any, modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
Upon written or oral request of any person to whom a Prospectus is
delivered, including any beneficial owner, the Company will provide, without
charge, a copy of the documents which have been incorporated by reference (other
than exhibits unless such exhibits are specifically incorporated by reference in
any such document) in this Prospectus. Requests for such documents should be
directed to G. Steven Dawson, Sr. Vice President -Finance and Chief Financial
Officer, Camden Property Trust, 3200 Southwest Freeway, Suite 1500, Houston,
Texas 77027, telephone number (713) 964-3555.
2
<PAGE>
THE COMPANY
Camden Property Trust (the "Company") is a self-administered and self-
managed real estate investment trust (a "REIT") formed pursuant to the Texas
Real Estate Investment Trust Act, as amended (the "Texas REIT Act"). Unless the
context otherwise requires, all references herein to the "Company" shall mean
Camden Property Trust and its subsidiaries, and "Centeq" shall mean Centeq
Investments, Inc. and its predecessors and related affiliates, partnerships and
companies. As of December 31, 1995, the Company owned and operated 50
multifamily properties (the "Operating Properties") located in Houston,
Dallas/Fort Worth, Austin, Corpus Christi, El Paso, San Antonio and Tucson. The
Operating Properties contained 16,742 apartment units and had an occupancy rate
of 93.7% at December 31, 1995. The Company is developing four multifamily
properties in Houston, Dallas, Corpus Christi and Phoenix (the "Development
Properties") which will, when completed, add 1,688 units to its portfolio, and
has five properties on which it intends to begin construction in the next twelve
months (the "Future Development Properties") which the Company anticipates will,
when completed, add an estimated 1,678 units to its portfolio. Through
Apartment Connection, Inc., an affiliate of the Company, the Company engages in
apartment marketing in the Houston metropolitan area utilizing a network of 32
independent licensed real estate agents operating in four offices. The Company
is vertically integrated, with operations that encompass multifamily property
acquisition, development, construction services, management, marketing, finance,
leasing, brokerage and asset management.
The Company was formed in 1993 to continue the multifamily property
acquisition, development, management and marketing operations and related
business objectives and strategies of Centeq (the "Multifamily Operations").
Upon completion of the Company's initial public offering in July 1993 and the
concurrent completion of the transactions involved in the formation of the
Company ("Formation Transactions"), the Company succeeded to the Multifamily
Operations of Centeq and owned and operated 20 of the Operating Properties
located in the Houston, Dallas and Austin metropolitan areas containing 7,054
units and owned contracts to purchase two of the Development Properties. The
predecessors of Centeq were formed in 1982 by Richard J. Campo, the Company's
Chairman of the Board of Trust Managers and Chief Executive Officer, and D.
Keith Oden, the Company's President and Chief Operating Officer, to provide real
estate services to owners and financial institutions. Centeq was involved in
the acquisition, development, management and marketing of approximately 28
multifamily properties containing 8,564 units in certain major Texas and other
markets and the development, marketing and management of a number of other types
of properties, including office facilities, high-rise condominiums and research
facilities. The Company is operated under the direction of Messrs. Campo and
Oden and a management team consisting of substantially all of the former
personnel of Centeq.
In April 1994, the Company completed two concurrent offerings (the
"Subsequent Offerings"), consisting of a public offering of 3,450,000 Common
Shares (including 450,000 Common Shares issued pursuant to the underwriters'
over-allotment option) and a public offering of $86,250,000 aggregate principal
amount of its 7.33% Convertible Subordinated Debentures due 2001 (the
"Convertible Debentures") (including $11,250,000 aggregate principal amount of
the Convertible Debentures issued pursuant to the underwriters' over-allotment
option). The net proceeds of the Subsequent Offerings of $159 million were used
to repay approximately $108 million of floating rate indebtedness, to acquire
additional multifamily properties and to fund certain development activities.
The Company elected to be taxed as a REIT for federal income tax purposes
for its taxable year ended December 31, 1994, and expects to continue to elect
such status. Although the Company believes that it was organized and has been
operating in conformity with the requirements for qualification under the
Internal Revenue Code of 1986, as amended (the "Code"), no assurance can be
given that the Company will continue to qualify as a REIT. Qualification as a
REIT involves application of highly technical and complex Code provisions for
which there are only limited judicial or administrative interpretations. If in
any taxable year the Company would fail to qualify as a REIT, the Company would
not be allowed a deduction for distributions to shareholders for computing
taxable income and would be subject to federal taxation at regular corporate
rates. Unless entitled to relief under certain statutory provisions, the
Company would also be disqualified from treatment as a REIT for the four taxable
years following the year during which qualification was lost. As a result, the
Company's ability to make distributions to its shareholders would be adversely
affected.
3
<PAGE>
To ensure that the Company qualifies as a REIT, transfer of the Common
Shares or Preferred Shares is subject to certain restrictions and ownership of
the outstanding Shares (as defined in the Company's Declaration of Trust) by any
single person is limited to 9.8% of the total number of outstanding Shares,
subject to certain exceptions. As provided in the Declaration of Trust of the
Company, any purported transfer in violation the above-described ownership
limitations shall be void.
The Common Shares of the Company are listed on the NYSE under the symbol
"CPT." On September 14, 1995, the Company declared a regular quarterly
distribution ($0.46 per Common Share) for the third quarter of 1995 to all
shareholders of record on September 29, 1995, paid on October 17, 1995. On
December 14, 1995, the Company declared a regular quarterly distribution ($0.46
per Common Share) for the fourth quarter of 1995, bringing total dividends for
the year to $1.84 per Common Share. The fourth quarter distribution was paid on
January 17, 1996 to shareholders of record as of December 27, 1995. The Company
intends to continue making regular quarterly distributions to its shareholders.
Distributions depend upon a variety of factors, and there can be no assurance
that distributions will be made.
The Company's principal executive offices are located at 3200 Southwest
Freeway, Suite 1500, Houston, Texas 77027 and its telephone number is
(713) 964-3555.
USE OF PROCEEDS
Unless otherwise described in the Prospectus Supplement which accompanies
this Prospectus, the Company intends to use the net proceeds from the sale of
the Offered Securities for general corporate purposes, which may include the
acquisition and development of multifamily properties as suitable opportunities
arise, the improvement of certain properties in the Company's portfolio and the
repayment of certain then-outstanding secured or unsecured indebtedness.
DESCRIPTION OF COMMON SHARES
The Declaration of Trust of the Company provides that the Company may issue
up to 110,000,000 shares of beneficial interest of the Company, par value $.01
per share, consisting of 100,000,000 Common Shares and 10,000,000 Preferred
Shares. At December 31, 1995, 14,513,526 Common Shares were issued and
outstanding and 84,783 Series A Preferred Shares were issued and outstanding.
The following description of the Common Shares sets forth certain general
terms and provisions of the Common Shares to which any Prospectus Supplement may
relate, including a Prospectus Supplement providing that Common Shares will be
issuable upon conversion of Debt Securities or Preferred Shares of the Company
or upon the exercise of the Common Shares Warrants issued by the Company. The
statements below describing the Common Shares are in all respects subject to and
qualified in their entirety by reference to the applicable provisions of the
Company's Declaration of Trust and Bylaws.
GENERAL
Subject to the provisions of the Declaration of Trust regarding Excess
Securities (as defined therein), holders of Common Shares are entitled to such
dividends, in cash, property or shares of beneficial interest, as may be
declared from time to time by the Board of Trust Managers. The Company is
prohibited from declaring or paying any dividend when the Company is unable to
pay its debts as they become due in the usual course or when the payment of such
dividend would result in the Company becoming unable to pay its debts as they
become due. Payment and declaration of dividends on the Common Shares and
purchases of shares thereof by the Company will be subject to certain
restrictions if the Company fails to pay dividends on the Preferred Shares. See
"Description of Preferred Shares." In the event of any liquidation, dissolution
or winding-up of the affairs of the Company, holders of Common Shares will be
entitled to share equally and ratably in the assets of the Company remaining
after provision for liabilities to creditors and payment of liquidation
preferences to holders of Preferred Shares or senior debt securities and subject
to the provisions of the Declaration of Trust regarding Excess Securities. Each
outstanding Common Share entitles the holder to one vote on all matters
submitted to a vote of shareholders,
4
<PAGE>
including the election of Trust Managers. There is no cumulative voting in the
election of Trust Managers. Upon receipt by the Company of lawful payment
therefor, the Common Shares will, when issued, be fully paid and nonassessable,
and will not be subject to redemption except (as described in the Declaration of
Trust) as necessary to preserve the Company's status as a REIT. A shareholder
of the Company has no preemptive rights to subscribe for additional Common
Shares or other securities of the Company except as may be granted by the Board
of Trust Managers.
RESTRICTIONS ON OWNERSHIP
For the Company to qualify as a REIT under the Code, not more than 50% in
value of its outstanding Shares may be owned directly or indirectly, by five or
fewer individuals (as defined in the Code to include certain entities) during
the last half of a taxable year, and such Shares must be beneficially owned by
100 or more persons during at least 335 days of a taxable year of 12 months, or
during a proportionate part of a shorter taxable year.
Because the Board of Trust Managers believes it is essential for the
Company to continue to qualify as a REIT, the Declaration of Trust, subject to
certain exceptions, provides that no holder may own, or be deemed to own by
virtue of the attribution provisions of the Code, more than 9.8% (the "Ownership
Limit") of the total outstanding Shares. The Trust Managers are not permitted
to waive the Ownership Limit. Any transfer of Shares that would; (i) create a
direct or indirect ownership of Shares in excess of the Ownership Limit; (ii)
result in the Shares being owned by fewer than 100 persons; (iii) result in the
Company being "closely held" within the meaning of Section 856(h) of the Code;
or (iv) result in the disqualification of the Company as a REIT, shall be null
and void, and the intended transferee will acquire no rights in the Shares,
except as provided in the Declaration of Trust regarding Excess Securities.
The Company's Declaration of Trust provides that Shares owned, or deemed to
be owned, or transferred to a shareholder in excess of the Ownership Limit will
automatically be deemed to be Excess Securities and as such will be deemed to
have been transferred to the Company as trustee of a trust for the exclusive
benefit of the transferees to whom such Shares may ultimately be transferred
without violating the Ownership Limit. While the Excess Securities are held in
trust, they will not be entitled to vote, and they will not be considered for
purposes of any shareholder vote or the determination of a quorum for such vote,
and they will not be entitled to participate in dividends or other
distributions. Any dividend or distribution paid to a proposed transferee of
Excess Securities prior to the discovery by the Company that Shares have been
transferred in violation of the provisions of the Company's Declaration of Trust
shall be repaid to the Company upon demand. The Excess Securities are not
treasury shares, but rather constitute a separate class of issued and
outstanding Shares of the Company. The original transferee-shareholder may, at
any time the Excess Securities are held by the Company in trust, transfer the
interest in the trust representing the Excess Securities to any individual whose
ownership of the Shares that have been deemed to be Excess Securities would be
permitted under the Ownership Limit, at a price not in excess of the price paid
by the original transferee-shareholder for the Shares that were exchanged into
Excess Securities. Immediately upon the transfer to the permitted transferee,
the Excess Securities will automatically be deemed to be Shares of the class
from which they were converted. If the foregoing transfer restrictions are
determined to be void or invalid by virtue of any legal decision, statute, rule
or regulation, then the intended transferee-shareholder of any Excess Securities
may be deemed, at the option of the Company, to have acted as an agent on behalf
of the Company in acquiring the Excess Securities and to hold the Excess
Securities on behalf of the Company.
In addition to the foregoing transfer restrictions, the Company will have
the right, for a period of 90 days during the time any Excess Securities are
held by the Company in trust, to purchase all or any portion of the Excess
Securities from the original transferee-shareholder at the lesser of the price
paid for the Shares by the original transferee-shareholder and the market price
(as determined in the manner set forth in the Declaration of Trust) of the
Shares on the date the Company exercises its option to purchase. The 90-day
period begins on the later of the date of the violative transfer or date the
Board of Trust Managers determines that a violative transfer has been made.
All certificates representing the Common Shares will bear a legend
referring to the restrictions described above.
5
<PAGE>
Each shareholder shall upon demand be required to disclose to the Company
in writing any information with respect to the direct, indirect and constructive
ownership of beneficial interests as the Board of Trust Managers deems necessary
to comply with the provisions of the Code applicable to REITs, to comply with
the requirements of any taxing authority or governmental agency or to determine
any such compliance.
The Ownership Limit may have the effect of precluding acquisition of
control of the Company unless the Board of Trust Managers and the shareholders
determine that maintenance of REIT status is no longer in the best interest of
the Company.
American Stock Transfer & Trust Company or its successor is the transfer
agent and registrar for the Common Shares.
DESCRIPTION OF PREFERRED SHARES
The following description of the terms of the Preferred Shares sets forth
certain general terms and provisions of the Preferred Shares to which any
Prospectus Supplement may relate. Certain other terms of any series of the
Preferred Shares offered by any Prospectus Supplement will be described in such
Prospectus Supplement. The description of certain provisions of the Preferred
Shares set forth below and in any Prospectus Supplement does not purport to be
complete and is subject to and qualified in its entirety by reference to the
Company's Declaration of Trust and the Board of Trust Managers' resolution or
resolutions relating to each series of the Preferred Shares which will be filed
with the Commission and incorporated by reference as an exhibit to the
Registration Statement of which this Prospectus is a part at or prior to the
time of the issuance of such series of Preferred Shares.
GENERAL
The Company is authorized to issue 10,000,000 preferred shares of
beneficial interest, par value $0.01 per share, of which 84,783 Series A
Preferred Shares were outstanding at December 31, 1995.
Under the Company's Declaration of Trust, the Board of Trust Managers,
without further shareholder approval, may from time to time establish and issue
Preferred Shares in one or more series with such designations, powers,
preferences or rights of the shares of such series and the qualifications,
limitations or restrictions thereon.
The Preferred Shares shall have the dividend, liquidation, redemption and
voting rights set forth below unless otherwise provided in a Prospectus
Supplement relating to a particular series of the Preferred Shares. Reference is
made to the Prospectus Supplement relating to the particular series of the
Preferred Shares offered thereby for specific terms, including: (i) the
designation and stated value per share of such Preferred Shares and the number
of shares offered; (ii) the amount of liquidation preference per share; (iii)
the initial public offering price at which such Preferred Shares will be issued;
(iv) the dividend rate (or method of calculation), the dates on which dividends
shall be payable and the dates from which dividends shall commence to cumulate,
if any; (v) any redemption or sinking fund provisions; (vi) any conversion
right; and (vii) any additional voting, dividend, liquidation, redemption,
sinking fund and other rights, preferences, privileges, limitations and
restrictions not in conflict with the Declaration of Trust or the Texas REIT
Act. The Preferred Shares will, when issued for lawful consideration therefor,
be fully paid and nonassessable and will have no preemptive rights.
RANK
Unless otherwise specified in the Prospectus Supplement, the Preferred
Shares will, with respect to dividend rights and rights upon liquidation,
dissolution or winding up of the Company, rank (i) senior to all classes or
series of Common Shares and to all equity securities ranking junior to such
Preferred Shares; (ii) on a parity with all equity securities issued by the
Company the terms of which specifically provide that such equity securities rank
on a parity with the Preferred Shares; and (iii) junior to all equity securities
issued by the Company the terms of which specifically provide that such equity
securities rank senior to the Preferred Shares. The rights of the holders of
each series of the Preferred Shares will be subordinate to those of the
Company's general creditors.
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DIVIDENDS
Holders of each series of Preferred Shares shall be entitled to receive,
when, as and if declared by the Board of Trust Managers of the Company, out of
assets of the Company legally available for payment, cash dividends at such
rates and on such dates as will be set forth in the applicable Prospectus
Supplement. Such rate may be fixed or variable or both. Each such dividend
shall be payable to holders of record as they appear on the share transfer books
of the Company on such record dates as shall be fixed by the Board of Trust
Managers of the Company, as specified in the Prospectus Supplement relating to
such series of Preferred Shares.
Dividends on any series of the Preferred Shares may be cumulative or non-
cumulative, as provided in the applicable Prospectus Supplement. Dividends, if
cumulative, will be cumulative from and after the date set forth in the
applicable Prospectus Supplement. If the Board of Trust Managers of the Company
fails to declare a dividend payable on a dividend payment date on any series of
the Preferred Shares for which dividends are noncumulative, then the holders of
such series of the Preferred Shares will have no right to receive a dividend in
respect of the dividend period ending on such dividend payment date, and the
Company will have no obligation to pay the dividend accrued for such period,
whether or not dividends on such series are declared payable on any future
dividend payment date. Dividends on shares of each series of Preferred Shares
for which dividends are cumulative will accrue from the date on which the
Company initially issues shares of such series.
So long as any series of the Preferred Shares shall be outstanding, unless
(i) full dividends (including if such dividends are cumulative, dividends for
prior dividend periods) shall have been paid or declared and set apart for
payment on all outstanding Preferred Shares of such series and all other classes
and series of Preferred Shares of the Company (other than Junior Shares, as
defined below); and (ii) the repurchase or other mandatory retirement of, or
with respect to any sinking or other analogous fund for, any shares of Preferred
Shares of such series or any other Preferred Shares of the Company of any class
or series (other than Junior Shares), the Company may not declare any dividends
on any Common Shares of the Company or any other shares of the Company ranking
as to dividends or distributions of assets junior to such series of Preferred
Shares (the Common Shares and any such other shares being herein referred to as
"Junior Shares"), or make any payment on account of, or set apart money for, the
purchase, redemption or other retirement of, or for a sinking or other analogous
fund for, any Junior Shares or make any distribution in respect thereof, whether
in cash or property or in obligations or shares of the Company, other than
Junior Shares which are neither convertible into, nor exchangeable or
exercisable for, any securities of the Company other than Junior Shares.
Any dividend payment made on a series of Preferred Shares shall first be
credited against the earliest accrued but unpaid dividend due with respect to
shares of such series which remains payable.
REDEMPTION
A series of Preferred Shares may be redeemable, in whole or from time to
time in part, at the option of the Company, and may be subject to mandatory
redemption pursuant to a sinking fund or otherwise, in each case upon terms, at
the times and at the redemption prices set forth in the Prospectus Supplement
relating to such series. Shares of the Preferred Shares redeemed by the Company
will be restored to the status of authorized but unissued Preferred Shares of
the Company.
The Prospectus Supplement relating to a series of Preferred Shares that is
subject to mandatory redemption will specify the number of shares of such
Preferred Shares that shall be redeemed by the Company in each year commencing
after a date to be specified, at a redemption price per share to be specified,
together with an amount equal to all accrued and unpaid dividends thereon (which
shall not, if such Preferred Shares do not have a cumulative dividend, include
any accumulation in respect of unpaid dividends for prior dividend periods) to
the date of redemption. The redemption price may be payable in cash or other
property, as specified in the applicable Prospectus Supplement. If the
redemption price for Preferred Shares of any series is payable only from the net
proceeds of the issuance of shares of beneficial interest of the Company, the
terms of such Preferred Shares may provide that, if no such shares shall have
been issued or to the extent the net proceeds from any issuance are
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insufficient to pay in full the aggregate redemption price then due, such
Preferred Shares shall automatically and mandatorily be converted into shares of
the applicable shares of beneficial interest of the Company pursuant to
conversion provisions specified in the applicable Prospectus Supplement.
So long as any dividends on shares of any series of the Preferred Shares or
any other series of Preferred Shares of the Company ranking on a parity as to
dividends and distribution of assets with such series of the Preferred Shares
are in arrears, no shares of any such series of the Preferred Shares or such
other series of Preferred Shares of the Company will be redeemed (whether by
mandatory or optional redemption) unless all such shares are simultaneously
redeemed, and the Company will not purchase or otherwise acquire any such
shares; provided, however, that the foregoing will not prevent the purchase or
acquisition of such shares pursuant to a purchase or exchange offer made on the
same terms to holders of all such shares outstanding.
In the event that fewer than all of the outstanding shares of a series of
the Preferred Shares are to be redeemed, whether by mandatory or optional
redemption, the number of shares to be redeemed will be determined by lot or pro
rata (subject to rounding to avoid fractional shares) as may be determined by
the Company or by any other method as may be determined by the Company in its
sole discretion to be equitable. From and after the redemption date (unless
default shall be made by the Company in providing for the payment of the
redemption price plus accumulated and unpaid dividends, if any), dividends shall
cease to accumulate on the Preferred Shares called for redemption and all rights
of the holders thereof (except the right to receive the redemption price plus
accumulated and unpaid dividends, if any) shall cease.
LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the Company, then, before any distribution or payment shall be
made to the holders of any Junior Shares, the holders of each series of
Preferred Shares shall be entitled to receive out of assets of the Company
legally available for distribution to shareholders, liquidating distributions in
the amount of the liquidation preference per share (set forth in the applicable
Prospectus Supplement), plus an amount equal to all dividends accrued and unpaid
thereon (which shall not include any accumulation in respect of unpaid dividends
for prior dividend periods if such Preferred Shares do not have a cumulative
dividend). After payment of the full amount of the liquidating distributions to
which they are entitled, the holders of Preferred Shares will have no right or
claim to any of the remaining assets of the Company. In the event that, upon
any such voluntary or involuntary liquidation, dissolution or winding up, the
available assets of the Company are insufficient to pay the amount of the
liquidating distributions on all outstanding Preferred Shares and the
corresponding amounts payable on all shares of other classes or series of shares
of beneficial interest of the Company ranking on a parity with the Preferred
Shares in the distribution of assets, then the holders of the Preferred Shares
and all other such classes or series of shares of beneficial interest shall
share ratably in any such distribution of assets in proportion to the full
liquidating distributions to which they would otherwise be respectively
entitled.
If liquidating distributions shall have been made in full to all holders of
Preferred Shares, the remaining assets of the Company shall be distributed among
the holders of Junior Shares, according to their respective rights and
preferences and in each case according to their respective number of shares.
For such purposes, the consolidation or merger of the Company with or into any
other corporation, or the sale, lease or conveyance of all or substantially all
of the property or business of the Company, shall not be deemed to constitute a
liquidation, dissolution or winding up of the Company.
VOTING RIGHTS
Except as indicated below or in a Prospectus Supplement relating to a
particular series of the Preferred Shares, or except as required by applicable
law, holders of the Preferred Shares will not be entitled to vote for any
purpose.
So long as any series of Preferred Shares remain outstanding, the consent
or the affirmative vote of the holders of at least 66-2/3% of the votes entitled
to be cast with respect to the then outstanding shares of such series of the
Preferred Shares together with any Other Preferred Shares (as defined below),
voting as one class, either
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expressed in writing or at a meeting called for that purpose, will be necessary
(i) to permit, effect or validate the authorization, or any increase in the
authorized amount, of any class or series of shares of the Company ranking prior
to the Preferred Shares of such series as to dividends, voting or upon
distribution of assets; and (ii) to repeal, amend or otherwise change any of the
provisions applicable to the Preferred Shares of such series in any manner which
adversely affects the powers, preferences, voting power or other rights or
privileges of such series of the Preferred Shares. In case any series of the
Preferred Shares would be so affected by any such action referred to in clause
(ii) above in a different manner than one or more series of the Other Preferred
Shares which will be similarly affected, the holders of the Preferred Shares of
such series, together with any series of the Other Preferred Shares which will
be similarly affected, will be entitled to vote as a class, and the Company will
not take such action without the consent or affirmative vote, as above provided,
of at least 66-2/3% of the total number of votes entitled to be cast with
respect to each such series of the Preferred Shares and the Other Preferred
Shares, then outstanding, in lieu of the consent or affirmative vote hereinabove
otherwise required.
With respect to any matter as to which the Preferred Shares of any series
is entitled to vote, holders of the Preferred Shares of such series and any
other series of Preferred Shares of the Company ranking on a parity with such
series of the Preferred Shares as to dividends and distributions of assets and
which by its terms provides for similar voting rights (the "Other Preferred
Shares") will be entitled to cast the number of votes set forth in the
Prospectus Supplement with respect to that series of Preferred Shares. As a
result of the provisions described in the preceding paragraph requiring the
holders of shares of a series of the Preferred Shares to vote together as a
class with the holders of shares of one or more series of Other Preferred
Shares, it is possible that the holders of such shares of Other Preferred Shares
could approve action that would adversely affect such series of Preferred
Shares, including the creation of a class of shares of beneficial interest
ranking prior to such series of Preferred Shares as to dividends, voting or
distributions of assets.
CONVERSION RIGHTS
The terms and conditions, if any, upon which shares of any series of
Preferred Shares are convertible into Common Shares will be set forth in the
applicable Prospectus Supplement relating thereto. Such terms will include the
number of shares of Common Shares into which the Preferred Shares are
convertible, the conversion price (or manner of calculation thereof), the
conversion period, provisions as to whether conversion will be at the option of
the holders of the Preferred Shares or the Company, the events requiring an
adjustment of the conversion price and provisions affecting conversion.
RESTRICTIONS ON OWNERSHIP
See "Description of Common Shares--Restrictions on Ownership" for a
discussion of the restrictions on shares of beneficial interest ownership
necessary for the Company to qualify as a REIT under the Code.
TRANSFER AGENT AND REGISTRAR
Unless otherwise indicated in a Prospectus Supplement relating thereto,
American Stock Transfer & Trust Company will be the transfer agent and registrar
for shares of each series of the Preferred Shares.
DESCRIPTION OF SECURITIES WARRANTS
The Company may issue Securities Warrants for the purchase of Debt
Securities, Preferred Shares or Common Shares. Securities Warrants may be
issued independently or together with any other Offered Securities offered by
any Prospectus Supplement and may be attached to or separate from such Offered
Securities. Each series of Securities Warrants will be issued under a separate
warrant agreement (each, a "Warrant Agreement") to be entered into between the
Company and a warrant agent specified in the applicable Prospectus Supplement
(the "Warrant Agent"). The Warrant Agent will act solely as an agent of the
Company in connection with the Securities Warrants of such series and will not
assume any obligation or relationship of agency or trust for or with any holders
or beneficial owners of Securities Warrants. The following summaries of certain
provisions of the Securities Warrant Agreement and the Securities Warrants do
not purport to be complete and are subject to, and are qualified
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in their entirety by reference to, all the provisions of the Securities Warrant
Agreement and the Securities Warrant certificates relating to each series of
Securities Warrants which will be filed with the Commission and incorporated by
reference as an exhibit to the Registration Statement of which this Prospectus
is a part at or prior to the time of the issuance of such series of Securities
Warrants.
If Securities Warrants are offered, the applicable Prospectus Supplement
will describe the terms of such Securities Warrants, including, in the case of
Securities Warrants for the purchase of Debt Securities, the following where
applicable: (i) the offering price; (ii) the denominations and terms of the
series of Debt Securities purchasable upon exercise of such Securities Warrants;
(iii) the designation and terms of any series of Debt Securities with which such
Securities Warrants are being offered and the number of such Securities Warrants
being offered with such Debt Securities; (iv) the date, if any, on and after
which such Securities Warrants and the related series of Debt Securities will be
transferable separately; (v) the principal amount of the series of Debt
Securities purchasable upon exercise of each such Securities Warrant and the
price at which such principal amount of Debt Securities of such series may be
purchased upon such exercise; (vi) the date on which the right to exercise such
Securities Warrants shall commence and the date on which such right shall expire
(the "Expiration Date"); (vii) whether the Securities Warrants will be issued in
registered or bearer form; (viii) any special United States federal income tax
consequences; (ix) the terms, if any, on which the Company may accelerate the
date by which the Securities Warrants must be exercised; and (x) any other
material terms of such Securities Warrants.
In the case of Securities Warrants for the purchase of Preferred Shares or
Common Shares, the applicable Prospectus Supplement will describe the terms of
such Securities Warrants, including the following where applicable: (i) the
offering price; (ii) the aggregate number of shares purchasable upon exercise of
such Securities Warrants, the exercise price, and in the case of Securities
Warrants for Preferred Shares, the designation, aggregate number and terms of
the series of Preferred Shares purchasable upon exercise of such Securities
Warrants; (iii) the designation and terms of any series of Preferred Shares with
which such Securities Warrants are being offered and the number of such
Securities Warrants being offered with such Preferred Shares; (iv) the date, if
any, on and after which such Securities Warrants and the related series of
Preferred Shares or Common Shares will be transferable separately; (v) the date
on which the right to exercise such Securities Warrants shall commence and the
Expiration Date; (vi) any special United States federal income tax consequences;
and (vii) any other material terms of such Securities Warrants.
Securities Warrant certificates may be exchanged for new Securities Warrant
certificates of different denominations, may (if in registered form) be
presented for registration of transfer, and may be exercised at the corporate
trust office of the Securities Warrant Agent or any other office indicated in
the applicable Prospectus Supplement. Prior to the exercise of any Securities
Warrant to purchase Debt Securities, holders of such Securities Warrants will
not have any of the rights of holders of the Debt Securities purchasable upon
such exercise, including the right to receive payments of principal, premium, if
any, or interest, if any, on such Debt Securities or to enforce covenants in the
applicable indenture. Prior to the exercise of any Securities Warrants to
purchase Preferred Shares or Common Shares, holders of such Securities Warrants
will not have any rights of holders of such Preferred Shares or Common Shares,
including the right to receive payments of dividends, if any, on such Preferred
Shares or Common Shares, or to exercise any applicable right to vote.
EXERCISE OF SECURITIES WARRANTS
Each Securities Warrant will entitle the holder thereof to purchase such
principal amount of Debt Securities or number of shares of Preferred Shares or
Common Shares, as the case may be, at such exercise price as shall in each case
be set forth in, or calculable from, the Prospectus Supplement relating to the
offered Securities Warrants. After the close of business on the Expiration Date
(or such later date to which such Expiration Date may be extended by the
Company), unexercised Securities Warrants will become void.
Securities Warrants may be exercised by delivering to the Securities
Warrant Agent payment as provided in the applicable Prospectus Supplement of the
amount required to purchase the Debt Securities, Preferred Shares or Common
Shares, as the case may be, purchasable upon such exercise together with certain
information set forth on the reverse side of the Securities Warrant certificate.
Securities Warrants will be deemed to have been exercised upon receipt of
payment of the exercise price, subject to the receipt within five (5) business
days, of the Securities
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Warrant certificate evidencing such Securities Warrants. Upon receipt of such
payment and the Securities Warrant certificate properly completed and duly
executed at the corporate trust office of the Securities Warrant Agent or any
other office indicated in the applicable Prospectus Supplement, the Company
will, as soon as practicable, issue and deliver the Debt Securities, Preferred
Shares or Common Shares, as the case may be, purchasable upon such exercise. If
fewer than all of the Securities Warrants represented by such Securities Warrant
certificate are exercised, a new Securities Warrant certificate will be issued
for the remaining amount of Securities Warrants.
AMENDMENTS AND SUPPLEMENTS TO WARRANT AGREEMENT
The Warrant Agreements may be amended or supplemented without the consent
of the holders of the Securities Warrants issued thereunder to effect changes
that are not inconsistent with the provisions of the Securities Warrants and
that do not adversely affect the interests of the holders of the Securities
Warrants.
ADJUSTMENTS
Unless otherwise indicated in the applicable Prospectus Supplement, the
exercise price of, and the number of shares of Common Shares covered by, a
Common Shares Warrant are subject to adjustment in certain events, including (i)
payment of a dividend on the Common Shares payable in shares of beneficial
interest and share splits, combinations or reclassification of the Common
Shares; (ii) issuance to all holders of Common Shares of rights or warrants to
subscribe for or purchase shares of Common Shares at less than their current
market price (as defined in the Warrant Agreement for such series of Common
Shares Warrants); and (iii) certain distributions of evidences of indebtedness
or assets (including securities but excluding cash dividends or distributions
paid out of consolidated earnings or retained earnings or dividends payable in
Common Shares) or of subscription rights and warrants (excluding those referred
to above).
No adjustment in the exercise price of, and the number of Common Shares
covered by, a Common Shares Warrant will be made for regular quarterly or other
periodic or recurring cash dividends or distributions or for cash dividends or
distributions to the extent paid from consolidated earnings or retained
earnings. No adjustment will be required unless such adjustment would require a
change of at least 1% in the exercise price then in effect. Except as stated
above, the exercise price of, and the number of Common Shares covered by, a
Common Shares Warrant will not be adjusted for the issuance of Common Shares or
any securities convertible into or exchangeable for Common Shares, or carrying
the right or option to purchase or otherwise acquire the foregoing, in exchange
for cash, other property or services.
In the event of any (i) consolidation or merger of the Company with or into
any entity (other than a consolidation or a merger that does not result in any
reclassification, conversion, exchange or cancellation of outstanding shares of
Common Shares); (ii) sale, transfer, lease or conveyance of all or substantially
all of the assets of the Company; or (iii) reclassification, capital
reorganization or change of the Common Shares (other than solely a change in par
value or from par value to no par value), then any holder of a Common Shares
Warrant will be entitled, on or after the occurrence of any such event, to
receive on exercise of such Common Shares Warrant the kind and amount of shares
of beneficial interest or other securities, cash or other property (or any
combination thereof) that the holder would have received had such holder
exercised such holder's Common Shares Warrant immediately prior to the
occurrence of such event. If the consideration to be received upon exercise of
the Common Shares Warrant following any such event consists of common shares of
the surviving entity, then from and after the occurrence of such event, the
exercise price of such Common Shares Warrant will be subject to the same anti-
dilution and other adjustments described in the second preceding paragraph,
applied as if such common shares were Common Shares.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities are to be issued under an Indenture, as amended or
supplemented from time to time (the "Indenture"), between the Company and a
trustee to be selected by the Company (the "Trustee"). A form of the Indenture
executed by the Company will be filed as an exhibit to an amendment to the
Registration Statement of which this Prospectus is a part or to a Current Report
on Form 8-K incorporated by reference into the Registration Statement of which
this Prospectus is a part. The Indenture will be subject to, and governed by,
the
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Trust Indenture Act of 1939, as amended (the "TIA"). The description of the
Indenture set forth below assumes that the Company has entered into the
Indenture. The Company will execute the applicable Indenture when and if the
Company issues Debt Securities. The statements made hereunder relating to the
Indenture and the Debt Securities to be issued thereunder are summaries of
certain provisions thereof and do not purport to be complete and are subject to,
and are qualified in their entirety by reference to, all provisions of the
Indenture and such Debt Securities. All section references appearing herein are
to sections of the Indenture, and capitalized terms used but not defined herein
shall have the respective meanings set forth in the Indenture.
GENERAL
The Debt Securities will be direct, unsecured and unsubordinated
obligations of the Company and will rank equally with all other unsecured and
unsubordinated indebtedness of the Company. The Indenture provides that the
Debt Securities may be issued without limit as to aggregate principal amount, in
one or more series, in each case as established from time to time in or pursuant
to authority granted by a resolution of the Board of Trust Managers of the
Company or as established in one or more indentures supplemental to the
Indenture. All Debt Securities of one series need not be issued at the same
time and, unless otherwise provided, a series may be reopened, without the
consent of the Holders of the Debt Securities of such series, for issuances of
additional Debt Securities of such series (Section 301).
The Indenture provides that there may be more than one Trustee thereunder,
each with respect to one or more series of Debt Securities. Any Trustee under
the Indenture may resign or be removed with respect to one or more series of
Debt Securities, and a successor Trustee may be appointed to act with respect to
such series (Section 609). In the event that two or more persons are acting as
Trustee with respect to different series of Debt Securities, each such Trustee
shall be a Trustee of a trust under the Indenture separate and apart from the
trust administered by any other Trustee (Section 610), and, except as otherwise
indicated herein, any action described herein to be taken by the Trustee may be
taken by each such Trustee with respect to, and only with respect to, the one or
more series of Debt Securities for which it is Trustee under the Indenture.
Reference is made to the Prospectus Supplement relating to the series of
Debt Securities being offered for the specific terms thereof, including:
1. the title of such Debt Securities;
2. the aggregate principal amount of such Debt Securities and any limit
on such aggregate principal amount;
3. the date or dates, or the method for determining such date or dates,
on which the principal (and premium or Make-Whole Amount, if any) of
such Debt Securities will be payable;
4. the rate or rates (which may be fixed or variable), or the method by
which such rate or rates shall be determined, at which such Debt
Securities will bear interest, if any;
5. the date or dates, or the method for determining such date or dates,
from which any such interest will accrue, the Interest Payment Dates
on which any such interest will be payable, the Regular Record Dates
for such Interest Payment Dates, or the method by which such dates
shall be determined, the Person to whom such interest shall be
payable, and the basis upon which interest shall be calculated if
other than that of a 360-day year of twelve 30-day months;
6. the place or places where the principal of (and premium or Make-Whole
Amount, if any) and interest (including all Additional Amounts), if
any, on such Debt Securities will be payable, such Debt Securities may
be surrendered for conversion or registration of transfer or exchange,
and notices or demands to or upon the Company in respect of such Debt
Securities and the Indenture may be served;
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7. the period or periods within which, the price or prices at which and
the terms and conditions upon which such Debt Securities may be
redeemed, as a whole or in part, at the option of the Company, if the
Company is to have such an option;
8. the obligation, if any, of the Company to redeem, repay or purchase
such Debt Securities pursuant to any sinking fund or analogous
provision or at the option of a Holder thereof, and the period or
periods within which, the price or prices at which and the terms and
conditions upon which such Debt Securities will be redeemed, repaid or
purchased, as a whole or in part, pursuant to such obligation;
9. the percentage of the principal amount at which such Debt Securities
will be issued and, if other than the principal amount thereof, the
portion of the principal amount thereof payable upon declaration of
acceleration of the maturity thereof, or (if applicable) the portion
of the principal amount of such Debt Securities which is convertible
into Common Shares, Preferred Shares or Debt Securities of another
series, or the method by which any such portion shall be determined;
10. if other than U.S. dollars, the currency or currencies in which such
Debt Securities are denominated and payable, which may be a foreign
currency or units of two or more foreign currencies or a composite
currency or currencies, and the terms and conditions relating thereto;
11. whether the amount of payments of principal of (and premium or Make-
Whole Amount, if any, including any amount due upon redemption, if
any) or interest and Additional Amounts, if any, on such Debt
Securities may be determined with reference to an index, formula or
other method (which index, formula or method may, but need not be,
based on a currency, currencies, currency unit or units or composite
currency or currencies) and the manner in which such amounts shall be
determined;
12. any additions to, modifications of or deletions from the terms of such
Debt Securities with respect to the Events of Default or covenants set
forth in the Indenture;
13. whether such Debt Securities will be issued in certificated or
book-entry form;
14. whether such Debt Securities will be in registered or bearer form and,
if in registered form, the denominations thereof if other than $1,000
and any integral multiple thereof and, if in bearer form, the
denominations thereof and terms and conditions relating thereto;
15. the applicability, if any, of the defeasance and covenant defeasance
provisions of Article Fourteen of the Indenture;
16. if such Debt Securities are to be issued upon the exercise of Debt
Securities Warrants, the time, manner and place for such Debt
Securities to be authenticated and delivered;
17. the terms, if any, upon which Debt Securities may be convertible into
Common Shares, Preferred Shares or Debt Securities of another series
of the Company and the terms and conditions upon which such conversion
will be effected, including, without limitation, the initial
conversion price or rate and the conversion period;
18. if convertible, in connection with the preservation of the Company's
status as a REIT, any applicable limitations on the ownership or
transferability of the Common Shares, Preferred Shares or other
capital shares of the Company into which such Debt Securities are
convertible;
19. whether and under what circumstances the Company will pay Additional
Amounts as contemplated in the Indenture on such Debt Securities in
respect of any tax, assessment or governmental charge and, if so,
whether the Company will have the option to redeem such Debt
Securities in lieu of making such payment; and
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20. any other terms of such Debt Securities not inconsistent with the
provisions of the Indenture (Section 301).
If so provided in the applicable Prospectus Supplement, the Debt Securities
may be issued at a discount below their principal amount and may provide for
less than the entire principal amount thereof to be payable upon declaration of
acceleration of the maturity thereof or bear no interest or bear interest at a
rate which at the time of issuance is below market rates ("Original Issue
Discount Securities"). Special U.S. federal income tax, accounting and other
considerations applicable to Original Issue Discount Securities will be
described in the applicable Prospectus Supplement.
Except as set forth below under "Certain Covenants-Limitations on
Incurrence of Debt," the Indenture does not contain any other provisions that
would limit the ability of the Company to incur indebtedness or that would
afford Holders of Debt Securities protection in the event of a highly leveraged
or similar transaction involving the Company or in the event of a change of
control. However, restrictions on ownership and transfers of the Company's
Common Shares and Preferred Shares are designed to preserve its status as a REIT
and, therefore, may act to prevent or hinder a change of control. See
"Description of Common Shares" and "Description of Preferred Shares." Reference
is made to the applicable Prospectus Supplement for information with respect to
any deletions from, modifications of or additions to the Events of Default or
covenants of the Company that are described below, including any addition of a
covenant or other provision providing event risk or similar protection.
DENOMINATIONS, INTEREST, REGISTRATION AND TRANSFER
Unless otherwise described in the applicable Prospectus Supplement, the
Debt Securities of any series will be issuable in denominations of $1,000 and
integral multiples thereof (Section 302).
Unless otherwise specified in the applicable Prospectus Supplement, the
principal of (and premium or Make-Whole Amount, if any) and interest or
Additional Amounts, if any on any series of Debt Securities will be payable at
the corporate trust office of the Trustee, provided that, at the option of the
Company, payment of interest may be made by check mailed to the address of the
Person entitled thereto as it appears in the Security Register or by wire
transfer of funds to such Person at an account maintained within the United
States (Sections 301, 305, 306, 307 and 1002).
Any interest not punctually paid or duly provided for on any Interest
Payment Date with respect to a Debt Security ("Defaulted Interest") will
forthwith cease to be payable to the Holder on the applicable Regular Record
Date and may either be paid to the person in whose name such Debt Security is
registered at the close of business on a special record date (the "Special
Record Date") for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to the Holder of such Debt Security not
less than 10 days prior to such Special Record Date, or may be paid at any time
in any other lawful manner, all as more completely described in the Indenture.
Subject to certain limitations imposed upon Debt Securities issued in book-
entry form, the Debt Securities of any series will be exchangeable for other
Debt Securities of the same series and of a like aggregate principal amount and
tenor of different authorized denominations upon surrender of such Debt
Securities at the corporate trust office of the Trustee. In addition, subject
to certain limitations imposed upon Debt Securities issued in book-entry form,
the Debt Securities of any series may be surrendered for conversion or
registration of transfer thereof at the corporate trust office of the Trustee.
Every Debt Security surrendered for conversion, registration of transfer or
exchange shall be duly endorsed or accompanied by a written instrument of
transfer. No service charge will be made for any registration of transfer or
exchange of any Debt Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith (Section 305). If the applicable Prospectus Supplement refers to any
transfer agent (in addition to the Trustee) initially designated by the Company
with respect to any series of Debt Securities, the Company may at any time
rescind the designation of any such transfer agent or approve a change in the
location through which any such transfer agent acts, except that the Company
will be required to maintain a transfer agent in each Place of Payment for such
series. The Company may at any time designate additional transfer agents with
respect to any series of Debt Securities (Section 1002).
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Neither the Company nor the Trustee shall be required to (i) issue,
register the transfer of or exchange Debt Securities of any series during a
period beginning at the opening of business 15 days before any selection of Debt
Securities of that series to be redeemed and ending at the close of business on
the day of mailing of the relevant notice of redemption; (ii) register the
transfer of or exchange any Debt Security, or portion thereof, called for
redemption, except the unredeemed portion of any Debt Security being redeemed in
part; or (iii) issue, register the transfer of or exchange any Debt Security
which has been surrendered for repayment at the option of the Holder, except the
portion, if any, of such Debt Security not to be so repaid (Section 305).
MERGER, CONSOLIDATION OR SALE
The Company, without the consent of the Holders of any of the Debt
Securities, may consolidate with, or sell, lease or convey all or substantially
all of its assets to, or merge with or into, any other corporation, provided
that (a) either the Company shall be the continuing corporation or, the
successor corporation (if other than the Company) formed by or resulting from
any such consolidation or merger or which shall have received the transfer of
such assets shall expressly assume payment of the principal of (and premium or
Make-Whole Amount, if any) and interest (including Additional Amounts, if any)
on all of the Debt Securities and the due and punctual performance and
observance of all of the covenants and conditions contained in the Indenture;
(b) immediately after giving effect to such transaction and treating any
indebtedness which becomes an obligation of the Company or any Subsidiary as a
result thereof as having been incurred by the Company or such Subsidiary at the
time of such transaction, no Event of Default under the Indenture, and no event
which, after notice or the lapse of time, or both, would become such an Event of
Default, shall have occurred and be continuing; and (c) an officers' certificate
and legal opinion covering such conditions shall be delivered to the Trustee
(Sections 801 and 803).
CERTAIN COVENANTS
Existence. Except as permitted under "Merger, Consolidation or Sale," the
Company will do or cause to be done all things necessary to preserve and keep in
full force and effect its corporate existence, rights (charter and statutory)
and franchises; provided, however, that the Company shall not be required to
preserve any right or franchise if it determines that the preservation thereof
is no longer desirable in the conduct of its business and that the loss thereof
is not disadvantageous in any material respect to the Holders of the Debt
Securities (Section 1004).
Maintenance of Properties. The Company will cause all of its properties
used or useful in the conduct of its business or the business of any Subsidiary
to be maintained and kept in good condition, repair and working order and
supplied with all necessary equipment and will cause to be made all necessary
repairs, renewals, replacements and improvements thereof, all as in the judgment
of the Company may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; provided,
however, that the Company and its Subsidiaries shall not be prevented from
selling or otherwise disposing for value its properties in the ordinary course
of business (Section 1005).
Insurance. The Company will, and will cause each of its Subsidiaries to,
keep all of its insurable properties insured against loss or damage in
accordance with industry practices and with insurers of recognized
responsibility and of suitable financial stability (Section 1006).
Payment of Taxes and Other Claims. The Company will pay or discharge or
cause to be paid or discharged, before the same shall become delinquent, (i) all
taxes, assessments and governmental charges levied or imposed upon it or any
Subsidiary or upon the income, profits or property of the Company or any
Subsidiary; and (ii) all lawful claims for labor, materials and supplies which,
if unpaid, might by law become a lien upon the property of the Company or any
Subsidiary; provided, however, that the Company shall not be required to pay or
discharge or cause to be paid or discharged any such tax, assessment, charge or
claim whose amount, applicability or validity is being contested in good faith
by appropriate proceedings (Section 1007).
Provision of Financial Information. Whether or not the Company is subject
to Section 13 or 15(d) of the Exchange Act, the Company will, to the extent
permitted under the Exchange Act, file with the Commission the annual reports,
quarterly reports and other documents which the Company would have been required
to file with
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the Commission pursuant to such Section 13 or 15(d) (the "Financial Statements")
if the Company were so subject, such documents to be filed with the Commission
on or prior to the respective dates (the "Required Filing Dates") by which the
Company would have been required so to file such documents if the Company were
so subject. The Company will also in any event (x) within 15 days of each
Required Filing Date file with the Trustee copies of the annual reports,
quarterly reports and other documents which the Company would have been required
to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act
if the Company were subject to such Sections; and (y) if filing such documents
by the Company with the Commission is not permitted under the Exchange Act,
promptly upon written request and payment of the reasonable cost of duplication
and delivery, supply copies of such documents to any prospective Holder
(Section 1008).
EVENTS OF DEFAULT, NOTICE AND WAIVER
The Indenture provides that the following events are "Events of Default"
with respect to a series of Debt Securities issued thereunder: (a) default for
30 days in the payment of any installment of interest or Additional Amount
payable on any Debt Security of such series when due and payable; (b) default in
the payment of the principal of (or premium or Make-Whole Amount, if any) any
Debt Security of such series when due and payable; (c) default in the
performance, or breach, of any covenant of the Company contained in the
Indenture (other than a covenant added to the Indenture solely for the benefit
of a series of Debt Securities other than such series), which continues for 60
days after written notice as provided in the Indenture; (d) default under any
bond, debenture, note, mortgage, indenture or instrument under which there may
be issued or by which there may be secured or evidenced any indebtedness for
money borrowed by the Company (or by any Subsidiary, the repayment of which the
Company has guaranteed or for which the Company is directly responsible or
liable as obligor or guarantor) having an aggregate principal amount outstanding
of at least $10,000,000, whether such indebtedness now exists or shall hereafter
be incurred or created, which default shall have resulted in such indebtedness
becoming or being declared due and payable prior to the date on which it would
otherwise have become due and payable, without such indebtedness having been
discharged or such acceleration having been rescinded or annulled within a
period of 30 days after written notice to the Company as provided in the
Indenture; (e) the entry by a court of competent jurisdiction of one or more
judgments, orders or decrees against the Company or any of its Subsidiaries in
an aggregate amount (excluding amounts covered by insurance) in excess of
$10,000,000 and such judgments, orders or decrees remain undischarged, unstayed
and unsatisfied in an aggregate amount (excluding amounts covered by insurance)
in excess of $10,000,000 for a period of 30 consecutive days; or (f) certain
events of bankruptcy, insolvency or reorganization, or court appointment of a
receiver, liquidator or trustee of the Company or any Significant Subsidiary or
for all or substantially all of either of its property (Section 501).
If an Event of Default under the Indenture with respect to Debt Securities
of any series at the time Outstanding occurs and is continuing, then in every
such case the Trustee or the Holders of not less than 25% in principal amount of
the Outstanding Debt Securities of that series may declare the principal amount
(or, if the Debt Securities of that series are Original Issue Discount
Securities or Indexed Securities, such portion of the principal amount as may be
specified in the terms thereof) of all of the Debt Securities of that series to
be due and payable immediately by written notice thereof to the Company (and to
the Trustee if given by the Holders). However, at any time after such a
declaration of acceleration with respect to Debt Securities of such series (or
of all Debt Securities then Outstanding under the Indenture, as the case may be)
has been made, but before a judgment or decree for payment of the money due has
been obtained by the Trustee, the Holders of not less than a majority in
principal amount of Outstanding Debt Securities of such series (or of all Debt
Securities then Outstanding under the Indenture, as the case may be) may rescind
and annul such declaration and its consequences if (a) the Company shall have
deposited with the Trustee all required payments of the principal of (and
premium and Make-Whole Amount, if any) and interest on and any Additional
Amounts and any other amounts that may be payable in respect of the Debt
Securities of such series (or of all Debt Securities then Outstanding under the
Indenture, as the case may be), plus certain fees, expenses, disbursements and
advances of the Trustee and (b) all Events of Default, other than the non-
payment of accelerated principal (or specified portion thereof), with respect to
Debt Securities of such series (or all Debt Securities then Outstanding under
the Indenture, as the case may be) have been cured or waived as provided in the
Indenture (Section 502). The Indenture also provides that the Holders of not
less than a majority in principal amount of the Outstanding Debt Securities of
any series (or of all Debt Securities then Outstanding under the Indenture, as
the case may be) may waive any past default with respect to such series and its
consequences, except a default (x) in the payment of the principal of (or
premium and Make-Whole Amount, if any)
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or interest on and any Additional Amounts payable in respect of any Debt
Security of such series or (y) in respect of a covenant or provision contained
in the Indenture that cannot be modified or amended without the consent of the
Holder of each Outstanding Debt Security affected thereby (Section 513).
The Trustee is required to give notice to the Holders of Debt Securities
within 90 days of a default under the Indenture; provided, however, that the
Trustee may withhold notice to the Holders of any series of Debt Securities of
any default with respect to such series (except a default in the payment of the
principal of (or premium, if any) or interest on any Debt Security of such
series or in the payment of any sinking fund installment in respect of any Debt
Security of such series) if the Responsible Officers of the Trustee consider
such withholding to be in the interest of such Holders (Section 601).
The Indenture provides that no Holders of Debt Securities of any series may
institute any proceedings, judicial or otherwise, with respect to the Indenture
or for any remedy thereunder, except in the case of failure of the Trustee, for
60 days, to act after it has received a written request to institute proceedings
in respect of an Event of Default from the Holders of not less than 25% in
principal amount of the Outstanding Debt Securities of such series, as well as
an offer of reasonable indemnity (Section 507). This provision will not
prevent, however, any Holder of Debt Securities from instituting suit for the
enforcement of payment of the principal of (and premium, if any) and interest on
such Debt Securities at the respective due dates thereof (Section 508).
Subject to provisions in the Indenture relating to its duties in case of
default, the Trustee is under no obligation to exercise any of its rights or
powers under the Indenture at the request or direction of any Holders of any
series of Debt Securities then outstanding under the Indenture, unless such
Holders shall have offered to the Trustee reasonable security or indemnity
(Section 602). The Holders of not less than a majority in principal amount of
the Outstanding Debt Securities of any series (or of all Debt Securities then
Outstanding under the Indenture, as the case may be) shall have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or of exercising any trust or power conferred upon the
Trustee. However, the Trustee may refuse to follow any direction which is in
conflict with any law or the Indenture, which may involve the Trustee in
personal liability or which may be unduly prejudicial to the Holders of Debt
Securities of such series not joining therein (Section 512).
Within 120 days after the close of each fiscal year, the Company must
deliver to the Trustee a certificate, signed by one of several specified
officers, stating whether or not such officer has knowledge of any default under
the Indenture and, if so, specifying each such default and the nature and status
thereof (Section 1009).
MODIFICATION OF THE INDENTURE
Modifications and amendments of the Indenture may be made only with the
consent of the Holders of not less than a majority in principal amount of all
outstanding Debt Securities which are affected by such modification or
amendment; provided, however, that no such modification or amendment may,
without the consent of the Holder of each such Debt Security affected thereby,
(a) change the Stated Maturity of the principal of, or any installment of
interest (or premium or Make-Whole Amount, if any) on, any such Debt Security;
(b) reduce the principal amount of, or the rate or amount of interest on or
Additional Amounts payable in respect thereof, or any premium on redemption of,
any such Debt Security, or change any obligation of the Company to pay
Additional Amounts (except as provided in the Indenture), or reduce the amount
of principal of an Original Issue Discount Security that would be due and
payable upon declaration of acceleration of the maturity thereof or would be
provable in bankruptcy, or adversely affect any right of repayment of the Holder
of any such Debt Security; (c) change the Place of Payment, or the coin or
currency, for payment of principal of, premium, if any, or interest on any such
Debt Security; (d) impair the right to institute suit for the enforcement of any
payment on or with respect to any such Debt Security; (e) reduce the above-
stated percentage of Outstanding Debt Securities of any series necessary to
modify or amend the Indenture, to waive compliance with certain provisions
thereof or certain defaults and consequences thereunder or to reduce the quorum
or voting requirements set forth in the Indenture; or (f) modify any of the
foregoing provisions or any of the provisions relating to the waiver of certain
past defaults or certain covenants, except to increase the required percentage
to effect such action or to provide that certain other provisions may not be
modified or waived without the consent of the Holder of such Debt Security
(Section 902).
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The Holders of not less than a majority in principal amount of each series
of Outstanding Debt Securities have the right to waive compliance by the Company
with certain covenants in the Indenture (Section 1011).
Modifications and amendments of the Indenture may be made by the Company
and the Trustee without the consent of any Holder of Debt Securities for any of
the following purposes: (i) to evidence the succession of another person to the
Company as obligor under the Indenture; (ii) to add to the covenants of the
Company for the benefit of the Holders of all or any series of Debt Securities
or to surrender any right or power conferred upon the Company in the Indenture;
(iii) to add Events of Default for the benefit of the Holders of all or any
series of Securities; (iv) to add or change any provisions of the Indenture to
facilitate the issuance of, or to liberalize certain terms of, Debt Securities
in bearer form, or to permit or facilitate the issuance of Debt Securities in
uncertificated form, provided that such action shall not adversely affect the
interest of the Holders of the Debt Securities of any series in any material
respect; (v) to change or eliminate any provisions of the Indenture, provided
that any such change or elimination shall become effective only when there are
no Debt Securities Outstanding of any series created prior thereto which are
entitled to the benefit of such provision; (vi) to secure the Debt Securities;
(vii) to establish the form or terms of Debt Securities of any series, including
the provisions and procedures, if applicable, for the conversion of such Debt
Securities into Common Shares or Preferred Shares of the Company; (viii) to
provide for the acceptance of appointment by a successor Trustee or facilitate
the administration of the trusts under the Indenture by more than one Trustee;
(ix) to cure any ambiguity, correct or supplement any provision which may be
defective or inconsistent or make any other provisions with respect to matters
or questions arising under the Indenture, provided that such action shall not
adversely affect the interests of Holders of Debt Securities of any series in
any material respect; or (x) to supplement any of the provisions of the
Indenture to the extent necessary to permit or facilitate defeasance and
discharge of any series of such Debt Securities, provided that such action shall
not adversely affect the interests of the Holders of the Debt Securities of any
series in any material respect (Section 901).
The Indenture provides that in determining whether the Holders of the
requisite principal amount of Outstanding Debt Securities of a series have given
any request, demand, authorization, direction, notice, consent or waiver
thereunder or whether a quorum is present at a meeting of Holders of Debt
Securities, (i) the principal amount of an Original Issue Discount Security that
shall be deemed to be outstanding shall be the amount of the principal thereof
that would be due and payable as of the date of such determination upon
declaration of acceleration of the maturity thereof; (ii) the principal amount
of a Debt Security denominated in a Foreign Currency that shall be deemed
outstanding shall be the U.S. dollar equivalent, determined on the issue date
for such Debt Security, of the principal amount (or, in the case of an Original
Issue Discount Security, the U.S. dollar equivalent on the issue date of such
Debt Security of the amount determined as provided in (i) above); (iii) the
principal amount of an Indexed Security that shall be deemed outstanding shall
be the principal face amount of such Indexed Security at original issuance,
unless otherwise provided with respect to such Indexed Security pursuant to
Section 301 of the Indenture; and (iv) Debt Securities owned by the Company or
any other obligor upon the Debt Securities or any Affiliate of the Company or of
such other obligor shall be disregarded (Section 101).
The Indenture contains provisions for convening meetings of the Holders of
Debt Securities of a series (Section 1501). A meeting may be called at any time
by the Trustee, and also, upon request, by the Company or the Holders of at
least 10% in principal amount of the Outstanding Debt Securities of such series,
in any such case upon notice given as provided in the Indenture (Section 1502).
Except for any consent that must be given by the Holder of each Debt Security
affected by certain modifications and amendments of the Indenture, any
resolution presented at a meeting or adjourned meeting duly reconvened at which
a quorum is present may be adopted by the affirmative vote of the Holders of a
majority in principal amount of the Outstanding Debt Securities of that series;
provided, however, that, except as referred to above, any resolution with
respect to any request, demand, authorization, direction, notice, consent,
waiver or other action that may be made, given or taken by the Holders of a
specified percentage, which is less than a majority, in principal amount of the
Outstanding Debt Securities of a series may be adopted at a meeting or adjourned
meeting duly reconvened at which a quorum is present by the affirmative vote of
the Holders of such specified percentage in principal amount of the Outstanding
Debt Securities of that series. Any resolution passed or decision taken at any
meeting of Holders of Debt Securities of any series duly held in accordance with
the Indenture will be binding on all Holders of Debt Securities of that series.
The quorum at any meeting called to adopt a resolution, and at any reconvened
meeting, will be Persons holding or
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representing a majority in principal amount of the Outstanding Debt Securities
of a series; provided, however, that if any action is to be taken at such
meeting with respect to a consent or waiver which may be given by the Holders of
not less than a specified percentage in principal amount of the Outstanding Debt
Securities of a series, the Persons holding or representing such specified
percentage in principal amount of the Outstanding Debt Securities of such series
will constitute a quorum (Section 1504).
Notwithstanding the foregoing provisions, if any action is to be taken at a
meeting of Holders of Debt Securities of any series with respect to any request,
demand, authorization, direction, notice, consent, waiver or other action that
the Indenture expressly provides may be made, given or taken by the Holders of a
specified percentage in principal amount of all Outstanding Debt Securities
affected thereby, or of the Holders of such series and one or more additional
series: (i) there shall be no minimum quorum requirement for such meeting; and
(ii) the principal amount of the Outstanding Debt Securities of such series that
vote in favor of such request, demand, authorization, direction, notice,
consent, waiver or other action shall be taken into account in determining
whether such request, demand, authorization, direction, notice, consent, waiver
or other action has been made, given or taken under the Indenture (Section
1504).
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
The Company may discharge certain obligations to Holders of any series of
Debt Securities that have not already been delivered to the Trustee for
cancellation and that either have become due and payable or will become due and
payable within one year (or scheduled for redemption within one year) by
irrevocably depositing with the Trustee, in trust, funds in such currency or
currencies, currency unit or units or composite currency or currencies in which
such Debt Securities are payable in an amount sufficient to pay the entire
indebtedness on such Debt Securities in respect of principal (and premium or
Make-Whole Amount, if any) and interest to the date of such deposit (if such
Debt Securities have become due and payable) or to the Stated Maturity or
Redemption Date, as the case may be (Section 1401).
The Indenture provides that, if the provisions of Article Fourteen are made
applicable to the Debt Securities of or within any series pursuant to Section
301 of the Indenture, the Company may elect either (a) to defease and be
discharged from any and all obligations with respect to such Debt Securities
(except for the obligation to pay Additional Amounts, if any, upon the
occurrence of certain events of tax, assessment or governmental charge with
respect to payments on such Debt Securities and the obligations to register the
transfer or exchange of such Debt Securities, to replace temporary or mutilated,
destroyed, lost or stolen Debt Securities, to maintain an office or agency in
respect of such Debt Securities and to hold moneys for payment in trust)
("defeasance") (Section 1402) or (b) to be released from its obligations with
respect to such Debt Securities under Section 1004 to 1008, inclusive, of the
Indenture (being the restrictions described under "Certain Covenants") or, if
provided pursuant to Section 301 of the Indenture, its obligations with respect
to any other covenant, and any omission to comply with such obligations shall
not constitute a default or an Event of Default with respect to such Debt
Securities ("covenant defeasance") (Section 1403), in either case upon the
irrevocable deposit by the Company with the Trustee, in trust, of an amount, in
such currency or currencies, currency unit or units or composite currency or
currencies in which such Debt Securities are payable at Stated Maturity, or
Governmental Obligations (as defined below), or both, applicable to such Debt
Securities which through the scheduled payment of principal and interest in
accordance with their terms will provide money in an amount sufficient to pay
the principal of (and premium, if any) and interest on such Debt Securities, and
any mandatory sinking fund or analogous payments thereon, on the scheduled due
dates therefor.
Such a trust may only be established if, among other things, the Company
has delivered to the Trustee an Opinion of Counsel (as specified in the
Indenture) to the effect that the Holders of such Debt Securities will not
recognize income, gain or loss for U.S. federal income tax purposes as a result
of such defeasance or covenant defeasance and will be subject to U.S. federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such defeasance or covenant defeasance had not
occurred, and such Opinion of Counsel, in the case of defeasance, must refer to
and be based upon a ruling of the Internal Revenue Service or a change in
applicable United States federal income tax law occurring after the date of the
Indenture (Section 1404).
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"Government Obligations" means securities which are (i) direct obligations
of the United States of America or the government which issued the Foreign
Currency in which the Debt Securities of a particular series are payable, for
the payment of which its full faith and credit is pledged or (ii) obligations of
a Person controlled or supervised by and acting as an agency or instrumentality
of the United States of America or such government which issued the Foreign
Currency in which the Debt Securities of such series are payable, the payment of
which is unconditionally guaranteed as a full faith and credit obligation by the
United States of America or such other government, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank or trust company as custodian with
respect to any such Government Obligation or a specific payment of interest on
or principal of any such Government Obligation held by such custodian for the
account of the holder of a depository receipt, provided that (except as required
by law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received by the
custodian in respect of the Government Obligation or the specific payment of
interest on or principal of the Government Obligation evidenced by such
depository receipt (Section 101).
Unless otherwise provided in the applicable Prospectus Supplement, if after
the Company has deposited funds and/or Government Obligations to effect
defeasance or covenant defeasance with respect to Debt Securities of any series,
(a) the Holder of a Debt Security of such series is entitled to, and does, elect
pursuant to Section 301 of the Indenture or the terms of such Debt Security to
receive payment in a currency, currency unit or composite currency other than
that in which such deposit has been made in respect of such Debt Security, or
(b) a Conversion Event (as defined below) occurs in respect of the currency,
currency unit or composite currency in which such deposit has been made, the
indebtedness represented by such Debt Security shall be deemed to have been, and
will be, fully discharged and satisfied through the payment of the principal of
(and premium or Make-Whole Amount, if any) and interest on such Debt Security as
they become due out of the proceeds yielded by converting the amount so
deposited in respect of such Debt Security into the currency, currency unit or
composite currency in which such Debt Security becomes payable as a result of
such election or such cessation of usage based on the applicable market exchange
rate (Section 1405). "Conversion Event" means the cessation of use of (i) a
currency, currency unit or composite currency both by the government of the
country which issued such currency and for the settlement of transactions by a
central bank or other public institutions of or within the international banking
community, (ii) the ECU both within the European Monetary System and for the
settlement of transactions by public institutions of or within the European
Communities or (iii) any currency unit or composite currency other than the ECU
for the purposes for which it was established. Unless otherwise provided in the
applicable Prospectus Supplement, all payments of principal of (and premium or
Make-Whole Amount, if any) and interest on any Debt Security that is payable in
a Foreign Currency that ceases to be used by its government of issuance shall be
made in U.S. dollars (Section 101).
In the event the Company effects covenant defeasance with respect to any
Debt Securities and such Debt Securities are declared due and payable because of
the occurrence of any Event of Default other than the Event of Default described
in clause (d) under "Events of Default, Notice and Waiver" with respect to
Sections 1004 to 1008, inclusive, of the Indenture (which Sections would no
longer be applicable to such Debt Securities) or described in clause (g) under
"Events of Default, Notice and Waiver" with respect to any other covenant as to
which there has been covenant defeasance, the amount in such currency, currency
unit or composite currency in which such Debt Securities are payable, and
Government Obligations on deposit with the Trustee, will be sufficient to pay
amounts due on such Debt Securities at the time of their Stated Maturity but may
not be sufficient to pay amounts due on such Debt Securities at the time of the
acceleration resulting from such Event of Default. However, the Company would
remain liable to make payment of such amounts due at the time of acceleration.
The applicable Prospectus Supplement may further describe the provisions,
if any, permitting such defeasance or covenant defeasance, including any
modifications to the provisions described above, with respect to the Debt
Securities of or within a particular series.
CONVERSION RIGHTS
The terms and conditions, if any, upon which the Debt Securities are
convertible into Common Shares, Preferred Shares or Debt Securities of another
series will be set forth in the applicable Prospectus Supplement
20
<PAGE>
relating thereto. Such terms will include whether such Debt Securities are
convertible into Common Shares, Preferred Shares or Debt Securities of another
series, the conversion price (or manner of calculation thereof), the conversion
period, provisions as to whether conversion will be at the option of the Holders
or the Company, the events requiring an adjustment of the conversion price and
provisions affecting conversion in the event of the redemption of such Debt
Securities. To protect the Company's status as a REIT, a Holder may not convert
any Debt Security, and such Debt Security shall not be convertible by any
Holder, if as a result of such conversion any person would then be deemed to
own, directly or indirectly, more than 9.8% of the Company's capital shares.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one more global securities (the "Global Securities") that will be
deposited with, or on behalf of, a depositary (the "Depositary") identified in
the applicable Prospectus Supplement relating to such series. Global Securities
may be issued in either registered or bearer form and in either temporary or
permanent form. The specific terms of the depositary arrangement with respect
to a series of Debt Securities will be described in the applicable Prospectus
Supplement relating to such series. The laws of some jurisdictions require that
certain purchasers of securities take physical delivery of such securities in
definitive form. Such laws may impair the ability to transfer beneficial
interests in Debt Securities represented by Global Securities.
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges and the ratio of earnings to
combined fixed charges and preferred distributions for the nine months ended
September 30, 1995 and each of the last five fiscal years for the Company
(including its predecessors in interest) are presented below. The ratio of
earnings to fixed charges for the Company is computed by dividing earnings by
fixed charges. The ratio of earnings to combined fixed charges and preferred
distributions is computed by dividing earnings by the sum of fixed charges and
preferred shares dividend requirements.
For purposes of computing these ratios, "earnings" have been calculated by
adding fixed charges to income from operations before income taxes. "Fixed
charges" consist of interest costs, the interest component of capitalized lease
obligations, a portion of rental expense, other than on capitalized leases,
estimated to represent the interest factor in such rental expense and the
amortization of debt discounts and issue costs.
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<TABLE>
<CAPTION>
Camden Property Trust Camden Predecessors
----------------------------------------------------------- ---------------------------------------
Nine Months Years Ended December 31,
Ended Year Ended July 29 to January 1, ---------------------------------------
September 30, December 31, December 31, to July 28,
1995 1994 1993 1993 1992 1991 1990
--------------- -------------- -------------- ------------ -------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed
charges 1.37x 1.60x 3.27x 1.10x 0.88x 0.48x 0.19x
Dollar amount of coverage
deficiency (in thousands) -- -- -- -- $( 778) $(1,917) $(1,764)
Ratio of earnings to
combined fixed charges
and preferred share
dividends (a) 1.36x 1.60x
</TABLE>
(a) The ratio of earnings to combined fixed charges and preferred share
dividends is the same as the ratio of earnings to fixed charges for fiscal
years prior to 1994 as the Company had no preferred share dividends prior
to 1994.
PLAN OF DISTRIBUTION
The Company may sell the Offered Securities to one or more underwriters for
public offering and sale by them or may sell the Offered Securities to investors
directly or through agents. Any such underwriter or agent involved in the offer
and sale of the Offered Securities will be named in the applicable Prospectus
Supplement.
Underwriters may offer and sell the Offered Securities at a fixed price or
prices, which may be changed, at prices related to the prevailing market prices
at the time of sale or at negotiated prices. The Company also may offer and sell
the Offered Securities in exchange for one or more of its then outstanding
issues of debt or convertible debt securities. The Company also may, from time
to time, authorize underwriters acting as the Company's agents to offer and sell
the Offered Securities upon the terms and conditions as are set forth in the
applicable Prospectus Supplement. In connection with the sale of Offered
Securities, underwriters may be deemed to have received compensation from the
Company in the form of underwriting discounts or commissions and may also
receive commissions from purchasers of Offered Securities for whom they may act
as agent. Underwriters may sell Offered Securities to or through dealers, and
such dealers may receive compensation in the form of discounts, concessions or
commissions from the underwriters and/or commissions from the purchasers for
whom they may act as agent.
Any underwriting compensation paid by the Company to underwriters or agents
in connection with the offering of Offered Securities, and any discounts,
concessions or commissions allowed by underwriters to participating dealers,
will be set forth in the applicable Prospectus Supplement. Underwriters, dealers
and agents participating in the distribution of the Offered Securities may be
deemed to be underwriters, and any discounts and commissions received by them
and any profit realized by them on resale of the Offered Securities may be
deemed
22
<PAGE>
to be underwriting discounts and commissions, under the Securities Act.
Underwriters, dealers and agents may be entitled, under agreements entered into
with the Company, to indemnification against and contribution toward certain
civil liabilities, including liabilities under the Securities Act.
If so indicated in the applicable Prospectus Supplement, the Company will
authorize dealers acting as the Company's agents to solicit offers by certain
institutions to purchase Offered Securities from the Company at the public
offering price set forth in such Prospectus Supplement pursuant to Delayed
Delivery Contracts ("Contracts") providing for payment and delivery on the date
or dates stated in such Prospectus Supplement. Each Contract will be for an
amount not less than, and the aggregate principal amount of Offered Securities
sold pursuant to Contracts shall be not less nor more than, the respective
amounts stated in the applicable Prospectus Supplement. Institutions with whom
Contracts, when authorized, may be made include commercial and savings banks,
insurance companies, pension funds, investment companies, educational and
charitable institutions, and other institutions but will in all cases be subject
to the approval of the Company. Contracts will not be subject to any conditions
except (i) the purchase by an institution of the Offered Securities covered by
its Contracts shall not at the time of delivery be prohibited under the laws of
any jurisdiction in the United States to which such institution is subject; and
(ii) if the Offered Securities are being sold to underwriters, the Company shall
have sold to such underwriters the total principal amount of the Offered
Securities less the principal amount thereof covered by the Contracts.
Certain of the underwriters and their affiliates may be customers of,
engage in transactions with and perform services for the Company and its
subsidiaries in the ordinary course of business.
LEGAL MATTERS
Certain legal matters relating to the validity of the Offered Securities
will be passed upon for the Company by Liddell, Sapp, Zivley, Hill & LaBoon,
L.L.P., Dallas, Texas.
EXPERTS
The consolidated financial statements of Camden Property Trust as of
December 31, 1994 and 1993 and for the year ended December 31, 1994 and for the
period from July 29, 1993 to December 31, 1993, the related financial statement
schedules and the combined financial statements of Camden Predecessors for the
period from January 1, 1993 to July 28, 1993 and for the year ended December 31,
1992, incorporated in this Prospectus by reference from the Annual Report on
Form 10-K of Camden Property Trust for the year ended December 31, 1994 have
been audited by Deloitte & Touche LLP, independent auditors, as stated in their
reports which are incorporated herein by reference, and have been so
incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
23
<PAGE>
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NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN ANY
PRICING SUPPLEMENT, THIS PROSPECTUS SUPPLEMENT, OR THE PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED. ANY PRICING SUPPLEMENT, THIS PROSPECTUS SUPPLEMENT,
AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY SECURITIES OTHER THAN THE NOTES DESCRIBED IN THIS PROSPECTUS
SUPPLEMENT. ANY PRICING SUPPLEMENT, THIS PROSPECTUS SUPPLEMENT, AND THE
PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY SUCH NOTES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF ANY PRICING SUPPLEMENT, THIS PROSPECTUS
SUPPLEMENT, OR THE PROSPECTUS NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE
IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION
CONTAINED OR INCORPORATED BY REFERENCE HEREIN OR THEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO THE DATE OF SUCH INFORMATION.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
PROSPECTUS SUPPLEMENT ----
<S> <C>
Risk Factors............................................................... S-2
The Company................................................................ S-4
Description of Notes....................................................... S-5
Certain Investment Considerations Relating to Foreign Currency Notes....... S-25
United States Taxation..................................................... S-28
Supplemental Plan of Distribution.......................................... S-38
Validity of Notes.......................................................... S-39
PROSPECTUS
Available Information...................................................... 2
Incorporation of Certain Documents by
Reference................................................................. 2
The Company................................................................ 3
Use of Proceeds............................................................ 4
Description of Common Shares............................................... 4
Description of Preferred Shares............................................ 6
Description of Securities Warrants......................................... 9
Description of Debt Securities............................................. 11
Ratio of Earnings to Fixed Charges......................................... 21
Plan of Distribution....................................................... 22
Legal Matters.............................................................. 23
Experts.................................................................... 23
</TABLE>
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LOGO
[LOGO OF CAMDEN PROPERTY TRUST APPEARS HERE]
$196,000,000
MEDIUM-TERM NOTES,
SERIES A
DUE NINE MONTHS OR MORE
FROM DATE OF ISSUE
---------------
PROSPECTUS SUPPLEMENT
---------------
NATIONSBANC CAPITAL MARKETS, INC.
MERRILL LYNCH & CO.
J.P. MORGAN & CO.
SMITH BARNEY INC.
UBS SECURITIES
MARCH 20, 1997
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